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Senior Income Tax

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Senior Income Tax

Senior income tax 6. Senior income tax   Insurance Table of Contents What's New Introduction Topics - This chapter discusses: Useful Items - You may want to see: Deductible PremiumsSelf-Employed Health Insurance Deduction Nondeductible Premiums Capitalized Premiums When To Deduct Premiums What's New Retiree drug subsidy. Senior income tax  Beginning in 2013, sponsors of certain qualified retiree prescription drug plans must account for the subsidy received by reducing the amount of qualified retiree prescription drug plans expense by the subsidy received (taking into account the taxpayer's accounting method). Senior income tax For more information, see the retiree drug subsidy frequently asked questions on IRS. Senior income tax gov. Senior income tax Introduction You generally can deduct the ordinary and necessary cost of insurance as a business expense if it is for your trade, business, or profession. Senior income tax However, you may have to capitalize certain insurance costs under the uniform capitalization rules. Senior income tax For more information, see Capitalized Premiums , later. Senior income tax Topics - This chapter discusses: Deductible premiums Nondeductible premiums Capitalized premiums When to deduct premiums Useful Items - You may want to see: Publication 15-B Employer's Tax Guide to Fringe Benefits 525 Taxable and Nontaxable Income 538 Accounting Periods and Methods 547 Casualties, Disasters, and Thefts Form (and Instructions) 1040 U. Senior income tax S. Senior income tax Individual Income Tax Return See chapter 12 for information about getting publications and forms. Senior income tax Deductible Premiums You generally can deduct premiums you pay for the following kinds of insurance related to your trade or business. Senior income tax Insurance that covers fire, storm, theft, accident, or similar losses. Senior income tax Credit insurance that covers losses from business bad debts. Senior income tax Group hospitalization and medical insurance for employees, including long-term care insurance. Senior income tax If a partnership pays accident and health insurance premiums for its partners, it generally can deduct them as guaranteed payments to partners. Senior income tax If an S corporation pays accident and health insurance premiums for its more-than-2% shareholder-employees, it generally can deduct them, but must also include them in the shareholder's wages subject to federal income tax withholding. Senior income tax See Publication 15-B. Senior income tax Liability insurance. Senior income tax Malpractice insurance that covers your personal liability for professional negligence resulting in injury or damage to patients or clients. Senior income tax Workers' compensation insurance set by state law that covers any claims for bodily injuries or job-related diseases suffered by employees in your business, regardless of fault. Senior income tax If a partnership pays workers' compensation premiums for its partners, it generally can deduct them as guaranteed payments to partners. Senior income tax If an S corporation pays workers' compensation premiums for its more-than-2% shareholder-employees, it generally can deduct them, but must also include them in the shareholder's wages. Senior income tax Contributions to a state unemployment insurance fund are deductible as taxes if they are considered taxes under state law. Senior income tax Overhead insurance that pays for business overhead expenses you have during long periods of disability caused by your injury or sickness. Senior income tax Car and other vehicle insurance that covers vehicles used in your business for liability, damages, and other losses. Senior income tax If you operate a vehicle partly for personal use, deduct only the part of the insurance premium that applies to the business use of the vehicle. Senior income tax If you use the standard mileage rate to figure your car expenses, you cannot deduct any car insurance premiums. Senior income tax Life insurance covering your officers and employees if you are not directly or indirectly a beneficiary under the contract. Senior income tax Business interruption insurance that pays for lost profits if your business is shut down due to a fire or other cause. Senior income tax Self-Employed Health Insurance Deduction You may be able to deduct premiums paid for medical and dental insurance and qualified long-term care insurance for yourself, your spouse, and your dependents. Senior income tax The insurance can also cover your child who was under age 27 at the end of 2013, even if the child was not your dependent. Senior income tax A child includes your son, daughter, stepchild, adopted child, or foster child. Senior income tax A foster child is any child placed with you by an authorized placement agency or by judgment, decree, or other order of any court of competent jurisdiction. Senior income tax One of the following statements must be true. Senior income tax You were self-employed and had a net profit for the year reported on Schedule C (Form 1040), Profit or Loss From Business; Schedule C-EZ (Form 1040), Net Profit From Business; or Schedule F (Form 1040), Profit or Loss From Farming. Senior income tax You were a partner with net earnings from self-employment for the year reported on Schedule K-1 (Form 1065), Partner's Share of Income, Deductions, Credits, etc. Senior income tax , box 14, code A. Senior income tax You used one of the optional methods to figure your net earnings from self-employment on Schedule SE. Senior income tax You received wages in 2013 from an S corporation in which you were a more-than-2% shareholder. Senior income tax Health insurance premiums paid or reimbursed by the S corporation are shown as wages on Form W-2, Wage and Tax Statement. Senior income tax The insurance plan must be established, or considered to be established as discussed in the following bullets, under your business. Senior income tax For self-employed individuals filing a Schedule C, C-EZ, or F, a policy can be either in the name of the business or in the name of the individual. Senior income tax For partners, a policy can be either in the name