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Turbo Tax Free Military

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Turbo Tax Free Military

Turbo tax free military 6. Turbo tax free military   Basis of Assets Table of Contents Introduction Topics - This chapter discusses: Useful Items - You may want to see: Cost BasisReal Property Allocating the Basis Uniform Capitalization Rules Adjusted BasisIncreases to Basis Decreases to Basis Basis Other Than CostTaxable Exchanges Involuntary Conversions Nontaxable Exchanges Property Received as a Gift Property Transferred From a Spouse Inherited Property Property Distributed From a Partnership or Corporation Introduction Your basis is the amount of your investment in property for tax purposes. Turbo tax free military Use basis to figure the gain or loss on the sale, exchange, or other disposition of property. Turbo tax free military Also use basis to figure depreciation, amortization, depletion, and casualty losses. Turbo tax free military If you use property for both business or investment purposes and for personal purposes, you must allocate the basis based on the use. Turbo tax free military Only the basis allocated to the business or investment use of the property can be depreciated. Turbo tax free military Your original basis in property is adjusted (increased or decreased) by certain events. Turbo tax free military For example, if you make improvements to the property, increase your basis. Turbo tax free military If you take deductions for depreciation, or casualty losses, or claim certain credits, reduce your basis. Turbo tax free military Keep accurate records of all items that affect the basis of your assets. Turbo tax free military For information on keeping records, see chapter 1. Turbo tax free military Topics - This chapter discusses: Cost basis Adjusted basis Basis other than cost Useful Items - You may want to see: Publication 535 Business Expenses 544 Sales and Other Dispositions of Assets 551 Basis of Assets 946 How To Depreciate Property See chapter 16 for information about getting publications and forms. Turbo tax free military Cost Basis The basis of property you buy is usually its cost. Turbo tax free military Cost is the amount you pay in cash, debt obligations, other property, or services. Turbo tax free military Your cost includes amounts you pay for sales tax, freight, installation, and testing. Turbo tax free military The basis of real estate and business assets will include other items, discussed later. Turbo tax free military Basis generally does not include interest payments. Turbo tax free military However, see Carrying charges and Capitalized interest in chapter 4 of Publication 535. Turbo tax free military You also may have to capitalize (add to basis) certain other costs related to buying or producing property. Turbo tax free military Under the uniform capitalization rules, discussed later, you may have to capitalize direct costs and certain indirect costs of producing property. Turbo tax free military Loans with low or no interest. Turbo tax free military   If you buy property on a time-payment plan that charges little or no interest, the basis of your property is your stated purchase price minus the amount considered to be unstated interest. Turbo tax free military You generally have unstated interest if your interest rate is less than the applicable federal rate. Turbo tax free military See the discussion of unstated interest in Publication 537, Installment Sales. Turbo tax free military Real Property Real property, also called real estate, is land and generally anything built on, growing on, or attached to land. Turbo tax free military If you buy real property, certain fees and other expenses you pay are part of your cost basis in the property. Turbo tax free military Some of these expenses are discussed next. Turbo tax free military Lump sum purchase. Turbo tax free military   If you buy improvements, such as buildings, and the land on which they stand for a lump sum, allocate your cost basis between the land and improvements. Turbo tax free military Allocate the cost basis according to the respective fair market values (FMVs) of the land and improvements at the time of purchase. Turbo tax free military Figure the basis of each asset by multiplying the lump sum by a fraction. Turbo tax free military The numerator is the FMV of that asset and the denominator is the FMV of the whole property at the time of purchase. Turbo tax free military Fair market value (FMV). Turbo tax free military   FMV is the price at which property would change hands between a willing buyer and a willing seller, neither having to buy or sell, and both having reasonable knowledge of all necessary facts. Turbo tax free military Sales of similar property on or about the same date may help in figuring the FMV of the property. Turbo tax free military If you are not certain of the FMV of the land and improvements, you can allocate the basis according to their assessed values for real estate tax purposes. Turbo tax free military Real estate taxes. Turbo tax free military   If you pay the real estate taxes the seller owed on real property you bought, and the seller did not reimburse you, treat those taxes as part of your basis. Turbo tax free military   If you reimburse the seller for taxes the seller paid for you, you generally can deduct that amount as a tax expense. Turbo tax free military Whether or not you reimburse the seller, do not include that amount in the basis of your property. Turbo tax free military Settlement costs. Turbo tax free military   Your basis includes the settlement fees and closing costs for buying the property. Turbo tax free military See Publication 551 for a detailed list of items you can and cannot include in basis. Turbo tax free military   Do not include fees and costs for getting a loan on the property. Turbo tax free military Also, do not include amounts placed in escrow for the future payment of items such as taxes and insurance. Turbo tax free military Points. Turbo tax free military   If you pay points to get a loan (including a mortgage, second mortgage, or line-of-credit), do not add the points to the basis of the related property. Turbo tax free military You may be able to deduct the points currently or over the term of the loan. Turbo tax free military For more information about deducting points, see Points in chapter 4 of Publication 535. Turbo tax free military Assumption of a mortgage. Turbo tax free military   If you buy property and assume (or buy the property subject to) an existing mortgage, your basis includes the amount you pay for the property plus the amount you owe on the mortgage. Turbo tax free military Example. Turbo tax free military If you buy a farm for $100,000 cash and assume a mortgage of $400,000, your basis is $500,000. Turbo tax free military Constructing assets. Turbo tax free military   If you build property or have assets built for you, your expenses for this construction are part of your basis. Turbo tax free military Some of these expenses include the following costs: Land, Labor and materials, Architect's fees, Building permit charges, Payments to contractors, Payments for rental equipment, and Inspection fees. Turbo tax free military   In addition, if you use your own employees, farm materials, and equipment to build an asset, do not deduct the following expenses. Turbo tax free military You must capitalize them (include them in the asset's basis). Turbo tax free military Employee wages paid for the construction work, reduced by any employment credits allowed. Turbo tax free military Depreciation on equipment you own while it is used in the construction. Turbo tax free military Operating and maintenance costs for equipment used in the construction. Turbo tax free military The cost of business supplies and materials used in the construction. Turbo tax free military    Do not include the value of your own labor, or any other labor you did not pay for, in the basis of any property you construct. Turbo tax free military Allocating the Basis In some instances, the rules for determining basis apply to a group of assets acquired in the same transaction or to property that consists of separate items. Turbo tax free military To determine the basis of these assets or separate items, there must be an allocation of basis. Turbo tax free military Group of assets acquired. Turbo tax free military   If you buy multiple assets for a lump sum, allocate the amount you pay among the assets. Turbo tax free military Use this allocation to figure your basis for depreciation and gain or loss on a later disposition of any of these assets. Turbo tax free military You and the seller may agree in the sales contract to a specific allocation of the purchase price among the assets. Turbo tax free military If this allocation is based on the value of each asset and you and the seller have adverse tax interests, the allocation generally will be accepted. Turbo tax free military Farming business acquired. Turbo tax free military   If you buy a group of assets that makes up a farming business, there are special rules you must use to allocate the purchase price among the assets. Turbo tax free military Generally, reduce the purchase price by any cash received. Turbo tax free military Allocate the remaining purchase price to the other business assets received in proportion to (but not more than) their FMV and in a certain order. Turbo tax free military See Trade or Business Acquired under Allocating the Basis in Publication 551 for more information. Turbo tax free military Transplanted embryo. Turbo tax free military   If you buy a cow that is pregnant with a transplanted embryo, allocate to the basis of the cow the part of the purchase price equal to the FMV of the cow without the implant. Turbo tax free military Allocate the rest of the purchase price to the basis of the calf. Turbo tax free military Neither the cost allocated to the cow nor the cost allocated to the calf is deductible as a current business expense. Turbo tax free military Uniform Capitalization Rules Under the uniform capitalization rules, you must include certain direct and indirect costs in the basis of property you produce or in your inventory costs, rather than claim them as a current deduction. Turbo tax free military You recover these costs through depreciation, amortization, or cost of goods sold when you use, sell, or otherwise dispose of the property. Turbo tax free military Generally, you are subject to the uniform capitalization rules if you do any of the following: Produce real or tangible personal property, or Acquire property for resale. Turbo tax free military However, this rule does not apply to personal property if your average annual gross receipts for the 3-tax-year period ending with the year preceding the current tax year are $10 million or less. Turbo tax free military You produce property if you construct, build, install, manufacture, develop, improve, or create the property. Turbo tax free military You are not subject to the uniform capitalization rules if the property is produced for personal use. Turbo tax free military In a farming business, you produce property if you raise or grow any agricultural or horticultural commodity, including plants and animals. Turbo tax free military Plants. Turbo tax free military   A plant produced in a farming business includes the following items: A fruit, nut, or other crop-bearing tree; An ornamental tree; A vine; A bush; Sod; and The crop or yield of a plant that will have more than one crop or yield. Turbo tax free military Animals. Turbo tax free military   An animal produced in a farming business includes any stock, poultry or other bird, and fish or other sea life. Turbo tax free military The direct and indirect costs of producing plants or animals include preparatory costs and preproductive period costs. Turbo tax free military Preparatory costs include the acquisition costs of the seed, seedling, plant, or animal. Turbo tax free military For plants, preproductive period costs include the costs of items such as irrigation, pruning, frost protection, spraying, and harvesting. Turbo tax free military For animals, preproductive period costs include the costs of items such as feed, maintaining pasture or pen areas, breeding, veterinary services, and bedding. Turbo tax free military Exceptions. Turbo tax free military   In a farming business, the uniform capitalization rules do not apply to: Any animal, Any plant with a preproductive period of 2 years or less, or Any costs of replanting certain plants lost or damaged due to casualty. Turbo tax free military   Exceptions (1) and (2) do not apply to a corporation, partnership, or tax shelter required to use an accrual method of accounting. Turbo tax free military See Accrual Method Required under Accounting Methods in chapter 2. Turbo tax free military   In addition, you can elect not to use the uniform capitalization rules for plants with a preproductive period of more than 2 years. Turbo tax free military If you make this election, special rules apply. Turbo tax free military This election cannot be made by a corporation, partnership, or tax shelter required to use an accrual method of accounting. Turbo tax free military This election also does not apply to any costs incurred for the planting, cultivation, maintenance, or development of any citrus or almond grove (or any part thereof) within the first 4 years the trees were planted. Turbo tax free military    If you elect not to use the uniform capitalization rules, you must use the alternative depreciation system for all property used in any of your farming businesses and placed in service in any tax year during which the election is in effect. Turbo tax free military See chapter 7, for additional information on depreciation. Turbo tax free military Example. Turbo tax free military You grow trees that have a preproductive period of more than 2 years. Turbo tax free military The trees produce an annual crop. Turbo tax free military You are an individual and the uniform capitalization rules apply to your farming business. Turbo tax free military You must capitalize the direct costs and an allocable part of indirect costs incurred due to the production of the trees. Turbo tax free military You are not required to capitalize the costs of producing the annual crop because its preproductive period is 2 years or less. Turbo tax free military Preproductive period of more than 2 years. Turbo tax free military   The preproductive period of plants grown in commercial quantities in the United States is based on their nationwide weighted average preproductive period. Turbo tax free military Plants producing the crops or yields shown in Table 6-1 have a nationwide weighted average preproductive period of more than 2 years. Turbo tax free military Other plants (not shown in Table 6-1) may also have a nationwide weighted average preproductive period of more than 2 years. Turbo tax free military More information. Turbo tax free military   For more information on the uniform capitalization rules that apply to property produced in a farming business, see Regulations section 1. Turbo tax free military 263A-4. Turbo tax free military Table 6-1. Turbo tax free military Plants With a Preproductive Period of More Than 2 Years Plants producing the following crops or yields have a nationwide weighted average preproductive period of more than 2 years. Turbo tax free military Almonds Apples Apricots Avocados Blueberries Cherries Chestnuts Coffee beans Currants Dates Figs Grapefruit Grapes Guavas Kiwifruit Kumquats Lemons Limes Macadamia nuts Mangoes Nectarines Olives Oranges Peaches Pears Pecans Persimmons Pistachio nuts Plums Pomegranates Prunes Tangelos Tangerines Tangors Walnuts Adjusted Basis Before figuring gain or loss on a sale, exchange, or other disposition of property or figuring allowable depreciation, depletion, or amortization, you must usually make certain adjustments to the cost basis or basis other than cost (discussed later) of the property. Turbo tax free military The adjustments to the original basis are increases or decreases to the cost basis or other basis which result in the adjusted basis of the property. Turbo tax free military Increases to Basis Increase the basis of any property by all items properly added to a capital account. Turbo tax free military These include the cost of any improvements having a useful life of more than 1 year. Turbo tax free military The following costs increase the basis of property. Turbo tax free military The cost of extending utility service lines to property. Turbo tax free military Legal fees, such as the cost of defending and perfecting title. Turbo tax free military Legal fees for seeking a decrease in an assessment levied against property to pay for local improvements. Turbo tax free military Assessments for items such as paving roads and building ditches that increase the value of the property assessed. Turbo tax free military Do not deduct these expenses as taxes. Turbo tax free military However, you can deduct as taxes amounts assessed for maintenance or repairs, or for meeting interest charges