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Instructions for Form 1040A 2003 Tax Year

1040A - Main Contents

This is archived information that pertains only to the 2003 Tax Year. If you
are looking for information for the current tax year, go to the Tax Prep Help Area.

Table of Contents


Before You Fill In Form 1040A— See How To Avoid Common Mistakes
on page 53.

Tip

For details on these and other changes for 2003 and 2004, see Pub. 553.

What's New for 2003?

Tax Rates Reduced.   The tax rates of 27%, 30%, 35%, and 38.6% have been reduced to 25%, 28%, 33%, and 35%, respectively. The 10% tax rate applies to the first $7,000 of taxable income (the first $10,000 of taxable income if head of household; the first $14,000 of taxable income if married filing jointly or qualifying widow(er)). These changes are reflected in the Tax Table that begins on page 58.

Married People—Increased Tax Benefits.   The standard deduction for most joint filers has increased to $9,500 (twice that of single filers). For most people filing a separate return, the standard deduction has increased to $4,750 (the same amount as single filers). See the instructions for line 24 on
page 32.

  Also, the 15% bracket for joint filers has been expanded to cover twice the income range as that of single filers. For people filing a separate return, the 15% tax bracket is the same as that of single filers. These changes are reflected in the Tax Table that begins on page 58.

Qualifying Widow(er)—Increased Tax Benefits.   For most people, the standard deduction has been increased to $9,500 (twice that of single filers). See the instructions for line 24 on page 32. Also, the 15% tax bracket has been expanded to cover twice the income range as that of single filers. This change is reflected in the Tax Table that begins on page 58.

Child Tax Credits Increased.   You may be able to take credits of up to $1,000 for each qualifying child. But you must reduce your credits by any advance child tax credit payment you received in 2003 (see below). For more details, see the instructions for line 33 that begin on page 37.

Advance Child Tax Credit Payment.   You must reduce your 2003 child tax credits by any advance child tax credit payment you received in 2003. Enter the amount of any advance payment you received (before offset) on line 2 of your Child Tax Credit Worksheet. The amount of your advance payment (before offset) is shown on Notice 1319. This notice was mailed to you in 2003. If you do not have this notice, you can check the amount of your advance payment (before offset) on the IRS website at www.irs.gov or call us at 1-800-829-1040. For more details on offsets, see Refund Offset on page 50.

  If you received an advance payment but did not have a qualifying child in 2003 (see the instructions for line 6c, column (4) on page 23), you do not have to pay back the amount you received. Do not enter the amount of your advance payment on your return. If you filed a joint return for 2002, but for 2003 you are not filing a joint return (or a joint return with the same spouse), you are considered to have received one-half of the advance payment.

Dividends—New Tax Rate.   The maximum tax rate for qualified dividends is 15% (generally, 5% for people whose other income is taxed at the 10% or 15% rate). See the instructions for
line 9b on page 25.

Capital Gain—Maximum Tax Rate Reduced.   The maximum tax rate for most net capital gain taken into account after
May 5, 2003, has been reduced to 15% (generally, 5% for people whose other income is taxed at the 10% or 15% rate). Use the Qualified Dividends and Capital Gain Tax Worksheet on page 34 to figure your tax.

Child and Dependent Care Credit Increased.   You may be able to take a credit of up to $1,050 for the expenses you paid for the care of one qualifying person; $2,100 if you paid for the care of two or more qualifying person. See Schedule 2 for details.

Earned Income Credit.   You may be able to take the credit if:
  • A child lived with you and you earned less than $33,692 ($34,692 if married filing jointly) or
  • A child did not live with you and you earned less than $11,230 ($12,230 if married filing jointly).
See the instructions for line 41 that begin on page 40.

Lifetime Learning Credit Doubled.   The maximum lifetime learning credit for 2003 is $2,000. See the instructions for
line 31 on page 36.

IRA Deduction Allowed to More People Covered by Retirement Plans.   You may be able to take an IRA deduction if you were covered by a retirement plan and your 2003 modified AGI is less than $50,000 ($70,000 if married filing jointly or qualifying widow(er)). See the instructions for line 17 on page 28.

Alternative Minimum Tax Exemption Amount Increased.   The alternative minimum tax exemption amount has increased to $40,250 ($58,000 if married filing jointly or qualifying widow(er); $29,000 if married filing separately). These new amounts are reflected in the Alternative Minimum Tax Worksheet on page 35.

Third Party Designee.   A third party designee can ask the IRS for copies of notices or transcripts related to your return. Also, the authorization can be revoked. See page 52.

Mailing Your Return.   You may be mailing your return to a different address this year because the IRS has changed the filing location for several areas. If you received an envelope with your tax package, please use it. Otherwise, see Where Do You File? on the back cover.

What To Look for in 2004

Tuition and Fees Deduction Expanded.   You may be able to take a deduction of up to $4,000 if your 2004 AGI is not more than $65,000 ($130,000 if married filing jointly) or a deduction of up to $2,000 if your 2004 AGI is not more than $80,000 ($160,000 if married filing jointly).

Certain Credits No Longer Allowed Against Alternative Minimum Tax (AMT).   The credit for child and dependent care expenses, credit for the elderly or the disabled, education credits, mortgage interest credit, and District of Columbia first-time homebuyer credit will no longer be allowed against AMT. However, the child tax credit, adoption credit, and credit for qualified retirement savings contributions will still be allowed against your AMT.

IRA Deduction Allowed to More People Covered by Retirement Plans.   You may be able to take an IRA deduction if you were covered by a retirement plan and your 2004 modified AGI is less than $55,000 ($75,000 if married filing jointly or qualifying widow(er)).


Filing Requirements— These rules apply to all U.S. citizens, regardless of where they live,
and resident aliens.

Do You Have To File?

Use Chart A, B, or C to see if you must file a return.

Tip

Even if you do not otherwise have to file a return, you should file one to get a refund of any Federal income tax withheld. You should also file if you are eligible for the earned income credit, the additional child tax credit, or the health coverage tax credit.

File electronically

Have you tried IRS e-file? It's the fastest way to get your refund and it's FREE if you are eligible. Visit www.irs.gov for details.

Exception for Children Under Age 14.   If you are planning to file a return for your child who was under age 14 at the end of 2003, and certain other conditions apply, you can elect to include your child's income on your return. But you must use Form 1040 and Form 8814 to do so. If you make this election, your child does not have to file a return. For details, use TeleTax topic 553 (see page 10) or see Form 8814.

  A child born on January 1, 1990, is considered to be age 14 at the end of 2003. Do not use Form 8814 for such a child.

Nonresident Aliens and Dual-Status Aliens.   These rules also apply to nonresident aliens and dual-status aliens who were married to U.S. citizens or residents at the end of 2003 and who have elected to be taxed as resident aliens. Other nonresident aliens and dual-status aliens have different filing requirements. They may have to file Form 1040NR or Form 1040NR-EZ. Specific rules apply to determine if you are a resident or nonresident alien. See Pub. 519 for details, including the rules for students and scholars who are aliens.

