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Amended Tax Returns More:label_amended_20tax_20returns More:taxes

2011 TaxDo Taxes Online 2010Federal Form 1040xFile Taxes For 2010 Online Free1040ezfile1040a1040 NrEfile 2007 Tax Returns For Free2012 Federal Income Tax Forms 1040ezTaxact.com 2012Filing Taxes1040ez 20111099 FormStateincometaxformFree Tax OnlineAmend A Tax ReturnEfile For 2012Www H & R BlockAmend My Tax ReturnHr Block Free File2011 Irs Tax Forms1040nr FilingTax AideForm 1040ez More:label_form_201040ez More:taxesFile Federal Taxes OnlineHow To Do Your TaxesIrs E FileExtension FormFree TaxesFederal Income Tax Forms 2011File An Amended Return1040ez Free FileIrs 2010 Tax FormsIrs Tax Form 1040xFree Online Income Tax FilingFree E-file For 2011State Tax ReturnFile 2005 Tax ReturnWww Irs Gov Form1040aHow To File An Amended Return For 2011

Amended Tax Returns More:label_amended_20tax_20returns More:taxes

Amended tax returns more:label_amended_20tax_20returns more:taxes Index A Accounting methods Accrual method, Accrual Method Cash method, Cash Method Change in, Change in Accounting Method Methods you can use, Methods you can use. Amended tax returns more:label_amended_20tax_20returns more:taxes Accounting periods 52-53 week tax year, 52-53-Week Tax Year Business purpose tax year, Business Purpose Tax Year Calendar year, Calendar Year Improper tax year, Improper Tax Year Partnerships, Partnership Accrual method Expenses, Expenses Income, Income Advance payments, Advance Payment for Services Sales, Advance Payment for Sales Services, Advance Payment for Services Assistance (see Tax help) B Business purpose tax year, Business Purpose Tax Year C Calendar year, Calendar Year Cash method, Income Expenses, Expenses Income, Income Change, accounting method, Change to accrual method. Amended tax returns more:label_amended_20tax_20returns more:taxes , Change in Accounting Method Comments on publication, Comments and suggestions. Amended tax returns more:label_amended_20tax_20returns more:taxes Constructive receipt of income, Constructive receipt. Amended tax returns more:label_amended_20tax_20returns more:taxes Corporation tax periods, Corporations (Other Than S Corporations and PSCs) Cost identification, Identifying Cost D Death of individual, short period return, Death of individual. Amended tax returns more:label_amended_20tax_20returns more:taxes E Economic performance, Economic Performance Excluded entities, cash method, Excluded Entities F Fiscal year, Fiscal Year Form 1128, Improper Tax Year, Change in Tax Year 8716, Making the election. Amended tax returns more:label_amended_20tax_20returns more:taxes , Making back-up election. Amended tax returns more:label_amended_20tax_20returns more:taxes 8752, Required payment for partnership or S corporation. Amended tax returns more:label_amended_20tax_20returns more:taxes , Activating election. Amended tax returns more:label_amended_20tax_20returns more:taxes 970, Adopting LIFO method. Amended tax returns more:label_amended_20tax_20returns more:taxes Free tax services, How To Get Tax Help H Help (see Tax help) I Inventories Cost identification, Identifying Cost FIFO, FIFO Method LIFO, LIFO Method Lower of cost or market, Lower of Cost or Market Method Perpetual or book, Perpetual or Book Inventory Retail method, Retail Method Specific identification, Specific Identification Method Uniform capitalization rules, Inventories. Amended tax returns more:label_amended_20tax_20returns more:taxes Valuing, Valuing Inventory M More information (see Tax help) P Partnerships, Partnership Personal service corporation, Partnerships, S Corporations, and Personal Service Corporations (PSCs) Limit, use of cash method, Qualified PSC. Amended tax returns more:label_amended_20tax_20returns more:taxes Required tax year, Partnerships, S Corporations, and Personal Service Corporations (PSCs), Personal Service Corporation (PSC) Publications (see Tax help) R Related persons, Related Persons S S corporations, S Corporation Section 444 election, Section 444 Election Short period return, Short period return. Amended tax returns more:label_amended_20tax_20returns more:taxes Short tax year, Short Tax Year Suggestions for publication, Comments and suggestions. Amended tax returns more:label_amended_20tax_20returns more:taxes T Tax help, How To Get Tax Help Tax year Change in, Change in Tax Year Corporations, Corporations (Other Than S Corporations and PSCs) Fiscal year, Fiscal Year Personal service corporation, Personal Service Corporation (PSC) S corporations, S Corporation Section 444 election, Section 444 Election Short tax year, Short Tax Year Taxpayer Advocate, Taxpayer Advocate Service. Amended tax returns more:label_amended_20tax_20returns more:taxes TTY/TDD information, How To Get Tax Help U Uniform capitalization rules Exceptions, Exceptions. Amended tax returns more:label_amended_20tax_20returns more:taxes General rules, Uniform Capitalization Rules Prev  Up     Home   More Online Publications
