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Federal Amended Tax Return

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Federal Amended Tax Return

Federal amended tax return 2. Federal amended tax return   Estimated Tax for 2014 Table of Contents Introduction Topics - This chapter discusses: Useful Items - You may want to see: Who Does Not Have To Pay Estimated Tax Who Must Pay Estimated TaxGeneral Rule Married Taxpayers Special Rules Aliens Estates and Trusts How To Figure Estimated Tax2014 Estimated Tax Worksheet When To Pay Estimated TaxWhen To Start Farmers and Fishermen How To Figure Each PaymentRegular Installment Method Annualized Income Installment Method Estimated Tax Payments Not Required How To Pay Estimated TaxCredit an Overpayment Pay Online Pay by Phone Pay by Check or Money Order Using the Estimated Tax Payment Voucher Introduction Estimated tax is the method used to pay tax on income that is not subject to withholding. Federal amended tax return This includes income from self-employment, interest, dividends, alimony, rent, gains from the sale of assets, prizes, and awards. Federal amended tax return You also may have to pay estimated tax if the amount of income tax being withheld from your salary, pension, or other income is not enough. Federal amended tax return Estimated tax is used to pay both income tax and self-employment tax, as well as other taxes and amounts reported on your tax return. Federal amended tax return If you do not pay enough tax, either through withholding or estimated tax, or a combination of both, you may have to pay a penalty. Federal amended tax return If you do not pay enough by the due date of each payment period (see When To Pay Estimated Tax , later), you may be charged a penalty even if you are due a refund when you file your tax return. Federal amended tax return For information on when the penalty applies, see chapter 4. Federal amended tax return It would be helpful for you to have a copy of your 2013 tax return and an estimate of your 2014 income nearby while reading this chapter. Federal amended tax return Topics - This chapter discusses: Who must pay estimated tax, How to figure estimated tax (including illustrated examples), When to pay estimated tax, How to figure each payment, and How to pay estimated tax. Federal amended tax return Useful Items - You may want to see: Form (and Instructions) 1040-ES Estimated Tax for Individuals See chapter 5 for information about how to get this publication and form. Federal amended tax return Worksheets. Federal amended tax return   You may need to use several of the blank worksheets included in this chapter. Federal amended tax return See Worksheets for Chapter 2, later, to locate what you need. Federal amended tax return Who Does Not Have To Pay Estimated Tax If you receive salaries and wages, you may be able to avoid paying estimated tax by asking your employer to take more tax out of your earnings. Federal amended tax return To do this, file a new Form W-4 with your employer. Federal amended tax return See chapter 1. Federal amended tax return Estimated tax not required. Federal amended tax return   You do not have to pay estimated tax for 2014 if you meet all three of the following conditions. Federal amended tax return You had no tax liability for 2013. Federal amended tax return You were a U. Federal amended tax return S. Federal amended tax return citizen or resident alien for the whole year. Federal amended tax return Your 2013 tax year covered a 12-month period. Federal amended tax return   You had no tax liability for 2013 if your total tax (defined later under Total tax for 2013—line 14b ) was zero or you did not have to file an income tax return. Federal amended tax return Please click here for the text description of the image. Federal amended tax return Figure 2-A: Do You Have To Pay Estimated Tax? Who Must Pay Estimated Tax If you owed additional tax for 2013, you may have to pay estimated tax for 2014. Federal amended tax return You can use the following general rule as a guide during the year to see if you will have enough withholding, or should increase your withholding or make estimated tax payments. Federal amended tax return General Rule In most cases, you must pay estimated tax for 2014 if both of the following apply. Federal amended tax return You expect to owe at least $1,000 in tax for 2014, after subtracting your withholding and refundable credits. Federal amended tax return You expect your withholding and refundable credits to be less than the smaller of: 90% of the tax to be shown on your 2014 tax return, or 100% of the tax shown on your 2013 tax return. Federal amended tax return Your 2013 tax return must cover all 12 months. Federal amended tax return Note. Federal amended tax return The percentages in (2a) or (2b) above may be different if you are a farmer, fisherman, or higher income taxpayer. Federal amended tax return See Special Rules , later. Federal amended tax return If the result from using the general rule above suggests that you will not have enough withholding, complete the 2014 Estimated Tax Worksheet for a more accurate calculation. Federal amended tax return Figure 2-A takes you through the general rule. Federal amended tax return You may find this helpful in determining if you must pay estimated tax. Federal amended tax return If all your income will be subject to income tax withholding, you probably do not need to pay estimated tax. Federal amended tax return Example 1. Federal amended tax return Jane Smart uses Figure 2-A and the following information to figure whether she should pay estimated tax for 2014. Federal amended tax return She files as head of household claiming her dependent son, takes the standard deduction, and expects no refundable credits for 2014. Federal amended tax return Expected adjusted gross income (AGI) for 2014 $82,800 AGI for 2013 $73,700 Total tax on 2013 return (Form 1040,  line 61) $  8,746 Total 2014 estimated tax (line 13c of the 2014 Estimated Tax Worksheet) $11,015 Tax expected to be withheld in 2014 $10,000 Jane's answer to Figure 2-A, box 1, is YES; she expects to owe at least $1,000 for 2014 after subtracting her withholding from her expected total tax ($11,015 − $10,000 = $1,015). Federal amended tax return Her answer to box 2a is YES; she expects her income tax withholding ($10,000) to be at least 90% of the tax to be shown on her 2014 return ($11,015 × 90% = $9,913. Federal amended tax return 50). Federal amended tax return Jane does not need to pay estimated tax. Federal amended tax return Example 2. Federal amended tax return The facts are the same as in Example 1, except that Jane expects only $8,700 tax to be withheld in 2014. Federal amended tax return Because that is less than $9,913. Federal amended tax return 50, her answer to box 2a is NO. Federal amended tax return Jane's answer to box 2b is also NO; she does not expect her income tax withholding ($8,700) to be at least 100% of the total tax shown on her 2013 return ($8,746). Federal amended tax return Jane must increase her withholding or pay estimated tax for 2014. Federal amended tax return Example 3. Federal amended tax return The facts are the same as in Example 2, except that the total tax shown on Jane's 2013 return was $8,600. Federal amended tax return Because she expects to have more than $8,600 withheld in 2014 ($8,700), her answer to box 2b is YES. Federal amended tax return Jane does not need to pay estimated tax for 2014. Federal amended tax return Married Taxpayers If you qualify to make joint estimated tax payments, apply the rules discussed here to your joint estimated income. Federal amended tax return You and your spouse can make joint estimated tax payments even if you are not living together. Federal amended tax return However, you and your spouse cannot make joint estimated tax payments if: You are legally separated under a decree of divorce or separate maintenance, You and your spouse have different tax years, Either spouse is a nonresident alien (unless that spouse elected to be treated as a resident alien for tax purposes). Federal amended tax return See Choosing Resident Alien Status in Publication 519, or Individuals of the same sex and opposite sex who are in registered domestic partnerships, civil unions, or other similar formal relationships that are not marriages under state law cannot make joint estimated tax payments. Federal amended tax return These individuals can take credit only for the estimated tax payments that he or she made. Federal amended tax return If you and your spouse cannot make joint estimated tax payments, apply these rules to your separate estimated income. Federal amended tax return Making joint or separate estimated tax payments will not affect your choice of filing a joint tax return or separate returns for 2014. Federal amended tax return 2013 separate returns and 2014 joint return. Federal amended tax return   If you plan to file a joint return with your spouse for 2014, but you filed separate returns for 2013, your 2013 tax is the total of the tax shown on your separate returns. Federal amended tax return You filed a separate return if you filed as single, head of household, or married filing separately. Federal amended tax return 2013 joint return and 2014 separate returns. Federal amended tax return   If you plan to file a separate return for 2014, but you filed a joint return for 2013, your 2013 tax is your share of the tax on the joint return. Federal amended tax return You file a separate return if you file as single, head of household, or married filing separately. Federal amended tax return   To figure your share of the tax on a joint return, first figure the tax both you and your spouse would have paid had you filed separate returns for 2013 using the same filing status for 2014. Federal amended tax return Then multiply the tax on the joint return by the following fraction. Federal amended tax return      The tax you would have paid had you filed a separate return   The total tax you and your spouse would have paid had you filed separate returns Example. Federal amended tax return Joe and Heather filed a joint return for 2013 showing taxable income of $48,500 and a tax of $6,386. Federal amended tax return Of the $48,500 taxable income, $40,100 was Joe's and the rest was Heather's. Federal amended tax return For 2014, they plan to file married filing separately. Federal amended tax return Joe figures his share of the tax on the 2013 joint return as follows: Tax on $40,100 based on separate return $5,960 Tax on $8,400 based on separate return 843 Total $6,803 Joe's percentage of total ($5,960 ÷ $6,803) 87. Federal amended tax return 6% Joe's share of tax on joint return  ($6,386 × 87. Federal amended tax return 6%) $5,594 Special Rules There are special rules for farmers, fishermen, and certain higher income taxpayers. Federal amended tax return Farmers and Fishermen If at least two-thirds of your gross income for 2013 or 2014 is from farming or fishing, substitute 662/3% for 90% in (2a) under General Rule , earlier. Federal amended tax return Gross income. Federal amended tax return   Your gross income is all income you receive in the form of money, goods, property, and services that is not exempt from tax. Federal amended tax return To determine whether two-thirds of your gross income for 2013 was from farming or fishing, use as your gross income the total of the income (not loss) amounts. Federal amended tax return Joint returns. Federal amended tax return   On a joint return, you must add your spouse's gross income to your gross income to determine if at least two-thirds of your total gross income is from farming or fishing. Federal amended tax return Gross income from farming. Federal amended tax return   This is income from cultivating the soil or raising agricultural commodities. Federal amended tax return It includes the following amounts. Federal amended tax return Income from operating a stock, dairy, poultry, bee, fruit, or truck farm. Federal