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How To File Taxes For 2012

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How To File Taxes For 2012

How to file taxes for 2012 22. How to file taxes for 2012   Taxes Table of Contents IntroductionIndian tribal government. How to file taxes for 2012 Useful Items - You may want to see: Tests To Deduct Any Tax Income TaxesState and Local Income Taxes Foreign Income Taxes General Sales TaxesMotor vehicles. How to file taxes for 2012 Real Estate TaxesReal estate taxes for prior years. How to file taxes for 2012 Examples. How to file taxes for 2012 Form 1099-S. How to file taxes for 2012 Real Estate-Related Items You Cannot Deduct Personal Property Taxes Taxes and Fees You Cannot Deduct Where To Deduct Introduction This chapter discusses which taxes you can deduct if you itemize deductions on Schedule A (Form 1040). How to file taxes for 2012 It also explains which taxes you can deduct on other schedules or forms and which taxes you cannot deduct. How to file taxes for 2012 This chapter covers the following topics. How to file taxes for 2012 Income taxes (federal, state, local, and foreign). How to file taxes for 2012 General sales taxes (state and local). How to file taxes for 2012 Real estate taxes (state, local, and foreign). How to file taxes for 2012 Personal property taxes (state and local). How to file taxes for 2012 Taxes and fees you cannot deduct. How to file taxes for 2012 Use Table 22-1 as a guide to determine which taxes you can deduct. How to file taxes for 2012 The end of the chapter contains a section that explains which forms you use to deduct different types of taxes. How to file taxes for 2012 Business taxes. How to file taxes for 2012   You can deduct certain taxes only if they are ordinary and necessary expenses of your trade or business or of producing income. How to file taxes for 2012 For information on these taxes, see Publication 535, Business Expenses. How to file taxes for 2012 State or local taxes. How to file taxes for 2012   These are taxes imposed by the 50 states, U. How to file taxes for 2012 S. How to file taxes for 2012 possessions, or any of their political subdivisions (such as a county or city), or by the District of Columbia. How to file taxes for 2012 Indian tribal government. How to file taxes for 2012   An Indian tribal government recognized by the Secretary of the Treasury as performing substantial government functions will be treated as a state for purposes of claiming a deduction for taxes. How to file taxes for 2012 Income taxes, real estate taxes, and personal property taxes imposed by that Indian tribal government (or by any of its subdivisions that are treated as political subdivisions of a state) are deductible. How to file taxes for 2012 General sales taxes. How to file taxes for 2012   These are taxes imposed at one rate on retail sales of a broad range of classes of items. How to file taxes for 2012 Foreign taxes. How to file taxes for 2012   These are taxes imposed by a foreign country or any of its political subdivisions. How to file taxes for 2012 Useful Items - You may want to see: Publication 514 Foreign Tax Credit for Individuals 530 Tax Information for Homeowners Form (and Instructions) Schedule A (Form 1040) Itemized Deductions Schedule E (Form 1040) Supplemental Income and Loss 1116 Foreign Tax Credit Tests To Deduct Any Tax The following two tests must be met for you to deduct any tax. How to file taxes for 2012 The tax must be imposed on you. How to file taxes for 2012 You must pay the tax during your tax year. How to file taxes for 2012 The tax must be imposed on you. How to file taxes for 2012   In general, you can deduct only taxes imposed on you. How to file taxes for 2012   Generally, you can deduct property taxes only if you are an owner of the property. How to file taxes for 2012 If your spouse owns the property and pays the real estate taxes, the taxes are deductible on your spouse's separate return or on your joint return. How to file taxes for 2012 You must pay the tax during your tax year. How to file taxes for 2012   If you are a cash basis taxpayer, you can deduct only those taxes you actually paid during your tax year. How to file taxes for 2012 If you pay your taxes by check, the day you mail or deliver the check is the date of payment, provided the check is honored by the financial institution. How to file taxes for 2012 If you use a pay-by-phone account (such as a credit card or electronic funds withdrawal), the date reported on the statement of the financial institution showing when payment was made is the date of payment. How to file taxes for 2012 If you contest a tax liability and are a cash basis taxpayer, you can deduct the tax only in the year you actually pay it (or transfer money or other property to provide for satisfaction of the contested liability). How to file taxes for 2012 See Publication 538, Accounting Periods and Methods, for details. How to file taxes for 2012    If you use an accrual method of accounting, see Publication 538 for more information. How to file taxes for 2012 Income Taxes This section discusses the deductibility of state and local income taxes (including employee contributions to state benefit funds) and foreign income taxes. How to file taxes for 2012 State and Local Income Taxes You can deduct state and local income taxes. How to file taxes for 2012 However, you can elect to deduct state and local general sales taxes instead of state and local income taxes. How to file taxes for 2012 See General Sales Taxes , later. How to file taxes for 2012 Exception. How to file taxes for 2012    You cannot deduct state and local income taxes you pay on income that is exempt from federal income tax, unless the exempt income is interest income. How to file taxes for 2012 For example, you cannot deduct the part of a state's income tax that is on a cost-of-living allowance exempt from federal income tax. How to file taxes for 2012 What To Deduct Your deduction may be for withheld taxes, estimated tax payments, or other tax payments as follows. How to file taxes for 2012 Withheld taxes. How to file taxes for 2012   You can deduct state and local income taxes withheld from your salary in the year they are withheld. How to file taxes for 2012 Your Form(s) W-2 will show these amounts. How to file taxes for 2012 Forms W-2G, 1099-G, 1099-R, and 1099-MISC may also show state and local income taxes withheld. How to file taxes for 2012 Estimated tax payments. How to file taxes for 2012   You can deduct estimated tax payments you made during the year to a state or local government. How to file taxes for 2012 However, you must have a reasonable basis for making the estimated tax payments. How to file taxes for 2012 Any estimated state or local tax payments that are not made in good faith at the time of payment are not deductible. How to file taxes for 2012 For example, you made an estimated state income tax payment. How to file taxes for 2012 However, the estimate of your state tax liability shows that you will get a refund of the full amount of your estimated payment. How to file taxes for 2012 You had no reasonable basis to believe you had any additional liability for state income taxes and you cannot deduct the estimated tax payment. How to file taxes for 2012 Refund applied to taxes. How to file taxes for 2012   You can deduct any part of a refund of prior-year state or local income taxes that you chose to have credited to your 2013 estimated state or local income taxes. How to file taxes for 2012    Do not reduce your deduction by either of the following items. How to file taxes for 2012 Any state or local income tax refund (or credit) you expect to receive for 2013. How to file taxes for 2012 Any refund of (or credit for) prior-year state and local income taxes you actually received in 2013. How to file taxes for 2012   However, part or all of this refund (or credit) may be taxable. How to file taxes for 2012 See Refund (or credit) of state or local income taxes , later. How to file taxes for 2012 Separate federal returns. How to file taxes for 2012   If you and your spouse file separate state, local, and federal income tax returns, you each can deduct on your federal return only the amount of your own state and local income tax that you paid during the tax year. How to file taxes for 2012 Joint state and local returns. How to file taxes for 2012   If you and your spouse file joint state and local returns and separate federal returns, each of you can deduct on your separate federal return a part of the total state and local income taxes paid during the tax year. How to file taxes for 2012 You can deduct only the amount of the total taxes that is proportionate to your gross income compared to the combined gross income of you and your spouse. How to file taxes for 2012 However, you cannot deduct more than the amount you actually paid during the year. How to file taxes for 2012 You can avoid this calculation if you and your spouse are jointly and individually liable for the full amount of the state and local income taxes. How to file taxes for 2012 If so, you and your spouse can deduct on your separate federal returns the amount you each actually paid. How to file taxes for 2012 Joint federal return. How to file taxes for 2012   If you file a joint federal return, you can deduct the total of the state and local income taxes both of you paid. How to file taxes for 2012 Contributions to state benefit funds. How to file taxes for 2012    As an employee, you can deduct mandatory contributions to state benefit funds withheld from your wages that provide protection against loss of wages. How to file taxes for 2012 For example, certain states require employees to make contributions to state funds providing disability or unemployment insurance benefits. How to file taxes for 2012 Mandatory payments made to the following state benefit funds are deductible as state income taxes on Schedule A (Form 1040), line 5. How to file taxes for 2012 Alaska Unemployment Compensation Fund. How to file taxes for 2012 California Nonoccupational Disability Benefit Fund. How to file taxes for 2012 New Jersey Nonoccupational Disability Benefit Fund. How to file taxes for 2012 New Jersey Unemployment Compensation Fund. How to file taxes for 2012 New York Nonoccupational Disability Benefit Fund. How to file taxes for 2012 Pennsylvania Unemployment Compensation Fund. How to file taxes for 2012 Rhode Island Temporary Disability Benefit Fund. How to file taxes for 2012 Washington State Supplemental Workmen's Compensation Fund. How to file taxes for 2012    Employee contributions to private or voluntary disability plans are not deductible. How to file taxes for 2012 Refund (or credit) of state or local income taxes. How to file taxes for 2012   If you receive a refund of (or credit for) state or local income taxes in a year after the year in which you paid them, you may have to include the refund in income on Form 1040, line 10, in the year you receive it. How to file taxes for 2012 This includes refunds resulting from taxes that were overwithheld, applied from a prior year return, not figured correctly, or figured again because of an amended return. How to file taxes for 2012 If you did not itemize your deductions in the previous year, do not include the refund in income. How to file taxes for 2012 If you deducted the taxes in the previous year, include all or part of the refund on Form 1040, line 10, in the year you receive the refund. How to file taxes for 2012 For a discussion of how much to include, see Recoveries in chapter 12. How to file taxes for 2012 Foreign Income Taxes Generally, you can take either a deduction or a credit for income taxes imposed on you by a foreign country or a U. How to file taxes for 2012 S. How to file taxes for 2012 possession. How to file taxes for 2012 However, you cannot take a deduction or credit for foreign income taxes paid on income that is exempt from U. How to file taxes for 2012 S. How to file taxes for 2012 tax under the foreign earned income exclusion or the foreign housing exclusion. How to file taxes for 2012 For information on these exclusions, see Publication 54, Tax Guide for U. How to file taxes for 2012 S. How to file taxes for 2012 Citizens and Resident Aliens Abroad. How to file taxes for 2012 For information on the foreign tax credit, see Publication 514. How to file taxes for 2012 General Sales Taxes You can elect to deduct state and local general sales taxes, instead of state and local income taxes, as an itemized deduction on Schedule A (Form 1040), line 5b. How to file taxes for 2012 You can use either your actual expenses or the state and local sales tax tables to figure your sales tax deduction. How to file taxes for 2012 Actual expenses. How to file taxes for 2012   Generally, you can deduct the actual state and local general sales taxes (including compensating use taxes) if the tax rate was the same as the general sales tax rate. How to file taxes for 2012 However, sales taxes on food, clothing, medical supplies, and motor vehicles are deductible as a general sales tax even if the tax rate was less than the general sales tax rate. How to file taxes for 2012 If you paid sales tax on a motor vehicle at a rate higher than the general sales tax rate, you can deduct only the amount of tax that you would have paid at the general sales tax rate on that vehicle. How to file taxes for 2012 If you use the actual expenses method, you must have receipts to show the general sales taxes paid. How to file taxes for 2012 Do not