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1040x 2011 Free File

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1040x 2011 Free File

1040x 2011 free file 7. 1040x 2011 free file   Ship Passenger Tax Table of Contents A tax of $3 per passenger is imposed on certain ship voyages, as explained later under Taxable situations. 1040x 2011 free file The tax is imposed only once for each passenger, either at the time of first embarkation or disembarkation in the United States. 1040x 2011 free file The person providing the voyage (the operator of the vessel) is liable for the tax. 1040x 2011 free file Voyage. 1040x 2011 free file   A voyage is the vessel's journey that includes the outward and homeward trips or passages. 1040x 2011 free file The voyage starts when the vessel begins to load passengers and continues until the vessel has completed at least one outward and one homeward passage. 1040x 2011 free file The tax may be imposed even if a passenger does not make both an outward and a homeward passage as long as the voyage begins or ends in the United States. 1040x 2011 free file Passenger. 1040x 2011 free file   A passenger is an individual carried on the vessel other than the Master or a crew member or other individual engaged in the business of the vessel or its owners. 1040x 2011 free file Example 1. 1040x 2011 free file John Smith works as a guest lecturer. 1040x 2011 free file The cruise line hired him for the benefit of the passengers. 1040x 2011 free file Therefore, he is engaged in the business of the vessel and is not a passenger. 1040x 2011 free file Example 2. 1040x 2011 free file Marian Green is a travel agent. 1040x 2011 free file She is taking the cruise as a promotional trip to determine if she wants to offer it to her clients. 1040x 2011 free file She is a passenger. 1040x 2011 free file Taxable situations. 1040x 2011 free file   There are two taxable situations. 1040x 2011 free file The first situation involves voyages on commercial passenger vessels extending over one or more nights. 1040x 2011 free file A voyage extends over one or more nights if it extends for more than 24 hours. 1040x 2011 free file A passenger vessel is any vessel with stateroom or berth accommodations for more than 16 passengers. 1040x 2011 free file   The second situation involves voyages on a commercial vessel transporting passengers engaged in gambling on the vessel beyond the territorial waters of the United States. 1040x 2011 free file Territorial waters of the United States are those waters within the international boundary line between the United States and any contiguous foreign country or within 3 nautical miles (3. 1040x 2011 free file 45 statute miles) from low tide on the coastline. 1040x 2011 free file If passengers participate as players in any policy game or other lottery, or any other game of chance for money or other thing of value that the owner or operator of the vessel (or their employee, agent, or franchisee) conducts, sponsors, or operates, the voyage is subject to the ship passenger tax. 1040x 2011 free file The tax applies regardless of the duration of the voyage. 1040x 2011 free file A casual, friendly game of chance with other passengers that is not conducted, sponsored, or operated by the owner or operator is not gambling for determining if the voyage is subject to the ship passenger tax. 1040x 2011 free file Exemptions. 1040x 2011 free file   The tax does not apply when a vessel is on a voyage of less than 12 hours between 2 points in the United States or if a vessel is owned or operated by a state or local government. 1040x 2011 free file Prev  Up  Next   Home   More Online Publications
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The 1040x 2011 Free File

1040x 2011 free file Publication 51 - Main Content Table of Contents 1. 1040x 2011 free file Taxpayer Identification NumbersWhen you receive your EIN. 1040x 2011 free file Registering for SSNVS. 1040x 2011 free file 2. 1040x 2011 free file Who Are Employees?Crew Leaders Business Owned and Operated by Spouses 3. 1040x 2011 free file Wages and Other Compensation 4. 1040x 2011 free file Social Security and Medicare TaxesThe $150 Test or the $2,500 Test Social Security and Medicare Tax Withholding 5. 1040x 2011 free file Federal Income Tax WithholdingImplementation of lock-in letter. 1040x 2011 free file Seasonal employees and employees not currently performing services. 1040x 2011 free file Termination and re-hire of employees. 1040x 2011 free file How To Figure Federal Income Tax Withholding 6. 1040x 2011 free file Required Notice to Employees About Earned Income Credit (EIC) 7. 1040x 2011 free file Depositing TaxesWhen To Deposit How To Deposit Deposit Penalties Employers of Both Farm and Nonfarm Workers 8. 1040x 2011 free file Form 943 9. 1040x 2011 free file Reporting Adjustments on Form 943Current Year Adjustments Prior Year Adjustments 10. 1040x 2011 free file Federal Unemployment (FUTA) Tax 11. 1040x 2011 free file Reconciling Wage Reporting Forms 13. 1040x 2011 free file Federal Income Tax Withholding MethodsWage Bracket Method Percentage Method Alternative Methods of Federal Income Tax Withholding How To Get Tax Help 1. 1040x 2011 free file Taxpayer Identification Numbers If you are required to withhold any federal income, social security, or Medicare taxes, you will need an employer identification number (EIN) for yourself. 1040x 2011 free file Also, you will need the SSN of each employee and the name of each employee as shown on the employee's social security card. 1040x 2011 free file Employer identification number (EIN). 1040x 2011 free file   An employer identification number (EIN) is a nine-digit number that the IRS issues. 1040x 2011 free file The digits are arranged as follows: 00-0000000. 1040x 2011 free file It is used to identify the tax accounts of employers and certain others who have no employees. 1040x 2011 free file Use your EIN on all of the items that you send to the IRS and SSA. 1040x 2011 free file   If you do not have an EIN, you may apply for one online. 1040x 2011 free file Visit IRS. 1040x 2011 free file gov and click on the Apply for an EIN Online link under Tools. 1040x 2011 free file You may also apply for an EIN by calling 1-800-829-4933, or you can fax or mail Form SS-4, Application for Employer Identification Number, to the IRS. 1040x 2011 free file Do not use a SSN in place of an EIN. 1040x 2011 free file   If you do not have an EIN by the time a return is due, write “Applied For” and the date you applied for it in the space shown for the number. 1040x 2011 free file If you took over another employer's business, do not use that employer's EIN. 1040x 2011 free file   You should have only one EIN. 1040x 2011 free file If you have more than one, and are not sure which one to use, call the toll-free Business and Specialty Tax Line at 1-800-829-4933 or 1-800-829-4059 (TDD/TTY for persons who are deaf, hard of hearing, or have a speech disability). 1040x 2011 free file Provide the EINs that you have, the name and address to which each number was assigned, and the address of your principal place of business. 1040x 2011 free file The IRS will tell you which EIN to use. 1040x 2011 free file   For more information, see Publication 1635 or Publication 583. 1040x 2011 free file When you receive your EIN. 1040x 2011 free file   If you are a new employer that indicated a federal tax obligation when requesting an EIN, you will be pre-enrolled in the Electronic Federal Tax Payment System (EFTPS). 1040x 2011 free file You will receive information in your Employer Identification Number (EIN) Package about Express Enrollment and an additional mailing containing your EFTPS personal identification number (PIN) and instructions for activating your PIN. 1040x 2011 free file Call the toll-free number located in your “How to Activate Your Enrollment” brochure to activate your enrollment and begin making your employment tax deposits. 1040x 2011 free file If you outsource any of your payroll and related tax duties to a third party payer, such as a payroll service provider or reporting agent, be sure to tell them about your EFTPS enrollment. 1040x 2011 free file Social security number (SSN). 1040x 2011 free file   An employee's social security number (SSN) consists of nine digits arranged as follows: 000-00-0000. 1040x 2011 free file You must obtain each employee's name and SSN as shown on the employee's social security card because you must enter them on Form W-2. 1040x 2011 free file Do not accept a social security card that says “Not valid for employment. 1040x 2011 free file ” A social security number issued with this legend does not permit employment. 1040x 2011 free file You may, but are not required to, photocopy the social security card if the employee provides it. 1040x 2011 free file If you do not show the employee's correct name and SSN on Form W-2, you may owe a penalty unless you have reasonable cause. 1040x 2011 free file See Publication 1586, Reasonable Cause Regulations & Requirements for Missing and Incorrect Name/TINs. 1040x 2011 free file Applying for a social security card. 1040x 2011 free file   Any employee who is legally eligible to work in the United States and does not have a social security card can get one by completing Form SS-5, Application for a Social Security Card, and submitting the necessary documentation to SSA. 1040x 2011 free file You can get Form SS-5 at SSA offices, by calling 1-800-772-1213 or 1-800-325-0778 (TTY), or from the SSA website at www. 1040x 2011 free file socialsecurity. 1040x 2011 free file gov/online/ss-5. 1040x 2011 free file html. 1040x 2011 free file The employee must complete and sign Form SS-5; it cannot be filed by the employer. 1040x 2011 free file You may be asked to supply a letter to accompany Form SS-5 if the employee has exceeded his or her yearly or lifetime limit for the number of replacement cards allowed. 1040x 2011 free file Applying for a social security number. 1040x 2011 free file   If you file Form W-2 on paper and your employee has applied for an SSN but does not have one when you must file Form W-2, enter “Applied For” on the form. 1040x 2011 free file If you are filing electronically, enter all zeros (000-00-0000) in the social security number field. 