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1040ez File Online Free

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1040ez File Online Free

1040ez file online free Publication 560 - Introductory Material Table of Contents Future Developments What's New Reminders IntroductionSEP plans. 1040ez file online free SIMPLE plans. 1040ez file online free Qualified plans. 1040ez file online free Ordering forms and publications. 1040ez file online free Tax questions. 1040ez file online free Future Developments For the latest information about developments related to Publication 560, such as legislation enacted after we release it, go to www. 1040ez file online free irs. 1040ez file online free gov/pub560. 1040ez file online free What's New Compensation limit increased for 2013 and 2014. 1040ez file online free  For 2013 the maximum compensation used for figuring contributions and benefits increases to $255,000. 1040ez file online free This limit increases to $260,000 for 2014. 1040ez file online free Elective deferral limit for 2013 and 2014. 1040ez file online free  The limit on elective deferrals, other than catch-up contributions, increases to $17,500 for 2013 and remains at $17,500 for 2014. 1040ez file online free These limits apply for participants in SARSEPs, 401(k) plans (excluding SIMPLE plans), section 403(b) plans and section 457(b) plans. 1040ez file online free Defined contribution limit increased for 2013 and 2014. 1040ez file online free  The limit on contributions, other than catch-up contributions, for a participant in a defined contribution plan increases to $51,000 for 2013. 1040ez file online free This limit increases to $52,000 for 2014. 1040ez file online free SIMPLE plan salary reduction contribution limit for 2013 and 2014. 1040ez file online free  The limit on salary reduction contributions, other than catch-up contributions, increases to $12,000 for 2013 and remains at $12,000 for 2014. 1040ez file online free Catch-up contribution limit remains unchanged for 2013 and 2014. 1040ez file online free  A plan can permit participants who are age 50 or over at the end of the calendar year to make catch-up contributions in addition to elective deferrals and SIMPLE plan salary reduction contributions. 1040ez file online free The catch-up contribution limitation for defined contribution plans other than SIMPLE plans remains unchanged at $5,500 for 2013 and 2014. 1040ez file online free The catch-up contribution limitation for SIMPLE plans remains unchanged at $2,500 for 2013 and 2014. 1040ez file online free The catch-up contributions a participant can make for a year cannot exceed the lesser of the following amounts. 1040ez file online free The catch-up contribution limit. 1040ez file online free The excess of the participant's compensation over the elective deferrals that are not catch-up contributions. 1040ez file online free See “Catch-up contributions” under Contribution Limits and Limit on Elective Deferrals in chapters 3 and 4, respectively, for more information. 1040ez file online free All section references are to the Internal Revenue Code, unless otherwise stated. 1040ez file online free Reminders In-plan Roth rollovers. 1040ez file online free  Section 402A(c)(4) provides for a distribution from an individual's account in a 401(k) plan, other than from a designated Roth account, that is rolled over to the individual's designated Roth account in the same plan. 1040ez file online free An in-plan Roth rollover is not treated as a distribution for most purposes. 1040ez file online free Section 402A(c)(4) was added by the Small Business Jobs Act of 2010 and applies to distributions made after September 27, 2010. 1040ez file online free For additional guidance on in-plan Roth rollovers, see Notice 2010-84, 2010-51 I. 1040ez file online free R. 1040ez file online free B. 1040ez file online free 872, available at  www. 1040ez file online free irs. 1040ez file online free gov/irb/2010-51_IRB/ar11. 1040ez file online free html. 1040ez file online free In-plan Roth rollovers expanded. 1040ez file online free  Beginning in 2013, a plan with designated Roth accounts can permit a participant to roll over amounts into a designated Roth account from his or her other accounts in the same plan, regardless of whether the participant is eligible for a distribution from the other accounts. 1040ez file online free Section 402A(c)(4) was amended by the American Taxpayer Relief Act of 2012. 1040ez file online free For more information, see Notice 2013-74, 2013-52 I. 1040ez file online free R. 1040ez file online free B. 1040ez file online free 819, available at www. 1040ez file online free irs. 1040ez file online free gov/irb/2013-52_IRB/ar11. 1040ez file online free html. 1040ez file online free Credit for startup costs. 1040ez file online free  You may be able to claim a tax credit for part of the ordinary and necessary costs of starting a SEP, SIMPLE, or qualified plan. 1040ez file online free The credit equals 50% of the cost to set up and administer the plan and educate employees about the plan, up to a maximum of $500 per year for each of the first 3 years of the plan. 1040ez file online free You can choose to start claiming the credit in the tax year before the tax year in which the plan becomes effective. 1040ez file online free You must have had 100 or fewer employees who received at least $5,000 in compensation from you for the preceding year. 1040ez file online free At least one participant must be a non-highly compensated employee. 