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Irs1040ez

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Irs1040ez

Irs1040ez 2. Irs1040ez   Entertainment Table of Contents Directly-Related Test Associated TestMeetings at conventions. Irs1040ez 50% LimitExceptions to the 50% Limit What Entertainment Expenses Are Deductible?A meal as a form of entertainment. Irs1040ez Deduction may depend on your type of business. Irs1040ez Exception for events that benefit charitable organizations. Irs1040ez Food and beverages in skybox seats. Irs1040ez What Entertainment Expenses Are Not Deductible?Out-of-pocket expenses. Irs1040ez You may be able to deduct business-related entertainment expenses you have for entertaining a client, customer, or employee. Irs1040ez The rules and definitions are summarized in Table 2-1 . Irs1040ez You can deduct entertainment expenses only if they are both ordinary and necessary and meet one of the following tests. Irs1040ez Directly-related test. Irs1040ez Associated test. Irs1040ez Both of these tests are explained later. Irs1040ez An ordinary expense is one that is common and accepted in your trade or business. Irs1040ez A necessary expense is one that is helpful and appropriate for your business. Irs1040ez An expense does not have to be required to be considered necessary. Irs1040ez The amount you can deduct for entertainment expenses may be limited. Irs1040ez Generally, you can deduct only 50% of your unreimbursed entertainment expenses. Irs1040ez This limit is discussed later under 50% Limit. Irs1040ez Directly-Related Test To meet the directly-related test for entertainment expenses (including entertainment-related meals), you must show that: The main purpose of the combined business and entertainment was the active conduct of business, You did engage in business with the person during the entertainment period, and You had more than a general expectation of getting income or some other specific business benefit at some future time. Irs1040ez Business is generally not considered to be the main purpose when business and entertainment are combined on hunting or fishing trips, or on yachts or other pleasure boats. Irs1040ez Even if you show that business was the main purpose, you generally cannot deduct the expenses for the use of an entertainment facility. Irs1040ez See Entertainment facilities under What Entertainment Expenses Are Not Deductible? later in this chapter. Irs1040ez You must consider all the facts, including the nature of the business transacted and the reasons for conducting business during the entertainment. Irs1040ez It is not necessary to devote more time to business than to entertainment. Irs1040ez However, if the business discussion is only incidental to the entertainment, the entertainment expenses do not meet the directly-related test. Irs1040ez Table 2-1. Irs1040ez When Are Entertainment Expenses Deductible? General rule You can deduct ordinary and necessary expenses to entertain a client, customer, or employee if the expenses meet the directly-related test or the associated test. Irs1040ez Definitions Entertainment includes any activity generally considered to provide entertainment, amusement, or recreation, and includes meals provided to a customer or client. Irs1040ez An ordinary expense is one that is common and accepted in your trade or business. Irs1040ez A necessary expense is one that is helpful and appropriate. Irs1040ez Tests to be met Directly-related test Entertainment took place in a clear business setting, or Main purpose of entertainment was the active conduct of business, and You did engage in business with the person during the entertainment period, and You had more than a general expectation of getting income or some other specific business benefit. Irs1040ez   Associated test Entertainment is associated with your trade or business, and Entertainment is directly before or after a substantial business discussion. Irs1040ez Other rules You cannot deduct the cost of your meal as an entertainment expense if you are claiming the meal as a travel expense. Irs1040ez You cannot deduct expenses that are lavish or extravagant under the circumstances. Irs1040ez You generally can deduct only 50% of your unreimbursed entertainment expenses (see 50% Limit ). Irs1040ez You do not have to show that business income or other business benefit actually resulted from each entertainment expense. Irs1040ez Clear business setting. Irs1040ez   If the entertainment takes place in a clear business setting and is for your business or work, the expenses are considered directly related to your business or work. Irs1040ez The following situations are examples of entertainment in a clear business