related to the improvements. Turbo tax free military If you make additions or improvements to business property, depreciate the basis of each addition or improvement as separate depreciable property using the rules that would apply to the original property if you had placed it in service at the same time you placed the addition or improvement in service. Turbo tax free military See chapter 7. Turbo tax free military Deducting vs. Turbo tax free military capitalizing costs. Turbo tax free military   Do not add to your basis costs you can deduct as current expenses. Turbo tax free military For example, amounts paid for incidental repairs or maintenance are deductible as business expenses and are not added to basis. Turbo tax free military However, you can elect either to deduct or to capitalize certain other costs. Turbo tax free military See chapter 7 in Publication 535. Turbo tax free military Decreases to Basis The following are some items that reduce the basis of property. Turbo tax free military Section 179 deduction. Turbo tax free military Deductions previously allowed or allowable for amortization, depreciation, and depletion. Turbo tax free military Alternative motor vehicle credit. Turbo tax free military See Form 8910. Turbo tax free military Alternative fuel vehicle refueling property credit. Turbo tax free military See Form 8911. Turbo tax free military Residential energy efficient property credits. Turbo tax free military See Form 5695. Turbo tax free military Investment credit (part or all) taken. Turbo tax free military Casualty and theft losses and insurance reimbursements. Turbo tax free military Payments you receive for granting an easement. Turbo tax free military Exclusion from income of subsidies for energy conservation measures. Turbo tax free military Certain canceled debt excluded from income. Turbo tax free military Rebates from a manufacturer or seller. Turbo tax free military Patronage dividends received from a cooperative association as a result of a purchase of property. Turbo tax free military See Patronage Dividends in chapter 3. Turbo tax free military Gas-guzzler tax. Turbo tax free military See Form 6197. Turbo tax free military Some of these items are discussed next. Turbo tax free military For a more detailed list of items that decrease basis, see section 1016 of the Internal Revenue Code and Publication 551. Turbo tax free military Depreciation and section 179 deduction. Turbo tax free military   The adjustments you must make to the basis of the property if you take the section 179 deduction or depreciate the property are explained next. Turbo tax free military For more information on these deductions, see chapter 7. Turbo tax free military Section 179 deduction. Turbo tax free military   If you take the section 179 expense deduction for all or part of the cost of qualifying business property, decrease the basis of the property by the deduction. Turbo tax free military Depreciation. Turbo tax free military   Decrease the basis of property by the depreciation you deducted or could have deducted on your tax returns under the method of depreciation you chose. Turbo tax free military If you took less depreciation than you could have under the method chosen, decrease the basis by the amount you could have taken under that method. Turbo tax free military If you did not take a depreciation deduction, reduce the basis by the full amount of the depreciation you could have taken. Turbo tax free military   If you deducted more depreciation than you should have, decrease your basis by the amount you should have deducted plus the part of the excess depreciation you deducted that actually reduced your tax liability for any year. Turbo tax free military   See chapter 7 for information on figuring the depreciation you should have claimed. Turbo tax free military   In decreasing your basis for depreciation, take into account the amount deducted on your tax returns as depreciation and any depreciation you must capitalize under the uniform capitalization rules. Turbo tax free military Casualty and theft losses. Turbo tax free military   If you have a casualty or theft loss, decrease the basis of the property by any insurance or other reimbursement. Turbo tax free military Also, decrease it by any deductible loss not covered by insurance. Turbo tax free military See chapter 11 for information about figuring your casualty or theft loss. Turbo tax free military   You must increase your basis in the property by the amount you spend on clean-up costs (such as debris removal) and repairs that restore the property to its pre-casualty condition. Turbo tax free military To make this determination, compare the repaired property to the property before the casualty. Turbo tax free military Easements. Turbo tax free military   The amount you receive for granting an easement is usually considered to be proceeds from the sale of an interest in the real property. Turbo tax free military It reduces the basis of the affected part of the property. Turbo tax free military If the amount received is more than the basis of the part of the property affected by the easement, reduce your basis in that part to zero and treat the excess as a recognized gain. Turbo tax free military See Easements and rights-of-way in chapter 3. Turbo tax free military Exclusion from income of subsidies for energy conservation measures. Turbo tax free military   You can exclude from gross income any subsidy you received from a public utility company for the purchase or installation of an energy conservation measure for a dwelling unit. Turbo tax free military Reduce the basis of the property by the excluded amount. Turbo tax free military Canceled debt excluded from income. Turbo tax free military   If a debt you owe is canceled or forgiven, other than as a gift or bequest, you generally must include the canceled amount in your gross income for tax purposes. Turbo tax free military A debt includes any indebtedness for which you are liable or which attaches to property you hold. Turbo tax free military   You can exclude your canceled debt from income if the debt is any of the following. Turbo tax free military Debt canceled in a bankruptcy case or when you are insolvent. Turbo tax free military Qualified farm debt. Turbo tax free military Qualified real property business debt (provided you are not a C corporation). Turbo tax free military Qualified principal residence indebtedness. Turbo tax free military Discharge of certain indebtedness of a qualified individual because of Midwestern disasters. Turbo tax free military If you exclude canceled debt described in (1) or (2), you may have to reduce the basis of your depreciable and nondepreciable property. Turbo tax free military If you exclude canceled debt described in (3), you must only reduce the basis of your depreciable property by the excluded amount. Turbo tax free military   For more information about canceled debt in a bankruptcy case, see Publication 908, Bankruptcy Tax Guide. Turbo tax free military For more information about insolvency and canceled debt that is qualified farm debt or qualified principal residence indebtedness, see chapter 3. Turbo tax free military For more information about qualified real property business debt, see Publication 334, Tax Guide for Small Business. Turbo tax free military For more information about canceled debt in Midwestern disaster areas, see Publication 4492-B, Information for Affected Taxpayers in the Midwestern Disaster Areas. Turbo tax free military Basis Other Than Cost There are times when you cannot use cost as basis. Turbo tax free military In these situations, the fair market value or the adjusted basis of property may be used. Turbo tax free military Examples are discussed next. Turbo tax free military Property changed from personal to business or rental use. Turbo tax free military   When you hold property for personal use and then change it to business use or use it to produce rent, you must figure its basis for depreciation. Turbo tax free military An example of changing property from personal to business use would be changing the use of your pickup truck that you originally purchased for your personal use to use in your farming business. Turbo tax free military   The basis for depreciation is the lesser of: The FMV of the property on the date of the change, or Your adjusted basis on the date of the change. Turbo tax free military   If you later sell or dispose of this property, the basis you use will depend on whether you are figuring a gain or loss. Turbo tax free military The basis for figuring a gain is your adjusted basis in the property when you sell the property. Turbo tax free military Figure the basis for a loss starting with the smaller of your adjusted basis or the FMV of the property at the time of the change to business or rental use. Turbo tax free military Then make adjustments (increases and decreases) for the period after the change in the property's use, as discussed earlier under Adjusted Basis . Turbo tax free military Property received for services. Turbo tax free military   If you receive property for services, include the property's FMV in income. Turbo tax free military The amount you include in income becomes your basis. Turbo tax free military If the services were performed for a price agreed on beforehand, it will be accepted as the FMV of the property if there is no evidence to the contrary. Turbo tax free military Example. Turbo tax free military George Smith is an accountant and also operates a farming business. Turbo tax free military George agreed to do some accounting work for his neighbor in exchange for a dairy cow. Turbo tax free military The accounting work and the cow are each worth $1,500. Turbo tax free military George must include $1,500 in income for his accounting services. Turbo tax free military George's basis in the cow is $1,500. Turbo tax free military Taxable Exchanges A taxable exchange is one in which the gain is taxable, or the loss is deductible. Turbo tax free military A taxable gain or deductible loss also is known as a recognized gain or loss. Turbo tax free military A taxable exchange occurs when you receive cash or get property that is not similar or related in use to the property exchanged. Turbo tax free military If you receive property in exchange for other property in a taxable exchange, the basis of the property you receive is usually its FMV at the time of the exchange. Turbo tax free military Example. Turbo tax free military You trade a tract of farmland with an adjusted basis of $2,000 for a tractor that has an FMV of $6,000. Turbo tax free military You must report a taxable gain of $4,000 for the land. Turbo tax free military The tractor has a basis of $6,000. Turbo tax free military Involuntary Conversions If you receive property as a result of an involuntary conversion, such as a casualty, theft, or condemnation, figure the basis of the replacement property you receive using the basis of the converted property. Turbo tax free military Similar or related property. Turbo tax free military   If the replacement property is similar or related in service or use to the converted property, the replacement property's basis is the same as the old property's basis on the date of the conversion. Turbo tax free military However, make the following adjustments. Turbo tax free military Decrease the basis by the following amounts. Turbo tax free military Any loss you recognize on the involuntary conversion. Turbo tax free military Any money you receive that you do not spend on similar property. Turbo tax free military Increase the basis by the following amounts. Turbo tax free military Any gain you recognize on the involuntary conversion. Turbo tax free military Any cost of acquiring the replacement property. Turbo tax free military Money or property not similar or related. Turbo tax free military   If you receive money or property not similar or related in service or use to the converted property and you buy replacement property similar or related in service or use to the converted property, the basis of the replacement property is its cost decreased by the gain not recognized on the involuntary conversion. Turbo tax free military Allocating the basis. Turbo tax free military   If you buy more than one piece of replacement property, allocate your basis among the properties based on their respective costs. Turbo tax free military Basis for depreciation. Turbo tax free military   Special rules apply in determining and depreciating the basis of MACRS property acquired in an involuntary conversion. Turbo tax free military For information, see Figuring the Deduction for Property Acquired in a Nontaxable Exchange under Figuring Depreciation Under MACRS in chapter 7. Turbo tax free military For more information about involuntary conversions, see chapter 11. Turbo tax free military Nontaxable Exchanges A nontaxable exchange is an exchange in which you are not taxed on any gain and you cannot deduct any loss. Turbo tax free military A nontaxable gain or loss also is known as an unrecognized gain or loss. Turbo tax free military If you receive property in a nontaxable exchange, its basis is usually the same as the basis of the property you transferred. Turbo tax free military Like-Kind Exchanges The exchange of property for the same kind of property is the most common type of nontaxable exchange. Turbo tax free military For an exchange to qualify as a like-kind exchange, you must hold for business or investment purposes both the property you transfer and the property you receive. Turbo tax free military There must also be an exchange of like-kind property. Turbo tax free military For more information, see Like-Kind Exchanges in  chapter 8. Turbo tax free military The basis of the property you receive generally is the same as the adjusted basis of the property you gave up. Turbo tax free military Example 1. Turbo tax free military You traded a truck you used in your farming business for a new smaller truck to use in farming. Turbo tax free military The adjusted basis of the old truck was $10,000. Turbo tax free military The FMV of the new truck is $30,000. Turbo tax free military Because this is a nontaxable exchange, you do not recognize any gain, and your basis in the new truck is $10,000, the same as the adjusted basis of the truck you traded. Turbo tax free military Example 2. Turbo tax free military You trade a field cultivator (adjusted basis of $8,000) for a planter (FMV of $9,000). Turbo tax free military You use both the field cultivator and the planter in your farming business. Turbo tax free military The basis of the planter you receive is $8,000, the same as the field cultivator traded Exchange expenses. Turbo tax free military   Exchange expenses generally are the closing costs that you pay. Turbo tax free military They include such items as brokerage commissions, attorney fees, and deed preparation fees. Turbo tax free military Add them to the basis of the like-kind property you receive. Turbo tax free military Property plus cash. Turbo tax free military   If you trade property in a like-kind exchange and also pay money, the basis of the property you receive is the adjusted basis of the property you gave up plus the money you paid. Turbo tax free military Example. Turbo tax free military You trade in a truck (adjusted basis of $3,000) for another truck (FMV of $7,500) and pay $4,000. Turbo tax free military Your basis in the new truck is $7,000 (the $3,000 adjusted basis of the old truck plus the $4,000 cash). Turbo tax free military Special rules for related persons. Turbo tax free military   If a like-kind exchange takes place directly or indirectly between related persons and either party disposes of the property within 2 years after the exchange, the exchange no longer qualifies for like-kind exchange treatment. Turbo tax free military Each person must report any gain or loss not recognized on the original exchange unless the loss is not deductible under the related party rules. Turbo tax free military Each person reports it on the tax return filed for the year in which the later disposition occurred. Turbo tax free military If this rule applies, the basis of the property received in the original exchange will be its FMV. Turbo tax free military For more information, see chapter 8. Turbo tax free military Exchange of business property. Turbo tax free military   Exchanging the property of one business for the property of another business generally is a multiple property exchange. Turbo tax free military For information on figuring basis, see Multiple Property Exchanges in chapter 1 of Publication 544. Turbo tax free military Basis for depreciation. Turbo tax free military   Special rules apply in determining and depreciating the basis of MACRS property acquired in a like-kind transaction. Turbo tax free military For information, see Figuring the Deduction for Property Acquired in a Nontaxable Exchange under Figuring Depreciation Under MACRS in chapter 7. Turbo tax free military Partially Nontaxable Exchanges A partially nontaxable exchange is an exchange in which you receive unlike property or money in addition to like-kind