amended tax return Income from a plantation, ranch, nursery, range, orchard, or oyster bed. Federal amended tax return Crop shares for the use of your land. Federal amended tax return Gains from sales of draft, breeding, dairy, or sporting livestock. Federal amended tax return   For 2013, gross income from farming is the total of the following amounts. Federal amended tax return Schedule F (Form 1040), Profit or Loss From Farming, line 9. Federal amended tax return Form 4835, Farm Rental Income and Expenses, line 7. Federal amended tax return Your share of the gross farming income from a partnership, S corporation, estate or trust, from: Schedule K-1 (Form 1065), Schedule K-1 (Form 1120S), or Schedule K-1 (Form 1041). Federal amended tax return Your gains from sales of draft, breeding, dairy, or sporting livestock shown on Form 4797, Sales of Business Property. Federal amended tax return   Wages you receive as a farm employee and wages you receive from a farm corporation are not gross income from farming. Federal amended tax return Gross income from fishing. Federal amended tax return   This is income from catching, taking, harvesting, cultivating, or farming any kind of fish, shellfish (for example, clams and mussels), crustaceans (for example, lobsters, crabs, and shrimp), sponges, seaweeds, or other aquatic forms of animal and vegetable life. Federal amended tax return   Gross income from fishing includes the following amounts. Federal amended tax return Schedule C (Form 1040), Profit or Loss From Business. Federal amended tax return Income for services as an officer or crew member of a vessel while the vessel is engaged in fishing. Federal amended tax return Your share of the gross fishing income from a partnership, S corporation, estate or trust, from: Schedule K-1 (Form 1065), Schedule K-1 (Form 1120S), or Schedule K-1 (Form 1041). Federal amended tax return Certain taxable interest and punitive damage awards received in connection with the Exxon Valdez litigation. Federal amended tax return Income for services normally performed in connection with fishing. Federal amended tax return Services normally performed in connection with fishing include: Shore service as an officer or crew member of a vessel engaged in fishing, and Services that are necessary for the immediate preservation of the catch, such as cleaning, icing, and packing the catch. Federal amended tax return Higher Income Taxpayers If your AGI for 2013 was more than $150,000 ($75,000 if your filing status for 2014 is married filing a separate return), substitute 110% for 100% in (2b) under General Rule , earlier. Federal amended tax return For 2013, AGI is the amount shown on Form 1040, line 37; Form 1040A, line 21; and Form 1040EZ, line 4. Federal amended tax return Note. Federal amended tax return This rule does not apply to farmers and fishermen. Federal amended tax return Aliens Resident and nonresident aliens also may have to pay estimated tax. Federal amended tax return Resident aliens should follow the rules in this publication, unless noted otherwise. Federal amended tax return Nonresident aliens should get Form 1040-ES (NR), U. Federal amended tax return S. Federal amended tax return Estimated Tax for Nonresident Alien Individuals. Federal amended tax return You are an alien if you are not a citizen or national of the United States. Federal amended tax return You are a resident alien if you either have a green card or meet the substantial presence test. Federal amended tax return For more information about withholding, the substantial presence test, and Form 1040-ES (NR), see Publication 519. Federal amended tax return Estates and Trusts Estates and trusts also must pay estimated tax. Federal amended tax return However, estates (and certain grantor trusts that receive the residue of the decedent's estate under the decedent's will) are exempt from paying estimated tax for the first 2 years after the decedent's death. Federal amended tax return Estates and trusts must use Form 1041-ES, Estimated Income Tax for Estates and Trusts, to figure and pay estimated tax. Federal amended tax return How To Figure Estimated Tax To figure your estimated tax, you must figure your expected AGI, taxable income, taxes, deductions, and credits for the year. Federal amended tax return When figuring your 2014 estimated tax, it may be helpful to use your income, deductions, and credits for 2013 as a starting point. Federal amended tax return Use your 2013 federal tax return as a guide. Federal amended tax return You can use Form 1040-ES to figure your estimated tax. Federal amended tax return Nonresident aliens use Form 1040-ES (NR) to figure estimated tax. Federal amended tax return You must make adjustments both for changes in your own situation and for recent changes in the tax law. Federal amended tax return Some of these changes are discussed under What's New for 2014 , earlier. Federal amended tax return For information about these and other changes in the law, visit the IRS website at IRS. Federal amended tax return gov. Federal amended tax return The instructions for Form 1040-ES include a worksheet to help you figure your estimated tax. Federal amended tax return Keep the worksheet for your records. Federal amended tax return 2014 Estimated Tax Worksheet Use Worksheet 2-1 to help guide you through the information about completing the 2014 Estimated Tax Worksheet. Federal amended tax return You can also find a copy of the worksheet in the Instructions for Form 1040-ES. Federal amended tax return Expected AGI—Line 1 Your expected AGI for 2014 (line 1) is your expected total income minus your expected adjustments to income. Federal amended tax return Total income. Federal amended tax return   Include in your total income all the income you expect to receive during the year, even income that is subject to withholding. Federal amended tax return However, do not include income that is tax exempt. Federal amended tax return   Total income includes all income and loss for 2014 that, if you had received it in 2013, would have been included on your 2013 tax return in the total on line 22 of Form 1040, line 15 of Form 1040A, or line 4 of Form 1040EZ. Federal amended tax return Social security and railroad retirement benefits. Federal amended tax return If you expect to receive social security or tier 1 railroad retirement benefits during 2014, use Worksheet 2-2 to figure the amount of expected taxable benefits you should include on line 1. Federal amended tax return Adjustments to income. Federal amended tax return   Be sure to subtract from your expected total income all of the adjustments you expect to take on your 2014 tax return. Federal amended tax return Self-employed. Federal amended tax return If you expect to have income from self-employment, use Worksheet 2-3 to figure your expected self-employment tax and your allowable deduction for self-employment tax. Federal amended tax return Include the amount from Worksheet 2-3 in your expected adjustments to income. Federal amended tax return If you file a joint return and both you and your spouse have net earnings from self-employment, each of you must complete a separate worksheet. Federal amended tax return Expected Taxable Income— Lines 2–5 Reduce your expected AGI for 2014 (line 1) by either your expected itemized deductions or your standard deduction and by your exemptions (lines 2 through 5). Federal amended tax return Itemized deductions—line 2. Federal amended tax return   If you expect to claim itemized deductions on your 2014 tax return, enter the estimated amount on line 2. Federal amended tax return   Itemized deductions are the deductions that can be claimed on Schedule A (Form 1040). Federal amended tax return    For 2014, your total itemized deductions may be reduced if your AGI is more than the amount shown next for your filing status. Federal amended tax return Single $254,200 Married filing jointly or qualifying widow(er) $305,050 Married filing separately $152,525 Head of household $279,650   If you expect your AGI to be more than this amount, use Worksheet 2-5 to figure the amount to enter on line 2. Federal amended tax return Standard deduction—line 2. Federal amended tax return   If you expect to claim the standard deduction on your 2014 tax return, enter the amount on line 2. Federal amended tax return Use Worksheet 2-4 to figure your standard deduction. Federal amended tax return No standard deduction. Federal amended tax return   The standard deduction for some individuals is zero. Federal amended tax return Your standard deduction will be zero if you: File a separate return and your spouse itemizes deductions, Are a dual-status alien, or File a return for a period of less than 12 months because you change your accounting period. Federal amended tax return Exemptions—line 4. Federal amended tax return   After you have subtracted either your expected itemized deductions or your standard deduction from your expected AGI, reduce the amount remaining by $3,950 for each exemption you expect to take on your 2014 tax return. Federal amended tax return If another person (such as your parent) can claim an exemption for you on his or her tax return, you cannot claim your own personal exemption. Federal amended tax return This is true even if the other person will not claim your exemption or the exemption will be reduced or eliminated under the phaseout rule. Federal amended tax return    For 2014, your deduction for personal exemption is reduced if your AGI is more than the amount shown next for your filing status. Federal amended tax return Single $254,200 Married filing jointly or qualifying widow(er) $305,050 Married filing separately $152,525 Head of household $279,650   If you expect your AGI to be more than this amount, use Worksheet 2-6 to figure the amount to enter on line 4. Federal amended tax return Expected Taxes and Credits— Lines 6–13c After you have figured your expected taxable income (line 5), follow the steps next to figure your expected taxes, credits, and total tax for 2014. Federal amended tax return Most people will have entries for only a few of these steps. Federal amended tax return However, you should check every step to be sure you do not overlook anything. Federal amended tax return Step 1. Federal amended tax return   Figure your expected income tax (line 6). Federal amended tax return Generally, you will use the 2014 Tax Rate Schedules, later, to figure your expected income tax. Federal amended tax return   However, see below for situations where you must use a different method to compute your estimated tax. Federal amended tax return Tax on child's investment income. Federal amended tax return   You must use a special method to figure tax on the income of the following children who have more than $2,000 of investment income. Federal amended tax return Children under age 18 at the end of 2014. Federal amended tax return The following children if their earned income is not more than half their support. Federal amended tax return Children age 18 at the end of 2014. Federal amended tax return Children who are full-time students over age 18 and under age 24 at the end of 2014. Federal amended tax return See Publication 929, Tax Rules for Children and Dependents. Federal amended tax return Although the ages and dollar amounts in the publication may be different in the 2014 revision, this reference will give you basic information for figuring the tax. Federal amended tax return Tax on net capital gain. Federal amended tax return   The regular income tax rates for individuals do not apply to a net capital gain. Federal amended tax return Instead, your net capital gain is taxed at a lower maximum rate. Federal amended tax return   The term “net capital gain” means the amount by which your net long-term capital gain for the year is more than your net short-term capital loss. Federal amended tax return Tax on capital gain and qualified dividends. Federal amended tax return If the amount on line 1 includes a net capital gain or qualified