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2012 Amended Tax Form

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2012 Amended Tax Form

2012 amended tax form 10. 2012 amended tax form   Retirement Plans, Pensions, and Annuities Table of Contents What's New Reminder IntroductionThe General Rule. 2012 amended tax form Individual retirement arrangements (IRAs). 2012 amended tax form Civil service retirement benefits. 2012 amended tax form Useful Items - You may want to see: General InformationIn-plan rollovers to designated Roth accounts. 2012 amended tax form How To Report Cost (Investment in the Contract) Taxation of Periodic PaymentsExclusion limited to cost. 2012 amended tax form Exclusion not limited to cost. 2012 amended tax form Simplified Method Taxation of Nonperiodic PaymentsLump-Sum Distributions RolloversIn-plan rollovers to designated Roth accounts. 2012 amended tax form Special Additional TaxesTax on Early Distributions Tax on Excess Accumulation Survivors and Beneficiaries What's New For purposes of the Net Investment Income Tax (NIIT), net investment income does not include distributions from a qualified retirement plan (for example, 401(a), 403(a), 403(b), 408, 408A, or 457(b) plans). 2012 amended tax form However, these distributions are taken into account when determining the modified adjusted gross income threshold. 2012 amended tax form Distributions from a nonqualified retirement plan are included in net investment income. 2012 amended tax form See Form 8960, Net Investment Income Tax - Individuals, Estates, and Trusts, and its instructions for more information. 2012 amended tax form Reminder Starting in 2013, the American Taxpayer Relief Act of 2012 expanded the rules for in-plan Roth rollovers to include more taxpayers. 2012 amended tax form For more information, see Designated Roth accounts discussed later. 2012 amended tax form Introduction This chapter discusses the tax treatment of distributions you receive from: An employee pension or annuity from a qualified plan, A disability retirement, and A purchased commercial annuity. 2012 amended tax form What is not covered in this chapter. 2012 amended tax form   The following topics are not discussed in this chapter. 2012 amended tax form The General Rule. 2012 amended tax form   This is the method generally used to determine the tax treatment of pension and annuity income from nonqualified plans (including commercial annuities). 2012 amended tax form For a qualified plan, you generally cannot use the General Rule unless your annuity starting date is before November 19, 1996. 2012 amended tax form For more information about the General Rule, see Publication 939, General Rule for Pensions and Annuities. 2012 amended tax form Individual retirement arrangements (IRAs). 2012 amended tax form   Information on the tax treatment of amounts you receive from an IRA is in chapter 17. 2012 amended tax form Civil service retirement benefits. 2012 amended tax form    If you are retired from the federal government (regular, phased, or disability retirement), see Publication 721, Tax Guide to U. 2012 amended tax form S. 2012 amended tax form Civil Service Retirement Benefits. 2012 amended tax form Publication 721 also covers the information that you need if you are the survivor or beneficiary of a federal employee or retiree who died. 2012 amended tax form Useful Items - You may want to see: Publication 575 Pension and Annuity Income 721 Tax Guide to U. 2012 amended tax form S. 2012 amended tax form Civil Service Retirement Benefits 939 General Rule for Pensions and Annuities Form (and Instructions) W-4P Withholding Certificate for Pension or Annuity Payments 1099-R Distributions From Pensions, Annuities, Retirement or Profit-Sharing Plans, IRAs, Insurance Contracts, etc. 2012 amended tax form 4972 Tax on Lump-Sum Distributions 5329 Additional Taxes on Qualified Plans (Including IRAs) and Other Tax-Favored Accounts General Information Designated Roth accounts. 2012 amended tax form   A designated Roth account is a separate account created under a qualified Roth contribution program to which participants may elect to have part or all of their elective deferrals to a 401(k), 403(b), or 457(b) plan designated as Roth contributions. 2012 amended tax form Elective deferrals that are designated as Roth contributions are included in your income. 2012 amended tax form However, qualified distributions are not included in your income. 2012 amended tax form See Publication 575 for more information. 2012 amended tax form In-plan rollovers to designated Roth accounts. 2012 amended tax form   If you are a participant in a 401(k), 403(b), or 457(b) plan, your plan may permit you to roll over amounts in those plans to a designated Roth account within the same plan. 2012 amended tax form The rollover of any untaxed amounts must be included in income. 2012 amended tax form See Publication 575 for more information. 2012 amended tax form More than one program. 2012 amended tax form   If you receive benefits from more than one program under a single trust or plan of your employer, such as a pension plan and a profit-sharing plan, you may have to figure the taxable part of each pension or annuity contract separately. 2012 amended tax form Your former employer or the plan administrator should be able to tell you if you have more than one pension or annuity contract. 2012 amended tax form Section 457 deferred compensation plans. 2012 amended tax form    If you work for a state or local government or for a tax-exempt organization, you may be able to participate in a section 457 deferred compensation plan. 2012 amended tax form If your plan is an eligible plan, you are not taxed currently on pay that is deferred under the plan or on any earnings from the plan's investment of the deferred pay. 2012 amended tax form You are generally taxed on amounts deferred in an eligible state or local government plan only when they are distributed from the plan. 2012 amended tax form You are taxed on amounts deferred in an eligible tax-exempt organization plan when they are distributed or otherwise made available to you. 2012 amended tax form   Your 457(b) plan may have a designated Roth account option. 2012 amended tax form If so, you may be able to roll over amounts to the designated Roth account or make contributions. 2012 amended tax form Elective deferrals to a designated Roth account are included in your income. 2012 amended tax form Qualified distributions from a designated Roth account are not subject to tax. 2012 amended tax form   This chapter covers the tax treatment of benefits under eligible section 457 plans, but it does not cover the treatment of deferrals. 2012 amended tax form For information on deferrals under section 457 plans, see Retirement Plan Contributions under Employee Compensation in Publication 525, Taxable and Nontaxable Income. 2012 amended tax form   For general information on these deferred compensation plans, see Section 457 Deferred Compensation Plans in Publication 575. 2012 amended tax form Disability pensions. 2012 amended tax form   If you retired on disability, you generally must include in income any disability pension you receive under a plan that is paid for by your employer. 2012 amended tax form You must report your taxable disability payments as wages on line 7 of Form 1040 or Form 1040A until you reach minimum retirement age. 2012 amended tax form Minimum retirement age generally is the age at which you can first receive a pension or annuity if you are not disabled. 2012 amended tax form    You may be entitled to a tax credit if you were permanently and totally disabled when you retired. 2012 amended tax form For information on the credit for the elderly or the disabled, see chapter 33. 2012 amended tax form   Beginning on the day after you reach minimum retirement age, payments you receive are taxable as a pension or annuity. 2012 amended tax form Report the payments on Form 1040, lines 16a and 16b, or on Form 1040A, lines 12a and 12b. 2012 amended tax form    Disability payments for injuries incurred as a direct result of a terrorist attack directed against the United States (or its allies) are not included in income. 2012 amended tax form For more information about payments to survivors of terrorist attacks, see Publication 3920, Tax Relief for Victims of Terrorist Attacks. 2012 amended tax form   For more information on how to report disability pensions, including military and certain government disability pensions, see chapter 5. 2012 amended tax form Retired public safety officers. 2012 amended tax form   An eligible retired public safety officer can elect to exclude from income distributions of up to $3,000 made directly from a government retirement plan to the provider of accident, health, or long-term disability insurance. 2012 amended tax form See Insurance Premiums for Retired Public Safety Officers in Publication 575 for more information. 2012 amended tax form Railroad retirement benefits. 2012 amended tax form   Part of any railroad retirement benefits you receive is treated for tax purposes as social security benefits, and part is treated as an employee pension. 2012 amended tax form For information about railroad retirement benefits treated as social security benefits, see Publication 915, Social Security and Equivalent Railroad Retirement Benefits. 2012 amended tax form For information about railroad retirement benefits treated as an employee pension, see Railroad Retirement Benefits in Publication 575. 2012 amended tax form Withholding and estimated tax. 2012 amended tax form   The payer of your pension, profit-sharing, stock bonus, annuity, or deferred compensation plan will withhold income tax on the taxable parts of amounts paid to you. 2012 amended tax form You can tell the payer how much to withhold, or not to withhold, by filing Form W-4P. 2012 amended tax form If you choose not to have tax withheld, or you do not have enough tax withheld, you may have to pay estimated tax. 2012 amended tax form   If you receive an eligible rollover distribution, you cannot choose not to have tax withheld. 2012 amended tax form Generally, 20% will be withheld, but no tax will be withheld on a direct rollover of an eligible rollover distribution. 2012 amended tax form See Direct rollover option under Rollovers, later. 2012 amended tax form   For more information, see Pensions and Annuities under Tax Withholding for 2014 in chapter 4. 2012 amended tax form Qualified plans for self-employed individuals. 2012 amended tax form   Qualified plans set up by self-employed individuals are sometimes called Keogh or H. 2012 amended tax form R. 2012 amended tax form 10 plans. 2012 amended tax form Qualified plans can be set up by sole proprietors, partnerships (but not a partner), and corporations. 2012 amended tax form They can cover self-employed persons, such as the sole proprietor or partners, as well as regular (common-law) employees. 2012 amended tax form    Distributions from a qualified plan are usually fully taxable because most recipients have no cost basis. 2012 amended tax form If you have an investment (cost) in the plan, however, your pension or annuity payments from a qualified plan are taxed under the Simplified Method. 2012 amended tax form For more information about qualified plans, see Publication 560, Retirement Plans for Small Business. 2012 amended tax form Purchased annuities. 2012 amended tax form   If you receive pension or annuity payments from a privately purchased annuity contract from a commercial organization, such as an insurance company, you generally must use the General Rule to figure the tax-free part of each annuity payment. 2012 amended tax form For more information about the General Rule, get Publication 939. 2012 amended tax form Also, see Variable Annuities in Publication 575 for the special provisions that apply to these annuity contracts. 2012 amended tax form Loans. 2012 amended tax form   If you borrow money from your retirement plan, you must treat the loan as a nonperiodic distribution from the plan unless certain exceptions apply. 2012 amended tax form This treatment also applies to any loan under a contract purchased under your retirement plan, and to the value of any part of your interest in the plan or contract that you pledge or assign. 2012 amended tax form This means that you must include in income all or part of the amount borrowed. 2012 amended tax form Even if you do not have to treat the loan as a nonperiodic distribution, you may not be able to deduct the interest on the loan in some situations. 2012 amended tax form For details, see Loans Treated as Distributions in Publication 575. 2012 amended tax form For information on the deductibility of interest, see chapter 23. 2012 amended tax form Tax-free exchange. 