[Individual]Ordinary Dividends and Qualified Dividends (Mar-04-2011, 46 days left)

Ordinary dividends are ordinary income, rather than capital gains. You can assume that any dividend you receive on common or preferred stock is an ordinary dividend unless the paying corporation tells you otherwise. It is reported in 1099-DIV box 1a.

Qualified Dividends: it is reported in 1099-DIV box 1b

It is subject to net capital gain.

Tax rate for Qualified dividends
15%	If the regular tax rate is 25% or higher
0%	If the regular tax rate is lower than 25%

All the following requirements must be met to be qualified for this special treatment:

• The dividends must have been paid by a U.S. corporation or a qualified foreign corporation.
• The dividends are not of the type listed :

--capital gain distributions

--Dividends paid on deposits with mutual savings banks, cooperative banks, credit unions, U.S. building and loan associations, U.S. savings and loan associations, federal savings and loan associations, and similar financial institutions.

--Dividends from a corporation that is a tax-exempt organization or farmer's cooperative

--Dividends paid by a corporation on employer securities held on the date of record by an employee stock ownership olan (ESOP)

--Dividends on any share of stock to the extent you are obligated to make related payments for positions in substantially similar or related property

--Payments in lieu of dividends, but only if you know the payment are not qualified dividends

--Payments shown in Form 1099-DIV, box 1b to the extent you know it's not qualified dividends

• You meet the holding period requirement:

Common Stock	more than 60 days during the 121-day period that begins 60 days before the ex-dividend date ( the first date following the declaration of a dividend on which the buyer of a stock is not entitled to receive the next dividend payment.)
Preferred stock	More than 90 days during the 181 days

PSQ

Source: http://www.irs.gov

[Individual]Original Issue Discount --OID (Mar-03-2011, 47 days left)

OID is a form of interest.

You include OID in your income as it accrues over the term of the debt instrument, whether or not your receive any payments from the issuer.

OID is the difference between the issue price and face value.

Certificates of Deposit (CDs)

You should this rule to CDs, if it has more than 1 year maturity. You must include in income each year a part of the total interest due and report it in the same manner as other OID.

Besides CDs, the following are also fit for OID rule:

• Time deposits,

• Bonus plans,
• Savings certificates,
• Deferred income certificates,
• Bonus savings certificates, and
• Growth savings certificates

Exceptions to reporting OID:

The OID rules do not apply to the following debt instruments:

• Tax-exempt obligation.

• U.S. savings bonds

• Short-term debt instrument.

• Obligation issued by an individual before Mar-2-1984

• Loans between individuals, if all of the following are true:

--the lender is not in the business of lending money

--the amount of the loan + outstanding prior loans <= 10,000

--Avoiding federal tax is not one of the principal purposes of the loan

PSQ

Source: http://www.irs.gov

[Individual]U.S. Treasury Bills, Notes and Bonds (Mar-03-2011, 47 days left)

Interest income from Treasury bills, notes and bonds is subject to federal income tax but is exempt from all state and local income taxes. It is reported in Form 1099-INT Box 3.

Treasury Bills

These bills generally have a 4-week, 13-week, 26-week, or 52-week maturity period.

They are issued at a discount. The difference between purchase price and face value is the interest income which is included in your income when you get the payment at maturity.

Treasury notes and bonds

Treasury notes have maturity period more than 1 year, ranging up to 10 years.

Treasury bonds have maturity period more than 10 years.

Generally, you report the interest for the year paid.

Bonds Sold between interest dates

Sell a bond	Part of sales price represents interest accrued to the date of sale. You must include that part of the sales price as interest income for the year of sale.
Buy a bond	Part of purchase price represents interest accrued before the date of purchase, you must treat this part as a return of your capital investment, rather than interest income. You should reduce your basis in the bond.