dividends, use Worksheet 2-7 to figure your tax. Federal amended tax return Note. Federal amended tax return For 2014, your capital gains and dividends rate will depend on your income. Federal amended tax return Tax if excluding foreign earned income or excluding or deducting foreign housing. Federal amended tax return If you expect to claim the foreign earned income exclusion or the housing exclusion or deduction on Form 2555 or Form 2555-EZ, use Worksheet 2-8 to figure your estimated tax. Federal amended tax return Step 2. Federal amended tax return   Total your expected taxes (line 8). Federal amended tax return Include on line 8 the sum of the following. Federal amended tax return Your tax on line 6. Federal amended tax return Your expected alternative minimum tax (AMT) from Form 6251, or included on Form 1040A. Federal amended tax return Your expected additional taxes from Form 8814, Parents' Election To Report Child's Interest and Dividends, and Form 4972, Tax on Lump-Sum Distributions. Federal amended tax return Any recapture of education credits. Federal amended tax return Step 3. Federal amended tax return   Subtract your expected credits (line 9). Federal amended tax return If you are using your 2013 return as a guide and filed Form 1040, your total credits for 2013 were shown on line 54. Federal amended tax return If you filed Form 1040A, your total credits for 2013 were on line 34. Federal amended tax return   If your credits on line 9 are more than your taxes on line 8, enter “-0-” on line 10 and go to Step 4. Federal amended tax return Step 4. Federal amended tax return   Add your expected self-employment tax (line 11). Federal amended tax return You already should have figured your self-employment tax (see Self-employed under Expected AGI—Line 1, earlier). Federal amended tax return Step 5. Federal amended tax return   Add your expected other taxes (line 12). Federal amended tax return   Other taxes include the following. Federal amended tax return Additional tax on early distributions from: An IRA or other qualified retirement plan, A tax-sheltered annuity, or A modified endowment contract entered into after June 20, 1988. Federal amended tax return Household employment taxes if: You will have federal income tax withheld from wages, pensions, annuities, gambling winnings, or other income, or You would be required to make estimated tax payments even if you did not include household employment taxes when figuring your estimated tax. Federal amended tax return Amounts written on Form 1040 on the line for “other taxes” (line 60 on the 2013 Form 1040). Federal amended tax return But, do not include recapture of a federal mortgage subsidy; tax on excess golden parachute payments; look-back interest due under section 167(g) or 460(b) of the Internal Revenue Code; excise tax on insider stock compensation from an expatriated corporation; uncollected social security and Medicare tax or RRTA tax on tips or group-term life insurance; or additional tax on advance payments of health coverage tax credit when not eligible. Federal amended tax return Repayment of the first-time homebuyer credit. Federal amended tax return See Form 5405. Federal amended tax return Additional Medicare Tax. Federal amended tax return A 0. Federal amended tax return 9% Additional Medicare Tax applies to your combined Medicare wages and self-employment income and/or your RRTA compensation that exceeds the amount listed in the following chart, based on your filing status. Federal amended tax return Filing Status Threshold Amount Married filing jointly $250,000 Married filing separately $125,000 Single $200,000 Head of household $200,000 Qualifying Widow(er) $200,000 Medicare wages and self-employment income are combined to determine if your income exceeds the threshold. Federal amended tax return A self-employment loss should not be considered for purposes of this tax. Federal amended tax return RRTA compensation should be separately compared to the threshold. Federal amended tax return Your employer is responsible for withholding the 0. Federal amended tax return 9% Additional Medicare Tax on Medicare wages or RRTA compensation it pays to you in excess of $200,000 in 2014. Federal amended tax return You should consider this withholding, if applicable, in determining whether you need to make an estimated payment. Federal amended tax return For more information on Additional Medicare Tax, go to IRS. Federal amended tax return gov and enter “Additional Medicare Tax” in the search box. Federal amended tax return Net Investment Income Tax (NIIT). Federal amended tax return The NIIT is 3. Federal amended tax return 8% of the lesser of your net investment income or the excess of your modified adjusted gross income over the amount listed in the following chart, based on your filing status. Federal amended tax return Filing Status Threshold Amount Married filing jointly $250,000 Married filing separately $125,000 Single $200,000 Head of household $200,000 Qualifying Widow(er) $250,000 For more information on Net Investment Income Tax, go to IRS. Federal amended tax return gov and enter “Net Investment Income Tax” in the search box. Federal amended tax return Step 6. Federal amended tax return   Subtract your refundable credit (line 13b). Federal amended tax return   To figure your expected fuel tax credit, do not include fuel tax for the first three quarters of the year that you expect to have refunded to you. Federal amended tax return   The result of steps 1 through 6 is your total estimated tax for 2014 (line 13c). Federal amended tax return Required Annual Payment— Line 14c On lines 14a through 14c, figure the total amount you must pay for 2014, through withholding and estimated tax payments, to avoid paying a penalty. Federal amended tax return General rule. Federal amended tax return   The total amount you must pay is the smaller of: 90% of your total expected tax for 2014, or 100% of the total tax shown on your 2013 return. Federal amended tax return Your 2013 tax return must cover all 12 months. Federal amended tax return Special rules. Federal amended tax return   There are special rules for higher income taxpayers and for farmers and fishermen. Federal amended tax return Higher income taxpayers. Federal amended tax return   If your AGI for 2013 was more than $150,000 ($75,000 if your filing status for 2014 is married filing separately), substitute 110% for 100% in (2) above. Federal amended tax return This rule does not apply to farmers and fishermen. Federal amended tax return For 2013, AGI is the amount shown on Form 1040, line 37; Form 1040A, line 21; and Form 1040EZ, line 4. Federal amended tax return Example. Federal amended tax return   Jeremy Martin's total tax on his 2013 return was $42,581, and his expected tax for 2014 is $71,253. Federal amended tax return His 2013 AGI was $180,000. Federal amended tax return Because Jeremy had more than $150,000 of AGI in 2013, he figures his required annual payment as follows. Federal amended tax return He determines that 90% of his expected tax for 2014 is $64,128 (. Federal amended tax return 90 × $71,253). Federal amended tax return Next, he determines that 110% of the tax shown on his 2013 return is $46,839 (1. Federal amended tax return 10 x $42,581). Federal amended tax return Finally, he determines that his required annual payment is $46,839, the smaller of the two. Federal amended tax return Farmers and fishermen. Federal amended tax return   If at least two-thirds of your gross income for 2013 or 2014 is from farming or fishing, your required annual payment is the smaller of: 662/3% (. Federal amended tax return 6667) of your total tax for 2014, or 100% of the total tax shown on your 2013 return. Federal amended tax return (Your 2013 tax return must cover all 12 months. Federal amended tax return )   For definitions of “gross income from farming” and “gross income from fishing,” see Farmers and Fishermen , under Special Rules discussed earlier. Federal amended tax return Total tax for 2013—line 14b. Federal amended tax return   Your 2013 total tax, if you filed Form 1040, is the amount on line 61 reduced by the following. Federal amended tax return Unreported social security and Medicare tax or RRTA tax from Forms 4137 or 8919 (line 57). Federal amended tax return The following amounts from Form 5329 included on line 58. Federal amended tax return Any tax on excess contributions to IRAs, Archer MSAs, Coverdell education savings accounts, and health savings accounts. Federal amended tax return Any tax on excess accumulations in qualified retirement plans. Federal amended tax return The following write-ins on line 60. Federal amended tax return Excise tax on excess golden parachute payments (identified as “EPP”). Federal amended tax return Excise tax on insider stock compensation from an expatriated corporation (identified as “ISC”). Federal amended tax return Look-back interest due under section 167(g) (identified as “From Form 8866”). Federal amended tax return Look-back interest due under section 460(b) (identified as “From Form 8697”). Federal amended tax return Recapture of federal mortgage subsidy (identified as “FMSR”). Federal amended tax return Additional tax on advance payments of health coverage tax credit when not eligible (identified as “HCTC”). Federal amended tax return Uncollected social security and Medicare tax or RRTA tax on tips or group-term life insurance (identified as “UT”). Federal amended tax return Any refundable credit amounts. Federal amended tax return   If you filed Form 1040A, your 2013 total tax is the amount on line 35 reduced by any refundable credits. Federal amended tax return   If you filed Form 1040EZ, your 2013 total tax is the amount on line 10 reduced by the amount on line 8a. Federal amended tax return Total Estimated Tax Payments Needed—Line 16a Use lines 15 and 16a to figure the total estimated tax you may be required to pay for 2014. Federal amended tax return Subtract your expected withholding from your required annual payment (line 14c). Federal amended tax return You usually must pay this difference in four equal installments. Federal amended tax return See When To Pay Estimated Tax and How To Figure Each Payment . Federal amended tax return You do not have to pay estimated tax if: Line 14c minus line 15 is zero or less, or Line 13c minus line 15 is less than $1,000. Federal amended tax return Withholding—line 15. Federal amended tax return   Your expected withholding for 2014 (line 15) includes the income tax you expect to be withheld from all sources (wages, pensions and annuities, etc. Federal amended tax return ). Federal amended tax return It includes excess social security, and tier 1 railroad retirement tax you expect to be withheld from your wages and compensation. Federal amended tax return For this purpose, you will have excess social security or tier 1 railroad retirement tax withholding for 2014 only if your wages and compensation from two or more employers are more than $117,000. Federal amended tax return See Excess Social Security or Railroad Retirement Tax Withholding in chapter 3. Federal amended tax return   It also includes Additional Medicare Tax you expect to be withheld from your wages or compensation. Federal amended tax return Your employer is responsible for withholding the 0. Federal amended tax return 9% Additional Medicare Tax on Medicare wages or RRTA compensation it pays to you in excess of $200,000. Federal amended tax return When To Pay Estimated Tax For estimated tax purposes, the year is divided into four payment periods. Federal amended tax return Each period has a specific payment due date. Federal amended tax return If you do not pay enough tax by the due date of each of the payment periods, you may be charged a penalty even if you are due a refund when you file your income tax return. Federal amended tax return If a payment is mailed, the date of the U. Federal amended tax return S. Federal amended tax return postmark is considered the date of payment. Federal