1040x 2011 free file When the employee receives the SSN, file Copy A of Form W-2c, Corrected Wage and Tax Statement, with the SSA to show the employee's SSN. 1040x 2011 free file Furnish Copies B, C, and 2 of Form W-2c to the employee. 1040x 2011 free file Up to 25 Forms W-2c per Form W-3c, Transmittal of Corrected Wage and Tax Statements, may be filed per session over the Internet, with no limit on the number of sessions. 1040x 2011 free file For more information, visit SSA's Employer W-2 Filing Instructions & Information webpage at www. 1040x 2011 free file socialsecurity. 1040x 2011 free file gov/employer. 1040x 2011 free file Advise your employee to correct the SSN on his or her original Form W-2. 1040x 2011 free file Correctly record the employee's name and SSN. 1040x 2011 free file   Record the name and number of each employee as they are shown on the employee's social security card. 1040x 2011 free file If the employee's name is not correct as shown on the card (for example, because of marriage or divorce), the employee should request a corrected card from the SSA. 1040x 2011 free file Continue to report the employee's wages under the old name until the employee shows you an updated social security card with the new name. 1040x 2011 free file   If the SSA issues the employee a replacement card after a name change, or a new card with a different social security number after a change in alien work status, file a Form W-2c to correct the name/SSN reported on the most recently filed Form W-2. 1040x 2011 free file It is not necessary to correct other years if the previous name and SSN were used for years before the most recent Form W-2. 1040x 2011 free file IRS individual taxpayer identification numbers (ITINs) for aliens. 1040x 2011 free file   Do not accept an ITIN in place of an SSN for employee identification or for work. 1040x 2011 free file An ITIN is issued for use by resident and nonresident aliens who need identification for tax purposes, but who are not eligible for U. 1040x 2011 free file S. 1040x 2011 free file employment. 1040x 2011 free file The ITIN is a nine-digit number formatted like an SSN (for example, NNN-NN-NNNN). 1040x 2011 free file However, it begins with the number “9” and has either a “7” or “8” as the fourth digit (for example, 9NN-7N-NNNN or 9NN-8N-NNNN). 1040x 2011 free file    An individual with an ITIN who later becomes eligible to work in the United States must obtain an SSN. 1040x 2011 free file If the individual is currently eligible to work in the United States, instruct the individual to apply for an SSN and follow the instructions under Applying for a social security number, earlier in this section. 1040x 2011 free file Do not use an ITIN in place of an SSN on Form W-2. 1040x 2011 free file Verification of social security numbers. 1040x 2011 free file   Employers and authorized reporting agents can use the Social Security Number Verification Service (SSNVS) to instantly verify up to 10 employee names and SSNs (per screen) at a time, or submit an electronic file of up to 250,000 names and SSNs and usually receive results the next business day. 1040x 2011 free file Visit www. 1040x 2011 free file socialsecurity. 1040x 2011 free file gov/employer/ssnv. 1040x 2011 free file htm for more information. 1040x 2011 free file Registering for SSNVS. 1040x 2011 free file   You must register online and receive authorization from your employer to use SSNVS. 1040x 2011 free file To register, visit SSA's website at www. 1040x 2011 free file socialsecurity. 1040x 2011 free file gov/employer and click on the Business Services Online link. 1040x 2011 free file Follow the registration instructions to obtain a user identification (ID) and password. 1040x 2011 free file You will need to provide the following information about yourself and your company. 1040x 2011 free file Name. 1040x 2011 free file SSN. 1040x 2011 free file Date of birth. 1040x 2011 free file Type of employer. 1040x 2011 free file EIN. 1040x 2011 free file Company name, address, and telephone number. 1040x 2011 free file Email address. 1040x 2011 free file When you have completed the online registration process, SSA will mail a one-time activation code to your employer. 1040x 2011 free file You must enter the activation code online to use SSNVS. 1040x 2011 free file 2. 1040x 2011 free file Who Are Employees? Generally, employees are defined either under common law or under statutes for certain situations. 1040x 2011 free file See Publication 15-A for details on statutory employees and nonemployees. 1040x 2011 free file Employee status under common law. 1040x 2011 free file   Generally, a worker who performs services for you is your employee if you have the right to control what will be done and how it will be done. 1040x 2011 free file This is so even when you give the employee freedom of action. 1040x 2011 free file What matters is that you have the right to control the details of how the services are performed. 1040x 2011 free file See Publication 15-A for more information on how to determine whether an individual providing services is an independent contractor or an employee. 1040x 2011 free file If an employer-employee relationship exists, it does not matter what it is called. 1040x 2011 free file The employee may be called an agent or independent contractor. 1040x 2011 free file It also does not matter how payments are measured or paid, what they are called, or if the employee works full or part time. 1040x 2011 free file You are responsible for withholding and paying employment taxes for your employees. 1040x 2011 free file You are also required to file employment tax returns. 1040x 2011 free file These requirements do not apply to amounts that you pay to independent contractors. 1040x 2011 free file The rules discussed in this publication apply only to workers who are your employees. 1040x 2011 free file In general, you are an employer of farmworkers if your employees: Raise or harvest agricultural or horticultural products on your farm (including the raising and feeding of livestock); Work in connection with the operation, management, conservation, improvement, or maintenance of your farm and its tools and equipment; Provide services relating to salvaging timber, or clearing land of brush and other debris, left by a hurricane (also known as hurricane labor); Handle, process, or package any agricultural or horticultural commodity if you produced over half of the commodity (for a group of up to 20 unincorporated operators, all of the commodity); or Do work for you related to cotton ginning, turpentine, gum resin products, or the operation and maintenance of irrigation facilities. 1040x 2011 free file For this purpose, the term “farm” includes stock, dairy, poultry, fruit, fur-bearing animal, and truck farms, as well as plantations, ranches, nurseries, ranges, greenhouses or other similar structures used primarily for the raising of agricultural or horticultural commodities, and orchards. 1040x 2011 free file Farmwork does not include reselling activities that do not involve any substantial activity of raising agricultural or horticultural commodities, such as a retail store or a greenhouse used primarily for display or storage. 1040x 2011 free file The table in section 12, How Do Employment Taxes Apply to Farmwork , distinguishes between farm and nonfarm activities, and also addresses rules that apply in special situations. 1040x 2011 free file Crew Leaders If you are a crew leader, you are an employer of farmworkers. 1040x 2011 free file A crew leader is a person who furnishes and pays (either on his or her own behalf or on behalf of the farm operator) workers to do farmwork for the farm operator. 1040x 2011 free file If there is no written agreement between you and the farm operator stating that you are his or her employee and if you pay the workers (either for yourself or for the farm operator), then you are a crew leader. 1040x 2011 free file For FUTA tax rules, see section 10. 1040x 2011 free file Business Owned and Operated by Spouses If you and your spouse jointly own and operate a farm or nonfarm business and share in the profits and losses, you are partners in a partnership, whether or not you have a formal partnership agreement. 1040x 2011 free file See Publication 541, Partnerships, for more details. 1040x 2011 free file The partnership is considered the employer of any employees, and is liable for any employment taxes due on wages paid to its employees. 1040x 2011 free file Exception—Qualified joint venture. 1040x 2011 free file   For tax years beginning after December 31, 2006, the Small Business and Work Opportunity Tax Act of 2007 (Public Law 110-28) provides that a “qualified joint venture,” whose only members are spouses filing a joint income tax return, can elect not to be treated as a partnership for federal tax purposes. 1040x 2011 free file A qualified joint venture conducts a trade or business where: The only members of the joint venture are spouses who file a joint income tax return, Both spouses materially participate (see Material participation in the Instructions for Schedule C (Form 1040), line G) in the trade or business (mere joint ownership of property is not enough), Both spouses elect to not be treated as a partnership, and The business is co-owned by both spouses and is not held in the name of a state law entity such as a partnership or limited liability company (LLC). 1040x 2011 free file   To make the election, all items of income, gain, loss, deduction, and credit must be divided between the spouses, in accordance with each spouse's interest in the venture, and reported on separate Schedules C or F as sole proprietors. 1040x 2011 free file Each spouse must also file a separate Schedule SE to pay self-employment taxes, as applicable. 1040x 2011 free file   Spouses using the qualified joint venture rules are treated as sole proprietors for federal tax purposes and generally do not need an EIN. 1040x 2011 free file If employment taxes are owed by the qualified joint venture, either spouse may report and pay the employment taxes due on the wages paid to the employees using the EIN of that spouse's sole proprietorship. 