1040ez file online free The employees generally cannot be substantially the same employees for whom contributions were made or benefits accrued under a plan of any of the following employers in the 3-tax-year period immediately before the first year to which the credit applies. 1040ez file online free You. 1040ez file online free A member of a controlled group that includes you. 1040ez file online free A predecessor of (1) or (2). 1040ez file online free The credit is part of the general business credit, which can be carried back or forward to other tax years if it cannot be used in the current year. 1040ez file online free However, the part of the general business credit attributable to the small employer pension plan startup cost credit cannot be carried back to a tax year beginning before January 1, 2002. 1040ez file online free You cannot deduct the part of the startup costs equal to the credit claimed for a tax year, but you can choose not to claim the allowable credit for a tax year. 1040ez file online free To take the credit, use Form 8881, Credit for Small Employer Pension Plan Startup Costs. 1040ez file online free Retirement savings contributions credit. 1040ez file online free  Retirement plan participants (including self-employed individuals) who make contributions to their plan may qualify for the retirement savings contribution credit. 1040ez file online free The maximum contribution eligible for the credit is $2,000. 1040ez file online free To take the credit, use Form 8880, Credit for Qualified Retirement Savings Contributions. 1040ez file online free For more information on who is eligible for the credit, retirement plan contributions eligible for the credit and how to figure the credit, see Form 8880 and its instructions or go to the IRS website and search Retirement Topics-Retirement Savings Contributions Credit (Saver's Credit). 1040ez file online free Photographs of missing children. 1040ez file online free  The Internal Revenue Service is a proud partner with the National Center for Missing and Exploited Children. 1040ez file online free Photographs of missing children selected by the Center may appear in this publication on pages that would otherwise be blank. 1040ez file online free You can help bring these children home by looking at the photographs and calling 1-800-THE-LOST (1-800-843-5678) if you recognize a child. 1040ez file online free Introduction This publication discusses retirement plans you can set up and maintain for yourself and your employees. 1040ez file online free In this publication, “you” refers to the employer. 1040ez file online free See chapter 1 for the definition of the term employer and the definitions of other terms used in this publication. 1040ez file online free This publication covers the following types of retirement plans. 1040ez file online free SEP (simplified employee pension) plans. 1040ez file online free SIMPLE (savings incentive match plan for employees) plans. 1040ez file online free Qualified plans (also called H. 1040ez file online free R. 1040ez file online free 10 plans or Keogh plans when covering self-employed individuals), including 401(k) plans. 1040ez file online free SEP, SIMPLE, and qualified plans offer you and your employees a tax-favored way to save for retirement. 1040ez file online free You can deduct contributions you make to the plan for your employees. 1040ez file online free If you are a sole proprietor, you can deduct contributions you make to the plan for yourself. 1040ez file online free You can also deduct trustees' fees if contributions to the plan do not cover them. 1040ez file online free Earnings on the contributions are generally tax free until you or your employees receive distributions from the plan. 1040ez file online free Under a 401(k) plan, employees can have you contribute limited amounts of their before-tax (after-tax, in the case of a qualified Roth contribution program) pay to the plan. 1040ez file online free These amounts (and the earnings on them) are generally tax free until your employees receive distributions from the plan or, in the case of a qualified distribution from a designated Roth account, completely tax free. 1040ez file online free What this publication covers. 1040ez file online free   This publication contains the information you need to understand the following topics. 1040ez file online free What type of plan to set up. 1040ez file online free How to set up a plan. 1040ez file online free How much you can contribute to a plan. 1040ez file online free How much of your contribution is deductible. 1040ez file online free How to treat certain distributions. 1040ez file online free How to report information about the plan to the IRS and your employees. 1040ez file online free Basic features of SEP, SIMPLE, and qualified plans. 1040ez file online free The key rules for SEP, SIMPLE, and qualified plans are outlined in Table 1. 1040ez file online free SEP plans. 1040ez file online free   SEPs provide a simplified method for you to make contributions to a retirement plan for yourself and your employees. 1040ez file online free Instead of setting up a profit-sharing or money purchase plan with a trust, you can adopt a SEP agreement and make contributions directly to a traditional individual retirement account or a traditional individual retirement annuity (SEP-IRA) set up for yourself and each eligible employee. 