amended tax return The payment periods and due dates for estimated tax payments are shown next. Federal amended tax return For exceptions to the dates listed, see Saturday, Sunday, holiday rule below. Federal amended tax return For the period: Due date: Jan. Federal amended tax return 11 – March 31 April 15 April 1 – May 31 June 16 June 1 – August 31 September 15 Sept. Federal amended tax return 1 – Dec. Federal amended tax return 31 January 15  next year2 1If your tax year does not begin on January 1,  see Fiscal year taxpayers . Federal amended tax return 2See January payment . Federal amended tax return Saturday, Sunday, holiday rule. Federal amended tax return   If the due date for an estimated tax payment falls on a Saturday, Sunday, or legal holiday, the payment will be on time if you make it on the next day that is not a Saturday, Sunday, or a holiday. Federal amended tax return January payment. Federal amended tax return   If you file your 2014 Form 1040 or Form 1040A by February 2, 2015, and pay the rest of the tax you owe, you do not need to make the payment due on January 15, 2015. Federal amended tax return Example. Federal amended tax return Janet Adams does not pay any estimated tax for 2014. Federal amended tax return She files her 2014 income tax return and pays the balance due shown on her return on January 26, 2015. Federal amended tax return Janet's estimated tax for the fourth payment period is considered to have been paid on time. Federal amended tax return However, she may owe a penalty for not making the first three estimated tax payments, if required. Federal amended tax return Any penalty for not making those payments will be figured up to January 26, 2015. Federal amended tax return Fiscal year taxpayers. Federal amended tax return   If your tax year does not start on January 1, your payment due dates are: The 15th day of the 4th month of your fiscal year, The 15th day of the 6th month of your fiscal year, The 15th day of the 9th month of your fiscal year, and The 15th day of the 1st month after the end of your fiscal year. Federal amended tax return   You do not have to make the last payment listed above if you file your income tax return by the last day of the first month after the end of your fiscal year and pay all the tax you owe with your return. Federal amended tax return When To Start You do not have to make estimated tax payments until you have income on which you will owe income tax. Federal amended tax return If you have income subject to estimated tax during the first payment period, you must make your first payment by the due date for the first payment period. Federal amended tax return You have several options when paying estimated taxes. Federal amended tax return You can: apply an overpayment from the previous tax year, pay all your estimated tax by the due date of your first payment, or pay it in installments. Federal amended tax return If you choose to pay in installments, make your first payment by the due date for the first payment period. Federal amended tax return Make your remaining installment payments by the due dates for the later periods. Federal amended tax return To avoid any estimated tax penalties, all installments must be paid by their due date and for the required amount. Federal amended tax return No income subject to estimated tax during first period. Federal amended tax return   If you do not have income subject to estimated tax until a later payment period, you must make your first payment by the due date for that period. Federal amended tax return You can pay your entire estimated tax by the due date for that period or you can pay it in installments by the due date for that period and the due dates for the remaining periods. Federal amended tax return Table 2-1 shows the dates for making installment payments. Federal amended tax return    Table 2-1. Federal amended tax return Due Dates for Estimated Tax Installment Payments If you first have income on which you must pay estimated tax: Make a payment  by:* Make later  installments  by:* Before April 1 April 15 June 16     Sept. Federal amended tax return 15     Jan. Federal amended tax return 15 next year April 1–May 31 June 16 Sept. Federal amended tax return 15     Jan. Federal amended tax return 15 next year June 1–Aug. Federal amended tax return 31 Sept. Federal amended tax return 15 Jan. Federal amended tax return 15 next year After Aug. Federal amended tax return 31 Jan. Federal amended tax return 15 next year (None) *See January payment and Saturday, Sunday, holiday rule . Federal amended tax return How much to pay to avoid penalty. Federal amended tax return   To determine how much you should pay by each payment due date, see How To Figure Each Payment , later. Federal amended tax return Farmers and Fishermen If at least two-thirds of your gross income for 2013 or 2014 is from farming or fishing, you have only one payment due date for your 2014 estimated tax, January 15, 2015. Federal amended tax return The due dates for the first three payment periods, discussed under When To Pay Estimated Tax , earlier, do not apply to you. Federal amended tax return If you file your 2014 Form 1040 by March 2, 2015, and pay all the tax you owe at that time, you do not need to make an estimated tax payment. Federal amended tax return Fiscal year farmers and fishermen. Federal amended tax return   If you are a farmer or fisherman, but your tax year does not start on January 1, you can either: Pay all your estimated tax by the 15th day after the end of your tax year, or File your return and pay all the tax you owe by the 1st day of the 3rd month after the end of your tax year. Federal amended tax return How To Figure Each Payment After you have figured your total estimated tax, figure how much you must pay by the due date of each payment period. Federal amended tax return You should pay enough by each due date to avoid a penalty for that period. Federal amended tax return If you do not pay enough during any payment period, you may be charged a penalty even if you are due a refund when you file your tax return. Federal amended tax return The penalty is discussed in chapter 4. Federal amended tax return Regular Installment Method If your first estimated tax payment is due April 15, 2014, you can figure your required payment for each period by dividing your annual estimated tax due (line 16a of the 2014 Estimated Tax Worksheet (Worksheet 2-1)) by 4. Federal amended tax return Enter this amount on line 17. Federal amended tax return However, use this method only if your income is basically the same throughout the year. Federal amended tax return Change in estimated tax. Federal amended tax return   After you make an estimated tax payment, changes in your income, adjustments, deductions, credits, or exemptions may make it necessary for you to refigure your estimated tax. Federal amended tax return Pay the unpaid balance of your amended estimated tax by the next payment due date after the change or in installments by that date and the due dates for the remaining payment periods. Federal amended tax return If you do not receive your income evenly throughout the year, your required estimated tax payments may not be the same for each period. Federal amended tax return See Annualized Income Installment Method . Federal amended tax return Amended estimated tax. Federal amended tax return If you refigure your estimated tax during the year, or if your first estimated tax payment is due after April 15, 2014, figure your required payment for each remaining payment period using Worksheet 2-14. Federal amended tax return Example. Federal amended tax return Early in 2014, Mira Roberts figures that her estimated tax due is $1,800. Federal amended tax return She makes estimated tax payments on April 15 and June 16 of $450 each ($1,800 ÷ 4). Federal amended tax return On July 10, she sells investment property at a gain. Federal amended tax return Her refigured estimated tax is $4,100. Federal amended tax return Her required estimated tax payment for the third payment period is $2,175, as shown in her filled-in Worksheet 2-14. Federal amended tax return If Mira's estimated tax does not change again, her required estimated tax payment for the fourth payment period will be $1,025. Federal amended tax return Worksheet 2-14. Federal amended tax return Amended Estimated Tax Worksheet—Illustrated               1. Federal amended tax return Amended total estimated tax due 1. Federal amended tax return $4,100 2. Federal amended tax return Multiply line 1 by:           50% (. Federal amended tax return 50) if next payment is due June 16, 2014           75% (. Federal amended tax return 75) if next payment is due September 15,  2014           100% (1. Federal amended tax return 00) if next payment is due January 15,  2015 2. Federal amended tax return 3,075     3. Federal amended tax return Estimated tax payments for all previous periods 3. Federal amended tax return 900     4. Federal amended tax return Next required payment: Subtract line 3 from line 2 and enter the result (but not less than zero) here and on your payment voucher for your next required payment 4. Federal amended tax return $2,175       Note. Federal amended tax return If the payment on line 4 is due January 15, 2015, stop here. Federal amended tax return Otherwise, go to line 5. Federal amended tax return         5. Federal amended tax return Add lines 3 and 4 5. Federal amended tax return 3,075 6. Federal amended tax return Subtract line 5 from line 1 and enter the result (but not less than zero) 6. Federal amended tax return 1,025 7. Federal amended tax return Each following required payment: If the payment on line 4 is due June 16, 2014, enter one-half of the amount on line 6 here and on the payment vouchers for your payments due September 15, 2014, and January 15, 2015. Federal amended tax return If the amount on line 4 is due September 15, 2014, enter the amount from line 6 here and on the payment voucher for your payment due January 15, 2015 7. Federal amended tax return $1,025 Worksheet 2-14. Federal amended tax return Amended Estimated Tax Worksheet—Blank               1. Federal amended tax return Amended total estimated tax due 1. Federal amended tax return   2. Federal amended tax return Multiply line 1 by:           50% (. Federal amended tax return 50) if next payment is due June 16, 2014           75% (. Federal amended tax return 75) if next payment is due September 15,  2014           100% (1. Federal amended tax return 00) if next payment is due January 15,  2015 2. Federal amended tax return       3. Federal amended tax return Estimated tax payments for all previous periods 3. Federal amended tax return       4. Federal amended tax return Next required payment: Subtract line 3 from line 2 and enter the result (but not less than zero) here and on your payment voucher for your next required payment 4. Federal amended tax return         Note. Federal amended tax return If the payment on line 4 is due January 15, 2015, stop here. Federal amended tax return Otherwise, go to line 5. Federal amended tax return         5. Federal amended tax return Add lines 3 and 4 5. Federal amended tax return   6. Federal amended tax return Subtract line 5 from line 1 and enter the result (but not less than zero) 6. Federal amended tax return   7. Federal amended tax return Each following required payment: If the payment on line 4 is due June 16, 2014, enter one-half of the amount on line 6 here and on the payment vouchers for your payments due September 15, 2014, and January 15, 2015. Federal amended tax return If the amount on line 4 is due September 15, 2014, enter the amount from line 6 here and on the payment voucher for your payment due January 15, 2015 7. Federal amended tax return   Underpayment penalty. Federal amended tax return   The penalty is figured separately for each payment period. Federal amended tax return If you figure your payments using the regular installment method and later refigure your payments because