setting. Irs1040ez Entertainment in a hospitality room at a convention where business goodwill is created through the display or discussion of business products. Irs1040ez Entertainment that is mainly a price rebate on the sale of your products (such as a restaurant owner providing an occasional free meal to a loyal customer). Irs1040ez Entertainment of a clear business nature occurring under circumstances where there is no meaningful personal or social relationship between you and the persons entertained. Irs1040ez An example is entertainment of business and civic leaders at the opening of a new hotel or play when the purpose is to get business publicity rather than to create or maintain the goodwill of the persons entertained. Irs1040ez Expenses not considered directly related. Irs1040ez   Entertainment expenses generally are not considered directly related if you are not there or in situations where there are substantial distractions that generally prevent you from actively conducting business. Irs1040ez The following are examples of situations where there are substantial distractions. Irs1040ez A meeting or discussion at a nightclub, theater, or sporting event. Irs1040ez A meeting or discussion during what is essentially a social gathering, such as a cocktail party. Irs1040ez A meeting with a group that includes persons who are not business associates at places such as cocktail lounges, country clubs, golf clubs, athletic clubs, or vacation resorts. Irs1040ez Associated Test Even if your expenses do not meet the directly-related test, they may meet the associated test. Irs1040ez To meet the associated test for entertainment expenses (including entertainment-related meals), you must show that the entertainment is: Associated with the active conduct of your trade or business, and Directly before or after a substantial business discussion (defined later). Irs1040ez Associated with trade or business. Irs1040ez   Generally, an expense is associated with the active conduct of your trade or business if you can show that you had a clear business purpose for having the expense. Irs1040ez The purpose may be to get new business or to encourage the continuation of an existing business relationship. Irs1040ez Substantial business discussion. Irs1040ez   Whether a business discussion is substantial depends on the facts of each case. Irs1040ez A business discussion will not be considered substantial unless you can show that you actively engaged in the discussion, meeting, negotiation, or other business transaction to get income or some other specific business benefit. Irs1040ez   The meeting does not have to be for any specified length of time, but you must show that the business discussion was substantial in relation to the meal or entertainment. Irs1040ez It is not necessary that you devote more time to business than to entertainment. Irs1040ez You do not have to discuss business during the meal or entertainment. Irs1040ez Meetings at conventions. Irs1040ez   You are considered to have a substantial business discussion if you attend meetings at a convention or similar event, or at a trade or business meeting sponsored and conducted by a business or professional organization. Irs1040ez However, your reason for attending the convention or meeting must be to further your trade or business. Irs1040ez The organization that sponsors the convention or meeting must schedule a program of business activities that is the main activity of the convention or meeting. Irs1040ez Directly before or after business discussion. Irs1040ez   If the entertainment is held on the same day as the business discussion, it is considered to be held directly before or after the business discussion. Irs1040ez   If the entertainment and the business discussion are not held on the same day, you must consider the facts of each case to see if the associated test is met. Irs1040ez Among the facts to consider are the place, date, and duration of the business discussion. Irs1040ez If you or your business associates are from out of town, you must also consider the dates of arrival and departure, and the reasons the entertainment and the discussion did not take place on the same day. Irs1040ez Example. Irs1040ez A group of business associates comes from out of town to your place of business to hold a substantial business discussion. Irs1040ez If you entertain those business guests on the evening before the business discussion, or on the evening of the day following the business discussion, the entertainment generally is considered to be held directly before or after the discussion. Irs1040ez The expense meets the associated test. Irs1040ez 50% Limit In general, you can deduct only 50% of your