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How To Amend Your Income Tax Return

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How To Amend Your Income Tax Return

How to amend your income tax return 2. How to amend your income tax return   Simplified Employee Pensions (SEPs) Table of Contents Topics - This chapter discusses: Useful Items - You may want to see: Setting Up a SEPWhen not to use Form 5305-SEP. How to amend your income tax return How Much Can I Contribute?Contribution Limits Deducting ContributionsDeduction Limit for Contributions for Participants Deduction Limit for Self-Employed Individuals Carryover of Excess SEP Contributions When To Deduct Contributions Where To Deduct Contributions Salary Reduction Simplified Employee Pensions (SARSEPs)SARSEP ADP test. How to amend your income tax return Deferral percentage. How to amend your income tax return Employee compensation. How to amend your income tax return Compensation of self-employed individuals. How to amend your income tax return Choice not to treat deferrals as compensation. How to amend your income tax return Limit on Elective Deferrals Tax Treatment of Deferrals Distributions (Withdrawals) Additional TaxesEffects on employee. How to amend your income tax return Reporting and Disclosure Requirements Topics - This chapter discusses: Setting up a SEP How much can I contribute Deducting contributions Salary reduction simplified employee pensions (SARSEPs) Distributions (withdrawals) Additional taxes Reporting and disclosure requirements Useful Items - You may want to see: Publication 590 Individual Retirement Arrangements (IRAs) 3998 Choosing A Retirement Solution for Your Small Business 4285 SEP Checklist 4286 SARSEP Checklist 4333 SEP Retirement Plans for Small Businesses 4336 SARSEP for Small Businesses 4407 SARSEP—Key Issues and Assistance Forms (and Instructions) W-2 Wage and Tax Statement 1040 U. How to amend your income tax return S. How to amend your income tax return Individual Income Tax Return 5305-SEP Simplified Employee Pension—Individual Retirement Accounts Contribution Agreement 5305A-SEP Salary Reduction Simplified Employee Pension—Individual Retirement Accounts Contribution Agreement 8880 Credit for Qualified Retirement Savings Contributions 8881 Credit for Small Employer Pension Plan Startup Costs A SEP is a written plan that allows you to make contributions toward your own retirement and your employees' retirement without getting involved in a more complex qualified plan. How to amend your income tax return Under a SEP, you make contributions to a traditional individual retirement arrangement (called a SEP-IRA) set up by or for each eligible employee. How to amend your income tax return A SEP-IRA is owned and controlled by the employee, and you make contributions to the financial institution where the SEP-IRA is maintained. How to amend your income tax return SEP-IRAs are set up for, at a minimum, each eligible employee (defined below). How to amend your income tax return A SEP-IRA may have to be set up for a leased employee (defined in chapter 1), but does not need to be set up for excludable employees (defined later). How to amend your income tax return Eligible employee. How to amend your income tax return   An eligible employee is an individual who meets all the following requirements. How to amend your income tax return Has reached age 21. How to amend your income tax return Has worked for you in at least 3 of the last 5 years. How to amend your income tax return Has received at least $550 in compensation from you in 2013. How to amend your income tax return This amount remains the same in 2014. How to amend your income tax return    You can use less restrictive participation requirements than those listed, but not more restrictive ones. How to amend your income tax return Excludable employees. How to amend your income tax return   The following employees can be excluded from coverage under a SEP. How to amend your income tax return Employees covered by a union agreement and whose retirement benefits were bargained for in good faith by the employees' union and you. How to amend your income tax return Nonresident alien employees who have received no U. How to amend your income tax return S. How to amend your income tax return source wages, salaries, or other personal services compensation from you. How to amend your income tax return For more information about nonresident aliens, see Publication 519, U. How to amend your income tax return S. How to amend your income tax return Tax Guide for Aliens. How to amend your income tax return Setting Up a SEP There are three basic steps in setting up a SEP. How to amend your income tax return You must execute a formal written agreement to provide benefits to all eligible employees. How to amend your income tax return You must give each eligible employee certain information about the SEP. How to amend your income tax return A SEP-IRA must be set up by or for each eligible employee. How to amend your income tax return Many financial institutions will help you set up a SEP. How to amend your income tax return Formal written agreement. How to amend your income tax return   You must execute a formal written agreement to provide benefits to all eligible employees under a SEP. How to amend your income tax return You can satisfy the written agreement requirement by adopting an IRS model SEP using Form 5305-SEP. How to amend your income tax return However, see When not to use Form 5305-SEP, below. How to amend your income tax return   If you adopt an IRS model SEP using Form 5305-SEP, no prior IRS approval or determination letter is required. How to amend your income tax return Keep the original form. How to amend your income tax return Do not file it with the IRS. How to amend your income tax return Also, using Form 5305-SEP will usually relieve you from filing annual retirement plan information returns with the IRS and the Department of Labor. How to amend your income tax return See the Form 5305-SEP instructions for details. How to amend your income tax return If you choose not to use Form 5305-SEP, you should seek professional advice in adopting a SEP. How to amend your income tax return When not to use Form 5305-SEP. How to amend your income tax return   You cannot use Form 5305-SEP if any of the following apply. How to amend your income tax return You currently maintain any other qualified retirement plan other than another SEP. How to amend your income tax return You have any eligible employees for whom IRAs have not been set up. How to amend your income tax return You use the services of leased employees, who are not your common-law employees (as described in chapter 1). How to amend your income tax return You are a member of any of the following unless all eligible employees of all the members of these groups, trades, or businesses participate under the SEP. How to amend your income tax return An affiliated service group described in section 414(m). How to amend your income tax return A controlled group of corporations described in section 414(b). How to amend your income tax return Trades or businesses under common control described in section 414(c). How to amend your income tax return You do not pay the cost of the SEP contributions. How to amend your income tax return Information you must give to employees. How to amend your income tax return   You must give each eligible employee a copy of Form 5305-SEP, its instructions, and the other information listed in the Form 5305-SEP instructions. How to amend your income tax return An IRS model SEP is not considered adopted until you give each employee this information. How to amend your income tax return Setting up the employee's SEP-IRA. How to amend your income tax return   A SEP-IRA must be set up by or for each eligible employee. How to amend your income tax return SEP-IRAs can be set up with banks, insurance companies, or other qualified financial institutions. How to amend your income tax return You send SEP contributions to the financial institution where the SEP-IRA is maintained. How to amend your income tax return Deadline for setting up a SEP. How to amend your income tax return   You can set up a SEP for any year as late as the due date (including extensions) of your income tax return for that year. How to amend your income tax return Credit for startup costs. How to amend your income tax return   You may be able to claim a tax credit for part of the ordinary and necessary costs of starting a SEP that first became effective in 2013. How to amend your income tax return For more information, see Credit for startup costs under Reminders, earlier. How to amend your income tax return How Much Can I Contribute? The SEP rules permit you to contribute a limited amount of money each year to each employee's SEP-IRA. How to amend your income tax return If you are self-employed, you can contribute to your own SEP-IRA. How to amend your income tax return Contributions must be in the form of money (cash, check, or money order). How to amend your income tax return You cannot contribute property. How to amend your income tax return However, participants may be able to transfer or roll over certain property from one retirement plan to another. How to amend your income tax return See Publication 590 for more information about rollovers. How to amend your income tax return You do not have to make contributions every year. How to amend your income tax return But if you make contributions, they must be based on a written allocation formula and must not discriminate in favor of highly compensated employees (defined in chapter 1). How to amend your income tax return When you contribute, you must contribute to the SEP-IRAs of all participants who actually performed personal services during the year for which the contributions are made, including employees who die or terminate employment before the contributions are made. How to amend your income tax return Contributions are deductible within limits, as discussed later, and generally are not taxable to the plan participants. How to amend your income tax return A SEP-IRA cannot be a Roth IRA. How to amend your income tax return Employer contributions to a SEP-IRA will not affect the amount an individual can contribute to a Roth or traditional IRA. How to amend your income tax return Unlike regular contributions to a traditional IRA, contributions under a SEP can be made to participants over age 70½. How to amend your income tax return If you are self-employed, you can also make contributions under the SEP for yourself even if you are over 70½. How to amend your income tax return Participants age 70½ or over must take required minimum distributions. How to amend your income tax return Time limit for making contributions. How to amend your income tax return   To deduct contributions for a year, you must make the contributions by the due date (including extensions) of your tax return for the year. How to amend your income tax return Contribution Limits Contributions you make for 2013 to a common-law employee's SEP-IRA cannot exceed the lesser of 25% of the employee's compensation or $51,000. How to amend your income tax return Compensation generally does not include your contributions to the SEP. How to amend your income tax return The SEP plan document will specify how the employer contribution is determined and how it will be allocated to participants. How to amend your income tax return Example. How to amend your income tax return Your employee, Mary Plant, earned $21,000 for 2013. How to amend your income tax return The maximum contribution you can make to her SEP-IRA is $5,250 (25% x $21,000). How to amend your income tax return Contributions for yourself. How to amend your income tax return   The annual limits on your contributions to a common-law employee's SEP-IRA also apply to contributions you make to your own SEP-IRA. How to amend your income tax return However, special rules apply when figuring your maximum deductible contribution. How to amend your income tax return See Deduction Limit for Self-Employed Individuals , later. How to amend your income tax return Annual compensation limit. How to amend your income tax return   You cannot consider the part of an employee's compensation over $255,000 when figuring your contribution limit for that employee. How to amend your income tax return However, $51,000 is the maximum contribution for an eligible employee. How to amend your income tax return These limits are $260,000 and $52,000, respectively, in 2014. How to amend your income tax return Example. How to amend your income tax return Your employee, Susan Green, earned $210,000 for 2013. How to amend your income tax return Because of the maximum contribution limit for 2013, you can only contribute $51,000 to her SEP-IRA. How to amend your income tax return More than one plan. How to amend your income tax return   If you contribute to a defined contribution plan (defined in chapter 4), annual additions to an account are limited to the lesser of $51,000 or 100% of the participant's compensation. How to amend your income tax return When you figure this limit, you must add your contributions to all defined contribution plans maintained by you. How to amend your income tax return Because a SEP is considered a defined contribution plan for this limit, your contributions to a SEP must be added to your contributions to other defined contribution plans you maintain. How to amend your income tax return Tax treatment of excess contributions. How to amend your income tax return   Excess contributions are your contributions to an employee's SEP-IRA (or to your own SEP-IRA) for 2013 that exceed the lesser of the following amounts. How to amend your income tax return 25% of the employee's compensation (or, for you, 20% of your net earnings from self-employment). How to amend your income tax return $51,000. How to amend your income tax return Excess contributions are included in the employee's income for the year and are treated as contributions by the employee to his or her SEP-IRA. How to amend your income tax return For more information on employee tax treatment of excess contributions, see chapter 1 in Publication 590. How to amend your income tax return Reporting on Form W-2. How to amend your income tax return   Do not include SEP contributions on your employee's Form W-2 unless contributions were made under a salary reduction arrangement (discussed later). How to amend your income tax return Deducting Contributions Generally, you can deduct the contributions you make each year to each employee's SEP-IRA. How to amend your income tax return If you are self-employed, you can deduct the contributions you make each year to your own SEP-IRA. How to amend your income tax return Deduction Limit for Contributions for Participants The most you can deduct for your contributions to you or your employee's SEP-IRA is the lesser of the following amounts. How to amend your income tax return Your contributions (including any excess contributions carryover). How to amend your income tax return 25% of the compensation (limited to $255,000 per participant) paid to the participants during 2013 from the business that has the plan, not to exceed $51,000 per participant. How to amend your income tax return In 2014, the amounts in (2) above are $260,000 and $52,000, respectively. How to amend your income tax return Deduction Limit for Self-Employed Individuals If you contribute to your own SEP-IRA, you must make a special computation to figure your maximum deduction for these contributions. How to amend your income tax return When figuring the deduction for contributions made to your own SEP-IRA, compensation is your net earnings from self-employment (defined in chapter 1), which takes into account both the following deductions. How to amend your income tax return The deduction for the deductible part of your self-employment tax. How to amend your income tax return The deduction for contributions to your own SEP-IRA. How to amend your income tax return The deduction for contributions to your own SEP-IRA and your net earnings depend on each other. How to amend your income tax return For this reason, you determine the deduction for contributions to your own SEP-IRA indirectly by reducing the contribution rate called for in your plan. How to amend your income tax return To do this, use the Rate Table for Self-Employed or the Rate Worksheet for Self-Employed, whichever is appropriate for your plan's contribution rate, in chapter 5. How to amend your income tax