When Should You File?

Not later than April 15, 2004. If you file after this date, you may have to pay interest and penalties. See page 54.

Tip

If you were serving in or in support of the Armed Forces in a designated combat zone or qualified hazardous duty area (for example, you were in Afghanistan, Bosnia, Kosovo, or the Persian Gulf area), see Pub. 3.

What if You Cannot File on Time?

You can get an automatic 4-month extension if, no later than April 15, 2004, you either file for an extension by phone or you file Form 4868. For details, including how to file by phone, see Form 4868.

However, even if you get an extension, the tax you owe is still due April 15, 2004. If you make a payment with your extension request, see the instructions for line 43 on page 50.

Where Do You File?

See the back cover for filing instructions and addresses.

Private Delivery Services.   You can use certain private delivery services designated by the IRS to meet the “timely mailing as timely filing/paying” rule for tax returns and payments. The most recent list of designated private delivery services was published by the IRS in September 2002. The list includes only the following:
  • Airborne Express (Airborne): Overnight Air Express Service, Next Afternoon Service, and Second Day Service.
  • DHL Worldwide Express (DHL): DHL “Same Day” Service and DHL USA Overnight.
  • Federal Express (FedEx): FedEx Priority Overnight, FedEx Standard Overnight, FedEx 2Day, FedEx International Priority, and FedEx International First.
  • United Parcel Service (UPS): UPS Next Day Air, UPS Next Day Air Saver, UPS 2nd Day Air, UPS 2nd Day Air A.M., UPS Worldwide Express Plus, and UPS Worldwide Express.

  The private delivery service can tell you how to get written proof of the mailing date.

  
Caution

  Private delivery services cannot deliver items to P.O. boxes. You must use the U.S. Postal Service to mail any item to an IRS P.O. box address.

  

Chart A—For Most People

IF your filing status is . . .   AND at the end of
2003 you were* . . . 		THEN file a return if your
gross income** was at least . . . 		 
Single   under 65
65 or older 		  $7,800
8,950 		   
Married filing jointly***   under 65 (both spouses)
65 or older (one spouse)
65 or older (both spouses) 		  $15,600
16,550
17,500 		   
Married filing separately   any age   $3,050    
Head of household
(see page 20) 		  under 65
65 or older 		  $10,050
11,200 		   
Qualifying widow(er) with dependent child (see page 21)   under 65
65 or older 		  $12,550
13,500 		   
* If you were born on January 1, 1939, you are considered to be age 65 at the end of 2003.
** Gross incomemeans all income you received in the form of money, goods, property, and services that is not exempt from tax, including any income from sources outside the United States (even if you may exclude part or all of it). Do not include social security benefits unless you are married filing a separate return and you lived with your spouse at any time in 2003.
*** If you did not live with your spouse at the end of 2003 (or on the date your spouse died) and your gross income was at least $3,050, you must file a return regardless of your age.		  

Chart B—For Children and Other Dependents


See the instructions for line 6c that begin on page 21 to find out if someone can claim you as a dependent.
If your parent (or someone else) can claim you as a dependent, use this chart to see if you must file a return.  
In this chart, unearned income includes taxable interest, ordinary dividends, and capital gain distributions. Earned income includes wages, tips, and taxable scholarship and fellowship grants. Gross income is the total of your unearned and earned income.  
Caution
   If your gross income was $3,050 or more, you usually cannot be claimed as a dependent unless you were under age 19 or a student and under age 24. For details, see Test 4—Income on page 22.  
Single dependents. Were you either age 65 or older or blind?  
 
No. You must file a return if any of the following apply.  
   
  • Your unearned income was over $750.
  • Your earned income was over $4,750.
  • Your gross income was more than the larger of—
 
     
  • $750 or
  • Your earned income (up to $4,500) plus $250.
  
 
Yes. You must file a return if any of the following apply.  
   
  • Your unearned income was over $1,900 ($3,050 if 65 or older and blind).
  • Your earned income was over $5,900 ($7,050 if 65 or older and blind).
  • Your gross income was more than—
  
        The larger of: Plus This amount:    
     
  • $750 or
  • Your earned income (up to $4,500) plus $250.
Right brace
 $1,150 ($2,300 if 65 or older and blind)    
Married dependents. Were you either age 65 or older or blind?  
 
No. You must file a return if any of the following apply.  
   
  • Your unearned income was over $750.
  • Your earned income was over $4,750.
  • Your gross income was at least $5 and your spouse files a separate return and itemizes deductions.
  • Your gross income was more than the larger of—
 
     
  • $750 or
  • Your earned income (up to $4,500) plus $250.
  
 
Yes. You must file a return if any of the following apply.  
   
  • Your unearned income was over $1,700 ($2,650 if 65 or older and blind.)
  • Your earned income was over $5,700 ($6,650 if 65 or older and blind.)
  • Your gross income was at least $5 and your spouse files a separate return and itemizes deductions.
  • Your gross income was more than—
  
        The larger of: Plus This amount:    
     
  • $750 or
  • Your earned income (up to $4,500) plus $250.
Right brace
 $950 ($1,900 if 65 or older and blind)    

Chart C—Other Situations When You Must File

   
You must file a return if either of the following applies for 2003.
  • You received any advance earned income credit (EIC) payments from your employer. These payments are shown in box 9 of your Form W-2.
  • You owe tax from the recapture of an education credit or the alternative minimum tax. See the instructions for line 28 that begin on page 33.
 
You must file a return using Form 1040 if any of the following apply for 2003.
  • You owe any special taxes, such as social security and Medicare tax on tips you did not report to your employer.
  • You owe uncollected social security and Medicare or RRTA tax on tips you reported to your employer or on your group-term life insurance.
  • You had net earnings from self-employment of at least $400.
  • You had wages of $108.28 or more from a church or qualified church-controlled organization that is exempt from employer social security and Medicare taxes.
  • You owe tax on a qualified plan, including an individual retirement arrangement (IRA), or other tax-favored account. But if you are filing a return only because you owe this tax, you can file Form 5329 by itself.
 
   

  

Would It Help You To Itemize Deductions on Form 1040?

           
  You may be able to reduce your tax by itemizing deductions on Schedule A (Form 1040). Itemized deductions include amounts you paid for state and local income taxes, real estate taxes, personal property taxes, and mortgage interest. You may also include gifts to charity and part of the amount you paid for medical and dental expenses. You would usually benefit by itemizing if—
  Your filing status is: AND Your itemized deductions are more than:
  Single        
  • Under 65
  • 65 or older or blind
  • 65 or older and blind
   
  • $4,750
  • 5,900
  • 7,050
  
  Married filing jointly        
  • Under 65 (both spouses)
  • 65 or older or blind (one spouse)
  • 65 or older or blind (both spouses)
  • 65 or older and blind (one spouse)
  • 65 or older or blind (one spouse) and
    65 or older and blind (other spouse)
  • 65 or older and blind (both spouses)
   
  • $9,500
  • 10,450
  • 11,400
  • 11,400

  • 12,350
  • 13,300
  
  Married filing separately*
  • Your spouse itemizes deductions
  • Under 65
  • 65 or older or blind
  • 65 or older and blind
   
  • $0
  • 4,750
  • 5,700
  • 6,650
  
  Head of household
  • Under 65
  • 65 or older or blind
  • 65 or older and blind
   
  • $7,000
  • 8,150
  • 9,300
  
  Qualifying widow(er) with dependent child
  • Under 65
  • 65 or older or blind
  • 65 or older and blind
   
  • $9,500
  • 10,450
  • 11,400
  
* If you can take an exemption for your spouse, see Standard Deduction Chart for People Born Before January 2, 1939, or Who Were Blind on page 33 for the amount that applies to you.
If someone can claim you as a dependent, it would benefit you to itemize deductions if they total more than your standard deduction figured on the Standard Deduction Worksheet for Dependents on page 33.