of the partnership or in the name of the partner. Senior income tax You can either pay the premiums yourself or your partnership can pay them and report the premium amounts on Schedule K-1 (Form 1065) as guaranteed payments to be included in your gross income. Senior income tax However, if the policy is in your name and you pay the premiums yourself, the partnership must reimburse you and report the premium amounts on Schedule K-1 (Form 1065) as guaranteed payments to be included in your gross income. Senior income tax Otherwise, the insurance plan will not be considered to be established under your business. Senior income tax For more-than-2% shareholders, a policy can be either in the name of the S corporation or in the name of the shareholder. Senior income tax You can either pay the premiums yourself or your S corporation can pay them and report the premium amounts on Form W-2 as wages to be included in your gross income. Senior income tax However, if the policy is in your name and you pay the premiums yourself, the S corporation must reimburse you and report the premium amounts on Form W-2 as wages to be included in your gross income. Senior income tax Otherwise, the insurance plan will not be considered to be established under your business. Senior income tax Medicare premiums you voluntarily pay to obtain insurance in your name that is similar to qualifying private health insurance can be used to figure the deduction. Senior income tax If you previously filed returns without using Medicare premiums to figure the deduction, you can file timely amended returns to refigure the deduction. Senior income tax For more information, see Form 1040X, Amended U. Senior income tax S. Senior income tax Individual Income Tax Return. Senior income tax Amounts paid for health insurance coverage from retirement plan distributions that were nontaxable because you are a retired public safety officer cannot be used to figure the deduction. Senior income tax Take the deduction on Form 1040, line 29. Senior income tax Qualified long-term care insurance. Senior income tax   You can include premiums paid on a qualified long-term care insurance contract when figuring your deduction. Senior income tax But, for each person covered, you can include only the smaller of the following amounts. Senior income tax The amount paid for that person. Senior income tax The amount shown below. Senior income tax Use the person's age at the end of the tax year. Senior income tax Age 40 or younger–$360 Age 41 to 50–$680 Age 51 to 60–$1,360 Age 61 to 70–$3,640 Age 71 or older–$4,550 Qualified long-term care insurance contract. Senior income tax   A qualified long-term care insurance contract is an insurance contract that only provides coverage of qualified long-term care services. Senior income tax The contract must meet all the following requirements. Senior income tax It must be guaranteed renewable. Senior income tax It must provide that refunds, other than refunds on the death of the insured or complete surrender or cancellation of the contract, and dividends under the contract may be used only to reduce future premiums or increase future benefits. Senior income tax It must not provide for a cash surrender value or other money that can be paid, assigned, pledged, or borrowed. Senior income tax It generally must not pay or reimburse expenses incurred for services or items that would be reimbursed under Medicare, except where Medicare is a secondary payer or the contract makes per diem or other periodic payments without regard to expenses. Senior income tax Qualified long-term care services. Senior income tax   Qualified long-term care services are: Necessary diagnostic, preventive, therapeutic, curing, treating, mitigating, and rehabilitative services, and Maintenance or personal care services. Senior income tax The services must be required by a chronically ill individual and prescribed by a licensed health care practitioner. Senior income tax Worksheet 6-A. Senior income tax Self-Employed Health Insurance Deduction Worksheet Note. Senior income tax Use a separate worksheet for each trade or business under which an insurance plan is established. Senior income tax 1. Senior income tax Enter the total amount paid in 2013 for health insurance coverage established under your business for 2013 for you, your spouse, and your dependents. Senior income tax Your insurance can also cover your child who was under age 27 at the end of 2013, even if the child was not your dependent. Senior income tax But do not include the following. Senior income tax   Amounts for any month you were eligible to participate in a health plan subsidized by your or your spouse's employer or the employer of either your dependent or your child who was under the age of 27 at the end of 2013. Senior income tax Any amounts paid from retirement plan distributions that were nontaxable because you are a retired public safety officer. Senior income tax Any amounts you included on Form 8885, line 4. Senior income tax Any qualified health insurance premiums you paid to “U. Senior income tax S. Senior income tax Treasury-HCTC. Senior income tax ” Any health coverage tax credit advance payments shown in box 1 of Form 1099-H. Senior income tax Any payments for qualified long-term care insurance (see line 2) 1. Senior income tax   2. Senior income tax For coverage under a qualified long-term care insurance contract, enter for each person covered the smaller of the following amounts. Senior income tax       a) Total payments made for that person during the year. Senior income tax       b) The amount shown below. Senior income tax Use the person's age at the end of the tax year. Senior income tax         $360— if that person is age 40 or younger          $680— if age 41 to 50         $1,360— if age 51 to 60         $3,640— if age 61 to 70         $4,550— if age 71 or older         Do not include payments for any month you were eligible to participate in a long-term care insurance plan subsidized by your or your spouse’s employer or the employer of either your dependent or your child who was under the age of 27 at the end of 2013. Senior income tax If more than one person is covered, figure separately the amount to enter for each person. Senior income tax Then enter the total of those