return Then figure your maximum deduction by using the Deduction Worksheet for Self-Employed in chapter 5. How to amend your income tax return Carryover of Excess SEP Contributions If you made SEP contributions that are more than the deduction limit (nondeductible contributions), you can carry over and deduct the difference in later years. How to amend your income tax return However, the carryover, when combined with the contribution for the later year, is subject to the deduction limit for that year. How to amend your income tax return If you also contributed to a defined benefit plan or defined contribution plan, see Carryover of Excess Contributions under Employer Deduction in chapter 4 for the carryover limit. How to amend your income tax return Excise tax. How to amend your income tax return   If you made nondeductible (excess) contributions to a SEP, you may be subject to a 10% excise tax. How to amend your income tax return For information about the excise tax, see Excise Tax for Nondeductible (Excess) Contributions under Employer Deduction in chapter 4. How to amend your income tax return When To Deduct Contributions When you can deduct contributions made for a year depends on the tax year on which the SEP is maintained. How to amend your income tax return If the SEP is maintained on a calendar year basis, you deduct the yearly contributions on your tax return for the year within which the calendar year ends. How to amend your income tax return If you file your tax return and maintain the SEP using a fiscal year or short tax year, you deduct contributions made for a year on your tax return for that year. How to amend your income tax return Example. How to amend your income tax return You are a fiscal year taxpayer whose tax year ends June 30. How to amend your income tax return You maintain a SEP on a calendar year basis. How to amend your income tax return You deduct SEP contributions made for calendar year 2013 on your tax return for your tax year ending June 30, 2014. How to amend your income tax return Where To Deduct Contributions Deduct the contributions you make for your common-law employees on your tax return. How to amend your income tax return For example, sole proprietors deduct them on Schedule C (Form 1040) or Schedule F (Form 1040), Profit or Loss From Farming; partnerships deduct them on Form 1065, U. How to amend your income tax return S. How to amend your income tax return Return of Partnership Income; and corporations deduct them on Form 1120, U. How to amend your income tax return S. How to amend your income tax return Corporation Income Tax Return, or Form 1120S, U. How to amend your income tax return S. How to amend your income tax return Income Tax Return for an S Corporation. How to amend your income tax return Sole proprietors and partners deduct contributions for themselves on line 28 of Form 1040. How to amend your income tax return (If you are a partner, contributions for yourself are shown on the Schedule K-1 (Form 1065), Partner's Share of Income, Deductions, Credits, etc. How to amend your income tax return , you receive from the partnership. How to amend your income tax return ) Remember that sole proprietors and partners can't deduct as a business expense contributions made to a SEP for themselves, only those made for their common-law employees. How to amend your income tax return Salary Reduction Simplified Employee Pensions (SARSEPs) A SARSEP is a SEP set up before 1997 that includes a salary reduction arrangement. How to amend your income tax return (See the Caution, next. How to amend your income tax return ) Under a SARSEP, your employees can choose to have you contribute part of their pay to their SEP-IRAs rather than receive it in cash. How to amend your income tax return This contribution is called an “elective deferral” because employees choose (elect) to set aside the money, and they defer the tax on the money until it is distributed to them. How to amend your income tax return You are not allowed to set up a SARSEP after 1996. How to amend your income tax return However, participants (including employees hired after 1996) in a SARSEP set up before 1997 can continue to have you contribute part of their pay to the plan. How to amend your income tax return If you are interested in setting up a retirement plan that includes a salary reduction arrangement, see chapter 3. How to amend your income tax return Who can have a SARSEP?   A SARSEP set up before 1997 is available to you and your eligible employees only if all the following requirements are met. How to amend your income tax return At least 50% of your employees eligible to participate choose to make elective deferrals. How to amend your income tax return You have 25 or fewer employees who were eligible to participate in the SEP at any time during the preceding year. How to amend your income tax return The elective deferrals of your highly compensated employees meet the SARSEP ADP test. How to amend your income tax return SARSEP ADP test. How to amend your income tax return   Under the SARSEP ADP test, the amount deferred each year by each eligible highly compensated employee as a percentage of pay (the deferral percentage) cannot be more than 125% of the average deferral percentage (ADP) of all non-highly compensated employees eligible to participate. How to amend your income tax return A highly compensated employee is defined in chapter 1. How to amend your income tax return Deferral percentage. How to amend your income tax return   The deferral percentage for an employee for a year is figured as follows. How to amend your income tax return   The elective employer contributions (excluding certain catch-up contributions)  paid to the SEP for the employee for the year     The employee's compensation (limited to $255,000 in 2013)   The instructions for Form 5305A-SEP have a worksheet you can use to determine whether the elective deferrals of your highly compensated employees meet the SARSEP ADP test. How to amend your income tax return Employee compensation. How to amend your income tax return   For figuring the deferral percentage, compensation is generally the amount you pay to the employee for the year. How to amend your income tax return Compensation includes the elective deferral and other amounts deferred in certain employee benefit plans. How to amend your income tax return See Compensation in chapter 1. How to amend your income tax return Elective deferrals under the SARSEP are included in figuring your employees' deferral percentage even though they are not included in the income of your employees for income tax purposes. How to amend your income tax return Compensation of self-employed individuals. How to amend your income tax return   If you are self-employed, compensation is your net earnings from self-employment as defined in chapter 1. How to amend your income tax return   Compensation does not include tax-free items (or deductions related to them) other than foreign earned income and housing cost amounts. How to amend your income tax return Choice not to treat deferrals as compensation. How to amend your income tax return   You can choose not to treat elective deferrals (and other amounts deferred in certain employee benefit plans) for a year as compensation under your SARSEP. How to amend your income tax return Limit on Elective Deferrals The most a participant can choose to defer for calendar year 2013 is the lesser of the following amounts. How to amend your income tax return 25% of the participant's compensation (limited to $255,000 of the participant's compensation). How to amend your income tax return $17,500. How to amend your income tax return The $17,500 limit applies to the total elective deferrals the employee makes for the year to a SEP and any of the following. How to amend your income tax return Cash or deferred arrangement (section 401(k) plan). How to amend your income tax return Salary reduction arrangement under a tax-sheltered annuity plan (section 403(b) plan). How to amend your income tax return SIMPLE IRA plan. How to amend your income tax return In 2014, the $255,000 limit increases to $260,000 and the $17,500 limit remains at $17,500. How to amend your income tax return Catch-up contributions. How to amend your income tax return   A SARSEP can permit participants who are age 50 or over at the end of the calendar year to also make catch-up contributions. How to amend your income tax return The catch-up contribution limit for 2013 is $5,500 and remains at $5,500 for 2014. How to amend your income tax return Elective deferrals are not treated as catch-up contributions for 2013 until they exceed the elective deferral limit (the lesser of 25% of compensation or $17,500), the SARSEP ADP test limit discussed earlier, or the plan limit (if any). How to amend your income tax return However, the catch-up contribution a participant can make for a year cannot exceed the lesser of the following amounts. How to amend your income tax return The catch-up contribution limit. How to amend your income tax return The excess of the participant's compensation over the elective deferrals that are not catch-up contributions. How to amend your income tax return   Catch-up contributions are not subject to the elective deferral limit (the lesser of 25% of compensation or $17,500 in 2013 and in 2014). How to amend your income tax return Overall limit on SEP contributions. How to amend your income tax return   If you also make nonelective contributions to a SEP-IRA, the total of the nonelective and elective contributions to that SEP-IRA cannot exceed the lesser of 25% of the employee's compensation or $51,000 for 2013 ($52,000 for 2014). How to amend your income tax return The same rule applies to contributions you make to your own SEP-IRA. How to amend your income tax return See Contribution Limits , earlier. How to amend your income tax return Figuring the elective deferral. How to amend your income tax return   For figuring the 25% limit on elective deferrals, compensation does not include SEP contributions, including elective deferrals or other amounts deferred in certain employee benefit plans. How to amend your income tax return Tax Treatment of Deferrals Elective deferrals that are not more than the limits discussed earlier under Limit on Elective Deferrals are excluded from your employees' wages subject to federal income tax in the year of deferral. How to amend your income tax return However, these deferrals are included in wages for social security, Medicare, and federal unemployment (FUTA) tax. How to amend your income tax return Excess deferrals. How to amend your income tax return   For 2013, excess deferrals are the elective deferrals for the year that are more than the $17,500 limit discussed earlier. How to amend your income tax return For a participant who is eligible to make catch-up contributions, excess deferrals are the elective deferrals that are more than $23,000. How to amend your income tax return The treatment of excess deferrals made under a SARSEP is similar to the treatment of excess deferrals made under a qualified plan. How to amend your income tax return See Treatment of Excess Deferrals under Elective Deferrals (401(k) Plans) in chapter 4. How to amend your income tax return Excess SEP contributions. How to amend your income tax return   Excess SEP contributions are elective deferrals of highly compensated employees that are more than the amount permitted under the SARSEP ADP test. How to amend your income tax return You must notify your highly compensated employees within 2½ months after the end of the plan year of their excess SEP contributions. How to amend your income tax return If you do not notify them within this time period, you must pay a 10% tax on the excess. How to amend your income tax return For an explanation of the notification requirements, see Rev. How to amend your income tax return Proc. How to amend your income tax return 91-44, 1991-2 C. How to amend your income tax return B. How to amend your income tax return 733. How to amend your income tax return If you adopted a SARSEP using Form 5305A-SEP, the notification requirements are explained in the instructions for that form. How to amend your income tax return Reporting on Form W-2. How to amend your income tax return   Do not include elective deferrals in the “Wages, tips, other compensation” box of Form W-2. How to amend your income tax return You must, however, include them in the “Social security wages” and “Medicare wages and tips” boxes. How to amend your income tax return You must also include them in box 12. How to amend your income tax return Mark the “Retirement plan” checkbox in box 13. How to amend your income tax return For more information, see the Form W-2 instructions. How to amend your income tax return Distributions (Withdrawals) As an employer, you cannot prohibit distributions from a SEP-IRA. How to amend your income tax return Also, you cannot make your contributions on the condition that any part of them must be kept in the account after you have made your contributions to the employee's accounts. How to amend your income tax return Distributions are subject to IRA rules. How to amend your income tax return Generally, you or your employee must begin to receive distributions from a SEP-IRA by April 1 of the first year after the calendar year in which you or your employee reaches age 70½. How to amend your income tax return For more information about IRA rules, including the tax treatment of distributions, rollovers, required distributions, and income tax withholding, see Publication 590. How to amend your income tax return Additional Taxes The tax advantages of using SEP-IRAs for retirement savings can be offset by additional taxes that may be imposed for all the following actions. How to amend your income tax return Making excess contributions. How to amend your income tax return Making early withdrawals. How to amend your income tax return Not making required withdrawals. How to amend your income tax return For information about these taxes, see chapter 1 in Publication 590. How to amend your income tax return Also, a SEP-IRA may be disqualified, or an excise tax may apply, if the account is involved in a prohibited transaction, discussed next. How to amend your income tax return Prohibited transaction. How to amend your income tax return   If an employee improperly uses his or her SEP-IRA, such as by borrowing money from it, the employee has engaged in a prohibited transaction. How to amend your income tax return In that case, the SEP-IRA will no longer qualify as an IRA. How to amend your income tax return For a list of prohibited transactions, see Prohibited Transactions in chapter 4. How to amend your income tax return Effects on employee. How to amend your income tax return   If a SEP-IRA is disqualified because of a prohibited transaction, the assets in the account will be treated as having been distributed to the employee on the first day of the year in which the transaction occurred. How to amend your income tax return The employee must include in income the fair market value of the assets (on the first day of the year) that is more than any cost basis in the account. How to amend your income tax return Also, the employee may have to pay the additional tax for making early withdrawals. How to amend your income tax return Reporting and Disclosure Requirements If you set up a SEP using Form 5305-SEP, you must give your eligible employees certain information about the SEP when you set it up. How to amend your income tax return See Setting Up a SEP , earlier. How to amend your income tax return Also, you must give your eligible employees a statement each year showing any contributions to their SEP-IRAs. How to amend your income tax return You must also give them notice of any excess contributions. How to amend your income tax return For details about other information you must give them, see the instructions for Form 5305-SEP or Form 5305A-SEP (for a salary reduction SEP). How to amend your income tax return Even if you did not use Form 5305-SEP or Form 5305A-SEP to set up your SEP, you must give your employees information similar to that described above. How to amend your income tax return For more information, see the instructions for either Form 5305-SEP or Form 5305A-SEP. How to amend your income tax return Prev  Up  Next   Home   More Online Publications
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Fake Form W-8BEN Used in IRS Tax Scams

Remember:
You can only submit Form W-8BEN directly to your
withholding agent.