PSQ

Source: http://www.irs.gov

[Individual]Taxable Interest Income 3 (Mar-02-2011, 48 days left)

1. U.S. obligations:

Interest on U.S. obligations, such as U.S. Treasury bills, notes, and bonds, issued by any agency or instrumentality of the United States is taxable for federal income tax purposes.

2. Interest on tax refunds: taxable

3. Interest on condemnation award

Interest to compensate for delay in payment of an award is taxable.

4. Installment sale payments

Interest payable with the deferred payments is taxable when you receive it.

5. Interest on annuity contract

Accumulated interest on an annuity contract you sell before its maturity date is taxable.

6. Usurious interest

It's interest charged at an illegal rate. Usually it is taxable as interest.

7. Interest income on frozen deposits

You can exclude the interest on frozen deposits. The amount of interest you must exclude is the interest on frozen deposits minus the sum of :

--the net amount you withdrew from these deposits during the year,

--the amount you could have withdrawn as of the end of the year.

PSQ

Source: http://www.irs.gov

[Individual]Taxable Interest Income 2 (Mar-01-2011, 49 days left)

1. Money borrowed to invest in certificate of deposit

The interest paid for the loan and the interest earned from CD are totally two separate items.

You must report the total interest you earn on the CD in your income. You may be deduct the interest you pay as investment interest, up to the amount of your net investment income.

2. Gift for opening account

If you receive non-cash gift or services for making deposits or for opening an account in a savings institution, you may report the value as interest.

For deposits of less than 5,000, gifts or services valued at more than 10 must be reported as interest.

For deposits of more than 5,000, gifts or services valued at more than 20 must be reported as interest.

3. Interest on insurance dividends

If it is left on deposit with an insurance company and can be withdrawn annually, it is taxable when it is credited to your account.

If you can withdraw it only on the anniversary date of the policy, the interest is taxable in the year that date occurs.

4. Prepaid insurance premiums

Any increase in the value of prepaid insurance premiums, advance premiums, or premium deposit funds is interest if it is applied to the payment of premiums due on insurance policies or made available for you to withdraw.

PSQ

Source: http://www.irs.gov

[Individual]Taxable Interest Income 1 (Feb-28-2011, 50 days left)

1. Dividends that are actually interest

Certain distributions commonly called dividends are actually interest, such as interest on deposits or on share accounts in : Cooperative banks Credit unions Domestic building and loan associations Domestic savings and loan associations Federal savings and loan associations Mutual saving banks

Generally, it will be shown as interest income on Form 1099-INT

2. Money market funds

It pay dividends and is offered by nonbank financial institutions, such as mutual funds and stock brokerage houses.

You consider it as dividend, not as interest.

3. Certificates of deposit and other deferred interest income

Interest may be paid at fixed intervals of 1 year or less during the term of account, or the CD mature in 1 year or less and will get interest at maturity day. You generally include this interest in your income when you actually receive it or are entitled to receive it without penalty. Even it happens to be a penalty for early-withdraw, you still keep the original amount as your interest income, then treat the penalty separately. (Pub 550)

If interest is deferred for more than 1 year, see Original Issue Discount (OID).

PSQ

Source: http://www.irs.gov

[Individual]Interest Income -- General (Feb-27-2011, 51 days left)

There are several types of interest income, not only the interest earned on your saving account, but also some others from your estate, trust or property, etc.

Investment income of certain children	Taxed at the parent's tax rate: Investment income > 1,900, Form 8615 is required Investment income <> May choose to include child's interest and dividends on the parent's return: Form 8814.
Beneficiary of an estate or trust	Generally taxable income You should receive Form 1041 schedule K-1
Joint accounts	Joint saving account or bond, joint tenants, etc. Each share of any interest income is determined by local law
Income from property given to a child	Taxable to the child, except that any part used to satisfy a legal obligation to support the child is taxable to the parent.
Savings account with parent as trustee	Taxable to the child if, under the law of the state in which the child resides, both of the following are true: The savings account legally belongs to the child The parents are not legally permitted to use any of the funds to support the child
Exempt-interest dividends	Nontaxable income. Generally show in box 8 of 1099-INT If it is paid from specified private activity bonds may be subject to the alternative minimum tax.
Interest on VA dividends	Interest on insurance dividends left on deposit with the department of Veterans Affairs (VA) is nontaxable.
Individual Retirement arrangements (IRA)	Interest on a Roth IRA is nontaxable. Interest on a traditional IRA is tax deferred. You include it as your income when you make withdrawals from the IRA