1040ez file online free SIMPLE plans. 1040ez file online free   Generally, if you had 100 or fewer employees who received at least $5,000 in compensation last year, you can set up a SIMPLE plan. 1040ez file online free Under a SIMPLE plan, employees can choose to make salary reduction contributions rather than receiving these amounts as part of their regular pay. 1040ez file online free In addition, you will contribute matching or nonelective contributions. 1040ez file online free The two types of SIMPLE plans are the SIMPLE IRA plan and the SIMPLE 401(k) plan. 1040ez file online free Qualified plans. 1040ez file online free   The qualified plan rules are more complex than the SEP plan and SIMPLE plan rules. 1040ez file online free However, there are advantages to qualified plans, such as increased flexibility in designing plans and increased contribution and deduction limits in some cases. 1040ez file online free Table 1. 1040ez file online free Key Retirement Plan Rules for 2013 Type  of  Plan Last Date for Contribution Maximum Contribution Maximum Deduction When To Set Up Plan SEP Due date of employer's return (including extensions). 1040ez file online free Smaller of $51,000 or 25%1 of participant's compensation. 1040ez file online free 2 25%1 of all participants' compensation. 1040ez file online free 2 Any time up to the due date of employer's return (including extensions). 1040ez file online free SIMPLE IRA and SIMPLE 401(k) Salary reduction contributions: 30 days after the end of the month for which the contributions are to be made. 1040ez file online free 4  Matching or nonelective contributions: Due date of employer's return (including extensions). 1040ez file online free Employee contribution: Salary reduction contribution up to $12,000, $14,500 if age 50 or over. 1040ez file online free   Employer contribution:  Either dollar-for-dollar matching contributions, up to 3% of employee's compensation,3 or fixed nonelective contributions of 2% of compensation. 1040ez file online free 2 Same as maximum contribution. 1040ez file online free Any time between 1/1 and 10/1 of the calendar year. 1040ez file online free   For a new employer coming into existence after 10/1, as soon as administratively feasible. 1040ez file online free Qualified Plan: Defined Contribution Plan  Elective deferral: Due date of employer's return (including extensions). 1040ez file online free 4   Employer contribution: Money Purchase or Profit-Sharing: Due date of employer's return (including extensions). 1040ez file online free  Employee contribution: Elective deferral up to $17,500, $23,000 if age 50 or over. 1040ez file online free   Employer contribution: Money Purchase: Smaller of $51,000 or 100%1 of participant's compensation. 1040ez file online free 2  Profit-Sharing: Smaller of $51,000 or 100%1 of participant's compensation. 1040ez file online free 2  25%1 of all participants' compensation2, plus amount of elective deferrals made. 1040ez file online free   By the end of the tax year. 1040ez file online free Qualified Plan: Defined Benefit Plan Contributions generally must be paid in quarterly installments, due 15 days after the end of each quarter. 1040ez file online free See Minimum Funding Requirement in chapter 4. 1040ez file online free Amount needed to provide an annual benefit no larger than the smaller of $205,000 or 100% of the participant's average compensation for his or her highest 3 consecutive calendar years. 1040ez file online free Based on actuarial assumptions and computations. 1040ez file online free By the end of the tax year. 1040ez file online free 1Net earnings from self-employment must take the contribution into account. 1040ez file online free See Deduction Limit for Self-Employed Individuals in chapters 2 and 4 . 1040ez file online free  2Compensation is generally limited to $255,000 in 2013. 1040ez file online free  3Under a SIMPLE 401(k) plan, compensation is generally limited to $255,000 in 2013. 1040ez file online free  4Certain plans subject to Department of Labor rules may have an earlier due date for salary reduction contributions and elective deferrals. 1040ez file online free What this publication does not cover. 1040ez file online free   Although the purpose of this publication is to provide general information about retirement plans you can set up for your employees, it does not contain all the rules and exceptions that apply to these plans. 1040ez file online free You may also need professional help and guidance. 1040ez file online free   Also, this publication does not cover all the rules that may be of interest to employees. 1040ez file online free For example, it does not cover the following topics. 1040ez file online free The comprehensive IRA rules an employee needs to know. 1040ez file online free These rules are covered in Publication 590, Individual Retirement Arrangements (IRAs). 1040ez file online free The comprehensive rules that apply to distributions from retirement plans. 1040ez file online free These rules are covered in Publication 575, Pension and Annuity Income. 1040ez file online free The comprehensive rules that apply to section 403(b) plans. 1040ez file online free These rules are covered in Publication 571, Tax-Sheltered Annuity Plans (403(b) Plans). 1040ez file online free Comments and suggestions. 