The Form W-8BEN (Certificate of Foreign Status of Beneficial Owner for United States Tax Withholding) is a legitimate U.S. tax exemption document.

However, fraudsters typically target non-residents of the U.S. and use the W-8BEN format to acquire personal details such as,

  • mother's maiden name,
  • passport number,
  • date of birth,
  • PIN numbers and passcodes.

The legitimate IRS Form W-8BEN, does not ask for any of that information.
The fraudulent forms use various angles that may claim, for example:

  • Anti-money laundering regulations require a review of your client information and ask you to complete the form.
  • You are exempt from tax reporting and withholdings on income including interest paid to you. To protect your exemption from tax please complete the attached form.

What do I do if I receive such a scam form via email, fax, mail, or other format?

  1. Do not reply.
  2. Do not open any attachments.
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  3. Do not click on any links.
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Page Last Reviewed or Updated: 24-Mar-2014

The How To Amend Your Income Tax Return

How to amend your income tax return 2. How to amend your income tax return   Taxable and Nontaxable Income Table of Contents Compensation for Services Retirement Plan DistributionsIndividual Retirement Arrangements (IRAs) Pensions and Annuities Social Security and Equivalent Railroad Retirement BenefitsAre Any of Your Benefits Taxable? How Much Is Taxable? How To Report Your Benefits Lump-Sum Election Repayments More Than Gross Benefits Sickness and Injury BenefitsDisability Pensions Long-Term Care Insurance Contracts Workers' Compensation Other Sickness and Injury Benefits Life Insurance ProceedsInstallments for life. How to amend your income tax return Surviving spouse. How to amend your income tax return Endowment Contract Proceeds Accelerated Death Benefits Sale of HomeMaximum Amount of Exclusion Ownership and Use Tests Married Persons Business Use or Rental of Home Reporting the Sale Reverse Mortgages Other ItemsWelfare benefits. How to amend your income tax return Payments from a state fund for victims of crime. How to amend your income tax return Home Affordable Modification Program (HAMP). How to amend your income tax return Mortgage assistance payments. How to amend your income tax return Payments to reduce cost of winter energy use. How to amend your income tax return Nutrition Program for the Elderly. How to amend your income tax return Reemployment Trade Adjustment Assistance (RTAA). How to amend your income tax return Generally, income is taxable unless it is specifically exempt (not taxed) by law. How to amend your income tax return Your taxable income may include compensation for services, interest, dividends, rents, royalties, income from partnerships, estate or trust income, gain from sales or exchanges of property, and business income of all kinds. How to amend your income tax return Under special provisions of the law, certain items are partially or fully exempt from tax. How to amend your income tax return Provisions that are of special interest to older taxpayers are discussed in this chapter. How to amend your income tax return Compensation for Services Generally, you must include in gross income everything you receive in payment for personal services. How to amend your income tax return In addition to wages, salaries, commissions, fees, and tips, this includes other forms of compensation such as fringe benefits and stock options. How to amend your income tax return You need not receive the compensation in cash for it to be taxable. How to amend your income tax return Payments you receive in the form of goods or services generally must be included in gross income at their fair market value. How to amend your income tax return Volunteer work. How to amend your income tax return   Do not include in your gross income amounts you receive for supportive services or reimbursements for out-of-pocket expenses under any of the following volunteer programs. How to amend your income tax return Retired Senior Volunteer Program (RSVP). How to amend your income tax return Foster Grandparent Program. How to amend your income tax return Senior Companion Program. How to amend your income tax return Service Corps of Retired Executives (SCORE). How to amend your income tax return Unemployment compensation. How to amend your income tax return   You must include in income all unemployment compensation you or your spouse (if married filing jointly) received. How to amend your income tax return More information. How to amend your income tax return   See Publication 525, Taxable and Nontaxable Income, for more detailed information on specific types of income. How to amend your income tax return Retirement Plan Distributions This section summarizes the tax treatment of amounts you receive from traditional individual retirement arrangements (IRA), employee pensions or annuities, and disability pensions or annuities. How to amend your income tax return A traditional IRA is any IRA that is not a Roth or SIMPLE IRA. How to amend your income tax return A Roth IRA is an individual retirement plan that can be either an account or an annuity and features nondeductible contributions and tax-free distributions. How to amend your income tax return A SIMPLE IRA is a tax-favored retirement plan that certain small employers (including self-employed individuals) can set up for the benefit of their employees. How to amend your income tax return More detailed information can be found in Publication 590, Individual Retirement Arrangements (IRAs), and Publication 575, Pension and Annuity Income. How to amend your income tax return Individual Retirement Arrangements (IRAs) In general, distributions from a traditional IRA are taxable in the year you receive them. How to amend your income tax return Exceptions to the general rule are rollovers, tax-free withdrawals of contributions, and the return of nondeductible contributions. How to amend your income tax return These are discussed in Publication 590. How to amend your income tax return If you made nondeductible contributions to a traditional IRA, you must file Form 8606, Nondeductible IRAs. How to amend your income tax return If you do not file Form 8606 with your return, you may have to pay a $50 penalty. How to amend your income tax return Also, when you receive distributions from your traditional IRA, the amounts will be taxed unless you can show, with satisfactory evidence, that nondeductible contributions were made. How to amend your income tax return Early distributions. How to amend your income tax return   Generally, early distributions are amounts distributed from your traditional IRA account or annuity before you are age 59½, or amounts you receive when you cash in retirement bonds before you are age  59½. How to amend your income tax return You must include early distributions of taxable amounts in your gross income. How to amend your income tax return These taxable amounts are also subject to an additional 10% tax unless the distribution qualifies for an exception. How to amend your income tax return For purposes of the additional 10% tax, an IRA is a qualified retirement plan. How to amend your income tax return For more information about this tax, see Tax on Early Distributions under Pensions and Annuities, later. How to amend your income tax return After age 59½ and before age 70½. How to amend your income tax return   After you reach age 59½, you can receive distributions from your traditional IRA without having to pay the 10% additional tax. How to amend your income tax return Even though you can receive distributions after you reach age 59½, distributions are not required until you reach  age 70½. How to amend your income tax return Required distributions. How to amend your income tax return   If you are the owner of a traditional IRA, you generally must receive the entire balance in your IRA or start receiving periodic distributions from your IRA by April 1 of the year following the year in which you reach age 70½. How to amend your income tax return See When Must You Withdraw Assets? (Required Minimum Distributions) in Publication 590. How to amend your income tax return If distributions from your traditional IRA(s) are less than the required minimum distribution for the year, you may have to pay a 50% excise tax for that year on the amount not distributed as required. How to amend your income tax return For purposes of the 50% excise tax, an IRA is a qualified retirement plan. How to amend your income tax return For more information about this tax, see Tax on Excess Accumulation under Pensions and Annuities, later. How to amend your income tax return See also Excess Accumulations (Insufficient Distributions) in Publication 590. How to amend your income tax return Pensions and Annuities Generally, if you did not pay any part of the cost of your employee pension or annuity, and your employer did not withhold part of the cost of the contract from your pay while you worked, the amounts you receive each year are fully taxable. How to amend your income tax return However, see Insurance Premiums for Retired Public Safety Officers , later. How to amend your income tax return If you paid part of the cost of your pension or annuity plan (see Cost , later), you can exclude part of each annuity payment from income as a recovery of your cost (investment in the contract). How to amend your income tax return This tax-free part of the payment is figured when your annuity starts and remains the same each year, even if the amount of the payment changes. How to amend your income tax return The rest of each payment is taxable. How to amend your income tax return However, see Insurance Premiums for Retired Public Safety Officers , later. How to amend your income tax return You figure the tax-free part of the payment using one of the following methods. How to amend your income tax return Simplified Method. How to amend your income tax return You generally must use this method if your annuity is paid under a qualified plan (a qualified employee plan, a qualified employee annuity, or a tax-sheltered annuity plan or contract). How to amend your income tax return You cannot use this method if your annuity is paid under a nonqualified plan. How to amend your income tax return General Rule. How to amend your income tax return You must use this method if your annuity is paid under a nonqualified plan. How to amend your income tax return You generally cannot use this method if your annuity is paid under a qualified plan. How to amend your income tax return Contact your employer or plan administrator to find out if your pension or annuity is paid under a qualified or nonqualified plan. How to amend your income tax return You determine which method to use when you first begin receiving your annuity, and you continue using it each year that you recover part of your cost. How to amend your income tax return Exclusion limit. How to amend your income tax return   If your annuity starting date is after 1986, the total amount of annuity income you can exclude over the years as a recovery of the cost cannot exceed your total cost. How to amend your income tax return Any unrecovered cost at your (or the last annuitant's) death is allowed as a miscellaneous itemized deduction on the final return of the decedent. How to amend your income tax return This deduction is not subject to the 2%-of-adjusted-gross-income limit on miscellaneous deductions. How to amend your income tax return   If you contributed to your pension or annuity and your annuity starting date is before 1987, you can continue to take your monthly exclusion for as long as you receive your annuity. How to amend your income tax return If you chose a joint and survivor annuity, your survivor can continue to take the survivor's exclusion figured as of the annuity starting date. How to amend your income tax return The total exclusion may be more than your cost. How to amend your income tax return Cost. How to amend your income tax return   Before you can figure how much, if any, of your pension or annuity benefits are taxable, you must determine your cost in the plan (your investment in the contract). How to amend your income tax return Your total cost in the plan includes everything that you paid. How to amend your income tax return It also includes amounts your employer contributed that were taxable to you when paid. How to amend your income tax return However, see Foreign employment contributions , later. How to amend your income tax return   From this total cost, subtract any refunded premiums, rebates, dividends, unrepaid loans, or other tax-free amounts you received by the later of the annuity starting date or the date on which you received your first payment. How to amend your income tax return   The annuity starting date is the later of the first day of the first period for which you received a payment from the plan or the date on which the plan's obligations became fixed. How to amend your income tax return    The amount of your contributions to the plan may be shown in box 9b of any Form 1099-R, Distributions From Pensions, Annuities, Retirement or Profit-Sharing Plans, IRAs, Insurance Contracts, etc. How to amend your income tax return , that you receive. How to amend your income tax return Foreign employment contributions. How to amend your income tax return   If you worked abroad, certain amounts your employer paid into your retirement plan that were not includible in your gross income may be considered part of your cost. How to amend your income tax return For details, see Foreign employment contributions in Publication 575. How to amend your income tax return Withholding. How to amend your income tax return   The payer of your pension, profit-sharing, stock bonus, annuity, or deferred compensation plan will withhold income tax on the taxable part of amounts paid to you. How to amend your income tax return However, you can choose not to have tax withheld on the payments you receive, unless they are eligible rollover distributions. How to amend your income tax return (These are distributions that are eligible for rollover treatment but are not paid directly to another qualified retirement plan or to a traditional IRA. How to amend your income tax return ) See Withholding Tax and Estimated Tax and Rollovers in Publication 575 for more information. How to amend