of an increase in income, you may be charged a penalty for underpayment of estimated tax for the period(s) before you changed your payments. Federal amended tax return To see how you may be able to avoid or reduce this penalty, see Annualized Income Installment Method (Schedule AI) in chapter 4. Federal amended tax return Annualized Income Installment Method If you do not receive your income evenly throughout the year (for example, your income from a repair shop you operate is much larger in the summer than it is during the rest of the year), your required estimated tax payment for one or more periods may be less than the amount figured using the regular installment method. Federal amended tax return The annualized income installment method annualizes your tax at the end of each period based on a reasonable estimate of your income, deductions, and other items relating to events that occurred from the beginning of the tax year through the end of the period. Federal amended tax return To see whether you can pay less for any period, complete the 2014 Annualized Estimated Tax Worksheet (Worksheet 2-9). Federal amended tax return You first must complete the 2014 Estimated Tax Worksheet (Worksheet 2-1) through line 16b. Federal amended tax return Use the result you figure on line 32 of Worksheet 2-9 to make your estimated tax payments and complete your payment vouchers. Federal amended tax return Note. Federal amended tax return If you use the annualized income installment method to figure your estimated tax payments, you must file Form 2210 with your 2014 tax return. Federal amended tax return See Annualized Income Installment Method (Schedule AI) in chapter 4 for more information. Federal amended tax return Instructions for the 2014 Annualized Estimated Tax Worksheet (Worksheet 2-9) Use Worksheet 2-9 to help you follow these instructions. Federal amended tax return The purpose of this worksheet is to determine your estimated tax liability as your income accumulates throughout the year, rather than dividing your entire year's estimated tax liability by four as if your income was earned equally throughout the year. Federal amended tax return The top of the worksheet shows the dates for each payment period. Federal amended tax return The periods build; that is, each period includes all previous periods. Federal amended tax return After the end of each payment period, complete the corresponding worksheet column to figure the payment due for that period. Federal amended tax return Line 1. Federal amended tax return   Enter your AGI for the period. Federal amended tax return This is your gross income for the period, including your share of partnership or S corporation income or loss, minus your adjustments to income for that period. Federal amended tax return See Expected AGI—Line 1 , earlier. Federal amended tax return Self-employment income. Federal amended tax return   If you had self-employment income, first complete Section B of this worksheet. Federal amended tax return Use the amounts on line 43 when figuring your expected AGI to enter in each column of Section A, line 1. Federal amended tax return Line 4. Federal amended tax return   Be sure to consider all deduction limits figured on Schedule A (Form 1040), such as reducing your medical expenses by 10% (7. Federal amended tax return 5% if either you or your spouse was born before January 2, 1950) or reducing certain miscellaneous deductions by 2% of your AGI. Federal amended tax return Figure your deduction limits using your expected AGI in the corresponding column of line 1 (2014 Annualized Estimated Tax Worksheet (Worksheet 2-9)). Federal amended tax return Line 6. Federal amended tax return   Multiply line 4 by line 5 and enter the result on line 6 unless line 3 is more than $305,050 if married filing jointly or qualifying widow(er), $279,650 if head of household, $254,200 if single, or $152,525 if married filing separately. Federal amended tax return In that case, use Worksheet 2-10 to figure the amount to enter on line 6. Federal amended tax return Complete Worksheet 2–10 for each period, as necessary. Federal amended tax return Line 7. Federal amended tax return   If you will not itemize your deductions, use Worksheet 2-4 to figure your standard deduction. Federal amended tax return Line 10. Federal amended tax return   Multiply $3,950 by your total expected exemptions and enter the result on line 10 unless line 3 is more than $305,050 if married filing jointly or qualifying widow(er), $279,650 if head of household, $254,200 if single, or $152,525 if married filing separately. Federal amended tax return   In that case, use Worksheet 2-11 to figure the amount to enter on line 10. Federal amended tax return Line 12. Federal amended tax return   Generally, you will use the Tax Rate Schedules to figure the tax on your annualized income. Federal amended tax return However, see below for situations where you must use a different method to compute your estimated tax. Federal amended tax return Tax on child's investment income. Federal amended tax return   You must use a special method to figure tax on the income of the following children who have more than $2,000 of investment income. Federal amended tax return Children under age 18 at the end of 2014. Federal amended tax return The following children if their earned income is not more than half their support. Federal amended tax return Children age 18 at the end of 2014. Federal amended tax return Children who are full-time students over age 18 and under age 24 at the end of 2014. Federal amended tax return See Publication 929. Federal amended tax return Tax on net capital gain. Federal amended tax return   The regular income tax rates for individuals do not apply to a net capital gain. Federal amended tax return Instead, your net capital gain is taxed at a lower maximum rate. Federal amended tax return   The term “net capital gain” means the amount by which your net long-term capital gain for the year is more than your net short-term capital loss. Federal amended tax return Tax on qualified dividends and capital gains. Federal amended tax return   For 2014, your capital gain and dividends rate will depend on your income. Federal amended tax return Tax on capital gain or qualified dividends. Federal amended tax return If the amount on line 1 includes a net capital gain or qualified dividends, use Worksheet 2-12 to figure the amount to enter on line 12. Federal amended tax return Tax if excluding foreign earned income or excluding or deducting foreign housing. Federal amended tax return If you expect to claim the foreign earned income exclusion or the housing exclusion or deduction on Form 2555 or Form 2555-EZ, use Worksheet 2-13 to figure the amount to enter on line 12. Federal amended tax return Line 13. Federal amended tax return   If you file Form 1040, add the tax from Forms 8814, 4972, and 6251 for the period. Federal amended tax return If you file Form 1040A, add the amount from the Alternative Minimum Tax Worksheet found in the instructions. Federal amended tax return Also include any recapture of an education credit for each period. Federal amended tax return You may owe this tax if you claimed an education credit in an earlier year and you received either tax-free educational assistance or a refund of qualifying expenses for the same student after filing your 2013 return. Federal amended tax return   Use the 2013 forms or worksheets to see if you will owe any of the taxes discussed above. Federal amended tax return Figure the tax based on your income and deductions during the period shown in the column headings. Federal amended tax return Multiply this amount by the annualization amounts shown for each column on line 2 of the 2014 Annualized Estimated Tax Worksheet (Worksheet 2-9). Federal amended tax return Enter the result on line 13 of this worksheet. Federal amended tax return Line 15. Federal amended tax return   Include all the nonrefundable credits you expect to claim because of events that will occur during the period. Federal amended tax return Note. Federal amended tax return When figuring your credits for each period, annualize any item of income or deduction to figure each credit. Federal amended tax return For example, if you need to use your AGI to figure a credit, use line 3 of Worksheet 2-9 to figure the credit for each column. Federal amended tax return Line 18. Federal amended tax return   Add your expected other taxes. Federal amended tax return   Other taxes include the following. Federal amended tax return Additional tax on early distributions from: An IRA or other qualified retirement plan, A tax-sheltered annuity, or A modified endowment contract entered into after June 20, 1988. Federal amended tax return Household employment taxes if: You will have federal income tax withheld from wages, pensions, annuities, gambling winnings, or other income, or You would be required to make estimated tax payments even if you did not include household employment taxes when figuring your estimated tax. Federal amended tax return Amounts on Form 1040 written on the line for “other taxes” (line 60 on the 2013 Form 1040). Federal amended tax return But do not include recapture of a federal mortgage subsidy; tax on excess golden parachute payments; look-back interest due under section 167(g) or 460(b) of the Internal Revenue Code; excise tax on insider stock compensation from an expatriated corporation; uncollected social security, Medicare, or RRTA tax on tips or group-term life insurance; or additional tax on advance payments of health coverage tax credit when not eligible. Federal amended tax return Repayment of the first-time homebuyer credit if the home will cease to be your main home in 2014. Federal amended tax return See Form 5405 for exceptions. Federal amended tax return Additional Medicare Tax. Federal amended tax return A 0. Federal amended tax return 9% Additional Medicare Tax applies to your combined Medicare wages and self-employment income and/or your RRTA compensation that exceeds the amount listed in the following chart, based on your filing status. Federal amended tax return Filing Status Threshold Amount Married filing jointly $250,000 Married filing separately $125,000 Single $200,000 Head of household $200,000 Qualifying Widow(er) $200,000 Medicare wages and self-employment income are combined to determine if your income exceeds the threshold. Federal amended tax return A self-employment loss should not be considered for purposes of this tax. Federal amended tax return RRTA compensation should be separately compared to the threshold. Federal amended tax return Your employer is responsible for withholding the 0. Federal amended tax return 9% Additional Medicare Tax on Medicare wages or RRTA compensation it pays you in excess of $200,000 in 2014. Federal amended tax return You should consider this withholding, if applicable, in determining whether you need to make an estimated payment. Federal amended tax return For more information on Additional Medicare Tax, go to IRS. Federal amended tax return gov and enter “Additional Medicare Tax” in the search box. Federal amended tax return Net Investment Income Tax (NIIT). Federal amended tax return The NIIT is 3. Federal amended tax return 8% of the lesser of your net investment income or the excess of your modified adjusted gross income over a specified threshold amount. Federal amended tax return Threshold amounts: Filing Status Threshold Amount Married filing jointly $250,000 Married filing separately $125,000 Single $200,000 Head of household $200,000 Qualifying Widow(er) $250,000 For more information on Net Investment Income Tax, go to IRS. Federal amended tax return gov and enter “Net Investment Income Tax” in the search box. Federal amended tax return Line 20. Federal amended tax return   Include all the refundable credits (other than withholding credits) you can claim because of events that occurred during the period. Federal amended tax return Note. Federal amended tax return When figuring