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The Amended Tax Returns More:label_amended_20tax_20returns More:taxes

Amended tax returns more:label_amended_20tax_20returns more:taxes 3. Amended tax returns more:label_amended_20tax_20returns more:taxes   SIMPLE Plans Table of Contents Topics - This chapter discusses: Useful Items - You may want to see: SIMPLE IRA PlanWho Can Set Up a SIMPLE IRA Plan? Who Can Participate in a SIMPLE IRA Plan? How To Set Up a SIMPLE IRA Plan Notification Requirement Contribution Limits When To Deduct Contributions Where To Deduct Contributions Tax Treatment of Contributions Distributions (Withdrawals) More Information on SIMPLE IRA Plans SIMPLE 401(k) Plan Topics - This chapter discusses: SIMPLE IRA plan SIMPLE 401(k) plan Useful Items - You may want to see: Publications 590 Individual Retirement Arrangements (IRAs) 3998 Choosing A Retirement Solution for Your Small Business 4284 SIMPLE IRA Plan Checklist 4334 SIMPLE IRA Plans for Small Businesses Forms (and Instructions) W-2 Wage and Tax Statement 5304-SIMPLE Savings Incentive Match Plan for Employees of Small Employers (SIMPLE)–Not for Use With a Designated Financial Institution 5305-SIMPLE Savings Incentive Match Plan for Employees of Small Employers (SIMPLE)–for Use With a Designated Financial Institution 8880 Credit for Qualified Retirement Savings Contributions 8881 Credit for Small Employer Pension Plan Startup Costs A savings incentive match plan for employees (SIMPLE plan) is a written arrangement that provides you and your employees with a simplified way to make contributions to provide retirement income. Amended tax returns more:label_amended_20tax_20returns more:taxes Under a SIMPLE plan, employees can choose to make salary reduction contributions to the plan rather than receiving these amounts as part of their regular pay. Amended tax returns more:label_amended_20tax_20returns more:taxes In addition, you will contribute matching or nonelective contributions. Amended tax returns more:label_amended_20tax_20returns more:taxes SIMPLE plans can only be maintained on a calendar-year basis. Amended tax returns more:label_amended_20tax_20returns more:taxes A SIMPLE plan can be set up in either of the following ways. Amended tax returns more:label_amended_20tax_20returns more:taxes Using SIMPLE IRAs (SIMPLE IRA plan). Amended tax returns more:label_amended_20tax_20returns more:taxes As part of a 401(k) plan (SIMPLE 401(k) plan). Amended tax returns more:label_amended_20tax_20returns more:taxes Many financial institutions will help you set up a SIMPLE plan. Amended tax returns more:label_amended_20tax_20returns more:taxes SIMPLE IRA Plan A SIMPLE IRA plan is a retirement plan that uses SIMPLE IRAs for each eligible employee. Amended tax returns more:label_amended_20tax_20returns more:taxes Under a SIMPLE IRA plan, a SIMPLE IRA must be set up for each eligible employee. Amended tax returns more:label_amended_20tax_20returns more:taxes For the definition of an eligible employee, see Who Can Participate in a SIMPLE IRA Plan , later. Amended tax returns more:label_amended_20tax_20returns more:taxes Who Can Set Up a SIMPLE IRA Plan? You can set up a SIMPLE IRA plan if you meet both the following requirements. Amended tax returns more:label_amended_20tax_20returns more:taxes You meet the employee limit. Amended tax returns more:label_amended_20tax_20returns more:taxes You do not maintain another qualified plan unless the other plan is for collective bargaining employees. Amended tax returns more:label_amended_20tax_20returns more:taxes Employee limit. Amended tax returns more:label_amended_20tax_20returns more:taxes   You can set up a SIMPLE IRA plan only if you had 100 or fewer employees who received $5,000 or more in compensation from you for the preceding year. Amended tax returns more:label_amended_20tax_20returns more:taxes Under this rule, you must take into account all employees employed at any time during the calendar year regardless of whether they are eligible to participate. Amended tax returns more:label_amended_20tax_20returns more:taxes Employees include self-employed individuals who received earned income and leased employees (defined in chapter 1). Amended tax returns more:label_amended_20tax_20returns more:taxes   Once you set up a SIMPLE IRA plan, you must continue to meet the 100-employee limit each year you maintain the plan. Amended tax returns more:label_amended_20tax_20returns more:taxes Grace period for employers who cease to meet the 100-employee limit. Amended tax returns more:label_amended_20tax_20returns more:taxes   If you maintain the SIMPLE IRA plan for at least 1 year and you cease to meet the 100-employee limit in a later year, you will be treated as meeting it for the 2 calendar years immediately following the calendar year for which you last met it. Amended tax returns more:label_amended_20tax_20returns more:taxes   A different rule applies if you do not meet the 100-employee limit because of an acquisition, disposition, or similar transaction. Amended