PDF document

- 1 -

                            Userid: CPM               Schema: tipx Leadpct: 100% Pt. size: 10            Draft           Ok to Print
AH XSL/XML                  Fileid: … tions/p554/2023/a/xml/cycle06/source                          (Init. & Date) _______

Page 1 of 37                                                                                        14:46 - 18-Jan-2024

The type and rule above prints on all proofs including departmental reproduction proofs. MUST be removed before printing.

            Department of the Treasury                        Contents
            Internal Revenue Service
                                                              What's New. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .    1
                                                              Reminders    . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Publication 554
Cat. No. 15102R                                               Introduction  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  2
                                                              Chapter  1.  2023 Filing Requirements                 . . . . . . . . . .  5
                                                              General Requirements              . . . . . . . . . . . . . . . . . . . .  5
Tax Guide
                                                              Chapter  2.  Taxable and Nontaxable Income . . . . .                       6
                                                              Compensation for Services . . . . . . . . . . . . . . . . .                6
for Seniors                                                   Retirement Plan Distributions             . . . . . . . . . . . . . . . .  6
                                                              Social Security and Equivalent Railroad 
For use in preparing                                                Retirement Benefits         . . . . . . . . . . . . . . . . . . .    11
                                                              Sickness and Injury Benefits              . . . . . . . . . . . . . . .    14
2023 Returns                                                  Life Insurance Proceeds             . . . . . . . . . . . . . . . . . .    15
                                                              Sale of Home . . . . . . . . . . . . . . . . . . . . . . . . . .           16
                                                              Reverse Mortgages             . . . . . . . . . . . . . . . . . . . . .    18
                                                              Other Items       . . . . . . . . . . . . . . . . . . . . . . . . . . .    18
                                                              Chapter  3.  Adjustments to Income . . . . . . . . . . .                   19
                                                              Individual Retirement Arrangement (IRA) 
                                                                    Contributions and Deductions              . . . . . . . . . . . .    19
                                                              Chapter  4.  Deductions         . . . . . . . . . . . . . . . . . . . .    20
                                                              Standard Deduction            . . . . . . . . . . . . . . . . . . . . .    20
                                                              Itemized Deductions . . . . . . . . . . . . . . . . . . . . .              21
                                                              Chapter  5.  Credits    . . . . . . . . . . . . . . . . . . . . . . . .    26
                                                              Credit for the Elderly or the Disabled                . . . . . . . . .    26
                                                              Child and Dependent Care Credit                   . . . . . . . . . . .    29
                                                              Earned Income Credit (EIC)              . . . . . . . . . . . . . . . .    29
                                                              Chapter  6.  Estimated Tax          . . . . . . . . . . . . . . . . . .    32
                                                              Who Must Make Estimated Tax Payments                        . . . . . .    32
                                                              Chapter  7.  How To Get Tax Help              . . . . . . . . . . . . .    32
                                                              Index . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  36

                                                              Future Developments
                                                              For  the  latest  information  about  developments  related  to 
                                                              Pub.  554,  such  as  legislation  enacted  after  it  was 
                                                              published, go to IRS.gov/Pub554.

                                                              What's New
                                                              Coronavirus-related  distributions.               The  repayment  pe-
                                                              riod for a coronavirus-related distribution made on or after 
                                                              January 1, 2020, and before December 31, 2020, ended 
                                                              on December 31, 2023. If you made repayments in 2023 
                                                              and/or you didn’t completely repay the distribution by De-
                                                              cember 31, 2023, see Form 8915-F.
Get forms and other information faster and easier at:         Increase in required minimum distribution age.                        If you 
• IRS.gov (English)         • IRS.gov/Korean (한국어)            reach age 72 in 2023 or later and have funds in a tradi-
• IRS.gov/Spanish (Español) • IRS.gov/Russian (Pусский)       tional IRA (including a SEP and SIMPLE IRA) the required 
• IRS.gov/Chinese (中文)      • IRS.gov/Vietnamese (Tiếng Việt) 
                                                              beginning date for your first required minimum distribution 

Jan 18, 2024

- 2 -

Page 2 of 37 Fileid: … tions/p554/2023/a/xml/cycle06/source 14:46 - 18-Jan-2024

The type and rule above prints on all proofs including departmental reproduction proofs. MUST be removed before printing.

is April 1 of the year following the year in which you turn are age 65 or older at the end of 2023. The form generally
73. mirrors Form 1040. However, the Form 1040-SR has
Exception to the 10% additional tax for early distribu- larger text and some helpful tips for older taxpayers. See
tions. The exception to the 10% additional tax for early the Instructions for Form 1040 for more information.
distributions include the following. Tax return preparers. Choose your preparer carefully. If
• Distributions from a retirement plan in connection with you pay someone to prepare your return, the preparer is
federally declared disasters. required, under the law, to sign the return and fill in the
other blanks in the Paid Preparer Use Only area of your re-
• Distributions from a retirement plan made to someone turn. Remember, however, that you are still responsible for
who is terminally ill. the accuracy of every item entered on your return. If there
• Distributions to certain firefighters who meet the age is any underpayment, you are responsible for paying it,
or years of service requirement. plus any interest and penalty that may be due.
See Form 5329 and Pub 590-B for more information. Third party designee. You can check the “Yes” box in
Standard deduction amount increased. For 2023, the the Third Party Designee area of your return to authorize
standard deduction amount has been increased for all fil- the IRS to discuss your return with your preparer, a friend,
ers. The amounts are: a family member, or any other person you choose. This al-
lows the IRS to call the person you identified as your des-
• Single or Married filing separately—$13,850. ignee to answer any questions that may arise during the
• Married filing jointly or Qualifying surviving processing of your return. It also allows your designee to
spouse—$27,700. perform certain actions. See your income tax return in-
structions for details.
• Head of household—$20,800.
Alternative minimum tax exemption increased. The Employment tax withholding. Your wages are subject
AMT exemption amount has increased to $81,300 to withholding for income tax, social security tax, and
($126,500 if married filing jointly or qualifying surviving Medicare tax even if you are receiving social security ben-
spouse; $63,250 if married filing separately). efits.
Earned income credit. The maximum amount of income Social security benefits information. Social security
you can earn and still get the credit has changed. You may beneficiaries may quickly and easily obtain various infor-
be able to take the credit if you earn less than: mation from the Social Security Administration’s (SSA’s)
website with a my Social Security account, including get-
• $17,640 ($24,210 if married filing jointly), don't have a ting a replacement SSA-1099 or SSA-1042S. For more in-
qualifying child, and are at least 25 years old and un- formation, go to SSA.gov/myaccount. See Obtaining so-
der age 65; cial security information, later.
• $46,560 ($53,120 if married filing jointly), and you
Photographs of missing children. The Internal Reve-
have one qualifying child;
nue Service is a proud partner with the National Center for
• $52,918 ($59,478 if married filing jointly), and you Missing & Exploited Children® (NCMEC). Photographs of
have two qualifying children; or missing children selected by the Center may appear in
• $56,838 ($63,398 if married filing jointly), and you this publication on pages that would otherwise be blank.
have three or more qualifying children. You can help bring these children home by looking at the
photographs and calling 800-THE-LOST (800-843-5678)
For more information, see Earned Income Credit, later. if you recognize a child.
Standard mileage rate. For 2023, the standard mileage
rate allowed for operating expenses for a car when you
use it for medical reasons is 22 cents a mile.
Introduction
The purpose of this publication is to provide a general
overview of selected topics that are of interest to older tax-
Reminders
payers. This publication will help you determine if you
Qualified disaster tax relief. Special rules provide for need to file a return and, if so, what items to report on your
tax-favored withdrawals and repayments from certain re- return. Each topic is discussed only briefly, so you will find
tirement plans for taxpayers who suffered economic loss references to other free IRS publications that provide
as a result of a qualified disaster. See Form 8915-F, Quali- more detail on these topics if you need it.
fied Disaster Retirement Plan Distributions and Repay- Table I has a list of questions you may have about filing
ments, for more information. your federal tax return. To the right of each question is the
Maximum age for traditional IRA contributions. The location of the answer in this publication. Also, at the back
age restriction for contributions to a traditional IRA has of this publication, there is an index to help you search for
been eliminated. the topic you need.
While most federal income tax laws apply equally to all
Form 1040-SR. Form 1040-SR, U.S. Tax Return for Se- taxpayers, regardless of age, there are some provisions
niors, was introduced in 2019. You can use this form if you

2 Publication 554 (2023)

- 3 -

Page 3 of 37        Fileid: … tions/p554/2023/a/xml/cycle06/source                      14:46 - 18-Jan-2024

The type and rule above prints on all proofs including departmental reproduction proofs. MUST be removed before printing.

that give special treatment to older taxpayers. The follow-     neighborhood libraries, malls, banks, community centers, 
ing are some examples.                                          and senior centers annually during the filing season. Visit 
• Higher gross income threshold for filing. You must            AARP.org/TaxAide   or   call             888-OUR-AARP 
  be age 65 or older at the end of the year to get this         (888-687-2277) for more information.

  benefit. You are considered age 65 on the day before          Comments  and  suggestions. We  welcome  your  com-
  your 65th birthday. Therefore, you are considered age         ments  about  this  publication  and  suggestions  for  future 
  65 at the end of the year if your 65th birthday is on or      editions.
  before January 1 of the following year.                       You  can  send  us  comments  through                    IRS.gov/
• Higher standard deduction. If you don't itemize de-           FormComments. Or, you can write to the Internal Revenue 
  ductions, you are entitled to a higher standard deduc-        Service,  Tax  Forms  and  Publications,  1111  Constitution 
  tion if you are age 65 or older at the end of the year.       Ave. NW, IR-6526, Washington, DC 20224.
  You are considered age 65 at the end of the year if           Although  we  can’t  respond  individually  to  each  com-
  your 65th birthday is on or before January 1 of the fol-      ment  received,  we  do  appreciate  your  feedback  and  will 
  lowing year.                                                  consider  your  comments  and  suggestions  as  we  revise 
• Credit for the elderly or the disabled. If you qualify,       our  tax  forms,  instructions,  and  publications. Don’t  send 
  you may benefit from the credit for the elderly or the        tax questions, tax returns, or payments to the above ad-
  disabled. To determine if you qualify and how to figure       dress.
  this credit, see Credit for the Elderly or the Disabled,      Getting answers to your tax questions.              If you have 
  later.                                                        a tax question not answered by this publication or the   How 
                                                                To Get Tax Help section at the end of this publication, go 
Return preparation assistance. The IRS wants to make            to  the  IRS  Interactive  Tax  Assistant  page  at      IRS.gov/
it easier for you to file your federal tax return. You may find Help/ITA  where  you  can  find  topics  by  using  the  search 
it  helpful  to  visit  a  Volunteer  Income  Tax  Assistance   feature or viewing the categories listed.
(VITA), Tax Counseling for the Elderly (TCE), or American 
Association of Retired Persons (AARP) Tax-Aide site near        Getting  tax  forms,  instructions,  and  publications. 
you.                                                            Go to IRS.gov/Forms to download current and prior-year 
                                                                forms, instructions, and publications.
Volunteer  Income  Tax  Assistance  and  Tax  Coun-
seling for the Elderly. These programs provide free help        Ordering tax forms, instructions, and publications. 
for low-income taxpayers and taxpayers age 60 or older to       Go to IRS.gov/OrderForms to order current forms, instruc-
prepare and file their returns. For the VITA/TCE site near-     tions,  and  publications;  call  800-829-3676  to  order 
est you, contact your local IRS office. For more informa-       prior-year  forms  and  instructions.  The  IRS  will  process 
tion, see Preparing and filing your tax return. under How       your order for forms and publications as soon as possible. 
To Get Tax Help.                                                Don’t resubmit requests you’ve already sent us. You can 
                                                                get forms and publications faster online.
AARP  Tax-Aide.    AARP  Foundation  Tax-Aide  offers 
free tax preparation and has more than 5,000 locations in 

Publication 554 (2023)                                                                                                   3

- 4 -

Page 4 of 37 Fileid: … tions/p554/2023/a/xml/cycle06/source 14:46 - 18-Jan-2024

The type and rule above prints on all proofs including departmental reproduction proofs. MUST be removed before printing.

Table I. What You Should Know About Federal Taxes
Note. The following is a list of questions you may have about filling out your federal income tax return.
To the right of each question is the location of the answer in this publication.

What I Should Know Where To Find the Answer
Do I need to file a return? See chapter 1.
Is my income taxable or nontaxable?
See chapter 2.
If it is nontaxable, must I still report it?
How do I report benefits I received from the Social
Security Administration or the Railroad Retirement Board? See Social Security and Equivalent Railroad Retirement
Benefits in chapter 2.
Are these benefits taxable?
Must I report the sale of my home?
See Sale of Home in chapter 2.
If I had a gain, is any part of it taxable?
What are some of the items that I can deduct to reduce my See chapters and .3 4
income?
How do I report the amounts I set aside for my IRA? See Individual Retirement Arrangement Contributions
and Deductions in chapter 3.
Would it be better for me to claim the standard deduction See chapter 4.
or itemize my deductions?
What are some of the credits I can claim to reduce my tax? See chapter 5 for discussions on the credit for the elderly
or the disabled, the child and dependent care credit, and
the earned income credit.
Must I make estimated tax payments? See chapter 6.
How do I contact the IRS or get more information? See chapter 7.

4 Publication 554 (2023)

- 5 -

Page 5 of 37  Fileid: … tions/p554/2023/a/xml/cycle06/source                                14:46 - 18-Jan-2024

The type and rule above prints on all proofs including departmental reproduction proofs. MUST be removed before printing.

                                                                     other filing requirements, see your tax return instructions 
                                                                     or Pub. 501. If you were a nonresident alien at any time 
1.                                                                   during the year, the filing requirements that apply to you 
                                                                     may  be  different  from  those  that  apply  to  U.S.  citizens. 
                                                                     See Pub. 519.
2023 Filing Requirements
                                                                     Gross income. Gross income is all income you receive 
If income tax was withheld from your pay, or if you qualify          in the form of money, goods, property, and services that 
for a refundable credit (such as the earned income credit,           isn't exempt from tax. If you are married and live with your 
the additional child tax credit, or the American opportunity         spouse in a community property state, half of any income 
credit), you should file a return to get a refund even if you        defined by state law as community income may be consid-
aren't otherwise required to file a return.                          ered yours. States with community property laws include 
                                                                     Arizona, California, Idaho, Louisiana, Nevada, New Mex-
       Don't file a federal income tax return if you don't           ico, Texas, Washington, and Wisconsin. A registered do-
TIP    meet the filing requirements and aren't due a re-             mestic partner in Nevada, Washington, or California must 
       fund.  If  you  need  assistance  to  determine  if  you      generally report half the combined community income of 
need  to  file  a  federal  income  tax  return  for  2023,  go  to  the individual and their domestic partner. For more infor-
IRS.gov/ITA and use the Interactive Tax Assistant (ITA).             mation about community property, see Pub. 555.
                                                                     For  more  information  on  what  to  include  in  gross  in-
                                                                     come, see chapter 2.
General Requirements                                                 Self-employed persons. If you are self-employed in a 
                                                                     business  that  provides  services  (where  the  production, 
If you are a U.S. citizen or resident alien, you must file a         purchase, or sale of merchandise isn't an income-produc-
return  if  your  gross  income  for  the  year  was  at  least  the ing factor), gross income from that business is the gross 
amount  shown  on  the  appropriate  line  in Table  1-1.  For       receipts. If you are self-employed in a business involving 

Table 1-1. 2023 Filing Requirements Chart for Most Taxpayers
           Note. You must file a return if your gross income was at least the amount shown in the last column.

                                            AND at the end of 2023                       THEN file a return if your gross 
IF your filing status is. . .               you were . . .*                              income  was at least. . .**

single                                      under 65                                                   $13,850
                                            65 or older                                                $15,700
head of household                           under 65                                                   $20,800
                                            65 or older                                                $22,650
married filing jointly***                   under 65 (both spouses)                                    $27,700
                                            65 or older (one spouse)                                   $29,200
                                            65 or older (both spouses)                                 $30,700
married filing separately                   any age                                                         $5
qualifying surviving spouse                 under 65                                                   $27,700
                                            65 or older                                                $29,200

* If you were born before January 2, 1959, you are considered to be age 65 or older at the end of 2023. (If your spouse died 
    in 2023 or if you are preparing a return for someone who died in 2023, see Pub. 501.)
** Gross income means all income you receive in the form of money, goods, property, and services that isn't exempt from 
    tax, including any income from sources outside the United States or from the sale of your main home (even if you can 
    exclude part or all of it). It also includes gains, but not losses, reported on Form 8949 or Schedule D. Gross income from a 
    business means, for example, the amount on Schedule C, line 7, or Schedule F, line 9. But, in figuring gross income, don't 
    reduce your income by any losses, including any loss on Schedule C, line 7, or Schedule F, line 9. Don't include any 
    social security benefits unless (a) you are married filing separately and you lived with your spouse at any time in 2023, or 
    (b) one-half of your social security benefits plus your other gross income and any tax-exempt interest is more than 
    $25,000 ($32,000* if married filing jointly). If (a) or (b) applies, see the Instructions for Form 1040 or Pub. 915 to figure the 
    taxable part of social security benefits you must include in gross income.
*** If you didn't live with your spouse at the end of 2023 (or on the date your spouse died) and your gross income was at least 
    $5, you must file a return regardless of your age.

Publication 554 (2023)        Chapter 1                 2023 Filing Requirements                                                      5

- 6 -

Page 6 of 37  Fileid: … tions/p554/2023/a/xml/cycle06/source                               14:46 - 18-Jan-2024

The type and rule above prints on all proofs including departmental reproduction proofs. MUST be removed before printing.

manufacturing,  merchandising,  or  mining,  gross  income 
from  that  business  is  the  total  sales  minus  the  cost  of 
goods sold. In either case, you must add any income from           2.
investments and from incidental or outside operations or 
sources. See Pub. 334.
                                                                   Taxable and Nontaxable 
Dependents. If you could be claimed as a dependent by 
another taxpayer (that is, you meet the dependency tests 
in  Pub.  501),  special  filing  requirements  apply.  See  Pub.  Income
501.
                                                                   Generally,  income  is  taxable  unless  it  is  specifically  ex-
                                                                   empt (not taxed) by law. Your taxable income may include 
Decedents                                                          compensation for services, interest, dividends, rents, roy-
                                                                   alties,  income  from  partnerships,  estate  or  trust  income, 
A personal representative of a decedent's estate can be 
                                                                   gain from sales or exchanges of property, and business in-
an executor, administrator, or anyone who is in charge of 
                                                                   come of all kinds.
the decedent's property.
  If  you  are  acting  as  the  personal  representative  of  a   Under special provisions of the law, certain items are par-
person who died during the year, you may have to file a fi-        tially or fully exempt from tax. Provisions that are of special 
nal  return  for  that  decedent.  You  also  have  other  duties, interest to older taxpayers are discussed in this chapter.
such as notifying the IRS that you are acting as the per-
sonal  representative.  Form  56,  Notice  Concerning  Fidu-
ciary Relationship, is available for this purpose.                 Compensation for Services
  When you file a return for the decedent, either as the 
                                                                   Generally,  you  must  include  in  gross  income  everything 
personal  representative  or  as  the  surviving  spouse,  you 
                                                                   you receive in payment for personal services. In addition 
should enter “DECEASED,” the decedent's name, and the 
                                                                   to  wages,  salaries,  commissions,  fees,  and  tips,  this  in-
date of death across the top of the tax return.
                                                                   cludes other forms of compensation such as fringe bene-
  If  no  personal  representative  has  been  appointed  by       fits and stock options.
the due date for filing the return, the surviving spouse (on 
a joint return) should sign the return and enter in the sig-        You don’t need to receive the compensation in cash for 
nature area “Filing as surviving spouse.”                          it to be taxable. Payments you receive in the form of goods 
                                                                   or services must generally be included in gross income at 
  For more information, see Pub. 559.                              their fair market value.

