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1040x Tax

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1040x Tax

1040x tax Publication 80 - Main Content Table of Contents Introduction 1. 1040x tax Employer Identification Number (EIN) 2. 1040x tax Who Are Employees?Tests. 1040x tax Business Owned and Operated by Spouses Farm Crew Leaders 3. 1040x tax Employee's Social Security Number (SSN)Registering for SSNVS. 1040x tax 4. 1040x tax Wages and Other CompensationFringe Benefits 5. 1040x tax TipsOrdering rule. 1040x tax 6. 1040x tax Social Security and Medicare Taxes for FarmworkersThe $150 Test or the $2,500 Test 7. 1040x tax How To Figure Social Security and Medicare TaxesHousehold and agricultural employers. 1040x tax 8. 1040x tax Depositing TaxesPayment with Return When To Deposit How To Deposit Deposit Penalties 9. 1040x tax Employer's ReturnsReporting Adjustments to Form 941-SS, 944-SS, 944, or 943 Current Period Adjustments Prior Period Adjustments 10. 1040x tax Wage and Tax StatementsWaiver. 1040x tax 11. 1040x tax Federal Unemployment (FUTA) Tax—U. 1040x tax S. 1040x tax Virgin Islands Employers Only How To Get Tax Help Introduction This publication is for employers whose principal place of business is in the U. 1040x tax S. 1040x tax Virgin Islands, Guam, American Samoa, or the Commonwealth of the Northern Mariana Islands, or who have employees who are subject to income tax withholding for any of these jurisdictions. 1040x tax Employers and employees in these areas are generally subject to social security and Medicare taxes under the Federal Insurance Contributions Act (FICA). 1040x tax See section 6 and section 7 for more information. 1040x tax This publication summarizes employer responsibilities to collect, pay, and report these taxes. 1040x tax Whenever the term “United States” is used in this publication, it includes U. 1040x tax S. 1040x tax Virgin Islands, Guam, American Samoa, and the Commonwealth of the Northern Mariana Islands. 1040x tax This publication also provides employers in the U. 1040x tax S. 1040x tax Virgin Islands with a summary of their responsibilities in connection with the tax under the Federal Unemployment Tax Act, known as FUTA tax. 1040x tax See section 11 for more information. 1040x tax Except as shown in the table in section 12, social security, Medicare, and FUTA taxes apply to every employer who pays taxable wages to employees or who has employees who report tips. 1040x tax This publication does not include information relating to the self-employment tax (for social security and Medicare of self-employed persons). 1040x tax See Publication 570, Tax Guide for Individuals With Income From U. 1040x tax S. 1040x tax Possessions, if you need this information. 1040x tax This publication also does not include information relating to income tax withholding. 1040x tax In U. 1040x tax S. 1040x tax Virgin Islands, Guam, American Samoa, and the Commonwealth of the Northern Mariana Islands, contact your local tax department for information about income tax withholding. 1040x tax See Publication 15 (Circular E), for information on U. 1040x tax S. 1040x tax federal income tax withholding. 1040x tax Comments and suggestions. 1040x tax   We welcome your comments about this publication and your suggestions for future editions. 1040x tax   You can write to us at the following address: Internal Revenue Service Tax Forms and Publications Division 1111 Constitution Ave. 1040x tax NW, IR-6526 Washington, DC 20224   We respond to many letters by telephone. 1040x tax Therefore, it would be helpful if you would include your daytime phone number, including the area code, in your correspondence. 1040x tax    You can also send us comments from www. 1040x tax irs. 1040x tax gov/formspubs. 1040x tax Click on More Information and then click on Comment on Tax Forms and Publications. 1040x tax   Although we cannot respond individually to each comment received, we do appreciate your feedback and will consider your comments as we revise our tax forms, instructions, and publications. 1040x tax 1. 1040x tax Employer Identification Number (EIN) An employer identification number (EIN) is a nine-digit number that the IRS issues. 1040x tax Its format is 00-0000000. 1040x tax It is used to identify the tax accounts of employers and certain other organizations and entities that have no employees. 1040x tax Use your EIN on all of the items that you send to the IRS and SSA for your business. 1040x tax If you do not have an EIN, you may apply for one online. 1040x tax Go to IRS. 1040x tax gov and click on the Apply for an EIN Online link under Tools. 1040x tax You may also apply for an EIN by calling 1-800-829-4933, (U. 1040x tax S. 1040x tax Virgin Islands only) or 267-941-1099 (toll call), or you can fax or mail Form SS-4, Application for Employer Identification Number, to the IRS. 1040x tax Do not use a social security number (SSN) in place of an EIN. 1040x tax If you do not have an EIN by the time a return is due, file a paper return and enter “Applied For” and the date that you applied for it in the space shown for the number. 1040x tax If you took over another employer's business, do not use that employer's EIN. 1040x tax You should have only one EIN. 1040x tax If you have more than one, write to the IRS office where you file your returns using the “without a payment” address in the Instructions for Form 941-SS, Instructions for Form 944, or Instructions for Form 943. 1040x tax Or call the IRS Business & Specialty Tax Line at 1-800-829-4933 (U. 1040x tax S. 1040x tax Virgin Islands only) or 267-941-1000 (toll call). 1040x tax Persons who are deaf, hard of hearing, or have a speech disability (TDD/TTY users) in the U. 1040x tax S. 1040x tax Virgin Islands may call 1-800-829-4059. 1040x tax The IRS will tell you which EIN to use. 1040x tax For more information, see Publication 1635, Employer Identification Number: Understanding Your EIN, or Publication 583, Starting a Business and Keeping Records. 1040x tax 2. 1040x tax Who Are Employees? Generally, employees are defined either under common law or under special statutes for certain situations. 1040x tax See Publication 15-A, Employer's Supplemental Tax Guide, for details on statutory employees and nonemployees. 1040x tax Employee status under common law. 1040x tax   Generally, a worker who performs services for you is your employee if you can control what will be done and how it will be done. 1040x tax This is so even when you give the employee freedom of action. 1040x tax What matters is that you have the right to control the details of how the services are performed. 1040x tax See Publication 15-A for more information on how to determine whether an individual providing services is an independent contractor or an employee. 1040x tax    Generally, people in business for themselves are not employees. 1040x tax For example, doctors, lawyers, veterinarians, and others in an independent trade in which they offer their services to the public are usually not employees. 1040x tax However, if the business is incorporated, corporate officers who work in the business are employees of the corporation. 1040x tax   If an employer-employee relationship exists, it does not matter what it is called. 1040x tax The employee may be called an agent or independent contractor. 1040x tax 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 tax Statutory employees. 1040x tax   There are also some special definitions of employees for social security, Medicare, and FUTA taxes. 1040x tax   While the following persons may not be common law employees, they are considered employees for social security and Medicare purposes if the conditions under Tests , discussed later, are met. 1040x tax a. 1040x tax   An agent (or commission) driver who delivers food or beverages (other than milk) or picks up and delivers laundry or dry cleaning for someone else. 1040x tax b. 1040x tax   A full-time life insurance salesperson who sells primarily for one company. 1040x tax c. 1040x tax   A homeworker who works by the guidelines of the person for whom the work is done, with materials furnished by and returned to that person or to someone that person designates. 1040x tax d. 1040x tax   A traveling or city salesperson (other than an agent-driver or commission-driver) who works full time (except for sideline sales activities) for one firm or person getting orders from customers. 1040x tax The orders must be for merchandise for resale or supplies for use in the customer's business. 1040x tax The customers must be retailers, wholesalers, contractors, or operators of hotels, restaurants, or other businesses dealing with food or lodging. 1040x tax Tests. 1040x tax   Withhold social security and Medicare taxes from statutory employees' wages if all three of the following tests apply. 