1040x 2011 free file Generally, filing as a qualified joint venture will not increase the spouses' total tax owed on the joint income tax return. 1040x 2011 free file However, it gives each spouse credit for social security earnings on which retirement benefits are based and for Medicare coverage without filing a partnership return. 1040x 2011 free file    Note. 1040x 2011 free file If your spouse is your employee, not your partner, you must pay social security and Medicare taxes for him or her. 1040x 2011 free file   For more information on qualified joint ventures, visit IRS. 1040x 2011 free file gov and enter “qualified joint venture” in the search box. 1040x 2011 free file Exception—Community income. 1040x 2011 free file   If you and your spouse wholly own an unincorporated business as community property under the community property laws of a state, foreign country, or U. 1040x 2011 free file S. 1040x 2011 free file possession, you can treat the business either as a sole proprietorship (of the spouse who carried on the business) or a partnership. 1040x 2011 free file You may still make an election to be taxed as a qualified joint venture instead of a partnership. 1040x 2011 free file See Exception—Qualified joint venture , earlier in this section. 1040x 2011 free file 3. 1040x 2011 free file Wages and Other Compensation Cash wages that you pay to employees for farmwork are generally subject to social security tax and Medicare tax. 1040x 2011 free file You may also be required to withhold, deposit, and report Additional Medicare Tax. 1040x 2011 free file See section 4 for more information. 1040x 2011 free file If the wages are subject to social security and Medicare taxes, they are also subject to federal income tax withholding. 1040x 2011 free file You may also be liable for FUTA tax, which is not withheld by you or paid by the employee. 1040x 2011 free file FUTA tax is discussed in section 10. 1040x 2011 free file Cash wages include checks, money orders, etc. 1040x 2011 free file Do not count as cash wages the value of food, lodging, and other noncash items. 1040x 2011 free file For more information on what payments are considered taxable wages, see Publication 15 (Circular E). 1040x 2011 free file Commodity wages. 1040x 2011 free file   Commodity wages are not cash and are not subject to social security and Medicare taxes or federal income tax withholding. 1040x 2011 free file However, noncash payments, including commodity wages, are treated as cash wages (see above) if the substance of the transaction is a cash payment. 1040x 2011 free file These noncash payments are subject to social security and Medicare taxes and federal income tax withholding. 1040x 2011 free file Other compensation. 1040x 2011 free file   Publications 15-A and 15-B discuss other forms of compensation that may be taxable. 1040x 2011 free file Family members. 1040x 2011 free file   Generally, the wages that you pay to family members who are your employees are subject to social security and Medicare taxes, federal income tax withholding, and FUTA tax. 1040x 2011 free file However, certain exemptions may apply for your child, spouse, or parent. 1040x 2011 free file See the table, How Do Employment Taxes Apply to Farmwork , in section 12. 1040x 2011 free file Household employees. 1040x 2011 free file   The wages of an employee who performs household services, such as a maid, babysitter, gardener, or cook, in your home are not subject to social security and Medicare taxes if you pay that employee cash wages of less than $1,900 in 2014. 1040x 2011 free file   Social security and Medicare taxes do not apply to cash wages for housework in your private home if it was done by your spouse or your child under age 21. 1040x 2011 free file Nor do the taxes apply to housework done by your parent unless: You have a child living in your home who is under age 18 or has a physical or mental condition that requires care by an adult for at least 4 continuous weeks in a calendar quarter, and You are a widow or widower, or divorced and not remarried, or have a spouse in the home who, because of a physical or mental condition, cannot care for your child for at least 4 continuous weeks in the quarter. 1040x 2011 free file   For more information, see Publication 926, Household Employer's Tax Guide. 1040x 2011 free file    Wages for household work may not be a deductible farm expense. 1040x 2011 free file See Publication 225, Farmer's Tax Guide. 1040x 2011 free file Share farmers. 1040x 2011 free file   You do not have to withhold or pay social security and Medicare taxes on amounts paid to share farmers under share-farming arrangements. 1040x 2011 free file Compensation paid to H-2A visa holders. 1040x 2011 free file   Report compensation of $600 or more paid to foreign agricultural workers who entered the country on H-2A visas in box 1 of Form W-2 but do not report it as social security wages (box 3) or Medicare wages (box 5) on Form W-2 because compensation paid to H-2A workers for agricultural labor performed in connection with this visa is not subject to social security and Medicare taxes. 1040x 2011 free file On Form W-2, do not check box 13 (Statutory employee), as H-2A workers are not statutory employees. 1040x 2011 free file   An employer is not required to withhold federal income tax from compensation it pays an H-2A worker for agricultural labor performed in connection with this visa unless the worker asks for withholding and the employer agrees. 1040x 2011 free file In that case, the worker must give the employer a completed Form W-4. 1040x 2011 free file Federal income tax withheld should be reported in box 2 of Form W-2. 1040x 2011 free file These reporting rules apply when the H-2A worker provides his or her taxpayer identification number (TIN) to the employer. 1040x 2011 free file For rules relating to backup withholding and reporting when the H-2A worker does not provide a TIN, see the Instructions for Form 1099-MISC and the Instructions for Form 945. 1040x 2011 free file 4. 1040x 2011 free file Social Security and Medicare Taxes Generally, you must withhold social security and Medicare taxes on all cash wage payments that you make to your employees. 1040x 2011 free file You may also be required to withhold Additional Medicare Tax. 1040x 2011 free file For more information, see Additional Medicare Tax withholding , later. 1040x 2011 free file The $150 Test or the $2,500 Test All cash wages that you pay to an employee during the year for farmwork are subject to social security and Medicare taxes and federal income tax withholding if either of the two tests below is met. 1040x 2011 free file You pay cash wages to an employee of $150 or more in a year for farmwork (count all cash wages paid on a time, piecework, or other basis). 1040x 2011 free file The $150 test applies separately to each farmworker that you employ. 1040x 2011 free file If you employ a family of workers, each member is treated separately. 1040x 2011 free file Do not count wages paid by other employers. 1040x 2011 free file The total that you pay for farmwork (cash and noncash) to all your employees is $2,500 or more during the year. 1040x 2011 free file Exceptions. 1040x 2011 free file   The $150 and $2,500 tests do not apply to wages that you pay to a farmworker who receives less than $150 in annual cash wages and the wages are not subject to social security and Medicare taxes, or federal income tax withholding, even if you pay $2,500 or more in that year to all of your farmworkers if the farmworker: Is employed in agriculture as a hand-harvest laborer, Is paid piece rates in an operation that is usually paid on a piece-rate basis in the region of employment, Commutes daily from his or her permanent home to the farm, and Had been employed in agriculture less than 13 weeks in the preceding calendar year. 1040x 2011 free file   Amounts that you pay to these seasonal farmworkers, however, count toward the $2,500-or-more test to determine whether wages that you pay to other farmworkers are subject to social security and Medicare taxes. 1040x 2011 free file Social Security and Medicare Tax Withholding The social security tax rate is 6. 1040x 2011 free file 2%, for both the employee and employer, on the first $117,000 paid to each employee. 1040x 2011 free file You must withhold at this rate from each employee and pay a matching amount. 1040x 2011 free file The Medicare tax rate is 1. 1040x 2011 free file 45% each for the employee and employer on all wages. 1040x 2011 free file You must withhold at this rate from each employee and pay a matching amount. 1040x 2011 free file There is no wage base limit for Medicare tax; all covered wages are subject to Medicare tax. 1040x 2011 free file Social security and Medicare taxes apply to most payments of sick pay, including payments made by third parties such as insurance companies. 1040x 2011 free file For details, see Publication 15-A. 1040x 2011 free file Additional Medicare Tax withholding. 1040x 2011 free file   In addition to withholding Medicare tax at 1. 1040x 2011 free file 45%, you must withhold a 0. 1040x 2011 free file 9% Additional Medicare Tax from wages you pay to an employee in excess of $200,000 in a calendar year. 1040x 2011 free file You are required to begin withholding Additional Medicare Tax in the pay period in which you pay wages in excess of $200,000 to an employee and continue to withhold it each pay period until the end of the calendar year. 1040x 2011 free file Additional Medicare Tax is only imposed on the employee. 1040x 2011 free file There is no employer share of Additional Medicare Tax. 1040x 2011 free file All wages that are subject to Medicare tax are subject to Additional Medicare Tax withholding if paid in excess of the $200,000 withholding threshold. 1040x 2011 free file   For more information on what wages are subject to Medicare tax, see the chart, Special Rules for Various Types of Services and Payments, in section 15 of Publication 15 (Circular E). 