2 Major forms you should received for your interest income:

Form 1099-INT

Interest income is generally reported to you on Form 1099-INT, or a similar statement, by banks, savings and loans, and other payers of interest.

Interest Not reported on Form 1099-INT

You still need to report it. For example, distributive shares of interest from partnerships or S corp. it is reported on Schedule K-1 (Form 1065) or Schedule K-1 (Form 1120S)

Form 1099-OID (Original Issue Discount)

PSQ

Source: http://www.irs.gov

[Individual]Retirement Plan Contributions (Feb-26-2011, 52 days left)

Qualified retirement plan	Nontaxable Exception: the cost of life insurance coverage (Group-Term Life Insurance)
Nonqualified retirement plan	Taxable Exception: if your interest in the plan is not transferable or is subject to a substantial risk of forfeiture, you don't need to include the value of your interest until the if condition doesn't exist.

Elective deferrals:

You can choose to set aside part of your compensation to a retirement fund. This amount is called an elected deferral which is treated as an employer contribution to a qualified plan, so nontaxable.

Elective Deferral other than a designated Roth Contribution	Nontaxable to income tax at the time contributed Taxable to social security and medicare taxes
A designated Roth Contribution	Employer with Section 401K and 403B can create qualified Roth contribution programs so that you can transfer part or all of your elective deferral to the plan. Designated Roth contributions are treated as elective deferral, except that they are included in income.

Examples of elective deferrals:

1. cash or deferred arrangements (401K)

2. the thrift savings plan for federal employees

3. Salary reduction simplified employee pension plans (SARSEP)

4. Saving incentive match plans for employees (SIMPLE plan)

5. Tax-sheltered annuity plans (403B)

6. Section 501C18-D plans

7. Section 457 plans

Limits on deferrals:

Up to 16,500 of contributions to the plans listed in 1-3 and 5 above.

Up to 11,500 for 4 above

Lesser of 7,000 or 25% of your compensation for 6 above

Lesser of your includible compensation or 16,500 for 7 above

Excess deferrals:

The excess generally must be included in your income for that year, unless you have an excess deferral of a designated Roth contribution.

Catch-up contributions: when you are age 50 or older by the end of your tax year.

More details in Pub 575.

PSQ

Source: http://www.irs.gov

[Individual]Restricted Property and Stock Options (Feb-25-2011, 53 days left)

If you received a property for your services, you should include its fair market value in your income.

If you received restricted property (such as stock which has certain restrictions that affect its value), you do not include it in your income until it has substantially vested. ( you can choose to include in your income once the property is transferred to you.)

Dividends received on restricted stock before you include them in your income: treated as compensation, not as dividend income. It should be included in your W-2.

Dividends received on restricted stock after you choose to include in your income when transfer: treated as dividends.

Stock Options:

Nonstatutory Option	Usually will have income when you receive the option, exercise the option, or sell or dispose of stock option
Statutory Option	Income happens when you sell or exchange your stock.

See Pub 525 for more details.

PSQ

Source: http://www.irs.gov

[Individual]Transportation (Feb-24-2011, 54 days left)

You can exclude transportation benefit up to certain limits.

First , you need to identify whether it's a qualified transportation fringe benefit, all of the following applye:

• Transportation in a commuter highway vehicle between your home and work place.

>6 adults (not include driver), employee occupy half of seating capacity

• A transit pass.

Any pass, token, farecard, voucher

• Qualified parking

Parking near to employer's place of business, or near to mass transit, etc.