  

Where To Report Certain Items From 2003 Forms W-2, 1098, and 1099

File electronically
 IRS e-file takes the guesswork out of preparing your return. Visit www.irs.gov/efile for details.

If any Federal income tax withheld is shown on these forms, include the tax withheld on Form 1040A, line 39.
Form Item and Box in Which it Should Appear   Where To Report on Form 1040A  
  W-2 Wages, salaries, tips, etc. (box 1)   Line 7  
    Allocated tips (box 8)   See Tip income on page 24  
    Advance EIC payment (box 9)   Line 37  
    Dependent care benefits (box 10)   Schedule 2, line 12  
    Adoption benefits (box 12, code T)   Form 8839, line 22  
    Employer contributions to an Archer MSA
(box 12, code R) 		  Must file Form 1040  
  W-2G Gambling winnings (box 1)   Must file Form 1040  
  1098 Mortgage interest (box 1)
Points (box 2)
Right brace
 Must file Form 1040 to deduct  
    Refund of overpaid interest (box 3)   See the instructions on Form 1098  
  1098-E Student loan interest (box 1)   See the instructions for line 18 on page 31  
  1098-T Qualified tuition and related expenses (box 1)   See the instructions for line 19 on page 31 or line 31 on page 36  
  1099-A Acquisition or abandonment of secured property   See Pub. 544  
  1099-B Stocks, bonds, etc. (box 2)
Bartering (box 3)
Right brace
 Must file Form 1040  
  1099-C Canceled debt (box 2)   Must file Form 1040 if taxable (see the instructions on Form 1099-C)  
  1099-DIV Total ordinary dividends (box 1a)   Line 9a  
    Qualified dividends (box 1b)   See the instructions for line 9b on page 25  
    Total capital gain distributions (box 2a)
Post-May 5 capital gain distributions (box 2b)
Right brace
 See the instructions for lines 10a and 10b on page 25  
    Nontaxable distributions (box 3)   Must file Form 1040 if required to report as capital gains (see the instructions on Form 1099-DIV)  
    Foreign tax paid (box 6)   Must file Form 1040 to deduct or take a credit for the tax  
  1099-G Unemployment compensation (box 1)   Line 13. But if you repaid any unemployment compensation in 2003, see the instructions for line 13 that begin on page 27  
    State or local income tax refund (box 2)   See the instructions on page 24  
  1099-H HCTC advance payments (box 1)   Must file Form 1040 to take a credit  
  1099-INT Interest income (box 1)   Line 8a  
    Early withdrawal penalty (box 2)   Must file Form 1040 to deduct  
    Interest on U.S. savings bonds and Treasury obligations (box 3)   See the instructions for line 8a on page 24  
    Foreign tax paid (box 6)   Must file Form 1040 to deduct or take a credit for the tax  
  1099-LTC Long-term care and accelerated death benefits   Must file Form 1040 if required to file Form 8853 (see the instructions for Form 8853)  
  1099-MISC Miscellaneous income   Must file Form 1040  
  1099-MSA Distributions from MSAs*   Must file Form 1040  
  1099-OID Original issue discount (box 1)
Right brace
 See the instructions on Form 1099-OID  
    Other periodic interest (box 2)
    Early withdrawal penalty (box 3)   Must file Form 1040 to deduct  
  1099-PATR Patronage dividends and other distributions from a cooperative (boxes 1, 2, 3, and 5)   Must file Form 1040 if taxable (see the instructions on
Form 1099-PATR) 		 
  1099-Q Qualified education program payments   Must file Form 1040  
  1099-R Distributions from IRAs**   See the instructions for lines 11a and 11b that begin on page 25  
    Distributions from pensions, annuities, etc.   See the instructions for lines 12a and 12b on page 26  
    Capital gain (box 3)   See the instructions on Form 1099-R  
  1099-S Gross proceeds from real estate transactions
(box 2) 		  Must file Form 1040 if required to report the sale (see Pub. 523)  
    Buyer's part of real estate tax (box 5)   Must file Form 1040  
*This includes distributions from Archer and Medicare+Choice MSAs.  
**This includes distributions from Roth, SEP, and SIMPLE IRAs.  


Who Can Use Form 1040A?

You can use Form 1040A if all five of the following apply.

  1. You only had income from the following sources:

    • Wages, salaries, tips.
    • Interest and ordinary dividends.
    • Capital gain distributions.
    • Taxable scholarship and fellowship grants.
    • Pensions, annuities, and IRAs.
    • Unemployment compensation.
    • Taxable social security and railroad retirement benefits.
    • Alaska Permanent Fund dividends.
  2. The only adjustments to income you can claim are:

    • Educator expenses.
    • IRA deduction.
    • Student loan interest deduction.
    • Tuition and fees deduction.
  3. You do not itemize deductions.
  4. Your taxable income (line 27) is less than $50,000.
  5. The only tax credits you can claim are:

    • Child tax credit.
    • Additional child tax credit.
    • Education credits.
    • Earned income credit.
    • Credit for child and dependent care expenses.
    • Credit for the elderly or the disabled.
    • Adoption credit.
    • Retirement savings contributions credit.

You can also use Form 1040A if you received advance earned income credit (EIC) payments, dependent care benefits, or employer-provided adoption benefits, or if you owe tax from the recapture of an education credit or the alternative minimum tax.


When Must You Use Form 1040?

You must use Form 1040 if any of the following apply.

  1. You received any of the following types of income:

    • Income from self-employment (business or farm income).
    • Certain tips you did not report to your employer. See Tip income on page 24.
    • Nontaxable distributions required to be reported as capital gains.
    • Income received as a partner in a partnership, shareholder in an S corporation, or a beneficiary of an estate or trust.
  2. You received or paid interest on securities transferred between interest payment dates.
  3. You can exclude either of the following types of income:

    • Foreign earned income you received as a U.S. citizen or resident alien.
    • Certain income received from sources in a U.S. possession if you were a bona fide resident of American Samoa for all of 2003.
  4. You had a financial account in a foreign country, such as a bank account or securities account. Exception. If the combined value of the accounts was $10,000 or less during all of 2003 or if the accounts were with a U.S. military banking facility operated by a U.S. financial institution, you may file Form 1040A.
  5. You received a distribution from a foreign trust.
  6. You are reporting original issue discount (OID) in an amount more or less than the amount shown on Form 1099-OID.
  7. You owe household employment taxes. See Schedule H (Form 1040) and its instructions to find out if you owe these taxes.
  8. You are eligible for the health coverage tax credit. See Form 8885 for details.