1040x 2011 free file For more information on Additional Medicare Tax, visit IRS. 1040x 2011 free file gov and enter “Additional Medicare Tax” in the search box. 1040x 2011 free file Employee share paid by employer. 1040x 2011 free file   If you would rather pay a household or agricultural employee's share of the social security and Medicare taxes without withholding them from his or her wages, you may do so. 1040x 2011 free file If you do not withhold the taxes, however, you must still pay them. 1040x 2011 free file Any employee social security and Medicare taxes that you pay is additional income to the employee. 1040x 2011 free file Include it in box 1 of the employee's Form W-2, but do not count it as social security and Medicare wages and do not include it in boxes 3 and 5. 1040x 2011 free file Also, do not count the additional income as wages for FUTA tax purposes. 1040x 2011 free file Different rules apply to employer payments of social security and Medicare taxes for non-household and non-agricultural employees. 1040x 2011 free file See section 7 of Publication 15-A. 1040x 2011 free file Withholding social security and Medicare taxes on nonresident alien employees. 1040x 2011 free file   In general, if you pay wages to nonresident alien employees, you must withhold social security and Medicare taxes as you would for a U. 1040x 2011 free file S. 1040x 2011 free file citizen or resident alien. 1040x 2011 free file However, see Publication 515, Withholding of Tax on Nonresident Aliens and Foreign Entities, for exceptions to this general rule. 1040x 2011 free file Also see Compensation paid to H-2A visa holders in section 3. 1040x 2011 free file Religious exemption. 1040x 2011 free file    An exemption from social security and Medicare taxes is available to members of a recognized religious sect opposed to public insurance. 1040x 2011 free file This exemption is available only if both the employee and the employer are members of the sect. 1040x 2011 free file   For more information, see Publication 517, Social Security and Other Information for Members of the Clergy and Religious Workers. 1040x 2011 free file 5. 1040x 2011 free file Federal Income Tax Withholding Farmers and crew leaders must withhold federal income tax from the wages of farmworkers if the wages are subject to social security and Medicare taxes. 1040x 2011 free file The amount to withhold is figured on gross wages before taking out social security and Medicare taxes, union dues, insurance, etc. 1040x 2011 free file You may use one of several methods to determine the amount of federal income tax withholding. 1040x 2011 free file They are discussed in section 13. 1040x 2011 free file Form W-4. 1040x 2011 free file   To know how much federal income tax to withhold from employees' wages, you should have a Form W-4 on file for each employee. 1040x 2011 free file Encourage your employees to file an updated Form W-4 for 2014, especially if they owed taxes or received a large refund when filing their 2013 tax return. 1040x 2011 free file Advise your employees to use the IRS Withholding Calculator on the IRS website at www. 1040x 2011 free file irs. 1040x 2011 free file gov/individuals for help in determining how many withholding allowances to claim on their Form W-4. 1040x 2011 free file   Ask each new employee to give you a signed Form W-4 when starting work. 1040x 2011 free file Make the form effective with the first wage payment. 1040x 2011 free file If a new employee does not give you a completed Form W-4, withhold tax as if he or she is single, with no withholding allowances. 1040x 2011 free file Forms in Spanish. 1040x 2011 free file   You can provide Formulario W-4(SP) in place of Form W-4 to your Spanish-speaking employees. 1040x 2011 free file For more information, see Publicación 17(SP). 1040x 2011 free file Effective date of Form W-4. 1040x 2011 free file   A Form W-4 remains in effect until the employee gives you a new one. 1040x 2011 free file When you receive a new Form W-4, do not adjust withholding for pay periods before the effective date of the new form. 1040x 2011 free file Do not adjust withholding retroactively. 1040x 2011 free file If an employee gives you a replacement Form W-4, begin withholding no later than the start of the first payroll period ending on or after the 30th day from the date when you received the replacement Form W-4. 1040x 2011 free file For exceptions, see Exemption from federal income tax withholding , IRS review of requested Forms W-4 , and Invalid Forms W-4 , later in this section. 1040x 2011 free file A Form W-4 that makes a change for the next calendar year will not take effect in the current calendar year. 1040x 2011 free file Completing Form W-4. 1040x 2011 free file   The amount of federal income tax withholding is based on marital status and withholding allowances. 1040x 2011 free file Your employees may not base their withholding amounts on a fixed dollar amount or percentage. 1040x 2011 free file However, the employee may specify a dollar amount to be withheld in addition to the amount of withholding based on filing status and withholding allowances claimed on Form W-4. 1040x 2011 free file   Employees may claim fewer withholding allowances than they are entitled to claim. 1040x 2011 free file They may do this to ensure that they have enough withholding or to offset other sources of taxable income that are not subject to withholding. 1040x 2011 free file   See Publication 505, Tax Withholding and Estimated Tax, for more information about completing Form W-4. 1040x 2011 free file Along with Form W-4, you may wish to order Publication 505 for use by your employees. 1040x 2011 free file    Do not accept any withholding or estimated tax payments from your employees in addition to withholding based on their Form W-4. 1040x 2011 free file If an employee wants additional withholding, he or she should submit a new Form W-4 and, if necessary, pay estimated tax by filing Form 1040-ES, Estimated Tax for Individuals, or by using the Electronic Federal Tax Payment System (EFTPS) to make estimated tax payments. 1040x 2011 free file Exemption from federal income tax withholding. 1040x 2011 free file   Generally, an employee may claim exemption from federal income tax withholding because he or she had no federal income tax liability last year and expects none this year. 1040x 2011 free file See the Form W-4 instructions for more information. 1040x 2011 free file However, the wages are still subject to social security and Medicare taxes. 1040x 2011 free file   A Form W-4 claiming exemption from withholding is effective when it is filed with the employer and only for that calendar year. 1040x 2011 free file To continue to be exempt from withholding in the next calendar year, an employee must give you a new Form W-4 by February 15. 1040x 2011 free file If the employee does not give you a new Form W-4 by February 15, withhold tax based on the last valid Form W-4 you have for the employee that did not claim an exemption from withholding or, if one does not exist, withhold as if he or she is single with zero withholding allowances. 1040x 2011 free file If the employee provides a new Form W-4 claiming an exemption from withholding on February 16 or later, you may apply the exemption to future wages, but do not refund taxes withheld while the exempt status was not in place. 1040x 2011 free file Withholding income taxes on the wages of nonresident alien employees. 1040x 2011 free file   In general, you must withhold federal income taxes on the wages of nonresident alien employees. 1040x 2011 free file However, see Publication 515 for exceptions to this general rule. 1040x 2011 free file Also see Compensation paid to H-2A visa workers in section 3. 1040x 2011 free file Withholding adjustment for nonresident alien employees. 1040x 2011 free file   A special procedure applies for figuring the amount of income tax to withhold from wages of nonresident alien employees performing services within the United States for wages paid in 2014. 1040x 2011 free file This procedure requires a special chart to be used with the withholding tables to determine the amount to withhold from the wages of the nonresident alien employee. 1040x 2011 free file See Withholding adjustment for nonresident alien employees in section 9 of Publication 15 (Circular E). 1040x 2011 free file Nonresident alien employee's Form W-4. 1040x 2011 free file   When completing Forms W-4, nonresident aliens are required to: Not claim exemption from income tax withholding; Request withholding as if they are single, regardless of their actual marital status; Claim only one allowance (if the nonresident alien is a resident of Canada, Mexico, or Korea, he or she may claim more than one allowance); and Write “Nonresident Alien” or “NRA” above the dotted line on line 6 of Form W-4. 1040x 2011 free file   If you maintain an electronic Form W-4 system, you should provide a field for nonresident alien employees to enter nonresident alien status in lieu of writing “Nonresident Alien” or “NRA” above the dotted line on line 6. 1040x 2011 free file    A nonresident alien employee may request additional withholding at his or her option for other purposes, although such additions should not be necessary for withholding to cover federal income tax liability related to employment. 1040x 2011 free file Form 8233. 1040x 2011 free file   If a nonresident alien employee claims a tax treaty exemption from withholding, the employee must submit Form 8233, Exemption from Withholding on Compensation for Independent (and Certain Dependent) Personal Services of a Nonresident Alien Individual, with respect to the income exempt under the treaty, instead of Form W-4. 1040x 2011 free file See Publication 515 for details. 1040x 2011 free file IRS review of requested Forms W-4. 1040x 2011 free file   When requested by the IRS, you must make original Forms W-4 available for inspection by an IRS employee. 1040x 2011 free file You may also be directed to send certain Forms W-4 to the IRS. 1040x 2011 free file You may receive a notice from the IRS requiring you to submit a copy of Form W-4 for one or more of your named employees. 