amounts 2. Senior income tax   3. Senior income tax Add lines 1 and 2 3. Senior income tax   4. Senior income tax Enter your net profit* and any other earned income** from the trade or business under which the insurance plan is established. Senior income tax Do not include Conservation Reserve Program payments exempt from self-employment tax. Senior income tax If the business is an S corporation, skip to line 11 4. Senior income tax   5. Senior income tax Enter the total of all net profits* from: Schedule C (Form 1040), line 31; Schedule C-EZ (Form 1040), line 3; Schedule F (Form 1040), line 34; or Schedule K-1 (Form 1065), box 14, code A; plus any other income allocable to the profitable businesses. Senior income tax Do not include Conservation Reserve Program payments exempt from self-employment tax. Senior income tax See the Instructions for Schedule SE (Form 1040). Senior income tax Do not include any net losses shown on these schedules. Senior income tax 5. Senior income tax   6. Senior income tax Divide line 4 by line 5 6. Senior income tax   7. Senior income tax Multiply Form 1040, line 27, by the percentage on line 6 7. Senior income tax   8. Senior income tax Subtract line 7 from line 4 8. Senior income tax   9. Senior income tax Enter the amount, if any, from Form 1040, line 28, attributable to the same trade or business in which the insurance plan is established 9. Senior income tax   10. Senior income tax Subtract line 9 from line 8 10. Senior income tax   11. Senior income tax Enter your Medicare wages (Form W-2, box 5) from an S corporation in which you are a more-than-2% shareholder and in which the insurance plan is established 11. Senior income tax   12. Senior income tax Enter any amount from Form 2555, line 45, attributable to the amount entered on line 4 or 11 above, or any amount from Form 2555-EZ, line 18, attributable to the amount entered on line 11 above 12. Senior income tax   13. Senior income tax Subtract line 12 from line 10 or 11, whichever applies 13. Senior income tax   14. Senior income tax Enter the smaller of line 3 or line 13 here and on Form 1040, line 29. Senior income tax Do not include this amount when figuring any medical expense deduction on Schedule A (Form 1040). Senior income tax 14. Senior income tax   * If you used either optional method to figure your net earnings from self-employment from any business, do not enter your net profit from the business. Senior income tax Instead, enter the amount attributable to that business from Schedule SE (Form 1040), Section B, line 4b. Senior income tax * *Earned income includes net earnings and gains from the sale, transfer, or licensing of property you created. Senior income tax However, it does not include capital gain income. Senior income tax Chronically ill individual. Senior income tax   A chronically ill individual is a person who has been certified as one of the following. Senior income tax An individual who has been unable, due to loss of functional capacity for at least 90 days, to perform at least two activities of daily living without substantial assistance from another individual. Senior income tax Activities of daily living are eating, toileting, transferring (general mobility), bathing, dressing, and continence. Senior income tax An individual who requires substantial supervision to be protected from threats to health and safety due to severe cognitive impairment. Senior income tax The certification must have been made by a licensed health care practitioner within the previous 12 months. Senior income tax Benefits received. Senior income tax   For information on excluding benefits you receive from a long-term care contract from gross income, see Publication 525. Senior income tax Other coverage. Senior income tax   You cannot take the deduction for any month you were eligible to participate in any employer (including your spouse's) subsidized health plan at any time during that month, even if you did not actually participate. Senior income tax In addition, if you were eligible for any month or part of a month to participate in any subsidized health plan maintained by the employer of either your dependent or your child who was under age 27 at the end of 2013, do not use amounts paid for coverage for that month to figure the deduction. Senior income tax   These rules are applied separately to plans that provide long-term care insurance and plans that do not provide long-term care insurance. Senior income tax However, any medical insurance payments not deductible on Form 1040, line 29, can be included as medical expenses on Schedule A (Form 1040), Itemized Deductions, if you itemize deductions. Senior income tax Effect on itemized deductions. Senior income tax   Subtract the health insurance deduction from your medical insurance when figuring medical expenses on Schedule A (Form 1040) if you itemize deductions. Senior income tax Effect on self-employment tax. Senior income tax   For tax years beginning before or after 2010, you cannot subtract the self-employed health insurance deduction when figuring net earnings for your self-employment tax from the business under which the insurance plan is established, or considered to be established as discussed earlier. Senior income tax For more information, see Schedule SE (Form 1040). Senior income tax How to figure the deduction. Senior income tax   Generally, you can use the worksheet in the Form 1040 instructions to figure your deduction. Senior income tax However, if any of the following apply, you must use Worksheet 6-A in this chapter. Senior income tax You had more than one source of income subject to self-employment tax. Senior income tax You file Form 2555, Foreign Earned Income, or Form 2555-EZ, Foreign Earned Income Exclusion. Senior income tax You are using amounts paid for qualified long-term care insurance to figure the deduction. Senior income tax If you are claiming the health coverage tax credit, complete Form 8885, Health Coverage Tax Credit, before you figure this deduction. Senior income tax Health coverage tax credit. Senior income tax   You may be able to take this credit only if you were an eligible trade adjustment assistance (TAA) recipient, alternative TAA (ATAA) recipient, reemployment trade adjustment assistance (RTAA) recipient, or Pension