Surviving  spouse. If  you  are  the  surviving  spouse,  the      Volunteer  work.  Don't  include  in  your  gross  income 
year your spouse died is the last year for which you can           amounts you receive for supportive services or reimburse-
file a joint return with that spouse. After that, if you don't     ments for out-of-pocket expenses under any of the follow-
remarry,  you  must  file  as  a  qualifying  surviving  spouse,   ing volunteer programs.
head of household, or single. For more information about 
each of these filing statuses, see Pub. 501.                       • Retired Senior Volunteer Program (RSVP).
  If you remarry before the end of the year in which your          • Foster Grandparent Program.
spouse died, a final joint return with the deceased spouse           Senior Companion Program.
                                                                   •
can't be filed. You can, however, file a joint return with your 
new  spouse.  In  that  case,  the  filing  status  of  your  de-  • Service Corps of Retired Executives (SCORE).
ceased spouse for their final return is married filing sepa-
rately.                                                            Unemployment compensation.   You must include in in-
                                                                   come  all  unemployment  compensation  you  or  your 
        The level of income that requires you to file an in-       spouse (if married filing jointly) received.
  !     come  tax  return  changes  when  your  filing  status 
CAUTION changes (see Table 1-1). Even if you and your de-          More information. See Pub. 525, for more detailed infor-
ceased spouse weren't required to file a return for several        mation on specific types of income.
years, you may have to file a return for tax years after the 
year  of  death.  For  example,  if  your  filing  status  changes 
from filing jointly in 2022 to single in 2023 because of the 
                                                                   Retirement Plan Distributions
death of your spouse, and your gross income is $17,500 
for both years, you must file a return for 2023 even though        This section summarizes the tax treatment of amounts you 
you didn't have to file a return for 2022.                         receive from traditional individual retirement arrangements 
                                                                   (IRAs),  employee  pensions  or  annuities,  and  disability 
                                                                   pensions  or  annuities.  A  traditional  IRA  is  any  IRA  that 
                                                                   isn't a Roth or SIMPLE IRA. A Roth IRA is an individual re-
                                                                   tirement plan that can be either an account or an annuity 
                                                                   and  features  nondeductible  contributions  and  tax-free 

6                             Chapter 2            Taxable and Nontaxable Income                Publication 554 (2023)

- 7 -

Page 7 of 37 Fileid: … tions/p554/2023/a/xml/cycle06/source 14:46 - 18-Jan-2024

The type and rule above prints on all proofs including departmental reproduction proofs. MUST be removed before printing.

distributions. A SIMPLE IRA is a tax-favored retirement Pensions and Annuities
plan that certain small employers (including self-employed
individuals) can set up for the benefit of their employees. Generally, if you didn't pay any part of the cost of your em-
More detailed information can be found in Pub. 590-A, ployee pension or annuity, and your employer didn't with-
Pub. 590-B, and Pub. 575. hold part of the cost of the contract from your pay while
you worked, the amounts you receive each year are fully
Individual Retirement Arrangements taxable. However, see Insurance Premiums for Retired
(IRAs) Public Safety Officers, later.
If you paid part of the cost of your pension or annuity
In general, distributions from a traditional IRA are taxable
plan (see Cost, later), you can exclude part of each annu-
in the year you receive them. Exceptions to the general
ity payment from income as a recovery of your cost (in-
rule are rollovers, tax-free withdrawals of contributions,
vestment in the contract). This tax-free part of the pay-
and the return of nondeductible contributions. These are
ment is figured when your annuity starts and remains the
discussed in Pub. 590-B.
same each year, even if the amount of the payment
If you made nondeductible contributions to a tradi- changes. The rest of each payment is taxable. However,
TIP tional IRA, you must file Form 8606, Nondeducti- see Insurance Premiums for Retired Public Safety Offi-
ble IRAs. If you don't file Form 8606 with your re- cers, later.
turn, you may have to pay a $50 penalty. Also, when you
receive distributions from your traditional IRA, the You figure the tax-free part of the payment using one of
amounts will be taxed unless you can show, with satisfac- the following methods.
tory evidence, that nondeductible contributions were • Simplified Method. You must generally use this
made. method if your annuity is paid under a qualified plan (a
qualified employee plan, a qualified employee annuity,
Early distributions. Generally, early distributions are or a tax-sheltered annuity plan or contract). You can't
amounts distributed from your traditional IRA account or use this method if your annuity is paid under a non-
annuity before you are age 59 / , or amounts you receive 1 2 qualified plan.
when you cash in retirement bonds before you are age General Rule. You must use this method if your annu-
•
59 / . You must include early distributions of taxable 1 2
ity is paid under a nonqualified plan. You generally
amounts in your gross income. These taxable amounts can't use this method if your annuity is paid under a
are also subject to an additional 10% tax unless the distri- qualified plan.
bution qualifies for an exception. For purposes of the addi-
tional 10% tax, an IRA is a qualified retirement plan. For Contact your employer or plan administrator to
more information about this tax, see Tax on Early Distribu- TIP find out if your pension or annuity is paid under a
tions under Pensions and Annuities, later. qualified or nonqualified plan.

After age 59 / . 1 2 After you reach age 59 / , you can re-1 2 You determine which method to use when you first be-
ceive distributions from your traditional IRA without having gin receiving your annuity, and you continue using it each
to pay the 10% additional tax. year that you recover part of your cost.

Required Distributions Exclusion limit. If your annuity starting date is after
1986, the total amount of annuity income you can exclude
General required minimum distribution rule. If you over the years as a recovery of the cost can't exceed your
are the owner of a traditional IRA, you must generally re- net cost (figured without any reduction for a refund fea-
ceive the entire balance in your IRA or start receiving peri- ture). Any unrecovered cost at your (or the last annui-
odic distributions from your IRA by April 1 of the year fol- tant's) death is allowed as an “other itemized deduction”
lowing the year in which you reach age 73 (72 for those on the final return of the decedent.
individuals who reach age 72 before January 1, 2023). If you contributed to your pension or annuity and your
See When Must You Withdraw Assets? (Required Mini- annuity starting date is before 1987, you can continue to
mum Distributions) in Pub. 590-B. If distributions from your take your monthly exclusion for as long as you receive
traditional IRA(s) are less than the required minimum dis- your annuity. If you chose a joint and survivor annuity, your
tribution for the year, you may have to pay an excise tax for survivor can continue to take the survivor's exclusion fig-
that year on the amount not distributed as required. For ured as of the annuity starting date. The total exclusion
more information about this tax, see Tax on Excess Accu- may be more than your cost.
mulation under Pensions and Annuities, later. See also
Excess Accumulations (Insufficient Distributions) in Pub. Cost. Before you can figure how much, if any, of your
590-B. pension or annuity benefits are taxable, you must deter-
mine your cost in the plan (your investment in the con-
tract). Your total cost in the plan includes everything that
you paid. It also includes amounts your employer contrib-
uted that were taxable to you when paid. However, see
Foreign employment contributions, later.

Publication 554 (2023) Chapter 2 Taxable and Nontaxable Income 7

- 8 -

Page 8 of 37 Fileid: … tions/p554/2023/a/xml/cycle06/source 14:46 - 18-Jan-2024

The type and rule above prints on all proofs including departmental reproduction proofs. MUST be removed before printing.

From this total cost, subtract any refunded premiums, have chosen to use the Simplified Method if your annuity
rebates, dividends, unrepaid loans, or other tax-free is payable for your life (or the lives of you and your survivor
amounts you received by the later of the annuity starting annuitant) and you met both of the conditions listed
date or the date on which you received your first payment. above.
Annuity starting date. The annuity starting date is the Guaranteed payments. Your annuity contract pro-
later of the first day of the first period for which you re- vides guaranteed payments if a minimum number of pay-
ceived a payment from the plan or the date on which the ments or a minimum amount (for example, the amount of
plan's obligations became fixed. your investment) is payable even if you and any survivor
annuitant don't live to receive the minimum. If the mini-
The amount of your contributions to the plan may
mum amount is less than the total amount of the payments
TIP be shown in box 9b of any Form 1099-R, Distribu-
you are to receive, barring death, during the first 5 years
tions From Pensions, Annuities, Retirement or
after payments begin (figured by ignoring any payment in-
Profit-Sharing Plans, IRAs, Insurance Contracts, etc., that
creases), you are entitled to less than 5 years of guaran-
you receive.
teed payments.
Foreign employment contributions. If you worked Who can't use the Simplified Method. You can't use
abroad, certain amounts your employer paid into your re- the Simplified Method and must use the General Rule if
tirement plan that weren't includible in your gross income you receive pension or annuity payments from:
may be considered part of your cost. For details, see For-
eign employment contributions in Pub. 575. • A nonqualified plan, such as a private annuity, a pur-
chased commercial annuity, or a nonqualified em-
Withholding. The payer of your pension, profit-sharing, ployee plan; or
stock bonus, annuity, or deferred compensation plan will • A qualified plan if you are age 75 or older on your an-
withhold income tax on the taxable part of amounts paid to nuity starting date and you are entitled to at least 5
you. However, you can choose not to have tax withheld on years of guaranteed payments (defined above).
the payments you receive, unless they are eligible rollover
In addition, you had to use the General Rule for either
distributions. (These are distributions that are eligible for
circumstance described above if your annuity starting date
rollover treatment but aren't paid directly to another quali-
is after July 1, 1986, and before November 19, 1996. You
fied retirement plan or to a traditional IRA.) See Withhold-
also had to use it for any fixed-period annuity. If you didn't
ing Tax and Estimated Tax and Rollovers in Pub. 575 for
have to use the General Rule, you could have chosen to
more information.
use it. You also had to use the General Rule for payments
For payments other than eligible rollover distributions,
from a qualified plan if your annuity starting date is before
you can tell the payer how much to withhold by filing a
July 2, 1986, and you didn't qualify to use the Three-Year
Form W-4P, Withholding Certificate for Periodic Pension or
Rule.
Annuity Payments.
If you had to use the General Rule (or chose to use it),
Simplified Method. Under the Simplified Method, you you must continue to use it each year that you recover
figure the tax-free part of each annuity payment by divid- your cost.
ing your cost by the total number of anticipated monthly Unless your annuity starting date was before 1987,
payments. For an annuity that is payable over the lives of once you have recovered all of your nontaxable invest-
the annuitants, this number is based on the annuitants' ment, all of each remaining payment you receive is fully
ages on the annuity starting date and is determined from a taxable. Once your remaining payments are fully taxable,
table. For any other annuity, this number is the number of there is no longer a concern with the General Rule or Sim-
monthly annuity payments under the contract. plified Method.
Complete information on the General Rule, including
Who must use the Simplified Method. You must use the actuarial tables you need, is contained in Pub. 939.
the Simplified Method if your annuity starting date is after
November 18, 1996, and you meet both of the following How to use the Simplified Method. Complete the
conditions. Simplified Method Worksheet in the Instructions for Form
1040 or Instructions for Form 1040-NR, or in Pub. 575 to
1. You receive your pension or annuity payments from a figure your taxable annuity for 2023. Be sure to keep the
qualified plan. completed worksheet; it will help you figure your taxable
2. On your annuity starting date, at least one of the fol- annuity next year.
lowing conditions applies to you. To complete line 3 of the worksheet, you must deter-
mine the total number of expected monthly payments for
a. You are under age 75. your annuity. How you do this depends on whether the an-
b. You are entitled to less than 5 years of guaranteed nuity is for a single life, multiple lives, or a fixed period. For
payments. this purpose, treat an annuity that is payable over the life
of an annuitant as payable for that annuitant's life even if
If your annuity starting date is after July 1, 1986, and the annuity has a fixed-period feature or also provides a
before November 19, 1996, and you previously chose to temporary annuity payable to the annuitant's child under
use the Simplified Method, you must continue to use it age 25.
each year that you recover part of your cost. You could

8 Chapter 2 Taxable and Nontaxable Income Publication 554 (2023)

- 9 -

Page 9 of 37 Fileid: … tions/p554/2023/a/xml/cycle06/source 14:46 - 18-Jan-2024

The type and rule above prints on all proofs including departmental reproduction proofs. MUST be removed before printing.

You don't need to complete line 3 of the work- Kris must use the Simplified Method to figure their taxa-
TIP sheet or make the computation on line 4 if you re- ble annuity because the payments are from a qualified
ceived annuity payments last year and used last plan and they are under age 75. You can find a blank ver-
year's worksheet to figure your taxable annuity. Instead, sion of this worksheet in Pub. 575.
enter the amount from line 4 of last year's worksheet on
line 4 of this year's worksheet. Survivors of retirees. Benefits paid to you as a survivor
under a joint and survivor annuity must be included in your
Single-life annuity. If your annuity is payable for your gross income in the same way the retiree would have in-
life alone, use Table 1 at the bottom of the worksheet to cluded them in gross income.
determine the total number of expected monthly pay- If you receive a survivor annuity because of the death
ments. Enter on line 3 the number shown for your age on of a retiree who had reported the annuity under the
your annuity starting date. This number will differ depend- Three-Year Rule, include the total received in your income.
ing on whether your annuity starting date is before Novem- The retiree's cost has already been recovered tax free.
ber 19, 1996, or after November 18, 1996. If the retiree was reporting the annuity payments under
the General Rule, you must apply the same exclusion per-
Multiple-lives annuity. If your annuity is payable for centage the retiree used to your initial payment called for
the lives of more than one annuitant, use Table 2 at the in the contract. The resulting tax-free amount will then re-
bottom of the worksheet to determine the total number of main fixed. Any increases in the survivor annuity are fully
expected monthly payments. Enter on line 3 the number taxable.
shown for the annuitants' combined ages on the annuity If the retiree was reporting the annuity payments under
starting date. For an annuity payable to you as the primary the Simplified Method, the part of each payment that is tax
annuitant and to more than one survivor annuitant, com- free is the same as the tax-free amount figured by the re-
bine your age and the age of the youngest survivor annui- tiree at the annuity starting date. See Simplified Method,
tant. For an annuity that has no primary annuitant and is earlier.
payable to you and others as survivor annuitants, combine
the ages of the oldest and youngest annuitants. Don't treat How to report. If you file Form 1040, 1040-SR, or
as a survivor annuitant anyone whose entitlement to pay- 1040-NR, report your total annuity on line 5a, and the tax-
ments depends on an event other than the primary annui- able part on line 5b. If your pension or annuity is fully taxa-
tant's death. ble, enter it on line 5b. Don't make an entry on line 5a.
However, if your annuity starting date is before 1998,
don't use Table 2 and don't combine the annuitants' ages. Example. You are a Form 1040 or 1040-SR filer and
Instead, you must use Table 1 at the bottom of the work- you received monthly payments totaling $1,200 (12
sheet and enter on line 3 the number shown for the pri- months x $100) during 2023 from a pension plan that was
mary annuitant's age on the annuity starting date. This completely financed by your employer. You had paid no
number will differ depending on whether your annuity tax on the payments that your employer made to the plan,
starting date is before November 19, 1996, or after No- and the payments weren't used to pay for accident, health,
vember 18, 1996. or long-term care insurance premiums (as discussed later
under Insurance Premiums for Retired Public Safety Offi-
Fixed-period annuities. If your annuity doesn't de- cers). The entire $1,200 is taxable. You include $1,200
pend in whole or in part on anyone's life expectancy, the only on Form 1040 or 1040-SR, line 5b.
total number of expected monthly payments to enter on
line 3 of the worksheet is the number of monthly annuity Joint return. If you file a joint return and you and your
payments under the contract. spouse each receive one or more pensions or annuities,
report the total of the pensions and annuities on line 5a of
Line 6. The amount on line 6 should include all Form 1040, 1040-SR, or 1040-NR. Report the total of the
amounts that could have been recovered in prior years. If taxable parts on line 5b of Form 1040, 1040-SR, or
you didn't recover an amount in a prior year, you may be 1040-NR.
able to amend your returns for the affected years.
Form 1099-R. You should receive a Form 1099-R for
Be sure to keep a copy of the completed work-
your pension or annuity. Form 1099-R shows your pension
TIP sheet; it will help you figure your taxable annuity in or annuity for the year and any income tax withheld. You
later years.
should receive a Form W-2, Wage and Tax Statement, if
you receive distributions from certain nonqualified plans.
Example. Kris Smith, age 65, began receiving retire-
ment benefits in 2023, under a joint and survivor annuity. You must attach Forms 1099-R or Forms W-2 to
Kris' annuity starting date is January 1, 2023. The benefits ! your 2023 tax return if federal income tax was
are to be paid over the joint lives of Kris and their spouse, CAUTION withheld. Generally, you should be sent these
Pat, age 65. Kris had contributed $31,000 to a qualified forms by January 31, 2024.
plan and had received no distributions before the annuity
starting date. Kris is to receive a retirement benefit of Nonperiodic Distributions
$1,200 a month, and Pat is to receive a monthly survivor
benefit of $600 upon Kris' death. If you receive a nonperiodic distribution from your retire-
ment plan, you may be able to exclude all or part of it from

Publication 554 (2023) Chapter 2 Taxable and Nontaxable Income 9

- 10 -

Page 10 of 37 Fileid: … tions/p554/2023/a/xml/cycle06/source 14:46 - 18-Jan-2024

The type and rule above prints on all proofs including departmental reproduction proofs. MUST be removed before printing.