business-related meal and entertainment expenses. Irs1040ez (If you are subject to the Department of Transportation's “hours of service” limits, you can deduct 80% of your business-related meal and entertainment expenses. Irs1040ez See Individuals subject to “hours of service” limits , later. Irs1040ez ) The 50% limit applies to employees or their employers, and to self-employed persons (including independent contractors) or their clients, depending on whether the expenses are reimbursed. Irs1040ez Figure A summarizes the general rules explained in this section. Irs1040ez The 50% limit applies to business meals or entertainment expenses you have while: Traveling away from home (whether eating alone or with others) on business, Entertaining customers at your place of business, a restaurant, or other location, or Attending a business convention or reception, business meeting, or business luncheon at a club. Irs1040ez Included expenses. Irs1040ez   Expenses subject to the 50% limit include: Taxes and tips relating to a business meal or entertainment activity, Cover charges for admission to a nightclub, Rent paid for a room in which you hold a dinner or cocktail party, and Amounts paid for parking at a sports arena. Irs1040ez However, the cost of transportation to and from a business meal or a business-related entertainment activity is not subject to the 50% limit. Irs1040ez Figure A. Irs1040ez Does the 50% Limit Apply to Your Expenses? There are exceptions to these rules. Irs1040ez See Exceptions to the 50% Limit . Irs1040ez Please click here for the text description of the image. Irs1040ez Figure A. Irs1040ez Does the 50% limit apply to Your Expenses?TAs for Figure A are: Notice 87-23; Form 2106 instructions Application of 50% limit. Irs1040ez   The 50% limit on meal and entertainment expenses applies if the expense is otherwise deductible and is not covered by one of the exceptions discussed later. Irs1040ez   The 50% limit also applies to certain meal and entertainment expenses that are not business related. Irs1040ez It applies to meal and entertainment expenses you have for the production of income, including rental or royalty income. Irs1040ez It also applies to the cost of meals included in deductible educational expenses. Irs1040ez When to apply the 50% limit. Irs1040ez   You apply the 50% limit after determining the amount that would otherwise qualify for a deduction. Irs1040ez You first have to determine the amount of meal and entertainment expenses that would be deductible under the other rules discussed in this publication. Irs1040ez Example 1. Irs1040ez You spend $200 for a business-related meal. Irs1040ez If $110 of that amount is not allowable because it is lavish and extravagant, the remaining $90 is subject to the 50% limit. Irs1040ez Your deduction cannot be more than $45 (50% × $90). Irs1040ez Example 2. Irs1040ez You purchase two tickets to a concert and give them to a client. Irs1040ez You purchased the tickets through a ticket agent. Irs1040ez You paid $200 for the two tickets, which had a face value of $80 each ($160 total). Irs1040ez Your deduction cannot be more than $80 (50% × $160). Irs1040ez Exceptions to the 50% Limit Generally, business-related meal and entertainment expenses are subject to the 50% limit. Irs1040ez Figure A can help you determine if the 50% limit applies to you. Irs1040ez Expenses not subject to 50% limit. Irs1040ez   Your meal or entertainment expense is not subject to the 50% limit if the expense meets one of the following exceptions. Irs1040ez 1 - Employee's reimbursed expenses. Irs1040ez   If you are an employee, you are not subject to the 50% limit on expenses for which your employer reimburses you under an accountable plan. Irs1040ez Accountable plans are discussed in chapter 6. Irs1040ez 2 - Self-employed. Irs1040ez   If you are self-employed, your deductible meal and entertainment expenses are not subject to the 50% limit if all of the following requirements are met. Irs1040ez You have these expenses as an independent contractor. Irs1040ez Your customer or client reimburses you or gives you an allowance for these expenses in connection with services you perform. Irs1040ez You provide adequate records of these expenses to your customer or client. Irs1040ez (See chapter 5 . Irs1040ez )   In this case, your client or customer is subject to the 50% limit on the expenses. Irs1040ez Example. Irs1040ez You are a self-employed attorney who adequately accounts for meal and entertainment expenses to a client who reimburses you for these expenses. Irs1040ez You are not subject to the directly-related or associated test, nor are you subject to the 50% limit. Irs1040ez If the client can deduct the expenses, the