• Qualified bicycle commuting reimbursement

The reimbursement is based on the number of qualified months. It can be for expenses for the purchase of a bicycle and bicycle improvements, repair, and storage.

A bona fide cash reimbursement is excludable. However, cash reimbursement for a transit pass is excludable only if a voucher or similar item is not readily available for direct distribution to you.

Second, there is a limit of 230/month.

For qualified parking, you may have higher limit. For bicycle reimburse, it is up to 20 * number of qualified months.

PSQ

Source: http://www.irs.gov

[Individual]Don't forget to report your tips (Feb-23-2011, 55 days left)

There are three categories for tip income.

First, you have reported tips to your employer. It is included in W-2 Box 1.

Second, your employer allocated tips to you. It is included in W-2 Box 8.

Last, you have not reported tips to your employer and the tips are not included in allocated tips.

If either of following condition applies, you must file Form 4137 to report Social Security and Medicare Tax on Unreported Tip Income:

• You received cash and charge tips of 20 or more in a calendar month and did not report all of those tips to your employer. The $20 rule applies separately to the tips while you worked for more than one employer and not to the total you received.
• You have allocated tips in your W-2 Form. If your actual tips is not agreed with the number in your W-2, please your records that show the actual amount of tips you received.

After you figure out the total taxable tip income, you should include this amount into Line 7 of Form 1040.

See Pub 531 for more details

PSQ

Source: http://www.irs.gov

[Individual]Accident or Health Plan 2 (Feb-22-2011, 56 days left)

Health Flexible Spending Arrangement (FSA)

If it is qualified as an accident or health plan, the amount of your salary deduction and reimbursement of your medical care expenses are nontaxable.

Qualified HAS distribution: this distribution is a direct transfer to your HAS trustee. Generally, it's nontaxable and not deductible. See Pub 969 for more details.

Health reimbursement arrangement (HRA)

If it is qualified as an accident or health plan, coverage and reimbursement are nontaxable.

Qualified HRA distribution: same as HAS distribution.

Health Savings accounts (HAS)

You, your employer, or your family can make contribution to your HAS.

• Contributions other than employer contributions are deductible on your return whether or not you itemize deductions.

• Contributions by your employer is excluded from income.

• Distribution to pay qualified medical expenses is excluded from your income.

• Distribution not used for qualified medical expenses is included in your income.

Special rules apply for partnership or S-corp

Qualified HAS funding distribution: you can make a one-time distribution from your individual retirement account (IRA) to an HAS and you generally will not include any of the distribution in your income.

PSQ

Source: http://www.irs.gov

[Individual]Accident or Health Plan 1 (Feb-21-2011, 57 days left)

Generally, the value of this plan provided by your employer is not included in your income. However it may be taxable, if it is sickness and injury benefits.

There are some sub-components for accident or health plan, such as Long-term care coverage, health savings accounts and other tax-favored health plans ( Details see Pub 969). Here I just want to briefly talk about some of them and will elaborate these topics in more details later.

Long-term care coverage

Contribution by employer:

In general, it's nontaxable; but if contributions made through a flexible spending or similar arrangement ( such as a cafeteria plan) , you must include the contribution as your income, reported in W-2, box 1.

Contribution by employee:

Use the rule foe Medical and Dental Expenses (Pub 502)

Archer MSA contributions

Contribution by employer:

Generally, it's nontaxable, reported in W-2, box 12 with code R. You must file Form 8853 with your return.

PSQ

Source: http://www.irs.gov

[Individual] Adoption 2 --Credit (Feb-20-2011, 58 days left)

Yesterday, I am talking about Exclusion for employer-provided adoption benefits. Actually, you also can get adoption credit. In 2010, the adoption credit turns to be refundable, meaning that you may be able to claim it even if you owe no tax. Most of requirements are the same as Adoption assistance, such as who, when issues, etc.

You should also fill out Form 8839, then fill out Form 1040 line 71.

But be aware that you cannot claim both a credit and exclusion for the same expenses.