1040x tax The service contract states or implies that almost all of the services are to be performed personally by them. 1040x tax They have little or no investment in the equipment and property used to perform the services (other than an investment in transportation facilities). 1040x tax The services are performed on a continuing basis for the same payer. 1040x tax Persons in a or d, earlier, are also employees for FUTA tax purposes if tests 1 through 3 are met (U. 1040x tax S. 1040x tax Virgin Islands only). 1040x tax   Publication 15-A gives examples of the employer-employee relationship. 1040x tax Statutory nonemployees. 1040x tax   Certain direct sellers, qualified real estate agents, and certain companion sitters are, by law, considered nonemployees. 1040x tax They are generally treated as self-employed for employment tax purposes. 1040x tax See Publication 15-A for details. 1040x tax H-2A agricultural workers. 1040x tax   On Form W-2, do not check box 13 (Statutory employee) as H-2A workers are not statutory employees. 1040x tax Treating employees as nonemployees. 1040x tax   If you incorrectly treated an employee as a nonemployee and did not withhold social security and Medicare taxes, you will be liable for the taxes. 1040x tax See Treating employees as nonemployees in section 2 of Publication 15 (Circular E), for details on Internal Revenue Code section 3509, which may apply. 1040x tax IRS help. 1040x tax   If you want the IRS to determine if a worker is an employee, file Form SS-8, Determination of Worker Status for Purposes of Federal Employment Taxes and Income Tax Withholding. 1040x tax Voluntary Classification Settlement Program (VCSP). 1040x tax   Employers who are currently treating their workers (or a class or group of workers) as independent contractors or other nonemployees and want to voluntarily reclassify their workers as employees for future tax periods may be eligible to participate in the VCSP if certain requirements are met. 1040x tax To apply, use Form 8952, Application for Voluntary Classification Settlement Program (VCSP). 1040x tax For more information, visit IRS. 1040x tax gov and enter “VCSP” in the search box. 1040x tax Business Owned and Operated by Spouses If you and your spouse jointly own and operate a business and share in the profits and losses, you are partners in a partnership, whether or not you have a formal partnership agreement. 1040x tax See Publication 541, Partnerships, for more details. 1040x tax The partnership is considered the employer of any employees, and is liable for any employment taxes due on wages paid to its employees. 1040x tax Exception—Qualified Joint Venture. 1040x tax   If you and your spouse materially participate as the only members of a jointly owned and operated business, and you file a joint Form 1040, U. 1040x tax S. 1040x tax Individual Income Tax Return, or joint Form 1040-SS, U. 1040x tax S. 1040x tax Self-Employment Tax Return—U. 1040x tax S. 1040x tax Virgin Islands, Guam, American Samoa, the Commonwealth of the Northern Mariana Islands, or Puerto Rico, you can make a joint election to be taxed as a qualified joint venture instead of a partnership. 1040x tax See the Instructions for Schedule C (Form 1040) or the Instructions for Form 1040-SS. 1040x tax Spouses electing qualified joint venture status are treated as sole proprietors for federal tax purposes. 1040x tax Either of the sole proprietor spouses may report and pay the employment taxes due on wages paid to the employees, using the EIN of that spouse’s sole proprietorship. 1040x tax For more information on qualified joint ventures, visit IRS. 1040x tax gov and enter “qualified joint venture” in the search box. 1040x tax Farm Crew Leaders You are an employer of farmworkers if you are a crew leader. 1040x tax 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 tax 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 tax 3. 1040x tax Employee's Social Security Number (SSN) An employee's social security number (SSN) consists of nine digits separated as follows: 000-00-0000. 1040x tax You must get each employee's name and SSN and enter them on Form W-2AS, W-2CM, W-2GU, or W-2VI. 1040x tax If you do not report the employee's correct name and SSN, you may owe a penalty unless you have reasonable cause. 1040x tax See Publication 1586, Reasonable Cause Regulations and Requirements for Missing and Incorrect Name/TINs, for information on the requirement to solicit the employee's SSN. 1040x tax Employee's social security card. 1040x tax   You should ask the employee to show you his or her social security card. 1040x tax The employee may show the card if it is available. 1040x tax Do not accept a social security card that says “Not valid for employment. 1040x tax ” A social security number issued with this legend does not permit employment. 1040x tax You may, but you are not required to, photocopy the social security card if the employee provides it. 1040x tax If an employee does not have a social security card or needs a new one, the employee should apply for one on Form SS-5 and submit the necessary documentation. 1040x tax The employee must complete and sign Form SS-5; it cannot be filed by the employer. 1040x tax 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 tax If your employee has applied for an SSN but has not received the card before you must file your Form W-2 reports, and you are filing your reports on paper, enter “Applied For” in box d. 1040x tax Enter all zeroes in the SSN field if filing electronically. 1040x tax When the employee receives the SSN, file Copy A of Form W-2c with SSA to show the employee's SSN. 1040x tax Correctly record the employee's name and SSN. 1040x tax   Record the name and number of each employee as they appear on his or her social security card. 1040x tax If the 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 tax Continue to use the old name until the employee shows you the replacement social security card with the corrected name. 1040x tax   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-2AS, W-2CM, W-2GU, or W-2VI. 1040x tax 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 tax Where to get and file social security number application forms. 1040x tax    U. 1040x tax S. 1040x tax Virgin Islands—U. 1040x tax S. 1040x tax Social Security Administration, 8000 Nisky Center, First Floor, Suite 2, St. 1040x tax Thomas, VI 00802. 1040x tax  Guam—U. 1040x tax S. 1040x tax Social Security Administration, 655 Harmon Loop Road, Suite 300, Dededo, GU 96929. 1040x tax  American Samoa—U. 1040x tax S. 1040x tax Social Security Administration, Pago Plaza, Suite 117, Pago Pago, AS 96799. 1040x tax  Commonwealth of the Northern Mariana Islands—U. 1040x tax S. 1040x tax Social Security Administration, MH Building, Suite 201, Saipan, MP 96950. 1040x tax Verification of social security numbers. 1040x tax   Employers and authorized reporting agents can use the Social Security Number Verification Service (SSNVS) to instantly verify up to 10 names and SSNs (per screen) at a time, or submit an electronic file of up to 250,000 names and SSNs and usually receive the results the next business day. 1040x tax Visit www. 1040x tax socialsecurity. 1040x tax gov/employer/ssnv. 1040x tax htm for more information. 1040x tax Registering for SSNVS. 1040x tax   You must register online and receive authorization from your employer to use SSNVS. 1040x tax To register, visit SSA's website at www. 1040x tax ssa. 1040x tax gov/employer and click on the Business Services Online link. 1040x tax Follow the registration instructions to obtain a user identification (ID) and password. 1040x tax You will need to provide the following information about yourself and your company. 1040x tax Name. 1040x tax SSN. 1040x tax Date of birth. 1040x tax Type of employer. 1040x tax EIN. 1040x tax Company name, address, and telephone number. 1040x tax Email address. 1040x tax   When you have completed the online registration process, SSA will mail a one-time activation code to your employer. 1040x tax You must enter the activation code online to use SSNVS. 1040x tax 4. 1040x tax Wages and Other Compensation Generally, all wages are subject to social security and Medicare tax (and FUTA tax for U. 1040x tax S. 1040x tax Virgin Islands employers). 1040x tax However, wages subject to social security tax and FUTA tax are limited by a wage base amount that you pay to each employee for the year. 1040x tax The wage base for social security tax is $117,000 for 2014. 1040x tax After you pay $117,000 to an employee in 2014, including tips, do not withhold social security tax on any amount that you later pay to the employee for the year. 1040x tax The wage base for FUTA tax is $7,000 for 2014. 1040x tax All wages are subject to Medicare tax. 1040x tax The wages may be in cash or in other forms, such as an automobile for personal use. 1040x tax Wages include salaries, vacation allowances, bonuses, commissions, and fringe benefits. 