2012 amended tax form   No gain or loss is recognized on an exchange of an annuity contract for another annuity contract if the insured or annuitant remains the same. 2012 amended tax form However, if an annuity contract is exchanged for a life insurance or endowment contract, any gain due to interest accumulated on the contract is ordinary income. 2012 amended tax form See Transfers of Annuity Contracts in Publication 575 for more information about exchanges of annuity contracts. 2012 amended tax form How To Report If you file Form 1040, report your total annuity on line 16a and the taxable part on line 16b. 2012 amended tax form If your pension or annuity is fully taxable, enter it on line 16b; do not make an entry on line 16a. 2012 amended tax form If you file Form 1040A, report your total annuity on line 12a and the taxable part on line 12b. 2012 amended tax form If your pension or annuity is fully taxable, enter it on line 12b; do not make an entry on line 12a. 2012 amended tax form More than one annuity. 2012 amended tax form   If you receive more than one annuity and at least one of them is not fully taxable, enter the total amount received from all annuities on Form 1040, line 16a, or Form 1040A, line 12a, and enter the taxable part on Form 1040, line 16b, or Form 1040A, line 12b. 2012 amended tax form If all the annuities you receive are fully taxable, enter the total of all of them on Form 1040, line 16b, or Form 1040A, line 12b. 2012 amended tax form Joint return. 2012 amended tax form   If you file a joint return and you and your spouse each receive one or more pensions or annuities, report the total of the pensions and annuities on Form 1040, line 16a, or Form 1040A, line 12a, and report the taxable part on Form 1040, line 16b, or Form 1040A, line 12b. 2012 amended tax form Cost (Investment in the Contract) Before you can figure how much, if any, of a distribution from your pension or annuity plan is taxable, you must determine your cost (your investment in the contract) in the pension or annuity. 2012 amended tax form Your total cost in the plan includes the total premiums, contributions, or other amounts you paid. 2012 amended tax form This includes the amounts your employer contributed that were taxable to you when paid. 2012 amended tax form Cost does not include any amounts you deducted or were excluded from your income. 2012 amended tax form From this total cost, subtract any refunds of premiums, rebates, dividends, unrepaid loans that were not included in your income, or other tax-free amounts that you received by the later of the annuity starting date or the date on which you received your first payment. 2012 amended tax form Your annuity starting date is the later of the first day of the first period for which you received a payment or the date the plan's obligations became fixed. 2012 amended tax form Designated Roth accounts. 2012 amended tax form   Your cost in these accounts is your designated Roth contributions that were included in your income as wages subject to applicable withholding requirements. 2012 amended tax form Your cost will also include any in-plan Roth rollovers you included in income. 2012 amended tax form Foreign employment contributions. 2012 amended tax form   If you worked in a foreign country and contributions were made to your retirement plan, special rules apply in determining your cost. 2012 amended tax form See Foreign employment contributions under Cost (Investment in the Contract) in Publication 575. 2012 amended tax form Taxation of Periodic Payments Fully taxable payments. 2012 amended tax form   Generally, if you did not pay any part of the cost of your employee pension or annuity and your employer did not withhold part of the cost from your pay while you worked, the amounts you receive each year are fully taxable. 2012 amended tax form You must report them on your income tax return. 2012 amended tax form Partly taxable payments. 2012 amended tax form   If you paid part of the cost of your pension or annuity, you are not taxed on the part of the pension or annuity you receive that represents a return of your cost. 2012 amended tax form The rest of the amount you receive is generally taxable. 2012 amended tax form You figure the tax-free part of the payment using either the Simplified Method or the General Rule. 2012 amended tax form Your annuity starting date and whether or not your plan is qualified determine which method you must or may use. 2012 amended tax form   If your annuity starting date is after November 18, 1996, and your payments are from a qualified plan, you must use the Simplified Method. 2012 amended tax form Generally, you must use the General Rule if your annuity is paid under a nonqualified plan, and you cannot use this method if your annuity is paid under a qualified plan. 2012 amended tax form   If you had more than one partly taxable pension or annuity, figure the tax-free part and the taxable part of each separately. 2012 amended tax form   If your annuity is paid under a qualified plan and your annuity starting date is after July 1, 1986, and before November 19, 1996, you could have chosen to use either the General Rule or the Simplified Method. 2012 amended tax form Exclusion limit. 2012 amended tax form   Your annuity starting date determines the total amount of annuity payments that you can exclude from your taxable income over the years. 2012 amended tax form Once your annuity starting date is determined, it does not change. 2012 amended tax form If you calculate the taxable portion of your annuity payments using the simplified method worksheet, the annuity starting date determines the recovery period for your cost. 2012 amended tax form That recovery period begins on your annuity starting date and is not affected by the date you first complete the worksheet. 2012 amended tax form Exclusion limited to cost. 2012 amended tax form   If your annuity starting date is after 1986, the total amount of annuity income that you can exclude over the years as a recovery of the cost cannot exceed your total cost. 2012 amended tax form Any unrecovered cost at your (or the last annuitant's) death is allowed as a miscellaneous itemized deduction on the final return of the decedent. 2012 amended tax form This deduction is not subject to the 2%-of-adjusted-gross-income limit. 2012 amended tax form Exclusion not limited to cost. 2012 amended tax form   If your annuity starting date is before 1987, you can continue to take your monthly exclusion for as long as you receive your annuity. 2012 amended tax form If you chose a joint and survivor annuity, your survivor can continue to take the survivor's exclusion figured as of the annuity starting date. 2012 amended tax form The total exclusion may be more than your cost. 2012 amended tax form Simplified Method Under the Simplified Method, you figure the tax-free part of each annuity payment by dividing your cost by the total number of anticipated monthly payments. 2012 amended tax form For an annuity that is payable for the lives of the annuitants, this number is based on the annuitants' ages on the annuity starting date and is determined from a table. 2012 amended tax form For any other annuity, this number is the number of monthly annuity payments under the contract. 2012 amended tax form Who must use the Simplified Method. 2012 amended tax form   You must use the Simplified Method if your annuity starting date is after November 18, 1996, and you both: Receive pension or annuity payments from a qualified employee plan, qualified employee annuity, or a tax-sheltered annuity (403(b)) plan, and On your annuity starting date, you were either under age 75, or entitled to less than 5 years of guaranteed payments. 2012 amended tax form Guaranteed payments. 2012 amended tax form   Your annuity contract provides guaranteed payments if a minimum number of payments or a minimum amount (for example, the amount of your investment) is payable even if you and any survivor annuitant do not live to receive the minimum. 2012 amended tax form If the minimum amount is less than the total amount of the payments you are to receive, barring death, during the first 5 years after payments begin (figured by ignoring any payment increases), you are entitled to less than 5 years of guaranteed payments. 2012 amended tax form How to use the Simplified Method. 2012 amended tax form    Complete the Simplified Method Worksheet in Publication 575 to figure your taxable annuity for 2013. 2012 amended tax form Single-life annuity. 2012 amended tax form    If your annuity is payable for your life alone, use Table 1 at the bottom of the worksheet to determine the total number of expected monthly payments. 2012 amended tax form Enter on line 3 the number shown for your age at the annuity starting date. 2012 amended tax form Multiple-lives annuity. 2012 amended tax form   If your annuity is payable for the lives of more than one annuitant, use Table 2 at the bottom of the worksheet to determine the total number of expected monthly payments. 2012 amended tax form Enter on line 3 the number shown for the combined ages of you and the youngest survivor annuitant at the annuity starting date. 2012 amended tax form   However, if your annuity starting date is before 1998, do not use Table 2 and do not combine the annuitants' ages. 2012 amended tax form Instead you must use Table 1 and enter on line 3 the number shown for the primary annuitant's age on the annuity starting date. 2012 amended tax form    Be sure to keep a copy of the completed worksheet; it will help you figure your taxable annuity next year. 2012 amended tax form Example. 2012 amended tax form Bill Smith, age 65, began receiving retirement benefits in 2013, under a joint and survivor annuity. 2012 amended tax form Bill's annuity starting date is January 1, 2013. 2012 amended tax form The benefits are to be paid for the joint lives of Bill and his wife Kathy, age 65. 2012 amended tax form Bill had contributed $31,000 to a qualified plan and had received no distributions before the annuity starting date. 2012 amended tax form Bill is to receive a retirement benefit of $1,200 a month, and Kathy is to receive a monthly survivor benefit of $600 upon Bill's death. 2012 amended tax form Bill must use the Simplified Method to figure his taxable annuity because his payments are from a qualified plan and he is under age 75. 2012 amended tax form Because his annuity is payable over the lives of more than one annuitant, he uses his and Kathy's combined ages and Table 2 at the bottom of the worksheet in completing line 3 of the worksheet. 2012 amended tax form His completed worksheet is shown in Worksheet 10-A. 2012 amended tax form Bill's tax-free monthly amount is $100 ($31,000 ÷ 310) as shown on line 4 of the worksheet. 2012 amended tax form Upon Bill's death, if Bill has not recovered the full $31,000 investment, Kathy will also exclude $100 from her $600 monthly payment. 2012 amended tax form The full amount of any annuity payments received after 310 payments are paid must be included in gross income. 2012 amended tax form If Bill and Kathy die before 310 payments are made, a miscellaneous itemized deduction will be allowed for the unrecovered cost on the final income tax return of the last to die. 2012 amended tax form This deduction is not subject to the 2%-of-adjusted- gross-income limit. 2012 amended tax form Worksheet 10-A. 2012 amended tax form Simplified Method Worksheet for Bill Smith 1. 2012 amended tax form Enter the total pension or annuity payments received this year. 2012 amended tax form Also, add this amount to the total for Form 1040, line 16a, or Form 1040A, line 12a 1. 2012 amended tax form 14,400 2. 2012 amended tax form Enter your cost in the plan (contract) at the annuity starting date plus any death benefit exclusion*. 2012 amended tax form See Cost (Investment in the Contract) , earlier 2. 2012 amended tax form 31,000       Note: If your annuity starting date was before this year and you completed this worksheet last year, skip line 3 and enter the amount from line 4 of last year's worksheet on line 4 below (even if the amount of your pension or annuity has changed). 2012 amended tax form Otherwise, go to line 3. 2012 amended tax form         3. 2012 amended tax form Enter the appropriate number from Table 1 below. 2012 amended tax form But if your annuity starting date was after 1997 and the payments are for your life and that of your beneficiary, enter the appropriate number from Table 2 below 3. 2012 amended tax form 310     4. 2012 amended tax form Divide line 2 by the number on line 3 4. 2012 amended tax form 100     5. 2012 amended tax form Multiply line 4 by the number of months for which this year's payments were made. 2012 amended tax form If your annuity starting date was before 1987, enter this amount on line 8 below and skip lines 6, 7, 10, and 11. 2012 amended tax form Otherwise, go to line 6 5. 2012 amended tax form 1,200     6. 2012 amended tax form Enter any amounts previously recovered tax free in years after 1986. 2012 amended tax form This is the amount shown on line 10 of your worksheet for last year 6. 