include sales taxes paid on items used in your trade or business. How to file taxes for 2012 Motor vehicles. How to file taxes for 2012   For purposes of this section, motor vehicles include cars, motorcycles, motor homes, recreational vehicles, sport utility vehicles, trucks, vans, and off-road vehicles. How to file taxes for 2012 This also includes sales taxes on a leased motor vehicle, but not on vehicles used in your trade or business. How to file taxes for 2012 Optional sales tax tables. How to file taxes for 2012   Instead of using your actual expenses, you can figure your state and local general sales tax deduction using the state and local sales tax tables in the Instructions for Schedule A (Form 1040). How to file taxes for 2012 You may also be able to add the state and local general sales taxes paid on certain specified items. How to file taxes for 2012   Your applicable table amount is based on the state where you live, your income, and the number of exemptions claimed on your tax return. How to file taxes for 2012 Your income is your adjusted gross income plus any nontaxable items such as the following. How to file taxes for 2012 Tax-exempt interest. How to file taxes for 2012 Veterans' benefits. How to file taxes for 2012 Nontaxable combat pay. How to file taxes for 2012 Workers' compensation. How to file taxes for 2012 Nontaxable part of social security and railroad retirement benefits. How to file taxes for 2012 Nontaxable part of IRA, pension, or annuity distributions, excluding rollovers. How to file taxes for 2012 Public assistance payments. How to file taxes for 2012 If you lived in different states during the same tax year, you must prorate your applicable table amount for each state based on the days you lived in each state. How to file taxes for 2012 See the Instructions for Schedule A (Form 1040), line 5, for details. How to file taxes for 2012 Real Estate Taxes Deductible real estate taxes are any state, local, or foreign taxes on real property levied for the general public welfare. How to file taxes for 2012 You can deduct these taxes only if they are based on the assessed value of the real property and charged uniformly against all property under the jurisdiction of the taxing authority. How to file taxes for 2012 Deductible real estate taxes generally do not include taxes charged for local benefits and improvements that increase the value of the property. How to file taxes for 2012 They also do not include itemized charges for services (such as trash collection) assessed against specific property or certain people, even if the charge is paid to the taxing authority. How to file taxes for 2012 For more information about taxes and charges that are not deductible, see Real Estate-Related Items You Cannot Deduct , later. How to file taxes for 2012 Tenant-shareholders in a cooperative housing corporation. How to file taxes for 2012   Generally, if you are a tenant-stockholder in a cooperative housing corporation, you can deduct the amount paid to the corporation that represents your share of the real estate taxes the corporation paid or incurred for your dwelling unit. How to file taxes for 2012 The corporation should provide you with a statement showing your share of the taxes. How to file taxes for 2012 For more information, see Special Rules for Cooperatives in Publication 530. How to file taxes for 2012 Division of real estate taxes between buyers and sellers. How to file taxes for 2012   If you bought or sold real estate during the year, the real estate taxes must be divided between the buyer and the seller. How to file taxes for 2012   The buyer and the seller must divide the real estate taxes according to the number of days in the real property tax year (the period to which the tax is imposed relates) that each owned the property. How to file taxes for 2012 The seller is treated as paying the taxes up to, but not including, the date of sale. How to file taxes for 2012 The buyer is treated as paying the taxes beginning with the date of sale. How to file taxes for 2012 This applies regardless of the lien dates under local law. How to file taxes for 2012 Generally, this information is included on the settlement statement provided at the closing. How to file taxes for 2012    If you (the seller) cannot deduct taxes until they are paid because you use the cash method of accounting, and the buyer of your property is personally liable for the tax, you are considered to have paid your part of the tax at the time of the sale. How to file taxes for 2012 This lets you deduct the part of the tax to the date of sale even though you did not actually pay it. How to file taxes for 2012 However, you must also include the amount of that tax in the selling price of the property. How to file taxes for 2012 The buyer must include the same amount in his or her cost of the property. How to file taxes for 2012   You figure your deduction for taxes on each property bought or sold during the real property tax year as follows. How to file taxes for 2012 Worksheet 22-1. How to file taxes for 2012 Figuring Your Real Estate Tax Deduction 1. How to file taxes for 2012 Enter the total real estate taxes for the real property tax year   2. How to file taxes for 2012 Enter the number of days in the real property tax year that you owned the property   3. How to file taxes for 2012 Divide line 2 by 365 (for leap years, divide line 2 by 366) . How to file taxes for 2012 4. How to file taxes for 2012 Multiply line 1 by line 3. How to file taxes for 2012 This is your deduction. How to file taxes for 2012 Enter it on Schedule A (Form 1040), line 6   Note. How to file taxes for 2012 Repeat steps 1 through 4 for each property you bought or sold during the real property tax year. How to file taxes for 2012 Your total deduction is the sum of the line 4 amounts for all of the properties. How to file taxes for 2012 Real estate taxes for prior years. How to file taxes for 2012   Do not divide delinquent taxes between the buyer and seller if the taxes are for any real property tax year before the one in which the property is sold. How to file taxes for 2012 Even if the buyer agrees to pay the delinquent taxes, the buyer cannot deduct them. How to file taxes for 2012 The buyer must add them to the cost of the property. How to file taxes for 2012 The seller can deduct these taxes paid by the buyer. How to file taxes for 2012 However, the seller must include them in the selling price. How to file taxes for 2012 Examples. How to file taxes for 2012   The following examples illustrate how real estate taxes are divided between buyer and seller. How to file taxes for 2012 Example 1. How to file taxes for 2012 Dennis and Beth White's real property tax year for both their old home and their new home is the calendar year, with payment due August 1. How to file taxes for 2012 The tax on their old home, sold on May 7, was $620. How to file taxes for 2012 The tax on their new home, bought on May 3, was $732. How to file taxes for 2012 Dennis and Beth are considered to have paid a proportionate share of the real estate taxes on the old home even though they did not actually pay them to the taxing authority. How to file taxes for 2012 On the other hand, they can claim only a proportionate share of the taxes they paid on their new property even though they paid the entire amount. How to file taxes for 2012 Dennis and Beth owned their old home during the real property tax year for 126 days (January 1 to May 6, the day before the sale). How to file taxes for 2012 They figure their deduction for taxes on their old home as follows. How to file taxes for 2012 Worksheet 22-1. How to file taxes for 2012 Figuring Your Real Estate Tax Deduction — Taxes on Old Home 1. How to file taxes for 2012 Enter the total real estate taxes for the real property tax year $620 2. How to file taxes for 2012 Enter the number of days in the real property tax year that you owned the property 126 3. How to file taxes for 2012 Divide line 2 by 365 (for leap years, divide line 2 by 366) . How to file taxes for 2012 3452 4. How to file taxes for 2012 Multiply line 1 by line 3. How to file taxes for 2012 This is your deduction. How to file taxes for 2012 Enter it on Schedule A (Form 1040), line 6 $214 Since the buyers of their old home paid all of the taxes, Dennis and Beth also include the $214 in the selling price of the old home. How to file taxes for 2012 (The buyers add the $214 to their cost of the home. How to file taxes for 2012 ) Dennis and Beth owned their new home during the real property tax year for 243 days (May 3 to December 31, including their date of purchase). How to file taxes for 2012 They figure their deduction for taxes on their new home as follows. How to file taxes for 2012 Worksheet 22-1. How to file taxes for 2012 Figuring Your Real Estate Tax Deduction — Taxes on New Home 1. How to file taxes for 2012 Enter the total real estate taxes for the real property tax year $732 2. How to file taxes for 2012 Enter the number of days in the real property tax year that you owned the property 243 3. How to file taxes for 2012 Divide line 2 by 365 (for leap years, divide line 2 by 366) . How to file taxes for 2012 6658 4. How to file taxes for 2012 Multiply line 1 by line 3. How to file taxes for 2012 This is your deduction. How to file taxes for 2012 Enter it on Schedule A (Form 1040), line 6 $487 Since Dennis and Beth paid all of the taxes on the new home, they add $245 ($732 paid less $487 deduction) to their cost of the new home. How to file taxes for 2012 (The sellers add this $245 to their selling price and deduct the $245 as a real estate tax. How to file taxes for 2012 ) Dennis and Beth's real estate tax deduction for their old and new homes is the sum of $214 and $487, or $701. How to file taxes for 2012 They will enter this amount on Schedule A (Form 1040), line 6. How to file taxes for 2012 Example 2. How to file taxes for 2012 George and Helen Brown bought a new home on May 3, 2013. How to file taxes for 2012 Their real property tax year for the new home is the calendar year. How to file taxes for 2012 Real estate taxes for 2012 were assessed in their state on January 1, 2013. How to file taxes for 2012 The taxes became due on May 31, 2013, and October 31, 2013. How to file taxes for 2012 The Browns agreed to pay all taxes due after the date of purchase. How to file taxes for 2012 Real estate taxes for 2012 were $680. How to file taxes for 2012 They paid $340 on May 31, 2013, and $340 on October 31, 2013. How to file taxes for 2012 These taxes were for the 2012 real property tax year. How to file taxes for 2012 The Browns cannot deduct them since they did not own the property until 2013. How to file taxes for 2012 Instead, they must add $680 to the cost of their new home. How to file taxes for 2012 In January 2014, the Browns receive their 2013 property tax statement for $752, which they will pay in 2014. How to file taxes for 2012 The Browns owned their new home during the 2013 real property tax year for 243 days (May 3 to December 31). How to file taxes for 2012 They will figure their 2014 deduction for taxes as follows. How to file taxes for 2012 Worksheet 22-1. How to file taxes for 2012 Figuring Your Real Estate Tax Deduction — Taxes on New Home 1. How to file taxes for 2012 Enter the total real estate taxes for the real property tax year $752 2. How to file taxes for 2012 Enter the number of days in the real property tax year that you owned the property 243 3. How to file taxes for 2012 Divide line 2 by 365 (for leap years, divide line 2 by 366) . How to file taxes for 2012 6658 4. How to file taxes for 2012 Multiply line 1 by line 3. How to file taxes for 2012 This is your deduction. How to file taxes for 2012 Claim it on Schedule A (Form 1040), line 6 $501 The remaining $251 ($752 paid less $501 deduction) of taxes paid in 2014, along with the $680 paid in 2013, is added to the cost of their new home. How to file taxes for 2012 Because the taxes up to the date of sale are considered paid by the seller on the date of sale, the seller is entitled to a 2013 tax deduction of $931. How to file taxes for 2012 This is the sum of the $680 for 2012 and the $251 for the 122 days the seller owned the home in 2013. How to file taxes for 2012 The seller must also include the $931 in the selling price when he or she figures the gain or loss on the sale. How to file taxes for 2012 The seller should contact the Browns in January 2014 to find out how much real estate tax is due for 2013. How to file taxes for 2012 Form 1099-S. How to file taxes for 2012   For certain sales or exchanges of real estate, the person responsible for closing the sale (generally the settlement agent) prepares Form 1099-S, Proceeds From Real Estate Transactions, to report certain information to the IRS and to the seller of the property. How to file taxes for 2012 Box 2 of Form 1099-S is for the gross proceeds from the sale and should include the portion of the seller's real estate tax liability that the buyer will pay after the date of sale. How to file taxes for 2012 The buyer includes these taxes in the cost basis of the property, and the seller both deducts this amount as a tax paid and includes it in the sales price of the property. How to file taxes for 2012   For a real estate transaction that involves a home, any real estate tax the seller paid in advance but that is the liability of the buyer appears on Form 1099-S, box 5. How to file taxes for 2012 The buyer deducts this amount as a real estate tax, and the seller reduces his or her real estate tax deduction (or