Line Instructions for Form 1040A

File electronically

You may be eligible to use FREE online commercial tax preparation software to file your Federal income tax return. Free services are accessible through www.irs.gov or you can buy a software package. You will be asked questions and your return will be prepared based on your answers.


Name and Address

Use the Peel-Off Label

Using your peel-off name and address label on the back cover of this booklet will speed the processing of your return. It also prevents common errors that can delay refunds or result in unnecessary notices. Put the label on your return after you have finished it. Cross out any incorrect information and print the correct information. Add any missing items, such as your apartment number.

Address Change.   If the address on your peel-off label is not your current address, cross out the old address and print your new address. If you plan to move after filing your return, see page 53.

Name Change.   If you changed your name because of marriage, divorce, etc., be sure to report the change to your local Social Security Administration office before you file your return. This prevents delays in processing your return and issuing refunds. It also safeguards your future social security benefits. See page 54 for more details. If you received a peel-off label, cross out your former name and print your new name.

What if You Do Not Have a Label?   Print or type the information in the spaces provided. If you are married filing a separate return, enter your husband's or wife's name on line 3 instead of below your name.

  
Tip

  If you filed a joint return for 2002 and you are filing a joint return for 2003 with the same spouse, be sure to enter your names and SSNs in the same order as on your 2002 return.

P.O. Box.   Enter your box number only if your post office does not deliver mail to your home.

Foreign Address.   Enter the information in the following order: City, province or state, and country. Follow the country's practice for entering the postal code. Do not abbreviate the country name.

What if a Taxpayer Died?   See Death of a Taxpayer beginning on page 54.


Social Security Number (SSN)

An incorrect or missing SSN may increase your tax or reduce your refund. To apply for an SSN, get Form SS-5 from your local Social Security Administration (SSA) office or call the SSA at 1-800-772-1213. Fill in Form SS-5 and return it to the SSA. It usually takes about 2 weeks to get an SSN.

Check that your SSN on your Forms W-2 and 1099 agrees with your social security card. If not, see page 54 for more details.

IRS Individual Taxpayer Identification Numbers (ITINs) for Aliens.   If you are a nonresident or resident alien and you do not have and are not eligible to get an SSN, you must apply for an ITIN. For details on how to do so, see Form W-7 and its instructions. It usually takes about 4-6 weeks to get an ITIN.

  If you already have an ITIN, enter it wherever your SSN is requested on your tax return.


Note.

An ITIN is for tax use only. It does not entitle you to social security benefits or change your employment or immigration status under U.S. law.

Nonresident Alien Spouse.   If your spouse is a nonresident alien and you file a joint or separate return, your spouse must have either an SSN or an ITIN.


Presidential Election Campaign Fund

This fund helps pay for Presidential election campaigns. The fund reduces candidates' dependence on large contributions from individuals and groups and places candidates on an equal financial footing in the general election. If you want $3 to go to this fund, check the “Yes” box. If you are filing a joint return, your spouse may also have $3 go to the fund. If you check “Yes,” your tax or refund will not change.


Filing Status

Check only the filing status that applies to you. The ones that will usually give you the lowest tax are listed last.

  • Married filing separately.
  • Single.
  • Head of household.
  • Married filing jointly or qualifying widow(er) with dependent child.

Tip

More than one filing status may apply to you. Choose the one that will give you the lowest tax.

Line 1

Single

You may check the box on line 1 if any of the following was true on December 31, 2003.

  • You were never married.
  • You were legally separated, according to your state law, under a decree of divorce or separate maintenance.
  • You were widowed before January 1, 2003, and did not remarry in 2003. But, if you have a dependent child, you may be able to use the qualifying widow(er) filing status. See the instructions for line 5 on page 21.

Line 2

Married Filing Jointly

You may check the box on line 2 if any of the following is true.

  • You were married as of December 31, 2003, even if you did not live with your spouse at the end of 2003.
  • Your spouse died in 2003 and you did not remarry in 2003.
  • Your spouse died in 2004 before filing a 2003 return.

A husband and wife may file a joint return even if only one had income or if they did not live together all year. However, both persons must sign the return. If you file a joint return for 2003, you may not, after the due date for filing that return, amend it to file as married filing separately.

Joint and Several Tax Liability.   If you file a joint return, both you and your spouse are generally responsible for the tax and any interest or penalties due on the return. This means that if one spouse does not pay the tax due, the other may have to. However, see Innocent Spouse Relief on page 53.

Nonresident Aliens and Dual-Status Aliens.   You may be able to file a joint return. See Pub. 519 for details.

Line 3

Married Filing Separately

If you are married and file a separate return, you will usually pay more tax than if you use another filing status that you qualify for. Also, if you file a separate return, you cannot take the student loan interest deduction, the tuition and fees deduction, the education credits, or the earned income credit. You also cannot take the standard deduction if your spouse itemizes deductions.

Generally, you report only your own income, exemptions, deductions, and credits. Different rules apply to people in community property states. See page 24.

Tip

You may be able to file as head of household if you had a child living with you and you lived apart from your spouse during the last 6 months of 2003. See Married Persons Who Live Apart on page 21.

Line 4

Head of Household

This filing status is for unmarried individuals who provide a home for certain other persons. (Some married persons who live apart may also qualify. See page 21.) You may check the box on line 4 only if as of December 31, 2003, you were unmarried or legally separated (according to your state law) under a decree of divorce or separate maintenance and either 1 or 2 below applies to you.

  1. You paid over half the cost of keeping up a home that was the main home for all of 2003 of your parent whom you can claim as a dependent. Your parent did not have to live with you in your home.
  2. You paid over half the cost of keeping up a home in which you lived and in which one of the following also lived for more than half of the year (if half or less, see Exception on this page).

    • Your unmarried child, adopted child, grandchild, great-grandchild, etc., or stepchild. It does not matter what age the child was. This child does not have to be your dependent. If the child is not your dependent, enter the child's name in the space provided on line 4. If you do not enter the name, it will take us longer to process your return.
    • Your married child, adopted child, grandchild, great-grandchild, etc., or stepchild. This child must be your dependent. But if your married child's other parent claims him or her as a dependent under the rules for Children of Divorced or Separated Parents on page 22, this child does not have to be your dependent. Enter the child's name on line 4. If you do not enter the name, it will take us longer to process your return.
    • Your foster child, who must be your dependent.
    • Any other relative you can claim as a dependent. For the definition of a relative, see Test 1—Relationship on page 22.


Note.

You cannot file as head of household if your child, parent, or relative described earlier is your dependent under the rules that begin on page 22 for Person Supported by Two or More Taxpayers.