client is subject to the 50% limit. Irs1040ez If you (as an independent contractor) have expenses for meals and entertainment related to providing services for a client but do not adequately account for and seek reimbursement from the client for those expenses, you are subject to the directly-related or associated test and to the 50% limit. Irs1040ez 3 - Advertising expenses. Irs1040ez   You are not subject to the 50% limit if you provide meals, entertainment, or recreational facilities to the general public as a means of advertising or promoting goodwill in the community. Irs1040ez For example, neither the expense of sponsoring a television or radio show nor the expense of distributing free food and beverages to the general public is subject to the 50% limit. Irs1040ez 4 - Sale of meals or entertainment. Irs1040ez   You are not subject to the 50% limit if you actually sell meals, entertainment, goods and services, or use of facilities to the public. Irs1040ez For example, if you run a nightclub, your expense for the entertainment you furnish to your customers, such as a floor show, is not subject to the 50% limit. Irs1040ez 5 - Charitable sports event. Irs1040ez   You are not subject to the 50% limit if you pay for a package deal that includes a ticket to a qualified charitable sports event. Irs1040ez For the conditions the sports event must meet, see Exception for events that benefit charitable organizations under What Entertainment Expenses Are Deductible?, later. Irs1040ez Individuals subject to “hours of service” limits. Irs1040ez   You can deduct a higher percentage of your meal expenses while traveling away from your tax home if the meals take place during or incident to any period subject to the Department of Transportation's “hours of service” limits. Irs1040ez The percentage is 80%. Irs1040ez   Individuals subject to the Department of Transportation's “hours of service” limits include the following persons. Irs1040ez Certain air transportation workers (such as pilots, crew, dispatchers, mechanics, and control tower operators) who are under Federal Aviation Administration regulations. Irs1040ez Interstate truck operators and bus drivers who are under Department of Transportation regulations. Irs1040ez Certain railroad employees (such as engineers, conductors, train crews, dispatchers, and control operations personnel) who are under Federal Railroad Administration regulations. Irs1040ez Certain merchant mariners who are under Coast Guard regulations. Irs1040ez What Entertainment Expenses Are Deductible? This section explains different types of entertainment expenses you may be able to deduct. Irs1040ez Entertainment. Irs1040ez   Entertainment includes any activity generally considered to provide entertainment, amusement, or recreation. Irs1040ez Examples include entertaining guests at nightclubs; at social, athletic, and sporting clubs; at theaters; at sporting events; on yachts; or on hunting, fishing, vacation, and similar trips. Irs1040ez   Entertainment also may include meeting personal, living, or family needs of individuals, such as providing meals, a hotel suite, or a car to customers or their families. Irs1040ez A meal as a form of entertainment. Irs1040ez   Entertainment includes the cost of a meal you provide to a customer or client, whether the meal is a part of other entertainment or by itself. Irs1040ez A meal expense includes the cost of food, beverages, taxes, and tips for the meal. Irs1040ez To deduct an entertainment-related meal, you or your employee must be present when the food or beverages are provided. Irs1040ez    You cannot claim the cost of your meal both as an entertainment expense and as a travel expense. Irs1040ez    Meals sold in the normal course of your business are not considered entertainment. Irs1040ez Deduction may depend on your type of business. Irs1040ez   Your kind of business may determine if a particular activity is considered entertainment. Irs1040ez For example, if you are a dress designer and have a fashion show to introduce your new designs to store buyers, the show generally is not considered entertainment. Irs1040ez This is because fashion shows are typical in your business. Irs1040ez But, if you are an appliance distributor and hold a fashion show for the spouses of your retailers, the show generally is considered entertainment. Irs1040ez Separating costs. Irs1040ez   If you have one expense that includes the costs of entertainment and other services (such as lodging or transportation), you must allocate that expense between the cost of entertainment and the cost of other services. Irs1040ez You must have a reasonable basis for making this allocation. Irs1040ez For example, you must