property. Turbo tax free military The basis of the property you receive is the same as the adjusted basis of the property you gave up with the following adjustments. Turbo tax free military Decrease the basis by the following amounts. Turbo tax free military Any money you receive. Turbo tax free military Any loss you recognize on the exchange. Turbo tax free military Increase the basis by the following amounts. Turbo tax free military Any additional costs you incur. Turbo tax free military Any gain you recognize on the exchange. Turbo tax free military If the other party to the exchange assumes your liabilities, treat the debt assumption as money you received in the exchange. Turbo tax free military Example 1. Turbo tax free military You trade farmland (basis of $100,000) for another tract of farmland (FMV of $110,000) and $30,000 cash. Turbo tax free military You realize a gain of $40,000. Turbo tax free military This is the FMV of the land received plus the cash minus the basis of the land you traded ($110,000 + $30,000 − $100,000). Turbo tax free military Include your gain in income (recognize gain) only to the extent of the cash received. Turbo tax free military Your basis in the land you received is figured as follows. Turbo tax free military Basis of land traded $100,000 Minus: Cash received (adjustment 1(a)) − 30,000   $70,000 Plus: Gain recognized (adjustment 2(b)) + 30,000 Basis of land received $100,000 Example 2. Turbo tax free military You trade a truck (adjusted basis of $22,750) for another truck (FMV of $20,000) and $10,000 cash. Turbo tax free military You realize a gain of $7,250. Turbo tax free military This is the FMV of the truck received plus the cash minus the adjusted basis of the truck you traded ($20,000 + $10,000 − $22,750). Turbo tax free military You include all the gain in your income (recognize gain) because the gain is less than the cash you received. Turbo tax free military Your basis in the truck you received is figured as follows. Turbo tax free military Adjusted basis of truck traded $22,750 Minus: Cash received (adjustment 1(a)) −10,000   $12,750 Plus: Gain recognized (adjustment 2(b)) + 7,250 Basis of truck received $20,000 Allocation of basis. Turbo tax free military   If you receive like-kind and unlike properties in the exchange, allocate the basis first to the unlike property, other than money, up to its FMV on the date of the exchange. Turbo tax free military The rest is the basis of the like-kind property. Turbo tax free military Example. Turbo tax free military You traded a tractor with an adjusted basis of $15,000 for another tractor that had an FMV of $12,500. Turbo tax free military You also received $1,000 cash and a truck that had an FMV of $3,000. Turbo tax free military The truck is unlike property. Turbo tax free military You realized a gain of $1,500. Turbo tax free military This is the FMV of the tractor received plus the FMV of the truck received plus the cash minus the adjusted basis of the tractor you traded ($12,500 + $3,000 + $1,000 − $15,000). Turbo tax free military You include in income (recognize) all $1,500 of the gain because it is less than the FMV of the unlike property plus the cash received. Turbo tax free military Your basis in the properties you received is figured as follows. Turbo tax free military Adjusted basis of old tractor $15,000 Minus: Cash received (adjustment 1(a)) − 1,000   $14,000 Plus: Gain recognized (adjustment 2(b)) + 1,500 Total basis of properties received $15,500 Allocate the total basis of $15,500 first to the unlike property—the truck ($3,000). Turbo tax free military This is the truck's FMV. Turbo tax free military The rest ($12,500) is the basis of the tractor. Turbo tax free military Sale and Purchase If you sell property and buy similar property in two mutually dependent transactions, you may have to treat the sale and purchase as a single nontaxable exchange. Turbo tax free military Example. Turbo tax free military You used a tractor on your farm for 3 years. Turbo tax free military Its adjusted basis is $22,000 and its FMV is $40,000. Turbo tax free military You are interested in a new tractor, which sells for $60,000. Turbo tax free military Ordinarily, you would trade your old tractor for the new one and pay the dealer $20,000. Turbo tax free military Your basis for depreciating the new tractor would then be $42,000 ($20,000 + $22,000, the adjusted basis of your old tractor). Turbo tax free military However, you want a higher basis for depreciating the new tractor, so you agree to pay the dealer $60,000 for the new tractor if he will pay you $40,000 for your old tractor. Turbo tax free military Because the two transactions are dependent on each other, you are treated as having exchanged your old tractor for the new one and paid $20,000 ($60,000 − $40,000). Turbo tax free military Your basis for depreciating the new tractor is $42,000, the same as if you traded the old tractor. Turbo tax free military Property Received as a Gift To figure the basis of property you receive as a gift, you must know its adjusted basis (defined earlier) to the donor just before it was given to you. Turbo tax free military You also must know its FMV at the time it was given to you and any gift tax paid on it. Turbo tax free military FMV equal to or greater than donor's adjusted basis. Turbo tax free military   If the FMV of the property is equal to or greater than the donor's adjusted basis, your basis is the donor's adjusted basis when you received the gift. Turbo tax free military Increase your basis by all or part of any gift tax paid, depending on the date of the gift. Turbo tax free military   Also, for figuring gain or loss from a sale or other disposition of the property, or for figuring depreciation, depletion, or amortization deductions on business property, you must increase or decrease your basis (the donor's adjusted basis) by any required adjustments to basis while you held the property. Turbo tax free military See Adjusted Basis , earlier. Turbo tax free military   If you received a gift during the tax year, increase your basis in the gift (the donor's adjusted basis) by the part of the gift tax paid on it due to the net increase in value of the gift. Turbo tax free military Figure the increase by multiplying the gift tax paid by the following fraction. Turbo tax free military Net increase in value of the gift Amount of the gift   The net increase in value of the gift is the FMV of the gift minus the donor's adjusted basis. Turbo tax free military The amount of the gift is its value for gift tax purposes after reduction by any annual exclusion and marital or charitable deduction that applies to the gift. Turbo tax free military Example. Turbo tax free military In 2013, you received a gift of property from your mother that had an FMV of $50,000. Turbo tax free military Her adjusted basis was $20,000. Turbo tax free military The amount of the gift for gift tax purposes was $36,000 ($50,000 minus the $14,000 annual exclusion). Turbo tax free military She paid a gift tax of $7,320. Turbo tax free military Your basis, $26,076, is figured as follows. Turbo tax free military Fair market value $50,000 Minus: Adjusted basis −20,000 Net increase in value $30,000 Gift tax paid $7,320 Multiplied by ($30,000 ÷ $36,000) × . Turbo tax free military 83 Gift tax due to net increase in value $6,076 Adjusted basis of property to your mother +20,000 Your basis in the property $26,076 Note. Turbo tax free military If you received a gift before 1977, your basis in the gift (the donor's adjusted basis) includes any gift tax paid on it. Turbo tax free military However, your basis cannot exceed the FMV of the gift when it was given to you. Turbo tax free military FMV less than donor's adjusted basis. Turbo tax free military   If the FMV of the property at the time of the gift is less than the donor's adjusted basis, your basis depends on whether you have a gain or a loss when you dispose of the property. Turbo tax free military Your basis for figuring gain is the donor's adjusted basis plus or minus any required adjustments to basis while you held the property. Turbo tax free military Your basis for figuring loss is its FMV when you received the gift plus or minus any required adjustments to basis while you held the property. Turbo tax free military (See Adjusted Basis , earlier. Turbo tax free military )   If you use the donor's adjusted basis for figuring a gain and get a loss, and then use the FMV for figuring a loss and get a gain, you have neither gain nor loss on the sale or other disposition of the property. Turbo tax free military Example. Turbo tax free military You received farmland as a gift from your parents when they retired from farming. Turbo tax free military At the time of the gift, the land had an FMV of $80,000. Turbo tax free military Your parents' adjusted basis was $100,000. Turbo tax free military After you received the land, no events occurred that would increase or decrease your basis. Turbo tax free military If you sell the land for $120,000, you will have a $20,000 gain because you must use the donor's adjusted basis at the time of the gift ($100,000) as your basis to figure a gain. Turbo tax free military If you sell the land for $70,000, you will have a $10,000 loss because you must use the FMV at the time of the gift ($80,000) as your basis to figure a loss. Turbo tax free military If the sales price is between $80,000 and $100,000, you have neither gain nor loss. Turbo tax free military For instance, if the sales price was $90,000 and you tried to figure a gain using the donor's adjusted basis ($100,000), you would get a $10,000 loss. Turbo tax free military If you then tried to figure a loss using the FMV ($80,000), you would get a $10,000 gain. Turbo tax free military Business property. Turbo tax free military   If you hold the gift as business property, your basis for figuring any depreciation, depletion, or amortization deductions is the same as the donor's adjusted basis plus or minus any required adjustments to basis while you hold the property. Turbo tax free military Property Transferred From a Spouse The basis of property transferred to you or transferred in trust for your benefit by your spouse is the same as your spouse's adjusted basis. Turbo tax free military The same rule applies to a transfer by your former spouse if the transfer is incident to divorce. Turbo tax free military However, for property transferred in trust, adjust your basis for any gain recognized by your spouse or former spouse if the liabilities assumed plus the liabilities to which the property is subject are more than the adjusted basis of the property transferred. Turbo tax free military The transferor must give you the records needed to determine the adjusted basis and holding period of the property as of the date of the transfer. Turbo tax free military For more information, see Property Settlements in Publication 504, Divorced or Separated Individuals. Turbo tax free military Inherited Property Your basis in property you inherited from a decedent, who died before January 1, 2010, or after December 31, 2010, is generally one of the following: The FMV of the property at the date of the decedent's death. Turbo tax free military If a federal estate return is filed, you can use its appraised value. Turbo tax free military The FMV on the alternate valuation date, if the personal representative for the estate elects to use alternate valuation. Turbo tax free military For information on the alternate valuation, see the Instructions for Form 706. Turbo tax free military The decedent's adjusted basis in land to the extent of the value that is excluded from the decedent's taxable estate as a qualified conservation easement. Turbo tax free military If a federal estate tax return does not have to be filed, your basis in the inherited property is its appraised value at the date of death for state inheritance or transmission taxes. Turbo tax free military Special-use valuation method. Turbo tax free military   Under certain conditions, when a person dies, the executor or personal representative of that person's estate may elect to value qualified real property at other than its FMV. Turbo tax free military If so, the executor or personal representative values the qualified real property based on its use as a farm or other closely held business. Turbo tax free military If the executor or personal representative elects this method of valuation for estate tax purposes, this value is the basis of the property for the qualified heirs. Turbo tax free military The qualified heirs should be able to get the necessary value from the executor or personal representative of the estate. Turbo tax free military   If you are a qualified heir who received special-use valuation property, increase your basis by any gain recognized by the estate or trust because of post-death appreciation. Turbo tax free military Post-death appreciation is the property's FMV on the date of distribution minus the property's FMV either on the date of the individual's death or on the alternate valuation date. Turbo tax free military Figure all FMVs without regard to the special-use valuation. Turbo tax free military   You may be liable for an additional estate tax if, within 10 years after the death of the decedent, you transfer the property or the property stops being used as a farm. Turbo tax free military This tax does not apply if you dispose of the property in a like-kind exchange or in an involuntary conversion in which all of the proceeds are reinvested in qualified replacement property. Turbo tax free military The tax also does not apply if you transfer the property to a member of your family and certain requirements are met. Turbo tax free military   You can elect to increase your basis in special-use valuation property if it becomes subject to the additional estate tax. Turbo tax free military To increase your basis, you must make an irrevocable election and pay interest on the additional estate tax figured from the date 9 months after the decedent's death until the date of payment of the additional estate tax. Turbo tax free military If you meet these requirements, increase your basis in the property to its FMV on the date of the decedent's death or the alternate valuation date. Turbo tax free military The increase in your basis is considered to have occurred immediately before the event that resulted in the additional estate tax. Turbo tax free military   You make the election by filing, with Form 706-A, United States Additional Estate Tax Return, a statement that: Contains your (and the estate's) name, address, and taxpayer identification number; Identifies the election as an election under section 1016(c) of the Internal Revenue Code; Specifies the property for which you are making the election; and Provides any additional information required by the Form 706-A instructions. Turbo tax free military   For more information, see Form 706, United States Estate (and Generation-Skipping Transfer) Tax Return, Form 706-A, and the related instructions. Turbo tax free military Property inherited from a decedent who died in 2010. Turbo tax free military   If you inherited property from a decedent who died in 2010, different rules may apply. Turbo tax free military See Publication 4895, Tax Treatment of Property Acquired From a Decendent Dying in 2010, for details. Turbo tax free military Property Distributed From a Partnership or Corporation The following rules apply to determine a partner's basis and a shareholder's basis in property distributed respectively from a partnership to the partner with respect to the partner's interest in the partnership and from a corporation to the shareholder with respect to the shareholder's ownership of stock in the corporation. Turbo tax free military Partner's basis. Turbo tax free military   Unless there is a complete liquidation of a partner's interest, the basis of property (other than money) distributed by a partnership to the partner is its adjusted basis to the partnership immediately before the distribution. Turbo tax free military However, the basis of the property to the partner cannot be more than the adjusted basis of his or her interest in the partnership reduced by any money received in the same transaction. Turbo tax free military For more information, see Partner's Basis for Distributed Property in Publication 541, Partnerships. Turbo tax free military Shareholder's basis. Turbo tax free military   The basis of property distributed by a corporation to a shareholder is its fair market value. Turbo tax free military For more information about corporate distributions, see Distributions to Shareholders in Publication 542, Corporations. Turbo tax free military Prev  Up  Next   Home   More Online Publications
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The Turbo Tax Free Military