1040x tax It does not matter how payments are measured or paid. 1040x tax See the table in section 12 for exceptions to social security, Medicare, and FUTA taxes on wages. 1040x tax See section 5 and section 6 for a discussion of how the rules apply to tips and farmworkers. 1040x tax Social security and Medicare taxes apply to most payments of sick pay, including payments by third parties such as insurance companies. 1040x tax Special rules apply to the reporting of third-party sick pay. 1040x tax For details, see Publication 15-A. 1040x tax Determine the value of noncash pay (such as goods, lodging, and meals) by its fair market value. 1040x tax However, see Fringe Benefits , later in this section. 1040x tax Except for farmworkers and household employees, this kind of pay may be subject to social security, Medicare, and FUTA taxes. 1040x tax Back pay, including retroactive wage increases (but not amounts paid as liquidated damages), is taxed as ordinary wages in the year paid. 1040x tax For information on reporting back pay to the Social Security Administration, see Publication 957, Reporting Back Pay and Special Wage Payments to the Social Security Administration. 1040x tax Travel and business expenses. 1040x tax   Payments to your employee for travel and other necessary expenses of your business generally are included in taxable wages if (a) your employee is not required to or does not substantiate timely those expenses to you with receipts or other documentation, or (b) you advance an amount to your employee for business expenses and your employee is not required to or does not return timely any amount that he or she does not substantiate. 1040x tax Sick pay. 1040x tax   In general, sick pay is any amount that you pay, under a plan that you take part in, to an employee because of sickness or injury. 1040x tax These amounts are sometimes paid by a third party, such as an insurance company. 1040x tax In either case, these payments are subject to social security and Medicare taxes (and FUTA tax for U. 1040x tax S. 1040x tax Virgin Islands employers). 1040x tax Sick pay becomes exempt from these taxes after the end of 6 calendar months after the calendar month the employee last worked for the employer. 1040x tax Publication 15-A explains the employment tax rules that apply to sick pay, disability benefits, and similar payments to employees. 1040x tax Fringe Benefits Generally, fringe benefits are includible in the gross income of an employee and are subject to employment taxes. 1040x tax Examples of fringe benefits include the use of an automobile, aircraft flights that you provide, free or discounted commercial airline flights, vacations, discounts on property or services, memberships in country clubs or other social clubs, and tickets to entertainment or sporting events. 1040x tax In general, the amount included in the employee's income is the excess of the fair market value of the benefit over the sum of any amount paid for it by the employee and any amount excluded by law. 1040x tax For more information, see Publication 15-B, Employer's Tax Guide to Fringe Benefits. 1040x tax When fringe benefits are treated as paid. 1040x tax   You can choose to treat certain noncash fringe benefits (including personal use of an automobile provided by you) as paid by the pay period, quarter, or on any other basis that you choose, but they must be treated as paid at least annually. 1040x tax You do not have to make a formal choice of payment dates or notify the IRS. 1040x tax You do not have to use the same basis for all employees. 1040x tax You may change methods as often as you like, as long as all benefits provided in a calendar year are treated as paid no later than December 31 of the calendar year. 1040x tax However, see Special accounting rule for fringe benefits provided during November and December , later in this section. 1040x tax   You can treat the value of a single taxable noncash fringe benefit as paid on one or more dates in the same calendar year, even if the employee gets the entire benefit at one time. 1040x tax However, once you elect the payment dates, you must report the taxes on your return in the same tax period in which you treated them as paid. 1040x tax This election does not apply to a fringe benefit where real property or investment personal property is transferred. 1040x tax Withholding social security and Medicare taxes on fringe benefits. 1040x tax   You add the value of fringe benefits to regular wages for a payroll period and figure social security and Medicare taxes on the total. 1040x tax   If you withhold less than the required amount of social security and Medicare taxes from the employee in a calendar year but report and pay the proper amount, you may recover the taxes from the employee. 1040x tax Depositing taxes on fringe benefits. 1040x tax   Once you choose payment dates for taxable noncash fringe benefits, you must deposit taxes in the same deposit period that you treat the fringe benefits as paid. 1040x tax You may make a reasonable estimate of the value of the fringe benefits. 1040x tax In general, the value of taxable noncash fringe benefits provided in a calendar year must be determined by January 31 of the following year. 1040x tax   You may claim a refund of overpayments or elect to have any overpayment applied to the next employment tax return. 1040x tax If deposits are underpaid, see Deposit Penalties in section 8. 1040x tax Valuation of vehicles provided to employees. 1040x tax    If you provide a vehicle to your employees, you may either determine the actual value of the benefit for the entire calendar year, taking into account the business use of the vehicle, or consider the entire use for the calendar year as personal and include 100% of the value of the vehicle in the employee's income. 1040x tax For reporting information to employees, see the box 14 instructions in the General Instructions for Forms W-2 and W-3. 1040x tax Special accounting rule for fringe benefits provided during November and December. 1040x tax   You may choose to treat the value of taxable noncash fringe benefits provided during November and December as paid in the next year. 1040x tax However, this applies only to those benefits that you actually provided during November and December, not to those you merely treated as paid during those months. 1040x tax   If you use this rule, you must notify each affected employee between the time of the employee's last paycheck of the calendar year and at or near the time that you give the employee Form W-2AS, W-2CM, W-2GU, or W-2VI. 1040x tax If you use the special accounting rule, your employee must also use it for the same period that you use it. 1040x tax You cannot use this rule for a fringe benefit of real property or tangible or intangible real property of a kind normally held for investment that is transferred to your employee. 1040x tax 5. 1040x tax Tips Tips that your employee receives from customers are generally subject to social security and Medicare withholding. 1040x tax Your employee must report cash tips to you by the 10th of the month after the month that the tips are received. 1040x tax The report should include tips you paid over to the employee for charge customers, tips the employee received directly from customers, and tips received from other employees under any tip-sharing arrangement. 1040x tax Both directly and indirectly tipped employees must report tips to you. 1040x tax The report should not include tips that the employee paid out to other employees. 1040x tax No report is required for months when tips are less than $20. 1040x tax Your employees report tips on Form 4070, Employee's Report of Tips to Employer, or on a similar statement. 1040x tax They may also use Form 4070A, Employee's Daily Record of Tips, to keep a record of their tips. 1040x tax Both forms are included in Publication 1244, Employee's Daily Record of Tips and Report to Employer, available at IRS. 1040x tax gov. 1040x tax The statement must be signed by the employee and must include: The employee's name, address, and SSN, Your name and address, The month or period that the report covers, and The total tips received during the month or period. 1040x tax You are permitted to establish a system for electronic tip reporting by employees. 1040x tax See Regulations section 31. 1040x tax 6053-1(d). 1040x tax Collecting taxes on tips. 1040x tax   You must collect the employee social security and Medicare taxes on the employee's tips. 1040x tax You can also collect these taxes from the employee's wages or from other funds that he or she makes available. 1040x tax Stop collecting the employee social security tax when his or her total wages and tips for 2014 reach $117,000. 1040x tax Collect the employee Medicare tax for the whole year on all wages and tips. 1040x tax   You are responsible for the employer social security tax on wages and tips until the wages (including tips) reach the wage base limit. 