Benefit Guaranty Corporation (PBGC) pension recipient. Senior income tax Use Form 8885 to figure the amount, if any, of this credit. Senior income tax   When figuring the amount to enter on line 1 of Worksheet 6-A, do not include the following. Senior income tax Any amounts you included on Form 8885, line 4. Senior income tax Any qualified health insurance premiums you paid to “U. Senior income tax S. Senior income tax Treasury-HCTC. Senior income tax ” Any health coverage tax credit advance payments shown in box 1 of Form 1099-H, Health Coverage Tax Credit (HCTC) Advance Payments. Senior income tax More than one health plan and business. Senior income tax   If you have more than one health plan during the year and each plan is established under a different business, you must use separate worksheets (Worksheet 6-A) to figure each plan's net earnings limit. Senior income tax Include the premium you paid under each plan on line 1 or line 2 of that separate worksheet and your net profit (or wages) from that business on line 4 (or line 11). Senior income tax For a plan that provides long-term care insurance, the total of the amounts entered for each person on line 2 of all worksheets cannot be more than the appropriate limit shown on line 2 for that person. Senior income tax Nondeductible Premiums You cannot deduct premiums on the following kinds of insurance. Senior income tax Self-insurance reserve funds. Senior income tax You cannot deduct amounts credited to a reserve set up for self-insurance. Senior income tax This applies even if you cannot get business insurance coverage for certain business risks. Senior income tax However, your actual losses may be deductible. Senior income tax See Publication 547. Senior income tax Loss of earnings. Senior income tax You cannot deduct premiums for a policy that pays for lost earnings due to sickness or disability. Senior income tax However, see the discussion on overhead insurance, item (8), under Deductible Premiums , earlier. Senior income tax Certain life insurance and annuities. Senior income tax For contracts issued before June 9, 1997, you cannot deduct the premiums on a life insurance policy covering you, an employee, or any person with a financial interest in your business if you are directly or indirectly a beneficiary of the policy. Senior income tax You are included among possible beneficiaries of the policy if the policy owner is obligated to repay a loan from you using the proceeds of the policy. Senior income tax A person has a financial interest in your business if the person is an owner or part owner of the business or has lent money to the business. Senior income tax For contracts issued after June 8, 1997, you generally cannot deduct the premiums on any life insurance policy, endowment contract, or annuity contract if you are directly or indirectly a beneficiary. Senior income tax The disallowance applies without regard to whom the policy covers. Senior income tax Partners. Senior income tax If, as a partner in a partnership, you take out an insurance policy on your own life and name your partners as beneficiaries to induce them to retain their investments in the partnership, you are considered a beneficiary. Senior income tax You cannot deduct the insurance premiums. Senior income tax Insurance to secure a loan. Senior income tax If you take out a policy on your life or on the life of another person with a financial interest in your business to get or protect a business loan, you cannot deduct the premiums as a business expense. Senior income tax Nor can you deduct the premiums as interest on business loans or as an expense of financing loans. Senior income tax In the event of death, the proceeds of the policy are generally not taxed as income even if they are used to liquidate the debt. Senior income tax Capitalized Premiums Under the uniform capitalization rules, you must capitalize the direct costs and part of the indirect costs for certain production or resale activities. Senior income tax Include these costs in the basis of property you produce or acquire for resale, rather than claiming them as a current deduction. Senior income tax You recover the costs through depreciation, amortization, or cost of goods sold when you use, sell, or otherwise dispose of the property. Senior income tax Indirect costs include premiums for insurance on your plant or facility, machinery, equipment, materials, property produced, or property acquired for resale. Senior income tax Uniform capitalization rules. Senior income tax   You may be subject to the uniform capitalization rules if you do any of the following, unless the property is produced for your use other than in a business or an activity carried on for profit. Senior income tax Produce real property or tangible personal property. Senior income tax For this purpose, tangible personal property includes a film, sound recording, video tape, book, or similar property. Senior income tax Acquire property for resale. Senior income tax However, these rules do not apply to the following property. Senior income tax Personal property you acquire for resale if your average annual gross receipts are $10 million or less for the 3 prior tax years. Senior income tax Property you produce if you meet either of the following conditions. Senior income tax Your indirect costs of producing the property are $200,000 or less. Senior income tax You use the cash method of accounting and do not account for inventories. Senior income tax More information. Senior income tax   For more information on these rules, see Uniform Capitalization Rules in Publication 538 and the regulations under Internal Revenue Code section 263A. Senior income tax When To Deduct Premiums You can usually deduct insurance premiums in the tax year to which they apply. Senior income tax Cash method. Senior income tax   If you use the cash method of accounting, you generally deduct insurance premiums in the tax year you actually paid them, even if you incurred them in an earlier year. Senior income tax However, see Prepayment , later. Senior income tax Accrual method. Senior income tax   If you use an accrual method of accounting, you cannot deduct insurance premiums before the tax year in which you incur a liability for them. Senior income tax In