includes it in income) by the same amount. How to file taxes for 2012 See Refund (or rebate) , later. How to file taxes for 2012 Taxes placed in escrow. How to file taxes for 2012   If your monthly mortgage payment includes an amount placed in escrow (put in the care of a third party) for real estate taxes, you may not be able to deduct the total amount placed in escrow. How to file taxes for 2012 You can deduct only the real estate tax that the third party actually paid to the taxing authority. How to file taxes for 2012 If the third party does not notify you of the amount of real estate tax that was paid for you, contact the third party or the taxing authority to find the proper amount to show on your return. How to file taxes for 2012 Tenants by the entirety. How to file taxes for 2012   If you and your spouse held property as tenants by the entirety and you file separate federal returns, each of you can deduct only the taxes each of you paid on the property. How to file taxes for 2012 Divorced individuals. How to file taxes for 2012   If your divorce or separation agreement states that you must pay the real estate taxes for a home owned by you and your spouse, part of your payments may be deductible as alimony and part as real estate taxes. How to file taxes for 2012 See Taxes and insurance in chapter 18 for more information. How to file taxes for 2012 Ministers' and military housing allowances. How to file taxes for 2012   If you are a minister or a member of the uniformed services and receive a housing allowance that you can exclude from income, you still can deduct all of the real estate taxes you pay on your home. How to file taxes for 2012 Refund (or rebate). How to file taxes for 2012   If you received a refund or rebate in 2013 of real estate taxes you paid in 2013, you must reduce your deduction by the amount refunded to you. How to file taxes for 2012 If you received a refund or rebate in 2013 of real estate taxes you deducted in an earlier year (either as an itemized deduction or an increase to your standard deduction), you generally must include the refund or rebate in income in the year you receive it. How to file taxes for 2012 However, the amount you include in income is limited to the amount of the deduction that reduced your tax in the earlier year. How to file taxes for 2012 For more information, see Recoveries in chapter 12. How to file taxes for 2012 Table 22-1. How to file taxes for 2012 Which Taxes Can You Deduct? Type of Tax You Can Deduct You Cannot Deduct Fees and Charges Fees and charges that are expenses of your trade or business or of producing income. How to file taxes for 2012 Fees and charges that are not expenses of your trade or business or of producing income, such as fees for driver's licenses, car inspections, parking, or charges for water bills (see Taxes and Fees You Cannot Deduct ). How to file taxes for 2012     Fines and penalties. How to file taxes for 2012 Income Taxes State and local income taxes. How to file taxes for 2012 Federal income taxes. How to file taxes for 2012   Foreign income taxes. How to file taxes for 2012     Employee contributions to state funds listed under Contributions to state benefit funds . How to file taxes for 2012 Employee contributions to private or voluntary disability plans. How to file taxes for 2012     State and local general sales taxes if you choose to deduct state and local income taxes. How to file taxes for 2012 General Sales Taxes State and local general sales taxes, including compensating use taxes. How to file taxes for 2012 State and local income taxes if you choose to deduct state and local general sales taxes. How to file taxes for 2012 Other Taxes Taxes that are expenses of your trade or business. How to file taxes for 2012 Federal excise taxes, such as tax on gasoline, that are not expenses of your trade or business or of producing income. How to file taxes for 2012   Taxes on property producing rent or royalty income. How to file taxes for 2012 Per capita taxes. How to file taxes for 2012   Occupational taxes. How to file taxes for 2012 See chapter 28. How to file taxes for 2012     One-half of self-employment tax paid. How to file taxes for 2012   Personal Property Taxes State and local personal property taxes. How to file taxes for 2012 Customs duties that are not expenses of your trade or business or of producing income. How to file taxes for 2012 Real Estate Taxes State and local real estate taxes. How to file taxes for 2012 Real estate taxes that are treated as imposed on someone else (see Division of real estate taxes between buyers and sellers ). How to file taxes for 2012   Foreign real estate taxes. How to file taxes for 2012 Taxes for local benefits (with exceptions). How to file taxes for 2012 See Real Estate-Related Items You Cannot Deduct . How to file taxes for 2012   Tenant's share of real estate taxes paid by  cooperative housing corporation. How to file taxes for 2012 Trash and garbage pickup fees (with exceptions). How to file taxes for 2012 See Real Estate-Related Items You Cannot Deduct . How to file taxes for 2012     Rent increase due to higher real estate taxes. How to file taxes for 2012     Homeowners' association charges. How to file taxes for 2012 Real Estate-Related Items You Cannot Deduct Payments for the following items generally are not deductible as real estate taxes. How to file taxes for 2012 Taxes for local benefits. How to file taxes for 2012 Itemized charges for services (such as trash and garbage pickup fees). How to file taxes for 2012 Transfer taxes (or stamp taxes). How to file taxes for 2012 Rent increases due to higher real estate taxes. How to file taxes for 2012 Homeowners' association charges. How to file taxes for 2012 Taxes for local benefits. How to file taxes for 2012   Deductible real estate taxes generally do not include taxes charged for local benefits and improvements tending to increase the value of your property. How to file taxes for 2012 These include assessments for streets, sidewalks, water mains, sewer lines, public parking facilities, and similar improvements. How to file taxes for 2012 You should increase the basis of your property by the amount of the assessment. How to file taxes for 2012   Local benefit taxes are deductible only if they are for maintenance, repair, or interest charges related to those benefits. How to file taxes for 2012 If only a part of the taxes is for maintenance, repair, or interest, you must be able to show the amount of that part to claim the deduction. How to file taxes for 2012 If you cannot determine what part of the tax is for maintenance, repair, or interest, none of it is deductible. How to file taxes for 2012    Taxes for local benefits may be included in your real estate tax bill. How to file taxes for 2012 If your taxing authority (or mortgage lender) does not furnish you a copy of your real estate tax bill, ask for it. How to file taxes for 2012 You should use the rules above to determine if the local benefit tax is deductible. How to file taxes for 2012 Contact the taxing authority if you need additional information about a specific charge on your real estate tax bill. How to file taxes for 2012 Itemized charges for services. How to file taxes for 2012    An itemized charge for services assessed against specific property or certain people is not a tax, even if the charge is paid to the taxing authority. How to file taxes for 2012 For example, you cannot deduct the charge as a real estate tax if it is: A unit fee for the delivery of a service (such as a $5 fee charged for every 1,000 gallons of water you use), A periodic charge for a residential service (such as a $20 per month or $240 annual fee charged to each homeowner for trash collection), or A flat fee charged for a single service provided by your government (such as a $30 charge for mowing your lawn because it was allowed to grow higher than permitted under your local ordinance). How to file taxes for 2012    You must look at your real estate tax bill to determine if any nondeductible itemized charges, such as those listed above, are included in the bill. How to file taxes for 2012 If your taxing authority (or mortgage lender) does not furnish you a copy of your real estate tax bill, ask for it. How to file taxes for 2012 Exception. How to file taxes for 2012   Service charges used to maintain or improve services (such as trash collection or police and fire protection) are deductible as real estate taxes if: The fees or charges are imposed at a like rate against all property in the taxing jurisdiction, The funds collected are not earmarked; instead, they are commingled with general revenue funds, and Funds used to maintain or improve services are not limited to or determined by the amount of these fees or charges collected. How to file taxes for 2012 Transfer taxes (or stamp taxes). How to file taxes for 2012   Transfer taxes and similar taxes and charges on the sale of a personal home are not deductible. How to file taxes for 2012 If they are paid by the seller, they are expenses of the sale and reduce the amount realized on the sale. How to file taxes for 2012 If paid by the buyer, they are included in the cost basis of the property. How to file taxes for 2012 Rent increase due to higher real estate taxes. How to file taxes for 2012   If your landlord increases your rent in the form of a tax surcharge because of increased real estate taxes, you cannot deduct the increase as taxes. How to file taxes for 2012 Homeowners' association charges. How to file taxes for 2012   These charges are not deductible because they are imposed by the homeowners' association, rather than the state or local government. How to file taxes for 2012 Personal Property Taxes Personal property tax is deductible if it is a state or local tax that is: Charged on personal property, Based only on the value of the personal property, and Charged on a yearly basis, even if it is collected more or less than once a year. How to file taxes for 2012 A tax that meets the above requirements can be considered charged on personal property even if it is for the exercise of a privilege. How to file taxes for 2012 For example, a yearly tax based on value qualifies as a personal property tax even if it is called a registration fee and is for the privilege of registering motor vehicles or using them on the highways. How to file taxes for 2012 If the tax is partly based on value and partly based on other criteria, it may qualify in part. How to file taxes for 2012 Example. How to file taxes for 2012 Your state charges a yearly motor vehicle registration tax of 1% of value plus 50 cents per hundredweight. How to file taxes for 2012 You paid $32 based on the value ($1,500) and weight (3,400 lbs. How to file taxes for 2012 ) of your car. How to file taxes for 2012 You can deduct $15 (1% × $1,500) as a personal property tax because it is based on the value. How to file taxes for 2012 The remaining $17 ($. How to file taxes for 2012 50 × 34), based on the weight, is not deductible. How to file taxes for 2012 Taxes and Fees You Cannot Deduct Many federal, state, and local government taxes are not deductible because they do not fall within the categories discussed earlier. How to file taxes for 2012 Other taxes and fees, such as federal income taxes, are not deductible because the tax law specifically prohibits a deduction for them. How to file taxes for 2012 See Table 22-1. How to file taxes for 2012 Taxes and fees that are generally not deductible include the following items. How to file taxes for 2012 Employment taxes. How to file taxes for 2012 This includes social security, Medicare, and railroad retirement taxes withheld from your pay. How to file taxes for 2012 However, one-half of self-employment tax you pay is deductible. How to file taxes for 2012 In addition, the social security and other employment taxes you pay on the wages of a household worker may be included in medical expenses that you can deduct or child care expenses that allow you to claim the child and dependent care credit. How to file taxes for 2012 For more information, see chapters 21 and 32. How to file taxes for 2012 Estate, inheritance, legacy, or succession taxes. How to file taxes for 2012 However, you can deduct the estate tax attributable to income in respect of a decedent if you, as a beneficiary, must include that income in your gross income. How to file taxes for 2012 In that case, deduct the estate tax as a miscellaneous deduction that is not subject to the 2%-of-adjusted-gross-income limit. How to file taxes for 2012 For more information, see Publication 559, Survivors, Executors, and Administrators. How to file taxes for 2012 Federal income taxes. How to file taxes for 2012 This includes income taxes withheld from your pay. How to file taxes for 2012 Fines and penalties. How to file taxes for 2012 You cannot deduct fines and penalties paid to a government for violation of any law, including related amounts forfeited as collateral deposits. How to file taxes for 2012 Gift taxes. How to file taxes for 2012 License fees. How to file taxes for 2012 You cannot deduct license fees for personal purposes (such as marriage, driver's, and dog license fees). How to file taxes for 2012 Per capita taxes. How to file taxes for 2012 You cannot deduct state or local per capita taxes. How to file taxes for 2012 Many taxes and fees other than those listed above are also nondeductible, unless they are ordinary and necessary expenses of a business or income producing activity. How to file taxes for 2012 For other nondeductible