1040x tax You are responsible for the employer Medicare tax for the whole year on all wages and tips. 1040x tax File Form 941-SS (or Form 944) to report withholding and employer taxes on tips. 1040x tax The withholding rules for withholding an employee's share of Medicare tax on tips also apply to withholding the Additional Medicare Tax once wages and tips exceed $200,000 in the calendar year. 1040x tax Ordering rule. 1040x tax   If, by the 10th of the month after the month you received an employee's report on tips, you do not have enough employee funds available to deduct the employee social security and Medicare tax on tips, you no longer have to collect it and are not liable for it. 1040x tax Reporting tips. 1040x tax   Report tips and any collected and uncollected social security in boxes 1, 5, 7, and 12 on Forms W-2AS, W-2CM, W-2GU, or W-2VI and on Form 941-SS, lines 5b, 5c, and 5d (Form 944, lines 4b, 4c, and 4d). 1040x tax Do not include any uncollected Additional Medicare Tax in box 12 of Form W-2. 1040x tax Report an adjustment on Form 941-SS, line 9 (Form 944, line 6), for the uncollected social security and Medicare taxes. 1040x tax The table in section 12 shows how tips are treated for FUTA tax purposes. 1040x tax   Revenue Ruling 2012-18 provides guidance for employers regarding social security and Medicare taxes imposed on tips, including information on the reporting of the employer share of social security and Medicare taxes under section 3121(q), the difference between tips and service charges, and the section 45B credit. 1040x tax See Revenue Ruling 2012-18, 2012-26 I. 1040x tax R. 1040x tax B. 1040x tax 1032, available at www. 1040x tax irs. 1040x tax gov/irb/2012-26_IRB/ar07. 1040x tax html. 1040x tax 6. 1040x tax Social Security and Medicare Taxes for Farmworkers The tests described below apply only to services that are defined as agricultural labor (farmwork). 1040x tax 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 tax 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 tax 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 tax A “share farmer” working for you is not your employee. 1040x tax However, the share farmer may be subject to self-employment tax. 1040x tax In general, share farming is an arrangement in which certain commodity products are shared between the farmer and the owner (or tenant) of the land. 1040x tax For details, see Regulations section 31. 1040x tax 3121(b)(16)-1. 1040x tax The $150 Test or the $2,500 Test All cash wages that you pay to any employee for farmwork are subject to social security and Medicare taxes if either of the following two tests is met. 1040x tax You pay cash wages to the employee of $150 or more in a year (count all cash wages paid on a time, piecework, or other basis) for farmwork. 1040x tax The $150 test applies separately to each farmworker that you employ. 1040x tax If you employ a family of workers, each member is treated separately. 1040x tax Do not count wages paid by other employers. 1040x tax The total that you pay for farmwork (cash and noncash) to all of your employees is $2,500 or more during the year. 1040x tax Exceptions. 1040x tax   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 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 home to the farm, and Had been employed in agriculture less than 13 weeks in the preceding calendar year. 1040x tax   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 tax 7. 1040x tax How To Figure Social Security and Medicare Taxes The tax rate for social security is 6. 1040x tax 2% (amount withheld) each for the employer and employee (12. 1040x tax 4% total). 1040x tax The social security wage base limit is $117,000. 1040x tax The tax rate for Medicare is 1. 1040x tax 45% (amount withheld) each for the employee and employer (2. 1040x tax 9% total). 1040x tax There is no wage base limit for Medicare tax; all covered wages are subject to Medicare tax. 1040x tax Multiply each wage payment by these percentages to figure the tax to withhold from employees. 1040x tax Employers report both the employee and employer shares on Forms 941-SS, 944, or Form 943 (farm employment). 1040x tax See section 5 for information on tips. 1040x tax Additional Medicare Tax withholding. 1040x tax   In addition to withholding Medicare tax at 1. 1040x tax 45%, you must withhold a 0. 1040x tax 9% Additional Medicare Tax from wages you pay to an employee in excess of $200,000 in a calendar year. 1040x tax 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 tax Additional Medicare Tax is only imposed on the employee. 1040x tax There is no employer share of Additional Medicare Tax. 1040x tax 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 tax   For more information on what wages are subject to Medicare tax, see the chart Special Rules for Various Types of Employment and Payments in section 12. 1040x tax For more information on Additional Medicare Tax, visit IRS. 1040x tax gov and enter “Additional Medicare Tax” in the search box. 1040x tax Deducting the tax. 1040x tax   Deduct the employee tax from each wage payment. 1040x tax If you are not sure that the wages that you pay to a farmworker during the year will be taxable, you may either deduct the tax when you make the payments or wait until the $2,500 test or the $150 test explained in section 6 has been met. 1040x tax Employee's portion of taxes paid by employer. 1040x tax   If you pay your employee's social security and Medicare taxes without deducting them from the employee's pay, you must include the amount of the payments in the employee's wages for social security and Medicare taxes. 1040x tax This increase in the employee's wage payment for your payment of the employee's social security and Medicare taxes is also subject to employee social security and Medicare taxes. 1040x tax This again increases the amount of the additional taxes that you must pay. 1040x tax Household and agricultural employers. 1040x tax   This discussion does not apply to household and agricultural employers. 1040x tax If you pay a household or agricultural employee's social security and Medicare taxes, these payments must be included in the employee's wages. 1040x tax However, this wage increase due to the tax payments is not subject to social security or Medicare taxes as discussed in this section. 1040x tax See Publication 15-A for details. 1040x tax Sick pay payments. 1040x tax   Social security and Medicare taxes apply to most payments of sick pay, including payments made by third parties such as insurance companies. 1040x tax For details on third-party payers of sick pay, see Publication 15-A. 1040x tax 8. 1040x tax Depositing Taxes You must deposit social security and Medicare taxes if your tax liability (Form 941-SS, line 10; Form 944, line 7; or Form 943, line 11) is $2,500 or more for the tax return period. 1040x tax You must make the deposit by electronic funds transfer. 1040x tax For more information about electronic funds transfers, see How To Deposit , later in this section. 1040x tax Payment with Return $2,500 rule. 1040x tax   Instead of making deposits during the current quarter, you can pay your total Form 941-SS tax liability when you timely file Form 941-SS if: Your total Form 941-SS tax liability for either the current quarter or the preceding quarter is less than $2,500 and You do not incur a $100,000 next-day deposit obligation during the current quarter. 1040x tax   If you are not sure your total liability for the current quarter will be less than $2,500, (and your liability for the preceding quarter was not less than $2,500), make deposits using the semiweekly or monthly rules so you won't be subject to failure to deposit penalties. 1040x tax Employers who have been notified to file Form 944 can pay their tax liability due for the fourth quarter with Form 944, if their fourth quarter tax liability is less than $2,500. 1040x tax Employers must have deposited any tax liability due for the first, second, and third quarters, according to the deposit rules, in order to avoid failure-to-deposit penalties for deposits due during those quarters. 1040x tax Only monthly schedule depositors are allowed to make an Accuracy of Deposits Rule payment with the return. 1040x tax Semiweekly schedule depositors must timely deposit the amount. 1040x tax See Accuracy of Deposits Rule and How To Deposit, later in this section. 1040x tax When To Deposit Under the rules discussed below, the only difference between farm and nonfarm workers' employment tax deposit rules is the lookback period. 1040x tax Therefore, farm and nonfarm workers are discussed together except where noted. 1040x tax Depending on your total taxes reported during a lookback period (discussed later), you are either a monthly schedule depositor or a semiweekly schedule depositor. 