your refundable credits for each period, annualize any item of income or deduction used to figure each credit. Federal amended tax return Line 29. Federal amended tax return   If line 28 is smaller than line 25 and you are not certain of the estimate of your 2014 tax, you can avoid a penalty by entering the amount from line 25 on line 29. Federal amended tax return Line 31. Federal amended tax return   For each period, include estimated tax payments made and any excess social security and railroad retirement tax. Federal amended tax return   Also include estimated federal income tax withholding. Federal amended tax return One-fourth of your estimated withholding is considered withheld on the due date of each payment period. Federal amended tax return To figure the amount to include on line 31 for each period, multiply your total expected withholding for 2014 by: 25% (. Federal amended tax return 25) for the first period, 50% (. Federal amended tax return 50) for the second period, 75% (. Federal amended tax return 75) for the third period, and 100% (1. Federal amended tax return 00) for the fourth period. Federal amended tax return   However, you may choose to include your withholding according to the actual dates on which the amounts will be withheld. Federal amended tax return For each period, include withholding made from the beginning of the period up to and including the payment due date. Federal amended tax return You can make this choice separately for the taxes withheld from your wages and all other withholding. Federal amended tax return For an explanation of what to include in withholding, see Total Estimated Tax Payments Needed—Line 16a , earlier. Federal amended tax return Nonresident aliens. Federal amended tax return   If you will file Form 1040NR and you do not receive wages as an employee subject to U. Federal amended tax return S. Federal amended tax return income tax withholding, the instructions for the worksheet are modified as follows. Federal amended tax return Skip column (a). Federal amended tax return On line 1, enter your income for the period that is effectively connected with a U. Federal amended tax return S. Federal amended tax return trade or business. Federal amended tax return On line 21, increase your entry by the amount determined by multiplying your income for the period that is not effectively connected with a U. Federal amended tax return S. Federal amended tax return trade or business by the following. Federal amended tax return 72% for column (b). Federal amended tax return 45% for column (c). Federal amended tax return 30% for column (d). Federal amended tax return However, if you can use a treaty rate lower than 30%, use the percentages determined by multiplying your treaty rate by 2. Federal amended tax return 4, 1. Federal amended tax return 5, and 1, respectively. Federal amended tax return On line 26, enter one-half of the amount from line 16c of the Form 1040-ES (NR) 2014 Estimated Tax Worksheet in column (b), and one-fourth in columns (c) and (d) of Worksheet 2-9. Federal amended tax return On lines 24 and 27, skip column (b). Federal amended tax return On line 31, if you do not use the actual withholding method, include one-half of your total expected withholding in column (b) and one-fourth in columns (c) and (d). Federal amended tax return See Publication 519 for more information. Federal amended tax return Estimated Tax Payments Not Required You do not have to pay estimated tax if your withholding in each payment period is at least as much as: One-fourth of your required annual payment, or Your required annualized income installment for that period. Federal amended tax return You also do not have to pay estimated tax if you will pay enough through withholding to keep the amount you will owe with your return under $1,000. Federal amended tax return How To Pay Estimated Tax There are several ways to pay estimated tax. Federal amended tax return Credit an overpayment on your 2013 return to your 2014 estimated tax. Federal amended tax return Pay by direct transfer from your bank account, or pay by credit or debit card using a pay-by-phone system or the Internet. Federal amended tax return Send in your payment (check or money order) with a payment voucher from Form 1040-ES. Federal amended tax return Credit an Overpayment If you show an overpayment of tax after completing your Form 1040 or Form 1040A for 2013, you can apply part or all of it to your estimated tax for 2014. Federal amended tax return On Form 1040, or Form 1040A, enter the amount you want credited to your estimated tax rather than refunded. Federal amended tax return Take the amount you have credited into account when figuring your estimated tax payments. Federal amended tax return If you timely file your 2013 return, treat the credit as a payment made on April 15, 2014. Federal amended tax return If you are a beneficiary of an estate or trust, and the trustee elects to credit 2014 trust payments of estimated tax to you, you can treat the amount credited as paid by you on January 15, 2015. Federal amended tax return If you choose to have an overpayment of tax credited to your estimated tax, you cannot have any of that amount refunded to you until you file your tax return for the following year. Federal amended tax return You also cannot use that overpayment in any other way. Federal amended tax return Example. Federal amended tax return When Kathleen finished filling out her 2013 tax return, she saw that she had overpaid her taxes by $750. Federal amended tax return Kathleen knew she would owe additional tax in 2014. Federal amended tax return She credited $600 of the overpayment to her 2014 estimated tax and had the remaining $150 refunded to her. Federal amended tax return In September, she amended her 2013 return by filing Form 1040X, Amended U. Federal amended tax return S. Federal amended tax return Individual Income Tax Return. Federal amended tax return It turned out that she owed $250 more in tax than she had thought. Federal amended tax return This reduced her 2013 overpayment from $750 to $500. Federal amended tax return Because the $750 had already been applied to her 2014 estimated tax or refunded to her, the IRS billed her for the additional $250 she owed, plus penalties and interest. Federal amended tax return Kathleen could not use any of the $600 she had credited to her 2014 estimated tax to pay this bill. Federal amended tax return Pay Online Paying online is convenient and secure and helps make sure we get your payments on time. Federal amended tax return You can make your estimated tax payments online when you e-file or at any time during the year. Federal amended tax return You can pay using either of the following electronic payment methods. Federal amended tax return Direct transfer from your bank account. Federal amended tax return Credit or debit card. Federal amended tax return To pay your taxes online or for more information, go to www. Federal amended tax return irs. Federal amended tax return gov/e-pay. Federal amended tax return Pay by Phone Paying by phone is another safe and secure method of paying electronically. Federal amended tax return Use one of the following methods. Federal amended tax return Direct transfer from your bank account. Federal amended tax return Credit or debit card. Federal amended tax return To pay by direct transfer from your bank account, call EFTPS Customer Service at 1-800-555-4477 (English), 1-800-244-4829 (Espanol), or TTY/TDD 1-800-733-4829. Federal amended tax return To pay using a credit or debit card, you can call one of the following service providers. Federal amended tax return There is a convenience fee charged by these providers that varies by provider, card type, and payment amount. Federal amended tax return WorldPay 1-888-9-PAY-TAXTM (1-888-972-9829) www. Federal amended tax return payUSAtax. Federal amended tax return com Official Payments Corporation 1-888-UPAY-TAXTM (1-888-872-9829) www. Federal amended tax return officialpayments. Federal amended tax return com Link2GOV Corporation 1-888-PAY-1040TM (1-888-729-1040) www. Federal amended tax return PAY1040. Federal amended tax return com For the latest details on how to pay by phone, go to www. Federal amended tax return irs. Federal amended tax return gov/e-pay. Federal amended tax return Pay by Check or Money Order Using the Estimated Tax Payment Voucher Each payment of estimated tax by check or money order must be accompanied by a payment voucher from Form 1040-ES. Federal amended tax return If you use your own envelopes (and not the window envelope that comes with the 1040-ES package), make sure you mail your payment vouchers to the address shown in the Form 1040-ES instructions for the place where you live. Federal amended tax return Do not use the address shown in the Form 1040 or Form 1040A instructions. Federal amended tax return If you did not pay estimated tax last year, get a copy of Form 1040-ES from the IRS (see chapter 5). Federal amended tax return Follow the instructions to make sure you use the vouchers correctly. Federal amended tax return Joint estimated tax payments. Federal amended tax return    If you file a joint return and are making joint estimated tax payments, enter the names and social security numbers on the payment voucher in the same order as they will appear on the joint return. Federal amended tax return Change of address. Federal amended tax return    You must notify the IRS if you are making estimated tax payments and you changed your address during the year. Federal amended tax return Complete Form 8822, Change of Address, and mail it to the address shown in the instructions for that form. Federal amended tax return Worksheets for Chapter 2 Use the following worksheets and tables to figure your correct estimated tax. Federal amended tax return IF you need. Federal amended tax return . Federal amended tax return . Federal amended tax return THEN use. Federal amended tax return . Federal amended tax return . Federal amended tax return 2014 Tax Rate Schedules   the 2014 Estimated Tax Worksheet Worksheet 2-1 to estimate your taxable social security and railroad retirement benefits—line 1 of ES Worksheet (or Annualized ES Worksheet (Worksheet 2-9)) Worksheet 2-2 to estimate your self-employment (SE) tax and your deduction for SE tax—lines 1 and 11 of ES Worksheet (lines 1 and 17 of Annualized ES Worksheet (Worksheet 2-9)) Worksheet 2-3 to estimate your standard deduction—line 2 of ES Worksheet (line 7 of Annualized ES Worksheet (Worksheet 2-9)) Worksheet 2-4 to reduce your itemized deductions because your estimated AGI is more than $152,525—line 2 of ES Worksheet Worksheet 2-5 to reduce your exemption amount because your estimated AGI is more than $152,525—line 4 of ES Worksheet Worksheet 2-6 to estimate your income tax if line 1 of your ES Worksheet includes a net capital gain or qualified dividends—line 6 of ES Worksheet Worksheet 2-7 to estimate your income tax if you expect to claim a foreign earned income exclusion or foreign housing exclusion or deduction on Form 2555 or Form 2555-EZ—line 6 of ES Worksheet Worksheet 2-8 the 2014 Annualized Estimated Tax Worksheet (Annualized ES Worksheet) Worksheet 2-9 to reduce your itemized deductions because your estimated annualized AGI is more than $152,525—line 6 of Annualized ES Worksheet Worksheet 2-10 to reduce your exemption amount because your estimated annualized AGI is more than $152,525—line 10 of Annualized ES Worksheet Worksheet 2-11 to estimate your income tax if line 1 of your Annualized ES Worksheet includes a net capital gain or qualified dividends—line 12 of Annualized ES Worksheet Worksheet 2-12 to estimate your income tax if you expect to claim a foreign earned income exclusion or foreign housing exclusion or deduction on Form 2555 or Form 2555-EZ—line 12 of Annualized ES Worksheet Worksheet 2-13 to refigure (amend) your estimated tax during the year Worksheet 2-14 2014 Tax Rate Schedules Do not use these Tax Rate Schedules to figure your 2013 