1040ez file online free   We welcome your comments about this publication and your suggestions for future editions. 1040ez file online free   You can write to us at the following address: Internal Revenue Service Tax Forms and Publications Division 1111 Constitution Ave. 1040ez file online free NW, IR-6526 Washington, DC 20224   We respond to many letters by telephone. 1040ez file online free Therefore, it would be helpful if you would include your daytime phone number, including the area code, in your correspondence. 1040ez file online free   You can send your comments from www. 1040ez file online free irs. 1040ez file online free gov/formspubs. 1040ez file online free Click on “More Information” and then on “Give us feedback. 1040ez file online free ”   Although we cannot respond individually to each comment received, we do appreciate your feedback and will consider your comments as we revise our tax products. 1040ez file online free Ordering forms and publications. 1040ez file online free   Visit www. 1040ez file online free irs. 1040ez file online free gov/formspubs to download forms  and publications, call 1-800-TAX-FORM  (1-800-829-3676), or write to the address below and receive a response within 10 days after your request is received. 1040ez file online free Internal Revenue Service 1201 N. 1040ez file online free Mitsubishi Motorway Bloomington, IL 61705-6613 Tax questions. 1040ez file online free   If you have a tax question, check the information available on IRS. 1040ez file online free gov or call 1-800-829-1040. 1040ez file online free We cannot answer tax questions sent to either of the above addresses. 1040ez file online free Note. 1040ez file online free Forms filed electronically with the Department of Labor are not available on the IRS website. 1040ez file online free Instead, see www. 1040ez file online free efast. 1040ez file online free dol. 1040ez file online free gov. 1040ez file online free Prev  Up  Next   Home   More Online Publications
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1040ez file online free 2. 1040ez file online free   Employees' Pay Table of Contents Introduction Topics - This chapter discusses: Useful Items - You may want to see: Tests for Deducting PayTest 1—Reasonableness Test 2—For Services Performed Kinds of PayAwards Bonuses Education Expenses Fringe Benefits Loans or Advances Property Reimbursements for Business Expenses Sick and Vacation Pay Introduction You can generally deduct the amount you pay your employees for the services they perform. 1040ez file online free The pay may be in cash, property, or services. 1040ez file online free It may include wages, salaries, bonuses, commissions, or other non-cash compensation such as vacation allowances and fringe benefits. 1040ez file online free For information about deducting employment taxes, see chapter 5. 1040ez file online free You can claim employment credits, such as the following, if you hire individuals who meet certain requirements. 1040ez file online free Empowerment zone employment credit (Form 8844). 1040ez file online free Indian employment credit (Form 8845). 1040ez file online free Work opportunity credit (Form 5884). 1040ez file online free Credit for employer differential wage payments (Form 8932). 1040ez file online free Reduce your deduction for employee wages by the amount of employment credits you claim. 1040ez file online free For more information about these credits, see the form on which the credit is claimed. 1040ez file online free Topics - This chapter discusses: Tests for deducting pay Kinds of pay Useful Items - You may want to see: Publication 15 (Circular E), Employer's Tax Guide 15-A Employer's Supplemental Tax Guide 15-B Employer's Tax Guide to Fringe Benefits See chapter 12 for information about getting publications and forms. 1040ez file online free Tests for Deducting Pay To be deductible, your employees' pay must be an ordinary and necessary business expense and you must pay or incur it. 1040ez file online free These and other requirements that apply to all business expenses are explained in chapter 1. 1040ez file online free In addition, the pay must meet both of the following tests. 1040ez file online free Test 1. 1040ez file online free It must be reasonable. 1040ez file online free Test 2. 1040ez file online free It must be for services performed. 1040ez file online free The form or method of figuring the pay does not affect its deductibility. 1040ez file online free For example, bonuses and commissions based on sales or earnings, and paid under an agreement made before the services were performed, are both deductible. 1040ez file online free Test 1—Reasonableness You must be able to prove that the pay is reasonable. 1040ez file online free Whether the pay is reasonable depends on the circumstances that existed when you contracted for the services, not those that exist when reasonableness is questioned. 1040ez file online free If the pay is excessive, the excess pay is disallowed as a deduction. 1040ez file online free Factors to consider. 1040ez file online free   Determine the reasonableness of pay by the facts and circumstances. 1040ez file online free Generally, reasonable pay is the amount that a similar business would pay for the same or similar services. 1040ez file online free   To determine if pay is reasonable, also consider the following items and any other pertinent facts. 1040ez file online free The duties performed by the employee. 