Turbo tax free military Publication 915 - Main Content Table of Contents Are Any of Your Benefits Taxable?Worksheet A. Turbo tax free military Exemption from withholding. Turbo tax free military How To Report Your Benefits How Much Is Taxable?Examples Lump-Sum ElectionExample Deductions Related to Your BenefitsRepayments More Than Gross Benefits Worksheets AppendixForm SSA-1099, Social Security Benefit Statement 2013 Form SSA-1042S, Social Security Benefit Statement 2013 (Nonresident Aliens) Form RRB-1099, Payments by the Railroad Retirement Board 2013 Form RRB-1042S, Payments by the Railroad Retirement Board 2013 (Nonresident Aliens) How To Get Tax HelpLow Income Taxpayer Clinics Are Any of Your Benefits Taxable? To find out whether any of your benefits shown on Forms SSA-1099 and RRB-1099 may be taxable, compare the base amount (explained later) for your filing status with the total of: One-half of your benefits, plus All your other income, including tax-exempt interest. Turbo tax free military When making this comparison, do not reduce your other income by any exclusions for: Interest from qualified U. Turbo tax free military S. Turbo tax free military savings bonds, Employer-provided adoption benefits, Foreign earned income or foreign housing, or Income earned by bona fide residents of American Samoa or Puerto Rico. Turbo tax free military Children's benefits. Turbo tax free military   The rules in this publication apply to benefits received by children. Turbo tax free military See Who is taxed , later. Turbo tax free military The SSA issues Form SSA-1099 and Form SSA-1042S. Turbo tax free military The RRB issues Form RRB-1099 and Form RRB-1042S. Turbo tax free military These forms (tax statements) report the amounts paid and repaid, and taxes withheld for a tax year. Turbo tax free military You may receive more than one of these forms for the same tax year. Turbo tax free military See the Appendix at the end of this publication for more information. Turbo tax free military Each original Form RRB-1099 or Form RRB-1042S is valid unless it has been corrected. Turbo tax free military The RRB will issue a corrected Form RRB-1099 or Form RRB-1042S if there is an error in the original. Turbo tax free military A corrected Form RRB-1099 or Form RRB-1042S is indicated as “CORRECTED” and replaces the corresponding original Form RRB-1099 or Form RRB-1042S. Turbo tax free military You must use the latest corrected Form RRB-1099 or Form RRB-1042S you received and any original Form RRB-1099 or Form RRB-1042S that the RRB has not corrected when you determine what amounts to report on your tax return. Turbo tax free military Figuring total income. Turbo tax free military   To figure the total of one-half of your benefits plus your other income, use Worksheet A, discussed later. Turbo tax free military If the total is more than your base amount, part of your benefits may be taxable. Turbo tax free military   If you are married and file a joint return for 2013, you and your spouse must combine your incomes and your benefits to figure whether any of your combined benefits are taxable. Turbo tax free military Even if your spouse did not receive any benefits, you must add your spouse's income to yours to figure whether any of your benefits are taxable. Turbo tax free military If the only income you received during 2013 was your social security or the SSEB portion of tier 1 railroad retirement benefits, your benefits generally are not taxable and you probably do not have to file a return. Turbo tax free military If you have income in addition to your benefits, you may have to file a return even if none of your benefits are taxable. Turbo tax free military Base amount. Turbo tax free military   Your base amount is: $25,000 if you are single, head of household, or qualifying widow(er), $25,000 if you are married filing separately and lived apart from your spouse for all of 2013, $32,000 if you are married filing jointly, or $-0- if you are married filing separately and lived with your spouse at any time during 2013. Turbo tax free military Worksheet A. Turbo tax free military   You can use Worksheet A to figure the amount of income to compare with your base amount. Turbo tax free military This is a quick way to check whether some of your benefits may be taxable. Turbo tax free military     Worksheet A. Turbo tax free military A Quick Way To Check if Your Benefits May Be Taxable Keep for your records A. Turbo tax free military Enter the amount from box 5 of all your Forms SSA-1099 and RRB-1099. Turbo tax free military Include the full amount of any lump-sum benefit payments received in 2013, for 2013 and earlier years. Turbo tax free military (If you received more than one form, combine the amounts from box 5 and enter the total. Turbo tax free military ) A. Turbo tax free military   Note. Turbo tax free military If the amount on line A is zero or less, stop here; none of your benefits are taxable this year. Turbo tax free military B. Turbo tax free military Enter one-half of the amount on line A B. Turbo tax free military   C. Turbo tax free military Enter your taxable pensions, wages, interest, dividends, and other taxable income C. Turbo tax free military   D. Turbo tax free military Enter any tax-exempt interest income (such as interest on municipal bonds) plus any exclusions from income (listed earlier) D. Turbo tax free military   E. Turbo tax free military Add lines B, C, and D E. Turbo tax free military   Note. Turbo tax free military Compare the amount on line E to your base amount for your filing status. Turbo tax free military If the amount on line E equals or is less than the base amount for your filing status, none of your benefits are taxable this year. Turbo tax free military If the amount on line E is more than your base amount, some of your benefits may be taxable. Turbo tax free military You need to complete Worksheet 1, shown later. Turbo tax free military If none of your benefits are taxable, but you otherwise must file a tax return, see Benefits not taxable , later, under How To Report Your Benefits . Turbo tax free military   Example. Turbo tax free military You and your spouse (both over 65) are filing a joint return for 2013 and you both received social security benefits during the year. Turbo tax free military In January 2014, you received a Form SSA-1099 showing net benefits of $7,500 in box 5. Turbo tax free military Your spouse received a Form SSA-1099 showing net benefits of $3,500 in box 5. Turbo tax free military You also received a taxable pension of $22,800 and interest income of $500. Turbo tax free military You did not have any tax-exempt interest income. Turbo tax free military Your benefits are not taxable for 2013 because your income, as figured in Worksheet A below, is not more than your base amount ($32,000) for married filing jointly. Turbo tax free military   Even though none of your benefits are taxable, you must file a return for 2013 because your taxable gross income ($23,300) exceeds the minimum filing requirement amount for your filing status. Turbo tax free military     Filled-in Worksheet A. Turbo tax free military A Quick Way To Check if Your Benefits May Be Taxable Keep for your records A. Turbo tax free military Enter the amount from box 5 of all your Forms SSA-1099 and RRB-1099. Turbo tax free military Include the full amount of any lump-sum benefit payments received in 2013, for 2013 and earlier years. Turbo tax free military (If you received more than one form, combine the amounts from box 5 and enter the total. Turbo tax free military ) A. Turbo tax free military $11,000 Note. Turbo tax free military If the amount on line A is zero or less, stop here; none of your benefits are taxable this year. Turbo tax free military B. Turbo tax free military Enter one-half of the amount on line A B. Turbo tax free military 5,500 C. Turbo tax free military Enter your taxable pensions, wages, interest, dividends, and other taxable income C. Turbo tax free military 23,300 D. Turbo tax free military Enter any tax-exempt interest income (such as interest on municipal bonds) plus any exclusions from income (listed earlier) D. Turbo tax free military -0- E. Turbo tax free military Add lines B, C, and D E. Turbo tax free military $28,800 Note. Turbo tax free military Compare the amount on line E to your base amount for your filing status. Turbo tax free military If the amount on line E equals or is less than the base amount for your filing status, none of your benefits are taxable this year. Turbo tax free military If the amount on line E is more than your base amount, some of your benefits may be taxable. Turbo tax free military You need to complete Worksheet 1, shown later. Turbo tax free military If none of your benefits are taxable, but you otherwise must file a tax return, see Benefits not taxable , later, under How To Report Your Benefits . Turbo tax free military   Who is taxed. Turbo tax free military   Benefits are included in the taxable income (to the extent they are taxable) of the person who has the legal right to receive the benefits. Turbo tax free military For example, if you and your child receive benefits, but the check for your child is made out in your name, you must use only your part of the benefits to see whether any benefits are taxable to you. Turbo tax free military One-half of the part that belongs to your child must be added to your child's other income to see whether any of those benefits are taxable to your child. Turbo tax free military Repayment of benefits. Turbo tax free military   Any repayment of benefits you made during 2013 must be subtracted from the gross benefits you received in 2013. Turbo tax free military It does not matter whether the repayment was for a benefit you received in 2013 or in an earlier year. Turbo tax free military If you repaid more than the gross benefits you received in 2013, see Repayments More Than Gross Benefits , later. Turbo tax free military   Your gross benefits are shown in box 3 of Form SSA-1099 or Form RRB-1099. Turbo tax free military Your repayments are shown in box 4. Turbo tax free military The amount in box 5 shows your net benefits for 2013 (box 3 minus box 4). Turbo tax free military Use the amount in box 5 to figure whether any of your benefits are taxable. Turbo tax free military Example. Turbo tax free military In 2012, you received $3,000 in social security benefits, and in 2013 you received $2,700. Turbo tax free military In March 2013, SSA notified you that you should have received only $2,500 in benefits in 2012. Turbo tax free military During 2013, you repaid $500 to SSA. Turbo tax free military The Form SSA-1099 you received for 2013 shows $2,700 in box 3 (gross amount) and $500 in box 4 (repayment). Turbo tax free military The amount in box 5 shows your net benefits of $2,200 ($2,700 minus $500). Turbo tax free military Tax withholding and estimated tax. Turbo tax free military   You can choose to have federal income tax withheld from your social security benefits and/or the SSEB portion of your tier 1 railroad retirement benefits. Turbo tax free military If you choose to do this, you must complete a Form W-4V, Voluntary Withholding Statement. Turbo tax free military   If you do not choose to have income tax withheld, you may have to request additional withholding from other income or pay estimated tax during the year. Turbo tax free military For details, see Publication 505, Tax Withholding and Estimated Tax, or the instructions for Form 1040-ES, Estimated Tax for Individuals. Turbo tax free military U. Turbo tax free military S. Turbo tax free military citizens residing abroad. Turbo tax free military   U. Turbo tax free military S. Turbo tax free military citizens who are residents of the following countries are exempt from U. Turbo tax free military S. Turbo tax free military tax on their benefits. Turbo tax free military Canada. Turbo tax free military Egypt. Turbo tax free military Germany. Turbo tax free military Ireland. Turbo tax free military Israel. Turbo tax free military Italy. Turbo tax free military (You must also be a citizen of Italy for the exemption to apply. Turbo tax free military ) Romania. Turbo tax free military United Kingdom. Turbo tax free military   The SSA will not withhold U. Turbo tax free military S. Turbo tax free military tax from your benefits if you are a U. Turbo tax free military S. Turbo tax free military citizen. Turbo tax free military   The RRB will withhold U. Turbo tax free military S. Turbo tax free military tax from your benefits unless you file Form RRB-1001, Nonresident Questionnaire, with the RRB to provide citizenship and residency information. Turbo tax free military If you do not file Form RRB-1001, the RRB will consider you a nonresident alien and withhold tax from your railroad retirement benefits at a 30% rate. Turbo tax free military Contact the RRB to get this form. Turbo tax free military Lawful permanent residents. Turbo tax free military   For U. Turbo tax free military S. Turbo tax free military income tax purposes, lawful permanent residents (green card holders) are considered resident aliens until their lawful permanent resident status under the immigration laws is either taken away or is administratively or judicially determined to have been abandoned. Turbo tax free military Social security benefits paid to a green card holder are not subject to 30% withholding. Turbo tax free military If you are a green card holder and tax was withheld in error on your social security benefits because you have a foreign address, the withholding tax is refundable by the Social Security Administration (SSA) or the IRS. Turbo tax free military SSA will refund taxes erroneously withheld if the refund can be processed during the same calendar year in which the tax was withheld. Turbo tax free military If SSA cannot refund the taxes withheld, you must file a Form 1040 or 1040A with the Internal Revenue Service Center, Austin, TX 73301 to determine if you are entitled to a refund. Turbo tax free military You must also attach the following information to your Form 1040 or 1040A: A copy of the Form SSA-1042S, Social Security Benefit Statement, A copy of the “green card,” and A signed declaration that includes the following statements:    “The SSA should not have withheld federal income tax from my social security benefits because I am a U. Turbo tax free military S. Turbo tax free military lawful permanent resident and my green card has been neither revoked nor administratively or judicially determined to have been abandoned. Turbo tax free military I am filing a U. Turbo tax free military S. Turbo tax free military income tax return for the tax year as a resident alien reporting all of my worldwide income. Turbo tax free military I have not claimed benefits for the tax year under an income tax treaty as a nonresident alien. Turbo tax free military ” Nonresident aliens. Turbo tax free military   A nonresident alien is an individual who is not a citizen or resident of the United States. Turbo tax free military If you are a nonresident alien, the rules discussed in this publication do not apply to you. Turbo tax free military Instead, 85% of your benefits are taxed at a 30% rate, unless exempt (or subject to a lower rate) by treaty. Turbo tax free military You will receive a Form SSA-1042S or Form RRB-1042S showing the amount of your benefits. Turbo tax free military These forms will also show the tax rate and the amount of tax withheld from your benefits. Turbo tax free military   Under tax treaties with the following countries, residents of these countries are exempt from U. Turbo tax free military S. Turbo tax free military tax on their benefits. Turbo tax free military Canada. Turbo tax free military Egypt. Turbo tax free military Germany. Turbo tax free military Ireland. Turbo tax free military Israel. Turbo tax free military Italy. Turbo tax free military Japan. Turbo tax free military Romania. Turbo tax free military United Kingdom. Turbo tax free military   Under a treaty with India, benefits paid to individuals who are both residents and nationals of India are exempt from U. Turbo tax free military S. Turbo tax free military tax if the benefits are for services performed for the United States, its subdivisions, or local government authorities. Turbo tax free military   If you are a resident of Switzerland, your total benefit amount will be taxed at a 15% rate. Turbo tax free military   For more information on whether you are a nonresident alien, see Publication 519, U. Turbo tax free military S. Turbo tax free military Tax Guide for Aliens. Turbo tax free military Exemption from withholding. Turbo tax free military   If your social security benefits are exempt from tax because you are a resident of one of the treaty countries listed, the SSA will not withhold U. Turbo tax free military S. Turbo tax free military tax from your benefits. Turbo tax free military   If your railroad retirement benefits are exempt from tax because you are a resident of one of the treaty countries listed, you can claim an exemption from withholding by filing Form RRB-1001 with the RRB. Turbo tax free military Contact the RRB to get this form. Turbo tax free military Canadian or German social security benefits paid to U. Turbo tax free military S. Turbo tax free military residents. Turbo tax free military   Under income tax treaties with Canada and Germany, social security benefits paid by those countries to U. Turbo tax free