your income as a recovery of your cost. Nonperiodic distri- General exceptions to tax. There are a number of ex-
butions include cash withdrawals, distributions of current ceptions to the early distribution tax. Some general excep-
earnings (dividends) on your investment, and certain tions include, but are not limited to, distributions:
loans. For information on how to figure the taxable amount
• Made as part of a series of substantially equal peri-
of a nonperiodic distribution, see Taxation of Nonperiodic
odic payments (made at least annually) for your life (or
Payments in Pub. 575.
life expectancy) or the joint lives (or joint life expectan-
The taxable part of a nonperiodic distribution may cies) of you and your designated beneficiary (if from a
! be subject to an additional 10% tax. See Tax on qualified retirement plan, the payments must begin af-
CAUTION Early Distributions, later. ter separation from service),
• Made because you are totally and permanently disa-
Lump-sum distributions. If you receive a lump-sum dis- bled,
tribution from a qualified employee plan or qualified em-
ployee annuity and the plan participant was born before • Made on or after the death of the plan participant or
January 2, 1936, you may be able to elect optional meth- contract holder, or
ods of figuring the tax on the distribution. The part from • Made because you separated from service in or after
active participation in the plan before 1974 may qualify as the year you reach age 55.
capital gain subject to a 20% tax rate. The part from par-
ticipation after 1973 (and any part from participation be- Reporting tax. If you owe the tax on early distributions,
fore 1974 that you don't report as capital gain) is ordinary you must generally attach Form 5329, Additional Taxes on
income. You may be able to use the 10-year tax option Qualified Plans (Including IRAs) and Other Tax-Favored
(explained in Pub. 575) to figure tax on the ordinary in- Accounts, to your 2023 income tax return. If you don’t
come part. have to file a 2023 income tax return, you may file Form
5329 by itself. See the Instructions for Form 5329. In addi-
Form 1099-R. If you receive a total distribution from a tion, you don’t have to attach Form 5329 to your income
plan, you should receive a Form 1099-R. If the distribution tax return if distribution code 1 (early distribution, no
qualifies as a lump-sum distribution, box 3 shows the capi- known exception) is correctly shown in box 7 of all your
tal gain part of the distribution. The amount in box 2a, Tax- Forms 1099-R, and you owe the additional tax on each
able amount, minus the amount in box 3, Capital gain, is Form 1099-R. Instead, multiply the taxable part of the
the ordinary income part. early distribution by 10% (0.10), or 25% (0.25) if applica-
More information. For more detailed information on ble, and enter the result on Schedule 2 (Form 1040),
lump-sum distributions, see Pub. 575 or Form 4972, Tax line 8. See the instructions for Schedule 2 (Form 1040),
on Lump-Sum Distributions. line 8, for more information about reporting the early distri-
bution tax.
Tax on Early Distributions
Tax on Excess Accumulation
Most distributions you receive from your qualified retire-
ment plan and nonqualified annuity contracts before you To make sure that most of your retirement benefits are
reach age 59 / are subject to an additional tax of 10%. 1 2 paid to you during your lifetime, rather than to your benefi-
The tax applies to the taxable part of the distribution. ciaries after your death, the payments that you receive
from qualified retirement plans must begin no later than
For this purpose, a qualified retirement plan is: your required beginning date. Unless the rule for 5% own-
• A qualified employee plan (including a qualified cash ers applies, this is generally April 1 of the year that follows
or deferred arrangement (CODA) under Internal Reve- the later of:
nue Code section 401(k)), • The calendar year in which you reach age 73, or
• A qualified employee annuity plan, • The calendar year in which you retire from employ-
• A tax-sheltered annuity plan (section 403(b) plan), ment with the employer maintaining the plan.
• An eligible state or local government section 457 de- However, your plan may require you to begin to receive
ferred compensation plan (to the extent that any distri- payments by April 1 of the year that follows the year in
bution is attributable to amounts the plan received in a which you reach age 73, even if you haven't retired.
direct transfer or rollover from one of the other plans
listed here or an IRA), or For this purpose, a qualified retirement plan includes:
• An IRA. • A qualified employee plan,
You may have to pay a 25%, rather than a 10%, • A qualified employee annuity plan,
! additional tax if you receive distributions from a • An eligible section 457 deferred compensation plan,
CAUTION SIMPLE IRA before you are age 59 / . See Pub. 1 2
560. • A tax-sheltered annuity plan (section 403(b) plan) (for
benefits accruing after 1986), or
• An IRA.

10 Chapter 2 Taxable and Nontaxable Income Publication 554 (2023)

- 11 -

Page 11 of 37 Fileid: … tions/p554/2023/a/xml/cycle06/source 14:46 - 18-Jan-2024

The type and rule above prints on all proofs including departmental reproduction proofs. MUST be removed before printing.

An excess accumulation is the undistributed re- If you make this election, reduce the otherwise taxable
TIP mainder of the required minimum distribution that amount of your pension or annuity by the amount exclu-
was left in your qualified retirement plan. ded. The taxable amount shown in box 2a of any Form
1099-R that you receive doesn't reflect the exclusion. Re-
5% owners. If you are a 5% owner, see Pub. 575 for port your total distributions on Form 1040, 1040-SR, or
more information on distribution dates. 1040-NR, line 5a. Report the taxable amount on Form
1040, 1040-SR, or 1040-NR, line 5b. Enter “PSO” next to
Amount of tax. If you don't receive the required minimum the appropriate line on which you report the taxable
distribution, you may be subject to an additional tax. See amount.
Pub. 590-B and the Instructions for Form 5329 for more in-
formation. Railroad Retirement Benefits

Form 5329. You must file a Form 5329 if you owe a tax Benefits paid under the Railroad Retirement Act fall into
because you didn't receive a minimum required distribu- two categories. These categories are treated differently for
tion from your qualified retirement plan. income tax purposes.

Additional information. For more detailed information Social security equivalent benefits. The first category
on the tax on excess accumulation, see Pub. 575. is the amount of tier 1 railroad retirement benefits that
equals the social security benefit that a railroad employee
Insurance Premiums for Retired Public or beneficiary would have been entitled to receive under
Safety Officers the social security system. This part of the tier 1 benefit is
the social security equivalent benefit (SSEB) and is trea-
If you are an eligible retired public safety officer (law en- ted for tax purposes like social security benefits. (See So-
forcement officer, firefighter, chaplain, or member of a res- cial Security and Equivalent Railroad Retirement Benefits,
cue squad or ambulance crew who is retired because of later.)
disability or because you reached normal retirement age),
you can elect to exclude from income distributions made Non-social security equivalent benefits. The second
from your eligible retirement plan that are used to pay the category contains the rest of the tier 1 benefits, called the
premiums for coverage by an accident or health plan or a non-social security equivalent benefit (NSSEB). It also
long-term care insurance contract. The premiums can be contains any tier 2 benefit, vested dual benefit (VDB), and
for coverage for you, your spouse, or dependent(s). The supplemental annuity benefit. This category of benefits is
distribution must be from the plan maintained by the em- treated as an amount received from a qualified employee
ployer from which you retired as a public safety officer. plan. This allows for the tax-free (nontaxable) recovery of
The distribution can be made directly from the plan to the employee contributions from the tier 2 benefits and the
provider of the accident or health plan or long-term care NSSEB part of the tier 1 benefits. VDBs and supplemental
insurance contract, or the distribution can be made to you annuity benefits are non-contributory pensions and are
to pay to the provider of the accident or health plan or fully taxable.
long-term care insurance contract. You can exclude from
income the lesser of the amount of the premiums paid or More information. For more information about railroad
$3,000. You can make this election only for amounts that retirement benefits, see Pub. 575.
would otherwise be included in your income. The amount
excluded from your income can't be used to claim a medi- Military Retirement Pay
cal expense deduction.
Military retirement pay based on age or length of service
An eligible retirement plan is a governmental plan that is taxable and must be included in income as a pension
is a: on Form 1040, 1040-SR, or 1040-NR, lines 5a and 5b.
But, certain military and government disability pensions
• Qualified trust, that are based on a percentage of disability from active
• Section 403(a) plan, service in the U.S. Armed Forces of any country generally
aren't taxable. For more information, including information
• Section 403(b) annuity, or
about veterans' benefits and insurance, see Pub. 525.
• Section 457(b) plan.
If you received a distribution from your eligible re-
! tirement plan, and you used part of that distribu- Social Security and Equivalent
CAUTION tion to pay premiums for an accident or health
plan or long-term care insurance contract, you can still ex- Railroad Retirement Benefits
clude from income only the lesser of the amount of the
premiums paid or $3,000. The rest of the distribution is This discussion explains the federal income tax rules for
taxable to you and should be reported as follows. social security benefits and equivalent tier 1 railroad retire-
ment benefits.

Publication 554 (2023) Chapter 2 Taxable and Nontaxable Income 11

- 12 -

Page 12 of 37             Fileid: … tions/p554/2023/a/xml/cycle06/source                         14:46 - 18-Jan-2024

The type and rule above prints on all proofs including departmental reproduction proofs. MUST be removed before printing.

Social security benefits include monthly retirement, sur-           If that total amount is more than your base amount, part of 
vivor,  and  disability  benefits.  They  don't  include  supple-   your benefits may be taxable.
mental security income (SSI) payments, which aren't taxa-
ble.                                                                If you are married and file a joint return for 2023, you 
                                                                    and  your  spouse  must  combine  your  incomes  and  your 
Equivalent tier 1 railroad retirement benefits are the part         benefits to figure whether any of your combined benefits 
of  tier  1  benefits  that  a  railroad  employee  or  beneficiary are taxable. Even if your spouse didn't receive any bene-
would have been entitled to receive under the social se-            fits, you must add your spouse's income to yours to figure 
curity system. They are commonly called the social secur-           whether any of your benefits are taxable.
ity equivalent benefit (SSEB) portion of tier 1 benefits.
                                                                            If the only income you received during 2023 was 
If you received these benefits during 2023, you should 
                                                                    TIP     your social security or the SSEB portion of tier 1 
have  received  a  Form  SSA-1099  or  Form  RRB-1099 
                                                                            railroad  retirement  benefits,  your  benefits  gener-
(Form SSA-1042S or Form RRB-1042S if you are a non-
                                                                    ally aren't taxable and you probably don't have to file a re-
resident alien) showing the amount of the benefits.
                                                                    turn. If you have income in addition to your benefits, you 
                                                                    may have to file a return even if none of your benefits are 
Social Security Information                                         taxable.
Obtaining social security information.         Social security 
beneficiaries may quickly and easily obtain various infor-
mation from the SSA's website with a   my Social Security           Base Amount
account to:
                                                                    Your base amount is:
•  Keep track of your earnings and verify them every 
   year,                                                            • $25,000 if you are single, head of household, or quali-
                                                                      fying surviving spouse;
•  Get an estimate of your future benefits if you are still 
   working,                                                         • $25,000 if you are married filing separately and lived 
                                                                      apart from your spouse for all of 2023;
•  Get a letter with proof of your benefits if you currently 
   receive them,                                                    • $32,000 if you are married filing jointly; or
•  Change your address,                                             • $0 if you are married filing separately and lived with 
                                                                      your spouse at any time during 2023.
•  Start or change your direct deposit,
•  Get a replacement Medicare card, and                             Repayment of Benefits
•  Get a replacement SSA-1099 or SSA-1042S for the 
   tax season.                                                      Any repayment of benefits you made during 2023 must be 
                                                                    subtracted from the gross benefits you received in 2023. It 
For more information and to set up an account, go to 
                                                                    doesn't  matter  whether  the  repayment  was  for  a  benefit 
SSA.gov/myaccount.
                                                                    you  received  in  2023  or  in  an  earlier  year.  If  you  repaid 
                                                                    more  than  the  gross  benefits  you  received  in  2023,  see 
Are Any of Your Benefits Taxable?                                   Repayments More Than Gross Benefits, later.
Note.    When the term “benefits” is used in this section, 
                                                                    Your  gross  benefits  are  shown  in  box  3  of  Form 
it  applies  to  both  social  security  benefits  and  the  SSEB 
                                                                    SSA-1099  or  Form  RRB-1099.  Your  repayments  are 
portion of tier 1 railroad retirement benefits.
                                                                    shown in box 4. The amount in box 5 shows your net ben-
To find out whether any of your benefits may be taxable,            efits  for  2023  (box  3  minus  box  4).  Use  the  amount  in 
compare the base amount for your filing status (explained           box 5 to figure whether any of your benefits are taxable.
later) with the total of:
                                                                    Tax Withholding and Estimated Tax
•  One-half of your benefits; plus
•  All your other income, including tax-exempt interest.            You can choose to have federal income tax withheld from 
When making this comparison, don't reduce your other                your social security and/or the SSEB portion of your tier 1 
income by any exclusions for:                                       railroad retirement benefits. If you choose to do this, you 
                                                                    must  complete  a  Form  W-4V,  Voluntary  Withholding  Re-
•  Interest from qualified U.S. savings bonds,                      quest.
•  Employer-provided adoption benefits,
                                                                    If  you  don't  choose  to  have  income  tax  withheld,  you 
•  Foreign earned income or foreign housing, or
                                                                    may have to request additional withholding from other in-
•  Income earned in American Samoa or Puerto Rico by                come,  or  pay  estimated  tax  during  the  year.  For  details, 
   bona fide residents.                                             see Pub. 505, or the Instructions for Form 1040-ES, Esti-
                                                                    mated Tax for Individuals.
Figuring total income.   To figure the total of one-half of 
your benefits plus your other income, use Worksheet 2-A. 

12                                Chapter 2    Taxable and Nontaxable Income                     Publication 554 (2023)

- 13 -

Page 13 of 37             Fileid: … tions/p554/2023/a/xml/cycle06/source                                                                           14:46 - 18-Jan-2024

The type and rule above prints on all proofs including departmental reproduction proofs. MUST be removed before printing.

Worksheet 2-A.       A Quick Way To Check if Your Benefits May 
Be Taxable                                                                                    Keep for Your Records
A. Enter the amount from box 5 of all your Forms SSA-1099 and RRB-1099. Include 
   the full amount of any lump-sum benefit payments received in 2023, for 2023 and 
   earlier years. (If you received more than one form, combine the amounts from box 5 
   and enter the total.)  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  A.   
   Note. If the amount on line A is zero or less, stop here; none of your benefits are 
   taxable this year.
B. Enter one-half of the amount on line A  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .               B.   
C. Enter your taxable pensions, wages, interest, dividends, and other taxable income . . . . . . . .                                               C.   
D. Enter any tax-exempt interest income (such as interest on municipal bonds) plus any 
   exclusions from income for:
   • Interest from qualified U.S. savings bonds,
   • Employer-provided adoption benefits,
   • Foreign earned income or foreign housing, or
   • Income earned in American Samoa or Puerto Rico by bona fide residents . . . . . . . . . . . . . .                                              D.  
E. Add lines B, C, and D and enter the total  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                 E.  
F. If you are:
   • Married filing jointly, enter $32,000;
   • Single, head of household, qualifying surviving spouse, or married filing separately and 
   you lived apart from your spouse for all of 2023, enter $25,000; or
   • Married filing separately and you lived with your spouse at any time during 2023,
   enter -0- . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  F.  
G. Is the amount on line F less than or equal to the amount on line E?
          No.  None of your benefits are taxable this year.
          Yes. Some of your benefits may be taxable. To figure how much of your benefits 
          are taxable, see Which worksheet to use under How Much Is Taxable.

How Much Is Taxable?                                                  Pub. 590-A to figure both your IRA deduction and your 
                                                                      taxable benefits.
If part of your benefits is taxable, how much is taxable de-
                                                               2. Situation (1) doesn't apply and you take one or more 
pends on the total amount of your benefits and other in-
                                                                      of the following exclusions.
come. Generally, the higher that total amount, the greater 
the taxable part of your benefits.                                    • Interest from qualified U.S. savings bonds (Form 
                                                                        8815, Exclusion of Interests From Series EE and I 
Maximum taxable part.    The taxable part of your benefits              U.S. Savings Bonds Issued After 1989).
usually can't be more than 50%. However, up to 85% of 
your benefits can be taxable if either of the following situa-        • Employer-provided adoption benefits (Form 8839, 
                                                                        Qualified Adoption Expenses).
tions applies to you.
•  The total of one-half of your benefits and all your other          • Foreign earned income or housing (Form 2555, 
                                                                        Foreign Earned Income).
   income is more than $34,000 ($44,000 if you are mar-
   ried filing jointly).                                              • Income earned in American Samoa (Form 4563, 
                                                                        Exclusion of Income for Bona Fide Residents of 
•  You are married filing separately and lived with your 
                                                                        American Samoa) or Puerto Rico by bona fide 
   spouse at any time during 2023.
                                                                        residents.
If you are a nonresident alien, 85% of your benefits are              In  these  situations,  you  must  use  Worksheet  1  in 
taxable. However, this income is exempt under some tax                Pub. 915, to figure your taxable benefits.
treaties.
                                                               3. You received a lump-sum payment for an earlier year. 
Which  worksheet  to  use. A  worksheet  to  figure  your             In this situation, also complete Worksheet 2 or 3 and 
taxable benefits is in the Instructions for Form 1040. How-           Worksheet 4 in Pub. 915. See Lump-Sum Election, 
ever, you will need to use a different worksheet(s) if any of         later.
the following situations applies to you.
1. You contributed to a traditional IRA and you or your        How To Report Your Benefits
   spouse were covered by a retirement plan at work. In 
                                                               If part of your benefits is taxable, you must use Form 1040, 
   this situation, you must use the special worksheets in 
                                                               1040-SR, or 1040-NR.

Publication 554 (2023)             Chapter 2     Taxable and Nontaxable Income                                                                         13

- 14 -

Page 14 of 37 Fileid: … tions/p554/2023/a/xml/cycle06/source 14:46 - 18-Jan-2024

The type and rule above prints on all proofs including departmental reproduction proofs. MUST be removed before printing.

Reporting on Form 1040 or 1040-SR. Report your net se's form. You do this to get your net benefits when figur-
benefits (the amount in box 5 of your Form SSA-1099 or ing if your combined benefits are taxable.
Form RRB-1099) on line 6a and the taxable part on
line 6b. If you are married filing separately and you lived Repayment of benefits received in an earlier year. If
apart from your spouse for all of 2023, also enter “D” to the the total amount shown in box 5 of all of your Forms
right of the word “benefits” on line 6a. SSA-1099 and RRB-1099 is a negative figure, you may be
able to take an itemized deduction for the part of this neg-
Reporting on Form 1040-NR. Report 85% of the total ative figure that represents benefits you included in gross
amount of your benefits (box 5 of your Form SSA-1042S income in an earlier year.
or Form RRB-1042S) in the appropriate column of Sched- The deduction must be more than $3,000 and you have
ule NEC (Form 1040-NR), line 8. to follow some special instructions. See Pub. 915 for those
instructions.
Benefits not taxable. Report your net benefits (the
amount in box 5 of your Form SSA-1099 or Form
RRB-1099) on Form 1040 or 1040-SR, line 6a. Enter -0-
on Form 1040 or 1040-SR, line 6b. If you are married filing Sickness and Injury Benefits
separately and you lived apart from your spouse for all of
2023, also enter “D” to the right of the word “benefits” on Generally, you must report as income any amount you re-
Form 1040 or 1040-SR, line 6a. ceive for personal injury or sickness through an accident
or health plan that is paid for by your employer. If both you
and your employer pay for the plan, only the amount you
Lump-Sum Election receive that is due to your employer's payments is repor-
ted as income. However, certain payments may not be
You must include the taxable part of a lump-sum (retroac- taxable to you. Some of these payments are discussed
tive) payment of benefits received in 2023 in your 2023 in- later in this section. Also, see Military and Government
come, even if the payment includes benefits for an earlier Disability Pensions and Other Sickness and Injury Bene-
year. fits in Pub. 525.
This type of lump-sum benefit payment shouldn't
TIP be confused with the lump-sum death benefit that Cost paid by you. If you pay the entire cost of an acci-
both the SSA and Railroad Retirement Board dent or health plan, don't include any amounts you receive
(RRB) pay to many of their beneficiaries. No part of the from the plan for personal injury or sickness as income on
lump-sum death benefit is subject to tax. For more infor- your tax return. If your plan reimbursed you for medical ex-
mation about the lump-sum death benefit, visit the SSA penses you deducted in an earlier year, you may have to
website at SSA.gov, and use keyword: “death benefit.” include some, or all, of the reimbursement in your income.