1040ez file online free The volume of business handled. 1040ez file online free The character and amount of responsibility. 1040ez file online free The complexities of your business. 1040ez file online free The amount of time required. 1040ez file online free The cost of living in the locality. 1040ez file online free The ability and achievements of the individual employee performing the service. 1040ez file online free The pay compared with the gross and net income of the business, as well as with distributions to shareholders if the business is a corporation. 1040ez file online free Your policy regarding pay for all your employees. 1040ez file online free The history of pay for each employee. 1040ez file online free Test 2—For Services Performed You must be able to prove the payment was made for services actually performed. 1040ez file online free Employee-shareholder salaries. 1040ez file online free   If a corporation pays an employee who is also a shareholder a salary that is unreasonably high considering the services actually performed, the excessive part of the salary may be treated as a constructive dividend to the employee-shareholder. 1040ez file online free The excessive part of the salary would not be allowed as a salary deduction by the corporation. 1040ez file online free For more information on corporate distributions to shareholders, see Publication 542, Corporations. 1040ez file online free Kinds of Pay Some of the ways you may provide pay to your employees in addition to regular wages or salaries are discussed next. 1040ez file online free For specialized and detailed information on employees' pay and the employment tax treatment of employees' pay, see Publications 15, 15-A, and 15-B. 1040ez file online free Awards You can generally deduct amounts you pay to your employees as awards, whether paid in cash or property. 1040ez file online free If you give property to an employee as an employee achievement award, your deduction may be limited. 1040ez file online free Achievement awards. 1040ez file online free   An achievement award is an item of tangible personal property that meets all the following requirements. 1040ez file online free It is given to an employee for length of service or safety achievement. 1040ez file online free It is awarded as part of a meaningful presentation. 1040ez file online free It is awarded under conditions and circumstances that do not create a significant likelihood of disguised pay. 1040ez file online free Length-of-service award. 1040ez file online free    An award will qualify as a length-of-service award only if either of the following applies. 1040ez file online free The employee receives the award after his or her first 5 years of employment. 1040ez file online free The employee did not receive another length-of-service award (other than one of very small value) during the same year or in any of the prior 4 years. 1040ez file online free Safety achievement award. 1040ez file online free    An award for safety achievement will qualify as an achievement award unless one of the following applies. 1040ez file online free It is given to a manager, administrator, clerical employee, or other professional employee. 1040ez file online free During the tax year, more than 10% of your employees, excluding those listed in (1), have already received a safety achievement award (other than one of very small value). 1040ez file online free Deduction limit. 1040ez file online free   Your deduction for the cost of employee achievement awards given to any one employee during the tax year is limited to the following. 1040ez file online free $400 for awards that are not qualified plan awards. 1040ez file online free $1,600 for all awards, whether or not qualified plan awards. 1040ez file online free   A qualified plan award is an achievement award given as part of an established written plan or program that does not favor highly compensated employees as to eligibility or benefits. 1040ez file online free   A highly compensated employee is an employee who meets either of the following tests. 1040ez file online free The employee was a 5% owner at any time during the year or the preceding year. 1040ez file online free The employee received more than $115,000 in pay for the preceding year. 1040ez file online free You can choose to ignore test (2) if the employee was not also in the top 20% of employees ranked by pay for the preceding year. 1040ez file online free   An award is not a qualified plan award if the average cost of all the employee achievement awards given during the tax year (that would be qualified plan awards except for this limit) is more than $400. 1040ez file online free To figure this average cost, ignore awards of nominal value. 1040ez file online free Deduct achievement awards as a nonwage business expense on your return or business schedule. 1040ez file online free You may not owe employment taxes on the value of some achievement awards you provide to an employee. 1040ez file online free See Publication 15-B. 1040ez file online free Bonuses You can generally deduct a bonus paid to an employee if you intended the bonus as additional pay for services, not as a gift, and the services were performed. 1040ez file online free However, the total bonuses, salaries, and other pay must be reasonable for the services performed. 1040ez file online free If the bonus is paid in property, see Property , later. 