tax returns more:label_amended_20tax_20returns more:taxes Under this rule, the SIMPLE IRA plan will be treated as meeting the 100-employee limit for the year of the transaction and the 2 following years if both the following conditions are satisfied. Amended tax returns more:label_amended_20tax_20returns more:taxes Coverage under the plan has not significantly changed during the grace period. Amended tax returns more:label_amended_20tax_20returns more:taxes The SIMPLE IRA plan would have continued to qualify after the transaction if you had remained a separate employer. Amended tax returns more:label_amended_20tax_20returns more:taxes    The grace period for acquisitions, dispositions, and similar transactions also applies if, because of these types of transactions, you do not meet the rules explained under Other qualified plan or Who Can Participate in a SIMPLE IRA Plan, below. Amended tax returns more:label_amended_20tax_20returns more:taxes Other qualified plan. Amended tax returns more:label_amended_20tax_20returns more:taxes   The SIMPLE IRA plan generally must be the only retirement plan to which you make contributions, or to which benefits accrue, for service in any year beginning with the year the SIMPLE IRA plan becomes effective. Amended tax returns more:label_amended_20tax_20returns more:taxes Exception. Amended tax returns more:label_amended_20tax_20returns more:taxes   If you maintain a qualified plan for collective bargaining employees, you are permitted to maintain a SIMPLE IRA plan for other employees. Amended tax returns more:label_amended_20tax_20returns more:taxes Who Can Participate in a SIMPLE IRA Plan? Eligible employee. Amended tax returns more:label_amended_20tax_20returns more:taxes   Any employee who received at least $5,000 in compensation during any 2 years preceding the current calendar year and is reasonably expected to receive at least $5,000 during the current calendar year is eligible to participate. Amended tax returns more:label_amended_20tax_20returns more:taxes The term “employee” includes a self-employed individual who received earned income. Amended tax returns more:label_amended_20tax_20returns more:taxes   You can use less restrictive eligibility requirements (but not more restrictive ones) by eliminating or reducing the prior year compensation requirements, the current year compensation requirements, or both. Amended tax returns more:label_amended_20tax_20returns more:taxes For example, you can allow participation for employees who received at least $3,000 in compensation during any preceding calendar year. Amended tax returns more:label_amended_20tax_20returns more:taxes However, you cannot impose any other conditions for participating in a SIMPLE IRA plan. Amended tax returns more:label_amended_20tax_20returns more:taxes Excludable employees. Amended tax returns more:label_amended_20tax_20returns more:taxes   The following employees do not need to be covered under a SIMPLE IRA plan. Amended tax returns more:label_amended_20tax_20returns more:taxes Employees who are covered by a union agreement and whose retirement benefits were bargained for in good faith by the employees' union and you. Amended tax returns more:label_amended_20tax_20returns more:taxes Nonresident alien employees who have received no U. Amended tax returns more:label_amended_20tax_20returns more:taxes S. Amended tax returns more:label_amended_20tax_20returns more:taxes source wages, salaries, or other personal services compensation from you. Amended tax returns more:label_amended_20tax_20returns more:taxes Compensation. Amended tax returns more:label_amended_20tax_20returns more:taxes   Compensation for employees is the total wages, tips, and other compensation from the employer subject to federal income tax withholding and the amounts paid for domestic service in a private home, local college club, or local chapter of a college fraternity or sorority. Amended tax returns more:label_amended_20tax_20returns more:taxes Compensation also includes the employee's salary reduction contributions made under this plan and, if applicable, elective deferrals under a section 401(k) plan, a SARSEP, or a section 403(b) annuity contract and compensation deferred under a section 457 plan required to be reported by the employer on Form W-2. Amended tax returns more:label_amended_20tax_20returns more:taxes If you are self-employed, compensation is your net earnings from self-employment (line 4 of Short Schedule SE or line 6 of Long Schedule SE (Form 1040)) before subtracting any contributions made to the SIMPLE IRA plan for yourself. Amended tax returns more:label_amended_20tax_20returns more:taxes How To Set Up a SIMPLE IRA Plan You can use Form 5304-SIMPLE or Form 5305-SIMPLE to set up a SIMPLE IRA plan. Amended tax returns more:label_amended_20tax_20returns more:taxes Each form is a model savings incentive match plan for employees (SIMPLE) plan document. Amended tax returns more:label_amended_20tax_20returns more:taxes Which form you use