items, see Real Estate-Related Items You Cannot Deduct , earlier. How to file taxes for 2012 Where To Deduct You deduct taxes on the following schedules. How to file taxes for 2012 State and local income taxes. How to file taxes for 2012    These taxes are deducted on Schedule A (Form 1040), line 5, even if your only source of income is from business, rents, or royalties. How to file taxes for 2012 Check box a on line 5. How to file taxes for 2012 General sales taxes. How to file taxes for 2012   Sales taxes are deducted on Schedule A (Form 1040), line 5. How to file taxes for 2012 You must check box b on line 5. How to file taxes for 2012 If you elect to deduct sales taxes, you cannot deduct state and local income taxes on Schedule A (Form 1040), line 5, box a. How to file taxes for 2012 Foreign income taxes. How to file taxes for 2012   Generally, income taxes you pay to a foreign country or U. How to file taxes for 2012 S. How to file taxes for 2012 possession can be claimed as an itemized deduction on Schedule A (Form 1040), line 8, or as a credit against your U. How to file taxes for 2012 S. How to file taxes for 2012 income tax on Form 1040, line 47. How to file taxes for 2012 To claim the credit, you may have to complete and attach Form 1116. How to file taxes for 2012 For more information, see chapter 37, the Form 1040 instructions, or Publication 514. How to file taxes for 2012 Real estate taxes and personal property taxes. How to file taxes for 2012    Real estate and personal property taxes are deducted on Schedule A (Form 1040), lines 6 and 7, respectively, unless they are paid on property used in your business, in which case they are deducted on Schedule C, Schedule C-EZ, or Schedule F (Form 1040). How to file taxes for 2012 Taxes on property that produces rent or royalty income are deducted on Schedule E (Form 1040). How to file taxes for 2012 Self-employment tax. How to file taxes for 2012    Deduct one-half of your self-employment tax on Form 1040, line 27. How to file taxes for 2012 Other taxes. How to file taxes for 2012    All other deductible taxes are deducted on Schedule A (Form 1040), line 8. How to file taxes for 2012 Prev  Up  Next   Home   More Online Publications
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The How To File Taxes For 2012

How to file taxes for 2012 10. How to file taxes for 2012   Retirement Plans, Pensions, and Annuities Table of Contents What's New Reminder IntroductionThe General Rule. How to file taxes for 2012 Individual retirement arrangements (IRAs). How to file taxes for 2012 Civil service retirement benefits. How to file taxes for 2012 Useful Items - You may want to see: General InformationIn-plan rollovers to designated Roth accounts. How to file taxes for 2012 How To Report Cost (Investment in the Contract) Taxation of Periodic PaymentsExclusion limited to cost. How to file taxes for 2012 Exclusion not limited to cost. How to file taxes for 2012 Simplified Method Taxation of Nonperiodic PaymentsLump-Sum Distributions RolloversIn-plan rollovers to designated Roth accounts. How to file taxes for 2012 Special Additional TaxesTax on Early Distributions Tax on Excess Accumulation Survivors and Beneficiaries What's New For purposes of the Net Investment Income Tax (NIIT), net investment income does not include distributions from a qualified retirement plan (for example, 401(a), 403(a), 403(b), 408, 408A, or 457(b) plans). How to file taxes for 2012 However, these distributions are taken into account when determining the modified adjusted gross income threshold. How to file taxes for 2012 Distributions from a nonqualified retirement plan are included in net investment income. How to file taxes for 2012 See Form 8960, Net Investment Income Tax - Individuals, Estates, and Trusts, and its instructions for more information. How to file taxes for 2012 Reminder Starting in 2013, the American Taxpayer Relief Act of 2012 expanded the rules for in-plan Roth rollovers to include more taxpayers. How to file taxes for 2012 For more information, see Designated Roth accounts discussed later. How to file taxes for 2012 Introduction This chapter discusses the tax treatment of distributions you receive from: An employee pension or annuity from a qualified plan, A disability retirement, and A purchased commercial annuity. How to file taxes for 2012 What is not covered in this chapter. How to file taxes for 2012   The following topics are not discussed in this chapter. How to file taxes for 2012 The General Rule. How to file taxes for 2012   This is the method generally used to determine the tax treatment of pension and annuity income from nonqualified plans (including commercial annuities). How to file taxes for 2012 For a qualified plan, you generally cannot use the General Rule unless your annuity starting date is before November 19, 1996. How to file taxes for 2012 For more information about the General Rule, see Publication 939, General Rule for Pensions and Annuities. How to file taxes for 2012 Individual retirement arrangements (IRAs). How to file taxes for 2012   Information on the tax treatment of amounts you receive from an IRA is in chapter 17. How to file taxes for 2012 Civil service retirement benefits. How to file taxes for 2012    If you are retired from the federal government (regular, phased, or disability retirement), see Publication 721, Tax Guide to U. How to file taxes for 2012 S. How to file taxes for 2012 Civil Service Retirement Benefits. How to file taxes for 2012 Publication 721 also covers the information that you need if you are the survivor or beneficiary of a federal employee or retiree who died. How to file taxes for 2012 Useful Items - You may want to see: Publication 575 Pension and Annuity Income 721 Tax Guide to U. How to file taxes for 2012 S. How to file taxes for 2012 Civil Service Retirement Benefits 939 General Rule for Pensions and Annuities Form (and Instructions) W-4P Withholding Certificate for Pension or Annuity Payments 1099-R Distributions From Pensions, Annuities, Retirement or Profit-Sharing Plans, IRAs, Insurance Contracts, etc. How to file taxes for 2012 4972 Tax on Lump-Sum Distributions 5329 Additional Taxes on Qualified Plans (Including IRAs) and Other Tax-Favored Accounts General Information Designated Roth accounts. How to file taxes for 2012   A designated Roth account is a separate account created under a qualified Roth contribution program to which participants may elect to have part or all of their elective deferrals to a 401(k), 403(b), or 457(b) plan designated as Roth contributions. How to file taxes for 2012 Elective deferrals that are designated as Roth contributions are included in your income. How to file taxes for 2012 However, qualified distributions are not included in your income. How to file taxes for 2012 See Publication 575 for more information. How to file taxes for 2012 In-plan rollovers to designated Roth accounts. How to file taxes for 2012   If you are a participant in a 401(k), 403(b), or 457(b) plan, your plan may permit you to roll over amounts in those plans to a designated Roth account within the same plan. How to file taxes for 2012 The rollover of any untaxed amounts must be included in income. How to file taxes for 2012 See Publication 575 for more information. How to file taxes for 2012 More than one program. How to file taxes for 2012   If you receive benefits from more than one program under a single trust or plan of your employer, such as a pension plan and a profit-sharing plan, you may have to figure the taxable part of each pension or annuity contract separately. How to file taxes for 2012 Your former employer or the plan administrator should be able to tell you if you have more than one pension or annuity contract. How to file taxes for 2012 Section 457 deferred compensation plans. How to file taxes for 2012    If you work for a state or local government or for a tax-exempt organization, you may be able to participate in a section 457 deferred compensation plan. How to file taxes for 2012 If your plan is an eligible plan, you are not taxed currently on pay that is deferred under the plan or on any earnings from the plan's investment of the deferred pay. How to file taxes for 2012 You are generally taxed on amounts deferred in an eligible state or local government plan only when they are distributed from the plan. How to file taxes for 2012 You are taxed on amounts deferred in an eligible tax-exempt organization plan when they are distributed or otherwise made available to you. How to file taxes for 2012   Your 457(b) plan may have a designated Roth account option. How to file taxes for 2012 If so, you may be able to roll over amounts to the designated Roth account or make contributions. How to file taxes for 2012 Elective deferrals to a designated Roth account are included in your income. How to file taxes for 2012 Qualified distributions from a designated Roth account are not subject to tax. How to file taxes for 2012   This chapter covers the tax treatment of benefits under eligible section 457 plans, but it does not cover the treatment of deferrals. How to file taxes for 2012 For information on deferrals under section 457 plans, see Retirement Plan Contributions under Employee Compensation in Publication 525, Taxable and Nontaxable Income. How to file taxes for 2012   For general information on these deferred compensation plans, see Section 457 Deferred Compensation Plans in Publication 575. How to file taxes for 2012 Disability pensions. How to file taxes for 2012   If you retired on disability, you generally must include in income any disability pension you receive under a plan that is paid for by your employer. How to file taxes for 2012 You must report your taxable disability payments as wages on line 7 of Form 1040 or Form 1040A until you reach minimum retirement age. How to file taxes for 2012 Minimum retirement age generally is the age at which you can first receive a pension or annuity if you are not disabled. How to file taxes for 2012    You may be entitled to a tax credit if you were permanently and totally disabled when you retired. How to file taxes for 2012 For information on the credit for the elderly or the disabled, see chapter 33. How to file taxes for 2012   Beginning on the day after you reach minimum retirement age, payments you receive are taxable as a pension or annuity. How to file taxes for 2012 Report the payments on Form 1040, lines 16a and 16b, or on Form 1040A, lines 12a and 12b. How to file taxes for 2012    Disability payments for injuries incurred as a direct result of a terrorist attack directed against the United States (or its allies) are not included in income. How to file taxes for 2012 For more information about payments to survivors of terrorist attacks, see Publication 3920, Tax Relief for Victims of Terrorist Attacks. How to file taxes for 2012   For more information on how to report disability pensions, including military and certain government disability pensions, see chapter 5. How to file taxes for 2012 Retired public safety officers. How to file taxes for 2012   An eligible retired public safety officer can elect to exclude from income distributions of up to $3,000 made directly from a government retirement plan to the provider of accident, health, or long-term disability insurance. How to file taxes for 2012 See Insurance Premiums for Retired Public Safety Officers in Publication 575 for more information. How to file taxes for 2012 Railroad retirement benefits. How to file taxes for 2012   Part of any railroad retirement benefits you receive is treated for tax purposes as social security benefits, and part is treated as an employee pension. How to file taxes for 2012 For information about railroad retirement benefits treated as social security benefits, see Publication 915, Social Security and Equivalent Railroad Retirement Benefits. How to file taxes for 2012 For information about railroad retirement benefits treated as an employee pension, see Railroad Retirement Benefits in Publication 575. How to file taxes for 2012 Withholding and estimated tax. How to file taxes for 2012   The payer of your pension, profit-sharing, stock bonus, annuity, or deferred compensation plan will withhold income tax on the taxable parts of amounts paid to you. How to file taxes for 2012 You can tell the payer how much to withhold, or not to withhold, by filing Form W-4P. How to file taxes for 2012 If you choose not to have tax withheld, or you do not have enough tax withheld, you may have to pay estimated tax. How to file taxes for 2012   If you receive an eligible rollover distribution, you cannot choose not to have tax withheld. How to file taxes for 2012 Generally, 20% will be withheld, but no tax will be withheld on a direct rollover of an eligible rollover distribution. How to file taxes for 2012 See Direct rollover option under Rollovers, later. How to file taxes for 2012   For more information, see Pensions and Annuities under Tax Withholding for 2014 in chapter 4. How to file taxes for 2012 Qualified plans for self-employed individuals. How to file taxes for 2012   Qualified plans set up by self-employed individuals are sometimes called Keogh or H. How to file taxes for 2012 R. How to file taxes for 2012 10 plans. How to file taxes for 2012 Qualified plans can be set up by sole proprietors, partnerships (but not a partner), and corporations. How to file taxes for 2012 They can cover self-employed persons, such as the sole proprietor or partners, as well as regular (common-law) employees. How to file taxes for 2012    Distributions