If any of the following statements are true, you can claim this credit:

1. You paid qualified adoption expenses in 2009 but adoption was not final in 2009; or in 2010 and adoption became final in or before 2010.

2. Adopt with a special needs and the adoption became final in 2010, even you did not pay any qualified adoption expenses.

3. paid qualified adoption expenses for a foreign child in 2010 or before and adoption became final in 2010; or 2010 and the adoption became final before 2010.

4. a carryforward of an adoption credit from a prior year.

What's qualified adoption expenses:

It includes:

• Adoption fees,
• Attorney fees,
• Court costs,
• Travel expenses while away from home,
• Re-adoption expenses relating to the adoption of a foreign child.

It do not include:

• You received funds under any state, local, or federal program,

• That violate state or federal law,
• For carrying out a surrogate parenting arrangement,

• For adoption of your spouse's child

• Get reimbursed

• As credit or deduction under other provision of income tax law

PSQ

Source: http://www.irs.gov

[Individual]Adoption 1 -- Exclusion for Employer-Provided Adoption Benefits (Feb-19-2011, 59 days left)

You may exclude from your income amounts paid or expenses incurred by your employer for qualified adoption expenses when the child is your eligible child. You should fill out Form 8839, then fill out Form 1040 line 7.

The maximum exclusion for employer-provided benefits have increased to 13,170/eligible child. If you have MAGI > 182,520, this amount begins to phase out and is completely phased out for MAGI > 222,520.

Both conditions are required:

Condition 1: your employer had a qualified adoption assistance program.

Condition 2: any of the following statement are true.

1. received adoption benefits in 2010, except for adoption of a foreign child.

2. adopt with special needs and adoption became finale in 2010.

3. adopt a foreign child: get benefit in 2010 and adoption became final in 2010 or before 2010.

Who is eligible child?

1. any child under age 18. If the child turned 18 during the year, you only consider the part of the year he/she was under age 18.

2. any disabled person physically or mentally unable to take care of himself or herself.

What's Employer-Provided Adoption Benefits?

It should be shown in W-2, Box 12 with code T. Your salary may have been reduced to pay this benefits, also may not show in box 12 but you still can exclude from your income, if all of following apply,

• Special needs
• Became final in 2010
• Existence of employer-qualified adoption assistance program

Who can take the credit and exclusion?

• Generally, if you are married, you must file a joint return to take the credit or exclusion. But we still have special rule for people file separately.
• MAGI less than 222,520 or you have a carryforward of adoption credit from a prior year

When to take the credit or exclusion?

You can began to get the credit or exclusion when child become a U.S. citizen or resident, even if the adoption never became final. If the child is a foreign child, you cannot take benefit until the adoption becomes final. So if you get early benefit, you cannot take it until the adoption became final.

PSQ

Source: http://www.irs.gov

[Individual]Financial Counseling Fees (Feb-18-2011, 60 days left)

Usually financial counseling fees paid by your employer are included in your income. It includes tax preparation, accounting, legal or brokerage services.

Some of fees, like tax or investment counseling, can be deducted on schedule A as a miscellaneous deduction (subject to the 2%-of-AGI limit)

Exception: Qualified retirement planning services paid by your employer may be excluded from your income. It includes retirement planning advice, information about your retirement plan, and information about how the plan may fit into your overall individual retirement income plan.

PSQ

Source: http://www.irs.gov

[Individual]Group-Term Life Insurance (Feb-17-2011, 61 days left)

What's Group-term life insurance?