depends on whether you select a financial institution or your employees select the institution that will receive the contributions. Amended tax returns more:label_amended_20tax_20returns more:taxes Use Form 5304-SIMPLE if you allow each plan participant to select the financial institution for receiving his or her SIMPLE IRA plan contributions. Amended tax returns more:label_amended_20tax_20returns more:taxes Use Form 5305-SIMPLE if you require that all contributions under the SIMPLE IRA plan be deposited initially at a designated financial institution. Amended tax returns more:label_amended_20tax_20returns more:taxes The SIMPLE IRA plan is adopted when you have completed all appropriate boxes and blanks on the form and you (and the designated financial institution, if any) have signed it. Amended tax returns more:label_amended_20tax_20returns more:taxes Keep the original form. Amended tax returns more:label_amended_20tax_20returns more:taxes Do not file it with the IRS. Amended tax returns more:label_amended_20tax_20returns more:taxes Other uses of the forms. Amended tax returns more:label_amended_20tax_20returns more:taxes   If you set up a SIMPLE IRA plan using Form 5304-SIMPLE or Form 5305-SIMPLE, you can use the form to satisfy other requirements, including the following. Amended tax returns more:label_amended_20tax_20returns more:taxes Meeting employer notification requirements for the SIMPLE IRA plan. Amended tax returns more:label_amended_20tax_20returns more:taxes Form 5304-SIMPLE and Form 5305-SIMPLE contain a Model Notification to Eligible Employees that provides the necessary information to the employee. Amended tax returns more:label_amended_20tax_20returns more:taxes Maintaining the SIMPLE IRA plan records and proving you set up a SIMPLE IRA plan for employees. Amended tax returns more:label_amended_20tax_20returns more:taxes Deadline for setting up a SIMPLE IRA plan. Amended tax returns more:label_amended_20tax_20returns more:taxes   You can set up a SIMPLE IRA plan effective on any date from January 1 through October 1 of a year, provided you did not previously maintain a SIMPLE IRA plan. Amended tax returns more:label_amended_20tax_20returns more:taxes This requirement does not apply if you are a new employer that comes into existence after October 1 of the year the SIMPLE IRA plan is set up and you set up a SIMPLE IRA plan as soon as administratively feasible after your business comes into existence. Amended tax returns more:label_amended_20tax_20returns more:taxes If you previously maintained a SIMPLE IRA plan, you can set up a SIMPLE IRA plan effective only on January 1 of a year. Amended tax returns more:label_amended_20tax_20returns more:taxes A SIMPLE IRA plan cannot have an effective date that is before the date you actually adopt the plan. Amended tax returns more:label_amended_20tax_20returns more:taxes Setting up a SIMPLE IRA. Amended tax returns more:label_amended_20tax_20returns more:taxes   SIMPLE IRAs are the individual retirement accounts or annuities into which the contributions are deposited. Amended tax returns more:label_amended_20tax_20returns more:taxes A SIMPLE IRA must be set up for each eligible employee. Amended tax returns more:label_amended_20tax_20returns more:taxes Forms 5305-S, SIMPLE Individual Retirement Trust Account, and 5305-SA, SIMPLE Individual Retirement Custodial Account, are model trust and custodial account documents the participant and the trustee (or custodian) can use for this purpose. Amended tax returns more:label_amended_20tax_20returns more:taxes   A SIMPLE IRA cannot be a Roth IRA. Amended tax returns more:label_amended_20tax_20returns more:taxes Contributions to a SIMPLE IRA will not affect the amount an individual can contribute to a Roth or traditional IRA. Amended tax returns more:label_amended_20tax_20returns more:taxes Deadline for setting up a SIMPLE IRA. Amended tax returns more:label_amended_20tax_20returns more:taxes   A SIMPLE IRA must be set up for an employee before the first date by which a contribution is required to be deposited into the employee's IRA. Amended tax returns more:label_amended_20tax_20returns more:taxes See Time limits for contributing funds , later, under Contribution Limits. Amended tax returns more:label_amended_20tax_20returns more:taxes Credit for startup costs. Amended tax returns more:label_amended_20tax_20returns more:taxes   You may be able to claim a tax credit for part of the ordinary and necessary costs of starting a SIMPLE IRA plan that first became effective in 2013. Amended tax returns more:label_amended_20tax_20returns more:taxes For more information, see Credit for startup costs under Reminders, earlier. Amended tax returns more:label_amended_20tax_20returns more:taxes Notification Requirement If you adopt a SIMPLE IRA plan, you must notify each employee of the following information before the beginning of the election period. Amended tax returns more:label_amended_20tax_20returns more:taxes The employee's opportunity to make or change