1040ez file online free Gifts of nominal value. 1040ez file online free    If, to promote employee goodwill, you distribute food or merchandise of nominal value to your employees at holidays, you can deduct the cost of these items as a nonwage business expense. 1040ez file online free Your deduction for de minimis gifts of food or drink are not subject to the 50% deduction limit that generally applies to meals. 1040ez file online free For more information on this deduction limit, see Meals and lodging , later. 1040ez file online free Education Expenses If you pay or reimburse education expenses for an employee, you can deduct the payments if they are part of a qualified educational assistance program. 1040ez file online free Deduct them on the “Employee benefit programs” or other appropriate line of your tax return. 1040ez file online free For information on educational assistance programs, see Educational Assistance in section 2 of Publication 15-B. 1040ez file online free Fringe Benefits A fringe benefit is a form of pay for the performance of services. 1040ez file online free You can generally deduct the cost of fringe benefits. 1040ez file online free You may be able to exclude all or part of the value of some fringe benefits from your employees' pay. 1040ez file online free You also may not owe employment taxes on the value of the fringe benefits. 1040ez file online free See Table 2-1, Special Rules for Various Types of Fringe Benefits, in Publication 15-B for details. 1040ez file online free Your deduction for the cost of fringe benefits for activities generally considered entertainment, amusement, or recreation, or for a facility used in connection with such an activity (for example, a company aircraft) for certain officers, directors, and more-than-10% shareholders is limited. 1040ez file online free Certain fringe benefits are discussed next. 1040ez file online free See Publication 15-B for more details on these and other fringe benefits. 1040ez file online free Meals and lodging. 1040ez file online free   You can usually deduct the cost of furnishing meals and lodging to your employees. 1040ez file online free Deduct the cost in whatever category the expense falls. 1040ez file online free For example, if you operate a restaurant, deduct the cost of the meals you furnish to employees as part of the cost of goods sold. 1040ez file online free If you operate a nursing home, motel, or rental property, deduct the cost of furnishing lodging to an employee as expenses for utilities, linen service, salaries, depreciation, etc. 1040ez file online free Deduction limit on meals. 1040ez file online free   You can generally deduct only 50% of the cost of furnishing meals to your employees. 1040ez file online free However, you can deduct the full cost of the following meals. 1040ez file online free Meals whose value you include in an employee's wages. 1040ez file online free Meals that qualify as a de minimis fringe benefit as discussed in section 2 of Publication 15-B. 1040ez file online free This generally includes meals you furnish to employees at your place of business if more than half of these employees are provided the meals for your convenience. 1040ez file online free Meals you furnish to your employees at the work site when you operate a restaurant or catering service. 1040ez file online free Meals you furnish to your employees as part of the expense of providing recreational or social activities, such as a company picnic. 1040ez file online free Meals you are required by federal law to furnish to crew members of certain commercial vessels (or would be required to furnish if the vessels were operated at sea). 1040ez file online free This does not include meals you furnish on vessels primarily providing luxury water transportation. 1040ez file online free Meals you furnish on an oil or gas platform or drilling rig located offshore or in Alaska. 1040ez file online free This includes meals you furnish at a support camp that is near and integral to an oil or gas drilling rig located in Alaska. 1040ez file online free Employee benefit programs. 1040ez file online free   Employee benefit programs include the following. 1040ez file online free Accident and health plans. 1040ez file online free Adoption assistance. 1040ez file online free Cafeteria plans. 1040ez file online free Dependent care assistance. 1040ez file online free Education assistance. 1040ez file online free Life insurance coverage. 1040ez file online free Welfare benefit funds. 1040ez file online free   You can generally deduct amounts you spend on employee benefit programs on the applicable line of your tax return. 1040ez file online free For example, if you provide dependent care by operating a dependent care facility for your employees, deduct your costs in whatever categories they fall (utilities, salaries, etc. 1040ez file online free ). 1040ez file online free Life insurance coverage. 1040ez file online free   You cannot deduct the cost of life insurance coverage for you, an employee, or any person with a financial interest in your business, if you are directly or indirectly the beneficiary of the policy. 1040ez file online free See Regulations section 1. 1040ez file online free 264-1 for more information. 1040ez file online free Welfare benefit funds. 1040ez file online free   A welfare benefit fund is a funded plan (or a funded arrangement having the effect of a plan) that provides welfare benefits to your employees, independent contractors, or their beneficiaries. 