military S. Turbo tax free military residents are treated for U. Turbo tax free military S. Turbo tax free military income tax purposes as if they were paid under the social security legislation of the United States. Turbo tax free military If you receive social security benefits from Canada or Germany, include them on line 1 of Worksheet 1, shown later. Turbo tax free military How To Report Your Benefits If part of your benefits are taxable, you must use Form 1040 or Form 1040A. Turbo tax free military You cannot use Form 1040EZ. Turbo tax free military Reporting on Form 1040. Turbo tax free military   Report your net benefits (the total amount from box 5 of all your Forms SSA-1099 and Forms RRB-1099) on line 20a and the taxable part on line 20b. Turbo tax free military If you are married filing separately and you lived apart from your spouse for all of 2013, also enter “D” to the right of the word “benefits” on line 20a. Turbo tax free military Reporting on Form 1040A. Turbo tax free military   Report your net benefits (the total amount from box 5 of all your Forms SSA-1099 and Forms RRB-1099) on line 14a and the taxable part on line 14b. Turbo tax free military If you are married filing separately and you lived apart from your spouse for all of 2013, also enter “D” to the right of the word “benefits” on line 14a. Turbo tax free military Benefits not taxable. Turbo tax free military   If you are filing Form 1040EZ, do not report any benefits on your tax return. Turbo tax free military If you are filing Form 1040 or Form 1040A, report your net benefits (the total amount from box 5 of all your Forms SSA-1099 and Forms RRB-1099) on Form 1040, line 20a, or Form 1040A, line 14a. Turbo tax free military Enter -0- on Form 1040, line 20b, or Form 1040A, line 14b. Turbo tax free military If you are married filing separately and you lived apart from your spouse for all of 2013, also enter “D” to the right of the word “benefits” on Form 1040, line 20a, or Form 1040A, line 14a. Turbo tax free military How Much Is Taxable? If part of your benefits are taxable, how much is taxable depends on the total amount of your benefits and other income. Turbo tax free military Generally, the higher that total amount, the greater the taxable part of your benefits. Turbo tax free military Maximum taxable part. Turbo tax free military   Generally, up to 50% of your benefits will be taxable. Turbo tax free military However, up to 85% of your benefits can be taxable if either of the following situations applies to you. Turbo tax free military The total of one-half of your benefits and all your other income is more than $34,000 ($44,000 if you are married filing jointly). Turbo tax free military You are married filing separately and lived with your spouse at any time during 2013. Turbo tax free military Which worksheet to use. Turbo tax free military   A worksheet you can use to figure your taxable benefits is in the instructions for your Form 1040 or 1040A. Turbo tax free military You can use either that worksheet or Worksheet 1 in this publication, unless any of the following situations applies to you. Turbo tax free military You contributed to a traditional individual retirement arrangement (IRA) and you or your spouse is covered by a retirement plan at work. Turbo tax free military In this situation you must use the special worksheets in Appendix B of Publication 590 to figure both your IRA deduction and your taxable benefits. Turbo tax free military Situation (1) does not apply and you take an exclusion for interest from qualified U. Turbo tax free military S. Turbo tax free military savings bonds (Form 8815), for adoption benefits (Form 8839), for foreign earned income or housing (Form 2555 or Form 2555-EZ), or for income earned in American Samoa (Form 4563) or Puerto Rico by bona fide residents. Turbo tax free military In this situation, you must use Worksheet 1 in this publication to figure your taxable benefits. Turbo tax free military You received a lump-sum payment for an earlier year. Turbo tax free military In this situation, also complete Worksheet 2 or 3 and Worksheet 4 in this publication. Turbo tax free military See Lump-Sum Election , later. Turbo tax free military Examples A few examples you can use as a guide to figure the taxable part of your benefits follow. Turbo tax free military Filled-in Worksheet 1. Turbo tax free military Figuring Your Taxable Benefits Before you begin: If you are married filing separately and you lived apart from your spouse for all of 2013, enter “D” to the right of the word “benefits” on Form 1040, line 20a, or Form 1040A, line 14a. Turbo tax free military Do not use this worksheet if you repaid benefits in 2013 and your total repayments (box 4 of Forms SSA-1099 and RRB-1099) were more than your gross benefits for 2013 (box 3 of Forms SSA-1099 and RRB-1099). Turbo tax free military None of your benefits are taxable for 2013. Turbo tax free military For more information, see Repayments More Than Gross Benefits . Turbo tax free military If you are filing Form 8815, Exclusion of Interest From Series EE and I U. Turbo tax free military S. Turbo tax free military Savings Bonds Issued After 1989, do not include the amount from line 8a of Form 1040 or Form 1040A on line 3 of this worksheet. Turbo tax free military Instead, include the amount from Schedule B (Form 1040A or 1040), line 2. Turbo tax free military 1. Turbo tax free military Enter the total amount from box 5 of ALL your Forms SSA-1099 and RRB-1099. Turbo tax free military Also enter this amount on Form 1040, line 20a, or Form 1040A, line 14a 1. Turbo tax free military $5,980         2. Turbo tax free military Enter one-half of line 1 2. Turbo tax free military 2,990     3. Turbo tax free military Combine the amounts from: Form 1040: Lines 7, 8a, 9a, 10 through 14, 15b, 16b, 17 through 19, and 21 Form 1040A: Lines 7, 8a, 9a, 10, 11b, 12b, and 13 3. Turbo tax free military 28,990     4. Turbo tax free military Enter the amount, if any, from Form 1040 or 1040A, line 8b 4. Turbo tax free military -0-     5. Turbo tax free military Enter the total of any exclusions/adjustments for: Adoption benefits (Form 8839, line 28), Foreign earned income or housing (Form 2555, lines 45 and 50, or Form 2555-EZ, line 18), and Certain income of bona fide residents of American Samoa (Form 4563, line 15) or Puerto Rico 5. Turbo tax free military -0-     6. Turbo tax free military Combine lines 2, 3, 4, and 5 6. Turbo tax free military 31,980     7. Turbo tax free military Form 1040 filers: Enter the amounts from Form 1040, lines 23 through 32, and any write-in adjustments you entered on the dotted line next to line 36. Turbo tax free military  Form 1040A filers: Enter the amounts from Form 1040A, lines 16 and 17 7. Turbo tax free military -0-     8. Turbo tax free military Is the amount on line 7 less than the amount on line 6?             No. Turbo tax free military None of your social security benefits are taxable. Turbo tax free military Enter -0- on Form 1040, line 20b, or Form 1040A, line 14b. Turbo tax free military             Yes. Turbo tax free military Subtract line 7 from line 6 8. Turbo tax free military 31,980     9. Turbo tax free military If you are:  Married filing jointly, enter $32,000 Single, head of household, qualifying widow(er), or married filing separately and you lived apart from your spouse for all of 2013, enter $25,000 9. Turbo tax free military 25,000       Note. Turbo tax free military If you are married filing separately and you lived with your spouse at any time in 2013, skip lines 9 through 16; multiply line 8 by 85% (. Turbo tax free military 85) and enter the result on line 17. Turbo tax free military Then go to line 18. Turbo tax free military         10. Turbo tax free military Is the amount on line 9 less than the amount on line 8?             No. Turbo tax free military None of your benefits are taxable. Turbo tax free military Enter -0- on Form 1040, line 20b, or on Form 1040A, line 14b. Turbo tax free military If you are married filing separately and you lived apart from your spouse for all of 2013, be sure you entered “D” to the right of the word “benefits” on Form 1040, line 20a, or on Form 1040A, line 14a. Turbo tax free military             Yes. Turbo tax free military Subtract line 9 from line 8 10. Turbo tax free military 6,980     11. Turbo tax free military Enter $12,000 if married filing jointly; $9,000 if single, head of household, qualifying widow(er), or married filing separately and you lived apart from your spouse for all of 2013 11. Turbo tax free military 9,000     12. Turbo tax free military Subtract line 11 from line 10. Turbo tax free military If zero or less, enter -0- 12. Turbo tax free military -0-     13. Turbo tax free military Enter the smaller of line 10 or line 11 13. Turbo tax free military 6,980     14. Turbo tax free military Enter one-half of line 13 14. Turbo tax free military 3,490     15. Turbo tax free military Enter the smaller of line 2 or line 14 15. Turbo tax free military 2,990     16. Turbo tax free military Multiply line 12 by 85% (. Turbo tax free military 85). Turbo tax free military If line 12 is zero, enter -0- 16. Turbo tax free military -0-     17. Turbo tax free military Add lines 15 and 16 17. Turbo tax free military 2,990     18. Turbo tax free military Multiply line 1 by 85% (. Turbo tax free military 85) 18. Turbo tax free military 5,083     19. Turbo tax free military Taxable benefits. Turbo tax free military Enter the smaller of line 17 or line 18. Turbo tax free military Also enter this amount on Form 1040, line 20b, or Form 1040A, line 14b 19. Turbo tax free military $2,990       If you received a lump-sum payment in 2013 that was for an earlier year, also complete Worksheet 2 or 3 and Worksheet 4 to see if you can report a lower taxable benefit. Turbo tax free military         Example 1. Turbo tax free military George White is single and files Form 1040 for 2013. Turbo tax free military In addition to receiving social security payments, he received a fully taxable pension of $18,600, wages from a part-time job of $9,400, and taxable interest income of $990, for a total of $28,990. Turbo tax free military He received a Form SSA-1099 in January 2014 that shows his net social security benefits of $5,980 in box 5. Turbo tax free military   To figure his taxable benefits, George completes Worksheet 1, shown below. Turbo tax free military On line 20a of his Form 1040, George enters his net benefits of $5,980. Turbo tax free military On line 20b, he enters his taxable benefits of $2,990. Turbo tax free military Example 2. Turbo tax free military Ray and Alice Hopkins file a joint return on Form 1040A for 2013. Turbo tax free military Ray is retired and received a fully taxable pension of $15,500. Turbo tax free military He also received social security benefits and his Form SSA-1099 for 2013 shows net benefits of $5,600 in box 5. Turbo tax free military Alice worked during the year and had wages of $14,000. Turbo tax free military She made a deductible payment to her IRA account of $1,000. Turbo tax free military Ray and Alice have two savings accounts with a total of $250 in taxable interest income. Turbo tax free military They complete Worksheet 1, entering $29,750 ($15,500 + $14,000 + $250) on line 3. Turbo tax free military They find none of Ray's social security benefits are taxable. Turbo tax free military On Form 1040A, they enter $5,600 on line 14a and -0- on line 14b. Turbo tax free military Filled-in Worksheet 1. Turbo tax free military Figuring Your Taxable Benefits Before you begin: If you are married filing separately and you lived apart from your spouse for all of 2013, enter “D” to the right of the word “benefits” on Form 1040, line 20a, or Form 1040A, line 14a. Turbo tax free military Do not use this worksheet if you repaid benefits in 2013 and your total repayments (box 4 of Forms SSA-1099 and RRB-1099) were more than your gross benefits for 2013 (box 3 of Forms SSA-1099 and RRB-1099). Turbo tax free military None of your benefits are taxable for 2013. Turbo tax free military For more information, see Repayments More Than Gross Benefits . Turbo tax free military If you are filing Form 8815, Exclusion of Interest From Series EE and I U. Turbo tax free military S. Turbo tax free military Savings Bonds Issued After 1989, do not include the amount from line 8a of Form 1040 or Form 1040A on line 3 of this worksheet. Turbo tax free military Instead, include the amount from Schedule B (Form 1040A or 1040), line 2. Turbo tax free military 1. Turbo tax free military Enter the total amount from box 5 of ALL your Forms SSA-1099 and RRB-1099. Turbo tax free military Also enter this amount on Form 1040, line 20a, or Form 1040A, line 14a 1. Turbo tax free military $5,600         2. Turbo tax free military Enter one-half of line 1 2. Turbo tax free military 2,800     3. Turbo tax free military Combine the amounts from: Form 1040: Lines 7, 8a, 9a, 10 through 14, 15b, 16b, 17 through 19, and 21 Form 1040A: Lines 7, 8a, 9a, 10, 11b, 12b, and 13 3. Turbo tax free military 29,750     4. Turbo tax free military Enter the amount, if any, from Form 1040 or 1040A, line 8b 4. Turbo tax free military -0-     5. Turbo tax free military Enter the total of any exclusions/adjustments for: Adoption benefits (Form 8839, line 28), Foreign earned income or housing (Form 2555, lines 45 and 50, or Form 2555-EZ, line 18), and Certain income of bona fide residents of American Samoa (Form 4563, line 15) or Puerto Rico 5. Turbo tax free military -0-     6. Turbo tax free military Combine lines 2, 3, 4, and 5 6. Turbo tax free military 32,550     7. Turbo tax free military Form 1040 filers: Enter the amounts from Form 1040, lines 23 through 32, and any write-in adjustments you entered on the dotted line next to line 36. Turbo tax free military  Form 1040A filers: Enter the amounts from Form 1040A, lines 16 and 17 7. Turbo tax free military 1,000     8. Turbo tax free military Is the amount on line 7 less than the amount on line 6?             No. Turbo tax free military None of your social security benefits are taxable. Turbo tax free military Enter -0- on Form 1040, line 20b, or Form 1040A, line 14b. Turbo tax free military             Yes. Turbo tax free military Subtract line 7 from line 6 8. Turbo tax free military 31,550     9. Turbo tax free military If you are:  Married filing jointly, enter $32,000 Single, head of household, qualifying widow(er), or married filing separately and you lived apart from your spouse for all of 2013, enter $25,000 9. Turbo tax free military 32,000       Note. Turbo tax free military If you are married filing separately and you lived with your spouse at any time in 2013, skip lines 9 through 16; multiply line 8 by 85% (. Turbo tax free military 85) and enter the result on line 17. Turbo tax free military Then go to line 18. Turbo tax free military         10. Turbo tax free military Is the amount on line 9 less than the amount on line 8?             