addition, you cannot deduct insurance premiums before the tax year in which you actually pay them (unless the exception for recurring items applies). Senior income tax For more information about the accrual method of accounting, see chapter 1. Senior income tax For information about the exception for recurring items, see Publication 538. Senior income tax Prepayment. Senior income tax   You cannot deduct expenses in advance, even if you pay them in advance. Senior income tax This rule applies to any expense paid far enough in advance to, in effect, create an asset with a useful life extending substantially beyond the end of the current tax year. Senior income tax   Expenses such as insurance are generally allocable to a period of time. Senior income tax You can deduct insurance expenses for the year to which they are allocable. Senior income tax Example. Senior income tax In 2013, you signed a 3-year insurance contract. Senior income tax Even though you paid the premiums for 2013, 2014, and 2015 when you signed the contract, you can only deduct the premium for 2013 on your 2013 tax return. Senior income tax You can deduct in 2014 and 2015 the premium allocable to those years. Senior income tax Dividends received. Senior income tax   If you receive dividends from business insurance and you deducted the premiums in prior years, at least part of the dividends generally are income. Senior income tax For more information, see Recovery of amount deducted (tax benefit rule) in chapter 1 under How Much Can I Deduct. Senior income tax Prev  Up  Next   Home   More Online Publications
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Understanding your CP12A Notice

We made changes to correct the Earned Income Credit (EIC) claimed on your tax return.

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  • Review the notice, and compare our changes to the information on your tax return.
  • If you agree with the changes we made, do nothing; you should receive a refund check in 4-6 weeks, as long as you don't owe other tax or debts we're required to collect.
  • If you don't agree, call 1-800-829-8374 to review your account or contact us by mail. Include any correspondence or documentation.

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Answers to Common Questions

How can I find out what caused my tax return to change?
Please contact us at the toll free number listed on the top right corner of your notice for specific information concerning your tax return.

What should I do if I disagree with the changes you made?
If you disagree, contact us at the toll free number listed on the top right corner of your notice.

If you contact us in writing within 60 days of the date of this notice, we'll reverse the changes we made to your account. However, if you're unable to provide us with additional information that justifies the reversal and we believe the reversal is in error, we'll forward your case to examination for audit. This step gives you formal appeal rights, including the right to appeal our decision in court. After we forward your case, the audit staff will contact you within five to six weeks to fully explain the audit process and your rights. If you don't contact us within the 60 day period, you'll lose your right to appeal our decision before payment of tax.

My child is turning 18 this year. Can I still get the Additional Child Tax Credit?
No. Your child must be under the age of 17 at the end of 2010 to qualify for both the Child Tax Credit and the Additional Child Tax Credit.


Tips for next year

Consider filing your taxes electronically. Filing online can help you avoid mistakes and find credits and deductions that you may qualify for. In many cases you can file for free. Learn more about e-file.

Page Last Reviewed or Updated: 19-Feb-2014

The Senior Income Tax

Senior income tax 8. Senior income tax   Distributions and Rollovers Table of Contents DistributionsMinimum Required Distributions No Special 10-Year Tax Option Transfer of Interest in 403(b) ContractAfter-tax contributions. Senior income tax Permissive service credit. Senior income tax Tax-Free RolloversHardship exception to rollover rules. Senior income tax Eligible retirement plans. Senior income tax Nonqualifying distributions. Senior income tax Second rollover. Senior income tax Gift Tax Distributions Permissible distributions. Senior income tax   Generally, a distribution cannot be made from a 403(b) account until the employee: Reaches age 59½, Has a severance from employment, Dies, Becomes disabled, In the case of elective deferrals, encounters financial hardship, or Has a qualified reservist distribution. Senior income tax In most cases, the payments you receive or that are made available to you under your 403(b) account are taxable in full as ordinary income. Senior income tax In general, the same tax rules apply to distributions from 403(b) plans that apply to distributions from other retirement plans. Senior income tax These rules are explained in Publication 575. Senior income tax Publication 575 also discusses the additional tax on early distributions from retirement plans. Senior income tax Retired public safety officers. Senior income tax   If you are an eligible retired public safety officer, distributions of up to $3,000, made directly from your 403(b) plan to pay accident, health, or long-term care insurance, are not included in your taxable income. Senior income tax The premiums can be for you, your spouse, or your dependents. Senior income tax   A public safety officer is a law enforcement officer, fire fighter, chaplain, or member of a rescue squad or ambulance crew. Senior income tax   For additional information, see Publication 575. Senior income tax Distribution for active reservist. Senior income tax   The 10% penalty for early withdrawals will not apply to a qualified reservist distribution attributable to elective deferrals from a 403(b) plan. Senior income tax A qualified reservist distribution is a distribution that is made: To an individual who is a reservist or national guardsman and who was ordered or called to active duty for a period in excess of 179 days or for an indefinite period; and During the period beginning on the date of the order or call to duty and ending at the close of the active duty period. Senior