1040x 2011 free file Send the requested copy or copies of Form W-4 to the IRS at the address provided and in the manner directed by the notice. 1040x 2011 free file The IRS may also require you to submit copies of Form W-4 to the IRS as directed by a revenue procedure or notice published in the Internal Revenue Bulletin. 1040x 2011 free file When we refer to Form W-4, the same rules apply to Formulario W-4(SP), its Spanish translation. 1040x 2011 free file   After submitting a copy of the requested Form W-4 to the IRS, continue to withhold federal income tax based on that Form W-4 if it is valid (see Invalid Forms W-4 , later in this section). 1040x 2011 free file However, if the IRS later notifies you in writing that the employee is not entitled to claim a complete exemption from withholding or more than the maximum number of withholding allowances specified by the IRS in the written notice, withhold federal income tax based on the effective date, marital status, and maximum number of withholding allowances specified in the notice (commonly referred to as a “lock-in letter”). 1040x 2011 free file Initial lock-in letter. 1040x 2011 free file   The IRS uses information reported on Form W-2 to identify employees with withholding compliance problems. 1040x 2011 free file In some cases, where a serious under-withholding problem is found to exist for a particular employee, the IRS may issue a lock-in letter to the employer specifying the maximum number of withholding allowances and marital status permitted for a specific employee. 1040x 2011 free file You will also receive a copy for the employee that identifies the maximum number of withholding allowances permitted and the process by which the employee can provide additional information to the IRS for purposes of determining the appropriate number of withholding allowances. 1040x 2011 free file If the employee is employed by you as of the date of the notice, you must furnish the employee copy to the employee within 10 business days of receipt. 1040x 2011 free file You may follow any reasonable business practice to furnish the employee copy to the employee. 1040x 2011 free file Implementation of lock-in letter. 1040x 2011 free file   When you receive the notice specifying the maximum number of withholding allowances and marital status permitted, you may not withhold immediately on the basis of the notice. 1040x 2011 free file You must begin withholding tax on the basis of the notice for any wages paid after the date specified in the notice. 1040x 2011 free file The delay between your receipt of the notice and the date to begin the withholding on the basis of the notice permits the employee to contact the IRS. 1040x 2011 free file Seasonal employees and employees not currently performing services. 1040x 2011 free file   If you receive a notice for an employee who is not currently performing services for you, you are still required to furnish the employee copy to the employee and withhold based on the notice if any of the following apply. 1040x 2011 free file You are paying wages for the employee's prior services and the wages are subject to income tax withholding on or after the date specified in the notice. 1040x 2011 free file You reasonably expect the employee to resume services within 12 months of the date of the notice. 1040x 2011 free file The employee is on a bona fide leave of absence that does not exceed 12 months or the employee has a right to reemployment after the leave of absence. 1040x 2011 free file Termination and re-hire of employees. 1040x 2011 free file   If you are required to furnish and withhold based on the notice and the employment relationship is terminated after the date of the notice, you must continue to withhold based on the notice if you continue to pay any wages subject to income tax withholding. 1040x 2011 free file You must also withhold based on the notice or modification notice (explained next) if the employee resumes the employment relationship with you within 12 months after the termination of the employment relationship. 1040x 2011 free file Modification notice. 1040x 2011 free file   After issuing the notice specifying the maximum number of withholding allowances and marital status permitted, the IRS may issue a subsequent notice (modification notice) that modifies the original notice. 1040x 2011 free file The modification notice may change the marital status and/or the number of withholding allowances permitted. 1040x 2011 free file You must withhold federal income tax based on the effective date specified in the modification notice. 1040x 2011 free file New Form W-4 after IRS notice. 1040x 2011 free file   After the IRS issues a notice or modification notice, if the employee provides you with a new Form W-4 claiming complete exemption from withholding or claims a marital status, a number of withholding allowances, and any additional withholding that results in less withholding than would result under the IRS notice or modification notice, you must disregard the new Form W-4. 1040x 2011 free file You are required to withhold on the basis of the notice or modification notice unless the IRS subsequently notifies you to withhold based on the new Form W-4. 1040x 2011 free file If the employee wants to put a new Form W-4 into effect that results in less withholding than required, the employee must contact the IRS. 1040x 2011 free file   If, after you receive an IRS notice or modification notice, your employee provides you with a new Form W-4 that does not claim exemption from federal income tax withholding and claims a marital status, a number of withholding allowances, and any additional withholding that results in more withholding than would result under the notice or modification notice, you must withhold tax on the basis of that new Form W-4. 1040x 2011 free file Otherwise, disregard any subsequent Forms W-4 provided by the employee and withhold based on the IRS notice or modification notice. 1040x 2011 free file Substitute Forms W-4. 1040x 2011 free file   You are encouraged to have your employees use the official version of Form W-4 to claim withholding allowances or exemption from withholding. 1040x 2011 free file Call the IRS at 1-800-TAX-FORM (1-800-829-3676) or visit IRS. 1040x 2011 free file gov to obtain copies of Form W-4. 1040x 2011 free file   You may use a substitute version of Form W-4 to meet your business needs. 1040x 2011 free file However, your substitute Form W-4 must contain language that is identical to the official Form W-4 and your form must meet all current IRS rules for substitute forms. 1040x 2011 free file At the time that you provide your substitute form to the employee, you must provide him or her with all tables, instructions, and worksheets from the current Form W-4. 1040x 2011 free file   You cannot accept a substitute Form W-4 developed by an employee, and the employee submitting such form will be treated as failing to furnish a Form W-4. 1040x 2011 free file However, continue to use any valid Forms W-4 developed by your employees that you accepted before October 11, 2007. 1040x 2011 free file Invalid Forms W-4. 1040x 2011 free file   Any unauthorized change or addition to Form W-4 makes it invalid. 1040x 2011 free file This includes taking out any language by which the employee certifies that the form is correct. 1040x 2011 free file A Form W-4 is also invalid if, by the date an employee gives it to you, he or she indicates in any way that it is false. 1040x 2011 free file An employee who submits a false Form W-4 may be subject to a $500 penalty. 1040x 2011 free file You may treat a Form W-4 as invalid if the employee wrote “exempt” on line 7 and also entered a number on line 5 or an amount on line 6. 1040x 2011 free file   When you get an invalid Form W-4, do not use it to figure federal income tax withholding. 1040x 2011 free file Tell the employee that it is invalid and ask for another one. 1040x 2011 free file If the employee does not give you a valid one, withhold taxes as if the employee was single and claiming no withholding allowances. 1040x 2011 free file However, if you have an earlier Form W-4 for this worker that is valid, withhold as you did before. 1040x 2011 free file   For additional information about these rules, see Treasury Decision 9337, 2007-35 I. 1040x 2011 free file R. 1040x 2011 free file B. 1040x 2011 free file 455, available at www. 1040x 2011 free file irs. 1040x 2011 free file gov/irb/2007-35_IRB/ar10. 1040x 2011 free file html. 1040x 2011 free file Amounts exempt from levy on wages, salary, and other income. 1040x 2011 free file   If you receive a Notice of Levy on Wages, Salary, and Other Income—Forms 668-W(ACS), 668-W(c)(DO), or 668-W(ICS), you must withhold amounts as described in the instructions for these forms. 1040x 2011 free file Publication 1494, Tables for Figuring Amount Exempt From Levy on Wages, Salary, and Other Income—Forms 668-W(ACS), 668-W(c)(DO), and 668-W(ICS), shows the exempt amount. 1040x 2011 free file If a levy issued in a prior year is still in effect and the taxpayer submits a new Statement of Exemptions and Filing Status, use the current year Publication 1494 to compute the exempt amount. 1040x 2011 free file How To Figure Federal Income Tax Withholding There are several ways to figure federal income tax withholding. 1040x 2011 free file Wage bracket tables. 1040x 2011 free file See section 13 for directions on how to use the tables. 1040x 2011 free file Percentage method. 1040x 2011 free file See section 13 for directions on how to use the percentage method. 1040x 2011 free file Alternative formula tables for percentage method withholding. 1040x 2011 free file See Publication 15-A. 1040x 2011 free file Wage bracket percentage method withholding tables. 1040x 2011 free file See Publication 15-A. 1040x 2011 free file Other alternative methods. 1040x 2011 free file See Publication 15-A. 1040x 2011 free file Employers with automated payroll systems will find the two alternative formula tables and the two alternative wage bracket percentage method tables in Publication 15-A useful. 