Generally, you use your 2023 income to figure the taxa- Disability Pensions
ble part of the total benefits received in 2023. However,
you may be able to figure the taxable part of a lump-sum If you retired on disability, you must include in income any
payment for an earlier year separately, using your income disability pension you receive under a plan that is paid for
for the earlier year. You can elect this method if it lowers by your employer. You must report your taxable disability
your taxable benefits. See Pub. 915 for more information. payments as wages on Form 1040, 1040-SR, or 1040-NR,
line 1h, until you reach minimum retirement age. Minimum
retirement age is generally the age at which you can first
Repayments More Than Gross receive a pension or annuity if you aren't disabled.
Benefits If you were age 65 or older by the end of 2023 or
TIP you were retired on permanent and total disability
In some situations, your Form SSA-1099 or Form
and received taxable disability income, you may
RRB-1099 will show that the total benefits you repaid
be able to claim the credit for the elderly or the disabled.
(box 4) are more than the gross benefits (box 3) you re-
See Credit for the Elderly or the Disabled, later. For more
ceived. If this occurred, your net benefits in box 5 will be a
information on this credit, see Pub. 524.
negative figure (a figure in parentheses) and none of your
benefits will be taxable. If you receive more than one form, Beginning on the day after you reach minimum retire-
a negative figure in box 5 of one form is used to offset a ment age, payments you receive are taxable as a pension
positive figure in box 5 of another form for that same year. or annuity. Report the payments on Form 1040, 1040-SR,
If you have any questions about this negative figure, or 1040-NR, lines 5a and 5b. For more information on
contact your local SSA office or your local U.S. RRB field pensions and annuities, see Pub. 575.
office.
Note. Don’t include in your income disability payments
Joint return. If you and your spouse file a joint return, you receive for injuries incurred as a direct result of terro-
and your Form SSA-1099 or RRB-1099 has a negative fig- rist attacks or military action directed against the United
ure in box 5 but your spouse's doesn't, subtract the box 5 States (or its allies), whether outside or within the United
amount on your form from the box 5 amount on your spou-

14 Chapter 2 Taxable and Nontaxable Income Publication 554 (2023)

- 15 -

Page 15 of 37 Fileid: … tions/p554/2023/a/xml/cycle06/source 14:46 - 18-Jan-2024

The type and rule above prints on all proofs including departmental reproduction proofs. MUST be removed before printing.

States. For more information, see Terrorist attacks in Pub. pay for sick leave while a claim is being processed is taxa-
525. ble and must be included in your income as wages.
Retirement and profit-sharing plans. If you receive If part of the payments you receive under FECA
payments from a retirement or profit-sharing plan that ! reduces your social security or equivalent railroad
doesn't provide for disability retirement, don't treat the CAUTION retirement benefits, that part is considered social
payments as a disability pension. The payments must be security (or equivalent railroad retirement) benefits and
reported as a pension or annuity. may be taxable. For a discussion of the taxability of these
benefits, see Social Security and Equivalent Railroad Re-
Accrued leave payment. If you retire on disability, any tirement Benefits, earlier.
lump-sum payment you receive for accrued annual leave
is a salary payment. The payment isn't a disability pay- Other compensation. Many other amounts you receive
ment. Include it in your income in the tax year you receive as compensation for sickness or injury aren't taxable.
it. These include the following amounts.
• Benefits you receive under an accident or health insur-
Long-Term Care Insurance Contracts ance policy on which either you paid the premiums or
your employer paid the premiums but you had to in-
In most cases, long-term care insurance contracts are clude the amount of employer-paid premiums in your
treated as accident and health insurance contracts. income.
Amounts you receive from them (other than policyholder
dividends or premium refunds) are generally excludable • Compensatory damages you receive for physical in-
from income as amounts received for personal injury or jury or physical sickness, whether paid in a lump sum
sickness. However, the amount you can exclude may be or in periodic payments.
limited. Long-term care insurance contracts are discussed • Disability benefits you receive for loss of income or
in more detail in Pub. 525. earning capacity as a result of injuries under a no-fault
car insurance policy.
Workers' Compensation • Compensation you receive for permanent loss or loss
of use of a part or function of your body, for your per-
Amounts you receive as workers' compensation for an oc-
manent disfigurement, or for such loss or disfigure-
cupational sickness or injury are fully exempt from tax if
ment suffered by your spouse or dependent(s). This
they are paid under a workers' compensation act or a stat-
compensation must be based only on the injury and
ute in the nature of a workers' compensation act. The ex-
not on the period of your absence from work. These
emption also applies to your survivors. The exemption,
benefits aren't taxable even if your employer pays for
however, doesn't apply to retirement plan benefits you re-
the accident and health plan that provides these bene-
ceive based on your age, length of service, or prior contri-
fits.
butions to the plan, even if you retired because of an occu-
pational sickness or injury.
If part of your workers' compensation reduces
Life Insurance Proceeds
! your social security or equivalent railroad retire-
CAUTION ment benefits, that part is considered social se-
Life insurance proceeds paid to you because of the death
curity (or equivalent railroad retirement) benefits and may of the insured person aren't taxable unless the policy was
be taxable. For a discussion of the taxability of these ben- turned over to you for a price. This is true even if the pro-
efits, see Social Security and Equivalent Railroad Retire- ceeds were paid under an accident or health insurance
ment Benefits, earlier. policy or an endowment contract issued on or before De-
cember 31, 1984. However, interest income received as a
Return to work. If you return to work after qualifying for result of life insurance proceeds may be taxable.
workers' compensation, salary payments you receive for
performing light duties are taxable as wages. Proceeds not received in installments. If death bene-
fits are paid to you in a lump sum or other than at regular
Other Sickness and Injury Benefits intervals, include in your income only the benefits that are
more than the amount payable to you at the time of the in-
In addition to disability pensions and annuities, you may sured person's death. If the benefit payable at death isn't
receive other payments for sickness or injury. specified, include in your income the benefit payments
that are more than the present value of the payments at
Federal Employees' Compensation Act (FECA). Pay- the time of death.
ments received under this Act for personal injury or sick-
ness, including payments to beneficiaries in case of Proceeds received in installments. If you receive life
death, aren't taxable. However, you are taxed on amounts insurance proceeds in installments, you can exclude part
you receive under this Act as continuation of pay for up to of each installment from your income.
45 days while a claim is being decided. Report this in- To determine the excluded part, divide the amount held
come on Form 1040, 1040-SR, or 1040-NR, line 1a. Also, by the insurance company (generally, the total lump-sum

Publication 554 (2023) Chapter 2 Taxable and Nontaxable Income 15

- 16 -

Page 16 of 37 Fileid: … tions/p554/2023/a/xml/cycle06/source 14:46 - 18-Jan-2024

The type and rule above prints on all proofs including departmental reproduction proofs. MUST be removed before printing.

payable at the death of the insured person) by the number qualified long-term care services are fully excludable. Ac-
of installments to be paid. Include anything over this exclu- celerated death benefits paid on a per diem or other peri-
ded part in your income as interest. odic basis without regard to the costs are excludable up to
a limit.
Installments for life. If, as the beneficiary under an in-
surance contract, you are entitled to receive the proceeds In addition, if any portion of a death benefit under a life
in installments for the rest of your life without a refund or insurance contract on the life of a terminally or chronically
period-certain guarantee, figure the excluded part of each ill individual is sold or assigned to a viatical settlement
installment by dividing the amount held by the insurance provider, the amount received is also excluded from in-
company by your life expectancy. If there is a refund or pe- come. Generally, a viatical settlement provider is one who
riod-certain guarantee, the amount held by the insurance regularly engages in the business of buying or taking as-
company for this purpose is reduced by the actuarial value signment of life insurance contracts on the lives of insured
of the guarantee. individuals who are terminally or chronically ill.
Surviving spouse. If your spouse died before Octo- To report taxable accelerated death benefits made on a
ber 23, 1986, and insurance proceeds paid to you be- per diem or other periodic basis, you must file Form 8853,
cause of the death of your spouse are received in install- Archer MSAs and Long-Term Care Insurance Contracts,
ments, you can exclude, in any year, up to $1,000 of the with your return.
interest included in the installments. If you remarry, you
can continue to take the exclusion. Terminally or chronically ill defined. A terminally ill
person is one who has been certified by a physician as
Surrender of policy for cash. If you surrender a life in- having an illness or physical condition that can reasonably
surance policy for cash, you must include in income any be expected to result in death within 24 months from the
proceeds that are more than the cost of the life insurance date of the certification. A chronically ill person is one who
policy. In general, your cost (or investment in the contract) isn't terminally ill but has been certified (within the previ-
is the total of premiums that you paid for the life insurance ous 12 months) by a licensed health care practitioner as
policy, less any refunded premiums, rebates, dividends, or meeting either of the following conditions.
unrepaid loans that weren't included in your income. You
should receive a Form 1099-R showing the total proceeds • The person is unable to perform (without substantial
and the taxable part. Report these amounts on Form help) at least two activities of daily living (eating, toilet-
1040, 1040-SR, or 1040-NR, lines 5a and 5b. ing, transferring, bathing, dressing, and continence)
for a period of 90 days or more because of a loss of
functional capacity.
Endowment Contract Proceeds
• The person requires substantial supervision to protect
An endowment contract is a policy that pays you a speci- themselves from threats to health and safety due to
fied amount of money on a certain date unless you die be- severe cognitive impairment.
fore that date, in which case the money is paid to your
designated beneficiary. Endowment proceeds paid in a Exception. The exclusion doesn't apply to any amount
lump sum to you at maturity are taxable only if the pro- paid to a person other than the insured if that other person
ceeds are more than the cost of the policy. To determine has an insurable interest in the life of the insured because
your cost, subtract from the total premiums (or other con- the insured:
sideration) paid for the contract any amount that you previ- • Is a director, officer, or employee of the other person;
ously received under the contract and excluded from your or
income. Include in your income the part of the lump-sum
payment that is more than your cost. • Has a financial interest in the business of the other
person.
Endowment proceeds that you choose to receive in in-
stallments instead of a lump-sum payment at the maturity
of the policy are taxed as an annuity. The tax treatment of
an annuity is explained in Pub. 575. For this treatment to Sale of Home
apply, you must choose to receive the proceeds in install-
You may be able to exclude from income any gain up to
ments before receiving any part of the lump sum. This
$250,000 ($500,000 on a joint return in most cases) on
election must be made within 60 days after the lump-sum
the sale of your main home. Generally, if you can exclude
payment first becomes payable to you.
all of the gain, you don't need to report the sale on your tax
return. You can choose not to take the exclusion by includ-
Accelerated Death Benefits ing the gain from the sale in your gross income on your tax
return for the year of the sale.
Certain amounts paid as accelerated death benefits under
a life insurance contract or viatical settlement before the Main home. Usually, your main home is the home you
insured's death are generally excluded from income if the live in most of the time and can be a:
insured is terminally or chronically ill. However, see Ex-
ception, later. For a chronically ill individual, accelerated • House,
death benefits paid on the basis of costs incurred for • Houseboat,

16 Chapter 2 Taxable and Nontaxable Income Publication 554 (2023)

- 17 -

Page 17 of 37 Fileid: … tions/p554/2023/a/xml/cycle06/source 14:46 - 18-Jan-2024

The type and rule above prints on all proofs including departmental reproduction proofs. MUST be removed before printing.

• Mobile home, Exception to use test for individuals with a disability.
There is an exception to the use test if, during the 5-year
• Cooperative apartment, or
period before the sale of your home:
• Condominium.
• You become physically or mentally unable to care for
Repaying the first-time homebuyer credit. If you pur- yourself, and
chased your home in 2008 and claimed the first-time • You owned and lived in your home as your main home
homebuyer credit, you must continue repaying the credit for a total of at least 1 year.
with your 2023 tax return. If you are required to repay the
If you qualify for this exception, you are considered to live
credit because you sold the home or it otherwise ceased
in your home during any time that you own the home and
to be your main home in 2023, you must generally repay
live in a facility (including a nursing home) that is licensed
the balance of the unpaid credit with your 2023 return.
by a state or political subdivision to care for persons in
See the Instructions for Form 5405, Repayment of the
your condition.
First-Time Homebuyer Credit, for more information and
If you meet this exception to the use test, you still have
exceptions.
to meet the 2-out-of-5-year ownership test to claim the ex-
clusion.
Maximum Amount of Exclusion
Exception to ownership test for property acquired in
You can generally exclude up to $250,000 of the gain a like-kind exchange. If you acquired your main home in
(other than gain allocated to periods of nonqualified use) a like-kind exchange, you must own the home for 5 years
on the sale of your main home if all of the following are before you qualify for the exclusion. This special 5-year
true. ownership rule continues to apply to the home even if you
• You meet the ownership test. give it to another person. A like-kind exchange is an ex-
change of property held for productive use in a trade or
• You meet the use test. business or for investment in which no gain or loss is rec-
• During the 2-year period ending on the date of the ognized. See Pub. 523 for more information.
sale, you didn't exclude gain from the sale of another
home. Period of nonqualified use. Generally, the gain from the
sale or exchange of your main home won't qualify for the
Joint returns. You may be able to exclude up to exclusion to the extent that the gain is allocated to periods
$500,000 of the gain (other than gain allocated to periods of nonqualified use. Nonqualified use is any period after
of nonqualified use) on the sale of your main home if you December 31, 2008, during which the property isn't used
are married and file a joint return and meet the require- as the main home. See Pub. 523 for more information.
ments listed in the discussion of the special rules for joint
returns, later, under Married Persons. Married Persons

Reduced exclusion. Even if you don't meet the require- Generally, if the home you sold counts as your main home
ments described above, you can still claim an exclusion in and you are a married person filing separately, the first
some cases. Generally, you must have sold the home due $250,000 of gain isn't taxable if all of the following are true.
to a change in place of employment, health, or unforeseen
circumstances. The maximum amount you can exclude • You meet the ownership test.
will be reduced. See Pub. 523 for more information. • You meet the use test.
Expatriation tax. You can't exclude gain from the sale of • During the 2-year period ending on the date of the
your home if you are subject to the expatriation tax. See sale, you didn’t exclude gain from the sale of another
Pub. 519 for more information about the expatriation tax. home.
You may be able to exclude up to $500,000 of the gain
Ownership and Use Tests (other than gain allocated to periods of nonqualified use)
on the sale of your main home if you are married and file a
To claim the exclusion, you must meet the ownership and joint return and meet the requirements for joint returns dis-
use tests. These tests generally require that during the cussed under Special rules for joint returns next.
5-year period ending on the date of the sale, you must
have: Special rules for joint returns. You can exclude up to
$500,000 of the gain on the sale of your main home if all of
• Owned the home for at least 2 years (the ownership
the following are true.
test), and
• Lived in the home as your main home for at least 2 • You are married and file a joint return for the year.
years (the use test). The 2 years of residence can fall • Either you or your spouse meets the ownership test.
anywhere within the 5-year period, and it doesn't need Both you and your spouse meet the use test.
•
to be a single block of time.

Publication 554 (2023) Chapter 2 Taxable and Nontaxable Income 17

- 18 -

Page 18 of 37 Fileid: … tions/p554/2023/a/xml/cycle06/source 14:46 - 18-Jan-2024

The type and rule above prints on all proofs including departmental reproduction proofs. MUST be removed before printing.

• During the 2-year period ending on the date of the • You have a loss from the sale that is deductible.
sale, neither you nor your spouse exclude gain from
A loss from the sale of your home, or the personal
the sale of another home.
part of your home if it was also used for business
Sale of home by surviving spouse. If your spouse died CAUTION! or to produce rental income, isn’t deductible.

and you didn't remarry before the date of sale, you are
considered to have owned and lived in the property as If any of the above apply, report the sale on Part I or
your main home during any period of time when your Part II of Form 8949 as a short-term or long-term transac-
spouse owned and lived in it as a main home. tion, depending on how long you owned the home. If you
If you meet all of the following requirements, you may used your home for business or to produce rental income,
qualify to exclude up to $500,000 of any gain from the sale you may have to use Form 4797, Sales of Business Prop-
or exchange of your main home in 2023. erty, to report the sale of the business or rental part. See
Pub. 523 for more information.
• The sale or exchange took place no more than 2 years
after the date of death of your spouse.
• You haven't remarried.
Reverse Mortgages
• You and your spouse met the use test at the time of
your spouse's death. A reverse mortgage is a loan where the lender pays you
(in a lump sum, a monthly advance, a line of credit, or a
• You or your spouse met the ownership test at the time
combination of all three) while you continue to live in your
of your spouse's death.
home. With a reverse mortgage, you retain title to your
• Neither you nor your spouse excluded gain from the home. Depending on the plan, your reverse mortgage be-
sale of another home during the last 2 years. comes due with interest when you move, sell your home,
reach the end of a pre-selected loan period, or die. Be-
Home transferred from spouse. If your home was cause reverse mortgages are considered loan advances
transferred to you by your spouse (or former spouse if the and not income, the amount you receive isn't taxable. Any
transfer was incident to divorce), you are considered to interest (including original interest discount) accrued on a
have owned it during any period of time when your spouse reverse mortgage isn’t deductible home mortgage inter-
owned it. est. See Pub. 936 for more information.
Use of home after divorce. You are considered to have
used property as your main home during any period when:
• You owned it, and Other Items

• Your spouse or former spouse is allowed to live in it The following items are generally excluded from taxable
under a divorce or separation instrument and uses it income. You shouldn't report them on your return, unless
as their main home. otherwise indicated as taxable or includible in income.

Gifts and inheritances. In most cases, property you re-
Business Use or Rental of Home
ceive as a gift, bequest, or inheritance isn't included in
your income. However, if property you receive this way
You may be able to exclude gain from the sale of a home
later produces income such as interest, dividends, or
that you have used for business or to produce rental in-
rents, that income is taxable to you. If property is given to
come. However, you must meet the ownership and use
a trust and the income from it is paid, credited, or distrib-
tests. See Pub. 523 for more information.
uted to you, that income is also taxable to you. If the gift,
Recapturing depreciation. If you used all or part of your bequest, or inheritance is the income from property, that
home for business or rental after May 6, 1997, you may income is taxable to you.
need to pay back (recapture) some or all of the deprecia-
Veterans' benefits. Don't include in your income any vet-
tion you were entitled to take on your property when you
erans' benefits paid under any law, regulation, or adminis-
sell it. See Pub. 523 for more information.
trative practice administered by the Department of Veter-
ans Affairs (VA). See Pub. 525.
Reporting the Sale
Public assistance benefits. Other items that are gener-
Don't report the 2023 sale of your main home on your tax ally excluded from taxable income also include the follow-
return unless: ing public assistance benefits.
• You received Form 1099-S, Proceeds From Real Es- Welfare benefits. Don't include in your income benefit
tate Transactions; payments from a public welfare fund based upon need,
such as payments due to blindness. However, you must
• You have a gain and you don't qualify to exclude all of
include in your income any welfare payments that are
it;
compensation for services or that are obtained fraudu-
• You have a gain and you choose not to exclude it; or lently.

18 Chapter 2 Taxable and Nontaxable Income Publication 554 (2023)

- 19 -

Page 19 of 37 Fileid: … tions/p554/2023/a/xml/cycle06/source 14:46 - 18-Jan-2024

The type and rule above prints on all proofs including departmental reproduction proofs. MUST be removed before printing.