1040ez file online free Welfare benefits are any benefits other than deferred compensation or transfers of restricted property. 1040ez file online free   Your deduction for contributions to a welfare benefit fund is limited to the fund's qualified cost for the tax year. 1040ez file online free If your contributions to the fund are more than its qualified cost, carry the excess over to the next tax year. 1040ez file online free   Generally, the fund's “qualified cost” is the total of the following amounts, reduced by the after-tax income of the fund. 1040ez file online free The cost you would have been able to deduct using the cash method of accounting if you had paid for the benefits directly. 1040ez file online free The contributions added to a reserve account that are needed to fund claims incurred but not paid as of the end of the year. 1040ez file online free These claims can be for supplemental unemployment benefits, severance pay, or disability, medical, or life insurance benefits. 1040ez file online free   For more information, see sections 419(c) and 419A of the Internal Revenue Code and the related regulations. 1040ez file online free Loans or Advances You generally can deduct as wages an advance you make to an employee for services performed if you do not expect the employee to repay the advance. 1040ez file online free However, if the employee performs no services, treat the amount you advanced as a loan. 1040ez file online free If the employee does not repay the loan, treat it as income to the employee. 1040ez file online free Below-market interest rate loans. 1040ez file online free   On certain loans you make to an employee or shareholder, you are treated as having received interest income and as having paid compensation or dividends equal to that interest. 1040ez file online free See Below-Market Loans in chapter 4. 1040ez file online free Property If you transfer property (including your company's stock) to an employee as payment for services, you can generally deduct it as wages. 1040ez file online free The amount you can deduct is the property's fair market value on the date of the transfer less any amount the employee paid for the property. 1040ez file online free You can claim the deduction only for the tax year in which your employee includes the property's value in income. 1040ez file online free Your employee is deemed to have included the value in income if you report it on Form W-2, Wage and Tax Statement, in a timely manner. 1040ez file online free You treat the deductible amount as received in exchange for the property, and you must recognize any gain or loss realized on the transfer, unless it is the company's stock transferred as payment for services. 1040ez file online free Your gain or loss is the difference between the fair market value of the property and its adjusted basis on the date of transfer. 1040ez file online free These rules also apply to property transferred to an independent contractor for services, generally reported on Form 1099-MISC, Miscellaneous Income. 1040ez file online free Restricted property. 1040ez file online free   If the property you transfer for services is subject to restrictions that affect its value, you generally cannot deduct it and do not report gain or loss until it is substantially vested in the recipient. 1040ez file online free However, if the recipient pays for the property, you must report any gain at the time of the transfer up to the amount paid. 1040ez file online free    “Substantially vested” means the property is not subject to a substantial risk of forfeiture. 1040ez file online free This means that the recipient is not likely to have to give up his or her rights in the property in the future. 1040ez file online free Reimbursements for Business Expenses You can generally deduct the amount you pay or reimburse employees for business expenses incurred for your business. 1040ez file online free However, your deduction may be limited. 1040ez file online free If you make the payment under an accountable plan, deduct it in the category of the expense paid. 1040ez file online free For example, if you pay an employee for travel expenses incurred on your behalf, deduct this payment as a travel expense. 1040ez file online free If you make the payment under a nonaccountable plan, deduct it as wages and include it in the employee's Form W-2. 1040ez file online free See Reimbursement of Travel, Meals, and Entertainment in chapter 11 for more information about deducting reimbursements and an explanation of accountable and nonaccountable plans. 1040ez file online free Sick and Vacation Pay Sick pay. 1040ez file online free   You can deduct amounts you pay to your employees for sickness and injury, including lump-sum amounts, as wages. 1040ez file online free However, your deduction is limited to amounts not compensated by insurance or other means. 1040ez file online free Vacation pay. 1040ez file online free   Vacation pay is an employee benefit. 1040ez file online free It includes amounts paid for unused vacation leave. 1040ez file online free You can deduct vacation pay only in the tax year in which the employee actually receives it. 1040ez file online free This rule applies regardless of whether you use the cash or accrual method of accounting. 1040ez file online free Prev  Up  Next   Home   More Online Publications