your income tax return   For payments other than eligible rollover distributions, you can tell the payer how much to withhold by filing a Form W-4P, Withholding Certificate for Pension or Annuity Payments. How to amend your income tax return Simplified Method. How to amend your income tax return   Under the Simplified Method, you figure the tax-free part of each annuity payment by dividing your cost by the total number of anticipated monthly payments. How to amend your income tax return For an annuity that is payable over the lives of the annuitants, this number is based on the annuitants' ages on the annuity starting date and is determined from a table. How to amend your income tax return For any other annuity, this number is the number of monthly annuity payments under the contract. How to amend your income tax return Who must use the Simplified Method. How to amend your income tax return   You must use the Simplified Method if your annuity starting date is after November 18, 1996, and you receive your pension or annuity payments from a qualified plan or annuity, unless you were at least 75 years old and entitled to at least 5 years of guaranteed payments (defined next). How to amend your income tax return   In addition, if your annuity starting date is after July 1, 1986, and before November 19, 1996, you could have chosen to use the Simplified Method for payments from a qualified plan, unless you were at least 75 years old and entitled to at least 5 years of guaranteed payments. How to amend your income tax return If you chose to use the Simplified Method, you must continue to use it each year that you recover part of your cost. How to amend your income tax return Guaranteed payments. How to amend your income tax return   Your annuity contract provides guaranteed payments if a minimum number of payments or a minimum amount (for example, the amount of your investment) is payable even if you and any survivor annuitant do not live to receive the minimum. How to amend your income tax return If the minimum amount is less than the total amount of the payments you are to receive, barring death, during the first 5 years after payments begin (figured by ignoring any payment increases), you are entitled to less than 5 years of guaranteed payments. How to amend your income tax return Who cannot use the Simplified Method. How to amend your income tax return   You cannot use the Simplified Method and must use the General Rule if you receive pension or annuity payments from: A nonqualified plan, such as a private annuity, a purchased commercial annuity, or a nonqualified employee plan, or A qualified plan if you are age 75 or older on your annuity starting date and you are entitled to at least 5 years of guaranteed payments (defined above). How to amend your income tax return   In addition, you had to use the General Rule for either circumstance described above if your annuity starting date is after July 1, 1986, and before November 19, 1996. How to amend your income tax return If you did not have to use the General Rule, you could have chosen to use it. How to amend your income tax return You also had to use the General Rule for payments from a qualified plan if your annuity starting date is before July 2, 1986, and you did not qualify to use the Three-Year Rule. How to amend your income tax return   If you had to use the General Rule (or chose to use it), you must continue to use it each year that you recover your cost. How to amend your income tax return   Unless your annuity starting date was before 1987, once you have recovered all of your non-taxable investment, all of each remaining payment you receive is fully taxable. How to amend your income tax return Once your remaining payments are fully taxable, there is no longer a concern with the General Rule or Simplified Method. How to amend your income tax return   Complete information on the General Rule, including the actuarial tables you need, is contained in Publication 939, General Rule for Pensions and Annuities. How to amend your income tax return How to use the Simplified Method. How to amend your income tax return   Complete the Simplified Method Worksheet in the Form 1040, Form 1040A, or Form 1040NR instructions or in Publication 575 to figure your taxable annuity for 2013. How to amend your income tax return Be sure to keep the completed worksheet; it will help you figure your taxable annuity next year. How to amend your income tax return   To complete line 3 of the worksheet, you must determine the total number of expected monthly payments for your annuity. How to amend your income tax return How you do this depends on whether the annuity is for a single life, multiple lives, or a fixed period. How to amend your income tax return For this purpose, treat an annuity that is payable over the life of an annuitant as payable for that annuitant's life even if the annuity has a fixed-period feature or also provides a temporary annuity payable to the annuitant's child under age 25. How to amend your income tax return    You do not need to complete line 3 of the worksheet or make the computation on line 4 if you received annuity payments last year and used last year's worksheet to figure your taxable annuity. How to amend your income tax return Instead, enter the amount from line 4 of last year's worksheet on line 4 of this year's worksheet. How to amend your income tax return Single-life annuity. How to amend your income tax return   If your annuity is payable for your life alone, use Table 1 at the bottom of the worksheet to determine the total number of expected monthly payments. How to amend your income tax return Enter on line 3 the number shown for your age on your annuity starting date. How to amend your income tax return This number will differ depending on whether your annuity starting date is before November 19, 1996, or after November 18, 1996. How to amend your income tax return Multiple-lives annuity. How to amend your income tax return   If your annuity is payable for the lives of more than one annuitant, use Table 2 at the bottom of the worksheet to determine the total number of expected monthly payments. How to amend your income tax return Enter on line 3 the number shown for the annuitants' combined ages on the annuity starting date. How to amend your income tax return For an annuity payable to you as the primary annuitant and to more than one survivor annuitant, combine your age and the age of the youngest survivor annuitant. How to amend your income tax return For an annuity that has no primary annuitant and is payable to you and others as survivor annuitants, combine the ages of the oldest and youngest annuitants. How to amend your income tax return Do not treat as a survivor annuitant anyone whose entitlement to payments depends on an event other than the primary annuitant's death. How to amend your income tax return   However, if your annuity starting date is before 1998, do not use Table 2 and do not combine the annuitants' ages. How to amend your income tax return Instead, you must use Table 1 at the bottom of the worksheet and enter on line 3 the number shown for the primary annuitant's age on the annuity starting date. How to amend your income tax return This number will differ depending on whether your annuity starting date is before November 19, 1996, or after November 18, 1996. How to amend your income tax return Fixed-period annuities. How to amend your income tax return   If your annuity does not depend in whole or in part on anyone's life expectancy, the total number of expected monthly payments to enter on line 3 of the worksheet is the number of monthly annuity payments under the contract. How to amend your income tax return Line 6. How to amend your income tax return   The amount on line 6 should include all amounts that could have been recovered in prior years. How to amend your income tax return If you did not recover an amount in a prior year, you may be able to amend your returns for the affected years. How to amend your income tax return    Be sure to keep a copy of the completed worksheet; it will help you figure your taxable annuity in later years. How to amend your income tax return Example. How to amend your income tax return Bill Smith, age 65, began receiving retirement benefits in 2013, under a joint and survivor annuity. How to amend your income tax return Bill's annuity starting date is January 1, 2013. How to amend your income tax return The benefits are to be paid over the joint lives of Bill and his wife, Kathy, age 65. How to amend your income tax return Bill had contributed $31,000 to a qualified plan and had received no distributions before the annuity starting date. How to amend your income tax return Bill is to receive a retirement benefit of $1,200 a month, and Kathy is to receive a monthly survivor benefit of $600 upon Bill's death. How to amend your income tax return Bill must use the Simplified Method to figure his taxable annuity because his payments are from a qualified plan and he is under age 75. How to amend your income tax return See the illustrated Worksheet 2-A, Simplified Method Worksheet, later. How to amend your income tax return You can find a blank version of this worksheet in Publication 575. How to amend your income tax return (The references in the illustrated worksheet are to sections in Publication 575). How to amend your income tax return His annuity is payable over the lives of more than one annuitant, so Bill uses his and Kathy's combined ages, 130 (65 + 65), and Table 2 at the bottom of the worksheet in completing line 3 of the worksheet and finds the line 3 amount to be 310. How to amend your income tax return Bill's tax-free monthly amount is $100 ($31,000 ÷ 310 as shown on line 4 of the worksheet). How to amend your income tax return Upon Bill's death, if Bill has not recovered the full $31,000 investment, Kathy will also exclude $100 from her $600 monthly payment. How to amend your income tax return The full amount of any annuity payments received after 310 payments are paid must generally be included in gross income. How to amend your income tax return If Bill and Kathy die before 310 payments are made, a miscellaneous itemized deduction will be allowed for the unrecovered cost on the final income tax return of the last to die. How to amend your income tax return This deduction is not subject to the 2%-of-adjusted-gross-income limit. How to amend your income tax return Worksheet 2-A. How to amend your income tax return Simplified Method Worksheet—Illustrated 1. How to amend your income tax return Enter the total pension or annuity payments received this year. How to amend your income tax return Also, add this amount to the total for Form 1040, line 16a; Form 1040A, line 12a; or Form 1040NR, line 17a 1. How to amend your income tax return $ 14,400 2. How to amend your income tax return Enter your cost in the plan (contract) at the annuity starting date plus any death benefit exclusion* See Cost (Investment in the Contract), earlier 2. How to amend your income tax return 31,000   Note. How to amend your income tax return 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). How to amend your income tax return Otherwise, go to line 3. How to amend your income tax return     3. How to amend your income tax return Enter the appropriate number from Table 1 below. How to amend your income tax return 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 3. How to amend your income tax return 310 4. How to amend your income tax return Divide line 2 by the number on line 3 4. How to amend your income tax return 100 5. How to amend your income tax return Multiply line 4 by the number of months for which this year's payments were made. How to amend your income tax return If your annuity starting date was before 1987, enter this amount on line 8 below and skip lines 6, 7, 10, and 11. How to amend your income tax return Otherwise, go to line 6 5. How to amend your income tax return 1,200 6. How to amend your income tax return Enter any amount previously recovered tax free in years after 1986. How to amend your income tax return This is the amount shown on line 10 of your worksheet for last year 6. How to amend your income tax return 0 7. How to amend your income tax return Subtract line 6 from line 2 7. How to amend your income tax return 31,000 8. How to amend your income tax return Enter the smaller of line 5 or line 7 8. How to amend your income tax return 1,200 9. How to amend your income tax return Taxable amount for year. How to amend your income tax return Subtract line 8 from line 1. How to amend your income tax return Enter the result, but not less than zero. How to amend your income tax return Also, add this amount to the total for Form 1040, line 16b; Form 1040A, line 12b; or Form 1040NR, line 17b. How to amend your income tax return Note. How to amend your income tax return If your Form 1099-R shows a larger taxable amount, use the amount figured on this line instead. How to amend your income tax return If you are a retired public safety officer, see Insurance Premiums for Retired Public Safety Officers, earlier, before entering an amount on your tax return. How to amend your income tax return 9. How to amend your income tax return $ 13,200 10. How to amend your income tax return Was your annuity starting date before 1987? □ Yes. How to amend your income tax return STOP. How to amend your income tax return Do not complete the rest of this worksheet. How to amend your income tax return  ☑ No. How to amend your income tax return Add lines 6 and 8. How to amend your income tax return This is the amount you have recovered tax free through 2013. How to amend your income tax return You will need this number if you need to fill out this worksheet next year. How to amend your income tax return 10. How to amend your income tax return 1,200 11. How to amend your income tax return Balance of cost to be recovered. How to amend your income tax return Subtract line 10 from line 2. How to amend your income tax return If zero, you will not have to complete this worksheet next year. How to amend your income tax return The payments you receive next year will generally be fully taxable 11. How to amend your income tax return $ 29,800 * A death benefit exclusion (up to $5,000) applied to certain benefits received by employees who died before August 21, 1996. How to amend your income tax return   Table 1 for Line 3 Above       AND your annuity starting date was—   IF