Payments from a state fund for victims of crime. come tax depending on your filing status and other in-
Don't include in your income payments from a state fund come. See Social Security and Equivalent Railroad Retire-
for victims of crime if the payments are in the nature of ment Benefits, earlier, and Pub. 915 for more information.
welfare payments. Don't deduct medical expenses that
are reimbursed by such a fund.
Mortgage assistance payments. Payments made
under section 235 of the National Housing Act for mort-
gage assistance aren't included in the homeowner's in-
come. Interest paid for the homeowner under the mort- 3.
gage assistance program can't be deducted.
Also, mortgage payments provided under the Depart-
ment of Housing and Urban Development's Emergency Adjustments to Income
Homeowners' Loan Program (EHLP), state housing fi-
nance authorities receiving funds allocated from the Hous- You may be able to subtract amounts from your total in-
ing Finance Agency Innovation Fund for the Hardest-Hit come (Form 1040 or 1040-SR, line 9) or total effectively
Housing Markets (HFA Hardest Hit Fund), or other similar connected income (Form 1040-NR, line 9) to get your ad-
state programs receiving funding from the EHLP are ex- justed gross income (Form 1040, 1040-SR, or 1040-NR,
cluded from income. See Form 1098-MA, Mortgage As- line 11). Some adjustments to income follow.
sistance Payments, and its instructions for details. • Contributions to your IRA (Schedule 1 (Form 1040),
line 20), explained later.
Payments to reduce cost of winter energy use.
Payments made by a state to qualified people on the basis • Some health insurance costs (Schedule 1 (Form
of need to reduce their cost of winter energy use aren't 1040), line 17) if you were self-employed and had a
taxable. net profit for the year, or if you received wages in 2023
from an S corporation in which you were a
Nutrition Program for the Elderly. Food benefits you
more-than-2% shareholder.
receive under the Nutrition Program for the Elderly aren't
taxable. If you prepare and serve free meals for the pro- • Payments to your self-employed SEP, SIMPLE, or
gram, include in your income as wages the cash pay you qualified plan (Schedule 1 (Form 1040), line 16). For
receive, even if you are also eligible for food benefits. more information, including limits on how much you
can deduct, see Pub. 560.
Reemployment Trade Adjustment Assistance
(RTAA). Payments you receive from a state agency under • Penalties paid on early withdrawal of savings (Sched-
RTAA must be included in your income. The state must ule 1 (Form 1040), line 18). Form 1099-INT, Interest
send you Form 1099-G, Certain Government Payments, to Income, or Form 1099-OID, Original Issue Discount,
advise you of the amount you should include in income. will show the amount of any penalty you were
The amount should be reported on Schedule 1 (Form charged.
1040), line 8z. • Alimony payments (Schedule 1 (Form 1040),
line 19a). Certain conditions may apply for your ali-
Persons with disabilities. If you have a disability, in-
mony payment to be deductible from income. For
clude in income compensation you receive for services
more information, see Pub. 504.
you perform unless the compensation is otherwise exclu-
ded. However, don't include in income the value of goods, There are other items you can claim as adjustments to in-
services, and cash that you receive, not in return for your come. These adjustments are discussed in your tax return
services, but for your training and rehabilitation because instructions.
you have a disability. Excludable amounts include pay-
ments for transportation and attendant care, such as inter-
preter services for the deaf, reader services for the blind,
Individual Retirement
and services to help individuals with an intellectual disabil-
ity do their work. Arrangement (IRA)

Medicare. Medicare benefits received under title XVIII of Contributions and Deductions
the Social Security Act aren't includible in the gross in-
come of the individuals for whom they are paid. This in- This section explains the tax treatment of amounts you
cludes basic (Part A (Hospital Insurance Benefits for the pay into traditional IRAs. A traditional IRA is any IRA that
Aged)) and supplementary (Part B (Supplementary Medi- isn't a Roth or SIMPLE IRA. Roth and SIMPLE IRAs are
cal Insurance Benefits for the Aged)). defined earlier in the IRA discussion under Retirement
Plan Distributions. For more detailed information, see Pub.
590-A and Pub. 590-B.
Social security benefits. The Social Security Adminis-
tration (SSA) provides benefits such as old-age benefits,
benefits to disabled workers, and benefits to spouses and
dependents. These benefits may be subject to federal in-

Publication 554 (2023) Chapter 3 Adjustments to Income 19

- 20 -

Page 20 of 37   Fileid: … tions/p554/2023/a/xml/cycle06/source                                  14:46 - 18-Jan-2024

The type and rule above prints on all proofs including departmental reproduction proofs. MUST be removed before printing.

Contributions. An IRA is a personal savings plan that of-            have a choice, you should use the method that gives you 
fers  you  tax  advantages  to  set  aside  money  for  your         the lower tax.
retirement. Two advantages of a traditional IRA are:
•  You may be able to deduct some or all of your contri-
   butions to it, depending on your circumstances; and               Standard Deduction
•  Generally, amounts in your IRA, including earnings 
                                                                     The  standard  deduction  amount  depends  on  your  filing 
   and gains, aren't taxed until distributed.
                                                                     status, whether you are 65 or older or blind, and whether 
        Although interest earned from your traditional IRA           another taxpayer can claim you as a dependent. Gener-
!       generally  isn't  taxed  in  the  year  earned,  it  isn't   ally,  the  standard  deduction  amounts  are  adjusted  each 
CAUTION tax-exempt  interest.  Don't  report  this  interest  on     year for inflation. In most cases, you can use Worksheet 
your tax return as tax-exempt interest.                              4-1 to figure your standard deduction amount.

General limit. The most that can be contributed for 2023             Persons not eligible for the standard deduction.    Your 
to  your  traditional  IRA  is  the  smaller  of  the  following     standard deduction is zero and you should itemize any de-
amounts.                                                             ductions you have if:
•  Your taxable compensation for the year, or                        •  You are married and filing a separate return, and your 
                                                                        spouse itemizes deductions;
•  $6,500 ($7,500 if you were age 50 or older by the end 
   of 2023).                                                         •  You are filing a tax return for a short tax year because 
                                                                        of a change in your annual accounting period; or
Contributions  to  Kay  Bailey  Hutchison  Spousal 
IRAs. In the case of a married couple filing a joint return          •  You are a nonresident or dual-status alien during the 
for 2023, up to $6,500 ($7,500 for each spouse age 50 or                year. You are considered a dual-status alien if you 
older by the end of 2023) can be contributed to IRAs on                 were both a nonresident alien and a resident alien dur-
behalf of each spouse, even if one spouse has little or no              ing the year.
compensation.                                                        If you are a nonresident alien who is married to a U.S. 
                                                                     citizen  or  resident  alien  at  the  end  of  the  year,  you  can 
For more information on the general limit and the Kay 
                                                                     choose to be treated as a U.S. resident. See Pub. 519. If 
Bailey  Hutchison  Spousal  IRA  limit,  see How  Much  Can 
                                                                     you make this choice, you can take the standard deduc-
Be Contributed? in Pub. 590-A.
                                                                     tion.
Deductible  contribution.   Generally,  you  can  deduct 
the  lesser  of  the  contributions  to  your  traditional  IRA  for Decedent's  final  return. Decedent's  final  tax  return 
the  year  or  the  general  limit  (or  Kay  Bailey  Hutchison      should  reflect  the  standard  deduction  that  the  decedent 
Spousal IRA limit, if applicable) just explained. However, if        was entitled to claim at the time of their death. However, if 
you  or  your  spouse  was  covered  by  an  employer  retire-       the decedent wasn't age 65 or older at the time of death, 
ment plan at any time during the year for which contribu-            the  higher  standard  deduction  for  age  can't  be  claimed. 
tions were made, you may not be able to deduct all of the            See Death before age 65, later.
contributions. Your deduction may be reduced or elimina-
                                                                     Higher  standard  deduction  for  age  (65  or  older).  If 
ted,  depending  on  your  filing  status  and  the  amount  of 
                                                                     you don't itemize deductions, you are entitled to a higher 
your income. For more information, see Limit if Covered by 
                                                                     standard deduction if you are age 65 or older at the end of 
Employer Plan in Pub. 590-A.
                                                                     the  year.  You  are  considered  age  65  on  the  day  before 
Nondeductible contribution.   The difference between                 your 65th birthday. Therefore, you can take a higher stand-
your total permitted contributions and your IRA deduction,           ard deduction for 2023 if you were born before January 2, 
if  any,  is  your  nondeductible  contribution.  You  must  file    1959.
Form  8606  to  report  nondeductible  contributions  even  if 
you don't have to file a tax return for the year.                    Death  before  age  65.  If  you  are  preparing  a  return  for 
                                                                     someone who died in 2023, consider the taxpayer to be 
                                                                     age 65 or older at the end of 2023 only if they were age 65 
                                                                     or older at the time of death. A taxpayer is considered age 
                                                                     65 on the day before their birthday.

                                                                     Example.      Your  spouse  was  born  on  February  14, 
4.                                                                   1958, and died on February 13, 2023. Your spouse is con-
                                                                     sidered  age  65  at  the  time  of  death.  However,  if  your 
                                                                     spouse died on February 12, 2023, your spouse isn't con-
Deductions                                                           sidered  age  65  at  the  time  of  death  and  isn't  age  65  or 
                                                                     older at the end of 2023.
Most taxpayers have a choice of taking a standard deduc-
tion  or  itemizing  their  deductions.  You  benefit  from  the     Higher  standard  deduction  for  blindness.        If  you  are 
standard  deduction  if  your  standard  deduction  is  more         blind  on  the  last  day  of  the  year  and  you  don't  itemize 
than the total of your allowable itemized deductions. If you 

20                                                Chapter 4          Deductions                     Publication 554 (2023)

- 21 -

Page 21 of 37 Fileid: … tions/p554/2023/a/xml/cycle06/source 14:46 - 18-Jan-2024

The type and rule above prints on all proofs including departmental reproduction proofs. MUST be removed before printing.

deductions, you are entitled to a higher standard deduc-
tion.
Itemized Deductions
Not totally blind. If you aren't totally blind, you must get
a certified statement from an eye doctor (ophthalmologist Some individuals should itemize their deductions because
or optometrist) that: it will save them money. Others should itemize because
they don't qualify for the standard deduction. See the dis-
• You can't see better than 20/200 in the better eye with cussion under Standard Deduction, earlier, to decide if it
glasses or contact lenses, or would be to your advantage to itemize deductions.
• Your field of vision isn't more than 20 degrees.
Medical and dental expenses, some taxes, certain in-
If your eye condition isn’t likely to improve beyond these terest expenses, charitable contributions, casualty and
limits, the statement should include this fact. You must theft losses, and certain other expenses may be itemized
keep the statement in your records. as deductions on Schedule A (Form 1040).
If your vision can be corrected beyond these limits only
by contact lenses that you can wear only briefly because You may benefit from itemizing your deductions on
of pain, infection, or ulcers, you can take the higher stand- Schedule A (Form 1040) if you:
ard deduction for blindness if you otherwise qualify. • Can't take the standard deduction;
Spouse age 65 or older or blind. You can take the • Had uninsured medical or dental expenses that are
higher standard deduction if your spouse is age 65 or more than 7.5% of your adjusted gross income (AGI);
older or blind and: • Paid interest on a loan secured by your home and that
• You file a joint return, or you used to buy, build, or improve your home;
• You file a separate return and your spouse had no • Paid real estate or personal property taxes;
gross income and can’t be claimed as a dependent by • Paid state and local income taxes or general sales
another taxpayer. taxes;
You can't claim the higher standard deduction for • Had large uninsured casualty or theft losses due to a
! an individual other than yourself and your spouse. federally declared disaster;
CAUTION
• Made large contributions to qualified charities (see
Example. This example illustrates how to determine Pub. 526.); or
your standard deduction using Worksheet 4-1. • Have total itemized deductions that are more than the
Jean and Terry are filing a joint return for 2023. Both are standard deduction that applies to you.
over age 65. Neither is blind, and neither can be claimed
as a dependent. They don't itemize deductions, so they See the Instructions for Schedule A (Form 1040) for
use Worksheet 4-1. Because they are married filing jointly, more information.
they enter $27,700 on line 1. They check the “No” box on
line 2, so they also enter $27,700 on line 4. Because they Medical and Dental Expenses
are both over age 65, they enter $3,000 ($1,500 × 2) on
line 5. They enter $30,700 ($27,700 + $3,000) on line 6, You can deduct certain medical and dental expenses you
so their standard deduction is $30,700. paid for yourself, your spouse, and your dependent(s) if
you itemize your deductions on Schedule A (Form 1040).
Standard Deduction for Dependents Table 4-1 shows some common items that you can or
can't include in figuring your medical expense deduction.
The standard deduction for an individual who can be For more information, see the following discussions of se-
claimed as a dependent on another person's tax return is lected items, which are presented in alphabetical order. A
generally limited to the greater of: more extensive list of items and further details can be
• $1,250, or found in Pub. 502.
• The individual's earned income for the year plus $400
(but not more than the regular standard deduction
amount).
However, the standard deduction may be higher if the
individual is age 65 or older or blind.
If you (or your spouse, if you are filing jointly) can be
claimed as a dependent on someone else's return, use
Worksheet 4-1, if applicable, to determine your standard
deduction.

Publication 554 (2023) Chapter 4 Deductions 21

- 22 -

Page 22 of 37      Fileid: … tions/p554/2023/a/xml/cycle06/source                                                       14:46 - 18-Jan-2024

The type and rule above prints on all proofs including departmental reproduction proofs. MUST be removed before printing.

Worksheet 4-1. 2023 Standard Deduction Worksheet                           Keep for Your Records
Caution. If you are married filing separately and your spouse itemizes deductions, or if you are a dual-status alien, don't complete this worksheet. 
If you were born before January 2, 1959, and/or you were blind at the end of 2023, check the correct box(es) below. Put the total 
number of boxes checked in box c and go to line 1.
a.    You                                                       Born before January 2, 1959                                                                         Blind  
b.    Your spouse                                               Born before January 2, 1959                                                                         Blind
c.    Total boxes checked  
   1. Enter the amount shown below for your filing status.
      • Single or married filing separately—$13,850
      • Married filing jointly or qualifying surviving                                                                     
                                                                . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.
        spouse—$27,700
      • Head of household—$20,800
   2. Can you (or your spouse, if filing jointly) be claimed as a dependent on someone else's return?
        No. Skip line 3; enter the amount from line 1 on line 4.
        Yes. Go to line 3.
   3. Is your earned income* more than $850?

        Yes. Add $400 to your earned income. Enter the total.                                                              
                                                                . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.
        No. Enter $1,250.
   4. Enter the smaller of line 1 or line 3 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.      
   5. If born before January 2, 1959, or blind, multiply the number in box c by $1,500 ($1,850 if single or head of 
      household). Enter the result here. Otherwise, enter -0- . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .               5.      
   6. Add lines 4 and 5. This is your standard deduction for 2023** . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                     6.      
* Earned income includes wages, salaries, tips, professional fees, and other compensation received for personal services you performed. It also 
includes any taxable scholarship or fellowship grant. Generally, your earned income is the total of the amount(s) you reported on Form 1040 or 
1040-SR, line 1z, and Schedule 1 (Form 1040), lines 3, 6, 8r, 8t, and 8u minus the amount, if any, on Schedule 1 (Form 1040), line 15.
** You may be able to increase the amount of your standard deduction on line 6 by a loss you suffered related to property in one of 
the Presidentially declared disaster areas eligible for that relief. See Pub. 976 for more information.

22                                                Chapter 4     Deductions                                                Publication 554 (2023)

- 23 -

Page 23 of 37        Fileid: … tions/p554/2023/a/xml/cycle06/source                           14:46 - 18-Jan-2024

The type and rule above prints on all proofs including departmental reproduction proofs. MUST be removed before printing.

                                                                  502 contains additional information and examples, includ-
        You can deduct only the amount of your medical 
                                                                  ing a capital expense worksheet, to assist you in figuring 
!       and  dental  expenses  that  is  more  than  7.5%  of     the amount of the capital expense that you can include in 
CAUTION your AGI.
                                                                  your medical expenses. Also, see Pub. 502 for information 
                                                                  about deductible operating and upkeep expenses related 
What  to  include. Generally,  you  can  include  only  the       to such capital expense items, and for information about 
medical and dental expenses you paid this year, regard-           improvements, for medical reasons, to property rented by 
less of when the services were provided. If you pay medi-         a person with disabilities.
cal  expenses  by  check,  the  day  you  mail  or  deliver  the 
check  is  generally  the  date  of  payment.  If  you  use  a 
                                                                  Household Help
pay-by-phone  or  online  account  to  pay  your  medical  ex-
penses, the date reported on the statement of the financial 
                                                                  You can't include in medical expenses the cost of house-
institution showing when payment was made is the date of 
                                                                  hold help, even if such help is recommended by a doctor. 
payment. You can include medical expenses you charge 
                                                                  This is a personal expense that isn't deductible. However, 
to  your  credit  card  in  the  year  the  charge  is  made.  It 
                                                                  you may be able to include certain expenses paid to a per-
doesn't matter when you actually pay the amount charged.
                                                                  son providing nursing-type services. For more information, 
                                                                  see Nursing Services, later. Also, certain maintenance or 
Home Improvements                                                 personal  care  services  provided  for  qualified  long-term 
                                                                  care can be included in medical expenses. For more infor-
You can include in medical expenses amounts you pay for 
                                                                  mation,  see Qualified  long-term  care  services  under 
home improvements if their main purpose is medical care 
                                                                  Long-Term Care, later.
for you, your spouse, or your dependent(s).
Only reasonable costs to accommodate a home to your               Hospital Services
disabled condition (or that of your spouse or your depend-
ent(s)  who  lives  with  you)  are  considered  medical  care.   You can include in medical expenses amounts you pay for 
Additional costs for personal motives, such as for architec-      the cost of inpatient care at a hospital or similar institution 
tural or aesthetic reasons, aren't medical expenses. Pub.         if a principal reason for being there is to receive medical 