1040x tax The terms “monthly schedule depositor” and “semiweekly schedule depositor” do not refer to how often you pay your employees or how often you are required to make deposits. 1040x tax The terms identify which set of rules that you must follow when a tax liability arises (for example, when you have a payday). 1040x tax You will need to determine your deposit schedule for a calendar year based on the total employment taxes reported on Forms 941-SS, line 10; Form 944, line 7; or Form 943, line 9, for your lookback period (defined below). 1040x tax If you filed both Forms 941-SS and 941 during the lookback period, combine the tax liabilities for these returns for purposes of determining your deposit schedule. 1040x tax Determine your deposit schedule for Form 943 separately from Forms 941-SS and 941. 1040x tax Lookback period for employers of nonfarm workers. 1040x tax   The lookback period for Form 941-SS (or Form 941) consists of four quarters beginning July 1 of the second preceding year and ending June 30 of the prior year. 1040x tax These four quarters are your lookback period even if you did not report any taxes for any of the quarters. 1040x tax For 2014, the lookback period is July 1, 2012, through June 30, 2013. 1040x tax    Table 1. 1040x tax Lookback Period for Calendar Year 2014 Lookback Period July 1, 2012 Oct. 1040x tax 1, 2012 Jan. 1040x tax 1, 2013 Apr. 1040x tax 1, 2013 through through through through Sep. 1040x tax 30, 2012 Dec. 1040x tax 31, 2012 Mar. 1040x tax 31, 2013 June 30, 2013    The lookback period for Form 944 is the second calendar year preceding the current calendar year. 1040x tax For example, the lookback period for calendar year 2014 is calendar year 2012. 1040x tax In addition, for employers who filed Form 944 for 2012 or for 2013 and will file Form 941-SS (or Form 941) for 2014, the lookback period for 2014 is the second calendar year preceding the current calendar year, that is, 2012. 1040x tax Lookback period for employers of farmworkers. 1040x tax   The lookback period for Form 943 is the second calendar year preceding the current calendar year. 1040x tax The lookback period for calendar year 2014 is calendar year 2012. 1040x tax Adjustments to lookback period taxes. 1040x tax   To determine your taxes for the lookback period, use only the tax that you reported on the original returns (Forms 941-SS, 943, or 944). 1040x tax Do not include any adjustments shown on Form 941-X, 943-X, or 944-X. 1040x tax Example. 1040x tax   An employer originally reported total taxes of $45,000 for the lookback period. 1040x tax The employer discovered during January 2014 that the tax reported during the lookback period was understated by $10,000 and corrected this error by filing Form 941-X. 1040x tax The employer is a monthly schedule depositor for 2014 because the lookback period tax liabilities are based on the amounts originally reported, and they were $50,000 or less. 1040x tax Deposit Period The term “deposit period” refers to the period during which tax liabilities are accumulated for each required deposit due date. 1040x tax For monthly schedule depositors, the deposit period is a calendar month. 1040x tax The deposit periods for semiweekly schedule depositors are Wednesday through Friday and Saturday through Tuesday. 1040x tax Monthly Deposit Schedule If your total tax reported for the lookback period is $50,000 or less, you are a monthly schedule depositor for the current year. 1040x tax You must deposit taxes on wage payments made during a calendar month by the 15th day of the following month. 1040x tax New employers. 1040x tax   Your tax liability for any quarter in the lookback period before the date you started or acquired your business is considered to be zero. 1040x tax Therefore, you are a monthly schedule depositor for the first calendar year of your business (but see the $100,000 Next-Day Deposit Rule , later in this section). 1040x tax Semiweekly Deposit Schedule If your total tax reported for the lookback period is more than $50,000, you are a semiweekly schedule depositor for the current year. 1040x tax If you are a semiweekly schedule depositor, you must deposit on Wednesday and/or Friday, depending on what day of the week that you make wage payments, as follows. 1040x tax Deposit taxes on wage payments made on Wednesday, Thursday, and/or Friday by the following Wednesday. 1040x tax Deposit taxes on wage payments made on Saturday, Sunday, Monday, and/or Tuesday by the following Friday. 1040x tax Semiweekly depositors are generally 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 tax 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 on the following Wednesday. 1040x tax If you made no additional payments on Saturday through Tuesday, no deposit is due on Friday. 1040x tax Semiweekly deposit period spanning two quarters. 1040x tax   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 tax Example. 1040x tax   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 tax Both deposits will be due on Friday, April 4, 2014 (3 business days from the end of the semiweekly deposit period). 1040x tax Examples of Monthly and Semiweekly Schedules Employers of nonfarm workers. 1040x tax   Rose Co. 1040x tax reported Form 941-SS taxes as follows: 2013 Lookback Period 3rd Quarter 2011 $12,000 4th Quarter 2011 12,000 1st Quarter 2012 12,000 2nd Quarter 2012 12,000   $48,000 2014 Lookback Period 3rd Quarter 2012 $12,000 4th Quarter 2012 12,000 1st Quarter 2013 12,000 2nd Quarter 2013 15,000   $51,000 Rose Co. 1040x tax is a monthly schedule depositor for 2013 because its taxes for the four quarters in its lookback period ($48,000 for the 3rd quarter of 2011 through the 2nd quarter of 2012) were not more than $50,000. 1040x tax However, for 2014, Rose Co. 1040x tax is a semiweekly schedule depositor because the total taxes for the four quarters in its lookback period ($51,000 for the 3rd quarter of 2012 through the 2nd quarter of 2013) exceeded $50,000. 1040x tax Employers of farmworkers. 1040x tax   Red Co. 1040x tax reported taxes on its 2012 Form 943, line 9, of $48,000. 1040x tax On its 2013 Form 943, line 11, it reported taxes of $60,000. 1040x tax   Red Co. 1040x tax is a monthly schedule depositor for 2014 because its taxes for its lookback period ($48,000 for calendar year 2012) were not more than $50,000. 1040x tax However, for 2015, Red Co. 1040x tax is a semiweekly schedule depositor because the total taxes for its lookback period ($60,000 for calendar year 2013) exceeded $50,000. 1040x tax New agricultural employers. 1040x tax   New agricultural employers filing Form 943 are monthly schedule depositors for the first and second calendar years of their business because their taxes for the lookback period (2 years) are considered to be zero. 1040x tax However, see the $100,000 Next-Day Deposit Rule , later in this section. 1040x tax Deposits on Business Days Only If a deposit due date falls 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 tax A business day is any day other than a Saturday, Sunday, or legal holiday. 1040x tax For example, if a deposit is required to be made on Friday, but 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 tax Semiweekly schedule depositors have at least 3 business days to make a deposit. 1040x tax 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 required deposit. 1040x tax For example, if a semiweekly schedule depositor accumulated taxes for payments made 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 tax Legal holiday. 1040x tax   The term “legal holiday” means any legal holiday in the District of Columbia. 1040x tax Legal holidays for 2014 are listed below. 1040x tax January 1—New Year's Day January 20—Birthday of Martin Luther King, Jr. 1040x tax 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 Application of Monthly and Semiweekly Schedules The following examples illustrate the procedure for determining the deposit date under the two different deposit schedules. 1040x tax Monthly schedule example. 1040x tax   Spruce Co. 1040x tax is a monthly schedule depositor with seasonal employees. 1040x tax It paid wages each Friday during August but did not pay any wages during September. 1040x tax Under the monthly deposit schedule, Spruce Co. 1040x tax must deposit the combined tax liabilities for the four August paydays by September 15. 1040x tax Spruce Co. 1040x tax does not have a deposit requirement for September (due by October 15) because no wages were paid and, therefore, it did not have a tax liability for September. 1040x tax Semiweekly schedule example. 1040x tax   Green, Inc. 1040x tax is a semiweekly schedule depositor and pays wages once each month on the last Friday of the month. 1040x tax Although Green, Inc. 1040x tax , has a semiweekly deposit schedule, it will deposit just once a month because it pays wages only once a month. 