2012 amended tax form -0-     7. 2012 amended tax form Subtract line 6 from line 2 7. 2012 amended tax form 31,000     8. 2012 amended tax form Enter the smaller of line 5 or line 7 8. 2012 amended tax form 1,200 9. 2012 amended tax form Taxable amount for year. 2012 amended tax form Subtract line 8 from line 1. 2012 amended tax form Enter the result, but not less than zero. 2012 amended tax form Also, add this amount to the total for Form 1040, line 16b, or Form 1040A, line 12b 9. 2012 amended tax form 13,200   Note: If your Form 1099-R shows a larger taxable amount, use the amount figured on this line instead. 2012 amended tax form If you are a retired public safety officer, see Insurance Premiums for Retired Public Safety Officers in Publication 575 before entering an amount on your tax return. 2012 amended tax form     10. 2012 amended tax form Was your annuity starting date before 1987? □ Yes. 2012 amended tax form STOP. 2012 amended tax form Do not complete the rest of this worksheet. 2012 amended tax form  ☑ No. 2012 amended tax form Add lines 6 and 8. 2012 amended tax form This is the amount you have recovered tax free through 2013. 2012 amended tax form You will need this number if you need to fill out this worksheet next year 10. 2012 amended tax form 1,200 11. 2012 amended tax form Balance of cost to be recovered. 2012 amended tax form Subtract line 10 from line 2. 2012 amended tax form If zero, you will not have to complete this worksheet next year. 2012 amended tax form The payments you receive next year will generally be fully taxable 11. 2012 amended tax form 29,800 TABLE 1 FOR LINE 3 ABOVE   AND your annuity starting date was— IF the age at annuity starting date was. 2012 amended tax form . 2012 amended tax form . 2012 amended tax form before November 19, 1996, enter on line 3. 2012 amended tax form . 2012 amended tax form . 2012 amended tax form after November 18, 1996, enter on line 3. 2012 amended tax form . 2012 amended tax form . 2012 amended tax form 55 or under 300 360 56–60 260 310 61–65 240 260 66–70 170 210 71 or older 120 160 TABLE 2 FOR LINE 3 ABOVE IF the combined ages at annuity starting date were. 2012 amended tax form . 2012 amended tax form . 2012 amended tax form   THEN enter on line 3. 2012 amended tax form . 2012 amended tax form . 2012 amended tax form 110 or under   410 111–120   360 121–130   310 131–140   260 141 or older   210 * A death benefit exclusion (up to $5,000) applied to certain benefits received by employees who died before August 21, 1996. 2012 amended tax form Who must use the General Rule. 2012 amended tax form   You must use the General Rule if you receive pension or annuity payments from: A nonqualified plan (such as a private annuity, a purchased commercial annuity, or a nonqualified employee plan), or A qualified plan if you are age 75 or older on your annuity starting date and your annuity payments are guaranteed for at least 5 years. 2012 amended tax form Annuity starting before November 19, 1996. 2012 amended tax form   If your annuity starting date is after July 1, 1986, and before November 19, 1996, you had to use the General Rule for either circumstance just described. 2012 amended tax form You also had to use it for any fixed-period annuity. 2012 amended tax form If you did not have to use the General Rule, you could have chosen to use it. 2012 amended tax form If your annuity starting date is before July 2, 1986, you had to use the General Rule unless you could use the Three-Year Rule. 2012 amended tax form   If you had to use the General Rule (or chose to use it), you must continue to use it each year that you recover your cost. 2012 amended tax form Who cannot use the General Rule. 2012 amended tax form   You cannot use the General Rule if you receive your pension or annuity from a qualified plan and none of the circumstances described in the preceding discussions apply to you. 2012 amended tax form See Who must use the Simplified Method , earlier. 2012 amended tax form More information. 2012 amended tax form   For complete information on using the General Rule, including the actuarial tables you need, see Publication 939. 2012 amended tax form Taxation of Nonperiodic Payments Nonperiodic distributions are also known as amounts not received as an annuity. 2012 amended tax form They include all payments other than periodic payments and corrective distributions. 2012 amended tax form Examples of nonperiodic payments are cash withdrawals, distributions of current earnings, certain loans, and the value of annuity contracts transferred without full and adequate consideration. 2012 amended tax form Corrective distributions of excess plan contributions. 2012 amended tax form   Generally, if the contributions made for you during the year to certain retirement plans exceed certain limits, the excess is taxable to you. 2012 amended tax form To correct an excess, your plan may distribute it to you (along with any income earned on the excess). 2012 amended tax form For information on plan contribution limits and how to report corrective distributions of excess contributions, see Retirement Plan Contributions under Employee Compensation in Publication 525. 2012 amended tax form Figuring the taxable amount of nonperiodic payments. 2012 amended tax form   How you figure the taxable amount of a nonperiodic distribution depends on whether it is made before the annuity starting date, or on or after the annuity starting date. 2012 amended tax form If it is made before the annuity starting date, its tax treatment also depends on whether it is made under a qualified or nonqualified plan. 2012 amended tax form If it is made under a nonqualified plan, its tax treatment depends on whether it fully discharges the contract, is received under certain life insurance or endowment contracts, or is allocable to an investment you made before August 14, 1982. 2012 amended tax form Annuity starting date. 2012 amended tax form   The annuity starting date is either the first day of the first period for which you receive an annuity payment under the contract or the date on which the obligation under the contract becomes fixed, whichever is later. 2012 amended tax form Distribution on or after annuity starting date. 2012 amended tax form   If you receive a nonperiodic payment from your annuity contract on or after the annuity starting date, you generally must include all of the payment in gross income. 2012 amended tax form Distribution before annuity starting date. 2012 amended tax form   If you receive a nonperiodic distribution before the annuity starting date from a qualified retirement plan, you generally can allocate only part of it to the cost of the contract. 2012 amended tax form You exclude from your gross income the part that you allocate to the cost. 2012 amended tax form You include the remainder in your gross income. 2012 amended tax form   If you receive a nonperiodic distribution before the annuity starting date from a plan other than a qualified retirement plan (nonqualified plan), it is allocated first to earnings (the taxable part) and then to the cost of the contract (the tax-free part). 2012 amended tax form This allocation rule applies, for example, to a commercial annuity contract you bought directly from the issuer. 2012 amended tax form    Distributions from nonqualified plans are subject to the net investment income tax. 2012 amended tax form See the Instructions for Form 8960. 2012 amended tax form   For more information, see Figuring the Taxable Amount under Taxation of Nonperiodic Payments in Publication 575. 2012 amended tax form Lump-Sum Distributions This section on lump-sum distributions only applies if the plan participant was born before January 2, 1936. 2012 amended tax form If the plan participant was born after January 1, 1936, the taxable amount of this nonperiodic payment is reported as discussed earlier. 2012 amended tax form A lump-sum distribution is the distribution or payment in one tax year of a plan participant's entire balance from all of the employer's qualified plans of one kind (for example, pension, profit-sharing, or stock bonus plans). 2012 amended tax form A distribution from a nonqualified plan (such as a privately purchased commercial annuity or a section 457 deferred compensation plan of a state or local government or tax-exempt organization) cannot qualify as a lump-sum distribution. 2012 amended tax form The participant's entire balance from a plan does not include certain forfeited amounts. 2012 amended tax form It also does not include any deductible voluntary employee contributions allowed by the plan after 1981 and before 1987. 2012 amended tax form For more information about distributions that do not qualify as lump-sum distributions, see Distributions that do not qualify under Lump-Sum Distributions in Publication 575. 2012 amended tax form If you receive a lump-sum distribution from a qualified employee plan or qualified employee annuity and the plan participant was born before January 2, 1936, you may be able to elect optional methods of figuring the tax on the distribution. 2012 amended tax form The part from active participation in the plan before 1974 may qualify as capital gain subject to a 20% tax rate. 2012 amended tax form The part from participation after 1973 (and any part from participation before 1974 that you do not report as capital gain) is ordinary income. 2012 amended tax form You may be able to use the 10-year tax option, discussed later, to figure tax on the ordinary income part. 2012 amended tax form Use Form 4972 to figure the separate tax on a lump-sum distribution using the optional methods. 2012 amended tax form The tax figured on Form 4972 is added to the regular tax figured on your other income. 2012 amended tax form This may result in a smaller tax than you would pay by including the taxable amount of the distribution as ordinary income in figuring your regular tax. 2012 amended tax form How to treat the distribution. 2012 amended tax form   If you receive a lump-sum distribution, you may have the following options for how you treat the taxable part. 2012 amended tax form Report the part of the distribution from participation before 1974 as a capital gain (if you qualify) and the part from participation after 1973 as ordinary income. 2012 amended tax form Report the part of the distribution from participation before 1974 as a capital gain (if you qualify) and use the 10-year tax option to figure the tax on the part from participation after 1973 (if you qualify). 2012 amended tax form Use the 10-year tax option to figure the tax on the total taxable amount (if you qualify). 2012 amended tax form Roll over all or part of the distribution. 2012 amended tax form See Rollovers , later. 2012 amended tax form No tax is currently due on the part rolled over. 2012 amended tax form Report any part not rolled over as ordinary income. 2012 amended tax form Report the entire taxable part of the distribution as ordinary income on your tax return. 2012 amended tax form   The first three options are explained in the following discussions. 2012 amended tax form Electing optional lump-sum treatment. 2012 amended tax form   You can choose to use the 10-year tax option or capital gain treatment only once after 1986 for any plan participant. 2012 amended tax form If you make this choice, you cannot use either of these optional treatments for any future distributions for the participant. 2012 amended tax form Taxable and tax-free parts of the distribution. 2012 amended tax form    The taxable part of a lump-sum distribution is the employer's contributions and income earned on your account. 2012 amended tax form You may recover your cost in the lump sum and any net unrealized appreciation (NUA) in employer securities tax free. 2012 amended tax form Cost. 2012 amended tax form   In general, your cost is the total of: The plan participant's nondeductible contributions to the plan, The plan participant's taxable costs of any life insurance contract distributed, Any employer contributions that were taxable to the plan participant, and Repayments of any loans that were taxable to the plan participant. 2012 amended tax form You must reduce this cost by amounts previously distributed tax free. 2012 amended tax form Net unrealized appreciation (NUA). 2012 amended tax form   The NUA in employer securities (box 6 of Form 1099-R) received as part of a lump-sum distribution is generally tax free until you sell or exchange the securities. 2012 amended tax form (For more information, see Distributions of employer securities under Taxation of Nonperiodic Payments in Publication 575. 2012 amended tax form ) Capital Gain Treatment Capital gain treatment applies only to the taxable part of a lump-sum distribution resulting from participation in the plan before 1974. 2012 amended tax form The amount treated as capital gain is taxed at a 20% rate. 2012 amended tax form You can elect this treatment only once for any plan participant, and only if the plan participant was born before January 2, 1936. 