Married Persons Who Live Apart.   Even if you were not divorced or legally separated in 2003, you may be able to file as head of household. You may check the box on line 4 if all five of the following apply.
  1. You must have lived apart from your spouse for the last 6 months of 2003. Temporary absences for special circumstances, such as for business, medical care, school, or military service, count as time lived in the home.
  2. You file a separate return from your spouse.
  3. You paid over half the cost of keeping up your home for 2003.
  4. Your home was the main home of your child, adopted child, stepchild, or foster child for more than half of 2003 (if half or less, see Exception on this page).
  5. You claim this child as your dependent or the child's other parent claims him or her under the rules for Children of Divorced or Separated Parents on page 22. If this child is not your dependent, be sure to enter the child's name on line 4. If you do not enter the name, it will take us longer to process your return.

Keeping Up a Home.   To find out what is included in the cost of keeping up a home, see Pub. 501.

  If you used payments you received under Temporary Assistance for Needy Families (TANF) or other public assistance programs to pay part of the cost of keeping up your home, you cannot count them as money you paid. However, you must include them in the total cost of keeping up your home to figure if you paid over half of the cost.

Dependent.   To find out if someone is your dependent, see the instructions for line 6c that begin on this page.

Exception.   You can count temporary absences, such as for school, vacation, or medical care, as time lived in the home. If the person for whom you kept up a home was born or died in 2003, you may still file as head of household as long as the home was that person's main home for the part of the year he or she was alive.

Line 5

Qualifying Widow(er) With Dependent Child

You may check the box on line 5 and use joint return tax rates for 2003 if all five of the following apply.

  1. Your spouse died in 2001 or 2002 and you did not remarry in 2003.
  2. You have a child, adopted child, stepchild, or foster child whom you claim as a dependent.
  3. This child lived in your home for all of 2003. Temporary absences, such as for school, vacation, or medical care, count as time lived in the home.
  4. You paid over half the cost of keeping up your home.
  5. You could have filed a joint return with your spouse the year he or she died, even if you did not actually do so.

If your spouse died in 2003, you may not file as qualifying widow(er) with dependent child. Instead, see the instructions for line 2.


Exemptions

For each exemption you can take, you can deduct $3,050 on
line 26.

Line 6b

Spouse

Check the box on line 6b if you file either (a) a joint return or (b) a separate return and your spouse had no income and is not filing a return. However, do not check the box if your spouse can be claimed as a dependent on another person's return. If you were divorced or legally separated at the end of 2003, you cannot take an exemption for your former spouse. If, at the end of 2003, your divorce was not final (an interlocutory decree), you are considered married for the whole year.

Death of Your Spouse.   If your spouse died in 2003 and you did not remarry by the end of 2003, check the box on line 6b if you could have taken an exemption for your spouse on the date of death. For other filing instructions, see Death of a Taxpayer on page 54.

Line 6c

Dependents

You can take an exemption for each of your dependents who was alive during some part of 2003. This includes a baby born in 2003 or a person who died in 2003. For more details, see Pub. 501. Any person who meets all five of the following tests qualifies as your dependent.

If you have more than six dependents, attach a statement to your return with the required information.

Test 1—Relationship

The person must be either your relative or have lived in your home all year as a member of your household. If the person is not your relative, the relationship must not violate local law.

The following people are considered your relatives.

  • Your child, stepchild, adopted child; a child who lived in your home as a family member if placed with you by an authorized placement agency for legal adoption (including any person or court authorized by state law to place children for legal adoption); or a foster child (any child who lived in your home as a family member for the whole year).
  • Your grandchild, great-grandchild, etc.
  • Your son-in-law, daughter-in-law.
  • Your parent, stepparent, parent-in-law.
  • Your grandparent, great-grandparent, etc.
  • Your brother, sister, half brother, half sister, stepbrother, stepsister, brother-in-law, sister-in-law.
  • Your aunt, uncle, nephew, niece if related by blood.

Any relationships established by marriage are not treated as ended by divorce or death.

Test 2—Married Person

If the person is married and files a joint return, you cannot take an exemption for the person.

Tip

If the person and the person's spouse file a joint return only to get a refund and no tax liability would exist for either spouse on separate returns, you may be able to claim him or her if the other four tests
are met.

Test 3—Citizen or Resident

The person must be one of the following:

  • A U.S. citizen or resident alien, or
  • A resident of Canada or Mexico, or
  • Your adopted child who is not a U.S. citizen but who lived with you all year in a foreign country.

To find out who is a resident alien, use TeleTax topic 851 (see page 10) or see Pub. 519.

Test 4—Income

Generally, the person's gross income must be less than $3,050. Gross income does not include nontaxable income, such as welfare benefits or nontaxable social security benefits. Income earned by a permanently and totally disabled person for services performed at a sheltered workshop school is generally not included for purposes of the income test. See Pub. 501 for details.

Exception for Your Child.   Your child can have gross income of $3,050 or more if he or she was:
  1. Under age 19 at the end of 2003 or
  2. Under age 24 at the end of 2003 and was a student.

  Your child was a student if during any 5 months of 2003 he or she—
  • Was enrolled as a full-time student at a school or
  • Took a full-time, on-farm training course. The course had to be given by a school or a state, county, or local government agency.

  A school includes technical, trade, and mechanical schools. It does not include on-the-job training courses, correspondence schools, or night schools.

Test 5—Support

The general rule is that you had to provide over half the person's total support in 2003. If you file a joint return, support can come from either spouse. If you remarried, the support provided by your new spouse is treated as support coming from you. For exceptions to the support test, see Children of Divorced or Separated Parents and Person Supported by Two or More Taxpayers on this page.

Support includes food, a place to live, clothing, medical and dental care, and education. It also includes items such as a car and furniture, but only if they are for the person's own use or benefit. In figuring total support:

  • Use the actual cost of these items. But you should figure the cost of a place to live at its fair rental value.
  • Include money the person used for his or her own support, even if this money was not taxable. Examples are gifts, savings, social security and welfare benefits, and other public assistance payments. This support is treated as not coming from you.

Support does not include items such as income tax, social security and Medicare tax, life insurance premiums, scholarship grants, or funeral expenses.

If you care for a foster child, see Pub. 501 for special rules that apply.

Children of Divorced or Separated Parents.   Special rules apply to determine if the support test is met for children of divorced or separated parents. The rules also apply to children of parents who lived apart during the last 6 months of the year, even if they do not have a separation agreement. For these rules, a custodial parent is the parent who had custody of the child for most of the year. A noncustodial parent is the parent who had custody for the shorter period of time or who did not have custody at all. See Pub. 501 for the definition of custody.

  The general rule is that the custodial parent is treated as having provided over half of the child's total support if both parents together paid over half of the child's support. This means that the custodial parent can claim the child as a dependent if the other dependency tests are also met.