1040x tax The deposit, however, will be made under the semiweekly deposit schedule as follows: Green, Inc. 1040x tax ’s tax liability for the April 25, 2014 (Friday), payday must be deposited by April 30, 2014 (Wednesday). 1040x tax Under the semiweekly deposit schedule, liabilities for wages paid on Wednesday through Friday must be deposited by the following Wednesday. 1040x tax $100,000 Next-Day Deposit Rule If you accumulate taxes of $100,000 or more on any day during a deposit period, you must deposit by the close of the next business day, whether you are a monthly or a semiweekly schedule depositor. 1040x tax For purposes of the $100,000 rule, do not continue accumulating taxes after the end of a deposit period. 1040x tax For example, if a semiweekly schedule depositor has accumulated taxes of $95,000 on Tuesday and $10,000 on Wednesday, the $100,000 next-day deposit rule does not apply because the $10,000 is accumulated in the next deposit period. 1040x tax Thus, $95,000 must be deposited by Friday and $10,000 must be deposited by the following Wednesday. 1040x tax 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 tax For example, Fir Co. 1040x tax is a semiweekly schedule depositor. 1040x tax On Monday, Fir Co. 1040x tax accumulates taxes of $110,000 and must deposit on Tuesday, the next business day. 1040x tax On Tuesday, Fir Co. 1040x tax accumulates additional taxes of $30,000. 1040x tax Because the $30,000 is not added to the previous $110,000 and is less than $100,000, Fir Co. 1040x tax does not have to deposit the $30,000 until Friday (following the semiweekly deposit schedule). 1040x tax If you are a monthly schedule depositor and you accumulate a $100,000 tax liability on any day during a month, you become a semiweekly schedule depositor on the next day and remain so for the remainder of the calendar year and for the following calendar year. 1040x tax Example. 1040x tax   Elm, Inc. 1040x tax started its business on May 1, 2014. 1040x tax On May 8, it paid wages for the first time and accumulated a tax liability of $40,000. 1040x tax On Friday, May 9, Elm, Inc. 1040x tax paid wages and accumulated a liability of $60,000, making its accumulated Form 941-SS tax liability total $100,000. 1040x tax Elm, Inc. 1040x tax must deposit $100,000 by Monday, May 12, the next business day. 1040x tax Because this was the first year of its business, the tax liability for its lookback period is considered to be zero, and it would be a monthly schedule depositor based on the lookback rules. 1040x tax However, because Elm, Inc. 1040x tax accumulated $100,000 on May 9, it became a semiweekly schedule depositor on May 10. 1040x tax It will be a semiweekly schedule depositor for the remainder of 2014 and for 2015. 1040x tax Accuracy of Deposits Rule You are required to deposit 100% of your tax liability on or before the deposit due date. 1040x tax However, penalties will not be applied for depositing less than 100% if both of the following conditions are met. 1040x tax Any deposit shortfall does not exceed the greater of $100 or 2% of the amount of taxes otherwise required to be deposited, and The deposit shortfall is paid or deposited by the shortfall makeup date as described below. 1040x tax Makeup date for deposit shortfall: Monthly schedule depositor. 1040x tax Deposit or pay the shortfall by the due date of your Form 941-SS, 944, or 943 for the period in which the shortfall occurred. 1040x tax You may pay the shortfall with your return even if the amount is $2,500 or more. 1040x tax Semiweekly schedule depositor. 1040x tax Deposit by the earlier of: The first Wednesday or Friday (whichever comes first) that comes on or after the 15th of the month following the month in which the shortfall occurred, or The return due date for the period in which the shortfall occurred. 1040x tax For example, if a semiweekly schedule depositor filing Form 941-SS has a deposit shortfall during July 2014, the shortfall makeup date is August 15, 2014 (Friday). 1040x tax However, if the shortfall occurred on the required April 2 (Wednesday), deposit date for a March 28 (Friday) pay date, the return due date for the March 28 pay date (April 30) would come before the May 16 (Friday) shortfall makeup date. 1040x tax In this case, the shortfall must be deposited by April 30, 2014. 1040x tax 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-SS or 944 taxes). 1040x tax Form 943 taxes and Form 941-SS (or Form 944) taxes are not combined for purposes of applying any of the deposit rules. 1040x tax If a deposit is due, deposit the Form 941-SS (or Form 944) taxes and Form 943 taxes separately, as discussed next. 1040x tax How To Deposit You must deposit employment taxes by electronic funds transfer. 1040x tax 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 tax Electronic deposit requirement. 1040x tax   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 tax Generally, electronic fund transfers are made using the Electronic Federal Tax Payment System (EFTPS). 1040x tax 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 tax   EFTPS is a free service provided by the Department of the Treasury. 1040x tax To get more information or to enroll in EFTPS, call 1-800-555-4477 (U. 1040x tax S. 1040x tax Virgin Islands only) or 303-967-5916 (toll call). 1040x tax You can also visit the EFTPS website at www. 1040x tax eftps. 1040x tax gov. 1040x tax Additional information about EFTPS is also available in Publication 966. 1040x tax When you receive your EIN. 1040x tax   If you are a new employer that indicated a federal tax obligation when requesting an EIN, you will be pre-enrolled in EFTPS. 1040x tax You will receive information about Express Enrollment in your Employer Identification Number (EIN) Package and an additional mailing containing your EFTPS personal identification number (PIN) and instructions for activating your PIN. 1040x tax Follow the steps in your “How to Activate Your Enrollment” brochure to activate your enrollment and begin making your payroll tax deposits. 1040x tax 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 tax Deposit record. 1040x tax   For your records, an Electronic Funds Transfer (EFT) Trace Number will be provided with each successful payment. 1040x tax The number can be used as a receipt or to trace the payment. 1040x tax Depositing on time. 1040x tax   For deposits made by EFTPS to be on time, you must initiate the deposit by 8 p. 1040x tax m. 1040x tax Eastern time the day before the date the deposit is due. 1040x tax If you use a third party to make deposits on your behalf, they may have different cutoff times. 1040x tax Same-day payment option. 1040x tax   If you fail to initiate a deposit transaction on EFTPS by 8 p. 1040x tax m. 1040x tax 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 tax To use the same-day payment method, you will need to make arrangements with your financial institution ahead of time. 1040x tax Please check with your financial institution regarding availability, deadlines, and costs. 1040x tax Your financial institution may charge you a fee for payments made this way. 1040x tax To learn more about the information you will need to provide your financial institution to make a same-day wire payment, please visit www. 1040x tax eftps. 1040x tax gov to download the Same-Day Payment Worksheet. 1040x tax How to claim credit for overpayments. 1040x tax   If you deposited more than the right amount of taxes for a tax period, you can choose on Form 941-SS, 941, 944, or 943 for that tax period to have the overpayment refunded or applied as a credit to your next return. 1040x tax Do not ask EFTPS to request a refund from the IRS for you. 1040x tax Deposit Penalties Penalties may apply if you do not make required deposits on time or if you make deposits of less than the required amount. 1040x tax 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 tax The IRS may also waive 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 tax For amounts not properly or timely deposited, the penalty rates are as follows. 1040x tax 2% - Deposits made 1 to 5 days late. 1040x tax 5% - Deposits made 6 to 15 days late. 1040x tax 10% - Deposits made 16 or more days late. 1040x tax Also applies to amounts paid within 10 days of the date of the first notice that the IRS sent asking for the tax due. 1040x tax 10% - Amounts (that should have been deposited) paid directly to the IRS or paid with your tax return (but see Payment with Return , earlier in this section, for exceptions). 1040x tax 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 tax Late deposit penalty amounts are determined using calendar days, starting from the due date of the liability. 1040x tax Special rule for former Form 944 filers. 