1040x 2011 free file If an employee wants additional federal tax withheld, have the employee show the extra amount on Form W-4. 1040x 2011 free file Supplemental wages. 1040x 2011 free file   Supplemental wages are wage payments to an employee that are not regular wages. 1040x 2011 free file They include, but are not limited to, bonuses, commissions, overtime pay, accumulated sick leave, severance pay, awards, prizes, back pay and retroactive pay increases for current employees, and payments for nondeductible moving expenses. 1040x 2011 free file Other payments subject to the supplemental wage rules include taxable fringe benefits and expense allowances paid under a nonaccountable plan. 1040x 2011 free file   If you pay supplemental wages with regular wages but do not specify the amount of each, withhold federal income tax as if the total was a single payment for a regular payroll period. 1040x 2011 free file   If you pay supplemental wages separately (or combine them in a single payment and specify the amount of each), the federal income tax withholding method depends partly on whether you withhold federal income tax from your employee's regular wages. 1040x 2011 free file If you withheld federal income tax from an employee's regular wages in the current or immediately preceding calendar year, you can use one of the following methods for the supplemental wages. 1040x 2011 free file Withhold a flat 25% (no other percentage allowed). 1040x 2011 free file If the supplemental wages are paid concurrently with regular wages, add the supplemental wages to the concurrently paid regular wages. 1040x 2011 free file If there are no concurrently paid regular wages, add the supplemental wages to alternatively, either the regular wages paid or to be paid for the current payroll period or the regular wages paid for the preceding payroll period. 1040x 2011 free file Figure the income tax withholding as if the total of the regular wages and supplemental wages is a single payment. 1040x 2011 free file Subtract the tax withheld from the regular wages. 1040x 2011 free file Withhold the remaining tax from the supplemental wages. 1040x 2011 free file If there were other payments of supplemental wages paid during the payroll period made before the current payment of supplemental wages, aggregate all the payments of supplemental wages paid during the payroll period with the regular wages paid during the payroll period, calculate the tax on the total, subtract the tax already withheld from the regular wages and previous supplemental wage payments, and withhold the remaining tax from the current payment of supplemental wages. 1040x 2011 free file If you did not withhold federal income tax from the employee's regular wages in the current or immediately preceding calendar year, use method 1-b above. 1040x 2011 free file This would occur, for example, when the value of the employee's withholding allowances claimed on Form W-4 is more than the wages. 1040x 2011 free file    Separate rules apply to any supplemental wages exceeding $1 million that you pay to an individual during the year. 1040x 2011 free file See section 7 in Publication 15 (Circular E) for details. 1040x 2011 free file   Regardless of the method that you use to withhold federal income tax on supplemental wages, they are generally subject to social security, Medicare, and FUTA taxes. 1040x 2011 free file 6. 1040x 2011 free file Required Notice to Employees About Earned Income Credit (EIC) You must notify employees who have no federal income tax withheld that they may be able to claim a tax refund because of the EIC. 1040x 2011 free file Although you do not have to notify employees who claim exemption from withholding on Form W-4 about the EIC, you are encouraged to notify any employees whose wages for 2013 were less than $46,227 ($51,567 if married filing jointly) that they may be eligible to claim the credit for 2013. 1040x 2011 free file This is because eligible employees may get a refund of the amount of EIC that is more than the tax that they owe. 1040x 2011 free file You will meet the notification requirement if you issue to the employee Form W-2 with the EIC notice on the back of Copy B, or a substitute Form W-2 with the same statement. 1040x 2011 free file You may also meet the requirement by providing Notice 797, Possible Federal Tax Refund Due to the Earned Income Credit (EIC), or your own statement that contains the same wording. 1040x 2011 free file If a substitute Form W-2 is given to the employee on time but does not have the required statement, you must notify the employee within 1 week of the date that the substitute Form W-2 is given. 1040x 2011 free file If Form W-2 is required but is not given on time, you must give the employee Notice 797 or your written statement by the date that Form W-2 is required to be given. 1040x 2011 free file If Form W-2 is not required, you must notify the employee by February 7, 2014. 1040x 2011 free file 7. 1040x 2011 free file Depositing Taxes Generally, you must deposit both the employer and employee shares of social security and Medicare taxes and federal income tax withheld. 1040x 2011 free file You must use electronic funds transfer to make all federal tax deposits. 1040x 2011 free file See How To Deposit , later in this section. 1040x 2011 free file The credit against employment taxes for COBRA premium assistance payments is treated as a deposit of taxes on the first day of your return period. 1040x 2011 free file For more information, see COBRA premium assistance credit under Introduction. 1040x 2011 free file Payment with return. 1040x 2011 free file   You may make payments with Forms 943 or 945 instead of depositing if one of the following applies. 1040x 2011 free file You report less than a $2,500 tax liability for the year (Form 943, line 11; Form 945, line 3) and you pay in full with a return that is filed on time. 1040x 2011 free file However, if you are unsure that you will report less than $2,500, deposit under the rules explained in this section so that you will not be subject to failure-to-deposit penalties. 1040x 2011 free file You are a monthly schedule depositor and make a payment in accordance with the Accuracy of Deposits Rule discussed later in this section. 1040x 2011 free file This payment may be $2,500 or more. 1040x 2011 free file Only monthly schedule depositors, defined later, are allowed to make an Accuracy of Deposits Rule payment with the return. 1040x 2011 free file Semiweekly schedule depositors must timely deposit the amount. 1040x 2011 free file See Accuracy of Deposits Rule and How To Deposit, later in this section. 1040x 2011 free file When To Deposit If you employ both farm and nonfarm workers, do not combine the taxes reportable on Forms 941 or 944 with Form 943 to decide whether to make a deposit. 1040x 2011 free file See Employers of Both Farm and Nonfarm Workers, later in this section. 1040x 2011 free file The rules for determining when to deposit Form 943 taxes are discussed below. 1040x 2011 free file See section 10 for the separate rules that apply to FUTA tax. 1040x 2011 free file Under these rules, you are classified as either a monthly schedule depositor or a semiweekly schedule depositor. 1040x 2011 free file The terms “monthly schedule depositor” and “semiweekly schedule depositor” do not refer to how often your business pays its employees or how often you are required to make deposits. 1040x 2011 free file The terms identify which set of rules you must follow when you incur a tax liability (for example, when you have a payday). 1040x 2011 free file The deposit schedule that you must use for a calendar year is determined from the tax liability reported on your Form 943, line 9, for the lookback period, discussed next. 1040x 2011 free file If you reported $50,000 or less of Form 943 taxes for the lookback period, you are a monthly schedule depositor. 1040x 2011 free file If you reported more than $50,000 of Form 943 taxes for the lookback period, you are a semiweekly schedule depositor. 1040x 2011 free file Lookback period. 1040x 2011 free file   The lookback period is the second calendar year preceding the current calendar year. 1040x 2011 free file For example, the lookback period for 2014 is 2012. 1040x 2011 free file Example of deposit schedule based on lookback period. 1040x 2011 free file Rose Co. 1040x 2011 free file reported taxes on Form 943 as follows. 1040x 2011 free file 2012 — $48,000 2013 — $60,000 Rose Co. 1040x 2011 free file is a monthly schedule depositor for 2014 because its taxes for the lookback period ($48,000 for calendar year 2012) were not more than $50,000. 1040x 2011 free file However, for 2015, Rose Co. 1040x 2011 free file is a semiweekly schedule depositor because the total taxes before adjustment for its lookback period ($60,000 for calendar year 2013) exceeded $50,000. 1040x 2011 free file Adjustments to lookback period taxes. 1040x 2011 free file   To determine your taxes for the lookback period, use only the tax that you reported on the original return (Form 943, line 9). 1040x 2011 free file Do not include adjustments shown on Form 943-X, Adjusted Employer's Annual Federal Tax Return for Agricultural Employees or Claim for Refund. 1040x 2011 free file Example of adjustments. 1040x 2011 free file An employer originally reported total tax of $45,000 for the lookback period in 2012. 1040x 2011 free file The employer discovered during March 2014 that the tax reported for the lookback period was understated by $10,000 and corrected this error by filing Form 943-X. 1040x 2011 free file The total tax reported in the lookback period is still $45,000. 1040x 2011 free file The $10,000 adjustment is also not treated as part of the 2014 taxes. 1040x 2011 free file Deposit period. 1040x 2011 free file   The term “deposit period” refers to the period during which tax liabilities are accumulated for each required deposit due date. 1040x 2011 free file For monthly schedule depositors, the deposit period is a calendar month. 1040x 2011 free file The deposit periods for semiweekly schedule depositors are Wednesday through Friday and Saturday through Tuesday. 