  But if you are the noncustodial parent, you are treated as having provided over half of the child's support and can claim the child as a dependent if both parents together paid over half of the child's support, the other dependency tests are met, and either 1 or 2 below applies.
  1. The custodial parent agrees not to claim the child's exemption for 2003 by signing Form 8332 or a similar statement. But you (as the noncustodial parent) must attach this signed Form 8332 or similar statement to your return. Instead of attaching Form 8332, you can attach a copy of certain pages of your divorce decree or separation agreement if it went into effect after 1984 (see Children Who Did Not Live With You Due to Divorce or Separation on page 23).
  2. Your divorce decree or written separation agreement went into effect before 1985 and it states that you (the noncustodial parent) can claim the child as a dependent. But you must have given at least $600 for the child's support in 2003. This rule does not apply if your decree or agreement was changed after 1984 to say that you cannot claim the child as your dependent.

Person Supported by Two or More Taxpayers.   Even if you did not pay over half of another person's support, you might still be able to claim him or her as a dependent if all five of the following apply.
  1. You and one or more other eligible person(s) (see page 23) together paid over half of another person's support.
  2. You paid over 10% of that person's support.
  3. No one alone paid over half of that person's support.
  4. Tests 1 through 4 on page 22 are met.
  5. You have a signed statement from each other eligible person waiving his or her right to claim the person as a dependent and you attach Form 2120 to your return.

  An eligible person is someone who could have claimed another person as a dependent except that he or she did not pay over half of that person's support.

Line 6c, Column (2)

You must enter each dependent's social security number (SSN). Be sure the name and SSN entered agree with the dependent's social security card. Otherwise, at the time we process your return, we may disallow the exemption claimed for the dependent and reduce or disallow any other tax benefits (such as the child tax credit) based on that dependent. If the name or SSN on the dependent's social security card is not correct, call the Social Security Administration at 1-800-772-1213.

Tip

For details on how your dependent can get an SSN, see page 20. If your dependent will not have a number by April 15, 2004, see What if You Cannot File on Time? on page 14.

If your dependent child was born and died in 2003 and you do not have an SSN for the child, attach a copy of the child's birth certificate instead and enter “Died” in column (2).

Adoption Taxpayer Identification Numbers (ATINs).   If you have a dependent who was placed with you by an authorized placement agency and you do not know his or her SSN, you must get an ATIN for the dependent from the IRS. An authorized placement agency includes any person or court authorized by state law to place children for legal adoption. See Form W-7A for details.

Line 6c, Column (4)

Check the box in this column if your dependent is a qualifying child for the child tax credit (defined below). If you have a qualifying child, you may be able to take the child tax credit on line 33 and the additional child tax credit on line 42.

Qualifying Child for Child Tax Credit.   A qualifying child for purposes of the child tax credit is a child who:
  • Is claimed as your dependent on line 6c, and
  • Was under age 17 at the end of 2003, and
  • Is your (a) son, daughter, adopted child, stepchild, or a descendant of any of them (for example, your grandchild); (b) brother, sister, stepbrother, stepsister, or a descendant of any of them (for example, your niece or nephew), whom you cared for as you would your own child; or (c) foster child (any child placed with you by an authorized placement agency whom you cared for as you would your own child), and
  • Is a U.S. citizen or resident alien.


Note.

The above requirements are not the same as the requirements to be a qualifying child for the earned income credit.

  An adopted child is always treated as your own child. An adopted child includes a child placed with you by an authorized placement agency for legal adoption even if the adoption is not final. An authorized placement agency includes any person or court authorized by state law to place children for legal adoption.

Children Who Did Not Live With You Due to Divorce or Separation

If you are claiming a child who did not live with you under the rules on page 22 for Children of Divorced or Separated Parents, attach Form 8332 or similar statement to your return. But see Exception below. If your divorce or separation agreement went into effect after 1984, you may attach certain pages from the decree or agreement instead of Form 8332. To be able to do this, the decree or agreement must state:

  1. You can claim the child as your dependent without regard to any condition, such as payment of support, and
  2. The other parent will not claim the child as a dependent, and
  3. The years for which the claim is released.

    Attach the following pages from the decree or agreement:

    • Cover page (include the other parent's SSN on that page), and
    • The pages that include all of the information identified in 1 through 3 above, and
    • Signature page with the other parent's signature and date of agreement.


Note.

You must attach the required information even if you filed it with your return in an earlier year.

Exception.   You do not have to attach Form 8332 or similar statement if your divorce decree or written separation agreement went into effect before 1985 and it states that you can claim the child as your dependent.

Other Dependent Children

Include the total number of children who did not live with you for reasons other than divorce or separation on the line labeled “Dependents on 6c not entered above.” Include dependent children who lived in Canada or Mexico during 2003.


Income

Rounding Off to Whole Dollars

You may round off cents to whole dollars on your return and schedules. If you do round to whole dollars, you must round all amounts. To round, drop amounts under 50 cents and increase amounts from 50 to 99 cents to the next dollar. For example, $1.39 becomes $1 and $2.50 becomes $3.

If you have to add two or more amounts to figure the amount to enter on a line, include cents when adding the amounts and round off only the total.

Example.    You received two Forms W-2, one showing wages of $5,009.55 and one showing wages of $8,760.73. On Form 1040A, line 7, you would enter $13,770 ($5,009.55 + $8,760.73 = $13,770.28).

Refunds of State or Local Income Taxes

If you received a refund, credit, or offset of state or local income taxes in 2003, you may receive a Form 1099-G.

In the year the tax was paid to the state or other taxing authority, did you file Form 1040EZ or Form 1040A, or did you use TeleFile?

Yes.		 None of your refund is taxable.
No.		 You may have to report part or all of the refund as income on Form 1040 for 2003. Use TeleTax topic 405 (see page 10) or see Pub. 525 for details.

Community Property States

Community property states are Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington, and Wisconsin. If you and your spouse lived in a community property state, you must usually follow state law to determine what is community income and what is separate income. For details, see Pub. 555.

Foreign Retirement Plans

If you were a beneficiary of a foreign retirement plan, you may have to report the undistributed income earned in your plan. However, if you were the beneficiary of an eligible Canadian retirement plan, you may elect to defer tax on the undistributed income. For details on how to make the election, see Rev. Proc. 2002-23, 2002-1 C.B. 744. You can find Rev. Proc. 2002-23 on page 744 of Internal Revenue Bulletin 2002-15 at www.irs.gov/pub/irs-irbs/irb02-15.pdf. Report distributions from foreign pension plans on lines 12a and 12b.

Line 7

Wages, Salaries, Tips, etc.

Enter the total of your wages, salaries, tips, etc. If a joint return, also include your spouse's income. For most people, the amount to enter on this line should be shown in box 1 of their Form(s) W-2. But the following types of income must also be included in the total on line 7.