No. Turbo tax free military None of your benefits are taxable. Turbo tax free military Enter -0- on Form 1040, line 20b, or on Form 1040A, line 14b. Turbo tax free military If you are married filing separately and you lived apart from your spouse for all of 2013, be sure you entered “D” to the right of the word “benefits” on Form 1040, line 20a, or on Form 1040A, line 14a. Turbo tax free military             Yes. Turbo tax free military Subtract line 9 from line 8 10. Turbo tax free military       11. Turbo tax free military Enter $12,000 if married filing jointly; $9,000 if single, head of household, qualifying widow(er), or married filing separately and you lived apart from your spouse for all of 2013 11. Turbo tax free military       12. Turbo tax free military Subtract line 11 from line 10. Turbo tax free military If zero or less, enter -0- 12. Turbo tax free military       13. Turbo tax free military Enter the smaller of line 10 or line 11 13. Turbo tax free military       14. Turbo tax free military Enter one-half of line 13 14. Turbo tax free military       15. Turbo tax free military Enter the smaller of line 2 or line 14 15. Turbo tax free military       16. Turbo tax free military Multiply line 12 by 85% (. Turbo tax free military 85). Turbo tax free military If line 12 is zero, enter -0- 16. Turbo tax free military       17. Turbo tax free military Add lines 15 and 16 17. Turbo tax free military       18. Turbo tax free military Multiply line 1 by 85% (. Turbo tax free military 85) 18. Turbo tax free military       19. Turbo tax free military Taxable benefits. Turbo tax free military Enter the smaller of line 17 or line 18. Turbo tax free military Also enter this amount on Form 1040, line 20b, or Form 1040A, line 14b 19. Turbo tax free military         If you received a lump-sum payment in 2013 that was for an earlier year, also complete Worksheet 2 or 3 and Worksheet 4 to see if you can report a lower taxable benefit. Turbo tax free military         Example 3. Turbo tax free military Joe and Betty Johnson file a joint return on Form 1040 for 2013. Turbo tax free military Joe is a retired railroad worker and in 2013 received the social security equivalent benefit (SSEB) portion of tier 1 railroad retirement benefits. Turbo tax free military Joe's Form RRB-1099 shows $10,000 in box 5. Turbo tax free military Betty is a retired government worker and received a fully taxable pension of $38,000. Turbo tax free military They had $2,300 in taxable interest income plus interest of $200 on a qualified U. Turbo tax free military S. Turbo tax free military savings bond. Turbo tax free military The savings bond interest qualified for the exclusion. Turbo tax free military They figure their taxable benefits by completing Worksheet 1 below. Turbo tax free military Because they have qualified U. Turbo tax free military S. Turbo tax free military savings bond interest, they follow the note at the beginning of the worksheet and use the amount from line 2 of their Schedule B (Form 1040A or 1040) on line 3 of the worksheet instead of the amount from line 8a of their Form 1040. Turbo tax free military On line 3 of the worksheet, they enter $40,500 ($38,000 + $2,500). Turbo tax free military More than 50% of Joe's net benefits are taxable because the income on line 8 of the worksheet ($45,500) is more than $44,000. Turbo tax free military (See Maximum taxable part under How Much Is Taxable earlier. Turbo tax free military ) Joe and Betty enter $10,000 on Form 1040, line 20a, and $6,275 on Form 1040, line 20b. Turbo tax free military Filled-in Worksheet 1. Turbo tax free military Figuring Your Taxable Benefits Before you begin: If you are married filing separately and you lived apart from your spouse for all of 2013, enter “D” to the right of the word “benefits” on Form 1040, line 20a, or Form 1040A, line 14a. Turbo tax free military Do not use this worksheet if you repaid benefits in 2013 and your total repayments (box 4 of Forms SSA-1099 and RRB-1099) were more than your gross benefits for 2013 (box 3 of Forms SSA-1099 and RRB-1099). Turbo tax free military None of your benefits are taxable for 2013. Turbo tax free military For more information, see Repayments More Than Gross Benefits . Turbo tax free military If you are filing Form 8815, Exclusion of Interest From Series EE and I U. Turbo tax free military S. Turbo tax free military Savings Bonds Issued After 1989, do not include the amount from line 8a of Form 1040 or Form 1040A on line 3 of this worksheet. Turbo tax free military Instead, include the amount from Schedule B (Form 1040A or 1040), line 2. Turbo tax free military 1. Turbo tax free military Enter the total amount from box 5 of ALL your Forms SSA-1099 and RRB-1099. Turbo tax free military Also enter this amount on Form 1040, line 20a, or Form 1040A, line 14a 1. Turbo tax free military $10,000         2. Turbo tax free military Enter one-half of line 1 2. Turbo tax free military 5,000     3. Turbo tax free military Combine the amounts from: Form 1040: Lines 7, 8a, 9a, 10 through 14, 15b, 16b, 17 through 19, and 21 Form 1040A: Lines 7, 8a, 9a, 10, 11b, 12b, and 13 3. Turbo tax free military 40,500     4. Turbo tax free military Enter the amount, if any, from Form 1040 or 1040A, line 8b 4. Turbo tax free military -0-     5. Turbo tax free military Enter the total of any exclusions/adjustments for: Adoption benefits (Form 8839, line 28), Foreign earned income or housing (Form 2555, lines 45 and 50, or Form 2555-EZ, line 18), and Certain income of bona fide residents of American Samoa (Form 4563, line 15) or Puerto Rico 5. Turbo tax free military -0-     6. Turbo tax free military Combine lines 2, 3, 4, and 5 6. Turbo tax free military 45,500     7. Turbo tax free military Form 1040 filers: Enter the amounts from Form 1040, lines 23 through 32, and any write-in adjustments you entered on the dotted line next to line 36. Turbo tax free military  Form 1040A filers: Enter the amounts from Form 1040A, lines 16 and 17 7. Turbo tax free military -0-     8. Turbo tax free military Is the amount on line 7 less than the amount on line 6?             No. Turbo tax free military None of your social security benefits are taxable. Turbo tax free military Enter -0- on Form 1040, line 20b, or Form 1040A, line 14b. Turbo tax free military             Yes. Turbo tax free military Subtract line 7 from line 6 8. Turbo tax free military 45,500     9. Turbo tax free military If you are:  Married filing jointly, enter $32,000 Single, head of household, qualifying widow(er), or married filing separately and you lived apart from your spouse for all of 2013, enter $25,000 9. Turbo tax free military 32,000       Note. Turbo tax free military If you are married filing separately and you lived with your spouse at any time in 2013, skip lines 9 through 16; multiply line 8 by 85% (. Turbo tax free military 85) and enter the result on line 17. Turbo tax free military Then go to line 18. Turbo tax free military         10. Turbo tax free military Is the amount on line 9 less than the amount on line 8?             No. Turbo tax free military None of your benefits are taxable. Turbo tax free military Enter -0- on Form 1040, line 20b, or on Form 1040A, line 14b. Turbo tax free military If you are married filing separately and you lived apart from your spouse for all of 2013, be sure you entered “D” to the right of the word “benefits” on Form 1040, line 20a, or on Form 1040A, line 14a. Turbo tax free military             Yes. Turbo tax free military Subtract line 9 from line 8 10. Turbo tax free military 13,500     11. Turbo tax free military Enter $12,000 if married filing jointly; $9,000 if single, head of household, qualifying widow(er), or married filing separately and you lived apart from your spouse for all of 2013 11. Turbo tax free military 12,000     12. Turbo tax free military Subtract line 11 from line 10. Turbo tax free military If zero or less, enter -0- 12. Turbo tax free military 1,500     13. Turbo tax free military Enter the smaller of line 10 or line 11 13. Turbo tax free military 12,000     14. Turbo tax free military Enter one-half of line 13 14. Turbo tax free military 6,000     15. Turbo tax free military Enter the smaller of line 2 or line 14 15. Turbo tax free military 5,000     16. Turbo tax free military Multiply line 12 by 85% (. Turbo tax free military 85). Turbo tax free military If line 12 is zero, enter -0- 16. Turbo tax free military 1,275     17. Turbo tax free military Add lines 15 and 16 17. Turbo tax free military 6,275     18. Turbo tax free military Multiply line 1 by 85% (. Turbo tax free military 85) 18. Turbo tax free military 8,500     19. Turbo tax free military Taxable benefits. Turbo tax free military Enter the smaller of line 17 or line 18. Turbo tax free military Also enter this amount on Form 1040, line 20b, or Form 1040A, line 14b 19. Turbo tax free military $6,275       If you received a lump-sum payment in 2013 that was for an earlier year, also complete Worksheet 2 or 3 and Worksheet 4 to see if you can report a lower taxable benefit. Turbo tax free military         Filled-in Worksheet 1. Turbo tax free military Figuring Your Taxable Benefits Before you begin: If you are married filing separately and you lived apart from your spouse for all of 2013, enter “D” to the right of the word “benefits” on Form 1040, line 20a, or Form 1040A, line 14a. Turbo tax free military Do not use this worksheet if you repaid benefits in 2013 and your total repayments (box 4 of Forms SSA-1099 and RRB-1099) were more than your gross benefits for 2013 (box 3 of Forms SSA-1099 and RRB-1099). Turbo tax free military None of your benefits are taxable for 2013. Turbo tax free military For more information, see Repayments More Than Gross Benefits . Turbo tax free military If you are filing Form 8815, Exclusion of Interest From Series EE and I U. Turbo tax free military S. Turbo tax free military Savings Bonds Issued After 1989, do not include the amount from line 8a of Form 1040 or Form 1040A on line 3 of this worksheet. Turbo tax free military Instead, include the amount from Schedule B (Form 1040A or 1040), line 2. Turbo tax free military 1. Turbo tax free military Enter the total amount from box 5 of ALL your Forms SSA-1099 and RRB-1099. Turbo tax free military Also enter this amount on Form 1040, line 20a, or Form 1040A, line 14a 1. Turbo tax free military $4,000         2. Turbo tax free military Enter one-half of line 1 2. Turbo tax free military 2,000     3. Turbo tax free military Combine the amounts from: Form 1040: Lines 7, 8a, 9a, 10 through 14, 15b, 16b, 17 through 19, and 21 Form 1040A: Lines 7, 8a, 9a, 10, 11b, 12b, and 13 3. Turbo tax free military 8,000     4. Turbo tax free military Enter the amount, if any, from Form 1040 or 1040A, line 8b 4. Turbo tax free military -0-     5. Turbo tax free military Enter the total of any exclusions/adjustments for: Adoption benefits (Form 8839, line 28), Foreign earned income or housing (Form 2555, lines 45 and 50, or Form 2555-EZ, line 18), and Certain income of bona fide residents of American Samoa (Form 4563, line 15) or Puerto Rico 5. Turbo tax free military -0-     6. Turbo tax free military Combine lines 2, 3, 4, and 5 6. Turbo tax free military 10,000     7. Turbo tax free military Form 1040 filers: Enter the amounts from Form 1040, lines 23 through 32, and any write-in adjustments you entered on the dotted line next to line 36. Turbo tax free military  Form 1040A filers: Enter the amounts from Form 1040A, lines 16 and 17 7. Turbo tax free military -0-     8. Turbo tax free military Is the amount on line 7 less than the amount on line 6?             No. Turbo tax free military None of your social security benefits are taxable. Turbo tax free military Enter -0- on Form 1040, line 20b, or Form 1040A, line 14b. Turbo tax free military             Yes. Turbo tax free military Subtract line 7 from line 6 8. Turbo tax free military 10,000     9. Turbo tax free military If you are:  Married filing jointly, enter $32,000 Single, head of household, qualifying widow(er), or married filing separately and you lived apart from your spouse for all of 2013, enter $25,000 9. Turbo tax free military         Note. Turbo tax free military If you are married filing separately and you lived with your spouse at any time in 2013, skip lines 9 through 16; multiply line 8 by 85% (. Turbo tax free military 85) and enter the result on line 17. Turbo tax free military Then go to line 18. Turbo tax free military         10. Turbo tax free military Is the amount on line 9 less than the amount on line 8?             No. Turbo tax free military None of your benefits are taxable. Turbo tax free military Enter -0- on Form 1040, line 20b, or on Form 1040A, line 14b. Turbo tax free military If you are married filing separately and you lived apart from your spouse for all of 2013, be sure you entered “D” to the right of the word “benefits” on Form 1040, line 20a, or on Form 1040A, line 14a. Turbo tax free military             Yes. Turbo tax free military Subtract line 9 from line 8 10. Turbo tax free military       11. Turbo tax free military Enter $12,000 if married filing jointly; $9,000 if single, head of household, qualifying widow(er), or married filing separately and you lived apart from your spouse for all of 2013 11. Turbo tax free military       12. Turbo tax free military Subtract line 11 from line 10. Turbo tax free military If zero or less, enter -0- 12. Turbo tax free military       13. Turbo tax free military Enter the smaller of line 10 or line 11 13. Turbo tax free military       14. Turbo tax free military Enter one-half of line 13 14. Turbo tax free military       15. Turbo tax free military Enter the smaller of line 2 or line 14 15. Turbo tax free military       16. Turbo tax free military Multiply line 12 by 85% (. Turbo tax free military 85). Turbo tax free military If line 12 is zero, enter -0- 16. Turbo tax free military       17. Turbo tax free military Add lines 15 and 16 17. Turbo tax free military 8,500     18. Turbo tax free military Multiply line 1 by 85% (. Turbo tax free military 85) 18. Turbo tax free military 3,400     19. Turbo tax free military Taxable benefits. Turbo tax free military Enter the smaller of line 17 or line 18. Turbo tax free military Also enter this amount on Form 1040, line 20b, or Form 1040A, line 14b 19. Turbo tax free military $3,400       If you received a lump-sum payment in 2013 that was for an earlier year, also complete Worksheet 2 or 3 and Worksheet 4 to see if you can report a lower taxable benefit. Turbo tax free military         Example 4. Turbo tax free military Bill and Eileen Jones are married and live together, but file separate Form 1040 returns for 2013. Turbo tax free military Bill earned $8,000 during 2013. Turbo tax free military The only other income he had for the year was $4,000 net social security benefits (box 5 of his Form SSA-1099). Turbo tax free military Bill figures his taxable benefits by completing Worksheet 1 below. Turbo tax free military He must include 85% of his social security benefits in his taxable income because he is married filing separately and lived with his spouse during 2013. Turbo tax free military See How Much Is Taxable earlier. Turbo tax free military Bill enters $4,000 on his Form 1040, line 20a, and $3,400 on Form 1040, line 20b. Turbo tax free military Lump-Sum Election You must include the taxable part of a lump-sum (retroactive) payment of benefits received in 2013 in your 2013 income, even if the payment includes benefits for an earlier year. Turbo tax free military This type of lump-sum benefit payment should not be confused with the lump-sum death benefit that both the SSA and RRB pay to many of their beneficiaries. Turbo tax free military No part of the lump-sum death benefit is subject to tax. Turbo tax free military Generally, you use your 2013 income to figure the taxable part of the total benefits received in 2013. Turbo tax free military However, you may be able to figure the taxable part of a lump-sum payment for an earlier year separately, using your income for the earlier year. Turbo tax free military You can elect this method if it lowers your taxable benefits. Turbo tax free military Under the lump-sum election method, you refigure the taxable part of all your benefits for the earlier year (including the lump-sum payment) using that year's income. Turbo tax free military Then you subtract any taxable benefits for that year that you previously reported. Turbo tax free military The remainder is the taxable part of the lump-sum payment. Turbo tax free military Add it to the taxable part of your benefits for 2013 (figured without the lump-sum payment for the earlier year). Turbo tax free military Because the earlier year's taxable benefits are included in your 2013 income, no adjustment is made to the earlier year's return. Turbo tax free military Do not file an amended return for the earlier year. Turbo tax free military Will the lump-sum election method lower your taxable benefits?   