2012 amended tax form Complete Part II of Form 4972 to choose the 20% capital gain election. 2012 amended tax form For more information, see Capital Gain Treatment under Lump-Sum Distributions in Publication 575. 2012 amended tax form 10-Year Tax Option The 10-year tax option is a special formula used to figure a separate tax on the ordinary income part of a lump-sum distribution. 2012 amended tax form You pay the tax only once, for the year in which you receive the distribution, not over the next 10 years. 2012 amended tax form You can elect this treatment only once for any plan participant, and only if the plan participant was born before January 2, 1936. 2012 amended tax form The ordinary income part of the distribution is the amount shown in box 2a of the Form 1099-R given to you by the payer, minus the amount, if any, shown in box 3. 2012 amended tax form You also can treat the capital gain part of the distribution (box 3 of Form 1099-R) as ordinary income for the 10-year tax option if you do not choose capital gain treatment for that part. 2012 amended tax form Complete Part III of Form 4972 to choose the 10-year tax option. 2012 amended tax form You must use the special Tax Rate Schedule shown in the instructions for Part III to figure the tax. 2012 amended tax form Publication 575 illustrates how to complete Form 4972 to figure the separate tax. 2012 amended tax form Rollovers If you withdraw cash or other assets from a qualified retirement plan in an eligible rollover distribution, you can defer tax on the distribution by rolling it over to another qualified retirement plan or a traditional IRA. 2012 amended tax form For this purpose, the following plans are qualified retirement plans. 2012 amended tax form A qualified employee plan. 2012 amended tax form A qualified employee annuity. 2012 amended tax form A tax-sheltered annuity plan (403(b) plan). 2012 amended tax form An eligible state or local government section 457 deferred compensation plan. 2012 amended tax form Eligible rollover distributions. 2012 amended tax form   Generally, an eligible rollover distribution is any distribution of all or any part of the balance to your credit in a qualified retirement plan. 2012 amended tax form For information about exceptions to eligible rollover distributions, see Publication 575. 2012 amended tax form Rollover of nontaxable amounts. 2012 amended tax form   You may be able to roll over the nontaxable part of a distribution (such as your after-tax contributions) made to another qualified retirement plan that is a qualified employee plan or a 403(b) plan, or to a traditional or Roth IRA. 2012 amended tax form The transfer must be made either through a direct rollover to a qualified plan or 403(b) plan that separately accounts for the taxable and nontaxable parts of the rollover or through a rollover to a traditional or Roth IRA. 2012 amended tax form   If you roll over only part of a distribution that includes both taxable and nontaxable amounts, the amount you roll over is treated as coming first from the taxable part of the distribution. 2012 amended tax form   Any after-tax contributions that you roll over into your traditional IRA become part of your basis (cost) in your IRAs. 2012 amended tax form To recover your basis when you take distributions from your IRA, you must complete Form 8606 for the year of the distribution. 2012 amended tax form For more information, see the Form 8606 instructions. 2012 amended tax form Direct rollover option. 2012 amended tax form   You can choose to have any part or all of an eligible rollover distribution paid directly to another qualified retirement plan that accepts rollover distributions or to a traditional or Roth IRA. 2012 amended tax form If you choose the direct rollover option, or have an automatic rollover, no tax will be withheld from any part of the distribution that is directly paid to the trustee of the other plan. 2012 amended tax form Payment to you option. 2012 amended tax form   If an eligible rollover distribution is paid to you, 20% generally will be withheld for income tax. 2012 amended tax form However, the full amount is treated as distributed to you even though you actually receive only 80%. 2012 amended tax form You generally must include in income any part (including the part withheld) that you do not roll over within 60 days to another qualified retirement plan or to a traditional or Roth IRA. 2012 amended tax form (See Pensions and Annuities under Tax Withholding for 2014 in chapter 4. 2012 amended tax form )    If you decide to roll over an amount equal to the distribution before withholding, your contribution to the new plan or IRA must include other money (for example, from savings or amounts borrowed) to replace the amount withheld. 2012 amended tax form Time for making rollover. 2012 amended tax form   You generally must complete the rollover of an eligible rollover distribution paid to you by the 60th day following the day on which you receive the distribution from your employer's plan. 2012 amended tax form (If an amount distributed to you becomes a frozen deposit in a financial institution during the 60-day period after you receive it, the rollover period is extended for the period during which the distribution is in a frozen deposit in a financial institution. 2012 amended tax form )   The IRS may waive the 60-day requirement where the failure to do so would be against equity or good conscience, such as in the event of a casualty, disaster, or other event beyond your reasonable control. 2012 amended tax form   The administrator of a qualified plan must give you a written explanation of your distribution options within a reasonable period of time before making an eligible rollover distribution. 2012 amended tax form Qualified domestic relations order (QDRO). 2012 amended tax form   You may be able to roll over tax free all or part of a distribution from a qualified retirement plan that you receive under a QDRO. 2012 amended tax form If you receive the distribution as an employee's spouse or former spouse (not as a nonspousal beneficiary), the rollover rules apply to you as if you were the employee. 2012 amended tax form You can roll over the distribution from the plan into a traditional IRA or to another eligible retirement plan. 2012 amended tax form See Rollovers in Publication 575 for more information on benefits received under a QDRO. 2012 amended tax form Rollover by surviving spouse. 2012 amended tax form   You may be able to roll over tax free all or part of a distribution from a qualified retirement plan you receive as the surviving spouse of a deceased employee. 2012 amended tax form The rollover rules apply to you as if you were the employee. 2012 amended tax form You can roll over a distribution into a qualified retirement plan or a traditional or Roth IRA. 2012 amended tax form For a rollover to a Roth IRA, see Rollovers to Roth IRAs , later. 2012 amended tax form    A distribution paid to a beneficiary other than the employee's surviving spouse is generally not an eligible rollover distribution. 2012 amended tax form However, see Rollovers by nonspouse beneficiary next. 2012 amended tax form Rollovers by nonspouse beneficiary. 2012 amended tax form   If you are a designated beneficiary (other than a surviving spouse) of a deceased employee, you may be able to roll over tax free all or a portion of a distribution you receive from an eligible retirement plan of the employee. 2012 amended tax form The distribution must be a direct trustee-to-trustee transfer to your traditional or Roth IRA that was set up to receive the distribution. 2012 amended tax form The transfer will be treated as an eligible rollover distribution and the receiving plan will be treated as an inherited IRA. 2012 amended tax form For information on inherited IRAs, see What if You Inherit an IRA? in chapter 1 of Publication 590, Individual Retirement Arrangements (IRAs). 2012 amended tax form Retirement bonds. 2012 amended tax form   If you redeem retirement bonds purchased under a qualified bond purchase plan, you can roll over the proceeds that exceed your basis tax free into an IRA (as discussed in Publication 590) or a qualified employer plan. 2012 amended tax form Designated Roth accounts. 2012 amended tax form   You can roll over an eligible rollover distribution from a designated Roth account into another designated Roth account or a Roth IRA. 2012 amended tax form If you want to roll over the part of the distribution that is not included in income, you must make a direct rollover of the entire distribution or you can roll over the entire amount (or any portion) to a Roth IRA. 2012 amended tax form For more information on rollovers from designated Roth accounts, see Rollovers in Publication 575. 2012 amended tax form In-plan rollovers to designated Roth accounts. 2012 amended tax form   If you are a plan participant in a 401(k), 403(b), or 457(b) plan, your plan may permit you to roll over amounts in those plans to a designated Roth account within the same plan. 2012 amended tax form The rollover of any untaxed amounts must be included in income. 2012 amended tax form See Designated Roth accounts under Rollovers in Publication 575 for more information. 2012 amended tax form Rollovers to Roth IRAs. 2012 amended tax form   You can roll over distributions directly from a qualified retirement plan (other than a designated Roth account) to a Roth IRA. 2012 amended tax form   You must include in your gross income distributions from a qualified retirement plan (other than a designated Roth account) that you would have had to include in income if you had not rolled them over into a Roth IRA. 2012 amended tax form You do not include in gross income any part of a distribution from a qualified retirement plan that is a return of contributions to the plan that were taxable to you when paid. 2012 amended tax form In addition, the 10% tax on early distributions does not apply. 2012 amended tax form More information. 2012 amended tax form   For more information on the rules for rolling over distributions, see Rollovers in Publication 575. 2012 amended tax form Special Additional Taxes To discourage the use of pension funds for purposes other than normal retirement, the law imposes additional taxes on early distributions of those funds and on failures to withdraw the funds timely. 2012 amended tax form Ordinarily, you will not be subject to these taxes if you roll over all early distributions you receive, as explained earlier, and begin drawing out the funds at a normal retirement age, in reasonable amounts over your life expectancy. 2012 amended tax form These special additional taxes are the taxes on: Early distributions, and Excess accumulation (not receiving minimum distributions). 2012 amended tax form These taxes are discussed in the following sections. 2012 amended tax form If you must pay either of these taxes, report them on Form 5329. 2012 amended tax form However, you do not have to file Form 5329 if you owe only the tax on early distributions and your Form 1099-R correctly shows a “1” in box 7. 2012 amended tax form Instead, enter 10% of the taxable part of the distribution on Form 1040, line 58 and write “No” under the heading “Other Taxes” to the left of line 58. 2012 amended tax form Even if you do not owe any of these taxes, you may have to complete Form 5329 and attach it to your Form 1040. 2012 amended tax form This applies if you meet an exception to the tax on early distributions but box 7 of your Form 1099-R does not indicate an exception. 2012 amended tax form Tax on Early Distributions Most distributions (both periodic and nonperiodic) from qualified retirement plans and nonqualified annuity contracts made to you before you reach age 59½ are subject to an additional tax of 10%. 2012 amended tax form This tax applies to the part of the distribution that you must include in gross income. 2012 amended tax form For this purpose, a qualified retirement plan is: A qualified employee plan, A qualified employee annuity plan, A tax-sheltered annuity plan, or An eligible state or local government section 457 deferred compensation plan (to the extent that any distribution is attributable to amounts the plan received in a direct transfer or rollover from one of the other plans listed here or an IRA). 2012 amended tax form 5% rate on certain early distributions from deferred annuity contracts. 2012 amended tax form   If an early withdrawal from a deferred annuity is otherwise subject to the 10% additional tax, a 5% rate may apply instead. 2012 amended tax form A 5% rate applies to distributions under a written election providing a specific schedule for the distribution of your interest in the contract if, as of March 1, 1986, you had begun receiving payments under the election. 2012 amended tax form On line 4 of Form 5329, multiply the line 3 amount by 5% instead of 10%. 