taxes. Federal amended tax return Use them only to figure your 2014 estimated taxes. Federal amended tax return Schedule X—Use if your 2014 filing status is  Single Schedule Z—Use if your 2014 filing status is Head of household If line 5 is: The tax is:     If line 5 is: The tax is:     Over— But not  over—         of the  amount  over— Over— But not  over—         of the  amount  over— $0 $9,075     10. Federal amended tax return 0%   $0 $0 $12,950     10. Federal amended tax return 0%   $0 9,075 36,900 $907. Federal amended tax return 50 + 15. Federal amended tax return 0%   9,075 12,950 49,400 $1,295. Federal amended tax return 00 + 15. Federal amended tax return 0%   12,950 36,900 89,350 5,081. Federal amended tax return 25 + 25. Federal amended tax return 0%   36,900 49,400 127,550 6,762. Federal amended tax return 50 + 25. Federal amended tax return 0%   49,400 89,350 186,350 18,193. Federal amended tax return 75 + 28. Federal amended tax return 0%   89,350 127,550 206,600 26,300. Federal amended tax return 00 + 28. Federal amended tax return 0%   127,550 186,350 405,100 45,353. Federal amended tax return 75 + 33. Federal amended tax return 0%   186,350 206,600 405,100 48,434. Federal amended tax return 00 + 33. Federal amended tax return 0%   206,600 405,100 406,750 117,541. Federal amended tax return 25 + 35. Federal amended tax return 0%   405,100 405,100 432,200 113,939. Federal amended tax return 00 + 35. Federal amended tax return 0%   405,100 406,750 - - - - - - 118,118. Federal amended tax return 75 + 39. Federal amended tax return 6%   406,750 432,200 - - - - - - 123,424. Federal amended tax return 00 + 39. Federal amended tax return 6%   432,200 Schedule Y-1—Use if your 2014 filing status is Married filing jointly or Qualifying widow(er) Schedule Y-2—Use if your 2014 filing status is  Married filing separately If line 5 is: The tax is:     If line 5 is: The tax is:     Over— But not  over—         of the  amount  over— Over— But not  over—         of the  amount  over— $0 $18,150     10. Federal amended tax return 0%   $0 $0 $9,075     10. Federal amended tax return 0%   $0 18,150 73,800 $1,815. Federal amended tax return 00 + 15. Federal amended tax return 0%   18,150 9,075 36,900 $907. Federal amended tax return 50 + 15. Federal amended tax return 0%   9,075 73,800 148,850 10,162. Federal amended tax return 50 + 25. Federal amended tax return 0%   73,800 36,900 74,425 5,081. Federal amended tax return 25 + 25. Federal amended tax return 0%   36,900 148,850 226,850 28,925. Federal amended tax return 00 + 28. Federal amended tax return 0%   148,850 74,425 113,425 14,462. Federal amended tax return 50 + 28. Federal amended tax return 0%   74,425 226,850 405,100 50,765. Federal amended tax return 00 + 33. Federal amended tax return 0%   226,850 113,425 202,550 25,382. Federal amended tax return 50 + 33. Federal amended tax return 0%   113,425 405,100 457,600 109,587. Federal amended tax return 50 + 35. Federal amended tax return 0%   405,100 202,550 228,800 54,793. Federal amended tax return 75 + 35. Federal amended tax return 0%   202,550 457,600 - - - - - - 127,962. Federal amended tax return 50 + 39. Federal amended tax return 6%   457,600 228,800 - - - - - - 63,981. Federal amended tax return 25 + 39. Federal amended tax return 6%   228,800                             Worksheet 2-1. Federal amended tax return 2014 Estimated Tax Worksheet When this worksheet refers you to instructions, you can find those instructions in the Instructions for 2014 Form 1040-ES. Federal amended tax return 1 Adjusted gross income you expect in 2014 (see instructions) 1     2 If you plan to itemize deductions, enter the estimated total of your itemized deductions. Federal amended tax return  Caution: If line 1 is over $152,525, your deduction may be reduced. Federal amended tax return See Worksheet 2-5. Federal amended tax return If you do not plan to itemize deductions, enter your standard deduction. Federal amended tax return 2     3 Subtract line 2 from line 1 3     4 Exemptions. Federal amended tax return Multiply $3,950 by the number of personal exemptions. Federal amended tax return  Caution: If line 1 is over $152,525, the amount of your personal exemptions may be limited. Federal amended tax return See Worksheet 2-6. Federal amended tax return 4     5 Subtract line 4 from line 3 5     6 Tax. Federal amended tax return Figure your tax on the amount on line 5 by using the 2014 Tax Rate Schedules Caution: If you will have qualified dividends or a net capital gain, or expect to exclude or deduct foreign earned income or housing, see Worksheets 2-7 and 2-8 to figure the tax 6     7 Alternative minimum tax from Form 6251 or included on Form 1040A, line 28 7     8 Add lines 6 and 7. Federal amended tax return Add to this amount any other taxes you expect to include in the total on Form 1040, line 44 8     9 Credits (see instructions). Federal amended tax return Do not include any income tax withholding on this line 9     10 Subtract line 9 from line 8. Federal amended tax return If zero or less, enter -0- 10     11 Self-employment tax (see instructions) 11     12 Other taxes including, if applicable, Additional Medicare Tax and/or NIIT (see instructions) 12     13a Add lines 10 through 12 13a     b Earned income credit, additional child tax credit, fuel tax credit, and refundable American opportunity credit 13b     c Total 2014 estimated tax. Federal amended tax return Subtract line 13b from line 13a. Federal amended tax return If zero or less, enter -0- ▶ 13c     14a Multiply line 13c by 90% (662/3% for farmers and fishermen) 14a           b Required annual payment based on prior year's tax (see instructions) 14b           c Required annual payment to avoid a penalty. Federal amended tax return Enter the smaller of line 14a or 14b ▶ 14c        Caution: Generally, if you do not prepay (through income tax withholding and estimated tax payments) at least the amount on line 14c, you may owe a penalty for not paying enough estimated tax. Federal amended tax return To avoid a penalty, make sure your estimate on line 13c is as accurate as possible. Federal amended tax return Even if you pay the required annual payment, you may still owe tax when you file your return. Federal amended tax return If you prefer, you can pay the amount shown on line 13c. Federal amended tax return                         15 Income tax withheld and estimated to be withheld during 2014 (including income tax withholding on pensions, annuities, certain deferred income, etc. Federal amended tax return ) 15     16a Subtract line 15 from line 14c 16a             Is the result zero or less? □ Yes. Federal amended tax return Stop here. Federal amended tax return You are not required to make estimated tax payments. Federal amended tax return  □ No. Federal amended tax return Go to line 16b. Federal amended tax return             b Subtract line 15 from line 13c 16b             Is the result less than $1,000? □ Yes. Federal amended tax return Stop here. Federal amended tax return You are not required to make estimated tax payments. Federal amended tax return  □ No. Federal amended tax return Go to line 17 to figure your required payment. Federal amended tax return                         17 If the first payment you are required to make is due April 15, 2014, enter ¼ of line 16a (minus any 2013 overpayment that you are applying to this installment) here, and on your estimated tax payment voucher(s) if you are paying by check or money order 17     Worksheet 2-2. Federal amended tax return 2014 Estimated Tax Worksheet—Line 1 Estimated Taxable Social Security and Railroad Retirement Benefits Note. Federal amended tax return If you are using this worksheet to estimate your taxable social security or railroad retirement benefits for Worksheet 2-9, 2014 Annualized Estimated Tax Worksheet, multiply the expected amount of benefits for each period by the annualization amount shown on Worksheet 2-9, line 2, for the same period before entering it on line 1 below. Federal amended tax return     1. Federal amended tax return Enter your expected social security and railroad retirement benefits 1. Federal amended tax return   2. Federal amended tax return Enter one-half of line 1 2. Federal amended tax return   3. Federal amended tax return Enter your expected total income. Federal amended tax return Do not include any social security and railroad retirement benefits, nontaxable interest income, nontaxable IRA distributions, or nontaxable pension distributions 3. Federal amended tax return   4. Federal amended tax return Enter your expected nontaxable interest income 4. Federal amended tax return   5. Federal amended tax return Enter (as a positive amount) the total of any expected exclusions or deductions for: U. Federal amended tax return S. Federal amended tax return savings bond interest used for higher education expenses (Form 8815) Employer-provided adoption benefits (Form 8839) Foreign earned income or housing (Form 2555 or 2555-EZ) Income by bona fide residents of American Samoa (Form 4563) or Puerto Rico 5. Federal amended tax return   6. Federal amended tax return Add lines 2, 3, 4, and 5 6. Federal amended tax return   7. Federal amended tax return Enter your expected adjustments to income. Federal amended tax return Do not include any student loan interest deduction 7. Federal amended tax return   8. Federal amended tax return Subtract line 7 from line 6. Federal amended tax return If zero or less, stop here. Federal amended tax return  Note. Federal amended tax return Do not include any social security or railroad retirement benefits in the amount on line 1 of your 2014 Estimated Tax Worksheet (Worksheet 2-1) (or Annualized Estimated Tax Worksheet (Worksheet 2-9)) 8. Federal amended tax return   9. Federal amended tax return Enter $25,000 ($32,000 if you expect to file married filing jointly; $0 if you expect to file married filing separately and expect to live with your spouse at any time during the year) 9. Federal amended tax return   10. Federal amended tax return Subtract line 9 from line 8. Federal amended tax return If zero or less, stop here. Federal amended tax return  Note. Federal amended tax return Do not include any social security or railroad retirement benefits in the amount on line 1 of your Worksheet 2-1 (or Annualized Estimated Tax Worksheet (Worksheet 2-9)) 10. Federal amended tax return   11. Federal amended tax return Enter $9,000 ($12,000 if you expect to file married filing jointly; $0 if you expect to file married filing separately and expect to live with your spouse at any time during the year) 11. Federal amended tax return   12. Federal amended tax return Subtract line 11 from line 10. Federal amended tax return If zero or less, enter -0- 12. Federal amended tax return   13. Federal amended tax return Enter the smaller of line 10 or line 11 13. Federal amended tax return   14. Federal amended tax return Enter one-half of line 13 14. Federal amended tax return   15
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Employment Taxes

If you are self-employed, visit the Self-Employed Individuals Tax Center page for information about your tax obligations.

Understanding Employment Taxes
Understand the various types of taxes you need to deposit and report such as, federal income tax, social security and Medicare taxes and Federal Unemployment (FUTA) Tax.

Depositing and Reporting Employment Taxes
You must deposit federal income tax withheld and both the employer and employee social security and Medicare taxes. You also must report on the taxes you deposit, as well as report wages, tips and other compensation paid to an employee.

Employment Tax Due Dates
You must deposit and report your employment taxes on time.

Correcting Employment Taxes
"X" forms are used to report adjustments to employment taxes and to claim refunds of overpaid employment taxes.

e-File Form 940, 941 or 944 for Small Businesses
If you are a small business owner, you have two options to e-file tax forms of the 94x series.