Table 4-1.  Medical and Dental Expenses Checklist
You can include:                                                  You can't include:
• Bandages                  • Medicare Part D                     • Bottled water             • Medical insurance 
• Capital expenses for        premiums                            • Contributions to Archer     included in a car 
  equipment or              • Oxygen equipment and                  MSAs (see Pub. 969)         insurance policy 
  improvements to your        oxygen                              • Diaper service              covering all persons 
  home needed for           • Part of life-care fee paid          • Expenses for your general   injured in or by your car
  medical care (see Pub.      to retirement home                    health (even if following • Medicine you buy 
  502)                        designated for medical                your doctor's advice)       without a prescription
• Certain weight-loss         care                                  such as:                  • Nursing care for a 
  expenses for obesity      • Prescription medicines                —Health club dues;          healthy baby
• Diagnostic devices          (prescribed by a doctor)              —Household help (even if  • Prescription drugs you 
• Expenses of an organ        and insulin                           recommended by a            brought in (or ordered 
  donor                     • Psychiatric and                       doctor);                    shipped) from another 
• Eye surgery—to promote      psychological treatment               —Social activities, such    country, in most cases 
  the correct function of   • Social security tax,                  as dancing or swimming      (see Pub. 502)
  the eye                     Medicare tax, FUTA tax,               lessons; and              • Surgery for purely 
• Guide dogs or other         and state employment                  —Trip for general health    cosmetic reasons (see 
  service animals aiding      tax for worker providing              improvement                 Pub. 502)
  the blind, deaf, and        medical care (see Pub.              • Flexible spending         • Toothpaste, toiletries, 
  disabled                    502)                                  account reimbursements      cosmetics, etc.
• Hospital services fees    • Special items (artificial             for medical expenses (if  • Teeth whitening
  (lab work, therapy,         limbs, dentures,                      contributions were on a   • Weight-loss expenses 
  nursing services,           eyeglasses, contact                   pre-tax basis) (see Pub.    not for the treatment of 
  surgery, etc.)              lenses, hearing aids,                 502)                        obesity or other disease
• Lead-based paint            crutches, wheelchair,               • Funeral, burial, or 
  removal (see Pub. 502)      etc.)                                 cremation expenses
• Long-term care            • Special education for               • Health savings account 
  contracts, qualified (see   mentally or physically                payments for medical 
  Pub. 502)                   disabled persons (see                 expenses (see Pub. 502)
• Meals and lodging           Pub. 502)                           • Illegal operation or 
  provided by a hospital    • Stop-smoking programs                 treatment
  during medical treatment  • Transportation for                  • Life insurance or income 
• Medical and hospital        needed medical care                   protection policies, or 
  insurance premiums        • Treatment at a drug or                policies providing 
• Medical services fees       alcohol center (includes              payment for loss of life, 
  (from doctors, dentists,    meals and lodging                     limb, sight, etc.
  surgeons, specialists,      provided by the center)
  and other medical         • Wages for nursing 
  practitioners)              services (see Pub. 502)

Publication 554 (2023)                     Chapter 4              Deductions                                             23

- 24 -

Page 24 of 37 Fileid: … tions/p554/2023/a/xml/cycle06/source 14:46 - 18-Jan-2024

The type and rule above prints on all proofs including departmental reproduction proofs. MUST be removed before printing.

care. This includes amounts paid for meals and lodging. The amount of qualified long-term care premiums you
Also, see Meals and Lodging, later. can include is limited. You can include the following as
medical expenses on Schedule A (Form 1040).
Long-Term Care 1. Qualified long-term care premiums up to the following
amounts.
You can include in medical expenses amounts paid for
qualified long-term care services and certain amounts of a. Age 40 or under—$480.
premiums paid for qualified long-term care insurance con-
tracts. b. Age 41 to 50—$890.
c. Age 51 to 60—$1,790.
Qualified long-term care services. Qualified long-term
care services are necessary diagnostic, preventive, thera- d. Age 61 to 70—$4,770.
peutic, curing, treating, mitigating, rehabilitative services, e. Age 71 or over—$5,960.
and maintenance and personal care services (defined
later) that are: 2. Unreimbursed expenses for qualified long-term care
services.
1. Required by a chronically ill individual, and
2. Provided under a plan of care prescribed by a li- Note. The limit on premiums is for each person.
censed health care practitioner.
Meals and Lodging
Chronically ill individual. An individual is chronically
ill if, within the previous 12 months, a licensed health care You can include in medical expenses the cost of meals
practitioner has certified that the individual meets either of and lodging at a hospital or similar institution if your main
the following descriptions. reason for being there is to receive medical care.

1. The individual is unable to perform at least two activi- You may be able to include in medical expenses the
ties of daily living without substantial assistance from cost of lodging (but not meals) not provided in a hospital
another individual for at least 90 days, due to a loss of or similar institution. You can include the cost of such
functional capacity. Activities of daily living are eating, lodging while away from home if all of the following re-
toileting, transferring, bathing, dressing, and conti- quirements are met.
nence.
• The lodging is primarily for, and essential to, medical
2. The individual requires substantial supervision to be care.
protected from threats to health and safety due to se-
vere cognitive impairment. • The medical care is provided by a doctor in a licensed
hospital or in a medical care facility related to, or the
Maintenance and personal care services. Mainte- equivalent of, a licensed hospital.
nance or personal care services is care that has as its pri-
mary purpose the providing of a chronically ill individual • The lodging isn't lavish or extravagant under the cir-
with needed assistance with their disabilities (including cumstances.
protection from threats to health and safety due to severe • There is no significant element of personal pleasure,
cognitive impairment). recreation, or vacation in the travel away from home.

Qualified long-term care insurance contracts. A The amount you include in medical expenses for lodg-
qualified long-term care insurance contract is an insur- ing can't be more than $50 per night for each person. You
ance contract that provides only coverage of qualified can include lodging for a person traveling with the person
long-term care services. The contract must: receiving the medical care. For example, if a parent is trav-
eling with a sick child, up to $100 per night can be inclu-
1. Be guaranteed renewable;
ded as a medical expense for lodging. (Meals aren't inclu-
2. Not provide for a cash surrender value or other money ded.)
that can be paid, assigned, pledged, or borrowed;
Nursing home. You can include in medical expenses the
3. Provide that refunds, other than refunds on the death cost of medical care in a nursing home or a home for the
of the insured or complete surrender or cancellation of aged for yourself, your spouse, or your dependent(s). This
the contract, and dividends under the contract must includes the cost of meals and lodging in the home if a
be used only to reduce future premiums or increase main reason for being there is to get medical care.
future benefits; and Don't include the cost of meals and lodging if the rea-
4. Generally not pay or reimburse expenses incurred for son for being in the home is personal. However, you can
services or items that would be reimbursed under include in medical expenses the part of the cost that is for
Medicare, except where Medicare is a secondary medical or nursing care.
payer, or the contract makes per diem or other peri-
odic payments without regard to expenses.

24 Chapter 4 Deductions Publication 554 (2023)

- 25 -

Page 25 of 37 Fileid: … tions/p554/2023/a/xml/cycle06/source 14:46 - 18-Jan-2024

The type and rule above prints on all proofs including departmental reproduction proofs. MUST be removed before printing.

Medical Insurance Premiums that requires a prescription by a doctor for its use by an in-
dividual. You can also include amounts you pay for insulin.
You can include in medical expenses insurance premiums Except for insulin, you can't include in medical expenses
you pay for policies that cover medical care. Policies can amounts you pay for a drug that isn't prescribed.
provide payment for:
Imported medicines and drugs. If you import medi-
• Hospitalization, surgical fees, X-rays; cines or drugs from other countries, see Medicines and
• Prescription drugs and insulin; Drugs From Other Countries under What Expenses Aren't
Includible in Pub. 502.
• Dental care;
• Replacement of lost or damaged contact lenses; and Nursing Services
• Qualified long-term care insurance contracts (subject
to the additional limits included in the discussion on You can include in medical expenses wages and other
qualified long-term care insurance contracts under amounts you pay for nursing services. The services need
Long-Term Care, earlier). not be performed by a nurse as long as the services are of
a kind generally performed by a nurse. This includes serv-
If you have a policy that provides payments for other ices connected with caring for the patient's condition, such
than medical care, you can include the premiums for the as giving medication or changing dressings, as well as
medical care part of the policy if the charge for the medi- bathing and grooming the patient. These services can be
cal part is reasonable. The cost of the medical portion provided in your home or another care facility.
must be separately stated in the insurance contract or
given to you in a separate statement. Generally, only the amount spent for nursing services is
a medical expense. If the attendant also provides personal
Medicare Part A. If you are covered under social security and household services, amounts paid to the attendant
(or if you are a government employee who paid Medicare must be divided between the time spent performing
tax), you are enrolled in Medicare Part A. The payroll tax household and personal services and the time spent for
paid for Medicare Part A isn't a medical expense. If you nursing services. However, certain maintenance or per-
aren't covered under social security (or weren't a govern- sonal care services provided for qualified long-term care
ment employee who paid Medicare tax), you can enroll can be included in medical expenses. See Maintenance
voluntarily in Medicare Part A. In this situation, you can in- and personal care services under Qualified long-term care
clude the premiums you paid for Medicare Part A as a services, earlier. Additionally, certain expenses for house-
medical expense. hold services or for the care of a qualifying individual in-
curred to allow you to work may qualify for the child and
Medicare Part B. Medicare Part B is a supplemental dependent care credit. See Child and Dependent Care
medical insurance. Premiums you pay for Medicare Part B Credit, later, and Pub. 503.
are a medical expense. Check the information you re-
ceived from the SSA to find out your premium. You can also include in medical expenses part of the
Social security beneficiaries may quickly and easily ob- amount you pay for that attendant's meals. Divide the food
tain various information from the SSA’s website with a my expense among the household members to find the cost
Social Security account, including getting a replacement of the attendant's food. Then, divide that cost in the same
SSA-1099 or SSA-1042S. For more information, see Ob- manner as in the preceding paragraph. If you had to pay
taining social security information, earlier. additional amounts for household upkeep because of the
attendant, you can include the extra amounts with your
Medicare Part D. Medicare Part D is a voluntary pre- medical expenses. This includes extra rent or utilities you
scription drug insurance program for persons with Medi- pay because you moved to a larger apartment to provide
care Part A or Part B. You can include as a medical ex- space for the attendant.
pense premiums you pay for Medicare Part D.
Employment taxes. You can include as a medical ex-
Prepaid insurance premiums. Insurance premiums you pense social security tax, FUTA tax, Medicare tax, and
pay before you are age 65 for medical care for yourself, state employment taxes you pay for a nurse, attendant, or
your spouse, or your dependents after you reach age 65 other person who provides medical care. If the attendant
are medical care expenses in the year paid if they are: also provides personal and household services, you can
• Payable in equal yearly installments or more often; include as a medical expense only the amount of employ-
and ment taxes paid for medical services as explained earlier
under Nursing Services. For information on employment
• Payable for at least 10 years, or until you reach age 65
tax responsibilities of household employers, see Pub. 926.
(but not for less than 5 years).
Transportation
Medicines
You can include in medical expenses amounts paid for
You can include in medical expenses amounts you pay for
transportation primarily for, and essential to, medical care.
prescribed medicines and drugs. A prescribed drug is one

Publication 554 (2023) Chapter 4 Deductions 25

- 26 -

Page 26 of 37 Fileid: … tions/p554/2023/a/xml/cycle06/source 14:46 - 18-Jan-2024

The type and rule above prints on all proofs including departmental reproduction proofs. MUST be removed before printing.

Car expenses. You can include out-of-pocket expenses, earned income credit. You may be able to reduce your
such as the cost of gas and oil, when you use a car for federal income tax by claiming one or more of these cred-
medical reasons. You can't include depreciation, insur- its. You may also be able to increase your refund by claim-
ance, general repair, or maintenance expenses. ing the earned income credit.
If you don't want to use your actual expenses for 2023,
you can use the standard medical mileage rate of 22 cents
a mile.
Credit for the Elderly or the
You can also include parking fees and tolls. You can
add these fees and tolls to your medical expenses Disabled
whether you use actual expenses or use the standard
mileage rate. This section explains who qualifies for the credit for the
elderly or the disabled and how to figure this credit. For
You can also include:
more information, see Pub. 524.
• Bus, taxi, train, or plane fares or ambulance service;
You can take the credit only if you file Form 1040
and
or 1040-SR. You can't take the credit if you file
• Transportation expenses of a nurse or other person CAUTION! Form 1040-NR.
who can give injections, medications, or other treat-
ment required by a patient who is traveling to get med-
ical care and is unable to travel alone. Can You Take the Credit?

Don't include transportation expenses if, for purely You can take the credit for the elderly or the disabled if you
! personal reasons, you choose to travel to another meet both of the following requirements.
CAUTION city for an operation or other medical care prescri-
bed by your doctor. • You are a qualified individual.
• Your income isn't more than certain limits.
You can use Figure 5-A and Figure 5-B as guides to see if
you are eligible for the credit.

Credits

This chapter briefly discusses the credit for the elderly or
the disabled, the child and dependent care credit, and the

26 Chapter 5 Credits Publication 554 (2023)

- 27 -

Page 27 of 37           Fileid: … tions/p554/2023/a/xml/cycle06/source                                  14:46 - 18-Jan-2024

The type and rule above prints on all proofs including departmental reproduction proofs. MUST be removed before printing.

Figure 5-A. Are You a Qualified Individual?

                                                        START HERE
    Did you live with your                     Yes Were you married at the end of the tax
    spouse at any time 1                           year?
    during the tax year?                       No
                                                                     No
                       Yes
                                            Yes
                                               No  Are you a U.S. citizen or resident alien?2
    Are you ling a joint
    return with your spouse?
                                                                     Yes
                       No
                                                   Were you 65 or older at the end of       Yes
    You aren’t   a qualied
    individual and can’t                           the tax year?
    take the credit for the                                          No
    elderly or the disabled.
                                                                                                You are a qualied
                                               No  Are you retired on permanent and             individual and may be able
                                                   total disability?                            to take the credit for the
                                                                                                elderly or the disabled
                                                                     Yes                        unless your income
                                                                                                exceeds the limits in
                                            Yes    Did you reach mandatory retirement           Figure 5-B. 
                                                   age before the  tax year? 3

                                                                     No

                                               No  Did you receive taxable disability        Yes
                                                   benets during the tax year?

1 However, you may be able to claim this credit even if you lived with your spouse during the rst 6 months of the tax year, as long as you qualify to le as head of 
household. You qualify to le as head of household if you are considered unmarried and meet certain other conditions. See Pub. 501 for more information.
2 If you were a nonresident alien at any time during the tax year and were married to a U.S. citizen or resident alien at the end of the tax year, see U.S. Citizen or
  Resident Alien under Qualiﬁed Individual. If you and your spouse choose to treat you as a U.S. resident alien, answer “Yes” to this question.
3 Mandatory retirement age is the age set by your employer at which you would have been required to retire, had you not become disabled.

Qualified Individual                                                    resident alien at the end of the tax year and you and your 
                                                                        spouse choose to treat you as a U.S. resident alien. If you 
You are a qualified individual for this credit if you are a U.S.        make that choice, both you and your spouse are taxed on 
citizen or resident alien, and either of the following applies.         your worldwide income.
                                                                              If you were a nonresident alien at the beginning of the 
1. You were age 65 or older at the end of 2023.
                                                                        year and a resident alien at the end of the year, and you 
2. You were under age 65 at the end of 2023 and all                     were married to a U.S. citizen or resident alien at the end 
  three of the following statements are true.                           of the year, you may be able to choose to be treated as a 
                                                                        U.S.  resident  alien  for  the  entire  year.  In  that  case,  you 
  a. You retired on permanent and total disability (ex-                 may be allowed to take the credit.
    plained later).                                                           For information on these choices, see chapter 1 of Pub. 
  b. You received taxable disability income for 2023.                   519.

  c. On January 1, 2023, you had not reached manda-                     Married  persons.       Generally,  if  you  are  married  at  the 
    tory retirement age (defined, later, under Disability               end of the tax year, you and your spouse must file a joint 
    income).                                                            return to take the credit. However, if you and your spouse 
    Age 65.      You are considered to be age 65 on the                 didn't  live  in  the  same  household  at  any  time  during  the 
TIP day before your 65th birthday. As a result, if you                  tax year, you can file either a joint return or separate re-
    were  born  on  January  1,  1959,  you  are  consid-               turns and still take the credit.

ered to be age 65 at the end of 2023.                                   Head of household.      You can file as head of household 
                                                                        and qualify to take the credit even if your spouse lived with 
U.S. citizen or resident alien. You must be a U.S. citizen              you during the first 6 months of the year if you meet cer-
or resident alien (or be treated as a resident alien) to take           tain tests. See Pub. 524 and Pub. 501.
the credit. Generally, you can't take the credit if you were a 
nonresident alien at any time during the tax year.                      Under  age  65.         If  you  are  under  age  65  at  the  end  of 
                                                                        2023, you can qualify for the credit only if you are retired 
  Exceptions.    You may be able to take the credit if you 
                                                                        on  permanent  and  total  disability  and  have  taxable 
are a nonresident alien who is married to a U.S. citizen or 

Publication 554 (2023)                                  Chapter 5        Credits                                                                                      27

- 28 -

Page 28 of 37 Fileid: … tions/p554/2023/a/xml/cycle06/source 14:46 - 18-Jan-2024

The type and rule above prints on all proofs including departmental reproduction proofs. MUST be removed before printing.

Figure 5-B. Income Limits

THEN even if you qualify (see Figure 5-A), you CAN’T take the credit if:
OR the total of your nontaxable social
security and other nontaxable pension(s),
The amount on your Form 1040 or annuities, or disability income is equal to or
IF your filing status is... 1040-SR, line 11, is equal to or more than... more than...
single, head of household, or qualifying $17,500 $5,000
surviving spouse
married filing jointly and only one spouse $20,000 $5,000
qualifies in Figure 5-A
married filing jointly and both spouses qualify in $25,000 $7,500
Figure 5-A
married filing separately and you lived apart $12,500 $3,750
from your spouse for all of 2023

disability income (discussed later under Disability in- You don't have to file this statement with your tax return,
come). You are considered to be under age 65 at the end but you must keep it for your records. The Instructions for
of 2023 if you were born after January 1, 1959. You are re- Schedule R (Form 1040) include a statement your physi-
tired on permanent and total disability if: cian can complete and that you can keep for your records.
• You were permanently and totally disabled when you Veterans. If the VA certifies that you are permanently
retired, and and totally disabled, you can substitute VA Form 21-0172,
• You retired on disability before the end of the tax year. Certification of Permanent and Total Disability, for the
physician's statement you are required to keep. VA Form
Even if you don't retire formally, you may be considered 21-0172 must be signed by a person authorized by the VA
retired on disability when you have stopped working be- to do so. You can get this form from your local VA regional
cause of your disability. If you retired on disability before office.
1977, and weren't permanently and totally disabled at the
time, you can qualify for the credit if you were permanently Physician's statement obtained in earlier year. If
and totally disabled on January 1, 1976, or January 1, you got a physician's statement in an earlier year and, due
1977. to your continued disability, you were unable to engage in
any substantial gainful activity during 2023, you may not
Permanent and total disability. You are permanently need to get another physician's statement for 2023. For a
and totally disabled if you can't engage in any substantial detailed explanation of the conditions you must meet, see
gainful activity because of your physical or mental condi- the instructions for Schedule R (Form 1040), Part II. If you
tion. A physician must certify that the condition has lasted meet the required conditions, you must check the box on
or can be expected to last continuously for 12 months or Schedule R (Form 1040), Part II, line 2.
more, or that the condition can be expected to result in If you checked Schedule R (Form 1040), Part I, box 4,
death. See Physician's statement, later. 5, or 6, enter in the space above the box in Part II, line 2,
Substantial gainful activity. Substantial gainful activ- the first name(s) of the spouse(s) for whom the box is
ity is the performance of significant duties over a reasona- checked.
ble period of time while working for pay or profit, or in work
generally done for pay or profit. Disability income. If you are under age 65, you must
Full-time work (or part-time work done at the employer's also have taxable disability income to qualify for the credit.
convenience) in a competitive work situation for at least Disability income must meet the following two require-
the minimum wage conclusively shows that you are able ments.
to engage in substantial gainful activity. • It must be paid under your employer's accident or
Substantial gainful activity isn't work you do to take care health plan or pension plan.
of yourself or your home. It isn't unpaid work on hobbies,
• It must be included in your income as wages (or pay-
institutional therapy or training, school attendance, clubs,
ments in lieu of wages) for the time you are absent
social programs, and similar activities. However, doing this
from work because of permanent and total disability.
kind of work may show that you are able to engage in sub-
stantial gainful activity. Payments that aren't disability income. Any pay-
The fact that you haven't worked or have been unem- ment you receive from a plan that doesn't provide for disa-
ployed for some time isn't, of itself, conclusive evidence bility retirement isn't disability income. Any lump-sum pay-
that you can't engage in substantial gainful activity. ment for accrued annual leave that you receive when you
retire on disability is a salary payment and isn't disability
Physician's statement. If you are under age 65, you income.
must have your physician complete a statement certifying For purposes of the credit for the elderly or the disa-
that you were permanently and totally disabled on the bled, disability income doesn't include amounts you
date you retired.