from a qualified plan are usually fully taxable because most recipients have no cost basis. How to file taxes for 2012 If you have an investment (cost) in the plan, however, your pension or annuity payments from a qualified plan are taxed under the Simplified Method. How to file taxes for 2012 For more information about qualified plans, see Publication 560, Retirement Plans for Small Business. How to file taxes for 2012 Purchased annuities. How to file taxes for 2012   If you receive pension or annuity payments from a privately purchased annuity contract from a commercial organization, such as an insurance company, you generally must use the General Rule to figure the tax-free part of each annuity payment. How to file taxes for 2012 For more information about the General Rule, get Publication 939. How to file taxes for 2012 Also, see Variable Annuities in Publication 575 for the special provisions that apply to these annuity contracts. How to file taxes for 2012 Loans. How to file taxes for 2012   If you borrow money from your retirement plan, you must treat the loan as a nonperiodic distribution from the plan unless certain exceptions apply. How to file taxes for 2012 This treatment also applies to any loan under a contract purchased under your retirement plan, and to the value of any part of your interest in the plan or contract that you pledge or assign. How to file taxes for 2012 This means that you must include in income all or part of the amount borrowed. How to file taxes for 2012 Even if you do not have to treat the loan as a nonperiodic distribution, you may not be able to deduct the interest on the loan in some situations. How to file taxes for 2012 For details, see Loans Treated as Distributions in Publication 575. How to file taxes for 2012 For information on the deductibility of interest, see chapter 23. How to file taxes for 2012 Tax-free exchange. How to file taxes for 2012   No gain or loss is recognized on an exchange of an annuity contract for another annuity contract if the insured or annuitant remains the same. How to file taxes for 2012 However, if an annuity contract is exchanged for a life insurance or endowment contract, any gain due to interest accumulated on the contract is ordinary income. How to file taxes for 2012 See Transfers of Annuity Contracts in Publication 575 for more information about exchanges of annuity contracts. How to file taxes for 2012 How To Report If you file Form 1040, report your total annuity on line 16a and the taxable part on line 16b. How to file taxes for 2012 If your pension or annuity is fully taxable, enter it on line 16b; do not make an entry on line 16a. How to file taxes for 2012 If you file Form 1040A, report your total annuity on line 12a and the taxable part on line 12b. How to file taxes for 2012 If your pension or annuity is fully taxable, enter it on line 12b; do not make an entry on line 12a. How to file taxes for 2012 More than one annuity. How to file taxes for 2012   If you receive more than one annuity and at least one of them is not fully taxable, enter the total amount received from all annuities on Form 1040, line 16a, or Form 1040A, line 12a, and enter the taxable part on Form 1040, line 16b, or Form 1040A, line 12b. How to file taxes for 2012 If all the annuities you receive are fully taxable, enter the total of all of them on Form 1040, line 16b, or Form 1040A, line 12b. How to file taxes for 2012 Joint return. How to file taxes for 2012   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 Form 1040, line 16a, or Form 1040A, line 12a, and report the taxable part on Form 1040, line 16b, or Form 1040A, line 12b. How to file taxes for 2012 Cost (Investment in the Contract) Before you can figure how much, if any, of a distribution from your pension or annuity plan is taxable, you must determine your cost (your investment in the contract) in the pension or annuity. How to file taxes for 2012 Your total cost in the plan includes the total premiums, contributions, or other amounts you paid. How to file taxes for 2012 This includes the amounts your employer contributed that were taxable to you when paid. How to file taxes for 2012 Cost does not include any amounts you deducted or were excluded from your income. How to file taxes for 2012 From this total cost, subtract any refunds of premiums, rebates, dividends, unrepaid loans that were not included in your income, or other tax-free amounts that you received by the later of the annuity starting date or the date on which you received your first payment. How to file taxes for 2012 Your annuity starting date is the later of the first day of the first period for which you received a payment or the date the plan's obligations became fixed. How to file taxes for 2012 Designated Roth accounts. How to file taxes for 2012   Your cost in these accounts is your designated Roth contributions that were included in your income as wages subject to applicable withholding requirements. How to file taxes for 2012 Your cost will also include any in-plan Roth rollovers you included in income. How to file taxes for 2012 Foreign employment contributions. How to file taxes for 2012   If you worked in a foreign country and contributions were made to your retirement plan, special rules apply in determining your cost. How to file taxes for 2012 See Foreign employment contributions under Cost (Investment in the Contract) in Publication 575. How to file taxes for 2012 Taxation of Periodic Payments Fully taxable payments. How to file taxes for 2012   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 from your pay while you worked, the amounts you receive each year are fully taxable. How to file taxes for 2012 You must report them on your income tax return. How to file taxes for 2012 Partly taxable payments. How to file taxes for 2012   If you paid part of the cost of your pension or annuity, you are not taxed on the part of the pension or annuity you receive that represents a return of your cost. How to file taxes for 2012 The rest of the amount you receive is generally taxable. How to file taxes for 2012 You figure the tax-free part of the payment using either the Simplified Method or the General Rule. How to file taxes for 2012 Your annuity starting date and whether or not your plan is qualified determine which method you must or may use. How to file taxes for 2012   If your annuity starting date is after November 18, 1996, and your payments are from a qualified plan, you must use the Simplified Method. How to file taxes for 2012 Generally, you must use the General Rule if your annuity is paid under a nonqualified plan, and you cannot use this method if your annuity is paid under a qualified plan. How to file taxes for 2012   If you had more than one partly taxable pension or annuity, figure the tax-free part and the taxable part of each separately. How to file taxes for 2012   If your annuity is paid under a qualified plan and your annuity starting date is after July 1, 1986, and before November 19, 1996, you could have chosen to use either the General Rule or the Simplified Method. How to file taxes for 2012 Exclusion limit. How to file taxes for 2012   Your annuity starting date determines the total amount of annuity payments that you can exclude from your taxable income over the years. How to file taxes for 2012 Once your annuity starting date is determined, it does not change. How to file taxes for 2012 If you calculate the taxable portion of your annuity payments using the simplified method worksheet, the annuity starting date determines the recovery period for your cost. How to file taxes for 2012 That recovery period begins on your annuity starting date and is not affected by the date you first complete the worksheet. How to file taxes for 2012 Exclusion limited to cost. How to file taxes for 2012   If your annuity starting date is after 1986, the total amount of annuity income that you can exclude over the years as a recovery of the cost cannot exceed your total cost. How to file taxes for 2012 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 file taxes for 2012 This deduction is not subject to the 2%-of-adjusted-gross-income limit. How to file taxes for 2012 Exclusion not limited to cost. How to file taxes for 2012   If 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 file taxes for 2012 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 file taxes for 2012 The total exclusion may be more than your cost. How to file taxes for 2012 Simplified Method 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 file taxes for 2012 For an annuity that is payable for 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 file taxes for 2012 For any other annuity, this number is the number of monthly annuity payments under the contract. How to file taxes for 2012 Who must use the Simplified Method. How to file taxes for 2012   You must use the Simplified Method if your annuity starting date is after November 18, 1996, and you both: Receive pension or annuity payments from a qualified employee plan, qualified employee annuity, or a tax-sheltered annuity (403(b)) plan, and On your annuity starting date, you were either under age 75, or entitled to less than 5 years of guaranteed payments. How to file taxes for 2012 Guaranteed payments. How to file taxes for 2012   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 file taxes for 2012 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 file taxes for 2012 How to use the Simplified Method. How to file taxes for 2012    Complete the Simplified Method Worksheet in Publication 575 to figure your taxable annuity for 2013. How to file taxes for 2012 Single-life annuity. How to file taxes for 2012    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 file taxes for 2012 Enter on line 3 the number shown for your age at the annuity starting date. How to file taxes for 2012 Multiple-lives annuity. How to file taxes for 2012   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 file taxes for 2012 Enter on line 3 the number shown for the combined ages of you and the youngest survivor annuitant at the annuity starting date. How to file taxes for 2012   However, if your annuity starting date is before 1998, do not use Table 2 and do not combine the annuitants' ages. How to file taxes for 2012 Instead you must use Table 1 and enter on line 3 the number shown for the primary annuitant's age on the annuity starting date. How to file taxes for 2012    Be sure to keep a copy of the completed worksheet; it will help you figure your taxable annuity next year. How to file taxes for 2012 Example. How to file taxes for 2012 Bill Smith, age 65, began receiving retirement benefits in 2013, under a joint and survivor annuity. How to file taxes for 2012 Bill's annuity starting date is January 1, 2013. How to file taxes for 2012 The benefits are to be paid for the joint lives of Bill and his wife Kathy, age 65. How to file taxes for 2012 Bill had contributed $31,000 to a qualified plan and had received no distributions before the annuity starting date. How to file taxes for 2012 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 file taxes for 2012 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 file taxes for 2012 Because his annuity is payable over the lives of more than one annuitant, he uses his and Kathy's combined ages and Table 2 at the bottom of the worksheet in completing line 3 of the worksheet. How to file taxes for 2012 His completed worksheet is shown in Worksheet 10-A. How to file taxes for 2012 Bill's tax-free monthly amount is $100 ($31,000 ÷ 310) as shown on line 4 of the worksheet. How to file taxes for 2012 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 file taxes for 2012 The full amount of any annuity payments received after 310 payments are paid must be included in gross income. How to file taxes for 2012 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 file taxes for 2012 This deduction is not subject to the 2%-of-adjusted- gross-income limit. How to file taxes for 2012 Worksheet 10-A. How to file taxes for 2012 Simplified Method Worksheet for Bill Smith 1. How to file taxes for 2012 Enter the total pension or annuity payments received this year. How to file taxes for 2012 Also, add this amount to the total for Form 1040, line 16a, or Form 1040A, line 12a 1. How to file taxes for 2012 14,400 2. How to file taxes for 2012 Enter your cost in the plan (contract) at the annuity starting date plus any death benefit exclusion*. How to file taxes for 2012 See Cost (Investment in the Contract) , earlier 2. How to file taxes for 2012 31,000       Note: If your annuity starting date was before this year and you completed this worksheet last year, skip line 3 and enter the amount from line 4 of last year's worksheet on line 4 below (even if the amount of your pension or annuity has changed). How to file taxes for 2012 Otherwise, go to line 3. How to file taxes for 2012         3. How to file taxes for 2012 Enter the appropriate number from Table 1 below. How to file taxes for 2012 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 file taxes for 2012 310     4. How to file taxes for 2012 Divide line 2 by the number on line 3 4. How to file taxes for 2012 100     5. How to file taxes for 2012 Multiply line 4 by the number of months for which this year's payments were made. How to file taxes for 2012 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 file taxes for 2012 Otherwise, go to line 6 5. How to file taxes for 2012 1,200     6. How to file taxes for 2012 Enter any amounts previously recovered tax free in years