a salary reduction choice under a SIMPLE IRA plan. Amended tax returns more:label_amended_20tax_20returns more:taxes Your decision to make either matching contributions or nonelective contributions (discussed later). Amended tax returns more:label_amended_20tax_20returns more:taxes A summary description provided by the financial institution. Amended tax returns more:label_amended_20tax_20returns more:taxes Written notice that his or her balance can be transferred without cost or penalty if they use a designated financial institution. Amended tax returns more:label_amended_20tax_20returns more:taxes Election period. Amended tax returns more:label_amended_20tax_20returns more:taxes   The election period is generally the 60-day period immediately preceding January 1 of a calendar year (November 2 to December 31 of the preceding calendar year). Amended tax returns more:label_amended_20tax_20returns more:taxes However, the dates of this period are modified if you set up a SIMPLE IRA plan in mid-year (for example, on July 1) or if the 60-day period falls before the first day an employee becomes eligible to participate in the SIMPLE IRA plan. Amended tax returns more:label_amended_20tax_20returns more:taxes   A SIMPLE IRA plan can provide longer periods for permitting employees to enter into salary reduction agreements or to modify prior agreements. Amended tax returns more:label_amended_20tax_20returns more:taxes For example, a SIMPLE IRA plan can provide a 90-day election period instead of the 60-day period. Amended tax returns more:label_amended_20tax_20returns more:taxes Similarly, in addition to the 60-day period, a SIMPLE IRA plan can provide quarterly election periods during the 30 days before each calendar quarter, other than the first quarter of each year. Amended tax returns more:label_amended_20tax_20returns more:taxes Contribution Limits Contributions are made up of salary reduction contributions and employer contributions. Amended tax returns more:label_amended_20tax_20returns more:taxes You, as the employer, must make either matching contributions or nonelective contributions, defined later. Amended tax returns more:label_amended_20tax_20returns more:taxes No other contributions can be made to the SIMPLE IRA plan. Amended tax returns more:label_amended_20tax_20returns more:taxes These contributions, which you can deduct, must be made timely. Amended tax returns more:label_amended_20tax_20returns more:taxes See Time limits for contributing funds , later. Amended tax returns more:label_amended_20tax_20returns more:taxes Salary reduction contributions. Amended tax returns more:label_amended_20tax_20returns more:taxes   The amount the employee chooses to have you contribute to a SIMPLE IRA on his or her behalf cannot be more than $12,000 for 2013 and 2014. Amended tax returns more:label_amended_20tax_20returns more:taxes These contributions must be expressed as a percentage of the employee's compensation unless you permit the employee to express them as a specific dollar amount. Amended tax returns more:label_amended_20tax_20returns more:taxes You cannot place restrictions on the contribution amount (such as limiting the contribution percentage), except to comply with the $12,000 limit. Amended tax returns more:label_amended_20tax_20returns more:taxes   If you or an employee participates in any other qualified plan during the year and you or your employee have salary reduction contributions (elective deferrals) under those plans, the salary reduction contributions under a SIMPLE IRA plan also count toward the overall annual limit ($17,500 for 2013 and 2014) on exclusion of salary reduction contributions and other elective deferrals. Amended tax returns more:label_amended_20tax_20returns more:taxes Catch-up contributions. Amended tax returns more:label_amended_20tax_20returns more:taxes   A SIMPLE IRA plan can permit participants who are age 50 or over at the end of the calendar year to also make catch-up contributions. Amended tax returns more:label_amended_20tax_20returns more:taxes The catch-up contribution limit for 2013 and 2014 for SIMPLE IRA plans is $2,500. Amended tax returns more:label_amended_20tax_20returns more:taxes Salary reduction contributions are not treated as catch-up contributions for 2013 or 2014 until they exceed $12,000. Amended tax returns more:label_amended_20tax_20returns more:taxes However, the catch-up contribution a participant can make for a year cannot exceed the lesser of the following amounts. Amended tax returns more:label_amended_20tax_20returns more:taxes The catch-up contribution limit. Amended tax returns more:label_amended_20tax_20returns more:taxes The excess of the participant's compensation over the salary reduction contributions that are not catch-up contributions. Amended tax returns more:label_amended_20tax_20returns more:taxes Employer matching contributions. Amended tax returns more:label_amended_20tax_20returns more:taxes   You are generally required to match each employee's salary reduction