It's term life insurance protection (insurance for a fixed period of time) that:

• Provides a general death benefit,
• Is provided to a group of employees,
• Is provided under a policy carried by the employer, and
• Provides an amount of insurance to each employee based on a formula that prevents individual selection

Here is the tax rule for group-term life insurance

Nontaxable income	Taxable income
Cost of up to 50,000 of group-term life insurance coverage provided by employer	Excess of 50,000 the cost of coverage provided by employer - any amount you pay toward the purchase of insurance Multiple employers: you only can exclude total cost of 50,000 of coverage no matter the insurance is provided by a single employer or multiple employer. So you must adjust your taxable income. Limits to subtraction: you cannot reduce the amount to include in your income by: Payments for coverage in a different tax year, Payments for coverage through a cafeteria plan, unless the payments are after-tax contributions, Payments for coverage not taxed to you because of the exceptions .
	Permanent benefits=the cost of the permanent benefits - the amount you pay for them. Examples are paid-up or cash surrender value
Entire cost excluded: if any of the following circumstances apply: --Permanently and totally disabled and have ended your employment --Employer is the beneficiary of the policy --A charitable organization to which contributions are deductible is the only beneficiary --the plan existed on Jan-1-1984, and a) you retired before Jan-2-1984; b) you reached age 55 before Jan-2-1984 and employed in 1983	Entire cost taxed: if either of the following circumstances apply: --The insurance is provided by your employer through a qualified employees' trust, such as a pension trust or a qualified annuity plan. --You are a key employee and employer's plan discriminates in favor of key employees.

You can use worksheet-Figuring the cost of Group-Term Life Insurance to Include in income to calculate your number. (See Pub 525)

PSQ

Source: http://www.irs.gov

[Individual]Dependent Care Benefits (Feb-16-2011, 62 days left)

You can exclude this benefit from your income, the benefits include:

• Amounts your employer pays directly to either you or your care provider for the care of your qualifying person while you work
• The fair market value of care in a daycare facility provided or sponsored by your employer.

But, the amount is limited to the lesser of :

• Total amount of dependent care benefits you received
• Total amount of qualified expenses you incurred
• Your earned income
• Your spouse’s earned income
• 5,000 (2,500 if married filing separately)

PSQ

Source: http://www.irs.gov

[Individual]Athletic Facilities & Employee Discount (Feb-15-2011, 63 days left)

Athletic Facilities

If your employer provides you with the free or low-cost use of an employer-operated gym or other athletic club on your employer’s premises	If your employer pays for a fitness program at an off-site resort hotel or athletic club
the value is not included in your income	the value is included in your income

Employee Discounts:

Excluded from income	Not excluded from income
Discounts on property or services offered to customers in the ordinary course of the line of business in which you work The exclusion is limited to : The price charged nonemployee customers * employer’s gross profit percentage on property or 20% on services	Discounts on real property or property commonly held for investment (stock or bonds)

PSQ

Source: http://www.irs.gov

[Individual]De Minimis (Minimal) Benefits and No-additional-cost services (Feb-14-2011, 64 days left)

De Minimis Benefits:

If your employer provides you with a product or service at a very low cost, you don't need to include this part as your income. General examples would be discounts at company cafeterias, cab fares home when working overtime, and company picnics.

During Christmas or other holidays, you may receive holiday gifts as following:

Turkey, Ham, etc.	Cash, gift certificate or similar item that you easily can exchange for cash
Nontaxable	Taxable as extra salary or wages regardless of the amount involved

Another similar benefit is No-Additional Cost Services:

You receive service from employer free, at cost, or for a reduced price is not included in your income if employer:

• Offers the same service for sale to customers in the ordinary course of the line of business in which you work

• Does not have a substantial additional cost (including any sales income given up)

Generally, they are excess capacity services, such as airline, bus, or train tickets, hotel rooms, and telephone services.

PSQ

Source: http://www.irs.gov

[Individual]Fringe Benefits -- General(Feb-13-2011, 65 days left)

What's the Fringe Benefits?

It is received in connection with the performance of your services. In general, it is included in your income as compensation unless you pay fair market value for them or they are specifically excluded by law.

You must realize the accounting period used by your employer:

2 options available for your employer to report taxable noncash fringe benefits:

1. full calendar year (Jan-1 to Dec-31)

2. treat the last 2 months of the calendar year (or any shorter period) as a part of the following calendar year (e.g. Nov-1 2011 to Oct-31 2012)

Employer can use different accounting period for each fringe benefits, but must use the same period for each particular benefits.