after 1986. How to file taxes for 2012 This is the amount shown on line 10 of your worksheet for last year 6. How to file taxes for 2012 -0-     7. How to file taxes for 2012 Subtract line 6 from line 2 7. How to file taxes for 2012 31,000     8. How to file taxes for 2012 Enter the smaller of line 5 or line 7 8. How to file taxes for 2012 1,200 9. How to file taxes for 2012 Taxable amount for year. How to file taxes for 2012 Subtract line 8 from line 1. How to file taxes for 2012 Enter the result, but not less than zero. How to file taxes for 2012 Also, add this amount to the total for Form 1040, line 16b, or Form 1040A, line 12b 9. How to file taxes for 2012 13,200   Note: If your Form 1099-R shows a larger taxable amount, use the amount figured on this line instead. How to file taxes for 2012 If you are a retired public safety officer, see Insurance Premiums for Retired Public Safety Officers in Publication 575 before entering an amount on your tax return. How to file taxes for 2012     10. How to file taxes for 2012 Was your annuity starting date before 1987? □ Yes. How to file taxes for 2012 STOP. How to file taxes for 2012 Do not complete the rest of this worksheet. How to file taxes for 2012  ☑ No. How to file taxes for 2012 Add lines 6 and 8. How to file taxes for 2012 This is the amount you have recovered tax free through 2013. How to file taxes for 2012 You will need this number if you need to fill out this worksheet next year 10. How to file taxes for 2012 1,200 11. How to file taxes for 2012 Balance of cost to be recovered. How to file taxes for 2012 Subtract line 10 from line 2. How to file taxes for 2012 If zero, you will not have to complete this worksheet next year. How to file taxes for 2012 The payments you receive next year will generally be fully taxable 11. How to file taxes for 2012 29,800 TABLE 1 FOR LINE 3 ABOVE   AND your annuity starting date was— IF the age at annuity starting date was. How to file taxes for 2012 . How to file taxes for 2012 . How to file taxes for 2012 before November 19, 1996, enter on line 3. How to file taxes for 2012 . How to file taxes for 2012 . How to file taxes for 2012 after November 18, 1996, enter on line 3. How to file taxes for 2012 . How to file taxes for 2012 . How to file taxes for 2012 55 or under 300 360 56–60 260 310 61–65 240 260 66–70 170 210 71 or older 120 160 TABLE 2 FOR LINE 3 ABOVE IF the combined ages at annuity starting date were. How to file taxes for 2012 . How to file taxes for 2012 . How to file taxes for 2012   THEN enter on line 3. How to file taxes for 2012 . How to file taxes for 2012 . How to file taxes for 2012 110 or under   410 111–120   360 121–130   310 131–140   260 141 or older   210 * A death benefit exclusion (up to $5,000) applied to certain benefits received by employees who died before August 21, 1996. How to file taxes for 2012 Who must use the General Rule. How to file taxes for 2012   You 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 your annuity payments are guaranteed for at least 5 years. How to file taxes for 2012 Annuity starting before November 19, 1996. How to file taxes for 2012   If your annuity starting date is after July 1, 1986, and before November 19, 1996, you had to use the General Rule for either circumstance just described. How to file taxes for 2012 You also had to use it for any fixed-period annuity. How to file taxes for 2012 If you did not have to use the General Rule, you could have chosen to use it. How to file taxes for 2012 If your annuity starting date is before July 2, 1986, you had to use the General Rule unless you could use the Three-Year Rule. How to file taxes for 2012   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 file taxes for 2012 Who cannot use the General Rule. How to file taxes for 2012   You cannot use the General Rule if you receive your pension or annuity from a qualified plan and none of the circumstances described in the preceding discussions apply to you. How to file taxes for 2012 See Who must use the Simplified Method , earlier. How to file taxes for 2012 More information. How to file taxes for 2012   For complete information on using the General Rule, including the actuarial tables you need, see Publication 939. How to file taxes for 2012 Taxation of Nonperiodic Payments Nonperiodic distributions are also known as amounts not received as an annuity. How to file taxes for 2012 They include all payments other than periodic payments and corrective distributions. How to file taxes for 2012 Examples of nonperiodic payments are cash withdrawals, distributions of current earnings, certain loans, and the value of annuity contracts transferred without full and adequate consideration. How to file taxes for 2012 Corrective distributions of excess plan contributions. How to file taxes for 2012   Generally, if the contributions made for you during the year to certain retirement plans exceed certain limits, the excess is taxable to you. How to file taxes for 2012 To correct an excess, your plan may distribute it to you (along with any income earned on the excess). How to file taxes for 2012 For information on plan contribution limits and how to report corrective distributions of excess contributions, see Retirement Plan Contributions under Employee Compensation in Publication 525. How to file taxes for 2012 Figuring the taxable amount of nonperiodic payments. How to file taxes for 2012   How you figure the taxable amount of a nonperiodic distribution depends on whether it is made before the annuity starting date, or on or after the annuity starting date. How to file taxes for 2012 If it is made before the annuity starting date, its tax treatment also depends on whether it is made under a qualified or nonqualified plan. How to file taxes for 2012 If it is made under a nonqualified plan, its tax treatment depends on whether it fully discharges the contract, is received under certain life insurance or endowment contracts, or is allocable to an investment you made before August 14, 1982. How to file taxes for 2012 Annuity starting date. How to file taxes for 2012   The annuity starting date is either the first day of the first period for which you receive an annuity payment under the contract or the date on which the obligation under the contract becomes fixed, whichever is later. How to file taxes for 2012 Distribution on or after annuity starting date. How to file taxes for 2012   If you receive a nonperiodic payment from your annuity contract on or after the annuity starting date, you generally must include all of the payment in gross income. How to file taxes for 2012 Distribution before annuity starting date. How to file taxes for 2012   If you receive a nonperiodic distribution before the annuity starting date from a qualified retirement plan, you generally can allocate only part of it to the cost of the contract. How to file taxes for 2012 You exclude from your gross income the part that you allocate to the cost. How to file taxes for 2012 You include the remainder in your gross income. How to file taxes for 2012   If you receive a nonperiodic distribution before the annuity starting date from a plan other than a qualified retirement plan (nonqualified plan), it is allocated first to earnings (the taxable part) and then to the cost of the contract (the tax-free part). How to file taxes for 2012 This allocation rule applies, for example, to a commercial annuity contract you bought directly from the issuer. How to file taxes for 2012    Distributions from nonqualified plans are subject to the net investment income tax. How to file taxes for 2012 See the Instructions for Form 8960. How to file taxes for 2012   For more information, see Figuring the Taxable Amount under Taxation of Nonperiodic Payments in Publication 575. How to file taxes for 2012 Lump-Sum Distributions This section on lump-sum distributions only applies if the plan participant was born before January 2, 1936. How to file taxes for 2012 If the plan participant was born after January 1, 1936, the taxable amount of this nonperiodic payment is reported as discussed earlier. How to file taxes for 2012 A lump-sum distribution is the distribution or payment in one tax year of a plan participant's entire balance from all of the employer's qualified plans of one kind (for example, pension, profit-sharing, or stock bonus plans). How to file taxes for 2012 A distribution from a nonqualified plan (such as a privately purchased commercial annuity or a section 457 deferred compensation plan of a state or local government or tax-exempt organization) cannot qualify as a lump-sum distribution. How to file taxes for 2012 The participant's entire balance from a plan does not include certain forfeited amounts. How to file taxes for 2012 It also does not include any deductible voluntary employee contributions allowed by the plan after 1981 and before 1987. How to file taxes for 2012 For more information about distributions that do not qualify as lump-sum distributions, see Distributions that do not qualify under Lump-Sum Distributions in Publication 575. How to file taxes for 2012 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 file taxes for 2012 The part from active participation in the plan before 1974 may qualify as capital gain subject to a 20% tax rate. How to file taxes for 2012 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 file taxes for 2012 You may be able to use the 10-year tax option, discussed later, to figure tax on the ordinary income part. How to file taxes for 2012 Use Form 4972 to figure the separate tax on a lump-sum distribution using the optional methods. How to file taxes for 2012 The tax figured on Form 4972 is added to the regular tax figured on your other income. How to file taxes for 2012 This may result in a smaller tax than you would pay by including the taxable amount of the distribution as ordinary income in figuring your regular tax. How to file taxes for 2012 How to treat the distribution. How to file taxes for 2012   If you receive a lump-sum distribution, you may have the following options for how you treat the taxable part. How to file taxes for 2012 Report the part of the distribution from participation before 1974 as a capital gain (if you qualify) and the part from participation after 1973 as ordinary income. How to file taxes for 2012 Report the part of the distribution from participation before 1974 as a capital gain (if you qualify) and use the 10-year tax option to figure the tax on the part from participation after 1973 (if you qualify). How to file taxes for 2012 Use the 10-year tax option to figure the tax on the total taxable amount (if you qualify). How to file taxes for 2012 Roll over all or part of the distribution. How to file taxes for 2012 See Rollovers , later. How to file taxes for 2012 No tax is currently due on the part rolled over. How to file taxes for 2012 Report any part not rolled over as ordinary income. How to file taxes for 2012 Report the entire taxable part of the distribution as ordinary income on your tax return. How to file taxes for 2012   The first three options are explained in the following discussions. How to file taxes for 2012 Electing optional lump-sum treatment. How to file taxes for 2012   You can choose to use the 10-year tax option or capital gain treatment only once after 1986 for any plan participant. How to file taxes for 2012 If you make this choice, you cannot use either of these optional treatments for any future distributions for the participant. How to file taxes for 2012 Taxable and tax-free parts of the distribution. How to file taxes for 2012    The taxable part of a lump-sum distribution is the employer's contributions and income earned on your account. How to file taxes for 2012 You may recover your cost in the lump sum and any net unrealized appreciation (NUA) in employer securities tax free. How to file taxes for 2012 Cost. How to file taxes for 2012   In general, your cost is the total of: The plan participant's nondeductible contributions to the plan, The plan participant's taxable costs of any life insurance contract distributed, Any employer contributions that were taxable to the plan participant, and Repayments of any loans that were taxable to the plan participant. How to file taxes for 2012 You must reduce this cost by amounts previously distributed tax free. How to file taxes for 2012 Net unrealized appreciation (NUA). How to file taxes for 2012   The NUA in employer securities (box 6 of Form 1099-R) received as part of a lump-sum distribution is generally tax free until you sell or exchange the securities. How to file taxes for 2012 (For more information, see Distributions of employer securities under Taxation of Nonperiodic Payments in Publication 575. How to file taxes for 2012 ) Capital Gain Treatment Capital gain treatment applies only to the taxable part of a lump-sum distribution resulting from participation in the plan before 1974. How to file taxes for 2012 The amount treated as capital gain is taxed at a 20% rate. How to file taxes for 2012 You can elect this treatment only once for any plan participant, and only if the plan participant was born before January 2, 1936. How to file taxes for 2012 Complete Part II of Form 4972 to choose the 20% capital gain election. How to file taxes for 2012 For more information, see Capital Gain Treatment under Lump-Sum Distributions in Publication 575. How to file taxes for 2012 10-Year Tax Option The 10-year tax option is a special formula used to figure a separate tax on the ordinary income part of a lump-sum distribution. How to file