income tax Minimum Required Distributions You must receive all, or at least a certain minimum, of your interest accruing after 1986 in the 403(b) plan by April 1 of the calendar year following the later of the calendar year in which you become age 70½, or the calendar year in which you retire. Senior income tax Check with your employer, plan administrator, or provider to find out whether this rule also applies to pre-1987 accruals. Senior income tax If not, a minimum amount of these accruals must begin to be distributed by the later of the end of the calendar year in which you reach age 75 or April 1 of the calendar year following retirement. Senior income tax For each year thereafter, the minimum distribution must be made by the last day of the year. Senior income tax If you do not receive the required minimum distribution, you are subject to a nondeductible 50% excise tax on the difference between the required minimum distribution and the amount actually distributed. Senior income tax No Special 10-Year Tax Option A distribution from a 403(b) plan does not qualify as a lump-sum distribution. Senior income tax This means you cannot use the special 10-year tax option to calculate the taxable portion of a 403(b) distribution. Senior income tax For more information, see Publication 575. Senior income tax Transfer of Interest in 403(b) Contract Contract exchanges. Senior income tax   If you transfer all or part of your interest from a 403(b) contract to another 403(b) contract (held in the same plan), the transfer is tax free, and is referred to as a contract exchange. Senior income tax This was previously known as a 90-24 transfer. Senior income tax A contract exchange is similar to a 90-24 transfer with one major difference. Senior income tax Previously, you were able to accomplish the transfer without your employer’s involvement. Senior income tax After September 24, 2007, all such transfers are accomplished through a contract exchange requiring your employer’s involvement. Senior income tax In addition, the plan must provide for the exchange and the transferred interest must be subject to the same or stricter distribution restrictions. Senior income tax Finally, your accumulated benefit after the exchange must be equal to what it was before the exchange. Senior income tax   Transfers that do not satisfy this rule are plan distributions and are generally taxable as ordinary income. Senior income tax Plan-to-plan transfers. Senior income tax   You may also transfer part or all of your interest from a 403(b) plan to another 403(b) plan if you are an employee of (or were formerly employed by) the employer of the plan to which you would like to transfer. Senior income tax Both the initial plan and the receiving plan must provide for transfers. Senior income tax Your accumulated benefit after the transfer must be at least equal to what it was before the transfer. Senior income tax The new plan’s restrictions on distributions must be the same or stricter than those of the original plan. Senior income tax Tax-free transfers for certain cash distributions. Senior income tax   A tax-free transfer may also apply to a cash distribution of your 403(b) account from an insurance company that is subject to a rehabilitation, conservatorship, insolvency, or similar state proceeding. Senior income tax To receive tax-free treatment, you must do all of the following: Withdraw all the cash to which you are entitled in full settlement of your contract rights or, if less, the maximum permitted by the state. Senior income tax Reinvest the cash distribution in a single policy or contract issued by another insurance company or in a single custodial account subject to the same or stricter distribution restrictions as the original contract not later than 60 days after you receive the cash distribution. Senior income tax Assign all future distribution rights to the new contract or account for investment in that contract or account if you received an amount that is less than what you are entitled to because of state restrictions. Senior income tax   In addition to the preceding requirements, you must provide the new insurer with a written statement containing all of the following information: The gross amount of cash distributed under the old contract. Senior income tax The amount of cash reinvested in the new contract. Senior income tax Your investment in the old contract on the date you receive your first cash distribution. Senior income tax   Also, you must attach the following items to your timely filed income tax return in the year you receive the first distribution of cash. Senior income tax A copy of the statement you gave the new insurer. Senior income tax A statement that includes: The words ELECTION UNDER REV. Senior income tax PROC. Senior income tax 92-44, The name of the company that issued the new contract, and The new policy number. Senior income tax Direct trustee-to-trustee transfer. Senior income tax   If you make a direct trustee-to-trustee transfer, from your governmental 403(b) account to a defined benefit governmental plan, it may not be includible in gross income. Senior income tax   The transfer amount is not includible in gross income if it is made to: Purchase permissive service credits, or Repay contributions and earnings that were previously refunded under a forfeiture of service credit under the plan, or under another plan maintained by a state or local government employer within the same state. Senior income tax After-tax contributions. Senior income tax   For distributions beginning after December 31, 2006, after-tax contributions can be rolled over between a 403(b) plan and a defined benefit plan, IRA, or a defined contribution plan. Senior income tax If the rollover is to or from a 403(b) plan, it must occur through a direct trustee-to-trustee transfer. Senior income tax Permissive service credit. Senior income tax   A permissive service credit is credit for a period of service recognized by a defined benefit governmental plan only if you voluntarily contribute to the plan an amount that does not exceed the amount necessary to fund the benefit attributable to the period of service and the amount contributed is in addition to the regular employee contribution, if any, under the plan. Senior