2012 amended tax form Attach an explanation to your return. 2012 amended tax form Distributions from Roth IRAs allocable to a rollover from an eligible retirement plan within the 5-year period. 2012 amended tax form   If, within the 5-year period starting with the first day of your tax year in which you rolled over an amount from an eligible retirement plan to a Roth IRA, you take a distribution from the Roth IRA, you may have to pay the additional 10% tax on early distributions. 2012 amended tax form You generally must pay the 10% additional tax on any amount attributable to the part of the rollover that you had to include in income. 2012 amended tax form The additional tax is figured on Form 5329. 2012 amended tax form For more information, see Form 5329 and its instructions. 2012 amended tax form For information on qualified distributions from Roth IRAs, see Additional Tax on Early Distributions in chapter 2 of Publication 590. 2012 amended tax form Distributions from designated Roth accounts allocable to in-plan Roth rollovers within the 5-year period. 2012 amended tax form   If, within the 5-year period starting with the first day of your tax year in which you rolled over an amount from a 401(k), 403(b), or 457(b) plan to a designated Roth account, you take a distribution from the designated Roth account, you may have to pay the additional 10% tax on early distributions. 2012 amended tax form You generally must pay the 10% additional tax on any amount attributable to the part of the in-plan rollover that you had to include in income. 2012 amended tax form The additional tax is figured on Form 5329. 2012 amended tax form For more information, see Form 5329 and its instructions. 2012 amended tax form For information on qualified distributions from designated Roth accounts, see Designated Roth accounts under Taxation of Periodic Payments in Publication 575. 2012 amended tax form Exceptions to tax. 2012 amended tax form    Certain early distributions are excepted from the early distribution tax. 2012 amended tax form If the payer knows that an exception applies to your early distribution, distribution code “2,” “3,” or “4” should be shown in box 7 of your Form 1099-R and you do not have to report the distribution on Form 5329. 2012 amended tax form If an exception applies but distribution code “1” (early distribution, no known exception) is shown in box 7, you must file Form 5329. 2012 amended tax form Enter the taxable amount of the distribution shown in box 2a of your Form 1099-R on line 1 of Form 5329. 2012 amended tax form On line 2, enter the amount that can be excluded and the exception number shown in the Form 5329 instructions. 2012 amended tax form    If distribution code “1” is incorrectly shown on your Form 1099-R for a distribution received when you were age 59½ or older, include that distribution on Form 5329. 2012 amended tax form Enter exception number “12” on line 2. 2012 amended tax form General exceptions. 2012 amended tax form   The tax does not apply to distributions that are: Made as part of a series of substantially equal periodic payments (made at least annually) for your life (or life expectancy) or the joint lives (or joint life expectancies) of you and your designated beneficiary (if from a qualified retirement plan, the payments must begin after your separation from service), Made because you are totally and permanently disabled, or Made on or after the death of the plan participant or contract holder. 2012 amended tax form Additional exceptions for qualified retirement plans. 2012 amended tax form   The tax does not apply to distributions that are: From a qualified retirement plan (other than an IRA) after your separation from service in or after the year you reached age 55 (age 50 for qualified public safety employees), From a qualified retirement plan (other than an IRA) to an alternate payee under a qualified domestic relations order, From a qualified retirement plan to the extent you have deductible medical expenses that exceed 10% (or 7. 2012 amended tax form 5% if you or your spouse are age 65 or older) of your adjusted gross income, whether or not you itemize your deductions for the year, From an employer plan under a written election that provides a specific schedule for distribution of your entire interest if, as of March 1, 1986, you had separated from service and had begun receiving payments under the election, From an employee stock ownership plan for dividends on employer securities held by the plan, From a qualified retirement plan due to an IRS levy of the plan, From elective deferral accounts under 401(k) or 403(b) plans or similar arrangements that are qualified reservist distributions, or Phased retirement annuity payments made to federal employees. 2012 amended tax form See Pub. 2012 amended tax form 721 for more information on the phased retirement program. 2012 amended tax form Qualified public safety employees. 2012 amended tax form   If you are a qualified public safety employee, distributions made from a governmental defined benefit pension plan are not subject to the additional tax on early distributions. 2012 amended tax form You are a qualified public safety employee if you provide police protection, firefighting services, or emergency medical services for a state or municipality, and you separated from service in or after the year you attained age 50. 2012 amended tax form Qualified reservist distributions. 2012 amended tax form   A qualified reservist distribution is not subject to the additional tax on early distributions. 2012 amended tax form A qualified reservist distribution is a distribution (a) from elective deferrals under a section 401(k) or 403(b) plan, or a similar arrangement, (b) to an individual ordered or called to active duty (because he or she is a member of a reserve component) for a period of more than 179 days or for an indefinite period, and (c) made during the period beginning on the date of the order or call and ending at the close of the active duty period. 2012 amended tax form You must have been ordered or called to active duty after September 11, 2001. 2012 amended tax form For more information, see Qualified reservist distributions under Special Additional Taxes in Publication 575. 2012 amended tax form Additional exceptions for nonqualified annuity contracts. 2012 amended tax form   The tax does not apply to distributions from: A deferred annuity contract to the extent allocable to investment in the contract before August 14, 1982, A deferred annuity contract under a qualified personal injury settlement, A deferred annuity contract purchased by your employer upon termination of a qualified employee plan or qualified employee annuity plan and held by your employer until your separation from service, or An immediate annuity contract (a single premium contract providing substantially equal annuity payments that start within 1 year from the date of purchase and are paid at least annually). 2012 amended tax form Tax on Excess Accumulation To make sure that most of your retirement benefits are paid to you during your lifetime, rather than to your beneficiaries after your death, the payments that you receive from qualified retirement plans must begin no later than your required beginning date (defined later). 2012 amended tax form The payments each year cannot be less than the required minimum distribution. 2012 amended tax form Required distributions not made. 2012 amended tax form   If the actual distributions to you in any year are less than the minimum required distribution for that year, you are subject to an additional tax. 2012 amended tax form The tax equals 50% of the part of the required minimum distribution that was not distributed. 2012 amended tax form   For this purpose, a qualified retirement plan includes: A qualified employee plan, A qualified employee annuity plan, An eligible section 457 deferred compensation plan, or A tax-sheltered annuity plan (403(b) plan)(for benefits accruing after 1986). 2012 amended tax form Waiver. 2012 amended tax form   The tax may be waived if you establish that the shortfall in distributions was due to reasonable error and that reasonable steps are being taken to remedy the shortfall. 2012 amended tax form See the Instructions for Form 5329 for the procedure to follow if you believe you qualify for a waiver of this tax. 2012 amended tax form State insurer delinquency proceedings. 2012 amended tax form   You might not receive the minimum distribution because assets are invested in a contract issued by an insurance company in state insurer delinquency proceedings. 2012 amended tax form If your payments are reduced below the minimum due to these proceedings, you should contact your plan administrator. 2012 amended tax form Under certain conditions, you will not have to pay the 50% excise tax. 2012 amended tax form Required beginning date. 2012 amended tax form   Unless the rule for 5% owners applies, you generally must begin to receive distributions from your qualified retirement plan by April 1 of the year that follows the later of: The calendar year in which you reach age 70½, or The calendar year in which you retire from employment with the employer maintaining the plan. 2012 amended tax form However, your plan may require you to begin to receive distributions by April 1 of the year that follows the year in which you reach age 70½, even if you have not retired. 2012 amended tax form   If you reached age 70½ in 2013, you may be required to receive your first distribution by April 1, 2014. 2012 amended tax form Your required distribution then must be made for 2014 by December 31, 2014. 2012 amended tax form 5% owners. 2012 amended tax form   If you are a 5% owner, you must begin to receive distributions by April 1 of the year that follows the calendar year in which you reach age 70½. 2012 amended tax form   You are a 5% owner if, for the plan year ending in the calendar year in which you reach age 70½, you own (or are considered to own under section 318 of the Internal Revenue Code) more than 5% of the outstanding stock (or more than 5% of the total voting power of all stock) of the employer, or more than 5% of the capital or profits interest in the employer. 2012 amended tax form Age 70½. 2012 amended tax form   You reach age 70½ on the date that is 6 calendar months after the date of your 70th birthday. 2012 amended tax form   For example, if you are retired and your 70th birthday was on June 30, 2013, you were age 70½ on December 30, 2013. 2012 amended tax form If your 70th birthday was on July 1, 2013, you reached age 70½ on January 1, 2014. 2012 amended tax form Required distributions. 2012 amended tax form   By the required beginning date, as explained earlier, you must either: Receive your entire interest in the plan (for a tax-sheltered annuity, your entire benefit accruing after 1986), or Begin receiving periodic distributions in annual amounts calculated to distribute your entire interest (for a tax-sheltered annuity, your entire benefit accruing after 1986) over your life or life expectancy or over the joint lives or joint life expectancies of you and a designated beneficiary (or over a shorter period). 2012 amended tax form Additional information. 2012 amended tax form   For more information on this rule, see Tax on Excess Accumulation in Publication 575. 2012 amended tax form Form 5329. 2012 amended tax form   You must file Form 5329 if you owe tax because you did not receive a minimum required distribution from your qualified retirement plan. 2012 amended tax form Survivors and Beneficiaries Generally, a survivor or beneficiary reports pension or annuity income in the same way the plan participant would have. 2012 amended tax form However, some special rules apply. 2012 amended tax form See Publication 575 for more information. 2012 amended tax form Survivors of employees. 2012 amended tax form   If you are entitled to receive a survivor annuity on the death of an employee who died, you can exclude part of each annuity payment as a tax-free recovery of the employee's investment in the contract. 2012 amended tax form You must figure the taxable and tax-free parts of your annuity payments using the method that applies as if you were the employee. 2012 amended tax form Survivors of retirees. 2012 amended tax form   If you receive benefits as a survivor under a joint and survivor annuity, include those benefits in income in the same way the retiree would have included them in income. 2012 amended tax form If you receive a survivor annuity because of the death of a retiree who had reported the annuity under the Three-Year Rule and recovered all of the cost tax free, your survivor payments are fully taxable. 2012 amended tax form    If the retiree was reporting the annuity payments under the General Rule, you must apply the same exclusion percentage to your initial survivor annuity payment called for in the contract. 2012 amended tax form The resulting tax-free amount will then remain fixed. 