contributions on a dollar-for-dollar basis up to 3% of the employee's compensation. Amended tax returns more:label_amended_20tax_20returns more:taxes This requirement does not apply if you make nonelective contributions as discussed later. Amended tax returns more:label_amended_20tax_20returns more:taxes Example. Amended tax returns more:label_amended_20tax_20returns more:taxes In 2013, your employee, John Rose, earned $25,000 and chose to defer 5% of his salary. Amended tax returns more:label_amended_20tax_20returns more:taxes Your net earnings from self-employment are $40,000, and you choose to contribute 10% of your earnings to your SIMPLE IRA. Amended tax returns more:label_amended_20tax_20returns more:taxes You make 3% matching contributions. Amended tax returns more:label_amended_20tax_20returns more:taxes The total contribution you make for John is $2,000, figured as follows. Amended tax returns more:label_amended_20tax_20returns more:taxes Salary reduction contributions ($25,000 × . Amended tax returns more:label_amended_20tax_20returns more:taxes 05) $1,250 Employer matching contribution ($25,000 × . Amended tax returns more:label_amended_20tax_20returns more:taxes 03) 750 Total contributions $2,000     The total contribution you make for yourself is $5,200, figured as follows. Amended tax returns more:label_amended_20tax_20returns more:taxes Salary reduction contributions ($40,000 × . Amended tax returns more:label_amended_20tax_20returns more:taxes 10) $4,000 Employer matching contribution ($40,000 × . Amended tax returns more:label_amended_20tax_20returns more:taxes 03) 1,200 Total contributions $5,200 Lower percentage. Amended tax returns more:label_amended_20tax_20returns more:taxes   If you choose a matching contribution less than 3%, the percentage must be at least 1%. Amended tax returns more:label_amended_20tax_20returns more:taxes You must notify the employees of the lower match within a reasonable period of time before the 60-day election period (discussed earlier) for the calendar year. Amended tax returns more:label_amended_20tax_20returns more:taxes You cannot choose a percentage less than 3% for more than 2 years during the 5-year period that ends with (and includes) the year for which the choice is effective. Amended tax returns more:label_amended_20tax_20returns more:taxes Nonelective contributions. Amended tax returns more:label_amended_20tax_20returns more:taxes   Instead of matching contributions, you can choose to make nonelective contributions of 2% of compensation on behalf of each eligible employee who has at least $5,000 (or some lower amount you select) of compensation from you for the year. Amended tax returns more:label_amended_20tax_20returns more:taxes If you make this choice, you must make nonelective contributions whether or not the employee chooses to make salary reduction contributions. Amended tax returns more:label_amended_20tax_20returns more:taxes Only $255,000 of the employee's compensation can be taken into account to figure the contribution limit in 2013 ($260,000 in 2014). Amended tax returns more:label_amended_20tax_20returns more:taxes   If you choose this 2% contribution formula, you must notify the employees within a reasonable period of time before the 60-day election period (discussed earlier) for the calendar year. Amended tax returns more:label_amended_20tax_20returns more:taxes Example 1. Amended tax returns more:label_amended_20tax_20returns more:taxes In 2013, your employee, Jane Wood, earned $36,000 and chose to have you contribute 10% of her salary. Amended tax returns more:label_amended_20tax_20returns more:taxes Your net earnings from self-employment are $50,000, and you choose to contribute 10% of your earnings to your SIMPLE IRA. Amended tax returns more:label_amended_20tax_20returns more:taxes You make a 2% nonelective contribution. Amended tax returns more:label_amended_20tax_20returns more:taxes Both of you are under age 50. Amended tax returns more:label_amended_20tax_20returns more:taxes The total contribution you make for Jane is $4,320, figured as follows. Amended tax returns more:label_amended_20tax_20returns more:taxes Salary reduction contributions ($36,000 × . Amended tax returns more:label_amended_20tax_20returns more:taxes 10) $3,600 2% nonelective contributions ($36,000 × . Amended tax returns more:label_amended_20tax_20returns more:taxes 02) 720 Total contributions $4,320     The total contribution you make for yourself is $6,000, figured as follows. Amended tax returns more:label_amended_20tax_20returns more:taxes Salary reduction contributions ($50,000 × . Amended tax returns more:label_amended_20tax_20returns more:taxes 10) $5,000 2% nonelective contributions ($50,000 × . Amended tax returns more:label_amended_20tax_20returns more:taxes 02) 1,000 Total contributions $6,000 Example 2. Amended tax returns more:label_amended_20tax_20returns more:taxes Using the same facts as in Example 1, above, the maximum contribution you make for Jane or for yourself if you each