your age on your annuity starting date was . How to amend your income tax return . How to amend your income tax return . How to amend your income tax return   BEFORE November 19, 1996, enter on line 3 . How to amend your income tax return . How to amend your income tax return . How to amend your income tax return AFTER November 18, 1996, enter on line 3 . How to amend your income tax return . How to amend your income tax return . How to amend your income tax return   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 . How to amend your income tax return . How to amend your income tax return . How to amend your income tax return   THEN enter on line 3 . How to amend your income tax return . How to amend your income tax return . How to amend your income tax return         110 or under   410         111-120   360         121-130   310         131-140   260         141 or over   210       Survivors of retirees. How to amend your income tax return   Benefits paid to you as a survivor under a joint and survivor annuity must be included in your gross income in the same way the retiree would have included them in gross income. How to amend your income tax return   If you receive a survivor annuity because of the death of a retiree who had reported the annuity under the Three-Year Rule, include the total received in your income. How to amend your income tax return The retiree's cost has already been recovered tax free. How to amend your income tax return   If the retiree was reporting the annuity payments under the General Rule, you must apply the same exclusion percentage the retiree used to your initial payment called for in the contract. How to amend your income tax return The resulting tax-free amount will then remain fixed. How to amend your income tax return Any increases in the survivor annuity are fully taxable. How to amend your income tax return   If the retiree was reporting the annuity payments under the Simplified Method, the part of each payment that is tax free is the same as the tax-free amount figured by the retiree at the annuity starting date. How to amend your income tax return See Simplified Method , earlier. How to amend your income tax return How to report. How to amend your income tax return   If you file Form 1040, report your total annuity on line 16a, and the taxable part on line 16b. How to amend your income tax return If your pension or annuity is fully taxable, enter it on line 16b. How to amend your income tax return Do not make an entry on line 16a. How to amend your income tax return   If you file Form 1040A, report your total annuity on line 12a, and the taxable part on line 12b. How to amend your income tax return If your pension or annuity is fully taxable, enter it on line 12b. How to amend your income tax return Do not make an entry on line 12a. How to amend your income tax return   If you file Form 1040NR, report your total annuity on line 17a, and the taxable part on line 17b. How to amend your income tax return If your pension or annuity is fully taxable, enter it on line 17b. How to amend your income tax return Do not make an entry on line 17a. How to amend your income tax return Example. How to amend your income tax return You are a Form 1040 filer and you received monthly payments totaling $1,200 (12 months x $100) during 2013 from a pension plan that was completely financed by your employer. How to amend your income tax return You had paid no tax on the payments that your employer made to the plan, and the payments were not used to pay for accident, health, or long-term care insurance premiums (as discussed later under Insurance Premiums for Retired Public Safety Officers ). How to amend your income tax return The entire $1,200 is taxable. How to amend your income tax return You include $1,200 only on Form 1040, line 16b. How to amend your income tax return Joint return. How to amend your income tax return   If you file a joint return and you and your spouse each receive one or more pensions or annuities, report the total of the pensions and annuities on line 16a of Form 1040, line 12a of Form 1040A, or line 17a of Form 1040NR. How to amend your income tax return Report the total of the taxable parts on line 16b of Form 1040, line 12b of Form 1040A, or line 17b of Form 1040NR. How to amend your income tax return Form 1099-R. How to amend your income tax return   You should receive a Form 1099-R for your pension or annuity. How to amend your income tax return Form 1099-R shows your pension or annuity for the year and any income tax withheld. How to amend your income tax return You should receive a Form W-2 if you receive distributions from certain nonqualified plans. How to amend your income tax return You must attach Forms 1099-R or Forms W-2 to your 2013 tax return if federal income tax was withheld. How to amend your income tax return Generally, you should be sent these forms by January 31, 2014. How to amend your income tax return Nonperiodic Distributions If you receive a nonperiodic distribution from your retirement plan, you may be able to exclude all or part of it from your income as a recovery of your cost. How to amend your income tax return Nonperiodic distributions include cash withdrawals, distributions of current earnings (dividends) on your investment, and certain loans. How to amend your income tax return For information on how to figure the taxable amount of a nonperiodic distribution, see Taxation of Nonperiodic Payments in Publication 575. How to amend your income tax return The taxable part of a nonperiodic distribution may be subject to an additional 10% tax. How to amend your income tax return See Tax on Early Distributions, later. How to amend your income tax return Lump-sum distributions. How to amend your income tax return   If you receive a lump-sum distribution from a qualified employee plan or qualified employee annuity and the plan participant was born before January 2, 1936, you may be able to elect optional methods of figuring the tax on the distribution. How to amend your income tax return The part from active participation in the plan before 1974 may qualify as capital gain subject to a 20% tax rate. How to amend your income tax return The part from participation after 1973 (and any part from participation before 1974 that you do not report as capital gain) is ordinary income. How to amend your income tax return You may be able to use the 10-year tax option to figure tax on the ordinary income part. How to amend your income tax return Form 1099-R. How to amend your income tax return   If you receive a total distribution from a plan, you should receive a Form 1099-R. How to amend your income tax return If the distribution qualifies as a lump-sum distribution, box 3 shows the capital gain part of the distribution. How to amend your income tax return The amount in box 2a, Taxable amount, minus the amount in box 3, Capital gain, is the ordinary income part. How to amend your income tax return More information. How to amend your income tax return   For more detailed information on lump-sum distributions, see Publication 575 or Form 4972, Tax on Lump-Sum Distributions. How to amend your income tax return Tax on Early Distributions Most distributions you receive from your qualified retirement plan and nonqualified annuity contracts before you reach age 59½ are subject to an additional tax of 10%. How to amend your income tax return The tax applies to the taxable part of the distribution. How to amend your income tax return For this purpose, a qualified retirement plan is: A qualified employee plan (including a qualified cash or deferred arrangement (CODA) under Internal Revenue Code section 401(k)), A qualified employee annuity plan, A tax-sheltered annuity plan (403(b) plan), or An eligible state or local government section 457 deferred compensation plan (to the extent that any distribution is attributable to amounts the plan received in a direct transfer or rollover from one of the other plans listed here or an IRA). How to amend your income tax return  An IRA is also a qualified retirement plan for purposes of this tax. How to amend your income tax return General exceptions to tax. How to amend your income tax return   The early distribution tax does not apply to any distributions that are: Made as part of a series of substantially equal periodic payments (made at least annually) for your life (or life expectancy) or the joint lives (or joint life expectancies) of you and your designated beneficiary (if from a qualified retirement plan, the payments must begin after separation from service), Made because you are totally and permanently disabled, or Made on or after the death of the plan participant or contract holder. How to amend your income tax return Additional exceptions. How to amend your income tax return   There are additional exceptions to the early distribution tax for certain distributions from qualified retirement plans and nonqualified annuity contracts. How to amend your income tax return See Publication 575 for details. How to amend your income tax return Reporting tax. How to amend your income tax return   If you owe only the tax on early distributions and distribution code 1 (early distribution, no known exception) is correctly shown in Form 1099-R, box 7, multiply the taxable part of the early distribution by 10% (. How to amend your income tax return 10) and enter the result on Form 1040, line 58, or Form 1040NR, line 56. How to amend your income tax return See the instructions for line 58 of Form 1040 or line 56 of Form 1040NR for more information about reporting the early distribution tax. How to amend your income tax return Tax on Excess Accumulation To make sure that most of your retirement benefits are paid to you during your lifetime, rather than to your beneficiaries after your death, the payments that you receive from qualified retirement plans must begin no later than your required beginning date. How to amend your income tax return Unless the rule for 5% owners applies, this is generally April 1 of the year that follows the later of: The calendar year in which you reach age 70½, or The calendar year in which you retire from employment with the employer maintaining the plan. How to amend your income tax return However, your plan may require you to begin to receive payments by April 1 of the year that follows the year in which you reach 70½, even if you have not retired. How to amend your income tax return For this purpose, a qualified retirement plan includes: A qualified employee plan, A qualified employee annuity plan, An eligible section 457 deferred compensation plan, or A tax-sheltered annuity plan (403(b) plan) (for benefits accruing after 1986). How to amend your income tax return  An IRA is also a qualified retirement plan for purposes of this tax. How to amend your income tax return An excess accumulation is the undistributed remainder of the required minimum distribution that was left in your qualified retirement plan. How to amend your income tax return 5% owners. How to amend your income tax return   If you own (or are considered to own under section 318 of the Internal Revenue Code) more than 5% of the company maintaining your qualified retirement plan, you must begin to receive distributions from the plan by April 1 of the year after the calendar year in which you reach age 70½. How to amend your income tax return See Publication 575 for more information. How to amend your income tax return Amount of tax. How to amend your income tax return   If you do not receive the required minimum distribution, you are subject to an additional tax. How to amend your income tax return The tax equals 50% of the difference between the amount that must be distributed and the amount that was distributed during the tax year. How to amend your income tax return You can get this excise tax excused if you establish that the shortfall in distributions was due to reasonable error and that you are taking reasonable steps to remedy the shortfall. How to amend your income tax return Form 5329. How to amend your income tax return   You must file a Form 5329 if you owe a tax because you did not receive a minimum required distribution from your qualified retirement plan. How to amend your income tax return Additional information. How to amend your income tax return   For more detailed information on the tax on excess accumulation, see Publication 575. How to amend your income tax return Insurance Premiums for Retired Public Safety Officers If you are an eligible retired public safety officer (law enforcement officer, firefighter, chaplain, or member of a rescue squad or ambulance crew), you can elect to exclude from income distributions made from your eligible retirement plan that are used to pay the premiums for accident or health insurance or long-term care insurance. How to amend your income tax return The premiums can be for coverage for you, your spouse, or dependent(s). How to amend your income tax return The distribution must be made directly from the plan to the insurance provider. How to amend your income tax return You can exclude from income the smaller of the amount of the insurance premiums or $3,000. How to amend your income tax return You can only make this election for amounts that would otherwise be included in your income. How to amend your income tax return The amount excluded from your income cannot be used to claim a medical expense deduction. How to amend your income tax return An eligible retirement plan is a governmental plan that is a: Qualified trust, Section 403(a) plan, Section 403(b) annuity, or Section 457(b) plan. How to amend your income tax return If you make this election, reduce the otherwise taxable amount of your pension or annuity by the amount excluded. How to amend your income tax return The taxable amount shown in box 2a of any Form 1099-R that you receive does not reflect the exclusion. How to amend your income tax return Report your total distributions on Form 1040, line 16a; Form 1040A, line 12a; or Form 1040NR, line 17a. How to amend your income tax return Report the taxable amount on Form 1040, line 16b; Form 1040A, line 12b; or Form 1040NR, line 17b. How to amend your income tax return Enter “PSO” next to the appropriate line on which you report the taxable amount. How to amend your income tax return Railroad Retirement Benefits Benefits paid under the Railroad Retirement Act fall into two categories. How to amend your income tax return These categories are