2012 amended tax form Any increases in the survivor annuity are fully taxable. 2012 amended tax form    If the retiree was reporting the annuity payments under the Simplified Method, the part of each payment that is tax free is the same as the tax-free amount figured by the retiree at the annuity starting date. 2012 amended tax form This amount remains fixed even if the annuity payments are increased or decreased. 2012 amended tax form See Simplified Method , earlier. 2012 amended tax form   In any case, if the annuity starting date is after 1986, the total exclusion over the years cannot be more than the cost. 2012 amended tax form Estate tax deduction. 2012 amended tax form   If your annuity was a joint and survivor annuity that was included in the decedent's estate, an estate tax may have been paid on it. 2012 amended tax form You can deduct the part of the total estate tax that was based on the annuity. 2012 amended tax form The deceased annuitant must have died after the annuity starting date. 2012 amended tax form (For details, see section 1. 2012 amended tax form 691(d)-1 of the regulations. 2012 amended tax form ) Deduct it in equal amounts over your remaining life expectancy. 2012 amended tax form   If the decedent died before the annuity starting date of a deferred annuity contract and you receive a death benefit under that contract, the amount you receive (either in a lump sum or as periodic payments) in excess of the decedent's cost is included in your gross income as income in respect of a decedent for which you may be able to claim an estate tax deduction. 2012 amended tax form   You can take the estate tax deduction as an itemized deduction on Schedule A, Form 1040. 2012 amended tax form This deduction is not subject to the 2%-of-adjusted-gross-income limit on miscellaneous deductions. 2012 amended tax form See Publication 559, Survivors, Executors, and Administrators, for more information on the estate tax deduction. 2012 amended tax form Prev  Up  Next   Home   More Online Publications
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The 2012 Amended Tax Form

2012 amended tax form 6. 2012 amended tax form   Tuition and Fees Deduction Table of Contents IntroductionWhat is the tax benefit of the tuition and fees deduction. 2012 amended tax form Can You Claim the DeductionWho Can Claim the Deduction Who Cannot Claim the Deduction What Expenses QualifyQualified Education Expenses No Double Benefit Allowed Expenses That Do Not Qualify Who Is an Eligible Student Who Can Claim a Dependent's Expenses Figuring the DeductionEffect of the Amount of Your Income on the Amount of Your Deduction Claiming the Deduction Illustrated Example Introduction You may be able to deduct qualified education expenses paid during the year for yourself, your spouse, or your dependent(s). 2012 amended tax form You cannot claim this deduction if your filing status is married filing separately or if another person can claim an exemption for you as a dependent on his or her tax return. 2012 amended tax form The qualified expenses must be for higher education, as explained later under Qualified Education Expenses . 2012 amended tax form What is the tax benefit of the tuition and fees deduction. 2012 amended tax form   The tuition and fees deduction can reduce the amount of your income subject to tax by up to $4,000. 2012 amended tax form   This deduction is taken as an adjustment to income. 2012 amended tax form This means you can claim this deduction even if you do not itemize deductions on Schedule A (Form 1040). 2012 amended tax form This deduction may be beneficial to you if you do not qualify for the American opportunity or lifetime learning credits. 2012 amended tax form You can choose the education benefit that will give you the lowest tax. 2012 amended tax form You may want to compare the tuition and fees deduction to the education credits. 2012 amended tax form See chapter 2, American Opportunity Credit and chapter 3, Lifetime Learning Credit for more information on the education credits. 2012 amended tax form Table 6-1. 2012 amended tax form Tuition and Fees Deduction at a Glance summarizes the features of the tuition and fees deduction. 2012 amended tax form Can You Claim the Deduction The following rules will help you determine if you can claim the tuition and fees deduction. 2012 amended tax form Who Can Claim the Deduction Generally, you can claim the tuition and fees deduction if all three of the following requirements are met. 2012 amended tax form You pay qualified education expenses of higher education. 2012 amended tax form You pay the education expenses for an eligible student. 2012 amended tax form The eligible student is yourself, your spouse, or your dependent for whom you claim an exemption on your tax return. 2012 amended tax form The term “qualified education expenses” is defined later under Qualified Education Expenses . 2012 amended tax form “Eligible student” is defined later under Who Is an Eligible Student . 2012 amended tax form For more information on claiming the deduction for a dependent, see Who Can Claim a Dependent's Expenses , later. 2012 amended tax form Table 6-1. 2012 amended tax form Tuition and Fees Deduction at a Glance Do not rely on this table alone. 2012 amended tax form Refer to the text for complete details. 2012 amended tax form Question Answer What is the maximum benefit? You can reduce your income subject to tax by up to $4,000. 2012 amended tax form What is the limit on modified adjusted gross income (MAGI)? $160,000 if married filing a joint return; $80,000 if single, head of household, or qualifying widow(er). 2012 amended tax form Where is the deduction taken? As an adjustment to income on  Form 1040 or Form 1040A. 2012 amended tax form For whom must the expenses be paid? A student enrolled in an eligible educational institution who is either: •you,  •your spouse, or  •your dependent for whom you claim an exemption. 2012 amended tax form What tuition and fees are deductible? Tuition and fees required for enrollment or attendance at an eligible postsecondary educational institution, but not including personal, living, or family expenses, such as room and board. 2012 amended tax form Who Cannot Claim the Deduction You cannot claim the tuition and fees deduction if any of the following apply. 2012 amended tax form Your filing status is married filing separately. 2012 amended tax form Another person can claim an exemption for you as a dependent on his or her tax return. 2012 amended tax form You cannot take the deduction even if the other person does not actually claim that exemption. 2012 amended tax form Your modified adjusted gross income (MAGI) is more than $80,000 ($160,000 if filing a joint return). 2012 amended tax form You (or your spouse) were a nonresident alien for any part of 2013 and the nonresident alien did not elect to be treated as a resident alien for tax purposes. 2012 amended tax form More information on nonresident aliens can be found in Publication 519. 2012 amended tax form What Expenses Qualify The tuition and fees deduction is based on qualified education expenses you pay for yourself, your spouse, or a dependent for whom you claim an exemption on your tax return. 2012 amended tax form Generally, the deduction is allowed for qualified education expenses paid in 2013 in connection with enrollment at an institution of higher education during 2013 or for an academic period beginning in 2013 or in the first 3 months of 2014. 2012 amended tax form For example, if you paid $1,500 in December 2013 for qualified tuition for the spring 2014 semester beginning in January 2014, you may be able to use that $1,500 in figuring your 2013 deduction. 2012 amended tax form Academic period. 2012 amended tax form   An academic period includes a semester, trimester, quarter, or other period of study (such as a summer school session) as reasonably determined by an educational institution. 2012 amended tax form In the case of an educational institution that uses credit hours or clock hours and does not have academic terms, each payment period can be treated as an academic period. 2012 amended tax form Paid with borrowed funds. 2012 amended tax form   You can claim a tuition and fees deduction for qualified education expenses paid with the proceeds of a loan. 2012 amended tax form Use the expenses to figure the deduction for the year in which the expenses are paid, not the year in which the loan is repaid. 2012 amended tax form Treat loan disbursements sent directly to the educational institution as paid on the date the institution credits the student's account. 2012 amended tax form Student withdraws from class(es). 2012 amended tax form   You can claim a tuition and fees deduction for qualified education expenses not refunded when a student withdraws. 2012 amended tax form Qualified Education Expenses For purposes of the tuition and fees deduction, qualified education expenses are tuition and certain related expenses required for enrollment or attendance at an eligible educational institution. 2012 amended tax form Eligible educational institution. 2012 amended tax form   An eligible educational institution is any college, university, vocational school, or other postsecondary educational institution eligible to participate in a student aid program administered by the U. 2012 amended tax form S. 2012 amended tax form Department of Education. 2012 amended tax form It includes virtually all accredited public, nonprofit, and proprietary (privately owned profit-making) postsecondary institutions. 2012 amended tax form The educational institution should be able to tell you if it is an eligible educational institution. 2012 amended tax form   Certain educational institutions located outside the United States also participate in the U. 2012 amended tax form S. 2012 amended tax form Department of Education's Federal Student Aid (FSA) programs. 2012 amended tax form Related expenses. 2012 amended tax form   Student-activity fees and expenses for course-related books, supplies, and equipment are included in qualified education expenses only if the fees and expenses must be paid to the institution as a condition of enrollment or attendance. 2012 amended tax form Prepaid expenses. 2012 amended tax form   Qualified education expenses paid in 2013 for an academic period that begins in the first three months of 2014 can be used in figuring an education credit for 2013 only. 2012 amended tax form See Academic period , earlier. 2012 amended tax form For example, you pay $2,000 in December 2013 for qualified tuition for the 2014 winter quarter that begins in January 2014, you can use that $2,000 in figuring an education credit for 2013 only (if you meet all the other requirements). 2012 amended tax form You cannot use any amount you paid in 2012 or 2014 to figure the qualified education expenses you use to figure your 2013 education credit(s). 2012 amended tax form In the following examples, assume that each student is an eligible student and each college or university an eligible educational institution. 2012 amended tax form Example 1. 2012 amended tax form Jackson is a sophomore in University V's degree program in dentistry. 2012 amended tax form This year, in addition to tuition, he is required to pay a fee to the university for the rental of the dental equipment he will use in this program. 2012 amended tax form Because the equipment rental fee must be paid to University V for enrollment and attendance, Jackson's equipment rental fee is a qualified education expense. 2012 amended tax form Example 2. 2012 amended tax form Donna and Charles, both first-year students at College W, are required to have certain books and other reading materials to use in their mandatory first-year classes. 2012 amended tax form The college has no policy about how students should obtain these materials, but any student who purchases them from College W's bookstore will receive a bill directly from the college. 2012 amended tax form Charles bought his books from a friend, so what he paid for them is not a qualified education expense. 2012 amended tax form Donna bought hers at College W's bookstore. 2012 amended tax form Although Donna paid College W directly for her first-year books and materials, her payment is not a qualified education expense because the books and materials are not required to be purchased from College W for enrollment or attendance at the institution. 2012 amended tax form Example 3. 2012 amended tax form When Marci enrolled at College X for her freshman year, she had to pay a separate student activity fee in addition to her tuition. 2012 amended tax form This activity fee is required of all students, and is used solely to fund on-campus organizations and activities run by students, such as the student newspaper and the student government. 2012 amended tax form No portion of the fee covers personal expenses. 