earned $75,000 is $13,500, figured as follows. Amended tax returns more:label_amended_20tax_20returns more:taxes Salary reduction contributions (maximum amount allowed) $12,000 2% nonelective contributions ($75,000 × . Amended tax returns more:label_amended_20tax_20returns more:taxes 02) 1,500 Total contributions $13,500 Time limits for contributing funds. Amended tax returns more:label_amended_20tax_20returns more:taxes   You must make the salary reduction contributions to the SIMPLE IRA within 30 days after the end of the month in which the amounts would otherwise have been payable to the employee in cash. Amended tax returns more:label_amended_20tax_20returns more:taxes You must make matching contributions or nonelective contributions by the due date (including extensions) for filing your federal income tax return for the year. Amended tax returns more:label_amended_20tax_20returns more:taxes Certain plans subject to Department of Labor rules may have an earlier due date for salary reduction contributions. Amended tax returns more:label_amended_20tax_20returns more:taxes When To Deduct Contributions You can deduct SIMPLE IRA contributions in the tax year within which the calendar year for which contributions were made ends. Amended tax returns more:label_amended_20tax_20returns more:taxes You can deduct contributions for a particular tax year if they are made for that tax year and are made by the due date (including extensions) of your federal income tax return for that year. Amended tax returns more:label_amended_20tax_20returns more:taxes Example 1. Amended tax returns more:label_amended_20tax_20returns more:taxes Your tax year is the fiscal year ending June 30. Amended tax returns more:label_amended_20tax_20returns more:taxes Contributions under a SIMPLE IRA plan for the calendar year 2013 (including contributions made in 2013 before July 1, 2013) are deductible in the tax year ending June 30, 2014. Amended tax returns more:label_amended_20tax_20returns more:taxes Example 2. Amended tax returns more:label_amended_20tax_20returns more:taxes You are a sole proprietor whose tax year is the calendar year. Amended tax returns more:label_amended_20tax_20returns more:taxes Contributions under a SIMPLE IRA plan for the calendar year 2013 (including contributions made in 2014 by April 15, 2014) are deductible in the 2013 tax year. Amended tax returns more:label_amended_20tax_20returns more:taxes Where To Deduct Contributions Deduct the contributions you make for your common-law employees on your tax return. Amended tax returns more:label_amended_20tax_20returns more:taxes For example, sole proprietors deduct them on Schedule C (Form 1040) or Schedule F (Form 1040); partnerships deduct them on Form 1065; and corporations deduct them on Form 1120 or Form 1120S. Amended tax returns more:label_amended_20tax_20returns more:taxes Sole proprietors and partners deduct contributions for themselves on line 28 of Form 1040. Amended tax returns more:label_amended_20tax_20returns more:taxes (If you are a partner, contributions for yourself are shown on the Schedule K-1 (Form 1065) you receive from the partnership. Amended tax returns more:label_amended_20tax_20returns more:taxes ) Tax Treatment of Contributions You can deduct your contributions and your employees can exclude these contributions from their gross income. Amended tax returns more:label_amended_20tax_20returns more:taxes SIMPLE IRA plan contributions are not subject to federal income tax withholding. Amended tax returns more:label_amended_20tax_20returns more:taxes However, salary reduction contributions are subject to social security, Medicare, and federal unemployment (FUTA) taxes. Amended tax returns more:label_amended_20tax_20returns more:taxes Matching and nonelective contributions are not subject to these taxes. Amended tax returns more:label_amended_20tax_20returns more:taxes Reporting on Form W-2. Amended tax returns more:label_amended_20tax_20returns more:taxes   Do not include SIMPLE IRA plan contributions in the “Wages, tips, other compensation” box of Form W-2. Amended tax returns more:label_amended_20tax_20returns more:taxes You must, however, include them in the “Social security wages” and “Medicare wages and tips” boxes. Amended tax returns more:label_amended_20tax_20returns more:taxes You must also include them in box 12. Amended tax returns more:label_amended_20tax_20returns more:taxes Mark the “Retirement plan” checkbox in box 13. Amended tax returns more:label_amended_20tax_20returns more:taxes For more information, see the Form W-2 instructions. Amended tax returns more:label_amended_20tax_20returns more:taxes Distributions (Withdrawals) Distributions from a SIMPLE IRA are subject to IRA rules and generally are includible in income for the year received. Amended tax returns more:label_amended_20tax_20returns more:taxes Tax-free rollovers can be made from one SIMPLE IRA into another SIMPLE IRA. Amended tax returns more:label_amended_20tax_20returns more:taxes However, a rollover