  • Wages received as a household employee for which you did not receive a Form W-2 because your employer paid you less than $1,400 in 2003. Also, enter “HSH” and the amount not reported on a Form W-2 in the space to the left of line 7.
  • Tip income you did not report to your employer. But you must use Form 1040 and Form 4137 if (a) you received tips of $20 or more in any month and did not report the full amount to your employer or (b) your Form(s) W-2 shows allocated tips that you must report as income. You must report the allocated tips shown on your Form(s) W-2 unless you can prove that you received less. Allocated tips should be shown in box 8 of your Form(s) W-2. They are not included as income in box 1. See Pub. 531 for more details.
  • Dependent care benefits, which should be shown in box 10 of your Form(s) W-2. But first complete Schedule 2 to see if you may exclude part or all of the benefits.
  • Employer-provided adoption benefits, which should be shown in box 12 of your Form(s) W-2 with code T. You also may be able to exclude amounts if you adopted a child with special needs and the adoption became final in 2003. See the Instructions for Form 8839 to find out if you may exclude part or all of the benefits.
  • Scholarship and fellowship grants not reported on a Form W-2. Also, enter “SCH” and the amount in the space to the left of line 7. Exception. If you were a degree candidate, include on line 7 only the amounts you used for expenses other than tuition and course-related expenses. For example, amounts used for room, board, and travel must be reported on line 7.
  • Disability pensions shown on Form 1099-R if you have not reached the minimum retirement age set by your employer. Disability pensions received after you reach that age and other payments shown on Form 1099-R (other than payments from an IRA*) are reported on lines 12a and 12b of Form 1040A. Payments from an IRA are reported on lines 11a and 11b.

    * This includes a Roth, SEP, or SIMPLE IRA.

Missing or Incorrect Form W-2?   Your employer is required to provide or send Form W-2 to you no later than February 2, 2004. If you do not receive it by early February, use TeleTax topic 154 (see page 10) to find out what to do. Even if you do not get a Form W-2, you must still report your earnings on line 7. If you lose your Form W-2 or it is incorrect, ask your employer for a new one.

Line 8a

Taxable Interest

Each payer should send you a Form 1099-INT or Form 1099-OID. Enter your total taxable interest income on line 8a. But you must fill in and attach Schedule 1, Part I, if the total is over $1,500 or any of the other conditions listed at the beginning of the Schedule 1 instructions apply to you.

Include taxable interest from seller-financed mortgages, banks, savings and loan associations, money market certificates, credit unions, savings bonds, etc. Interest credited in 2003 on deposits that you could not withdraw because of the bankruptcy or insolvency of the financial institution may not have to be included in your 2003 income. For details, see Pub. 550.

Tip

If you get a 2003 Form 1099-INT for U.S. savings bond interest that includes amounts you reported before 2003, see Pub. 550.

Line 8b

Tax-Exempt Interest

If you received any tax-exempt interest, such as from municipal bonds, report it on line 8b. Include any exempt-interest dividends from a mutual fund. Do not include interest earned on your IRA or Coverdell education savings account.

Line 9a

Ordinary Dividends

Each payer should send you a Form 1099-DIV. Enter your total ordinary dividends on line 9a. This amount should be shown in box 1a of your Form(s) 1099-DIV. But you must fill in and attach Schedule 1, Part II, if the total is over $1,500 or you received, as a nominee, ordinary dividends that actually belong to someone else. You must use Form 1040 if you received nontaxable distributions required to be reported as capital gains.

For more details, see Pub. 550.

Line 9b

Qualified Dividends

Enter your total qualified dividends on line 9b. Qualified dividends are eligible for a lower tax rate than other ordinary income. Generally, these dividends are shown in box 1b of your Form(s) 1099-DIV. See Pub. 550 for the definition of qualified dividends if you received dividends not reported on Form 1099-DIV.

Exception.   Some dividends may be reported as qualified dividends in box 1b of Form 1099-DIV but are not qualified dividends. These include:
  • Dividends you received as a nominee. See the instructions for Schedule 1.
  • Dividends you received on any share of stock that you held for less than 61 days during the 120-day period that began 60 days before the ex-dividend date. The ex-dividend date is the first date following the declaration of a dividend on which the purchaser of a stock is not entitled to receive the next dividend payment. When counting the number of days you held the stock, include the day you disposed of the stock but not the day you acquired it. See the examples below.
  • Dividends attributable to periods totaling more than 366 days that you received on any share of preferred stock held for less than 91 days during the 180-day period that began 90 days before the ex-dividend date. Preferred dividends attributable to periods totaling less than 367 days are subject to the 61-day holding period rule above.
  • Dividends on any share of stock to the extent that you are under an obligation (including a short sale) to make related payments with respect to positions in substantially similar or related property.
  • Payments in lieu of dividends, but only if you know or have reason to know that the payments are not qualified dividends.

Example 1.   You bought 5,000 shares of XYZ Corp. common stock on July 1, 2003. XYZ Corp. paid a cash dividend of 10 cents per share. The ex-dividend date was July 9, 2003. Your Form 1099-DIV from XYZ Corp. shows $500 in box 1a (ordinary dividends) and in box 1b (qualified dividends). However, you sold the 5,000 shares on August 4, 2003. You held your shares of XYZ Corp. for only 34 days of the 120-day period (from July 2, 2003, through August 4, 2003). The 120-day period began on May 10, 2003 (60 days before the ex-dividend date) and ended on September 6, 2003. You have no qualified dividends from XYZ Corp. because you held the XYZ stock for less than 61 days.

Example 2.   Assume the same facts as in Example 1 except that you bought the stock on July 8, 2003 (the day before the ex-dividend date), and you sold the stock on September 9, 2003. You held the stock for 63 days (from July 9, 2003, through September 9, 2003). However, you have no qualified dividends from XYZ Corp. because you held the stock for only 60 days of the 120-day period (from July 9, 2003, through September 6, 2003).

Example 3.   You bought 10,000 shares of ABC Mutual Fund common stock on July 1, 2003. ABC Mutual Fund paid a cash dividend of 10 cents a share. The ex-dividend date was July 9, 2003. The ABC Mutual Fund advises you that the portion of the dividend eligible to be treated as qualified dividends equals 2 cents per share. Your Form 1099-DIV from ABC Mutual Fund shows total ordinary dividends of $1000, and qualified dividends of $200. However, you sold the 10,000 shares on August 4, 2003. You have no qualified dividends from ABC Mutual Fund because you held the ABC Mutual Fund stock for less than 61 days.

Tip

Be sure you use the Qualified Dividends and Capital Gain Tax Worksheet on page 34 to figure your tax. Your tax may be less if you use this worksheet.

Lines 10a and 10b

Capital Gain Distributions

Each payer should send you a Form 1099-DIV. Do any of the Forms 1099-DIV or substitute statements you, or your spouse if filing a joint return, received have an amount in box 2c (qualified 5-year gain), box 2d (unrecaptured section 1250 gain), box 2e (section 1202 gain), or box 2f (collectibles (28%) gain)?

Yes.		 You must use Form 1040.
No.		 You may use Form 1040A. See below for instructions on how to complete lines 10a and 10b.

On line 10a, enter your total capital gain distributions from box 2a of Form 1099-DIV. On line 10b, enter your post-May 5 capital gain distributions from box 2b of Form 1099-DIV. Also, be sure you use the Qualified Dividends and Capital Gain Tax Worksheet on page 34 to figure your tax. Your tax may be less if you use this worksheet.