2012 amended tax form Although labeled as a student activity fee, the fee is required for Marci's enrollment and attendance at College X. 2012 amended tax form Therefore, it is a qualified expense. 2012 amended tax form No Double Benefit Allowed You cannot do any of the following. 2012 amended tax form Deduct qualified education expenses you deduct under any other provision of the law, for example, as a business expense. 2012 amended tax form Deduct qualified education expenses for a student on your income tax return if you or anyone else claims an American opportunity or lifetime learning credit for that same student in the same year. 2012 amended tax form Deduct qualified education expenses that have been used to figure the tax-free portion of a distribution from a Coverdell education savings account (ESA) or a qualified tuition program (QTP). 2012 amended tax form For a QTP, this applies only to the amount of tax-free earnings that were distributed, not to the recovery of contributions to the program. 2012 amended tax form See Coordination With Tuition and Fees Deduction in chapter 8, Qualified Tuition Program, later. 2012 amended tax form Deduct qualified education expenses that have been paid with tax-free interest on U. 2012 amended tax form S. 2012 amended tax form savings bonds (Form 8815). 2012 amended tax form See Figuring the Tax-Free Amount in chapter 10, Education Savings Bond Program, later. 2012 amended tax form Deduct qualified education expenses that have been paid with tax-free educational assistance, such as a scholarship, grant, or assistance provided by an employer. 2012 amended tax form See the following section on Adjustments to Qualified Education Expenses. 2012 amended tax form Adjustments to Qualified Education Expenses For each student, reduce the qualified education expenses paid by or on behalf of that student under the following rules. 2012 amended tax form The result is the amount of adjusted qualified education expenses for each student. 2012 amended tax form You must also reduce qualified education expenses by the other amounts referred to in No Double Benefit Allowed , earlier. 2012 amended tax form Tax-free educational assistance. 2012 amended tax form   For tax-free educational assistance received in 2013, reduce the qualified educational expenses for each academic period by the amount of tax-free educational assistance allocable to that academic period. 2012 amended tax form See Academic period , earlier. 2012 amended tax form   Some tax-free educational assistance received after 2013 may be treated as a refund of qualified education expenses paid in 2013. 2012 amended tax form This tax-free educational assistance is any tax-free educational assistance received by you or anyone else after 2013 for qualified education expenses paid on behalf of a student in 2013 (or attributable to enrollment at an eligible educational institution during 2013). 2012 amended tax form   If this tax-free educational assistance is received after 2013 but before you file your 2013 income tax return, see Refunds received after 2013 but before your income tax return is filed , later. 2012 amended tax form If this tax-free educational assistance is received after 2013 and after you file your 2013 income tax return, see Refunds received after 2013 and after your income tax return is filed , later. 2012 amended tax form   This tax-free education assistance includes: The tax-free part of scholarships and fellowships (see Tax-Free Scholarships and Fellowships in chapter 1, Scholarships, Fellowships, Grants, and Tuition Reductions), Pell grants (see Pell Grants and Other Title IV Need-Based Education Grants in chapter 1, Scholarships, Fellowships, Grants, and Tuition Reductions), Employer-provided educational assistance (see chapter 11, Employer-Provided Educational Assistance ), Veterans' educational assistance (see Veterans' Benefits in chapter 1, Scholarships, Fellowships, Grants, and Tuition Reductions), and Any other nontaxable (tax-free) payments (other than gifts or inheritances) received as educational assistance. 2012 amended tax form Generally, any scholarship or fellowship is treated as tax free. 2012 amended tax form However, a scholarship or fellowship is not treated as tax free to the extent the student includes it in gross income (if the student is required to file a tax return for the year the scholarship or fellowship is received) and either of the following is true. 2012 amended tax form The scholarship or fellowship (or any part of it) must be applied (by its terms) to expenses (such as room and board) other than qualified education expenses as defined in Qualified education expenses in chapter 1, Scholarships, Fellowships, Grants, and Tuition Reductions. 2012 amended tax form The scholarship or fellowship (or any part of it) may be applied (by its terms) to expenses (such as room and board) other than qualified education expenses as defined in Qualified education expenses in chapter 1, Scholarships, Fellowships, Grants, and Tuition Reductions. 2012 amended tax form You may be able to increase the combined value of an education credit and certain educational assistance if the student includes some or all of the educational assistance in income in the year it is received. 2012 amended tax form For details, see Adjustments to Qualified Education Expenses in chapters 2 and 3. 2012 amended tax form Refunds. 2012 amended tax form   A refund of qualified education expenses may reduce adjusted qualified education expenses for the tax year or require repayment (recapture) of a credit claimed in an earlier year. 2012 amended tax form Some tax-free educational assistance received after 2013 may be treated as a refund. 2012 amended tax form See Tax-free educational assistance , earlier. 2012 amended tax form Refunds received in 2013. 2012 amended tax form   For each student, figure the adjusted qualified education expenses for 2013 by adding all the qualified education expenses for 2013 and subtracting any refunds of those expenses received from the eligible educational institution during 2013. 2012 amended tax form Refunds received after 2013 but before your income tax return is filed. 2012 amended tax form   If anyone receives a refund after 2013 of qualified education expenses paid on behalf of a student in 2013 and the refund is paid before you file an income tax return for 2013, the amount of qualified education expenses for 2013 is reduced by the amount of the refund. 2012 amended tax form Refunds received after 2013 and after your income tax return is filed. 2012 amended tax form   If anyone receives a refund after 2013 of qualified education expenses paid on behalf of a student in 2013 and the refund is paid after you file an income tax return for 2013, you may need to repay some or all of the credit. 2012 amended tax form See Credit recapture , later. 2012 amended tax form Coordination with Coverdell education savings accounts and qualified tuition programs. 2012 amended tax form   Reduce your qualified education expenses by any qualified education expenses used to figure the exclusion from gross income of (a) interest received under an education savings bond program, or (b) any distribution from a Coverdell education savings account or qualified tuition program (QTP). 2012 amended tax form For a QTP, this applies only to the amount of tax-free earnings that were distributed, not to the recovery of contributions to the program. 2012 amended tax form Credit recapture. 2012 amended tax form    If any tax-free educational assistance for the qualified education expenses paid in 2013 or any refund of your qualified education expenses paid in 2013 is received after you file your 2013 income tax return, you must recapture (repay) any excess credit. 2012 amended tax form You do this by refiguring the amount of your adjusted qualified education expenses for 2013 by reducing that amount by the amount of the refund or tax-free educational assistance. 2012 amended tax form You then refigure your education credit(s) for 2013 and figure the amount by which your 2013 tax liability would have increased if you had claimed the refigured credit(s). 2012 amended tax form Include that amount as an additional tax for the year the refund or tax-free assistance was received. 2012 amended tax form Example. 2012 amended tax form   You paid $3,500 of qualified education expenses in December 2013, and your child began college in January 2014. 2012 amended tax form You claimed $3,500 as the tuition and fees deduction on your 2013 income tax return. 2012 amended tax form The reduction reduced your taxable income by $3,500. 2012 amended tax form Also, you claimed no tax credits in 2013. 2012 amended tax form Your child withdrew from two classes and you received a refund of $2,000 in 2014 after you filed your 2013 tax return. 2012 amended tax form Refigure your 2013 tuition and fees deduction using $1,500 of qualified education expense instead of the $3,500. 2012 amended tax form The refigured tuition and fees deduction is $1,500. 2012 amended tax form Do not file an amended 2013 tax return to account for this adjustment. 2012 amended tax form Instead, include the difference of $2,000 (but only to the extent this difference would have increased your 2013 tax) on the “Other income” line of your 2014 Form 1040. 2012 amended tax form You cannot file Form 1040A for 2014. 2012 amended tax form Amounts that do not reduce qualified education expenses. 2012 amended tax form   Do not reduce qualified education expenses by amounts paid with funds the student receives as: Payment for services, such as wages, A loan, A gift, An inheritance, or A withdrawal from the student's personal savings. 2012 amended tax form   Do not reduce the qualified education expenses by any scholarship or fellowship reported as income on the student's tax return in the following situations. 2012 amended tax form The use of the money is restricted, by the terms of the scholarship or fellowship, to costs of attendance (such as room and board) other than qualified education expenses as defined in Qualified education expenses in chapter 1, Scholarships, Fellowships, Grants, and Tuition Restrictions. 2012 amended tax form The use of the money is not restricted. 2012 amended tax form Example 1. 2012 amended tax form In 2013, Jackie paid $3,000 for tuition and $5,000 for room and board at University X. 2012 amended tax form The university did not require her to pay any fees in addition to her tuition in order to enroll in or attend classes. 2012 amended tax form To help pay these costs, she was awarded a $2,000 scholarship and a $4,000 student loan. 2012 amended tax form The terms of the scholarship state that it can be used to pay any of Jackie's college expenses. 2012 amended tax form University X applies the $2,000 scholarship against Jackie's $8,000 total bill, and Jackie pays the $6,000 balance of her bill from University X with a combination of her student loan and her savings. 2012 amended tax form Jackie does not report any portion of the scholarship as income on her tax return. 2012 amended tax form In figuring the tuition and fees deduction, Jackie must reduce her qualified education expenses by the amount of the scholarship ($2,000) because she excluded the entire scholarship from her income. 2012 amended tax form The student loan is not tax-free educational assistance, so she does not need to reduce her qualified expenses by any part of the loan proceeds. 2012 amended tax form Jackie is treated as having paid $1,000 in qualified education expenses ($3,000 tuition – $2,000 scholarship) in 2013. 2012 amended tax form Example 2. 2012 amended tax form The facts are the same as in Example 1, except that Jackie reports her entire scholarship as income on her tax return. 2012 amended tax form Because Jackie reported the entire $2,000 scholarship in her income, she does not need to reduce her qualified education expenses. 2012 amended tax form Jackie is treated as having paid $3,000 in qualified education expenses. 2012 amended tax form Expenses That Do Not Qualify Qualified education expenses do not include amounts paid for: Insurance, Medical expenses (including student health fees), Room and board, Transportation, or Similar personal, living, or family expenses. 2012 amended tax form This is true even if the amount must be paid to the institution as a condition of enrollment or attendance. 2012 amended tax form Sports, games, hobbies, and noncredit courses. 2012 amended tax form   Qualified education expenses generally do not include expenses that relate to any course of instruction or other education that involves sports, games or hobbies, or any noncredit course. 2012 amended tax form However, if the course of instruction or other education is part of the student's degree program, these expenses can qualify. 2012 amended tax form Comprehensive or bundled fees. 2012 amended tax form   Some eligible educational institutions combine all of their fees for an academic period into one amount. 