28 Chapter 5 Credits Publication 554 (2023)

- 29 -

Page 29 of 37 Fileid: … tions/p554/2023/a/xml/cycle06/source 14:46 - 18-Jan-2024

The type and rule above prints on all proofs including departmental reproduction proofs. MUST be removed before printing.

receive after you reach mandatory retirement age. Manda- • Low-income housing.
tory retirement age is the age set by your employer at Temporary Assistance for Needy Families (TANF).
•
which you would have had to retire had you not become
disabled. In addition, when determining eligibility, the refund can't be
counted as a resource for at least 12 months after you re-
ceive it. Check with your local benefit coordinator to find
Figuring the Credit out if your refund will affect your benefits.
You can figure the credit yourself or allow the IRS to figure
it for you. Do You Qualify for the EIC?

Figuring the credit yourself. If you figure the credit Use Table 5-1 as a starting point to the rules you must
yourself, fill out the front of Schedule R (Form 1040). Next, meet in order to qualify for the EIC. The specific rules you
fill out Schedule R (Form 1040), Part III. must meet depend on whether you have a qualifying child.
• If you have a qualifying child, the rules in Parts A, B,
Credit figured for you. If you can take the credit and you and D apply to you.
want the IRS to figure the credit for you, see Pub. 524 or
the Instructions for Schedule R (Form 1040). If you want • If you don't have a qualifying child, the rules in Parts A,
the IRS to figure your tax, see chapter 13 of Pub. 17. C, and D apply to you.
If you think you may qualify for the credit after reading all
the rules in each part, see Pub. 596, for more details
Child and Dependent Care about the EIC. You can also find information about the EIC
in the instructions for Form 1040, line 27.
Credit The sections that follow provide additional information
for some of the rules.
You may be able to claim this credit if you pay someone to
care for your dependent who is under age 13 or for your Adjusted gross income (AGI). Under Rule 1, you can't
spouse or dependent who isn't able to care for them- claim the EIC unless your AGI is less than the applicable
selves. The credit can be up to 35% of your expenses. To limit shown in Part A of Table 5-1. Your AGI is the amount
qualify, you must pay these expenses so you can work or on line 11 of Form 1040 or 1040-SR.
look for work.
Social security number (SSN). Under Rule 2, you (and
If you claim this credit, you must include on your your spouse, if you are married filing jointly) must have a
! return the name and taxpayer identification num- valid SSN issued by the SSA. Any qualifying child listed
CAUTION ber (generally, the social security number) of each
on Schedule EIC must also have a valid SSN. (See Quali-
qualifying person for whom care is provided. You must fying child, later, if you have a qualifying child.)
also show on your return the name, address, and taxpayer An SSN is valid for the EIC unless it was issued after
identification number of the person(s) or organization(s) the due date of your 2023 return (including extensions) or
that provided the care. If the correct information isn't it was issued solely to apply for or receive a federally fun-
shown, the credit may be reduced or disallowed. ded benefit and does not authorize you to work. An exam-
ple of a federally funded benefit is Medicaid.
For more information, see Pub. 503.
Investment income. Under Rule 6, you can't claim the
EIC unless your investment income is $11,000 or less. If
your investment income is more than $11,000, you can't
Earned Income Credit (EIC)
claim the credit. For most people, investment income is
The EIC is a refundable tax credit for certain people who the total of the following amounts.
work and have earned income under $63,398. The EIC is • Taxable interest (line 2b of Form 1040 or 1040-SR).
available to persons with or without a qualifying child. Tax-exempt interest (line 2a of Form 1040 or
•
Credit has no effect on certain welfare benefits. Any 1040-SR).
refund you receive because of the EIC can't be counted as • Dividend income (line 3b of Form 1040 or 1040-SR).
income when determining whether you or anyone else is
• Capital gain net income (line 7 of Form 1040 or
eligible for benefits or assistance, or how much you or
1040-SR, if more than zero).
anyone else can receive, under any federal program or un-
der any state or local program financed in whole or in part For more information about investment income, see
with federal funds. These programs include the following. Pub. 596.

• Medicaid. Earned income. Under Rule 7, you must have earned in-
• SSI. come to claim the EIC. Under Rule 15, you can't claim the
EIC unless your earned income is less than the applicable
• Supplemental Nutrition Assistance Program (SNAP) limit shown in Table 5-1, Part D. Earned income includes
(food stamps). all of the following types of income.

Publication 554 (2023) Chapter 5 Credits 29

- 30 -

Page 30 of 37 Fileid: … tions/p554/2023/a/xml/cycle06/source 14:46 - 18-Jan-2024

The type and rule above prints on all proofs including departmental reproduction proofs. MUST be removed before printing.

Table 5-1. Earned Income Credit (EIC) in a Nutshell

First, you must meet all the rules in this Second, you must meet all the rules in Third, you must meet
column. one of these columns, whichever applies. the rule in this column.
Part A. Part B. Part C. Part D.
Rules for Everyone Rules if You Have a Rules if You Don't Figuring and Claiming
Qualifying Child Have a Qualifying the EIC
Child
1. Your adjusted gross 2. You must have a 8. Your child must meet 11. You must meet 15. Your earned income
income (AGI) must be valid SSN by the due the relationship, age, the age must be less than:
less than: date of your 2023 residency, and joint requirements. •$56,838 ($63,398 for
•$56,838 ($63,398 for return (including return tests. 12. You can't be the married filing jointly) if you
married filing jointly) if extensions). 9. Your qualifying child dependent of have three or more
you have three or 3. You must meet can't be used by more another person. qualifying children who
more qualifying certain requirements than one person to 13. You can't be a have valid SSNs,
children who have if you are separated claim the EIC. qualifying child of •$52,918 ($59,478 for
valid SSNs, from your spouse and 10. You can't be a another person. married filing jointly) if you
•$52,918 ($59,478 for not filing a joint return. qualifying child of 14. You must have have two qualifying
married filing jointly) if 4. You must be a U.S. another person. lived in the United children who have valid
you have two citizen or resident States more than SSNs,
qualifying children who alien all year. half of the year. •$46,560 ($53,120 for
have valid SSNs, (However, see Pub. married filing jointly) if you
•$46,560 ($53,120 for 596 if your filing have one qualifying child
married filing jointly) if status is married filing who has a valid SSN, or
you have one jointly.) •$17,640 ($24,210 for
qualifying child who 5. You can't file Form married filing jointly) if you
has a valid SSN, or 2555 (relating to don't have a qualifying
•$17,640 ($24,210 for foreign earned child who has a valid SSN.
married filing jointly) if income).
you don't have a 6. Your investment
qualifying child who income must be
has a valid SSN. $11,000 or less.
7. You must have
earned income.

1. Wages, salaries, tips, and other taxable employee Self-employed persons. If you are self-employed and
pay. Employee pay is earned income only if it is taxa- your net earnings are $400 or more, be sure to correctly fill
ble. Nontaxable employee pay, such as certain de- out Schedule SE (Form 1040), Self-Employment Tax, and
pendent care benefits and adoption benefits, isn't pay the proper amount of self-employment tax. If you
earned income. But there is an exception for nontaxa- don't, you may not get all the credit to which you are enti-
ble combat pay, which you can choose to include in tled.
earned income.
Disability benefits. If you retired on disability, taxable
2. Net earnings from self-employment. benefits you receive under your employer's disability re-
tirement plan are considered earned income until you
3. Gross income received as a statutory employee.
reach minimum retirement age. Minimum retirement age is
Gross income defined. Gross income means all income generally the earliest age at which you could have re-
you received in the form of money, goods, property, and ceived a pension or annuity if you weren't disabled. Begin-
services that isn't exempt from tax, including any income ning on the day after you reach minimum retirement age,
from sources outside the United States or from the sale of payments you receive are taxable as a pension and aren't
your main home (even if you can exclude part or all of it). considered earned income.
Don't include any social security benefits unless (a) you Payments you received from a disability insurance pol-
are married filing a separate tax return and you lived with icy that you paid the premiums for aren't earned income. It
your spouse at any time in 2023, or (b) one-half of your so- doesn't matter whether you have reached minimum retire-
cial security benefits plus your other gross income and ment age. If this policy is through your employer, the
any tax-exempt interest is more than $25,000 ($32,000 if amount may be shown in box 12 of your Form W-2 with
married filing jointly). If (a) or (b) applies, see the instruc- code J.
tions for Form 1040, lines 6a and 6b, to figure the taxable
Income that isn't earned income. Examples of items
part of social security benefits you must include in gross
that aren't earned income under Rule 7 include:
income.
• Interest and dividends;

30 Chapter 5 Credits Publication 554 (2023)

- 31 -

Page 31 of 37       Fileid: … tions/p554/2023/a/xml/cycle06/source                                        14:46 - 18-Jan-2024

The type and rule above prints on all proofs including departmental reproduction proofs. MUST be removed before printing.

Figure 5-C. Tests for Qualifying Child
                                 A qualifying child for the EIC is a child who is your...
                                      Son, daughter, stepchild, eligible foster child, 
                                or a descendant of any of them (for example, your grandchild) 
                                                                   OR
                                 Brother, sister, half brother, half sister, stepbrother, 
                                stepsister, or a descendant of any of them (for example, your 
                                            niece or nephew)

                                                        AND

                                                        was...
                       Under age 19 at the end of 2023 and younger than you (or your spouse, if filing jointly)
                                                                   OR
                   Under age 24 at the end of 2023, a student, and younger than you (or your spouse, if filing jointly)
                                                                   OR
                          Permanently and totally disabled at any time during the year, regardless of age 

                                                        AND

                                                        who...
                                            Isn’t filing a joint return for 2023 
              (or is filing a joint return for 2023 only to claim a refund of income tax withheld or estimated tax paid)

                                                        AND

                                                        who...
                                 Lived with you in the United States for more than half
                                                        of 2023.
                                            If the child didn't live with you for the
                                 required time, see Pub. 596 for more information.

• Pensions and annuities;                                            sector employment isn't available, or (2) community serv-
                                                                     ice program activities.
• Social security and railroad retirement benefits (in-
  cluding disability benefits—except for payments cov-               Qualifying child.    Under Rule 8, your child is a qualifying 
  ered under Disability benefits, earlier);                          child if your child meets four tests. The four tests are:
• Alimony and child support;
                                                                     1. Relationship,
• Welfare benefits;
                                                                     2. Age,
• Workers' compensation benefits;
                                                                     3. Joint return, and
• Unemployment compensation (insurance);
                                                                     4. Residency.
• Nontaxable foster care payments; and
                                                                     The  four  tests  are  illustrated  in    Figure  5-C.  See  Pub. 
• Veterans' benefits, including VA rehabilitation pay-               596 for more information about each test.
  ments.
Don't include any of these items in your earned income.              Figuring the EIC
Workfare  payments.    Nontaxable  workfare  payments 
aren't  earned  income  for  the  EIC.  These  are  cash  pay-       To figure the amount of your credit, you have two choices.
ments certain people receive from a state or local agency            1. Have the IRS figure the EIC for you. If you want to do 
that administers public assistance programs funded under             this, see IRS Will Figure the EIC for You in Pub. 596.
the federal TANF program in return for certain work activi-
ties  such  as  (1)  work  experience  activities  (including  re-   2. Figure the EIC yourself. If you want to do this, see 
modeling  or  repairing  public  housing)  if  sufficient  private   How To Figure the EIC Yourself in Pub. 596.

Publication 554 (2023)                      Chapter 5                Credits                                                  31

- 32 -

Page 32 of 37 Fileid: … tions/p554/2023/a/xml/cycle06/source 14:46 - 18-Jan-2024

The type and rule above prints on all proofs including departmental reproduction proofs. MUST be removed before printing.

banks and investment firms (Forms 1099), you have sev-
eral options to choose from to prepare and file your tax re-
6. turn. You can prepare the tax return yourself, see if you
qualify for free tax preparation, or hire a tax professional to
prepare your return.
Estimated Tax
Free options for tax preparation. Your options for pre-
Estimated tax is a method used to pay tax on income that paring and filing your return online or in your local com-
isn't subject to withholding. This income includes self-em- munity, if you qualify, include the following.
ployment income, interest, dividends, alimony, rent, gains • Free File. This program lets you prepare and file your
from the sale of assets, prizes, and awards. federal individual income tax return for free using soft-
Income tax is generally withheld from pensions and annu- ware or Free File Fillable Forms. However, state tax
ity payments you receive. However, if the tax withheld from preparation may not be available through Free File. Go
your pension (or other) income isn't enough, you may to IRS.gov/FreeFile to see if you qualify for free online
have to pay estimated tax. If you don't pay enough tax federal tax preparation, e-filing, and direct deposit or
through withholding, by making estimated tax payments, payment options.
or both, you may be charged a penalty. • VITA. The Volunteer Income Tax Assistance (VITA)
program offers free tax help to people with
low-to-moderate incomes, persons with disabilities,
and limited-English-speaking taxpayers who need
Who Must Make Estimated Tax
help preparing their own tax returns. Go to IRS.gov/
Payments VITA, download the free IRS2Go app, or call
800-906-9887 for information on free tax return prepa-
If you had a tax liability for 2023, you may have to pay esti- ration.
mated tax for 2024. In most cases, you must pay estima- • TCE. The Tax Counseling for the Elderly (TCE) pro-
ted tax for 2024 if both of the following apply. gram offers free tax help for all taxpayers, particularly
1. You expect to owe at least $1,000 in tax for 2024, after those who are 60 years of age and older. TCE volun-
subtracting your withholding and tax credits. teers specialize in answering questions about pen-
sions and retirement-related issues unique to seniors.
2. You expect your withholding and tax credits to be less Go to IRS.gov/TCE or download the free IRS2Go app
than the smaller of: for information on free tax return preparation.
• 90% of the tax to be shown on your 2024 tax return, or • MilTax. Members of the U.S. Armed Forces and quali-
• 100% of the tax shown on your 2023 tax return. The fied veterans may use MilTax, a free tax service of-
2023 tax return must cover all 12 months. fered by the Department of Defense through Military
OneSource. For more information, go to
If all of your income is subject to income tax withholding MilitaryOneSource MilitaryOneSource.mil/MilTax ( ).
and enough tax is withheld, you probably don't need to Also, the IRS offers Free Fillable Forms, which can
make estimated tax payments. be completed online and then e-filed regardless of in-
For more information on estimated tax, see Pub. 505. come.

Using online tools to help prepare your return. Go to
IRS.gov/Tools for the following.
• The Earned Income Tax Credit Assistant IRS.gov/ (
EITCAssistant) determines if you’re eligible for the
7. earned income credit (EIC).
• The Online EIN Application IRS.gov/EIN ( ) helps you
get an employer identification number (EIN) at no
How To Get Tax Help cost.
If you have questions about a tax issue; need help prepar- • The Tax Withholding Estimator IRS.gov/W4App ( )
ing your tax return; or want to download free publications, makes it easier for you to estimate the federal income
forms, or instructions, go to IRS.gov to find resources that tax you want your employer to withhold from your pay-
can help you right away. check. This is tax withholding. See how your withhold-
ing affects your refund, take-home pay, or tax due.
Preparing and filing your tax return. After receiving all
• The First-Time Homebuyer Credit Account Look-up
your wage and earnings statements (Forms W-2, W-2G,
(IRS.gov/HomeBuyer) tool provides information on
1099-R, 1099-MISC, 1099-NEC, etc.); unemployment
your repayments and account balance.
compensation statements (by mail or in a digital format) or
other government payment statements (Form 1099-G);
and interest, dividend, and retirement statements from

32 Chapter 6 Estimated Tax Publication 554 (2023)

- 33 -

Page 33 of 37 Fileid: … tions/p554/2023/a/xml/cycle06/source 14:46 - 18-Jan-2024

The type and rule above prints on all proofs including departmental reproduction proofs. MUST be removed before printing.

• The Sales Tax Deduction Calculator IRS.gov/ ( The following IRS YouTube channels provide short, in-
SalesTax) figures the amount you can claim if you formative videos on various tax-related topics in English,
itemize deductions on Schedule A (Form 1040). Spanish, and ASL.
Getting answers to your tax questions. On • Youtube.com/irsvideos.
IRS.gov, you can get up-to-date information on
• Youtube.com/irsvideosmultilingua.
current events and changes in tax law.
• Youtube.com/irsvideosASL.
• IRS.gov/Help: A variety of tools to help you get an-
swers to some of the most common tax questions. Watching IRS videos. The IRS Video portal
• IRS.gov/ITA: The Interactive Tax Assistant, a tool that (IRSVideos.gov) contains video and audio presentations
will ask you questions and, based on your input, pro- for individuals, small businesses, and tax professionals.
vide answers on a number of tax topics.
Online tax information in other languages. You can
• IRS.gov/Forms: Find forms, instructions, and publica- find information on IRS.gov/MyLanguage if English isn’t
tions. You will find details on the most recent tax your native language.
changes and interactive links to help you find answers
to your questions. Free Over-the-Phone Interpreter (OPI) Service. The
IRS is committed to serving taxpayers with limited-English
• You may also be able to access tax information in your
proficiency (LEP) by offering OPI services. The OPI Serv-
e-filing software.
ice is a federally funded program and is available at Tax-
payer Assistance Centers (TACs), most IRS offices, and
Need someone to prepare your tax return? There are every VITA/TCE tax return site. The OPI Service is acces-
various types of tax return preparers, including enrolled sible in more than 350 languages.
agents, certified public accountants (CPAs), accountants,
and many others who don’t have professional credentials. Accessibility Helpline available for taxpayers with
If you choose to have someone prepare your tax return, disabilities. Taxpayers who need information about ac-
choose that preparer wisely. A paid tax preparer is: cessibility services can call 833-690-0598. The Accessi-
bility Helpline can answer questions related to current and
• Primarily responsible for the overall substantive accu- future accessibility products and services available in al-
racy of your return, ternative media formats (for example, braille, large print,
• Required to sign the return, and audio, etc.). The Accessibility Helpline does not have ac-
cess to your IRS account. For help with tax law, refunds, or
• Required to include their preparer tax identification account-related issues, go to IRS.gov/LetUsHelp.
number (PTIN).
Although the tax preparer always signs the return, Note. Form 9000, Alternative Media Preference, or
Form 9000(SP) allows you to elect to receive certain types
! you're ultimately responsible for providing all the of written correspondence in the following formats.
CAUTION information required for the preparer to accurately
prepare your return and for the accuracy of every item re- • Standard Print.
ported on the return. Anyone paid to prepare tax returns
for others should have a thorough understanding of tax • Large Print.
matters. For more information on how to choose a tax pre- • Braille.
parer, go to Tips for Choosing a Tax Preparer on IRS.gov.
• Audio (MP3).
Employers can register to use Business Services On- • Plain Text File (TXT).
line. The Social Security Administration (SSA) offers on- • Braille Ready File (BRF).
line service at SSA.gov/employer for fast, free, and secure
W-2 filing options to CPAs, accountants, enrolled agents, Disasters. Go to IRS.gov/DisasterRelief to review the
and individuals who process Form W-2, Wage and Tax available disaster tax relief.
Statement, and Form W-2c, Corrected Wage and Tax
Statement. Getting tax forms and publications. Go to IRS.gov/
Forms to view, download, or print all the forms, instruc-
IRS social media. Go to IRS.gov/SocialMedia to see the tions, and publications you may need. Or, you can go to
various social media tools the IRS uses to share the latest IRS.gov/OrderForms to place an order.
information on tax changes, scam alerts, initiatives, prod-
ucts, and services. At the IRS, privacy and security are our Getting tax publications and instructions in eBook
highest priority. We use these tools to share public infor- format. Download and view most tax publications and in-
mation with you. Don’t post your social security number structions (including the Instructions for Form 1040) on
(SSN) or other confidential information on social media mobile devices as eBooks at IRS.gov/eBooks.
sites. Always protect your identity when using any social IRS eBooks have been tested using Apple's iBooks for
networking site. iPad. Our eBooks haven’t been tested on other dedicated
eBook readers, and eBook functionality may not operate
as intended.