1040x tax    If you filed Form 944 for the prior year and must file Forms 941-SS for the current year because your employment tax liability for the prior year exceeded the Form 944 eligibility requirement ($1,000 or less), the failure-to-deposit penalty will not apply to a late deposit of employment taxes for the first month of the current year if the taxes are deposited in full by March 15 of the current year. 1040x tax Order in which deposits are applied. 1040x tax   Deposits generally are applied to the most recent tax liability within the return period (quarter or year). 1040x tax However, if you receive a failure-to-deposit penalty notice, you may designate how your payment is 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 tax Follow the instructions on the penalty notice that you received. 1040x tax For more information on designating deposits, see Revenue Procedure 2001-58. 1040x tax You can find Revenue Procedure 2001-58 on page 579 of Internal Revenue Bulletin 2001-50 at www. 1040x tax irs. 1040x tax gov/pub/irs-irbs/irb01-50. 1040x tax pdf. 1040x tax Example. 1040x tax Cedar, Inc. 1040x tax is required to make a deposit of $1,000 on July 15 and $1,500 on August 15. 1040x tax It does not make the deposit on July 15. 1040x tax On August 15, Cedar, Inc. 1040x tax deposits $2,000. 1040x tax 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 tax Accordingly, $500 of the July 15 liability remains undeposited. 1040x tax The penalty on this underdeposit will apply as explained earlier. 1040x tax Trust fund recovery penalty. 1040x tax   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 tax The penalty is the full amount of the unpaid trust fund tax. 1040x tax This penalty may apply to you if these unpaid taxes cannot be immediately collected from the employer or business. 1040x tax   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 tax   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, or any other person or entity that is responsible for collecting, accounting for, and paying over trust fund taxes. 1040x tax 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 tax    Willfully means voluntarily, consciously, and intentionally. 1040x tax A responsible person acts willfully if the person knows 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 tax “Averaged” failure-to-deposit penalty. 1040x tax   The IRS may assess an “averaged” failure-to-deposit (FTD) penalty of 2% to 10% if you are a monthly schedule depositor and did not properly complete Form 941-SS, line 14, when your tax liability shown on Form 941-SS, line 10, was $2,500 or more. 1040x tax IRS may also assess this penalty of 2% to 10% if you are a semiweekly schedule depositor and your tax liability shown on Form 941-SS, line 10, was $2,500 or more and you did any of the following. 1040x tax Completed Form 941-SS, line 14, instead of Schedule B (Form 941). 1040x tax Failed to attach a properly completed Schedule B (Form 941). 1040x tax Completed Schedule B (Form 941) incorrectly, for example, by entering tax deposits instead of tax liabilities in the numbered spaces. 1040x tax   The IRS figures the penalty by allocating your total tax liability shown on Form 941-SS, line 10, equally throughout the tax period. 1040x tax Your deposits and payments may not be counted as timely because IRS does not know the actual dates of your tax liabilities. 1040x tax   You can avoid the penalty by reviewing your return before filing it. 1040x tax Follow these steps before filing your Form 941-SS. 1040x tax If you are a monthly schedule depositor, report your tax liabilities (not your deposits) in the monthly entry spaces on Form 941-SS, line 14. 1040x tax If you are a semiweekly schedule depositor, report your tax liabilities (not your deposits) on Schedule B (Form 941) in the lines that represent the dates you paid your employees. 1040x tax Verify that your total liability shown on Form 941-SS, line 14, or the bottom of Schedule B (Form 941) equals your tax liability shown on Form 941-SS,  line 10. 1040x tax Do not show negative amounts on Form 941-SS, line 14, or Schedule B (Form 941). 1040x tax For prior period errors, do not adjust your tax liabilities reported on your current Form 941-SS, line 14, or on Schedule B (Form 941). 1040x tax Instead, file an adjusted return (Form 941-X (if you are adjusting a previously filed Form 941-SS) or Form 944-X (if you are adjusting a previously filed Form 944-SS or 944)) if you are also adjusting your tax liability. 1040x tax If you are only adjusting your deposits in response to a failure-to-deposit penalty notice, see the Instructions for Schedule B (Form 941) (if you previously filed Form 941-SS) or the Instructions for Form 944-X (if you previously filed Form 944-SS or 944). 1040x tax If you filed Form 944 for 2013 and line 7 was $2,500 or more, you were required to complete Form 944, lines 13a–13m, or attach Form 945-A, Annual Record of Federal Tax Liability. 1040x tax If you failed to complete lines 13a–13m, or failed to attach Form 945-A, whichever was required, IRS may assess an “averaged” failure-to-deposit (FTD) penalty. 1040x tax 9. 1040x tax Employer's Returns General instructions. 1040x tax   File Forms 941-SS (or Form 944) for nonfarm workers and Form 943 for farmworkers. 1040x tax (U. 1040x tax S. 1040x tax Virgin Islands employers may be required to file Form 940 for the combined wages of nonfarm workers and farmworkers. 1040x tax ) Employers with employees subject to U. 1040x tax S. 1040x tax income tax withholding. 1040x tax   If you have both employees who are subject to U. 1040x tax S. 1040x tax income tax withholding and employees who are not subject to U. 1040x tax S. 1040x tax income tax withholding, you must file only Form 941 (or Form 944) and include all your employees’ wages on that form. 1040x tax Nonfarm employers. 1040x tax   File Form 941-SS for the calendar quarter in which you first pay wages for nonfarm workers and for each quarter thereafter unless you are a seasonal employer or file a final return. 1040x tax Due dates for each quarter of the calendar year are as follows. 1040x tax Quarter Due Jan. 1040x tax , Feb. 1040x tax , Mar. 1040x tax Apr. 1040x tax 30 Apr. 1040x tax , May, June July 31 July, Aug. 1040x tax , Sept. 1040x tax Oct. 1040x tax 31 Oct. 1040x tax , Nov. 1040x tax , Dec. 1040x tax Jan. 1040x tax 31   However, if you deposited all taxes when due for the quarter, you have 10 additional days from the due dates to file the return. 1040x tax If the due date for filing your return falls on a Saturday, Sunday, or legal holiday, you may file on the next business day. 1040x tax   If you closed your business or stopped paying wages and do not have to file returns in the future, check the box on line 15 of your final Form 941-SS and show the date final wages were paid. 1040x tax Form 944. 1040x tax   If IRS notified you to file Form 944, file your 2013 Form 944 by January 31, 2014, or by February 10, 2014 (if you deposited all taxes when due). 1040x tax Household employers reporting social security and Medicare taxes. 1040x tax   If you are a sole proprietor and file Forms 941-SS (or Form 944) for business employees, you may include taxes for household employees on your Forms 941-SS (or Form 944). 1040x tax Otherwise, report social security and Medicare taxes for household employees on Schedule H (Form 1040), Household Employment Taxes. 1040x tax See Publication 926, Household Employer's Tax Guide, for more information. 1040x tax Employers of farmworkers. 1040x tax   Every employer of farmworkers must file a Form 943 for each calendar year beginning with the first year the employer pays $2,500 or more for farmwork or employs a farmworker who meets the $150 test described in section 6. 1040x tax   File a Form 943 each year for all taxable wages paid for farmwork. 1040x tax You may report household workers in a private home on a farm operated for profit on Form 943. 1040x tax Do not report wages for farmworkers on Form 941-SS or 944. 1040x tax   Send Form 943 to the IRS by January 31 of the following year. 1040x tax Send it with payment of any taxes due that you are not required to deposit. 1040x tax If you deposited all taxes when due, you have 10 additional days to file. 1040x tax Penalties. 1040x tax   For each whole or part month that a return is not filed when required (disregarding any extensions of the filing deadline), there is a failure-to-file penalty of 5% of the unpaid tax due with that return. 1040x tax The maximum penalty is generally 25% of the tax due. 1040x tax Also, for each whole or part month that the tax is paid late (disregarding any extensions of the payment deadline), there is a failure-to-pay penalty of 0. 1040x tax 5% per month of the amount of tax. 1040x tax For individual filers only, the failure-to-pay penalty is reduced from 0. 1040x tax 5% per month to 0. 1040x tax 25% per month if an installment agreement is in effect. 1040x tax You must have filed your return on or before the due date of the return to qualify for the reduced penalty. 