2012 amended tax form If you do not receive, or do not have access to, an allocation showing how much you paid for qualified education expenses and how much you paid for personal expenses, such as those listed above, contact the institution. 2012 amended tax form The institution is required to make this allocation and provide you with the amount you paid (or were billed) for qualified education expenses on Form 1098-T. 2012 amended tax form See Figuring the Deduction , later, for more information about Form 1098-T. 2012 amended tax form Who Is an Eligible Student For purposes of the tuition and fees deduction, an eligible student is a student who is enrolled in one or more courses at an eligible educational institution (as defined under Qualified Education Expenses , earlier). 2012 amended tax form Who Can Claim a Dependent's Expenses Generally, in order to claim the tuition and fees deduction for qualified education expenses for a dependent, you must: Have paid the expenses, and Claim an exemption for the student as a dependent. 2012 amended tax form For you to be able to deduct qualified education expenses for your dependent, you must claim an exemption for that individual. 2012 amended tax form You do this by listing your dependent's name and other required information on Form 1040 (or Form 1040A), line 6c. 2012 amended tax form IF your dependent is an eligible student and you. 2012 amended tax form . 2012 amended tax form . 2012 amended tax form AND. 2012 amended tax form . 2012 amended tax form . 2012 amended tax form THEN. 2012 amended tax form . 2012 amended tax form . 2012 amended tax form claim an exemption for your dependent you paid all qualified education expenses for your dependent only you can deduct the qualified education expenses that you paid. 2012 amended tax form Your dependent cannot take a deduction. 2012 amended tax form claim an exemption for your dependent your dependent paid all qualified education expenses no one is allowed to take a deduction. 2012 amended tax form do not claim an exemption for your dependent you paid all qualified education expenses no one is allowed to take a deduction. 2012 amended tax form do not claim an exemption for your dependent your dependent paid all qualified education expenses no one is allowed to take a deduction. 2012 amended tax form Expenses paid by dependent. 2012 amended tax form   If your dependent pays qualified education expenses, no one can take a tuition and fees deduction for those expenses. 2012 amended tax form Neither you nor your dependent can deduct the expenses. 2012 amended tax form For purposes of the tuition and fees deduction, you are not treated as paying any expenses actually paid by a dependent for whom you or anyone other than the dependent can claim an exemption. 2012 amended tax form This rule applies even if you do not claim an exemption for your dependent on your tax return. 2012 amended tax form Expenses paid by you. 2012 amended tax form   If you claim an exemption for a dependent who is an eligible student, only you can include any expenses you paid when figuring your tuition and fees deduction. 2012 amended tax form Expenses paid under divorce decree. 2012 amended tax form   Qualified education expenses paid directly to an eligible educational institution for a student under a court-approved divorce decree are treated as paid by the student. 2012 amended tax form Only the student would be eligible to take a tuition and fees deduction for that payment, and then only if no one else could claim an exemption for the student. 2012 amended tax form Expenses paid by others. 2012 amended tax form   Someone other than you, your spouse, or your dependent (such as a relative or former spouse) may make a payment directly to an eligible educational institution to pay for an eligible student's qualified education expenses. 2012 amended tax form In this case, the student is treated as receiving the payment from the other person and, in turn, paying the institution. 2012 amended tax form If you claim, or can claim, an exemption on your tax return for the student, you are not considered to have paid the expenses and you cannot deduct them. 2012 amended tax form If the student is not a dependent, only the student can deduct payments made directly to the institution for his or her expenses. 2012 amended tax form If the student is your dependent, no one can deduct the payments. 2012 amended tax form Example. 2012 amended tax form In 2013, Ms. 2012 amended tax form Baker makes a payment directly to an eligible educational institution for her grandson Dan's qualified education expenses. 2012 amended tax form For purposes of deducting tuition and fees, Dan is treated as receiving the money from his grandmother and, in turn, paying his own qualified education expenses. 2012 amended tax form If an exemption cannot be claimed for Dan on anyone else's tax return, only Dan can claim a tuition and fees deduction for his grandmother's payment. 2012 amended tax form If someone else can claim an exemption for Dan, no one will be allowed a deduction for Ms. 2012 amended tax form Baker's payment. 2012 amended tax form Tuition reduction. 2012 amended tax form   When an eligible educational institution provides a reduction in tuition to an employee of the institution (or spouse or dependent child of an employee), the amount of the reduction may or may not be taxable. 2012 amended tax form If it is taxable, the employee is treated as receiving a payment of that amount and, in turn, paying it to the educational institution on behalf of the student. 2012 amended tax form For more information on tuition reductions, see Qualified Tuition Reduction , in chapter 1, Scholarships, Fellowships, Grants, and Tuition Reductions. 2012 amended tax form Figuring the Deduction The maximum tuition and fees deduction in 2013 is $4,000, $2,000, or $0, depending on the amount of your MAGI. 2012 amended tax form See Effect of the Amount of Your Income on the Amount of Your Deduction , later. 2012 amended tax form Form 1098-T. 2012 amended tax form   To help you figure your tuition and fees deduction, the student should receive Form 1098-T (see Appendix A for a completed example of Form 1098-T). 2012 amended tax form Generally, an eligible educational institution (such as a college or university) must send Form 1098-T (or acceptable substitute) to each enrolled student by January 31, 2014. 2012 amended tax form An institution may choose to report either payments received (box 1), or amounts billed (box 2), for qualified education expenses. 2012 amended tax form However, the amount in boxes 1 and 2 of Form 1098-T might be different than what you paid. 2012 amended tax form When figuring the deduction, use only the amounts you paid in 2013 for qualified education expenses. 2012 amended tax form   In addition, Form 1098-T should give other information for that institution, such as adjustments made for prior years, the amount of scholarships or grants, reimbursements or refunds, and whether the student was enrolled at least half-time or was a graduate student. 2012 amended tax form    The eligible educational institution may ask for a completed Form W-9S or similar statement to obtain the student's name, address, and taxpayer identification number. 2012 amended tax form Effect of the Amount of Your Income on the Amount of Your Deduction If your MAGI is not more than $65,000 ($130,000 if you are married filing jointly), your maximum tuition and fees deduction is $4,000. 2012 amended tax form If your MAGI is larger than $65,000 ($130,000 if you are married filing jointly), but is not more than $80,000 ($160,000 if you are married filing jointly), your maximum deduction is $2,000. 2012 amended tax form No tuition and fees deduction is allowed if your MAGI is larger than $80,000 ($160,000 if you are married filing jointly). 2012 amended tax form Modified adjusted gross income (MAGI). 2012 amended tax form   For most taxpayers, MAGI is adjusted gross income (AGI) as figured on their federal income tax return before subtracting any deduction for tuition and fees. 2012 amended tax form However, as discussed below, there may be other modifications. 2012 amended tax form MAGI when using Form 1040A. 2012 amended tax form   If you file Form 1040A, your MAGI is the AGI on line 22 of that form, figured without taking into account any amount on line 19 (tuition and fees deduction). 2012 amended tax form MAGI when using Form 1040. 2012 amended tax form   If you file Form 1040, your MAGI is the AGI on line 38 of that form, figured without taking into account any amount on line 34 (tuition and fees deduction) or line 35 (domestic production activities deduction), and modified by adding back any: Foreign earned income exclusion, Foreign housing exclusion, Foreign housing deduction, Exclusion of income by bona fide residents of American Samoa, and Exclusion of income by bona fide residents of Puerto Rico. 2012 amended tax form   Table 6-2 shows how the amount of your MAGI can affect your tuition and fees deduction. 2012 amended tax form   You can use Worksheet 6-1. 2012 amended tax form MAGI for the Tuition and Fees Deduction , later, to figure your MAGI. 2012 amended tax form Table 6-2. 2012 amended tax form Effect of MAGI on Maximum Tuition and Fees Deduction IF your filing status is. 2012 amended tax form . 2012 amended tax form . 2012 amended tax form AND your MAGI is. 2012 amended tax form . 2012 amended tax form . 2012 amended tax form THEN your maximum tuition and fees deduction is. 2012 amended tax form . 2012 amended tax form . 2012 amended tax form single,  head of household, or qualifying widow(er) not more than $65,000 $4,000. 2012 amended tax form more than $65,000  but not more than $80,000 $2,000. 2012 amended tax form more than $80,000 $0. 2012 amended tax form married filing joint return not more than $130,000 $4,000. 2012 amended tax form more than $130,000 but not more than $160,000 $2,000. 2012 amended tax form more than $160,000 $0. 2012 amended tax form Claiming the Deduction You claim a tuition and fees deduction by completing Form 8917 and submitting it with your Form 1040 or Form 1040A. 2012 amended tax form Enter the deduction on Form 1040, line 34, or Form 1040A, line 19. 2012 amended tax form A filled-in Form 8917 is shown at the end of this chapter. 2012 amended tax form Illustrated Example Tim Pfister, a single taxpayer, enrolled full-time at a local college to earn a degree in engineering. 2012 amended tax form This is the first year of his postsecondary education. 2012 amended tax form During 2013, he paid $3,600 for his qualified 2013 tuition expense. 2012 amended tax form Both he and the college meet all of the requirements for the tuition and fees deduction. 2012 amended tax form Tim's total income (Form 1040, line 22) and MAGI are $26,000. 2012 amended tax form He figures his deduction of $3,600 as shown on Form 8917, later. 2012 amended tax form Worksheet 6-1. 2012 amended tax form MAGI for the Tuition and Fees Deduction Use this worksheet if you are filing Form 2555, 2555-EZ, or 4563, or you are excluding income from sources within Puerto Rico. 2012 amended tax form Before using this worksheet, you must complete Form 1040, lines 7 through 33, and figure any amount to be entered on the dotted line next to line 36. 2012 amended tax form 1. 2012 amended tax form Enter the amount from Form 1040, line 22   1. 2012 amended tax form         2. 2012 amended tax form Enter the total from Form 1040, lines 23 through 33   2. 2012 amended tax form               3. 2012 amended tax form Enter the total of any amounts entered on the dotted line next to Form 1040, line 36   3. 2012 amended tax form               4. 2012 amended tax form Add lines 2 and 3   4. 2012 amended tax form         5. 2012 amended tax form Subtract line 4 from line 1   5. 2012 amended tax form         6. 2012 amended tax form Enter your foreign earned income exclusion and/or housing  exclusion (Form 2555, line 45, or Form 2555-EZ, line 18)   6. 2012 amended tax form         7. 2012 amended tax form Enter your foreign housing deduction (Form 2555, line 50)   7. 2012 amended tax form         8. 2012 amended tax form Enter the amount of income from Puerto Rico you are excluding   8. 2012 amended tax form         9. 2012 amended tax form Enter the amount of income from American Samoa you are  excluding (Form 4563, line 15)   9. 2012 amended tax form         10. 2012 amended tax form Add lines 5 through 9. 2012 amended tax form This is your modified adjusted gross income   10. 2012 amended tax form     Note. 2012 amended tax form If the amount on line 10 is more than $80,000 ($160,000 if married filing jointly),  you cannot take the deduction for tuition and fees. 2012 amended tax form       This image is too large to be displayed in the current screen. 2012 amended tax form Please click the link to view the image. 2012 amended tax form Form 8917 for Tim Pfister Prev  Up  Next   Home   More Online Publications