treated differently for income tax purposes. How to amend your income tax return Social security equivalent benefits. How to amend your income tax return   The first category is the amount of tier 1 railroad retirement benefits that equals the social security benefit that a railroad employee or beneficiary would have been entitled to receive under the social security system. How to amend your income tax return This part of the tier 1 benefit is the social security equivalent benefit (SSEB) and is treated for tax purposes like social security benefits. How to amend your income tax return (See Social Security and Equivalent Railroad Retirement Benefits , later. How to amend your income tax return ) Non-social security equivalent benefits. How to amend your income tax return   The second category contains the rest of the tier 1 benefits, called the non-social security equivalent benefit (NSSEB). How to amend your income tax return It also contains any tier 2 benefit, vested dual benefit (VDB), and supplemental annuity benefit. How to amend your income tax return This category of benefits is treated as an amount received from a qualified employee plan. How to amend your income tax return This allows for the tax-free (nontaxable) recovery of employee contributions from the tier 2 benefits and the NSSEB part of the tier 1 benefits. How to amend your income tax return Vested dual benefits and supplemental annuity benefits are non-contributory pensions and are fully taxable. How to amend your income tax return More information. How to amend your income tax return   For more information about railroad retirement benefits, see Publication 575. How to amend your income tax return Military Retirement Pay Military retirement pay based on age or length of service is taxable and must be included in income as a pension on Form 1040, lines 16a and 16b; on Form 1040A, lines 12a and 12b; or on Form 1040NR, lines 17a and 17b. How to amend your income tax return But, certain military and government disability pensions that are based on a percentage of disability from active service in the Armed Forces of any country generally are not taxable. How to amend your income tax return For more information, including information about veterans' benefits and insurance, see Publication 525. How to amend your income tax return Social Security and Equivalent Railroad Retirement Benefits This discussion explains the federal income tax rules for social security benefits and equivalent tier 1 railroad retirement benefits. How to amend your income tax return Social security benefits include monthly retirement, survivor, and disability benefits. How to amend your income tax return They do not include supplemental security income (SSI) payments, which are not taxable. How to amend your income tax return Equivalent tier 1 railroad retirement benefits are the part of tier 1 benefits that a railroad employee or beneficiary would have been entitled to receive under the social security system. How to amend your income tax return They commonly are called the social security equivalent benefit (SSEB) portion of tier 1 benefits. How to amend your income tax return If you received these benefits during 2013, you should have received a Form SSA-1099 or Form RRB-1099 (Form SSA-1042S or Form RRB-1042S if you are a nonresident alien), showing the amount of the benefits. How to amend your income tax return Are Any of Your Benefits Taxable? Note. How to amend your income tax return When the term “benefits” is used in this section, it applies to both social security benefits and the SSEB portion of tier 1 railroad retirement benefits. How to amend your income tax return  To find out whether any of your benefits may be taxable, compare the base amount for your filing status (explained later) with the total of: One-half of your benefits, plus All your other income, including tax-exempt interest. How to amend your income tax return When making this comparison, do not reduce your other income by any exclusions for: Interest from qualified U. How to amend your income tax return S. How to amend your income tax return savings bonds, Employer-provided adoption benefits, Foreign earned income or foreign housing, or Income earned in American Samoa or Puerto Rico by bona fide residents. How to amend your income tax return Figuring total income. How to amend your income tax return   To figure the total of one-half of your benefits plus your other income, use Worksheet 2-B. How to amend your income tax return If that total amount is more than your base amount, part of your benefits may be taxable. How to amend your income tax return If you are married and file a joint return for 2013, you and your spouse must combine your incomes and your benefits to figure whether any of your combined benefits are taxable. How to amend your income tax return Even if your spouse did not receive any benefits, you must add your spouse's income to yours to figure whether any of your benefits are taxable. How to amend your income tax return If the only income you received during 2013 was your social security or the SSEB portion of tier 1 railroad retirement benefits, your benefits generally are not taxable and you probably do not have to file a return. How to amend your income tax return If you have income in addition to your benefits, you may have to file a return even if none of your benefits are taxable. How to amend your income tax return Worksheet 2-B. How to amend your income tax return A Quick Way To Check if Your Benefits May Be Taxable A. How to amend your income tax return Enter the amount from box 5 of all your Forms SSA-1099 and RRB-1099. How to amend your income tax return Include  the full amount of any lump-sum benefit payments received in 2013, for 2013 and  earlier years. How to amend your income tax return (If you received more than one form, combine the amounts from box 5  and enter the total. How to amend your income tax return ) A. How to amend your income tax return     Note. How to amend your income tax return If the amount on line A is zero or less, stop here; none of your benefits are  taxable this year. How to amend your income tax return     B. How to amend your income tax return Enter one-half of the amount on line A B. How to amend your income tax return   C. How to amend your income tax return Enter your taxable pensions, wages, interest, dividends, and other taxable income C. How to amend your income tax return   D. How to amend your income tax return Enter any tax-exempt interest income (such as interest on municipal bonds) plus any exclusions from income for: •Interest from qualified U. How to amend your income tax return S. How to amend your income tax return savings bonds, •Employer-provided adoption benefits, •Foreign earned income or foreign housing, or •Income earned in American Samoa or Puerto Rico by bona fide residents D. How to amend your income tax return   E. How to amend your income tax return Add lines B, C, and D and enter the total E. How to amend your income tax return   F. How to amend your income tax return If you are: •Married filing jointly, enter $32,000 •Single, head of household, qualifying widow(er), or married filing separately and you  lived apart from your spouse for all of 2013, enter $25,000 •Married filing separately and you lived with your spouse at any time during 2013,  enter -0- F. How to amend your income tax return   G. How to amend your income tax return Is the amount on line F less than or equal to the amount on line E? □ No. How to amend your income tax return None of your benefits are taxable this year. How to amend your income tax return  □ Yes. How to amend your income tax return Some of your benefits may be taxable. How to amend your income tax return To figure how much of your benefits  are taxable, see Which worksheet to use under How Much Is Taxable. How to amend your income tax return     Base Amount Your base amount is: $25,000 if you are single, head of household, or qualifying widow(er) with dependent child, $25,000 if you are married filing separately and lived apart from your spouse for all of 2013, $32,000 if you are married filing jointly, or $0 if you are married filing separately and lived with your spouse at any time during 2013. How to amend your income tax return Repayment of Benefits Any repayment of benefits you made during 2013 must be subtracted from the gross benefits you received in 2013. How to amend your income tax return It does not matter whether the repayment was for a benefit you received in 2013 or in an earlier year. How to amend your income tax return If you repaid more than the gross benefits you received in 2013, see Repayments More Than Gross Benefits , later. How to amend your income tax return Your gross benefits are shown in box 3 of Form SSA-1099 or Form RRB-1099. How to amend your income tax return Your repayments are shown in box 4. How to amend your income tax return The amount in box 5 shows your net benefits for 2013 (box 3 minus box 4). How to amend your income tax return Use the amount in box 5 to figure whether any of your benefits are taxable. How to amend your income tax return Tax Withholding and Estimated Tax You can choose to have federal income tax withheld from your social security and/or the SSEB portion of your tier 1 railroad retirement benefits. How to amend your income tax return If you choose to do this, you must complete a Form W-4V, Voluntary Withholding Request. How to amend your income tax return If you do not choose to have income tax withheld, you may have to request additional withholding from other income, or pay estimated tax during the year. How to amend your income tax return For details, see Publication 505, Tax Withholding and Estimated Tax, or the instructions for Form 1040-ES, Estimated Tax for Individuals. How to amend your income tax return How Much Is Taxable? If part of your benefits is taxable, how much is taxable depends on the total amount of your benefits and other income. How to amend your income tax return Generally, the higher that total amount, the greater the taxable part of your benefits. How to amend your income tax return Maximum taxable part. How to amend your income tax return   The taxable part of your benefits usually cannot be more than 50%. How to amend your income tax return However, up to 85% of your benefits can be taxable if either of the following situations applies to you. How to amend your income tax return The total of one-half of your benefits and all your other income is more than $34,000 ($44,000 if you are married filing jointly). How to amend your income tax return You are married filing separately and lived with your spouse at any time during 2013. How to amend your income tax return   If you are a nonresident alien, 85% of your benefits are taxable. How to amend your income tax return However, this income is exempt under some tax treaties. How to amend your income tax return Which worksheet to use. How to amend your income tax return   A worksheet to figure your taxable benefits is in the instructions for your Form 1040 or 1040A. How to amend your income tax return However, you will need to use a different worksheet(s) if any of the following situations applies to you. How to amend your income tax return You contributed to a traditional individual retirement arrangement (IRA) and you or your spouse were covered by a retirement plan at work. How to amend your income tax return In this situation, you must use the special worksheets in Appendix B of Publication 590 to figure both your IRA deduction and your taxable benefits. How to amend your income tax return Situation (1) does not apply and you take one or more of the following exclusions. How to amend your income tax return Interest from qualified U. How to amend your income tax return S. How to amend your income tax return savings bonds (Form 8815). How to amend your income tax return Employer-provided adoption benefits (Form 8839). How to amend your income tax return Foreign earned income or housing (Form 2555 or Form 2555-EZ). How to amend your income tax return Income earned in American Samoa (Form 4563) or Puerto Rico by bona fide residents. How to amend your income tax return In these situations, you must use Worksheet 1 in Publication 915, Social Security and Equivalent Railroad Retirement Benefits, to figure your taxable benefits. How to amend your income tax return You received a lump-sum payment for an earlier year. How to amend your income tax return In this situation, also complete Worksheet 2 or 3 and Worksheet 4 in Publication 915. How to amend your income tax return See Lump-Sum Election , later. How to amend your income tax return How To Report Your Benefits If part of your benefits are taxable, you must use Form 1040, Form 1040A, or Form 1040NR. How to amend your income tax return You cannot use Form 1040EZ. How to amend your income tax return Reporting on Form 1040. How to amend your income tax return   Report your net benefits (the amount in box 5 of your Form SSA-1099 or Form RRB-1099) on line 20a and the taxable part on line 20b. How to amend your income tax return If you are married filing separately and you lived apart from your spouse for all of 2013, also enter “D” to the right of the word “benefits” on line 20a. How to amend your income tax return Reporting on Form 1040A. How to amend your income tax return   Report your net benefits (the amount in box 5 of your Form SSA-1099 or Form RRB-1099) on line 14a and the taxable part on line 14b. How to amend your income tax return If you are married filing separately and you lived apart from your spouse for all of 2013, also enter “D” to the right of the word “benefits” on line 14a. How to amend your income tax return Reporting on Form 1040NR. How to amend your income tax return   Report 85% of the total amount of your benefits (box 5 of your Form SSA-1042S or Form RRB-1042S) in the appropriate column of Form 1040NR, Schedule NEC, line 8. How to amend your income tax return Benefits not taxable. How to amend your income tax return   If you are filing Form 1040EZ, do not report any benefits on your tax return. How to amend your income tax return If you are filing Form 1040 or Form 1040A, report your net benefits (the amount in box 5 of your Form SSA-1099 or Form RRB-1099) on Form 1040, line 20a, or Form 1040A, line 14a. How to amend your income tax return Enter -0- on Form 1040, line 20b, or Form 1040A, line 14b. How to amend your income tax return If you are married