allocate your expenses if a hotel includes entertainment in its lounge on the same bill with your room charge. Irs1040ez Taking turns paying for meals or entertainment. Irs1040ez   If a group of business acquaintances takes turns picking up each others' meal or entertainment checks primarily for personal reasons, without regard to whether any business purposes are served, no member of the group can deduct any part of the expense. Irs1040ez Lavish or extravagant expenses. Irs1040ez   You cannot deduct expenses for entertainment that are lavish or extravagant. Irs1040ez An expense is not considered lavish or extravagant if it is reasonable considering the facts and circumstances. Irs1040ez Expenses will not be disallowed just because they are more than a fixed dollar amount or take place at deluxe restaurants, hotels, nightclubs, or resorts. Irs1040ez Allocating between business and nonbusiness. Irs1040ez   If you entertain business and nonbusiness individuals at the same event, you must divide your entertainment expenses between business and nonbusiness. Irs1040ez You can deduct only the business part. Irs1040ez If you cannot establish the part of the expense for each person participating, allocate the expense to each participant on a pro rata basis. Irs1040ez Example. Irs1040ez You entertain a group of individuals that includes yourself, three business prospects, and seven social guests. Irs1040ez Only 4/11 of the expense qualifies as a business entertainment expense. Irs1040ez You cannot deduct the expenses for the seven social guests because those costs are nonbusiness expenses. Irs1040ez Trade association meetings. Irs1040ez   You can deduct entertainment expenses that are directly related to and necessary for attending business meetings or conventions of certain exempt organizations if the expenses of your attendance are related to your active trade or business. Irs1040ez These organizations include business leagues, chambers of commerce, real estate boards, trade associations, and professional associations. Irs1040ez Entertainment tickets. Irs1040ez   Generally, you cannot deduct more than the face value of an entertainment ticket, even if you paid a higher price. Irs1040ez For example, you cannot deduct service fees you pay to ticket agencies or brokers or any amount over the face value of the tickets you pay to scalpers. Irs1040ez Exception for events that benefit charitable organizations. Irs1040ez   Different rules apply when the cost of a ticket to a sports event benefits a charitable organization. Irs1040ez You can take into account the full cost you pay for the ticket, even if it is more than the face value, if all of the following conditions apply. Irs1040ez The event's main purpose is to benefit a qualified charitable organization. Irs1040ez The entire net proceeds go to the charity. Irs1040ez The event uses volunteers to perform substantially all the event's work. Irs1040ez    The 50% limit on entertainment does not apply to any expense for a package deal that includes a ticket to such a charitable sports event. Irs1040ez Example 1. Irs1040ez You purchase tickets to a golf tournament organized by the local volunteer fire company. Irs1040ez All net proceeds will be used to buy new fire equipment. Irs1040ez The volunteers will run the tournament. Irs1040ez You can deduct the entire cost of the tickets as a business expense if they otherwise qualify as an entertainment expense. Irs1040ez Example 2. Irs1040ez You purchase tickets to a college football game through a ticket broker. Irs1040ez After having a business discussion, you take a client to the game. Irs1040ez Net proceeds from the game go to colleges that qualify as charitable organizations. Irs1040ez However, since the colleges also pay individuals to perform services, such as coaching and recruiting, you can only use the face value of the tickets in determining your business deduction. Irs1040ez Skyboxes and other private luxury boxes. Irs1040ez   If you rent a skybox or other private luxury box for more than one event at the same sports arena, you generally cannot deduct more than the price of a nonluxury box seat ticket. Irs1040ez   To determine whether a skybox has been rented for more than one event, count each game or other performance as one event. Irs1040ez For example, renting a skybox for a series of playoff games is considered renting it for more than one event. Irs1040ez All skyboxes you rent in the same arena, along with any rentals by related parties, are considered in making this determination. Irs1040ez   Related parties include: Family members (spouses, ancestors, and lineal descendants), Parties who have made a reciprocal arrangement involving the sharing of