taxes for 2012 You pay the tax only once, for the year in which you receive the distribution, not over the next 10 years. How to file taxes for 2012 You can elect this treatment only once for any plan participant, and only if the plan participant was born before January 2, 1936. How to file taxes for 2012 The ordinary income part of the distribution is the amount shown in box 2a of the Form 1099-R given to you by the payer, minus the amount, if any, shown in box 3. How to file taxes for 2012 You also can treat the capital gain part of the distribution (box 3 of Form 1099-R) as ordinary income for the 10-year tax option if you do not choose capital gain treatment for that part. How to file taxes for 2012 Complete Part III of Form 4972 to choose the 10-year tax option. How to file taxes for 2012 You must use the special Tax Rate Schedule shown in the instructions for Part III to figure the tax. How to file taxes for 2012 Publication 575 illustrates how to complete Form 4972 to figure the separate tax. How to file taxes for 2012 Rollovers If you withdraw cash or other assets from a qualified retirement plan in an eligible rollover distribution, you can defer tax on the distribution by rolling it over to another qualified retirement plan or a traditional IRA. How to file taxes for 2012 For this purpose, the following plans are qualified retirement plans. How to file taxes for 2012 A qualified employee plan. How to file taxes for 2012 A qualified employee annuity. How to file taxes for 2012 A tax-sheltered annuity plan (403(b) plan). How to file taxes for 2012 An eligible state or local government section 457 deferred compensation plan. How to file taxes for 2012 Eligible rollover distributions. How to file taxes for 2012   Generally, an eligible rollover distribution is any distribution of all or any part of the balance to your credit in a qualified retirement plan. How to file taxes for 2012 For information about exceptions to eligible rollover distributions, see Publication 575. How to file taxes for 2012 Rollover of nontaxable amounts. How to file taxes for 2012   You may be able to roll over the nontaxable part of a distribution (such as your after-tax contributions) made to another qualified retirement plan that is a qualified employee plan or a 403(b) plan, or to a traditional or Roth IRA. How to file taxes for 2012 The transfer must be made either through a direct rollover to a qualified plan or 403(b) plan that separately accounts for the taxable and nontaxable parts of the rollover or through a rollover to a traditional or Roth IRA. How to file taxes for 2012   If you roll over only part of a distribution that includes both taxable and nontaxable amounts, the amount you roll over is treated as coming first from the taxable part of the distribution. How to file taxes for 2012   Any after-tax contributions that you roll over into your traditional IRA become part of your basis (cost) in your IRAs. How to file taxes for 2012 To recover your basis when you take distributions from your IRA, you must complete Form 8606 for the year of the distribution. How to file taxes for 2012 For more information, see the Form 8606 instructions. How to file taxes for 2012 Direct rollover option. How to file taxes for 2012   You can choose to have any part or all of an eligible rollover distribution paid directly to another qualified retirement plan that accepts rollover distributions or to a traditional or Roth IRA. How to file taxes for 2012 If you choose the direct rollover option, or have an automatic rollover, no tax will be withheld from any part of the distribution that is directly paid to the trustee of the other plan. How to file taxes for 2012 Payment to you option. How to file taxes for 2012   If an eligible rollover distribution is paid to you, 20% generally will be withheld for income tax. How to file taxes for 2012 However, the full amount is treated as distributed to you even though you actually receive only 80%. How to file taxes for 2012 You generally must include in income any part (including the part withheld) that you do not roll over within 60 days to another qualified retirement plan or to a traditional or Roth IRA. How to file taxes for 2012 (See Pensions and Annuities under Tax Withholding for 2014 in chapter 4. How to file taxes for 2012 )    If you decide to roll over an amount equal to the distribution before withholding, your contribution to the new plan or IRA must include other money (for example, from savings or amounts borrowed) to replace the amount withheld. How to file taxes for 2012 Time for making rollover. How to file taxes for 2012   You generally must complete the rollover of an eligible rollover distribution paid to you by the 60th day following the day on which you receive the distribution from your employer's plan. How to file taxes for 2012 (If an amount distributed to you becomes a frozen deposit in a financial institution during the 60-day period after you receive it, the rollover period is extended for the period during which the distribution is in a frozen deposit in a financial institution. How to file taxes for 2012 )   The IRS may waive the 60-day requirement where the failure to do so would be against equity or good conscience, such as in the event of a casualty, disaster, or other event beyond your reasonable control. How to file taxes for 2012   The administrator of a qualified plan must give you a written explanation of your distribution options within a reasonable period of time before making an eligible rollover distribution. How to file taxes for 2012 Qualified domestic relations order (QDRO). How to file taxes for 2012   You may be able to roll over tax free all or part of a distribution from a qualified retirement plan that you receive under a QDRO. How to file taxes for 2012 If you receive the distribution as an employee's spouse or former spouse (not as a nonspousal beneficiary), the rollover rules apply to you as if you were the employee. How to file taxes for 2012 You can roll over the distribution from the plan into a traditional IRA or to another eligible retirement plan. How to file taxes for 2012 See Rollovers in Publication 575 for more information on benefits received under a QDRO. How to file taxes for 2012 Rollover by surviving spouse. How to file taxes for 2012   You may be able to roll over tax free all or part of a distribution from a qualified retirement plan you receive as the surviving spouse of a deceased employee. How to file taxes for 2012 The rollover rules apply to you as if you were the employee. How to file taxes for 2012 You can roll over a distribution into a qualified retirement plan or a traditional or Roth IRA. How to file taxes for 2012 For a rollover to a Roth IRA, see Rollovers to Roth IRAs , later. How to file taxes for 2012    A distribution paid to a beneficiary other than the employee's surviving spouse is generally not an eligible rollover distribution. How to file taxes for 2012 However, see Rollovers by nonspouse beneficiary next. How to file taxes for 2012 Rollovers by nonspouse beneficiary. How to file taxes for 2012   If you are a designated beneficiary (other than a surviving spouse) of a deceased employee, you may be able to roll over tax free all or a portion of a distribution you receive from an eligible retirement plan of the employee. How to file taxes for 2012 The distribution must be a direct trustee-to-trustee transfer to your traditional or Roth IRA that was set up to receive the distribution. How to file taxes for 2012 The transfer will be treated as an eligible rollover distribution and the receiving plan will be treated as an inherited IRA. How to file taxes for 2012 For information on inherited IRAs, see What if You Inherit an IRA? in chapter 1 of Publication 590, Individual Retirement Arrangements (IRAs). How to file taxes for 2012 Retirement bonds. How to file taxes for 2012   If you redeem retirement bonds purchased under a qualified bond purchase plan, you can roll over the proceeds that exceed your basis tax free into an IRA (as discussed in Publication 590) or a qualified employer plan. How to file taxes for 2012 Designated Roth accounts. How to file taxes for 2012   You can roll over an eligible rollover distribution from a designated Roth account into another designated Roth account or a Roth IRA. How to file taxes for 2012 If you want to roll over the part of the distribution that is not included in income, you must make a direct rollover of the entire distribution or you can roll over the entire amount (or any portion) to a Roth IRA. How to file taxes for 2012 For more information on rollovers from designated Roth accounts, see Rollovers in Publication 575. How to file taxes for 2012 In-plan rollovers to designated Roth accounts. How to file taxes for 2012   If you are a plan participant in a 401(k), 403(b), or 457(b) plan, your plan may permit you to roll over amounts in those plans to a designated Roth account within the same plan. How to file taxes for 2012 The rollover of any untaxed amounts must be included in income. How to file taxes for 2012 See Designated Roth accounts under Rollovers in Publication 575 for more information. How to file taxes for 2012 Rollovers to Roth IRAs. How to file taxes for 2012   You can roll over distributions directly from a qualified retirement plan (other than a designated Roth account) to a Roth IRA. How to file taxes for 2012   You must include in your gross income distributions from a qualified retirement plan (other than a designated Roth account) that you would have had to include in income if you had not rolled them over into a Roth IRA. How to file taxes for 2012 You do not include in gross income any part of a distribution from a qualified retirement plan that is a return of contributions to the plan that were taxable to you when paid. How to file taxes for 2012 In addition, the 10% tax on early distributions does not apply. How to file taxes for 2012 More information. How to file taxes for 2012   For more information on the rules for rolling over distributions, see Rollovers in Publication 575. How to file taxes for 2012 Special Additional Taxes To discourage the use of pension funds for purposes other than normal retirement, the law imposes additional taxes on early distributions of those funds and on failures to withdraw the funds timely. How to file taxes for 2012 Ordinarily, you will not be subject to these taxes if you roll over all early distributions you receive, as explained earlier, and begin drawing out the funds at a normal retirement age, in reasonable amounts over your life expectancy. How to file taxes for 2012 These special additional taxes are the taxes on: Early distributions, and Excess accumulation (not receiving minimum distributions). How to file taxes for 2012 These taxes are discussed in the following sections. How to file taxes for 2012 If you must pay either of these taxes, report them on Form 5329. How to file taxes for 2012 However, you do not have to file Form 5329 if you owe only the tax on early distributions and your Form 1099-R correctly shows a “1” in box 7. How to file taxes for 2012 Instead, enter 10% of the taxable part of the distribution on Form 1040, line 58 and write “No” under the heading “Other Taxes” to the left of line 58. How to file taxes for 2012 Even if you do not owe any of these taxes, you may have to complete Form 5329 and attach it to your Form 1040. How to file taxes for 2012 This applies if you meet an exception to the tax on early distributions but box 7 of your Form 1099-R does not indicate an exception. How to file taxes for 2012 Tax on Early Distributions Most distributions (both periodic and nonperiodic) from qualified retirement plans and nonqualified annuity contracts made to you before you reach age 59½ are subject to an additional tax of 10%. How to file taxes for 2012 This tax applies to the part of the distribution that you must include in gross income. How to file taxes for 2012 For this purpose, a qualified retirement plan is: A qualified employee plan, A qualified employee annuity plan, A tax-sheltered annuity 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 file taxes for 2012 5% rate on certain early distributions from deferred annuity contracts. How to file taxes for 2012   If an early withdrawal from a deferred annuity is otherwise subject to the 10% additional tax, a 5% rate may apply instead. How to file taxes for 2012 A 5% rate applies to distributions under a written election providing a specific schedule for the distribution of your interest in the contract if, as of March 1, 1986, you had begun receiving payments under the election. How to file taxes for 2012 On line 4 of Form 5329, multiply the line 3 amount by 5% instead of 10%. How to file taxes for 2012 Attach an explanation to your return. How to file taxes for 2012 Distributions from Roth IRAs allocable to a rollover from an eligible retirement plan within the 5-year period. How to file taxes for 2012   If, within the 5-year period starting with the first day of your tax year in which you rolled over an amount from an eligible retirement plan to a Roth IRA, you take a distribution from the Roth IRA, you may have to pay the additional 10% tax on early distributions. How to file taxes for 2012 You generally must pay the 10% additional tax on any amount attributable to the part of the rollover that you had to include in income. How to file taxes for 2012 The additional tax is figured on Form 5329. How to file taxes for 2012 For more information, see Form 5329 and its instructions. How to file taxes for 2012 