Employee must use the same accounting method as employer used

PSQ

Source: http://www.irs.gov

[Individual]Social security and Medicare taxes paid by employer & Stock appreciation rights (Feb-12-2011, 66 days left)

• Social security and Medicare taxes paid by employer:

If your employer agree to pay your part of Social Security and Medicare taxes, you must report this part as your income. And you must include this part of income when you calculate your social security and Medicare taxes and benefits, except that you are household worker or a farm worker.

• Stock appreciation rights:

Do not include stock appreciation until you exercise the right. The income equal to the difference between the fair market value of the stock on the date of exercise and the fair market value on the date the right k granted.

PSQ

Source: http://www.irs.gov

[Individual]Sick pay (Feb-11-2011, 67 days left)

You must include the payment from your employee when you are sick or injured.

Where do you get the payment?

1. if you get payment from a 3rd party who is not your employer, you may choose to withhold your tax or not. Then you must fill out Form W-4S.

2. if you receive the payment under a collective bargaining agreement between your union and your employer, the withholding part depends on the provisions in the agreement.

The sources of sick pay benefits:

• A welfare fund

• A state sickness or disability fund
• An association of employers or employees.
• An insurance plan via accident or health plan

Employer pay the premium	Employee pay the premium	Both pay the premium
The benefits are taxable	The benefits are nontaxable	The benefits are taxable only the amount due to employer's payments

If the accident or health insurance plan is under cafeteria plan

If you include the premiums as you income	If you don't include the premiums as your income
The benefits are nontaxable	The benefits are taxable

PSQ

Source: http://www.irs.gov

[Individual]Severance pay (Feb-10-2011, 68 days left)

You must include the following in income:

• Severance pay

--Outplacement services: No matter you severance is reduced by outplacement services fee or not, you must include the unreduced amount as your income.

• Any payment for the cancellation of your employment contract

--Accrued leave payment: you are a federal employee and receive a lump-sum payment for accrued annual leave when you retire or resign.

You may make adjustment for gross income :

• Repayment for your Accrued leave payment, because reemployed by another agency. You can reduce this part from your gross income.

You can deduct as miscellaneous deduction (subject to the 2% of AGI limit on schedule A):

• The value of the outplacement services up to the difference between the severance pay included in income and the amount actually received)

PSQ

Source: http://www.irs.gov

[Individual]Note received for services (Feb-9-2011, 69 days left)

When your employer gives you a secured note:

You must include the fair market value of the note in your income.

When your employer gives you a nonnegotiable unsecured note:

The principal amount of the note are compensation income when you receive them.

When you receive the periodic payment or lump-sum payment following:

You don't include the recovery part of the fair market value as your income, and only include the remaining part, like interest.

PSQ

Source: http://www.irs.gov

[Individual]Prizes, Bonuses and Awards (Feb-8-2011, 70 days left)

Generally, when you receive prizes or awards from employer for outstanding work, you should include the fair market value of prizes or awards into your income, except you get them from charity or non-profit organization. There are some rules for specific awards:

Back pay awards:

These include payments made to you for damages, unpaid life insurance premiums, and unpaid health insurance premiums, and unpaid health insurance premiums.

Employee achievement award:

If you receive tangible personal property (other than cash, a gift certificate, or an equivalent item) as an award for length of service or safety achievement, you generally can exclude its value from your income. The amount is limited to the lesser of:

• Employer's cost
• 1600, or 400, if awards are not qualified plan awards

But the exclusions does not apply to the following awards:

• A length-of-service award if you received it for less than 5 years of service or if you received another length-of-service award during the year or the previous 4 years.
• A safety achievement award if you are a manager, administrator, clerical employee, or other professional employee or if more than 10% of eligible employees previously received safety achievement awards during the year.

PSQ

Source: http://www.irs.gov