filing separately and you lived apart from your spouse for all of 2013, also enter “D” to the right of the word “benefits” on Form 1040, line 20a, or Form 1040A, line 14a. How to amend your income tax return Lump-Sum Election You must include the taxable part of a lump-sum (retroactive) payment of benefits received in 2013 in your 2013 income, even if the payment includes benefits for an earlier year. How to amend your income tax return This type of lump-sum benefit payment should not be confused with the lump-sum death benefit that both the SSA and RRB pay to many of their beneficiaries. How to amend your income tax return No part of the lump-sum death benefit is subject to tax. How to amend your income tax return For more information about the lump-sum death benefit, visit the Social Security Administration website at www. How to amend your income tax return SSA. How to amend your income tax return gov, and use keyword: death benefit. How to amend your income tax return Generally, you use your 2013 income to figure the taxable part of the total benefits received in 2013. How to amend your income tax return However, you may be able to figure the taxable part of a lump-sum payment for an earlier year separately, using your income for the earlier year. How to amend your income tax return You can elect this method if it lowers your taxable benefits. How to amend your income tax return See Publication 915 for more information. How to amend your income tax return Repayments More Than Gross Benefits In some situations, your Form SSA-1099 or Form RRB-1099 will show that the total benefits you repaid (box 4) are more than the gross benefits (box 3) you received. How to amend your income tax return If this occurred, your net benefits in box 5 will be a negative figure (a figure in parentheses) and none of your benefits will be taxable. How to amend your income tax return If you receive more than one form, a negative figure in box 5 of one form is used to offset a positive figure in box 5 of another form for that same year. How to amend your income tax return If you have any questions about this negative figure, contact your local Social Security Administration office or your local U. How to amend your income tax return S. How to amend your income tax return Railroad Retirement Board field office. How to amend your income tax return Joint return. How to amend your income tax return   If you and your spouse file a joint return, and your Form SSA-1099 or RRB-1099 has a negative figure in box 5 but your spouse's does not, subtract the box 5 amount on your form from the box 5 amount on your spouse's form. How to amend your income tax return You do this to get your net benefits when figuring if your combined benefits are taxable. How to amend your income tax return Repayment of benefits received in an earlier year. How to amend your income tax return   If the total amount shown in box 5 of all of your Forms SSA-1099 and RRB-1099 is a negative figure, you can take an itemized deduction for the part of this negative figure that represents benefits you included in gross income in an earlier year. How to amend your income tax return   If this deduction is $3,000 or less, it is subject to the 2%-of-adjusted-gross-income limit that applies to certain miscellaneous itemized deductions. How to amend your income tax return Claim it on Schedule A (Form 1040), line 23. How to amend your income tax return   If this deduction is more than $3,000, you have to follow some special instructions. How to amend your income tax return See Publication 915 for those instructions. How to amend your income tax return Sickness and Injury Benefits Generally, you must report as income any amount you receive for personal injury or sickness through an accident or health plan that is paid for by your employer. How to amend your income tax return If both you and your employer pay for the plan, only the amount you receive that is due to your employer's payments is reported as income. How to amend your income tax return However, certain payments may not be taxable to you. How to amend your income tax return Some of these payments are discussed later in this section. How to amend your income tax return Also, see Military and Government Disability Pensions and Other Sickness and Injury Benefits in Publication 525. How to amend your income tax return Cost paid by you. How to amend your income tax return   If you pay the entire cost of an accident or health plan, do not include any amounts you receive from the plan for personal injury or sickness as income on your tax return. How to amend your income tax return If your plan reimbursed you for medical expenses you deducted in an earlier year, you may have to include some, or all, of the reimbursement in your income. How to amend your income tax return Disability Pensions If you retired on disability, you must include in income any disability pension you receive under a plan that is paid for by your employer. How to amend your income tax return You must report your taxable disability payments as wages on line 7 of Form 1040 or Form 1040A or on line 8 of Form 1040NR until you reach minimum retirement age. How to amend your income tax return Minimum retirement age generally is the age at which you can first receive a pension or annuity if you are not disabled. How to amend your income tax return If you were 65 or older by the end of 2013 or you were retired on permanent and total disability and received taxable disability income, you may be able to claim the credit for the elderly or the disabled. How to amend your income tax return See Credit for the Elderly or the Disabled, later. How to amend your income tax return For more information on this credit, see Publication 524, Credit for the Elderly or the Disabled. How to amend your income tax return Beginning on the day after you reach minimum retirement age, payments you receive are taxable as a pension or annuity. How to amend your income tax return Report the payments on lines 16a and 16b of Form 1040, on lines 12a and 12b of Form 1040A, or on lines 17a and 17b of Form 1040NR. How to amend your income tax return For more information on pensions and annuities, see Publication 575. How to amend your income tax return Retirement and profit-sharing plans. How to amend your income tax return   If you receive payments from a retirement or profit-sharing plan that does not provide for disability retirement, do not treat the payments as a disability pension. How to amend your income tax return The payments must be reported as a pension or annuity. How to amend your income tax return Accrued leave payment. How to amend your income tax return   If you retire on disability, any lump-sum payment you receive for accrued annual leave is a salary payment. How to amend your income tax return The payment is not a disability payment. How to amend your income tax return Include it in your income in the tax year you receive it. How to amend your income tax return Long-Term Care Insurance Contracts In most cases, long-term care insurance contracts generally are treated as accident and health insurance contracts. How to amend your income tax return Amounts you receive from them (other than policyholder dividends or premium refunds) generally are excludable from income as amounts received for personal injury or sickness. How to amend your income tax return However, the amount you can exclude may be limited. How to amend your income tax return Long-term care insurance contracts are discussed in more detail in Publication 525. How to amend your income tax return Workers' Compensation Amounts you receive as workers' compensation for an occupational sickness or injury are fully exempt from tax if they are paid under a workers' compensation act or a statute in the nature of a workers' compensation act. How to amend your income tax return The exemption also applies to your survivors. How to amend your income tax return The exemption, however, does not apply to retirement plan benefits you receive based on your age, length of service, or prior contributions to the plan, even if you retired because of an occupational sickness or injury. How to amend your income tax return If part of your workers' compensation reduces your social security or equivalent railroad retirement benefits, that part is considered social security (or equivalent railroad retirement) benefits and may be taxable. How to amend your income tax return For a discussion of the taxability of these benefits, see Social Security and Equivalent Railroad Retirement Benefits, earlier. How to amend your income tax return Return to work. How to amend your income tax return   If you return to work after qualifying for workers' compensation, salary payments you receive for performing light duties are taxable as wages. How to amend your income tax return Other Sickness and Injury Benefits In addition to disability pensions and annuities, you may receive other payments for sickness or injury. How to amend your income tax return Federal Employees' Compensation Act (FECA). How to amend your income tax return   Payments received under this Act for personal injury or sickness, including payments to beneficiaries in case of death, are not taxable. How to amend your income tax return However, you are taxed on amounts you receive under this Act as continuation of pay for up to 45 days while a claim is being decided. How to amend your income tax return Report this income on Form 1040, line 7; Form 1040A, line 7; on Form 1040EZ, line 1; or Form 1040NR, line 8. How to amend your income tax return Also, pay for sick leave while a claim is being processed is taxable and must be included in your income as wages. How to amend your income tax return    If part of the payments you receive under FECA reduces your social security or equivalent railroad retirement benefits, that part is considered social security (or equivalent railroad retirement) benefits and may be taxable. How to amend your income tax return For a discussion of the taxability of these benefits, see Social Security and Equivalent Railroad Retirement Benefits, earlier. How to amend your income tax return Other compensation. How to amend your income tax return   Many other amounts you receive as compensation for sickness or injury are not taxable. How to amend your income tax return These include the following amounts. How to amend your income tax return Benefits you receive under an accident or health insurance policy on which either you paid the premiums or your employer paid the premiums but you had to include them in your income. How to amend your income tax return Disability benefits you receive for loss of income or earning capacity as a result of injuries under a no-fault car insurance policy. How to amend your income tax return Compensation you receive for permanent loss or loss of use of a part or function of your body, for your permanent disfigurement, or for such loss or disfigurement suffered by your spouse or dependent(s). How to amend your income tax return This compensation must be based only on the injury and not on the period of your absence from work. How to amend your income tax return These benefits are not taxable even if your employer pays for the accident and health plan that provides these benefits. How to amend your income tax return Life Insurance Proceeds Life insurance proceeds paid to you because of the death of the insured person are not taxable unless the policy was turned over to you for a price. How to amend your income tax return This is true even if the proceeds were paid under an accident or health insurance policy or an endowment contract. How to amend your income tax return Proceeds not received in installments. How to amend your income tax return   If death benefits are paid to you in a lump sum or other than at regular intervals, include in your income only the benefits that are more than the amount payable to you at the time of the insured person's death. How to amend your income tax return If the benefit payable at death is not specified, you include in your income the benefit payments that are more than the present value of the payments at the time of death. How to amend your income tax return Proceeds received in installments. How to amend your income tax return   If you receive life insurance proceeds in installments, you can exclude part of each installment from your income. How to amend your income tax return   To determine the excluded part, divide the amount held by the insurance company (generally the total lump sum payable at the death of the insured person) by the number of installments to be paid. How to amend your income tax return Include anything over this excluded part in your income as interest. How to amend your income tax return Installments for life. How to amend your income tax return   If, as the beneficiary under an insurance contract, you are entitled to receive the proceeds in installments for the rest of your life without a refund or period-certain guarantee, you figure the excluded part of each installment by dividing the amount held by the insurance company by your life expectancy. How to amend your income tax return If there is a refund or period-certain guarantee, the amount held by the insurance company for this purpose is reduced by the actuarial value of the guarantee. How to amend your income tax return Surviving spouse. How to amend your income tax return   If your spouse died before October 23, 1986, and insurance proceeds paid to you because of the death of your spouse are received in installments, you can exclude, in any year, up to $1,000 of the interest included in the installments. How to amend your income tax return If you remarry, you can continue to take the exclusion. How to amend your income tax return Surrender of policy for cash. How to amend your income tax return   If you surrender a life insurance policy for cash, you must include in income any proceeds that are more than the cost of the life insurance policy. How to amend your income tax return In general, your cost (or investment in the contract) is the total of premiums that you paid for the life insurance policy, less any refunded premiums, rebates, dividends, or unrepaid loans that were not included in your income. How to amend your income tax return You should receive a Form 1099-R showing the total proceeds and the taxable part. How to amend your income tax return Report these amounts on Form 1040, lines 16a