1040x 2011 free file Monthly Deposit Schedule If the tax liability reported on Form 943, line 9, for the lookback period is $50,000 or less, you are a monthly schedule depositor for the current year. 1040x 2011 free file You must deposit Form 943 taxes on payments made during a calendar month by the 15th day of the following month. 1040x 2011 free file Monthly schedule example. 1040x 2011 free file   Red Co. 1040x 2011 free file is a seasonal employer and a monthly schedule depositor. 1040x 2011 free file It pays wages each Friday. 1040x 2011 free file It paid wages during August 2014, but did not pay any wages during September. 1040x 2011 free file Red Co. 1040x 2011 free file must deposit the combined tax liabilities for the August paydays by September 15. 1040x 2011 free file Red Co. 1040x 2011 free file does not have a deposit requirement for September (that is, due by October 15, 2014) because no wages were paid in September; therefore, it did not have a tax liability for September. 1040x 2011 free file New employers. 1040x 2011 free file   For agricultural employers, your tax liability for any year in the lookback period before the date you started or acquired your business is considered to be zero. 1040x 2011 free file Therefore, you are a monthly schedule depositor for the first and second calendar years of your agricultural business (but see the $100,000 Next-Day Deposit Rule , later in this section). 1040x 2011 free file Semiweekly Deposit Schedule You are a semiweekly schedule depositor for a calendar year if the tax liability on Form 943, line 9, during your lookback period was more than $50,000. 1040x 2011 free file Under the semiweekly deposit schedule, deposit Form 943 taxes for payments made on Wednesday, Thursday, and/or Friday by the following Wednesday. 1040x 2011 free file Deposit amounts accumulated for payments made on Saturday, Sunday, Monday, and/or Tuesday by the following Friday. 1040x 2011 free file Semiweekly depositors are not required to deposit twice a week if their payments were in the same semiweekly period unless the $100,000 Next-Day Deposit Rule (discussed later in this section) applies. 1040x 2011 free file For example, if you made a payment on both Wednesday and Friday and incurred taxes of $10,000 for each pay date, deposit the $20,000 by the following Wednesday. 1040x 2011 free file If you made no additional payments on Saturday through Tuesday, no deposit is due on Friday. 1040x 2011 free file Semiweekly schedule depositors must complete Form 943-A, Agricultural Employer's Record of Federal Tax Liability, and submit it with Form 943. 1040x 2011 free file Semiweekly Deposit Schedule IF the payday falls on a. 1040x 2011 free file . 1040x 2011 free file . 1040x 2011 free file THEN deposit taxes by the following. 1040x 2011 free file . 1040x 2011 free file . 1040x 2011 free file Wednesday, Thursday, and/or Friday Wednesday Saturday, Sunday, Monday, and/or Tuesday Friday Semiweekly schedule example. 1040x 2011 free file   Green, Inc. 1040x 2011 free file , is a semiweekly schedule depositor and pays wages once each month on the last Friday of the month. 1040x 2011 free file Green, Inc. 1040x 2011 free file , will deposit only once a month, but the deposit will be made under the semiweekly deposit schedule as follows. 1040x 2011 free file Green, Inc. 1040x 2011 free file 's tax liability for the April 25, 2014 (Friday), wage payment must be deposited by April 30, 2014 (Wednesday). 1040x 2011 free file Semiweekly deposit period spanning two quarters. 1040x 2011 free file   If you have more than one pay date during a semiweekly period and the pay dates fall in different calendar quarters, you will need to make separate deposits for the separate liabilities. 1040x 2011 free file For example, if you have a pay date on Monday, March 31, 2014 (first quarter), and another pay date on Tuesday, April 1, 2014 (second quarter), two separate deposits will be required even though the pay dates fall within the same semiweekly period. 1040x 2011 free file Both deposits will be due Friday, April 4, 2014 (3 business days from the end of the semiweekly deposit period). 1040x 2011 free file Deposits on Business Days Only If a deposit is required to be made on a day that is not a business day, the deposit is considered timely if it is made by the close of the next business day. 1040x 2011 free file A business day is any day other than a Saturday, Sunday, or legal holiday. 1040x 2011 free file For example, if a deposit is required to be made on Friday and Friday is a legal holiday, the deposit is considered timely if it is made by the following Monday (if Monday is a business day). 1040x 2011 free file Semiweekly schedule depositors   will always have 3 business days to make a deposit. 1040x 2011 free file That is, if any of the 3 weekdays after the end of a semiweekly period is a legal holiday, you will have an additional day for each day that is a legal holiday to make the deposit. 1040x 2011 free file For example, if a semiweekly schedule depositor accumulated taxes on Friday and the following Monday is a legal holiday, the deposit normally due on Wednesday may be made on Thursday (this allows 3 business days to make the deposit). 1040x 2011 free file Legal holiday. 1040x 2011 free file   The term “legal holiday” means any legal holiday in the District of Columbia. 1040x 2011 free file Legal holidays for 2014 are listed below. 1040x 2011 free file January 1— New Year's Day January 20— Birthday of Martin Luther King, Jr. 1040x 2011 free file February 17— Washington's Birthday April 16— District of Columbia Emancipation Day May 26— Memorial Day July 4— Independence Day September 1— Labor Day October 13— Columbus Day November 11— Veterans' Day November 27— Thanksgiving Day December 25— Christmas Day $100,000 Next-Day Deposit Rule If you accumulate $100,000 or more of Form 943 taxes (that is, taxes reported on Form 943, line 11) on any day during a deposit period, you must deposit the tax by the close of the next business day, whether you are a monthly or a semiweekly schedule depositor. 1040x 2011 free file For purposes of the $100,000 rule, do not continue accumulating a tax liability after the end of a deposit period. 1040x 2011 free file For example, if a semiweekly schedule depositor has accumulated a liability of $95,000 on a Tuesday (of a Saturday-through-Tuesday deposit period) and accumulated a $10,000 liability on Wednesday, the $100,000 next-day deposit rule does not apply because the $10,000 is accumulated in the next deposit period. 1040x 2011 free file Thus, $95,000 must be deposited by Friday and $10,000 must be deposited by the following Wednesday. 1040x 2011 free file However, once you accumulate at least $100,000 in a deposit period, stop accumulating at the end of that day and begin to accumulate anew on the next day. 1040x 2011 free file For example, Fir Co. 1040x 2011 free file is a semiweekly schedule depositor. 1040x 2011 free file On Monday, Fir Co. 1040x 2011 free file accumulates taxes of $110,000 and must deposit this amount on Tuesday, the next business day. 1040x 2011 free file On Tuesday, Fir Co. 1040x 2011 free file accumulates additional taxes of $30,000. 1040x 2011 free file Because the $30,000 is not added to the previous $110,000 and is less than $100,000, Fir Co. 1040x 2011 free file does not have to deposit the $30,000 until Friday (following the semiweekly deposit schedule). 1040x 2011 free file If you are a monthly schedule depositor and you accumulate a $100,000 tax liability on any day, you become a semiweekly schedule depositor on the next day and remain so for at least the rest of the calendar year and for the following calendar year. 1040x 2011 free file Example of the $100,000 next-day deposit rule. 1040x 2011 free file   Elm, Inc. 1040x 2011 free file , started its business on May 1, 2014. 1040x 2011 free file Because Elm, Inc. 1040x 2011 free file , is a new employer, the taxes for its lookback period are considered to be zero; therefore, Elm, Inc. 1040x 2011 free file , is a monthly schedule depositor. 1040x 2011 free file On May 8, Elm, Inc. 1040x 2011 free file , paid wages for the first time and accumulated taxes of $50,000. 1040x 2011 free file On May 9 (Friday), Elm, Inc. 1040x 2011 free file , paid wages and accumulated taxes of $60,000, for a total of $110,000. 1040x 2011 free file Because Elm, Inc. 1040x 2011 free file , accumulated $110,000 on May 9, it must deposit $110,000 by May 12 (Monday), the next business day. 1040x 2011 free file Elm, Inc. 1040x 2011 free file , became a semiweekly schedule depositor on May 10. 1040x 2011 free file It will be a semiweekly schedule depositor for the remainder of 2014 and for 2015. 1040x 2011 free file Accuracy of Deposits Rule You are required to deposit 100% of your tax liability on or before the deposit due date. 1040x 2011 free file However, penalties will not be applied for depositing less than 100% if both of the following conditions are met. 1040x 2011 free file Any deposit shortfall does not exceed the greater of $100 or 2% of the amount of taxes otherwise required to be deposited. 1040x 2011 free file The deposit shortfall is paid or deposited by the shortfall makeup date as described below. 1040x 2011 free file Makeup Date for Deposit Shortfall:    Monthly Schedule Depositor—Deposit the shortfall or pay it with your return by the due date of your Form 943. 1040x 2011 free file You may pay the shortfall with your Form 943 even if the amount is $2,500 or more. 1040x 2011 free file Semiweekly Schedule Depositor—Deposit by the earlier of (a) the first Wednesday or Friday (whichever comes first) that falls on or after the 15th of the month following the month in which the shortfall occurred, or (b) the due date for Form 943. 1040x 2011 free file For example, if a semiweekly schedule depositor has a deposit shortfall during February 2014, the shortfall makeup date is March 19, 2014 (Wednesday). 1040x 2011 free file How To Deposit You must deposit employment taxes by electronic funds transfer. 