skyboxes, Related corporations, A partnership and its principal partners, and A corporation and a partnership with common ownership. Irs1040ez Example. Irs1040ez You pay $3,000 to rent a 10-seat skybox at Team Stadium for three baseball games. Irs1040ez The cost of regular nonluxury box seats at each event is $30 a seat. Irs1040ez You can deduct (subject to the 50% limit) $900 ((10 seats × $30 each) × 3 events). Irs1040ez Food and beverages in skybox seats. Irs1040ez   If expenses for food and beverages are separately stated, you can deduct these expenses in addition to the amounts allowable for the skybox, subject to the requirements and limits that apply. Irs1040ez The amounts separately stated for food and beverages must be reasonable. Irs1040ez You cannot inflate the charges for food and beverages to avoid the limited deduction for skybox rentals. Irs1040ez What Entertainment Expenses Are Not Deductible? This section explains different types of entertainment expenses you generally may not be able to deduct. Irs1040ez Club dues and membership fees. Irs1040ez   You cannot deduct dues (including initiation fees) for membership in any club organized for: Business, Pleasure, Recreation, or Other social purpose. Irs1040ez This rule applies to any membership organization if one of its principal purposes is either: To conduct entertainment activities for members or their guests, or To provide members or their guests with access to entertainment facilities, discussed later. Irs1040ez   The purposes and activities of a club, not its name, will determine whether or not you can deduct the dues. Irs1040ez You cannot deduct dues paid to: Country clubs, Golf and athletic clubs, Airline clubs, Hotel clubs, and Clubs operated to provide meals under circumstances generally considered to be conducive to business discussions. Irs1040ez Entertainment facilities. Irs1040ez   Generally, you cannot deduct any expense for the use of an entertainment facility. Irs1040ez This includes expenses for depreciation and operating costs such as rent, utilities, maintenance, and protection. Irs1040ez   An entertainment facility is any property you own, rent, or use for entertainment. Irs1040ez Examples include a yacht, hunting lodge, fishing camp, swimming pool, tennis court, bowling alley, car, airplane, apartment, hotel suite, or home in a vacation resort. Irs1040ez Out-of-pocket expenses. Irs1040ez   You can deduct out-of-pocket expenses, such as for food and beverages, catering, gas, and fishing bait, that you provided during entertainment at a facility. Irs1040ez These are not expenses for the use of an entertainment facility. Irs1040ez However, these expenses are subject to the directly-related and associated tests and to the 50% limit , all discussed earlier. Irs1040ez Expenses for spouses. Irs1040ez   You generally cannot deduct the cost of entertainment for your spouse or for the spouse of a customer. Irs1040ez However, you can deduct these costs if you can show you had a clear business purpose, rather than a personal or social purpose, for providing the entertainment. Irs1040ez Example. Irs1040ez You entertain a customer. Irs1040ez The cost is an ordinary and necessary business expense and is allowed under the entertainment rules. Irs1040ez The customer's spouse joins you because it is impractical to entertain the customer without the spouse. Irs1040ez You can deduct the cost of entertaining the customer's spouse. Irs1040ez If your spouse joins the party because the customer's spouse is present, the cost of the entertainment for your spouse is also deductible. Irs1040ez Gift or entertainment. Irs1040ez   Any item that might be considered either a gift or entertainment generally will be considered entertainment. Irs1040ez However, if you give a customer packaged food or beverages that you intend the customer to use at a later date, treat it as a gift. Irs1040ez   If you give a customer tickets to a theater performance or sporting event and you do not go with the customer to the performance or event, you have a choice. Irs1040ez You can treat the tickets as either a gift or entertainment, whichever is to your advantage. Irs1040ez   You can change your treatment of the tickets at a later date by filing an amended return. Irs1040ez Generally, an amended return must be filed within 3 years from the date the original return was filed or within 2 years from the time the tax was paid, whichever is later. Irs1040ez   If you go with the customer to the event, you must treat the cost of the tickets as an entertainment expense. Irs1040ez You cannot choose, in this case, to treat the tickets as a gift. Irs1040ez Prev  Up  Next   Home   More Online Publications