Publication 554 (2023) Chapter 7 How To Get Tax Help 33

- 34 -

Page 34 of 37 Fileid: … tions/p554/2023/a/xml/cycle06/source 14:46 - 18-Jan-2024

The type and rule above prints on all proofs including departmental reproduction proofs. MUST be removed before printing.

Access your online account (individual taxpayers identity theft, you can learn what steps you should
only). Go to IRS.gov/Account to securely access infor- take.
mation about your federal tax account.
• Get an Identity Protection PIN (IP PIN). IP PINs are
• View the amount you owe and a breakdown by tax six-digit numbers assigned to taxpayers to help pre-
year. vent the misuse of their SSNs on fraudulent federal in-
come tax returns. When you have an IP PIN, it pre-
• See payment plan details or apply for a new payment
vents someone else from filing a tax return with your
plan.
SSN. To learn more, go to IRS.gov/IPPIN.
• Make a payment or view 5 years of payment history
and any pending or scheduled payments. Ways to check on the status of your refund.
• Access your tax records, including key data from your • Go to IRS.gov/Refunds.
most recent tax return, and transcripts. • Download the official IRS2Go app to your mobile de-
• View digital copies of select notices from the IRS. vice to check your refund status.
• Approve or reject authorization requests from tax pro- • Call the automated refund hotline at 800-829-1954.
fessionals. The IRS can’t issue refunds before mid-February
• View your address on file or manage your communica- ! for returns that claimed the EIC or the additional
tion preferences. CAUTION child tax credit (ACTC). This applies to the entire
refund, not just the portion associated with these credits.
Get a transcript of your return. With an online account,
you can access a variety of information to help you during Making a tax payment. Payments of U.S. tax must be
the filing season. You can get a transcript, review your remitted to the IRS in U.S. dollars. Digital assets are not
most recently filed tax return, and get your adjusted gross accepted. Go to IRS.gov/Payments for information on how
income. Create or access your online account at IRS.gov/ to make a payment using any of the following options.
Account.
• IRS Direct Pay: Pay your individual tax bill or estimated
Tax Pro Account. This tool lets your tax professional tax payment directly from your checking or savings ac-
submit an authorization request to access your individual count at no cost to you.
taxpayer IRS online account. For more information, go to
• Debit Card, Credit Card, or Digital Wallet: Choose an
IRS.gov/TaxProAccount.
approved payment processor to pay online or by
Using direct deposit. The safest and easiest way to re- phone.
ceive a tax refund is to e-file and choose direct deposit, • Electronic Funds Withdrawal: Schedule a payment
which securely and electronically transfers your refund di- when filing your federal taxes using tax return prepara-
rectly into your financial account. Direct deposit also tion software or through a tax professional.
avoids the possibility that your check could be lost, stolen,
destroyed, or returned undeliverable to the IRS. Eight in • Electronic Federal Tax Payment System: Best option
for businesses. Enrollment is required.
10 taxpayers use direct deposit to receive their refunds. If
you don’t have a bank account, go to IRS.gov/ • Check or Money Order: Mail your payment to the ad-
DirectDeposit for more information on where to find a bank dress listed on the notice or instructions.
or credit union that can open an account online. Cash: You may be able to pay your taxes with cash at
•
Reporting and resolving your tax-related identity a participating retail store.
theft issues. • Same-Day Wire: You may be able to do same-day
• Tax-related identity theft happens when someone wire from your financial institution. Contact your finan-
steals your personal information to commit tax fraud. cial institution for availability, cost, and time frames.

Your taxes can be affected if your SSN is used to file a Note. The IRS uses the latest encryption technology to
fraudulent return or to claim a refund or credit. ensure that the electronic payments you make online, by
• The IRS doesn’t initiate contact with taxpayers by phone, or from a mobile device using the IRS2Go app are
email, text messages (including shortened links), tele- safe and secure. Paying electronically is quick, easy, and
phone calls, or social media channels to request or faster than mailing in a check or money order.
verify personal or financial information. This includes
requests for personal identification numbers (PINs), What if I can’t pay now? Go to IRS.gov/Payments for
passwords, or similar information for credit cards, more information about your options.
banks, or other financial accounts. • Apply for an online payment agreement IRS.gov/ (
• Go to IRS.gov/IdentityTheft, the IRS Identity Theft OPA) to meet your tax obligation in monthly install-
Central webpage, for information on identity theft and ments if you can’t pay your taxes in full today. Once
data security protection for taxpayers, tax professio- you complete the online process, you will receive im-
nals, and businesses. If your SSN has been lost or mediate notification of whether your agreement has
stolen or you suspect you’re a victim of tax-related been approved.

34 Chapter 7 How To Get Tax Help Publication 554 (2023)

- 35 -

Page 35 of 37 Fileid: … tions/p554/2023/a/xml/cycle06/source 14:46 - 18-Jan-2024

The type and rule above prints on all proofs including departmental reproduction proofs. MUST be removed before printing.

• Use the Offer in Compromise Pre-Qualifier to see if to ensure that every taxpayer is treated fairly and that you
you can settle your tax debt for less than the full know and understand your rights under the Taxpayer Bill
amount you owe. For more information on the Offer in of Rights.
Compromise program, go to IRS.gov/OIC.
How Can You Learn About Your Taxpayer
Filing an amended return. Go to IRS.gov/Form1040X
Rights?
for information and updates.
The Taxpayer Bill of Rights describes 10 basic rights that
Checking the status of your amended return. Go to
all taxpayers have when dealing with the IRS. Go to
IRS.gov/WMAR to track the status of Form 1040-X amen-
TaxpayerAdvocate.IRS.gov to help you understand what
ded returns.
these rights mean to you and how they apply. These are
It can take up to 3 weeks from the date you filed your rights. Know them. Use them.
! your amended return for it to show up in our sys-
CAUTION tem, and processing it can take up to 16 weeks.
What Can TAS Do for You?

Understanding an IRS notice or letter you’ve re- TAS can help you resolve problems that you can’t resolve
ceived. Go to IRS.gov/Notices to find additional informa- with the IRS. And their service is free. If you qualify for
tion about responding to an IRS notice or letter. their assistance, you will be assigned to one advocate
who will work with you throughout the process and will do
Responding to an IRS notice or letter. You can now everything possible to resolve your issue. TAS can help
upload responses to all notices and letters using the you if:
Document Upload Tool. For notices that require additional
• Your problem is causing financial difficulty for you,
action, taxpayers will be redirected appropriately on
your family, or your business;
IRS.gov to take further action. To learn more about the
tool, go to IRS.gov/Upload. • You face (or your business is facing) an immediate
threat of adverse action; or
Note. You can use Schedule LEP (Form 1040), Re-
quest for Change in Language Preference, to state a pref- • You’ve tried repeatedly to contact the IRS but no one
has responded, or the IRS hasn’t responded by the
erence to receive notices, letters, or other written commu-
date promised.
nications from the IRS in an alternative language. You may
not immediately receive written communications in the re-
quested language. The IRS’s commitment to LEP taxpay- How Can You Reach TAS?
ers is part of a multi-year timeline that began providing
TAS has offices in every state, the District of Columbia,
translations in 2023. You will continue to receive communi-
and Puerto Rico. To find your advocate’s number:
cations, including notices and letters, in English until they
are translated to your preferred language. • Go to TaxpayerAdvocate.IRS.gov/Contact-Us;
Contacting your local TAC. Keep in mind, many ques- • Download Pub. 1546, The Taxpayer Advocate Service
tions can be answered on IRS.gov without visiting a TAC. Is Your Voice at the IRS, available at IRS.gov/pub/irs-
Go to IRS.gov/LetUsHelp for the topics people ask about pdf/p1546.pdf;
most. If you still need help, TACs provide tax help when a • Call the IRS toll free at 800-TAX-FORM
tax issue can’t be handled online or by phone. All TACs (800-829-3676) to order a copy of Pub. 1546;
now provide service by appointment, so you’ll know in ad-
• Check your local directory; or
vance that you can get the service you need without long
wait times. Before you visit, go to IRS.gov/TACLocator to • Call TAS toll free at 877-777-4778.
find the nearest TAC and to check hours, available serv-
ices, and appointment options. Or, on the IRS2Go app, How Else Does TAS Help Taxpayers?
under the Stay Connected tab, choose the Contact Us op-
tion and click on “Local Offices.” TAS works to resolve large-scale problems that affect
many taxpayers. If you know of one of these broad issues,
report it to TAS at IRS.gov/SAMS. Be sure to not include
any personal taxpayer information.
The Taxpayer Advocate

Service (TAS) Is Here To Help Low Income Taxpayer Clinics (LITCs)

You LITCs are independent from the IRS and TAS. LITCs rep-
resent individuals whose income is below a certain level
and who need to resolve tax problems with the IRS. LITCs
What Is TAS? can represent taxpayers in audits, appeals, and tax collec-
TAS is an independent organization within the IRS that tion disputes before the IRS and in court. In addition,
helps taxpayers and protects taxpayer rights. Their job is LITCs can provide information about taxpayer rights and
responsibilities in different languages for individuals who

Publication 554 (2023) Chapter 7 How To Get Tax Help 35

- 36 -

Page 36 of 37        Fileid: … tions/p554/2023/a/xml/cycle06/source                 14:46 - 18-Jan-2024

The type and rule above prints on all proofs including departmental reproduction proofs. MUST be removed before printing.

speak English as a second language. Services are offered    TaxpayerAdvocate.IRS.gov/LITC  or  see  IRS  Pub.  4134, 
for free or a small fee. For more information or to find an Low  Income  Taxpayer  Clinic  List,  at IRS.gov/pub/irs-pdf/
LITC   near   you,   go      to the   LITC  page    at      p4134.pdf.

                 To help us develop a more useful index, please let us know if you have ideas for index entries.
Index            See “Comments and Suggestions” in the “Introduction” for the ways you can reach us.
 
                                                                            Form:
A                                     D                                      1099-R  9 10, 
Accelerated death benefits   16       Death benefit, accelerated    16       5329  11
Accounting periods:                   Decedents  6                           8853  16
 Change in, standard deduction not      Standard deduction    20             Schedule R        26
   allowed  20                        Deductions:                            W-4P   8
Accrued leave payment:                  Generally 20
 Disability retirement and 15           Insurance premiums    25            G
Adjusted gross income (AGI)     19      Itemized 21                         Gain on sale of home (See Sale of 
Adjustments to income    19             Meals and lodging   24               home)
Age:                                    Medical and dental  21              General rule, pension or annuity               7
 Elderly or disabled credit,            Standard  20                        Gifts 18
   requirements for  27               Dependents  6
 Standard deduction for age 65 or       Standard deduction for    21        H
   older  20                          Disability 28                         Home care (See Nursing services)
American Association of Retired         Credit for, permanently and totally Home improvements          23
 Persons (AARP)    3                       disabled 26                      Home, sale of (See Sale of home)
Annuities 7                             Income   15 28,                     Hospital services        23
Assistance (See Tax help)                  Definition and exceptions, for   Household help       23
                                             elderly and disabled credit  28
B                                          Exclusions from, generally  19   I
Base amount, social security               Inclusions in, generally 19      Income:
 benefits 12                            Sale of home, for persons with       Adjustments       19
Benefits:                                  (See (See Sale of home))          Disability payments, reporting 
 Accident or health 15                Distributions, retirement plan   6     for    14
 Long-term care  15                   Drugs (See Medicines)                  Earned income, defined      29
 No-fault insurance  15               Dual-status taxpayers:                 Gross, defined      5
 Sickness and injury 14                 Standard deduction    20             Nontaxable, generally     6
 Social security 12
                                                                             Sale of home      16
 Veterans' 18                         E                                      Self-employment         5
Bequests  18                          Early distributions, tax 10            Taxable, generally      6
Blind persons:                        Earned income credit    29            Individual retirement arrangement 
 Standard deduction for  20           Elderly:                               (IRA):
                                        Credit for, persons who are  26      Adjustments to income       19
C                                     Employment tax withholding      2      Contributions     20
Child and dependent care credit    29 Employment taxes      25               Deductible contribution     20
Children:                             Endowment proceeds       16            Distributions     7
 Standard deduction for  21           Estimated tax 12 32,                  Inheritances       18
Chronically ill persons  24           Excess accumulation, tax on      10   Injury benefits    14
Chronically ill, defined 16           Exclusion, gain on sale of home:      Insurance:
Compensation:                           Expatriate tax, effect of 17         Accident and health       15 25, 
 Compensatory damages       15                                               Benefits, long-term care    15
 For services 6                       F                                      Benefits, no-fault insurance                15
 Loss or disfigurement   15           Federal Employees:                     Life insurance proceeds     15
Contributions:                          Compensation Act (FECA)              Proceeds paid after death                   15
 Foreign employment    8                   payments 15                       Proceeds paid before death                  16
 Pension or annuity  7                Filing requirements:                  Insurance premiums for retired 
Cost, pension or annuity   7            Decedents   6                        public safety officers      11
Credits:                                General requirements   5            Itemized deductions        21
 Child and dependent care    29         Surviving spouse    6                Married filing separately:
 Earned income   29                   Final return for decedent:             One spouse has itemized                     20
 Elderly or disabled 26                 Standard deduction    20
                                      First-time homebuyer credit:          L
                                        Repayment   17                      Life insurance proceeds      15

36                                                                                       Publication 554 (2023)

- 37 -

Page 37 of 37       Fileid: … tions/p554/2023/a/xml/cycle06/source                    14:46 - 18-Jan-2024

The type and rule above prints on all proofs including departmental reproduction proofs. MUST be removed before printing.

Long-term care 24                    Nursing home   24                        Age 65 or older 20
Chronically ill individuals 24       Nursing services  25                     Blind persons 20
Maintenance and personal care          Chronically ill individuals 24         Dependents 21
  services  24                       Nutrition program for elderly    19      Final return of decedent  20
Qualified insurance contracts  24                                             Married filing separately:
Qualified services 24                O                                           One spouse has itemized                 20
Long-term care insurance    15       Other items 18                          Starting date, annuity  8
Loss or disfigurement                                                        State fund for victims of crime               19
compensation     15                  P                                       Supplemental Security Income 
Lump-sum death benefits     19       Payments, estimated tax       32         (SSI) benefits  19
Lump-sum distributions   10          Pensions  7                             Surrender of Iife insurance                 16
Lump-sum election, social            Pensions, disability 14                 Surviving spouse   6
security  14                                                                 Surviving spouse, insurance                 16
                                     Photographs, missing children      2
M                                    Prepaid insurance premiums       25     Survivors of retirees 9
                                     Preparer, paid 2
Maintenance and personal care                                                T
                                     Preparing your return 3
services  24                                                                 Tax:
                                     Profit-sharing plan 15
Married filing separately:                                                    Early distributions 10
                                     Public assistance payments       18
Itemized deductions:                                                          Estimated 12 32, 
                                     Publications (See Tax help)
  One spouse has itemized so                                                  Excess accumulation    10
  other must as well     20
                                     Q                                       Tax counseling for the elderly 
Married taxpayers:                                                            (TCE)   3
Age 65 or older spouse:              Qualified retirement plan     10
                                                                             Tax help 32
  Standard deduction    21                                                   Tax option, 10-year  10
Blind spouse:                        R
  Standard deduction    21           Railroad retirement benefits     11 12, Tax return preparers  2
Meals and lodging expenses     24    Repayments:                             Taxable income:
Medical expenses  21                   Social security benefits 12            Generally 6
Medicare 25                          Reporting pension income      9         Taxation of benefits 12
Benefits  19                         Residence, sale of (See Sale of         Terminally ill, defined 16
Medicines 25                           home)                                 Transportation expenses    25
Imported  25                         Retirement plans, distributions    6
Military retirement pay 11           Returns:                                U
Minimum distributions   10             Decedent  6                           U.S. citizen or resident alien:
Missing children 2                     Executors and administrators   6       Eligibility for elderly or disabled 
Mortgage assistance payments      19   Filing requirements 5                     credit:
                                       Surviving spouse 6                        Exceptions for certain 
                                                                                  nonresident aliens    27
N                                    Reverse mortgages    18
                                                                              Filing requirements 5
Nonperiodic distributions   9                                                Unemployment compensation                     6
                                     S
Nonqualified use 17
Nonresident aliens:                  Salaries (See Compensation)             V
Standard deduction  20               Sale of home  17
                                                                             Veterans' benefits 18
Nontaxable income   19                 Main home, definition of 16
                                                                             Viatical settlement  16
Accident or health insurance           Ownership and use test   17
                                                                             Victims of crime 19
  benefits 15                          Surviving spouse 18
                                                                             Volunteer income tax assistance 
Bequests  18                         Self-employed   5                        (VITA)  3
Generally 6                          Short tax year:                         Volunteer work 6
Gifts 18                               Change in annual accounting 
Inheritances 18                        period  20                            W
Mortgage assistance payments      19 Sickness and injury benefits     14
                                                                             Wages (See Compensation)
No-fault insurance benefits 15       Simplified method   7
                                                                             Winter energy use payments                  19
Nutrition program for elderly  19      How to use  8
                                                                             Withholding:
Public assistance payments     18      Who can’t use 8
                                                                              Employment tax  2
Sickness and injury benefits   14      Who must use  8
                                                                              Pensions and annuities   8
Veterans' benefits 18                Social security benefits   11
                                                                             Workers' compensation     15
Winter energy use   19                 lump-sum payments attributable to 
                                       prior years   19                      Worksheets, social security                 13
Workers' compensation    15
                                     Standard deduction    20

Publication 554 (2023)                                                                                                      37

PDF file checksum: 3473169246

(Plugin #1/9.12/13.0)