If you received capital gain distributions as a nominee (that is, they were paid to you but actually belong to someone else), report on lines 10a and 10b only the amount that belongs to you. Attach a statement showing the full amount you received and the amount you received as a nominee. See the Schedule 1 instructions for filing requirements for Forms 1099-DIV and 1096.

Lines 11a and 11b

Caution

You may have to pay an additional tax if (a) you received an early distribution from your IRA and the total was not rolled over or (b) you were born before July 1, 1932, and received less than the minimum required distribution from your traditional, SEP, and SIMPLE IRAs. To find out if you owe this tax, see Pub. 590. If you do owe this tax, you must use Form 1040.

IRA Distributions

You should receive a Form 1099-R showing the amount of any distribution from your IRA. Unless otherwise noted in the line 11a and 11b instructions, an IRA includes a traditional IRA, Roth IRA, simplified employee pension (SEP) IRA, and a savings incentive match plan for employees (SIMPLE) IRA. Except as provided below, leave line 11a blank and enter the total distribution on line 11b.

Exception 1.   Enter the total distribution on line 11a if you rolled over part or all of the distribution from one (a) IRA to another IRA of the same type (for example, from one traditional IRA to another traditional IRA) or (b) SEP or SIMPLE IRA to a traditional IRA.

  Also, put “Rollover” next to line 11b. If the total distribution was rolled over, enter zero on line 11b. If the total distribution was not rolled over, enter the part not rolled over on line 11b unless Exception 2 below applies to the part not rolled over.

  If you rolled over the distribution (a) in 2004 or (b) from an IRA into a qualified plan (other than an IRA), attach a statement explaining what you did.

Exception 2.   If any of the following apply, enter the total distribution on line 11a and see Form 8606 and its instructions to figure the amount to enter on line 11b.
  • You received a distribution from an IRA (other than a Roth IRA) and you made nondeductible contributions to any of your traditional or SEP IRAs for 2003 or an earlier year. If you made nondeductible contributions to these IRAs for 2003, also see Pub. 590.
  • You received a distribution from a Roth IRA. But if either 1 or 2 below applies, enter -0- on line 11b; you do not have to see Form 8606 or its instructions.

    1. Distribution code T is shown in box 7 of your Form 1099-R and you made a contribution (including a conversion) to a Roth IRA for 1998.
    2. Distribution code Q is shown in box 7 of your Form 1099-R.
  • You converted part or all of a traditional, SEP, or SIMPLE IRA to a Roth IRA in 2003.
  • You had a 2002 or 2003 IRA contribution returned to you, with the related earnings or less any loss, by the due date (including extensions) of your tax return for that year.
  • You made excess contributions to your IRA for an earlier year and had them returned to you in 2003.
  • You recharacterized part or all of a contribution to a Roth IRA as a traditional IRA contribution, or vice versa.


Note.

If you (or your spouse if filing jointly) received more than one distribution, figure the taxable amount of each distribution and enter the total of the taxable amounts on line 11b. Enter the total amount of those distributions on line 11a.

Lines 12a and 12b

Pensions and Annuities

You should receive a Form 1099-R showing the amount of your pension and annuity payments. See this page for details on rollovers and lump-sum distributions.

Do not report on lines 12a and 12b disability pensions received before you reach the minimum retirement age set by your employer. Instead, report them on line 7.

Tip

Attach Form(s) 1099-R to Form 1040A if any Federal income tax was withheld.

Fully Taxable Pensions and Annuities.   If your pension or annuity is fully taxable, enter it on line 12b; do not make an entry on line 12a. Your payments are fully taxable if (a) you did not contribute to the cost (see this page) of your pension or annuity or (b) you got back your entire cost tax free before 2003.

  Fully taxable pensions and annuities also include military retirement pay shown on Form 1099-R. For details on military disability pensions, see Pub. 525. If you received a Form RRB-1099-R, see Pub. 575 to find out how to report your benefits.

Partially Taxable Pensions and Annuities.   Enter the total pension or annuity payments you received in 2003 on line 12a. If your Form 1099-R does not show the taxable amount, you must use the General Rule explained in Pub. 939 to figure the taxable part to enter on line 12b. But if your annuity starting date (defined below) was after July 1, 1986, see this page to find out if you must use the Simplified Method to figure the taxable part.

  You can ask the IRS to figure the taxable part for you for a $90 fee. For details, see Pub. 939.

  If your Form 1099-R shows a taxable amount, you may report that amount on line 12b. But you may be able to report a lower taxable amount by using the General Rule or the Simplified Method.

Annuity Starting Date.   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.

Simplified Method.   You must use the Simplified Method if (a) your annuity starting date (defined above) was after July 1, 1986, and you used this method last year to figure the taxable part or (b) your annuity starting date was after November 18, 1996, and both of the following apply.
  1. The payments are from a qualified employee plan, a qualified employee annuity, or a tax-sheltered annuity.
  2. On your annuity starting date, either you were under age 75 or the number of years of guaranteed payments was fewer
    than 5. See Pub. 575 for the definition of guaranteed payments.

  If you must use the Simplified Method, complete the worksheet on page 27 to figure the taxable part of your pension or annuity. For more details on the Simplified Method, see Pub. 575 or Pub. 721 for U.S. Civil Service retirement.

Caution

If you received U.S. Civil Service retirement benefits and you chose the alternative annuity option, see Pub. 721 to figure the taxable part of your annuity. Do not use the worksheet on page 27.

Age (or Combined Ages) at Annuity Starting Date.   If you are the retiree, use your age on the annuity starting date. If you are the survivor of a retiree, use the retiree's age on his or her annuity starting date. But if your annuity starting date was after 1997 and the payments are for your life and that of your beneficiary, use your combined ages on the annuity starting date.

  If you are the beneficiary of an employee who died, see
Pub. 575. If there is more than one beneficiary, see Pub. 575 or Pub. 721 to figure each beneficiary's taxable amount.

Cost.   Your cost is generally your net investment in the plan as of the annuity starting date. It does not include pre-tax contributions. Your net investment should be shown in box 9b of Form 1099-R for the first year you received payments from the plan.

Rollovers.   A rollover is a tax-free distribution of cash or other assets from one retirement plan that is contributed to another plan. Use lines 12a and 12b to report a rollover, including a direct rollover, from one qualified employer's plan to another or to an IRA or SEP.

  Enter on line 12a the total distribution before income tax or other deductions were withheld. This amount should be shown in box 1 of Form 1099-R. From the total on line 12a, subtract any contributions (usually shown in box 5) that were taxable to you when made. From that result, subtract the amount that was rolled over. Enter the remaining amount, even if zero, on line 12b. Also, enter “Rollover” next to line 12b.

  Special rules apply to partial rollovers of property. For more details on rollovers, including distributions under qualified domestic relations orders, see Pub. 575.

Lump-Sum Distributions.   If you received a lump-sum distribution from a profit-sharing or retirement plan, your Form 1099-R should have the “Total distribution” box in box 2b checked. You must use Form 1040 if you owe additional tax because you received an early distribu