from a SIMPLE IRA to a non-SIMPLE IRA can be made tax free only after a 2-year participation in the SIMPLE IRA plan. Amended tax returns more:label_amended_20tax_20returns more:taxes Generally, you or your employee must begin to receive distributions from a SIMPLE IRA by April 1 of the first year after the calendar year in which you or your employee reaches age 70½. Amended tax returns more:label_amended_20tax_20returns more:taxes Early withdrawals generally are subject to a 10% additional tax. Amended tax returns more:label_amended_20tax_20returns more:taxes However, the additional tax is increased to 25% if funds are withdrawn within 2 years of beginning participation. Amended tax returns more:label_amended_20tax_20returns more:taxes More information. Amended tax returns more:label_amended_20tax_20returns more:taxes   See Publication 590 for information about IRA rules, including those on the tax treatment of distributions, rollovers, required distributions, and income tax withholding. Amended tax returns more:label_amended_20tax_20returns more:taxes More Information on SIMPLE IRA Plans If you need help to set up or maintain a SIMPLE IRA plan, go to the IRS website and search SIMPLE IRA Plan. Amended tax returns more:label_amended_20tax_20returns more:taxes SIMPLE 401(k) Plan You can adopt a SIMPLE plan as part of a 401(k) plan if you meet the 100-employee limit as discussed earlier under SIMPLE IRA Plan. Amended tax returns more:label_amended_20tax_20returns more:taxes A SIMPLE 401(k) plan is a qualified retirement plan and generally must satisfy the rules discussed under Qualification Rules in chapter 4, including the required distribution rules. Amended tax returns more:label_amended_20tax_20returns more:taxes However, a SIMPLE 401(k) plan is not subject to the nondiscrimination and top-heavy rules discussed in chapter 4 if the plan meets the conditions listed below. Amended tax returns more:label_amended_20tax_20returns more:taxes Under the plan, an employee can choose to have you make salary reduction contributions for the year to a trust in an amount expressed as a percentage of the employee's compensation, but not more than $12,000 for 2013 and 2014. Amended tax returns more:label_amended_20tax_20returns more:taxes If permitted under the plan, an employee who is age 50 or over can also make a catch-up contribution of up to $2,500 for 2013 and 2014. Amended tax returns more:label_amended_20tax_20returns more:taxes See Catch-up contributions , earlier under Contribution Limits. Amended tax returns more:label_amended_20tax_20returns more:taxes You must make either: Matching contributions up to 3% of compensation for the year, or Nonelective contributions of 2% of compensation on behalf of each eligible employee who has at least $5,000 of compensation from you for the year. Amended tax returns more:label_amended_20tax_20returns more:taxes No other contributions can be made to the trust. Amended tax returns more:label_amended_20tax_20returns more:taxes No contributions are made, and no benefits accrue, for services during the year under any other qualified retirement plan sponsored by you on behalf of any employee eligible to participate in the SIMPLE 401(k) plan. Amended tax returns more:label_amended_20tax_20returns more:taxes The employee's rights to any contributions are nonforfeitable. Amended tax returns more:label_amended_20tax_20returns more:taxes No more than $255,000 of the employee's compensation can be taken into account in figuring matching contributions and nonelective contributions in 2013 ($260,000 in 2014). Amended tax returns more:label_amended_20tax_20returns more:taxes Compensation is defined earlier in this chapter. Amended tax returns more:label_amended_20tax_20returns more:taxes Employee notification. Amended tax returns more:label_amended_20tax_20returns more:taxes   The notification requirement that applies to SIMPLE IRA plans also applies to SIMPLE 401(k) plans. Amended tax returns more:label_amended_20tax_20returns more:taxes See Notification Requirement in this chapter. Amended tax returns more:label_amended_20tax_20returns more:taxes Credit for startup costs. Amended tax returns more:label_amended_20tax_20returns more:taxes   You may be able to claim a tax credit for part of the ordinary and necessary costs of starting a SIMPLE 401(k) plan that first became effective in 2013. Amended tax returns more:label_amended_20tax_20returns more:taxes For more information, see Credit for startup costs under Reminders, earlier. Amended tax returns more:label_amended_20tax_20returns more:taxes Note on Forms. Amended tax returns more:label_amended_20tax_20returns more:taxes   Please note that Forms 5304-SIMPLE and 5305-SIMPLE can not be used to establish a SIMPLE 401(k) plan. Amended tax returns more:label_amended_20tax_20returns more:taxes To set up a SIMPLE 401(k) plan, see Adopting a Written Plan in chapter 4. Amended tax returns more:label_amended_20tax_20returns more:taxes Prev  Up  Next   Home   More Online Publications