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Irs1040ez 9. Irs1040ez   Worksheets Table of Contents When Should I Figure MAC?Checking the Previous Year's Contributions Available Worksheets Chapter 2 introduced you to the term maximum amount contributable (MAC). Irs1040ez Generally, your MAC is the lesser of your: Limit on annual additions (chapter 3), or Limit on elective deferrals (chapter 4). Irs1040ez The worksheets in this chapter can help you figure the cost of incidental life insurance, your includible compensation, your limit on annual additions, your limit on elective deferrals, your limit on catch-up contributions, and your MAC. Irs1040ez After completing the worksheets, you should maintain them with your 403(b) records for that year. Irs1040ez Do not attach them to your tax return. Irs1040ez At the end of the year or the beginning of the next year, you should compare your estimated compensation figures with your actual figures. Irs1040ez If your compensation is the same as, or more than, the projected amounts and the calculations are correct, then you should simply file these worksheets with your other tax records for the year. Irs1040ez If your compensation was lower than your estimated figures, you will need to check the amount contributed during the year to determine if contributions are more than your MAC. Irs1040ez When Should I Figure MAC? At the beginning of each year, you should figure your MAC using a conservative estimate of your compensation. Irs1040ez Should your income change during the year, you should refigure your MAC based on a revised conservative estimate. Irs1040ez By doing this, you will be able to determine if contributions to your 403(b) account should be increased or decreased for the year. Irs1040ez Checking the Previous Year's Contributions At the beginning of the following year, you should refigure your MAC based on your actual earned income. Irs1040ez At the end of the current year or the beginning of the next year, you should check your contributions to be sure you did not exceed your MAC. Irs1040ez This means refiguring your limit based on your actual compensation figures for the year. Irs1040ez This will allow you to determine if the amount contributed is more than the allowable amounts, and possibly avoid additional taxes. Irs1040ez Available Worksheets The following worksheets have been provided to help you figure your MAC. Irs1040ez Worksheet A. Irs1040ez Cost of Incidental Life Insurance. Irs1040ez Worksheet B. Irs1040ez Includible Compensation for Your Most Recent Year of Service Worksheet C. Irs1040ez Limit on Catch-Up Contributions. Irs1040ez ??? Worksheet 1. Irs1040ez Maximum Amount Contributable (MAC). Irs1040ez Worksheet A. Irs1040ez Cost of Incidental Life Insurance Note. Irs1040ez Use this worksheet to figure the cost of incidental life insurance included in your annuity contract. Irs1040ez This amount will be used to figure includible compensation for your most recent year of service. Irs1040ez 1. Irs1040ez Enter the value of the contract (amount payable upon your death) 1. Irs1040ez   2. Irs1040ez Enter the cash value in the contract at the end of the year 2. Irs1040ez   3. Irs1040ez Subtract line 2 from line 1. Irs1040ez This is the value of your current life insurance protection 3. Irs1040ez   4. Irs1040ez Enter your age on your birthday nearest the beginning of the policy year 4. Irs1040ez   5. Irs1040ez Enter the 1-year term premium for $1,000 of life insurance based on your age. Irs1040ez (From Figure 3-1) 5. Irs1040ez   6. Irs1040ez Divide line 3 by $1,000 6. Irs1040ez   7. Irs1040ez Multiply line 6 by line 5. Irs1040ez This is the cost of your incidental life insurance 7. Irs1040ez   Worksheet B. Irs1040ez Includible Compensation for Your Most Recent Year of Service1 Note. Irs1040ez Use this worksheet to figure includible compensation for your most recent year of service. Irs1040ez 1. Irs1040ez Enter your includible wages from the employer maintaining your 403(b) account for your most recent year of service 1. Irs1040ez   2. Irs1040ez Enter elective deferrals excluded from your gross income for your most recent year of service2 2. Irs1040ez   3. Irs1040ez Enter amounts contributed or deferred by your employer under a cafeteria plan for your most recent year of service 3. Irs1040ez   4. Irs1040ez Enter amounts contributed or deferred by your employer according to your election to your 457 account (a nonqualified plan of a state or local government or of a tax-exempt organization) for your most recent year of service 4. Irs1040ez   5. Irs1040ez Enter pre-tax contributions (employer's contributions made on your behalf according to your election) to a qualified transportation fringe benefit plan