For information on qualified distributions from Roth IRAs, see Additional Tax on Early Distributions in chapter 2 of Publication 590. How to file taxes for 2012 Distributions from designated Roth accounts allocable to in-plan Roth rollovers within the 5-year period. How to file taxes for 2012   If, within the 5-year period starting with the first day of your tax year in which you rolled over an amount from a 401(k), 403(b), or 457(b) plan to a designated Roth account, you take a distribution from the designated Roth account, you may have to pay the additional 10% tax on early distributions. How to file taxes for 2012 You generally must pay the 10% additional tax on any amount attributable to the part of the in-plan rollover that you had to include in income. How to file taxes for 2012 The additional tax is figured on Form 5329. How to file taxes for 2012 For more information, see Form 5329 and its instructions. How to file taxes for 2012 For information on qualified distributions from designated Roth accounts, see Designated Roth accounts under Taxation of Periodic Payments in Publication 575. How to file taxes for 2012 Exceptions to tax. How to file taxes for 2012    Certain early distributions are excepted from the early distribution tax. How to file taxes for 2012 If the payer knows that an exception applies to your early distribution, distribution code “2,” “3,” or “4” should be shown in box 7 of your Form 1099-R and you do not have to report the distribution on Form 5329. How to file taxes for 2012 If an exception applies but distribution code “1” (early distribution, no known exception) is shown in box 7, you must file Form 5329. How to file taxes for 2012 Enter the taxable amount of the distribution shown in box 2a of your Form 1099-R on line 1 of Form 5329. How to file taxes for 2012 On line 2, enter the amount that can be excluded and the exception number shown in the Form 5329 instructions. How to file taxes for 2012    If distribution code “1” is incorrectly shown on your Form 1099-R for a distribution received when you were age 59½ or older, include that distribution on Form 5329. How to file taxes for 2012 Enter exception number “12” on line 2. How to file taxes for 2012 General exceptions. How to file taxes for 2012   The tax does not apply to 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 your 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 file taxes for 2012 Additional exceptions for qualified retirement plans. How to file taxes for 2012   The tax does not apply to distributions that are: From a qualified retirement plan (other than an IRA) after your separation from service in or after the year you reached age 55 (age 50 for qualified public safety employees), From a qualified retirement plan (other than an IRA) to an alternate payee under a qualified domestic relations order, From a qualified retirement plan to the extent you have deductible medical expenses that exceed 10% (or 7. How to file taxes for 2012 5% if you or your spouse are age 65 or older) of your adjusted gross income, whether or not you itemize your deductions for the year, From an employer plan under a written election that provides a specific schedule for distribution of your entire interest if, as of March 1, 1986, you had separated from service and had begun receiving payments under the election, From an employee stock ownership plan for dividends on employer securities held by the plan, From a qualified retirement plan due to an IRS levy of the plan, From elective deferral accounts under 401(k) or 403(b) plans or similar arrangements that are qualified reservist distributions, or Phased retirement annuity payments made to federal employees. How to file taxes for 2012 See Pub. How to file taxes for 2012 721 for more information on the phased retirement program. How to file taxes for 2012 Qualified public safety employees. How to file taxes for 2012   If you are a qualified public safety employee, distributions made from a governmental defined benefit pension plan are not subject to the additional tax on early distributions. How to file taxes for 2012 You are a qualified public safety employee if you provide police protection, firefighting services, or emergency medical services for a state or municipality, and you separated from service in or after the year you attained age 50. How to file taxes for 2012 Qualified reservist distributions. How to file taxes for 2012   A qualified reservist distribution is not subject to the additional tax on early distributions. How to file taxes for 2012 A qualified reservist distribution is a distribution (a) from elective deferrals under a section 401(k) or 403(b) plan, or a similar arrangement, (b) to an individual ordered or called to active duty (because he or she is a member of a reserve component) for a period of more than 179 days or for an indefinite period, and (c) made during the period beginning on the date of the order or call and ending at the close of the active duty period. How to file taxes for 2012 You must have been ordered or called to active duty after September 11, 2001. How to file taxes for 2012 For more information, see Qualified reservist distributions under Special Additional Taxes in Publication 575. How to file taxes for 2012 Additional exceptions for nonqualified annuity contracts. How to file taxes for 2012   The tax does not apply to distributions from: A deferred annuity contract to the extent allocable to investment in the contract before August 14, 1982, A deferred annuity contract under a qualified personal injury settlement, A deferred annuity contract purchased by your employer upon termination of a qualified employee plan or qualified employee annuity plan and held by your employer until your separation from service, or An immediate annuity contract (a single premium contract providing substantially equal annuity payments that start within 1 year from the date of purchase and are paid at least annually). How to file taxes for 2012 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 (defined later). How to file taxes for 2012 The payments each year cannot be less than the required minimum distribution. How to file taxes for 2012 Required distributions not made. How to file taxes for 2012   If the actual distributions to you in any year are less than the minimum required distribution for that year, you are subject to an additional tax. How to file taxes for 2012 The tax equals 50% of the part of the required minimum distribution that was not distributed. How to file taxes for 2012   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 file taxes for 2012 Waiver. How to file taxes for 2012   The tax may be waived if you establish that the shortfall in distributions was due to reasonable error and that reasonable steps are being taken to remedy the shortfall. How to file taxes for 2012 See the Instructions for Form 5329 for the procedure to follow if you believe you qualify for a waiver of this tax. How to file taxes for 2012 State insurer delinquency proceedings. How to file taxes for 2012   You might not receive the minimum distribution because assets are invested in a contract issued by an insurance company in state insurer delinquency proceedings. How to file taxes for 2012 If your payments are reduced below the minimum due to these proceedings, you should contact your plan administrator. How to file taxes for 2012 Under certain conditions, you will not have to pay the 50% excise tax. How to file taxes for 2012 Required beginning date. How to file taxes for 2012   Unless the rule for 5% owners applies, you generally must begin to receive distributions from your qualified retirement plan by 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 file taxes for 2012 However, your plan may require you to begin to receive distributions by April 1 of the year that follows the year in which you reach age 70½, even if you have not retired. How to file taxes for 2012   If you reached age 70½ in 2013, you may be required to receive your first distribution by April 1, 2014. How to file taxes for 2012 Your required distribution then must be made for 2014 by December 31, 2014. How to file taxes for 2012 5% owners. How to file taxes for 2012   If you are a 5% owner, you must begin to receive distributions by April 1 of the year that follows the calendar year in which you reach age 70½. How to file taxes for 2012   You are a 5% owner if, for the plan year ending in the calendar year in which you reach age 70½, you own (or are considered to own under section 318 of the Internal Revenue Code) more than 5% of the outstanding stock (or more than 5% of the total voting power of all stock) of the employer, or more than 5% of the capital or profits interest in the employer. How to file taxes for 2012 Age 70½. How to file taxes for 2012   You reach age 70½ on the date that is 6 calendar months after the date of your 70th birthday. How to file taxes for 2012   For example, if you are retired and your 70th birthday was on June 30, 2013, you were age 70½ on December 30, 2013. How to file taxes for 2012 If your 70th birthday was on July 1, 2013, you reached age 70½ on January 1, 2014. How to file taxes for 2012 Required distributions. How to file taxes for 2012   By the required beginning date, as explained earlier, you must either: Receive your entire interest in the plan (for a tax-sheltered annuity, your entire benefit accruing after 1986), or Begin receiving periodic distributions in annual amounts calculated to distribute your entire interest (for a tax-sheltered annuity, your entire benefit accruing after 1986) over your life or life expectancy or over the joint lives or joint life expectancies of you and a designated beneficiary (or over a shorter period). How to file taxes for 2012 Additional information. How to file taxes for 2012   For more information on this rule, see Tax on Excess Accumulation in Publication 575. How to file taxes for 2012 Form 5329. How to file taxes for 2012   You must file Form 5329 if you owe tax because you did not receive a minimum required distribution from your qualified retirement plan. How to file taxes for 2012 Survivors and Beneficiaries Generally, a survivor or beneficiary reports pension or annuity income in the same way the plan participant would have. How to file taxes for 2012 However, some special rules apply. How to file taxes for 2012 See Publication 575 for more information. How to file taxes for 2012 Survivors of employees. How to file taxes for 2012   If you are entitled to receive a survivor annuity on the death of an employee who died, you can exclude part of each annuity payment as a tax-free recovery of the employee's investment in the contract. How to file taxes for 2012 You must figure the taxable and tax-free parts of your annuity payments using the method that applies as if you were the employee. How to file taxes for 2012 Survivors of retirees. How to file taxes for 2012   If you receive benefits as a survivor under a joint and survivor annuity, include those benefits in income in the same way the retiree would have included them in income. How to file taxes for 2012 If you receive a survivor annuity because of the death of a retiree who had reported the annuity under the Three-Year Rule and recovered all of the cost tax free, your survivor payments are fully taxable. How to file taxes for 2012    If the retiree was reporting the annuity payments under the General Rule, you must apply the same exclusion percentage to your initial survivor annuity payment called for in the contract. How to file taxes for 2012 The resulting tax-free amount will then remain fixed. How to file taxes for 2012 Any increases in the survivor annuity are fully taxable. How to file taxes for 2012    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 file taxes for 2012 This amount remains fixed even if the annuity payments are increased or decreased. How to file taxes for 2012 See Simplified Method , earlier. How to file taxes for 2012   In any case, if the annuity starting date is after 1986, the total exclusion over the years cannot be more than the cost. How to file taxes for 2012 Estate tax deduction. How to file taxes for 2012   If your annuity was a joint and survivor annuity that was included in the decedent's estate, an estate tax may have been paid on it. How to file taxes for 2012 You can deduct the part of the total estate tax that was based on the annuity. How to file taxes for 2012 The deceased annuitant must have died after the annuity starting date. How to file taxes for 2012 (For details, see section 1. How to file taxes for 2012 691(d)-1 of the regulations. How to file taxes for 2012 ) Deduct it in equal amounts over your remaining life expectancy. How to file taxes for 2012   If the decedent died before the annuity starting date of a deferred annuity contract and you receive a death benefit under that contract, the amount you receive (either in a lump sum or as periodic payments) in excess of the decedent's cost is included in your gross income as income in respect of a decedent for which you may be able to claim an estate tax deduction. How to file taxes for 2012   You can take the estate tax deduction as an itemized deduction on Schedule A, Form 1040. How to file taxes for 2012 This deduction is not subject to the 2%-of-adjusted-gross-income limit on miscellaneous deductions. How to file taxes for 2012 See Publication 559, Survivors, Executors, and Administrators, for more information on the estate tax deduction. How to file taxes for 2012 Prev  Up  Next   Home   More Online Publications