1040x tax The maximum amount of the failure-to-pay penalty is also 25% of the tax due. 1040x tax If both penalties apply in any month, the failure-to-file penalty is reduced by the amount of the failure-to-pay penalty. 1040x tax The penalties will not be charged if you have a reasonable cause for failing to file or pay. 1040x tax If you receive a penalty notice, you can provide an explanation of why you believe reasonable cause exists. 1040x tax Reporting Adjustments to Form 941-SS, 944-SS, 944, or 943 Current Period Adjustments Make current period adjustments for fractions of cents, sick pay, tips, and group-term life insurance on your Form 941-SS, 944, or 943. 1040x tax See the Instructions for Form 941-SS, Instructions for Form 944, or Instructions for Form 943 for information on how to report these adjustments. 1040x tax Prior Period Adjustments Forms for prior period adjustments. 1040x tax   Use Form 941-X or Form 944-X to make a correction after you discover an error on a previously filed Form 941 or Form 944. 1040x tax There are also Forms 943-X, 945-X, and CT-1X to report corrections on the corresponding returns. 1040x tax Form 941-X and Form 944-X also replace Form 843, Claim for Refund and Request for Abatement, for employers to request a refund or abatement of overreported employment taxes. 1040x tax Continue to use Form 843 when requesting a refund or abatement of assessed interest or penalties. 1040x tax See Revenue Ruling 2009-39, 2009-52 I. 1040x tax R. 1040x tax B. 1040x tax 951, for examples of how the interest-free adjustment and claim for refund rules apply in 10 different situations. 1040x tax You can find Revenue Ruling 2009-39, at www. 1040x tax irs. 1040x tax gov/irb/2009-52_IRB/ar14. 1040x tax html. 1040x tax Background. 1040x tax   Treasury Decision 9405 changed the process for making interest-free adjustments to employment taxes reported on Forms 941-SS, 943, 944-SS, and 944, and for filing a claim for refund of employment taxes. 1040x tax Treasury Decision 9405, 2008-32 I. 1040x tax R. 1040x tax B. 1040x tax 293, is available at www. 1040x tax irs. 1040x tax gov/irb/2008-32_IRB/ar13. 1040x tax html. 1040x tax You will use the adjustment process if you underreported employment taxes and are making a payment, or if you overreported employment taxes and will be applying the credit to the Form 941-SS, 943, or 944 period during which you file Forms 941-X, 943-X, or 944-X, respectively. 1040x tax You will use the claim process if you overreported employment taxes and are requesting a refund or abatement of the overreported amount. 1040x tax We use the terms “correct” and “corrections” to include interest-free adjustments under sections 6205 and 6413, and claims for refund and abatement under sections 6402, 6414, and 6404 of the Internal Revenue Code. 1040x tax Correcting employment taxes. 1040x tax   When you discover an error on a previously filed Form 941-SS, 943, 944-SS, or 944, you must: Correct that error using Form 941-X, Form 943-X, or Form 944-X, File a separate Form 941-X, Form 943-X, or Form 944-X for
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Are My Social Security or Railroad Retirement Tier I Benefits Taxable?

This application is not designed to address benefits received on behalf of a dependent as they are not taxable to you.This application does not address citizens residing in a foreign country that are receiving benefits.See Publication 54, Tax Guide for U.S. Citizens and Resident Aliens Abroad.

Information You Will Need:

  • Basic information to help you determine you gross income
  • Forms SSA-1099 and/or RRB-1099

Estimated Completion Time: 9 minutes. However: 5 minutes of inactivity will end the interview and you will be forced to start over.

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Page Last Reviewed or Updated: 14-Feb-2014

The 1040x Tax

1040x tax 5. 1040x tax   Student Loan Cancellations and Repayment Assistance Table of Contents Introduction Student Loan CancellationQualifying Loans Student Loan Repayment Assistance Introduction Generally, if you are responsible for making loan payments, and the loan is canceled (forgiven), you must include the amount that was forgiven in your gross income for tax purposes. 1040x tax However, if you fulfill certain requirements, two types of student loan assistance may be tax free. 1040x tax The types of assistance discussed in this chapter are: Student loan cancellation, and Student loan repayment assistance. 1040x tax Student Loan Cancellation If your student loan is canceled, you may not have to include any amount in income. 1040x tax This section describes the requirements for tax-free treatment of canceled student loans. 1040x tax Qualifying Loans To qualify for tax-free treatment, for the cancellation of your loan, your loan must have been made by a qualified lender to assist you in attending an eligible educational institution and contain a provision that all or part of the debt will be canceled if you work: For a certain period of time, In certain professions, and For any of a broad class of employers. 1040x tax The cancellation of your loan will not qualify for tax-free treatment if it is cancelled because of services you performed for the educational institution that made the loan or other organization that provided the funds. 1040x tax See Exception, later. 1040x tax Eligible educational institution. 1040x tax   This is an educational institution that maintains a regular faculty and curriculum and normally has a regularly enrolled body of students in attendance at the place where it carries on its educational activities. 1040x tax Qualified lenders. 1040x tax   These include the following. 1040x tax The United States, or an instrumentality thereof. 1040x tax A state, territory, or possession of the United States, or the District of Columbia, or any political subdivision thereof. 1040x tax A public benefit corporation that is tax-exempt under section 501(c)(3); and that has assumed control of a state, county, or municipal hospital; and whose employees are considered public employees under state law. 1040x tax An eligible educational institution, if the loan is made: As part of an agreement with an entity described in (1), (2), (3) under which the funds to make the loan were provided to the educational institution, or Under a program of the educational institution that is designed to encourage its students to serve in occupations with unmet needs or in areas with unmet needs where the services provided by the students (or former students) are for or under the direction of a governmental unit or a tax-exempt section 501(c)(3) organization. 1040x tax   Occupations with unmet needs include medicine, nursing, teaching, and law. 1040x tax Section 501(c)(3) organization. 1040x tax   This is any corporation, community chest, fund, or foundation organized and operated exclusively for one or more of the following purposes. 1040x tax Charitable. 1040x tax Religious. 1040x tax Educational. 1040x tax Scientific. 1040x tax Literary. 1040x tax Testing for public safety. 1040x tax Fostering national or international amateur sports competition (but only if none of its activities involve providing athletic facilities or equipment). 1040x tax The prevention of cruelty to children or animals. 1040x tax Exception. 1040x tax   The cancellation of your loan does not qualify as tax-free student loan cancellation if your student loan was made by an educational institution and is canceled because of services you performed for the educational institution or other organization that provided the funds. 1040x tax Refinanced Loan If you refinanced a student loan with another loan from an eligible educational institution or a tax-exempt organization, that loan may also be considered as made by a qualified lender. 1040x tax The refinanced loan is considered made by a qualified lender if it is made under a program of the refinancing organization that is designed to encourage students to serve in occupations with unmet needs or in areas with unmet needs where the services required of the students are for or under the direction of a governmental unit or a tax-exempt section 501(c)(3) organization. 1040x tax Student Loan Repayment Assistance Student loan repayments made to you are tax free if you received them for any of the following: The National Health Service Corps (NHSC) Loan Repayment Program (NHSC Loan Repayment Program). 1040x tax A state education loan repayment program eligible for funds under the Public Health Service Act. 1040x tax Any other state loan repayment or loan forgiveness program that is intended to provide for the increased availability of health services in under served or health professional shortage areas (as determined by such state). 1040x tax You cannot deduct the interest you paid on a student loan to the extent payments were made through your participation in the above programs. 1040x tax Prev  Up  Next   Home   More Online Publications