for your most recent year of service 5. Irs1040ez   6. Irs1040ez Enter your foreign earned income exclusion for your most recent year of service 6. Irs1040ez   7. Irs1040ez Add lines 1, 2, 3, 4, 5, and 6 7. Irs1040ez   8. Irs1040ez Enter the cost of incidental life insurance that is part of your annuity contract for your most recent year of service 8. Irs1040ez   9. Irs1040ez Enter compensation that was both: Earned during your most recent year of service, and Earned while your employer was not qualified to maintain a 403(b) plan 9. Irs1040ez   10. Irs1040ez Add lines 8 and 9 10. Irs1040ez   11. Irs1040ez Subtract line 10 from line 7. Irs1040ez This is your includible compensation for your most recent year of service 11. Irs1040ez   1Use estimated amounts if figuring includible compensation before the end of the year. Irs1040ez  2Elective deferrals made to a designated Roth account are not excluded from your gross income and should not be included on this line. Irs1040ez Worksheet C. Irs1040ez Limit on Catch-Up Contributions Note. Irs1040ez If you will be age 50 or older by the end of the year, use this worksheet to figure your limit on catch-up contributions. Irs1040ez 1. Irs1040ez Maximum catch-up contributions 1. Irs1040ez $5,500 2. Irs1040ez Enter your includible compensation for your most recent year of service 2. Irs1040ez   3. Irs1040ez Enter your elective deferrals 3. Irs1040ez   4. Irs1040ez Subtract line 3 from line 2 4. Irs1040ez   5. Irs1040ez Enter the lesser of line 1 or line 4. Irs1040ez This is your limit on catch-up contributions 5. Irs1040ez   Worksheet 1. Irs1040ez Maximum Amount Contributable (MAC) Note. Irs1040ez Use this worksheet to figure your MAC. Irs1040ez Part I. Irs1040ez Limit on Annual Additions     1. Irs1040ez Enter your includible compensation for your most recent year of service 1. Irs1040ez   2. Irs1040ez Maximum1: For 2013, enter $51,000 For 2014, enter $52,000 2. Irs1040ez   3. Irs1040ez Enter the lesser of line 1 or line 2. Irs1040ez This is your limit on annual additions 3. Irs1040ez     Caution: If you had only nonelective contributions, skip Part II and enter the amount from line 3 on line 18. Irs1040ez     Part II. Irs1040ez Limit on Elective Deferrals     4. Irs1040ez Maximum contribution: For 2013, enter $17,500 For 2014, enter $17,500 4. Irs1040ez     Note. Irs1040ez If you have at least 15 years of service with a qualifying organization, complete lines 5 through 17. Irs1040ez If not, enter zero (-0-) on line 16 and go to line 17. Irs1040ez     5. Irs1040ez Amount per year of service 5. Irs1040ez $ 5,000 6. Irs1040ez Enter your years of service 6. Irs1040ez   7. Irs1040ez Multiply line 5 by line 6 7. Irs1040ez   8. Irs1040ez Enter the total of all elective deferrals made for you by the qualifying organization for prior years 8. Irs1040ez   9. Irs1040ez Subtract line 8 from line 7. Irs1040ez If zero or less, enter zero (-0-) 9. Irs1040ez   10. Irs1040ez Maximum increase in limit for long service 10. Irs1040ez $15,000 11. Irs1040ez Enter the total of additional pre-tax elective deferrals made in prior years under the 15-year rule 11. Irs1040ez   12. Irs1040ez Enter the aggregate amount of all designated Roth contributions permitted for prior years under the 15-year rule 12. Irs1040ez   13. Irs1040ez Add line 11 and line 12 13. Irs1040ez   14. Irs1040ez Subtract line 13 from line 10 14. Irs1040ez   15. Irs1040ez Maximum additional contributions 15. Irs1040ez $ 3,000 16. Irs1040ez Enter the least of lines 9, 14, or 15. Irs1040ez This is your increase in the limit for long service 16. Irs1040ez   17. Irs1040ez Add lines 4 and 16. Irs1040ez This is your limit on elective deferrals 17. Irs1040ez     Part III. Irs1040ez Maximum Amount Contributable     18. Irs1040ez If you had only nonelective contributions, enter the amount from line 3. Irs1040ez This is your MAC. Irs1040ez    If you had only elective deferrals, enter the lesser of lines 3 or 17. Irs1040ez This is your MAC. Irs1040ez    If you had both elective deferrals and nonelective contributions, enter the amount from line 3. Irs1040ez This is your MAC. Irs1040ez (Use the amount on line 17 to determine if you have excess elective deferrals as explained in chapter 7. Irs1040ez ) 18. Irs1040ez   1If you participate in a 403(b) plan and a qualified plan, you must combine contributions made to your 403(b) account with contributions to a qualified plan and simplified employee pension plans of all corporations, partnerships, and sole proprietorships in which you have more than 50% control. Irs1040ez You must also combine the contributions made to all 403(b) accounts on your behalf by your employer. Irs1040ez Prev  Up  Next   Home   More Online Publications