To find out, take the following steps. Turbo tax free military Complete Worksheet 1 in this publication. Turbo tax free military Complete Worksheet 2 and Worksheet 3 as appropriate. Turbo tax free military Use Worksheet 2 if your lump-sum payment was for a year after 1993. Turbo tax free military Use Worksheet 3 if it was for 1993 or an earlier year. Turbo tax free military Complete a separate Worksheet 2 or Worksheet 3 for each earlier year for which you received the lump-sum payment. Turbo tax free military Complete Worksheet 4. Turbo tax free military Compare the taxable benefits on line 19 of Worksheet 1 with the taxable benefits on line 21 of Worksheet 4. Turbo tax free military If the taxable benefits on Worksheet 4 are lower than the taxable benefits on Worksheet 1, you can elect to report the lower amount on your return. Turbo tax free military Making the election. Turbo tax free military   If you elect to report your taxable benefits under the lump-sum election method, follow the instructions at the bottom of Worksheet 4. Turbo tax free military Do not attach the completed worksheets to your return. Turbo tax free military Keep them with your records. Turbo tax free military    Once you elect this method of figuring the taxable part of a lump-sum payment, you can revoke your election only with the consent of the IRS. Turbo tax free military Lump-sum payment reported on Form SSA-1099 or RRB-1099. Turbo tax free military   If you received a lump-sum payment in 2013 that includes benefits for one or more earlier years after 1983, it will be included in box 3 of either Form SSA-1099 or Form RRB-1099. Turbo tax free military That part of any lump-sum payment for years before 1984 is not taxed and will not be shown on the form. Turbo tax free military The form will also show the year (or years) the payment is for. Turbo tax free military However, Form RRB-1099 will not show a breakdown by year (or years) of any lump-sum payment for years before 2011. Turbo tax free military You must contact the RRB for a breakdown by year for any amount shown in box 9. Turbo tax free military Example Jane Jackson is single. Turbo tax free military In 2012 she applied for social security disability benefits but was told she was ineligible. Turbo tax free military She appealed the decision and won. Turbo tax free military In 2013, she received a lump-sum payment of $6,000, of which $2,000 was for 2012 and $4,000 was for 2013. Turbo tax free military Jane also received $5,000 in social security benefits in 2013, so her total benefits in 2013 were $11,000. Turbo tax free military Jane's other income for 2012 and 2013 is as follows. Turbo tax free military   Income 2012 2013     Wages $20,000 $ 3,500     Interest income 2,000 2,500     Dividend income 1,000 1,500     Fully taxable pension   18,000     Total $23,000 $25,500   To see if the lump-sum election method results in lower taxable benefits, she completes Worksheets 1, 2, and 4 from this publication. Turbo tax free military She does not need to complete Worksheet 3 because her lump-sum payment was for years after 1993. Turbo tax free military Jane completes Worksheet 1 to find the amount of her taxable benefits for 2013 under the regular method. Turbo tax free military She completes Worksheet 2 to find the taxable part of the lump-sum payment for 2012 under the lump-sum election method. Turbo tax free military She completes Worksheet 4 to decide if the lump-sum election method will lower her taxable benefits. Turbo tax free military After completing the worksheets, Jane compares the amounts from Worksheet 4, line 21, and Worksheet 1, line 19. Turbo tax free military Because the amount on Worksheet 4 is smaller, she chooses to use the lump-sum election method. Turbo tax free military To do this, she prints “LSE” to the left of Form 1040, line 20a. Turbo tax free military She then enters $11,000 on Form 1040, line 20a, and her taxable benefits of $2,500 on line 20b. Turbo tax free military Jane's filled-in worksheets (1, 2, and 4) follow. Turbo tax free military Jane Jackson's Filled-in Worksheet 1. Turbo tax free military Figuring Your Taxable Benefits Before you begin: If you are married filing separately and you lived apart from your spouse for all of 2013, enter “D” to the right of the word “benefits” on Form 1040, line 20a, or Form 1040A, line 14a. Turbo tax free military Do not use this worksheet if you repaid benefits in 2013 and your total repayments (box 4 of Forms SSA-1099 and RRB-1099) were more than your gross benefits for 2013 (box 3 of Forms SSA-1099 and RRB-1099). Turbo tax free military None of your benefits are taxable for 2013. Turbo tax free military For more information, see Repayments More Than Gross Benefits . Turbo tax free military If you are filing Form 8815, Exclusion of Interest From Series EE and I U. Turbo tax free military S. Turbo tax free military Savings Bonds Issued After 1989, do not include the amount from line 8a of Form 1040 or Form 1040A on line 3 of this worksheet. Turbo tax free military Instead, include the amount from Schedule B (Form 1040A or 1040), line 2. Turbo tax free military 1. Turbo tax free military Enter the total amount from box 5 of ALL your Forms SSA-1099 and RRB-1099. Turbo tax free military Also enter this amount on Form 1040, line 20a, or Form 1040A, line 14a 1. Turbo tax free military $11,000         2. Turbo tax free military Enter one-half of line 1 2. Turbo tax free military 5,500     3. Turbo tax free military Combine the amounts from: Form 1040: Lines 7, 8a, 9a, 10 through 14, 15b, 16b, 17 through 19, and 21 Form 1040A: Lines 7, 8a, 9a, 10, 11b, 12b, and 13 3. Turbo tax free military 25,500     4. Turbo tax free military Enter the amount, if any, from Form 1040 or 1040A, line 8b 4. Turbo tax free military -0-     5. Turbo tax free military Enter the total of any exclusions/adjustments for: Adoption benefits (Form 8839, line 28), Foreign earned income or housing (Form 2555, lines 45 and 50, or Form 2555-EZ, line 18), and Certain income of bona fide residents of American Samoa (Form 4563, line 15) or Puerto Rico 5. Turbo tax free military -0-     6. Turbo tax free military Combine lines 2, 3, 4, and 5 6. Turbo tax free military 31,000     7. Turbo tax free military Form 1040 filers: Enter the amounts from Form 1040, lines 23 through 32, and any write-in adjustments you entered on the dotted line next to line 36. Turbo tax free military  Form 1040A filers: Enter the amounts from Form 1040A, lines 16 and 17 7. Turbo tax free military -0-     8. Turbo tax free military Is the amount on line 7 less than the amount on line 6?             No. Turbo tax free military None of your social security benefits are taxable. Turbo tax free military Enter -0- on Form 1040, line 20b, or Form 1040A, line 14b. Turbo tax free military             Yes. Turbo tax free military Subtract line 7 from line 6 8. Turbo tax free military 31,000     9. Turbo tax free military If you are:  Married filing jointly, enter $32,000 Single, head of household, qualifying widow(er), or married filing separately and you lived apart from your spouse for all of 2013, enter $25,000 9. Turbo tax free military 25,000       Note. Turbo tax free military If you are married filing separately and you lived with your spouse at any time in 2013, skip lines 9 through 16; multiply line 8 by 85% (. Turbo tax free military 85) and enter the result on line 17. Turbo tax free military Then go to line 18. Turbo tax free military         10. Turbo tax free military Is the amount on line 9 less than the amount on line 8?             No. Turbo tax free military None of your benefits are taxable. Turbo tax free military Enter -0- on Form 1040, line 20b, or on Form 1040A, line 14b. Turbo tax free military If you are married filing separately and you lived apart from your spouse for all of 2013, be sure you entered “D” to the right of the word “benefits” on Form 1040, line 20a, or on Form 1040A, line 14a. Turbo tax free military             Yes. Turbo tax free military Subtract line 9 from line 8 10. Turbo tax free military 6,000     11. Turbo tax free military Enter $12,000 if married filing jointly; $9,000 if single, head of household, qualifying widow(er), or married filing separately and you lived apart from your spouse for all of 2013 11. Turbo tax free military 9,000     12. Turbo tax free military Subtract line 11 from line 10. Turbo tax free military If zero or less, enter -0- 12. Turbo tax free military -0-     13. Turbo tax free military Enter the smaller of line 10 or line 11 13. Turbo tax free military 6,000     14. Turbo tax free military Enter one-half of line 13 14. Turbo tax free military 3,000     15. Turbo tax free military Enter the smaller of line 2 or line 14 15. Turbo tax free military 3,000     16. Turbo tax free military Multiply line 12 by 85% (. Turbo tax free military 85). Turbo tax free military If line 12 is zero, enter -0- 16. Turbo tax free military -0-     17. Turbo tax free military Add lines 15 and 16 17. Turbo tax free military 3,000     18. Turbo tax free military Multiply line 1 by 85% (. Turbo tax free military 85) 18. Turbo tax free military 9,350     19. Turbo tax free military Taxable benefits. Turbo tax free military Enter the smaller of line 17 or line 18. Turbo tax free military Also enter this amount on Form 1040, line 20b, or Form 1040A, line 14b 19. Turbo tax free military $3,000       If you received a lump-sum payment in 2013 that was for an earlier year, also complete Worksheet 2 or 3 and Worksheet 4 to see if you can report a lower taxable benefit. Turbo tax free military         Jane Jackson's Filled-in Worksheet 2. Turbo tax free military Figure Your Additional Taxable Benefits (From a Lump-Sum Payment for a Year After 1993)     Enter earlier year 2012 1. Turbo tax free military Enter the total amount from box 5 of ALL your Forms SSA-1099 and RRB-1099 for the earlier year, plus the lump-sum payment for the earlier year received after that year 1. Turbo tax free military $2,000           Note. Turbo tax free military If line 1 is zero or less, skip lines 2 through 20 and enter -0- on line 21. Turbo tax free military Otherwise, go on to line 2. Turbo tax free military             2. Turbo tax free military Enter one-half of line 1 2. Turbo tax free military 1,000   3. Turbo tax free military Enter your adjusted gross income for the earlier year 3. Turbo tax free military 23,000   4. Turbo tax free military Enter the total of any exclusions/adjustments you claimed in the earlier year for: Adoption benefits (Form 8839) Qualified U. Turbo tax free military S. Turbo tax free military savings bond interest (Form 8815) Student loan interest (Form 1040, page 1, or Form 1040A, page 1) Tuition and fees (Form 1040, page 1, or Form 1040A, page 1) Domestic production activities (for 2005 through 2012) (Form 1040, page 1) Foreign earned income or housing (Form 2555 or Form 2555-EZ) Certain income of bona fide residents of American Samoa (Form 4563) or Puerto Rico 4. Turbo tax free military -0-   5. Turbo tax free military Enter any tax-exempt interest received in the earlier year 5. Turbo tax free military -0-   6. Turbo tax free military Add lines 2 through 5 6. Turbo tax free military 24,000   7. Turbo tax free military Enter your taxable benefits for the earlier year that you previously reported 7. Turbo tax free military -0-   8. Turbo tax free military Subtract line 7 from line 6 8. Turbo tax free military 24,000   9. Turbo tax free military If, for the earlier year, you were:     Married filing jointly, enter $32,000 Single, head of household, qualifying widow(er), married filing separately and you lived apart from your spouse for all of the earlier year, enter $25,000 9. Turbo tax free military 25,000     Note. Turbo tax free military If you were married filing separately and you lived with your spouse at any time during the earlier year, skip lines 9 through 16; multiply line 8 by 85% (. Turbo tax free military 85) and enter the result on line 17. Turbo tax free military Then go to line 18. Turbo tax free military         10. Turbo tax free military Is the amount on line 8 more than the amount on line 9?       No. Turbo tax free military Skip lines 10 through 20 and enter -0- on line 21. Turbo tax free military       Yes. Turbo tax free military Subtract line 9 from line 8 10. Turbo tax free military     11. Turbo tax free military Enter $12,000 if married filing jointly for the earlier year; $9,000 if single, head of household, qualifying widow(er), or married filing separately and you lived apart from your spouse for all of the earlier year 11. Turbo tax free military     12. Turbo tax free military Subtract line 11 from line 10. Turbo tax free military If zero or less, enter -0- 12. Turbo tax free military     13. Turbo tax free military Enter the smaller of line 10 or line 11 13. Turbo tax free military     14. Turbo tax free military Enter one-half of line 13 14. Turbo tax free military     15. Turbo tax free military Enter the smaller of line 2 or line 14 15. Turbo tax free military     16. Turbo tax free military Multiply line 12 by 85% (. Turbo tax free military 85). Turbo tax free military If line 12 is zero, enter -0- 16. Turbo tax free military     17. Turbo tax free military Add lines 15 and 16 17. Turbo tax free military     18. Turbo tax free military Multiply line 1 by 85% (. Turbo tax free military 85) 18. Turbo tax free military     19. Turbo tax free military Refigured taxable benefits. Turbo tax free military Enter the smaller of line 17 or line 18 19. Turbo tax free military     20. Turbo tax free military Enter your taxable benefits for the earlier year (or as refigured due to a previous lump-sum payment for the year) 20. Turbo tax free military     21. Turbo tax free military Additional taxable benefits. Turbo tax free military Subtract line 20 from line 19. Turbo tax free military Also enter this amount on Worksheet 4, line 20 21. Turbo tax free military -0-     Do not file an amended return for this earlier year. Turbo tax free military Complete a separate Worksheet 2 or Worksheet 3 for each earlier year for which you received a lump-sum payment in 2013. Turbo tax free military   Jane Jackson's Filled-in Worksheet 4. Turbo tax free military Figure Your Taxable Benefits Under the Lump-Sum Election Method (Use With Worksheet 2 or 3)     Complete Worksheet 1 and Worksheets 2 and 3 as appropriate before completing this worksheet. Turbo tax free military 1. Turbo tax free military Enter the total amount from box 5 of ALL your Forms SSA-1099 and RRB-1099 for 2013, minus the lump-sum payment for years before 2013 1. Turbo tax free military $9,000         Note. Turbo tax free military If line 1 is zero or less, skip lines 2 through 18, enter -0- on line 19 and go to line 20. Turbo tax free military Otherwise, go on to line 2. Turbo tax free military           2. Turbo tax free military Enter one-half of line 1 2. Turbo tax free military 4,500   3. Turbo tax free military Enter the amount from Worksheet 1, line 3 3. Turbo tax free military 25,500   4. Turbo tax free military Enter the amount from Worksheet 1, line 4 4. Turbo tax free military -0-   5. Turbo tax free military Enter the amount from Worksheet 1, line 5 5. Turbo tax free military -0-   6. Turbo tax free military Combine lines 2, 3, 4, and 5 6. Turbo tax free military 30,000   7. Turbo tax free military Enter the amount from Worksheet 1, line 7 7. Turbo tax free military -0-   8. Turbo tax free military Subtract line 7 from line 6 8. Turbo tax free military 30,000   9. Turbo tax free military Enter the amount from Worksheet 1, line 9. Turbo tax free military But if you are married filing separately and lived with your spouse at any time during 2013, skip lines 9 through 16; multiply line 8 by 85% (. Turbo tax free military 85) and enter the result on line 17. Turbo tax free military Then, go to line 18 9. Turbo tax free military 25,000   10. Turbo tax free military Is the amount on line 8 more than the amount on line 9? No. Turbo tax free military Skip lines 10 through 18, enter -0- on line 19, and go to line 20. Turbo tax free military  Yes. Turbo tax free military Subtract line 9 from line 8 10. Turbo tax free military 5,000   11. Turbo tax free military Enter the amount from Worksheet 1, line 11 11. Turbo tax free military 9,000   12. Turbo tax free military Subtract line 11 from line 10. Turbo tax free military If zero or less, enter -0- 12. Turbo tax free military -0-   13. Turbo tax free military Enter the smaller of line 10 or line 11 13. Turbo tax free military 5,000   14. Turbo tax free military Enter one-half of line 13 14. Turbo tax free military 2,500   15. Turbo tax free military Enter the smaller of line 2 or line 14 15. Turbo tax free military 2,500   16. Turbo tax free military Multiply line 12 by 85% (. Turbo tax free military 85). Turbo tax free military If line 12 is zero, enter -0- 16. Turbo tax free military -0-   17. Turbo tax free military Add lines 15 and 16 17. Turbo tax free military 2,500   18. Turbo tax free military Multiply line 1 by 85% (. Turbo tax free military 85) 18. Turbo tax free military 7,650   19. Turbo tax free military Enter the smaller of line 17 or line 18 19. Turbo tax free military 2,500   20. Turbo tax free military Enter the total of the amounts from Worksheet 2, line 21, and Worksheet 3, line 14, for all earlier years for which the lump-sum payment was received 20. Turbo tax free military -0-   21. Turbo tax free military Taxable benefits under lump-sum election method. Turbo tax free military Add lines 19 and 20 21. Turbo tax free military $2,500   Next. Turbo tax free military Is line 21 above smaller than Worksheet 1, line 19? No. Turbo tax free military Do not use this method to figure your taxable benefits. Turbo tax free military Follow the instructions on Worksheet 1 to report your benefits. Turbo tax free military  Yes. Turbo tax free military You can elect to report your taxable benefits under this method. Turbo tax free military To elect this method:     Enter “LSE” to the left of Form 1040, line 20a, or Form 1040A, line 14a. Turbo tax free military If line 21 above is zero, follow the instructions in line 10 for “No” on Worksheet 1. Turbo tax free military Otherwise: Enter the amount from Worksheet 1, line 1, on Form 1040, line 20a, or on Form 1040A, line 14a. Turbo tax free military Enter the amount from line 21 above on Form 1040, line 20b, or on Form 1040A, line 14b. Turbo tax free military If you are married filing separately and you lived apart from your spouse for all of 2013, enter “D” to the right of the word “benefits” on Form 1040, line 20a, or Form 1040A, line 14a. Turbo tax free military   Deductions Related to Your Benefits You may be entitled to deduct certain amounts related to the benefits you receive. Turbo tax free military Disability payments. Turbo tax free military   You may have received disability payments from your employer or an insurance company that you included as income on your tax return in an earlier year. Turbo tax free military If you received a lump-sum payment from SSA or RRB, and you had to repay the employer or insurance company for the disability payments, you can take an itemized deduction for the part of the payments you included in gross income in the earlier year. Turbo tax free military If the amount you repay is more than $3,000, you may be able to claim a tax credit instead. Turbo tax free military Claim the deduction or credit in the same way explained under Repayment of benefits received in an earlier