income tax   A permissive service credit may also include service credit for up to 5 years where there is no performance of service, or service credited to provide an increased benefit for service credit which a participant is receiving under the plan. Senior income tax   Check with your plan administrator as to the type and extent of service that may be purchased by this transfer. Senior income tax Tax-Free Rollovers You can generally roll over tax free all or any part of a distribution from a 403(b) plan to a traditional IRA or a non-Roth eligible retirement plan, except for any nonqualifying distributions, described later. Senior income tax You may also roll over any part of a distribution from a 403(b) plan by converting it through a direct rollover, described below, to a Roth IRA. Senior income tax Conversion amounts are generally includible in your taxable income in the year of the distribution from your 403(b) account. Senior income tax See Publication 590 for more information about conversion into a Roth IRA. Senior income tax Note. Senior income tax A participant is required to roll over distribution amounts received within 60 days in order for the amount to be treated as nontaxable. Senior income tax Distribution amounts that are rolled over within the 60 days are not subject to the 10% early distribution penalty. Senior income tax Rollovers to and from 403(b) plans. Senior income tax   You can generally roll over tax free all or any part of a distribution from an eligible retirement plan to a 403(b) plan. Senior income tax Beginning January 1, 2008, distributions from tax-qualified retirement plans and tax-sheltered annuities can be converted by making a direct rollover into a Roth IRA subject to the restrictions that currently apply to rollovers from a traditional IRA into a Roth IRA. Senior income tax Converted amounts are generally includible in your taxable income in the year of the distribution from your 403(b) account. Senior income tax See Publication 590 for more information on conversion into a Roth IRA. Senior income tax   If a distribution includes both pre-tax contributions and after-tax contributions, the portion of the distribution that is rolled over is treated as consisting first of pre-tax amounts (contributions and earnings that would be includible in income if no rollover occurred). Senior income tax This means that if you roll over an amount that is at least as much as the pre-tax portion of the distribution, you do not have to include any of the distribution in income. Senior income tax   For more information on rollovers and eligible retirement plans, see Publication 575. Senior income tax If you roll over money or other property from a 403(b) plan to an eligible retirement plan, see Publication 575 for information about possible effects on later distributions from the eligible retirement plan. Senior income tax Hardship exception to rollover rules. Senior income tax   The IRS may waive the 60-day rollover period if the failure to waive such requirement would be against equity or good conscience, including cases of casualty, disaster, or other events beyond the reasonable control of an individual. Senior income tax   To obtain a hardship exception, you must apply to the IRS for a waiver of the 60-day rollover requirement. Senior income tax You apply for the waiver by following the general instructions used in requesting a letter ruling. Senior income tax These instructions are stated in Revenue Procedure 2013-4, 2013-1 I. Senior income tax R. Senior income tax B. Senior income tax 126 available at www. Senior income tax irs. Senior income tax gov/irb/2013-01_IRB/ar09. Senior income tax html, or see the latest annual update. Senior income tax You must also pay a user fee with the application. Senior income tax The user fee for a rollover that is less than $50,000 is $500. Senior income tax For rollovers that are $50,000 or more, see Revenue Procedure 2013-8, 2013-1 I. Senior income tax R. Senior income tax B. Senior income tax 237 available at www. Senior income tax irs. Senior income tax gov/irb/2013-01_IRB/ar13. Senior income tax html, or see the latest annual update. Senior income tax   In determining whether to grant a waiver, the IRS will consider all relevant facts and circumstances, including: Whether errors were made by the financial institution; Whether you were unable to complete the rollover due to death, disability, hospitalization, incarceration, restrictions imposed by a foreign country, or postal error; Whether you used the amount distributed (for example, in the case of payment by check, whether you cashed the check); and How much time has passed since the date of distribution. Senior income tax   For additional information on rollovers, see Publication 590. Senior income tax Eligible retirement plans. Senior income tax   The following are considered eligible retirement plans. Senior income tax Individual retirement arrangements. Senior income tax Roth IRA. Senior income tax 403(b) plans. Senior income tax Government eligible 457 plans. Senior income tax Qualified retirement plans. Senior income tax  If the distribution is from a designated Roth account, then the only eligible retirement plan is another designated Roth account or a Roth IRA. Senior income tax Nonqualifying distributions. Senior income tax   You cannot roll over tax free: Minimum required distributions (generally required to begin at age 70½), Substantially equal payments over your life or life expectancy, Substantially equal payments over the joint lives or life expectancies of your beneficiary and you, Substantially equal payments for a period of 10 years or more, Hardship distributions, or Corrective distributions of excess contributions or excess deferrals, and any income allocable to the excess, or excess annual additions and any allocable gains. Senior income tax Rollover of nontaxable amounts. Senior income tax    You may be able to roll over the nontaxable part of a distribution (such as your after-tax contributions) made to another eligible retirement plan, traditional IRA, or Roth IRA. Senior income tax The transfer must be made either through a direct rollover to an eligible plan that separately accounts for the taxable and nontaxable parts of the rollover or through a rollover to