1040x 2011 free file See Payment with return , earlier in this section, for exceptions explaining when taxes may be paid with the tax return instead of being deposited. 1040x 2011 free file Electronic deposit requirement. 1040x 2011 free file   You must use electronic funds transfer to make all federal tax deposits (such as deposits of employment tax, excise tax, and corporate income tax). 1040x 2011 free file Generally, electronic funds transfers are made using the Electronic Federal Tax Payment System (EFTPS). 1040x 2011 free file If you do not want to use EFTPS, you can arrange for your tax professional, financial institution, payroll service, or other trusted third party to make electronic deposits on your behalf. 1040x 2011 free file   EFTPS is a free service provided by the Department of Treasury. 1040x 2011 free file To get more information or to enroll in EFTPS, call 1-800-555-4477 (business), 1-800-316-6541 (individual), or 1-800-733-4829 (TDD). 1040x 2011 free file You can also visit the EFTPS website at www. 1040x 2011 free file eftps. 1040x 2011 free file gov. 1040x 2011 free file Additional information about EFTPS is also available in Publication 966. 1040x 2011 free file New employers that have a federal tax obligation will be pre-enrolled in EFTPS. 1040x 2011 free file Call the toll-free number located in your Employer Identification Number (EIN) Package to activate your enrollment and begin making your tax deposit payments. 1040x 2011 free file See When you receive your EIN in section 1 for more information. 1040x 2011 free file Deposit record. 1040x 2011 free file   For your records, an Electronic Funds Transfer (EFT) Trace Number will be provided with each successful payment. 1040x 2011 free file The number can be used as a receipt or to trace the payment. 1040x 2011 free file Depositing on time. 1040x 2011 free file   For deposits made by EFTPS to be on time, you must initiate the deposit by 8 p. 1040x 2011 free file m. 1040x 2011 free file Eastern time the day before the date a deposit is due. 1040x 2011 free file If you use a third party to make a deposit on your behalf, they may have different cutoff times. 1040x 2011 free file Same-day payment option. 1040x 2011 free file   If you fail to initiate a deposit transaction on EFTPS by 8 p. 1040x 2011 free file m. 1040x 2011 free file Eastern time the day before the date a deposit is due, you can still make your deposit on time by using the Federal Tax Application (FTA). 1040x 2011 free file To use the same-day payment method, you will need to make arrangements with your financial institution ahead of time. 1040x 2011 free file Please check with your financial institution regarding availability, deadlines, and costs. 1040x 2011 free file Your financial institution may charge you a fee for payments made this way. 1040x 2011 free file To learn more about the information you will need to provide to your financial institution to make a same-day wire payment, visit www. 1040x 2011 free file eftps. 1040x 2011 free file gov to download the Same-Day Payment Worksheet. 1040x 2011 free file Deposit Penalties Penalties may apply if you do not make required deposits on time or if you make deposits for less than the required amount. 1040x 2011 free file The penalties do not apply if any failure to make a proper and timely deposit was due to reasonable cause and not to willful neglect. 1040x 2011 free file IRS may also waive deposit penalties if you inadvertently fail to deposit in the first quarter that a deposit is due, or the first quarter during which your frequency of deposits changed, if you timely filed your employment tax return. 1040x 2011 free file For amounts not properly deposited or not deposited on time, the penalty rates are shown next. 1040x 2011 free file Penalty Charged for. 1040x 2011 free file . 1040x 2011 free file . 1040x 2011 free file 2% Deposits made 1 to 5 days late. 1040x 2011 free file 5% Deposits made 6 to 15 days late. 1040x 2011 free file 10% Deposits made 16 or more days late. 1040x 2011 free file Also applies to amounts paid within 10 days of the date of the first notice the IRS sent asking for the tax due. 1040x 2011 free file 10% Amounts (that should have been deposited) paid directly to the IRS or paid with your tax return. 1040x 2011 free file See Payment with return , earlier in this section, for exceptions. 1040x 2011 free file 15% Amounts still unpaid more than 10 days after the date of the first notice that the IRS sent asking for the tax due or the day on which you received notice and demand for immediate payment, whichever is earlier. 1040x 2011 free file Late deposit penalty amounts are determined using calendar days, starting from the due date of the liability. 1040x 2011 free file Order in which deposits are applied. 1040x 2011 free file   Deposits generally are applied to the most recent tax liability within the year. 1040x 2011 free file If you receive a failure-to-deposit penalty notice, you may designate how your deposits are to be applied in order to minimize the amount of the penalty, if you do so within 90 days of the date of the notice. 1040x 2011 free file Follow the instructions on the penalty notice that you received. 1040x 2011 free file For examples on how the IRS will apply deposits and more information on designating deposits, see Revenue Procedure 2001-58. 1040x 2011 free file You can find Revenue Procedure 2001-58 on page 579 of Internal Revenue Bulletin 2001-50 at www. 1040x 2011 free file irs. 1040x 2011 free file gov/pub/irs-irbs/irb01-50. 1040x 2011 free file pdf. 1040x 2011 free file Example. 1040x 2011 free file Cedar, Inc. 1040x 2011 free file , is required to make a deposit of $1,000 on July 15 and $1,500 on August 15. 1040x 2011 free file It does not make the deposit on July 15. 1040x 2011 free file On August 15, Cedar, Inc. 1040x 2011 free file , deposits $2,000. 1040x 2011 free file Under the deposits rule, which applies deposits to the most recent tax liability, $1,500 of the deposit is applied to the August 15 deposit and the remaining $500 is applied to the July deposit. 1040x 2011 free file Accordingly, $500 of the July 15 liability remains undeposited. 1040x 2011 free file The penalty on this underdeposit will apply as explained above. 1040x 2011 free file Trust fund recovery penalty. 1040x 2011 free file   If federal income, social security, or Medicare taxes that must be withheld are not withheld or are not deposited or paid to the United States Treasury, the trust fund recovery penalty may apply. 1040x 2011 free file The penalty is the full amount of the unpaid trust fund tax. 1040x 2011 free file This penalty may apply to you if these unpaid taxes cannot be immediately collected from the employer or business. 1040x 2011 free file   The trust fund recovery penalty may be imposed on all persons who are determined by the IRS to be responsible for collecting, accounting for, and paying over these taxes, and who acted willfully in not doing so. 1040x 2011 free file   A responsible person can be an officer or employee of a corporation, a partner or employee of a partnership, an accountant, a volunteer director/trustee, or an employee of a sole proprietorship. 1040x 2011 free file A responsible person also may include one who signs checks for the business or otherwise has authority to cause the spending of business funds. 1040x 2011 free file    Willfully means voluntarily, consciously, and intentionally. 1040x 2011 free file A responsible person acts willfully if the person knows that the required actions of collecting, accounting for or paying over trust fund taxes are not taking place, or recklessly disregards obvious and known risks to the government's right to receive trust fund taxes. 1040x 2011 free file “Average” failure-to-deposit penalty. 1040x 2011 free file   IRS may assess an “averaged” failure-to-deposit penalty of 2% to 10% if you are a monthly schedule depositor and did not properly complete Form 943, line 17, when your tax liability shown on Form 943, line 11, was $2,500 or more. 1040x 2011 free file IRS may also assess this penalty of 2% to 10% if you are a semiweekly schedule depositor and your tax liability shown on Form 943, line 11, was $2,500 or more and you did any of the following. 1040x 2011 free file Completed Form 943, line 17, instead of Form 943-A. 1040x 2011 free file Failed to attach a properly completed Form 943-A. 1040x 2011 free file Completed Form 943-A incorrectly, for example, by entering tax deposits instead of tax liabilities in the numbered spaces. 1040x 2011 free file   IRS figures the penalty by allocating your tax liability on Form 943, line 11, equally throughout the tax period. 1040x 2011 free file Your deposits and payments may not be counted as timely because IRS does not know the actual dates of your tax liabilities. 1040x 2011 free file   You can avoid the penalty by reviewing your return before filing it. 1040x 2011 free file Follow these steps before filing your Form 943. 1040x 2011 free file If you are a monthly schedule depositor, report your tax liabilities (not your deposits) in the monthly entry spaces on Form 943, line 17. 1040x 2011 free file If you are a semiweekly schedule depositor, report your tax liabilities (not your deposits) on Form 943-A in the lines that represent the dates you paid your employees. 1040x 2011 free file Verify that your total liability shown on Form 943, line 17, or Form 943-A, line M, equals your tax liability shown on Form 943, line 11. 1040x 2011 free file Do not show negative amounts on Form 943, line 17, or Form 943-A. 1040x 2011 free file For prior period errors discovered after December 31, 2008, do not adjust your tax liabilities reported on Form 943, line 17, or on Form 943-A. 1040x 2011 free file Employers of Both Farm and Nonfarm Workers If you employ both farm and nonfarm workers, you must treat employment taxes for the farmworkers (Form 943 taxes) separately from employment taxes for the nonfarm workers (Form 941 and 944 taxes). 1040x 2011 free file Form 943 taxes and Form 941/944 taxes are not combined for purposes of applying any of the deposit schedule rules. 1040x 2011 free file If a deposit is due, deposi