year in the section Repayments More Than Gross Benefits , later. Turbo tax free military Legal expenses. Turbo tax free military   You can usually deduct legal expenses that you pay or incur to produce or collect taxable income or in connection with the determination, collection, or refund of any tax. Turbo tax free military   Legal expenses for collecting the taxable part of your benefits are deductible as a miscellaneous itemized deduction on Schedule A (Form 1040), line 23. Turbo tax free military Repayments More Than Gross Benefits In some situations, your Form SSA-1099 or Form RRB-1099 will show that the total benefits you repaid (box 4) are more than the gross benefits (box 3) you received. Turbo tax free military If this occurred, your net benefits in box 5 will be a negative figure (a figure in parentheses) and none of your benefits will be taxable. Turbo tax free military Do not use Worksheet 1 in this case. Turbo tax free military If you receive more than one form, a negative figure in box 5 of one form is used to offset a positive figure in box 5 of another form for that same year. Turbo tax free military If you have any questions about this negative figure, contact your local SSA office or your local RRB field office. Turbo tax free military Joint return. Turbo tax free military   If you and your spouse file a joint return, and your Form SSA-1099 or RRB-1099 has a negative figure in box 5, but your spouse's does not, subtract the amount in box 5 of your form from the amount in box 5 of your spouse's form. Turbo tax free military You do this to get your net benefits when figuring if your combined benefits are taxable. Turbo tax free military Example. Turbo tax free military John and Mary file a joint return for 2013. Turbo tax free military John received Form SSA-1099 showing $3,000 in box 5. Turbo tax free military Mary also received Form SSA-1099 and the amount in box 5 was ($500). Turbo tax free military John and Mary will use $2,500 ($3,000 minus $500) as the amount of their net benefits when figuring if any of their combined benefits are taxable. Turbo tax free military Repayment of benefits received in an earlier year. Turbo tax free military   If the total amount shown in box 5 of all of your Forms SSA-1099 and RRB-1099 is a negative figure, you can take an itemized deduction for the part of this negative figure that represents benefits you included in gross income in an earlier year. Turbo tax free military Deduction $3,000 or less. Turbo tax free military   If this deduction is $3,000 or less, it is subject to the 2%-of-adjusted-gross-income limit that applies to certain miscellaneous itemized deductions. Turbo tax free military Claim it on Schedule A (Form 1040), line 23. Turbo tax free military Deduction more than $3,000. Turbo tax free military   If this deduction is more than $3,000, you should figure your tax two ways: Figure your tax for 2013 with the itemized deduction included on Schedule A, line 28. Turbo tax free military Figure your tax for 2013 in the following steps: Figure the tax without the itemized deduction included on Schedule A, line 28. Turbo tax free military For each year after 1983 for which part of the negative figure represents a repayment of benefits, refigure your taxable benefits as if your total benefits for the year were reduced by that part of the negative figure. Turbo tax free military Then refigure the tax for that year. Turbo tax free military Subtract the total of the refigured tax amounts in (b) from the total of your actual tax amounts. Turbo tax free military Subtract the result in (c) from the result in (a). Turbo tax free military   Compare the tax figured in methods (1) and (2). Turbo tax free military Your tax for 2013 is the smaller of the two amounts. Turbo tax free military If method (1) results in less tax, take the itemized deduction on Schedule A (Form 1040), line 28. Turbo tax free military If method (2) results in less tax, claim a credit for the amount from step 2(c) above on Form 1040, line 71. Turbo tax free military Check box d and enter “I. Turbo tax free military R. Turbo tax free military C. Turbo tax free military 1341” in the space next to that box. Turbo tax free military If both methods produce the same tax, deduct the repayment on Schedule A (Form 1040), line 28. Turbo tax free military Worksheets Blank Worksheets 1 through 4 are provided in this section: Worksheet 1, Figuring Your Taxable Benefits; Worksheet 2, Figure Your Additional Taxable Benefits (From a Lump-Sum Payment for a Year After 1993); Worksheet 3, Figure Your Additional Taxable Benefits (From a Lump-Sum Payment for a Year Before 1994); Worksheet 4, Figure Your Taxable Benefits Under the Lump-Sum Election Method (Use With Worksheet 2 or 3). Turbo tax free military Worksheet 1. Turbo tax free military Figuring Your Taxable Benefits Before you begin: If you are married filing separately and you lived apart from your spouse for all of 2013, enter “D” to the right of the word “benefits” on Form 1040, line 20a, or Form 1040A, line 14a. Turbo tax free military Do not use this worksheet if you repaid benefits in 2013 and your total repayments (box 4 of Forms SSA-1099 and RRB-1099) were more than your gross benefits for 2013 (box 3 of Forms SSA-1099 and RRB-1099). Turbo tax free military None of your benefits are taxable for 2013. Turbo tax free military For more information, see Repayments More Than Gross Benefits . Turbo tax free military If you are filing Form 8815, Exclusion of Interest From Series EE and I U. Turbo tax free military S. Turbo tax free military Savings Bonds Issued After 1989, do not include the amount from line 8a of Form 1040 or Form 1040A on line 3 of this worksheet. Turbo tax free military Instead, include the amount from Schedule B (Form 1040A or 1040), line 2. Turbo tax free military 1. Turbo tax free military Enter the total amount from box 5 of ALL your Forms SSA-1099 and RRB-1099. Turbo tax free military Also enter this amount on Form 1040, line 20a, or Form 1040A, line 14a 1. Turbo tax free military           2. Turbo tax free military Enter one-half of line 1 2. Turbo tax free military       3. Turbo tax free military Combine the amounts from: Form 1040: Lines 7, 8a, 9a, 10 through 14, 15b, 16b, 17 through 19, and 21 Form 1040A: Lines 7, 8a, 9a, 10, 11b, 12b, and 13 3. Turbo tax free military       4. Turbo tax free military Enter the amount, if any, from Form 1040 or 1040A, line 8b 4. Turbo tax free military       5. Turbo tax free military Enter the total of any exclusions/adjustments for: Adoption benefits (Form 8839, line 28), Foreign earned income or housing (Form 2555, lines 45 and 50, or Form 2555-EZ, line 18), and Certain income of bona fide residents of American Samoa (Form 4563, line 15) or Puerto Rico 5. Turbo tax free military       6. Turbo tax free military Combine lines 2, 3, 4, and 5 6. Turbo tax free military       7. Turbo tax free military Form 1040 filers: Enter the amounts from Form 1040, lines 23 through 32, and any write-in adjustments you entered on the dotted line next to line 36. Turbo tax free military  Form 1040A filers: Enter the amounts from Form 1040A, lines 16 and 17 7. Turbo tax free military       8. Turbo tax free military Is the amount on line 7 less than the amount on line 6?             No. Turbo tax free military None of your social security benefits are taxable. Turbo tax free military Enter -0- on Form 1040, line 20b, or Form 1040A, line 14b. Turbo tax free military             Yes. Turbo tax free military Subtract line 7 from line 6 8. Turbo tax free military       9. Turbo tax free military If you are:  Married filing jointly, enter $32,000 Single, head of household, qualifying widow(er), or married filing separately and you lived apart from your spouse for all of 2013, enter $25,000 9. Turbo tax free military         Note. Turbo tax free military If you are married filing separately and you lived with your spouse at any time in 2013, skip lines 9 through 16; multiply line 8 by 85% (. Turbo tax free military 85) and enter the result on line 17. Turbo tax free military Then go to line 18. Turbo tax free military         10. Turbo tax free military Is the amount on line 9 less than the amount on line 8?             No. Turbo tax free military None of your benefits are taxable. Turbo tax free military Enter -0- on Form 1040, line 20b, or on Form 1040A, line 14b. Turbo tax free military If you are married filing separately and you lived apart from your spouse for all of 2013, be sure you entered “D” to the right of the word “benefits” on Form 1040, line 20a, or on Form 1040A, line 14a. Turbo tax free military             Yes. Turbo tax free military Subtract line 9 from line 8 10. Turbo tax free military       11. Turbo tax free military Enter $12,000 if married filing jointly; $9,000 if single, head of household, qualifying widow(er), or married filing separately and you lived apart from your spouse for all of 2013 11. Turbo tax free military       12. Turbo tax free military Subtract line 11 from line 10. Turbo tax free military If zero or less, enter -0- 12. Turbo tax free military       13. Turbo tax free military Enter the smaller of line 10 or line 11 13. Turbo tax free military       14. Turbo tax free military Enter one-half of line 13 14. Turbo tax free military       15. Turbo tax free military Enter the smaller of line 2 or line 14 15. Turbo tax free military       16. Turbo tax free military Multiply line 12 by 85% (. Turbo tax free military 85). Turbo tax free military If line 12 is zero, enter -0- 16. Turbo tax free military       17. Turbo tax free military Add lines 15 and 16 17. Turbo tax free military       18. Turbo tax free military Multiply line 1 by 85% (. Turbo tax free military 85) 18. Turbo tax free military       19. Turbo tax free military Taxable benefits. Turbo tax free military Enter the smaller of line 17 or line 18. Turbo tax free military Also enter this amount on Form 1040, line 20b, or Form 1040A, line 14b 19. Turbo tax free military         If you received a lump-sum payment in 2013 that was for an earlier year, also complete Worksheet 2 or 3 and Worksheet 4 to see if you can report a lower taxable benefit. Turbo tax free military         Worksheet 2. Turbo tax free military Figure Your Additional Taxable Benefits (From a Lump-Sum Payment for a Year After 1993)     Enter earlier year 1. Turbo tax free military Enter the total amount from box 5 of ALL your Forms SSA-1099 and RRB-1099 for the earlier year, plus the lump-sum payment for the earlier year received after that year 1. Turbo tax free military             Note. Turbo tax free military If line 1 is zero or less, skip lines 2 through 20 and enter -0- on line 21. Turbo tax free military Otherwise, go on to line 2. Turbo tax free military             2. Turbo tax free military Enter one-half of line 1 2. Turbo tax free military     3. Turbo tax free military Enter your adjusted gross income for the earlier year 3. Turbo tax free military     4. Turbo tax free military Enter the total of any exclusions/adjustments you claimed in the earlier year for: Adoption benefits (Form 8839) Qualified U. Turbo tax free military S. Turbo tax free military savings bond interest (Form 8815) Student loan interest (Form 1040, page 1, or Form 1040A, page 1) Tuition and fees (Form 1040, page 1, or Form 1040A, page 1) Domestic production activities (for 2005 through 2012) (Form 1040, page 1) Foreign earned income or housing (Form 2555 or Form 2555-EZ) Certain income of bona fide residents of American Samoa (Form 4563) or Puerto Rico 4. Turbo tax free military     5. Turbo tax free military Enter any tax-exempt interest received in the earlier year 5. Turbo tax free military     6. Turbo tax free military Add lines 2 through 5 6. Turbo tax free military     7. Turbo tax free military Enter your taxable benefits for the earlier year that you previously reported 7. Turbo tax free military     8. Turbo tax free military Subtract line 7 from line 6 8. Turbo tax free military     9. Turbo tax free military If, for the earlier year, you were:     Married filing jointly, enter $32,000 Single, head of household, qualifying widow(er), married filing separately and you lived apart from your spouse for all of the earlier year, enter $25,000 9. Turbo tax free military       Note. Turbo tax free military If you were married filing separately and you lived with your spouse at any time during the earlier year, skip lines 9 through 16; multiply line 8 by 85% (. Turbo tax free military 85) and enter the result on line 17. Turbo tax free military Then go to line 18. Turbo tax free military         10. Turbo tax free military Is the amount on line 8 more than the amount on line 9?       No. Turbo tax free military Skip lines 10 through 20 and enter -0- on line 21. Turbo tax free military       Yes. Turbo tax free military Subtract line 9 from line 8 10. Turbo tax free military     11. Turbo tax free military Enter $12,000 if married filing jointly for the earlier year; $9,000 if single, head of household, qualifying widow(er), or married filing separately and you lived apart from your spouse for all of the earlier year 11. Turbo tax free military     12. Turbo tax free military Subtract line 11 from line 10. Turbo tax free military If zero or less, enter -0- 12. Turbo tax free military     13. Turbo tax free military Enter the smaller of line 10 or line 11 13. Turbo tax free military     14. Turbo tax free military Enter one-half of line 13 14. Turbo tax free military     15. Turbo tax free military Enter the smaller of line 2 or line 14 15. Turbo tax free military     16. Turbo tax free military Multiply line 12 by 85% (. Turbo tax free military 85). Turbo tax free military If line 12 is zero, enter -0- 16. Turbo tax free military     17. Turbo tax free military Add lines 15 and 16 17. Turbo tax free military     18. Turbo tax free military Multiply line 1 by 85% (. Turbo tax free military 85) 18. Turbo tax free military     19. Turbo tax free military Refigured taxable benefits. Turbo tax free military Enter the smaller of line 17 or line 18 19. Turbo tax free military     20. Turbo tax free military Enter your taxable benefits for the earlier year (or as refigured due to a previous lump-sum payment for the year) 20. Turbo tax free military     21. Turbo tax free military Additional taxable benefits. Turbo tax free military Subtract line 20 from line 19. Turbo tax free military Also enter this amount on Worksheet 4, line 20 21. Turbo tax free military       Do not file an amended return for this earlier year. Turbo tax free military Complete a separate Worksheet 2 or Worksheet 3 for each earlier year for which you received a lump-sum payment in 2013. Turbo tax free military   Worksheet 3. Turbo tax free military Figure Your Additional Taxable Benefits (From a Lump-Sum Payment for a Year Before 1994) Enter earlier year 1. Turbo tax free military Enter the total amount from box 5 of ALL your Forms SSA-1099 and RRB-1099 for the earlier year, plus the lump-sum payment for the earlier year received after that year 1. Turbo tax free military           Note. Turbo tax free military If line 1 is zero or less, skip lines 2 through 13 and enter -0- on line 14. Turbo tax free military Otherwise, go on to line 2. Turbo tax free military           2. Turbo tax free military Enter one-half of line 1 2. Turbo tax free military     3. Turbo tax free military Enter your adjusted gross income for the earlier year 3. Turbo tax free military     4. Turbo tax free military Enter the total of any exclusions/adjustments you claimed in the earlier year for: Qualified U. Turbo tax free military S. Turbo tax free military savings bond interest (Form 8815) Foreign earned income or housing (Form 2555 or Form 2555-EZ) Certain income of bona fide residents of American Samoa (Form 4563) or Puerto Rico 4. Turbo tax free military     5. Turbo tax free military Enter any tax-exempt interest received in the earlier year 5. Turbo tax free military     6. Turbo tax free military Add lines 2 through 5 6. Turbo tax free military     7. Turbo tax free military Enter your taxable benefits for the earlier year that you previously reported 7. Turbo tax free military     8. Turbo tax free military Subtract line 7 from line 6 8. Turbo tax free military     9. Turbo tax free military Enter $25,000 ($32,000 if married filing jointly for the earlier year; $-0- if married filing separately for the earlier year and you lived with your spouse at any time during the earlier year) 9. Turbo tax free military     10. Turbo tax free military Is the amount on line 8 more than the amount on line 9? No. Turbo tax free military Skip lines 10 through 13 and enter -0- on line 14. Turbo tax free military  Yes. Turbo tax free military Subtract line 9 from line 8. Turbo tax free military 10. Turbo tax free military     11. Turbo tax free military Enter one-half of line 10 11. Turbo tax free military     12. Turbo tax free military Refigured taxable benefits. Turbo tax free military Enter the smaller of line 2 or line 11 12. Turbo tax free military     13. Turbo tax free military Enter your taxable benefits for the earlier year (or as refigured due to a previous