and 16b; Form 1040A, lines 12a and 12b; or Form 1040NR, lines 17a and 17b. How to amend your income tax return Endowment Contract Proceeds An endowment contract is a policy that pays over to you a specified amount of money on a certain date unless you die before that date, in which case, the money is paid to your designated beneficiary. How to amend your income tax return Endowment proceeds paid in a lump sum to you at maturity are taxable only if the proceeds are more than the cost of the policy. How to amend your income tax return To determine your cost, subtract from the total premiums (or other consideration) paid for the contract any amount that you previously received under the contract and excluded from your income. How to amend your income tax return Include in your income the part of the lump-sum payment that is more than your cost. How to amend your income tax return Endowment proceeds that you choose to receive in installments instead of a lump-sum payment at the maturity of the policy are taxed as an annuity. How to amend your income tax return The tax treatment of an annuity is explained in Publication 575. How to amend your income tax return For this treatment to apply, you must choose to receive the proceeds in installments before receiving any part of the lump sum. How to amend your income tax return This election must be made within 60 days after the lump-sum payment first becomes payable to you. How to amend your income tax return Accelerated Death Benefits Certain amounts paid as accelerated death benefits under a life insurance contract or viatical settlement before the insured's death are generally excluded from income if the insured is terminally or chronically ill. How to amend your income tax return However, see Exception , later. How to amend your income tax return For a chronically ill individual, accelerated death benefits paid on the basis of costs incurred for qualified long-term care services are fully excludable. How to amend your income tax return Accelerated death benefits paid on a per diem or other periodic basis without regard to the costs are excludable up to a limit. How to amend your income tax return In addition, if any portion of a death benefit under a life insurance contract on the life of a terminally or chronically ill individual is sold or assigned to a viatical settlement provider, the amount received also is excluded from income. How to amend your income tax return Generally, a viatical settlement provider is one who regularly engages in the business of buying or taking assignment of life insurance contracts on the lives of insured individuals who are terminally or chronically ill. How to amend your income tax return To report taxable accelerated death benefits made on a per diem or other periodic basis, you must file Form 8853, Archer MSAs and Long-Term Care Insurance Contracts, with your return. How to amend your income tax return Terminally or chronically ill defined. How to amend your income tax return   A terminally ill person is one who has been certified by a physician as having an illness or physical condition that reasonably can be expected to result in death within 24 months from the date of the certification. How to amend your income tax return A chronically ill person is one who is not terminally ill but has been certified (within the previous 12 months) by a licensed health care practitioner as meeting either of the following conditions. How to amend your income tax return The person is unable to perform (without substantial help) at least two activities of daily living (eating, toileting, transferring, bathing, dressing, and continence) for a period of 90 days or more because of a loss of functional capacity. How to amend your income tax return The person requires substantial supervision to protect himself or herself from threats to health and safety due to severe cognitive impairment. How to amend your income tax return Exception. How to amend your income tax return   The exclusion does not apply to any amount paid to a person other than the insured if that other person has an insurable interest in the life of the insured because the insured: Is a director, officer, or employee of the other person, or Has a financial interest in the business of the other person. How to amend your income tax return Sale of Home You may be able to exclude from income any gain up to $250,000 ($500,000 on a joint return in most cases) on the sale of your main home. How to amend your income tax return Generally, if you can exclude all of the gain, you do not need to report the sale on your tax return. How to amend your income tax return You can choose not to take the exclusion by including the gain from the sale in your gross income on your tax return for the year of the sale. How to amend your income tax return Main home. How to amend your income tax return   Usually, your main home is the home you live in most of the time and can be a: House, Houseboat, Mobile home, Cooperative apartment, or Condominium. How to amend your income tax return Repaying the first-time homebuyer credit because you sold your home. How to amend your income tax return   If you claimed a first-time homebuyer credit for your main home and you sell it, you may have to repay the credit. How to amend your income tax return For a home purchased in 2008 and used as your main home until sold in 2013, you must file Form 5405 and repay the balance of the unpaid credit on your 2013 tax return. How to amend your income tax return   For a home purchased after 2008, you generally must repay the entire credit if the home was sold (or otherwise ceased to be your main home) within 36 months of the purchase date. How to amend your income tax return If you purchased your home in 2009 and used it as your main home until sold in 2013, you do not have to repay the credit or file Form 5405. How to amend your income tax return If you purchased your home in 2010 and used it as your main home until sold in 2013, you may have to file Form 5405 and repay the entire credit on your 2013 tax return. How to amend your income tax return   See the Instructions for Form 5405 for more information about repaying the credit and exceptions to repayment that may apply to you. How to amend your income tax return Maximum Amount of Exclusion You can generally exclude up to $250,000 of the gain (other than gain allocated to periods of nonqualified use) on the sale of your main home if all of the following are true. How to amend your income tax return You meet the ownership test. How to amend your income tax return You meet the use test. How to amend your income tax return During the 2-year period ending on the date of the sale, you did not exclude gain from the sale of another home. How to amend your income tax return You may be able to exclude up to $500,000 of the gain (other than gain allocated to periods of nonqualified use) on the sale of your main home if you are married and file a joint return and meet the requirements listed in the discussion of the special rules for joint returns, later, under Married Persons . How to amend your income tax return Ownership and Use Tests To claim the exclusion, you must meet the ownership and use tests. How to amend your income tax return This means that during the 5-year period ending on the date of the sale, you must have: Owned the home for at least 2 years (the ownership test), and Lived in the home as your main home for at least 2 years (the use test). How to amend your income tax return Exception to ownership and use tests. How to amend your income tax return   If you owned and lived in the property as your main home for less than 2 years, you still can claim an exclusion in some cases. How to amend your income tax return Generally, you must have sold the home due to a change in place of employment, health, or unforeseen circumstances. How to amend your income tax return The maximum amount you can exclude will be reduced. How to amend your income tax return See Publication 523, Selling Your Home, for more information. How to amend your income tax return Exception to use test for individuals with a disability. How to amend your income tax return   There is an exception to the use test if, during the 5-year period before the sale of your home: You become physically or mentally unable to care for yourself, and You owned and lived in your home as your main home for a total of at least 1 year. How to amend your income tax return Under this exception, you are considered to live in your home during any time that you own the home and live in a facility (including a nursing home) that is licensed by a state or political subdivision to care for persons in your condition. How to amend your income tax return   If you meet this exception to the use test, you still have to meet the 2-out-of-5-year ownership test to claim the exclusion. How to amend your income tax return Exception to ownership test for property acquired in a like-kind exchange. How to amend your income tax return   You must have owned your main home for at least 5 years to qualify for the exclusion if you acquired your main home in a like-kind exchange. How to amend your income tax return This special 5-year ownership rule continues to apply to a home you acquired in a like-kind exchange and gave to another person. How to amend your income tax return A like-kind exchange is an exchange of property held for productive use in a trade or business or for investment. How to amend your income tax return See Publication 523 for more information. How to amend your income tax return Period of nonqualified use. How to amend your income tax return   Generally, the gain from the sale or exchange of your main home will not qualify for the exclusion to the extent that the gain is allocated to periods of nonqualified use. How to amend your income tax return Nonqualified use is any period after December 31, 2008, during which the property is not used as the main home. How to amend your income tax return See Publication 523 for more information. How to amend your income tax return Married Persons In the special situations discussed below, if you and your spouse file a joint return for the year of sale and one spouse meets the ownership and use test, you can exclude up to $250,000 of gain. How to amend your income tax return However, see Special rules for joint returns , next. How to amend your income tax return Special rules for joint returns. How to amend your income tax return   You can exclude up to $500,000 of the gain on the sale of your main home if all of the following are true. How to amend your income tax return You are married and file a joint return for the year. How to amend your income tax return Either you or your spouse meets the ownership test. How to amend your income tax return Both you and your spouse meet the use test. How to amend your income tax return During the 2-year period ending on the date of the sale, neither you nor your spouse exclude gain from the sale of another home. How to amend your income tax return Sale of home by surviving spouse. How to amend your income tax return   If your spouse died and you did not remarry before the date of sale, you are considered to have owned and lived in the property as your main home during any period of time when your spouse owned and lived in it as a main home. How to amend your income tax return   If you meet all of the following requirements, you may qualify to exclude up to $500,000 of any gain from the sale or exchange of your main home in 2013. How to amend your income tax return The sale or exchange took place no more than 2 years after the date of death of your spouse. How to amend your income tax return You have not remarried. How to amend your income tax return You and your spouse met the use test at the time of your spouse's death. How to amend your income tax return You or your spouse met the ownership test at the time of your spouse's death. How to amend your income tax return Neither you nor your spouse excluded gain from the sale of another home during the last 2 years. How to amend your income tax return Home transferred from spouse. How to amend your income tax return   If your home was transferred to you by your spouse (or former spouse if the transfer was incident to divorce), you are considered to have owned it during any period of time when your spouse owned it. How to amend your income tax return Use of home after divorce. How to amend your income tax return   You are considered to have used property as your main home during any period when: You owned it, and Your spouse or former spouse is allowed to live in it under a divorce or separation instrument and uses it as his or her main home. How to amend your income tax return Business Use or Rental of Home You may be able to exclude gain from the sale of a home that you have used for business or to produce rental income. How to amend your income tax return However, you must meet the ownership and use tests. How to amend your income tax return See Publication 523 for more information. How to amend your income tax return Depreciation after May 6, 1997. How to amend your income tax return   If you were entitled to take depreciation deductions because you used your home for business purposes or as rental property, you cannot exclude the part of your gain equal to any depreciation allowed or allowable as a deduction for periods after May 6, 1997. How to amend your income tax return See Publication 523 for more information. How to amend your income tax return Reporting the Sale Do not report the 2013 sale of your main home on your tax return unless: You have a gain and you do not qualify to exclude all of it, You have a gain and you choose not to exclude it, or You received Form 1099-S. How to amend your income tax return If you have a gain that you cannot or choose not to exclude, if you received a Form 1099-S, or if you have a deductible loss, report the sale on your tax return. How to amend your income tax return Report the sale on Part I or Part II of Form 8949 as a short-term or long-term transaction, depending on how long you owned the home. How to amend your income tax return If you used your home for business or to produce rental income, you may have to use Form 4797, Sales of Business Property, to report the sale of the business or rental part. How to amend your income tax return See Publication 523 for more information. How to amend your income tax return Reverse Mortgages A revers