a traditional IRA or Roth IRA. Senior income tax   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. Senior income tax Direct rollovers of 403(b) plan distributions. Senior income tax   You have the option of having your 403(b) plan make the rollover directly to a traditional IRA, Roth IRA, or new plan. Senior income tax Before you receive a distribution, your plan will give you information on this. Senior income tax It is generally to your advantage to choose this option because your plan will not withhold tax on the distribution if you choose it. Senior income tax Distribution received by you. Senior income tax   If you receive a distribution that qualifies to be rolled over, you can roll over all or any part of the distribution. Senior income tax Generally, you will receive only 80% of the distribution because 20% must be withheld. Senior income tax If you roll over only the 80% you receive, you must pay tax on the 20% you did not roll over. Senior income tax You can replace the 20% that was withheld with other money within the 60-day period to make a 100% rollover. Senior income tax Voluntary deductible contributions. Senior income tax   For tax years 1982 through 1986, employees could make deductible contributions to a 403(b) plan under the individual retirement arrangement (IRA) rules instead of deducting contributions to a traditional IRA. Senior income tax   If you made voluntary deductible contributions to a 403(b) plan under these traditional IRA rules, the distribution of all or part of the accumulated deductible contributions may be rolled over if it otherwise qualifies as a distribution you can roll over. Senior income tax Accumulated deductible contributions are the deductible contributions: Plus Income allocable to the contributions, Gain allocable to the contributions, and Minus Expenses and losses allocable to the contributions, and Distributions from the contributions, income, or gain. Senior income tax Excess employer contributions. Senior income tax   The portion of a distribution from a 403(b) plan transferred to a traditional IRA that was previously included in income as excess employer contributions (discussed earlier) is not an eligible rollover distribution. Senior income tax   Its transfer does not affect the rollover treatment of the eligible portion of the transferred amounts. Senior income tax However, the ineligible portion is subject to the traditional IRA contribution limits and may create an excess IRA contribution subject to a 6% excise tax (see chapter 1 of Publication 590). Senior income tax Qualified domestic relations order. Senior income tax   You may be able to roll over tax free all or any part of an eligible rollover distribution from a 403(b) plan that you receive under a qualified domestic relations order (QDRO). Senior income tax If you receive the interest in the 403(b) plan as an employee's spouse or former spouse under a QDRO, all of the rollover rules apply to you as if you were the employee. Senior income tax You can roll over your interest in the plan to a traditional IRA or another 403(b) plan. Senior income tax For more information on the treatment of an interest received under a QDRO, see Publication 575. Senior income tax Spouses of deceased employees. Senior income tax   If you are the spouse of a deceased employee, you can roll over the qualifying distribution attributable to the employee. Senior income tax You can make the rollover to any eligible retirement plan. Senior income tax   After you roll money and other property over from a 403(b) plan to an eligible retirement plan, and you take a distribution from that plan, you will not be eligible to receive the capital gain treatment or the special averaging treatment for the distribution. Senior income tax Second rollover. Senior income tax   If you roll over a qualifying distribution to a traditional IRA, you can, if certain conditions are satisfied, later roll the distribution into another 403(b) plan. Senior income tax For more information, see IRA as a holding account (conduit IRA) for rollovers to other eligible plans in chapter 1 of Publication 590. Senior income tax Nonspouse beneficiary. Senior income tax   A nonspouse beneficiary may make a direct rollover of a distribution from a 403(b) plan of a deceased participant if the rollover is a direct transfer to an inherited IRA established to receive the distribution. Senior income tax If the rollover is a direct trustee-to-trustee transfer to an IRA established to receive the distribution: The transfer will be treated as an eligible rollover distribution. Senior income tax The IRA will be considered an inherited account. Senior income tax The required minimum distribution rules that apply in instances where the participant dies before the entire interest is distributed will apply to the transferred IRA. Senior income tax    For more information on IRAs, see Publication 590. Senior income tax Frozen deposits. Senior income tax   The 60-day period usually allowed for completing a rollover is extended for any time that the amount distributed is a frozen deposit in a financial institution. Senior income tax The 60-day period cannot end earlier than 10 days after the deposit ceases to be a frozen deposit. Senior income tax   A frozen deposit is any deposit that on any day during the 60-day period cannot be withdrawn because: The financial institution is bankrupt or insolvent, or The state where the institution is located has placed limits on withdrawals because one or more banks in the state are (or are about to be) bankrupt or insolvent. Senior income tax Gift Tax If, by choosing or not choosing an election, or option, you provide an annuity for your beneficiary at or after your death, you may have made a taxable gift equal to the value of the annuity. Senior income tax Joint and survivor annuity. Senior income tax   If the gift is an interest in a joint and survivor annuity where only you and your spouse have the right to receive payments, the gift will generally be treated as qualifying for the unlimited marital deduction. Senior income tax More information. Senior income tax   For information on the gift tax, see Publication 559, Survivors, Executors, and Administrators. Senior income tax Prev  Up  Next   Home   More Online Publications