Rate the Small Business and Self-Employed Website

Page Last Reviewed or Updated: 04-Mar-2014

The Federal Amended Tax Return

Federal amended tax return Publication 517 - Main Content Table of Contents Social Security CoverageCoverage of Members of the Clergy Coverage of Religious Workers (Church Employees) U. Federal amended tax return S. Federal amended tax return Citizens and Resident and Nonresident Aliens Ministerial ServicesMinisters Members of Religious Orders Christian Science Practitioners and Readers Exemption From Self-Employment (SE) TaxMembers of the Clergy Members of Recognized Religious Sects Self-Employment Tax: Figuring Net EarningsRegular Method Nonfarm Optional Method Income Tax: Income and ExpensesIncome Items Expense Items Income Tax Withholding and Estimated Tax Filing Your Return Retirement Savings ArrangementsDeducting contributions to tax-sheltered annuity plans. Federal amended tax return Full-time student. Federal amended tax return Adjusted gross income. Federal amended tax return More information. Federal amended tax return Earned Income Credit Comprehensive ExampleForm W-2 From Church Form W-2 From College Schedule C-EZ (Form 1040) Form 2106-EZ Schedule A (Form 1040) Schedule SE (Form 1040) Form 1040 Attachment 1 Attachment 2 How To Get Tax HelpLow Income Taxpayer Clinics Social Security Coverage This section gives information about which system (SECA or FICA) is used to collect social security and Medicare taxes from members of the clergy (ministers, members of a religious order, and Christian Science practitioners and readers) and religious workers (church employees). Federal amended tax return Coverage of Members of the Clergy The services you perform in the exercise of your ministry, of the duties required by your religious order, or of your profession as a Christian Science practitioner or reader are covered by social security and Medicare under SECA. Federal amended tax return Your earnings for these ministerial services (defined later) are subject to self-employment (SE) tax unless one of the following applies. Federal amended tax return You are a member of a religious order who has taken a vow of poverty. Federal amended tax return You ask the Internal Revenue Service (IRS) for an exemption from SE tax for your services and the IRS approves your request. Federal amended tax return See Exemption From Self-Employment (SE) Tax , later. Federal amended tax return You are subject only to the social security laws of a foreign country under the provisions of a social security agreement between the United States and that country. Federal amended tax return For more information, see Bilateral Social Security (Totalization) Agreements in Publication 54. Federal amended tax return Your earnings that are not from ministerial services may be subject to social security tax under FICA or SECA according to the rules that apply to taxpayers in general. Federal amended tax return See Ministerial Services , later. Federal amended tax return Ministers If you are a minister of a church, your earnings for the services you perform in your capacity as a minister are subject to SE tax, even if you perform these services as an employee of that church. Federal amended tax return However, you can request that the IRS grant you an exemption, as discussed under Exemption From Self-Employment (SE) Tax , later. Federal amended tax return For the specific services covered, see Ministerial Services , later. Federal amended tax return Ministers defined. Federal amended tax return   Ministers are individuals who are duly ordained, commissioned, or licensed by a religious body constituting a church or church denomination. Federal amended tax return Ministers have the authority to conduct religious worship, perform sacerdotal functions, and administer ordinances or sacraments according to the prescribed tenets and practices of that church or denomination. Federal amended tax return   If a church or denomination ordains some ministers and licenses or commissions others, anyone licensed or commissioned must be able to perform substantially all the religious functions of an ordained minister to be treated as a minister for social security purposes. Federal amended tax return Employment status for other tax purposes. Federal amended tax return   Even though all of your income from performing ministerial services is subject to self-employment tax for social security tax purposes, you may be an employee for income tax or retirement plan purposes in performing those same services. Federal amended tax return For income tax or retirement plan purposes, your income earned as an employee will be considered wages. Federal amended tax return Common-law employee. Federal amended tax return   Under common-law rules, you are considered either an employee or a self-employed person. Federal amended tax return Generally, you are an employee if you perform services for someone who has the legal right to control both what you do and how you do it, even if you have considerable discretion and freedom of action. Federal amended tax return For more information about the common-law rules, see Publication 15-A, Employer's Supplemental Tax Guide. Federal amended tax return   If a congregation employs you and pays you a salary, you are generally a common-law employee and income from the exercise of your ministry is wages for income tax purposes. Federal amended tax return However, amounts received directly from members of the congregation, such as fees for performing marriages, baptisms, or other personal services, are not wages; such amounts are self-employment income for both income tax purposes and social security tax purposes. Federal amended tax return Example. Federal amended tax return A church hires and pays you a salary to perform ministerial services subject to its control. Federal amended tax return Under the common-law rules, you are an employee of the church while performing those services. Federal amended tax return Form SS-8. Federal amended tax return   If you are not certain whether you are an employee or a self-employed person, you can get a determination from the IRS by filing Form SS-8. Federal amended tax return Members of Religious Orders If you are a member of a religious order who has not taken a vow of poverty, your earnings for ministerial services you perform as a member of the order are subject to SE tax. Federal amended tax return See Ministerial Services , later. Federal amended tax return However, you can request that the IRS grant you an exemption as discussed under Exemption From Self-Employment (SE) Tax , later. Federal amended tax return Vow of poverty. Federal amended tax return   If you are a member of a religious order and have taken a vow of poverty, you are already exempt from paying SE tax on your earnings for ministerial services you perform as an agent of your church or its agencies. Federal amended tax return You do not need to request a separate exemption. Federal amended tax return For income tax purposes, the earnings are tax free to you. Federal amended tax return Your earnings are considered the income of the religious order. Federal amended tax return Services covered under FICA at the election of the order. Federal amended tax return   However, even if you have taken a vow of poverty, the services you perform for your church or its agencies may be covered under social security. Federal amended tax return Your services are covered if your order, or an autonomous subdivision of the order, elects social security coverage for its current and future vow-of-poverty members. Federal amended tax return   The order or subdivision elects coverage by filing Form SS-16. Federal amended tax return The election may cover certain vow-of-poverty members for a retroactive period of up to 20 calendar quarters before the quarter in which it files the certificate. Federal amended tax return If the election is made, the order or subdivision pays both the employer's and employee's share of the tax. Federal amended tax return You do not pay any of the FICA tax. Federal amended tax return Services performed outside the order. Federal amended tax return   Even if you are a member of a religious order who has taken a vow of poverty and the order requires you to turn over amounts you earn, your earnings are subject to federal income tax and either SE tax or FICA tax (including estimated tax payments and/or withholding) if you: Are self-employed or an employee of an organization outside your religious community, and Perform work not required by, or done on behalf of, the order. Federal amended tax return   In these cases, your income from self-employment or as an employee of that outside organization is taxable to you directly. Federal amended tax return You may, however, be able to take a charitable deduction for the amount you turn over to the order. Federal amended tax return See Publication 526, Charitable Contributions. Federal amended tax return Rulings. Federal amended tax return   Organizations and individuals may request rulings from the IRS on whether they are religious orders, or members of a religious order, respectively, for FICA tax, SE tax, and federal income tax withholding purposes. Federal amended tax return To request a ruling, follow the procedures in Revenue Procedure 2014-1, 2014-1 I. Federal amended tax return R. Federal amended tax return B. Federal amended tax return 1, available at www. Federal amended tax return irs. Federal amended tax return gov/irb/2014-1_IRB/ar05. Federal amended tax return html. Federal amended tax return Christian Science Practitioners and Readers Generally, your earnings from services you perform in your profession as a Christian Science practitioner or reader are subject to SE tax. Federal amended tax return However, you can request an exemption as discussed under Exemption From Self-Employment (SE) Tax , later. Federal amended tax return Practitioners. Federal amended tax return   Christian Science practitioners are members in good standing of the Mother Church, The First Church of Christ, Scientist, in Boston, Massachusetts, who practice healing according to the teachings of Christian Science. Federal amended tax return State law specifically exempts Christian Science practitioners from licensing requirements. Federal amended tax return   Some Christian Science practitioners also are Christian Science teachers or lecturers. Federal amended tax return Income from teaching or lecturing is considered the same as income from their work as practitioners. Federal amended tax return Readers. Federal amended tax return   For tax purposes, Christian Science readers are considered the same as ordained, commissioned, or licensed ministers. Federal amended tax return Coverage of Religious Workers (Church Employees) If you are a religious worker (a church employee) and are not in one of the classes already discussed, your wages are generally subject to social security and Medicare tax under FICA, not SECA. Federal amended tax return Some exceptions are discussed next. Federal amended tax return Election by Church To Exclude Its Employees From FICA Coverage Churches and qualified church-controlled organizations (church organizations) that are opposed for religious reasons to the payment of social security and Medicare taxes can elect to exclude their employees from FICA coverage. Federal amended tax return If your employer makes this election, it does not pay the employer's portion of the FICA taxes or withhold from your pay your portion of the FICA taxes. Federal amended tax return Instead, your wages are subject to SECA and you must pay SE tax on your wages if they exceed $108. Federal amended tax return 28 during the tax year. Federal amended tax return However, you can request an exemption from SE tax if you are a member of a recognized religious sect, as discussed below. Federal amended tax return Churches and church organizations make this election by filing two copies of Form 8274. Federal amended tax return For more information about making this election, see Form 8274. Federal amended tax return Election by Certain Church Employees Who Are Opposed to Social Security and Medicare You may be able to choose to be exempt from social security and Medicare taxes, including the SE tax, if you are a member of a recognized religious sect or division and work for a church (or church-controlled nonprofit division) that does not pay the employer's part of the social security tax on wages. Federal amended tax return This exemption does not apply to your service, if any, as a minister of a church or as a member of a religious order. Federal amended tax return Make this choice by filing Form 4029. Federal amended tax return See Requesting Exemption—Form 4029 , later, under Members of Recognized Religious Sects. Federal amended tax return U. Federal amended tax return S. Federal amended tax return Citizens and Resident and Nonresident Aliens To be covered under the SE tax provisions (SECA), individuals generally must be citizens or resident aliens of the United States. Federal amended tax return Nonresident aliens are not covered under SECA unless a social security agreement in effect between the United States and the foreign country determines that you are covered under the U. Federal amended tax return S. Federal amended tax return social security system. Federal amended tax return To determine your alien status, see Publication 519, U. Federal amended tax return S. Federal amended tax return Tax Guide for Aliens. Federal amended tax return Residents of Puerto Rico, the U. Federal amended tax return S. Federal amended tax return Virgin Islands, Guam, the CNMI, and American Samoa. Federal amended tax return   If you are a resident of one of these U. Federal amended tax return S. Federal amended tax return possessions but not a U. Federal amended tax return S. Federal amended tax return citizen, for SE tax purposes you are treated the same as a citizen or resident alien of the United States. Federal amended tax return For information on figuring the tax, see Self-Employment Tax: Figuring Net Earnings , later. Federal amended tax return Ministerial Services Ministerial services, in general, are the services you perform in the exercise of your ministry, in the exercise of your duties as required by your religious order, or in the exercise of your profession as a Christian Science practitioner or reader. Federal amended tax return Income you receive for performing ministerial services is subject to SE tax unless you have an exemption as explained later. Federal amended tax return Even if you have an exemption, only the income you receive for performing ministerial services is exempt. Federal amended tax return The exemption does not apply to any other income. Federal amended tax return The following discussions provide more detailed information on ministerial services of ministers, members of a religious order, and Christian Science practitioners and readers. Federal amended tax return Ministers Most services you perform as a minister, priest, rabbi, etc. Federal amended tax return , are ministerial services. Federal amended tax return These services include: Performing sacerdotal functions, Conducting religious worship, and Controlling, conducting, and maintaining religious organizations (including the religious boards, societies, and other integral agencies of such organizations) that are under the authority of a religious body that is a church or denomination. Federal amended tax return You are considered to control, conduct, and maintain a religious organization if you direct, manage, or promote the organization's activities. Federal amended tax return A religious organization is under the authority of a religious body that is a church or denomination if it is organized for and dedicated to carrying out the principles of a faith according to the requirements governing the creation of institutions of the faith. Federal amended tax return Services for nonreligious organizations. Federal amended tax return   Your services for a nonreligious organization are ministerial services if the services are assigned or designated by your church. Federal amended tax return Assigned or designated services qualify even if they do not involve performing sacerdotal functions or conducting religious worship. Federal amended tax return   If your services are not assigned or designated by your church, they are ministerial services only if they involve performing sacerdotal functions or conducting religious worship. Federal amended tax return Services that are not part of your ministry. Federal amended tax return   Income from services you perform as an employee that are not ministerial services is subject to social security and Medicare tax withholding under FICA (not SECA) under the rules that apply to employees in general. Federal amended tax return The following are not ministerial services. Federal amended tax return Services you perform for nonreligious organizations other than the services stated above. Federal amended tax return Services you perform as a duly ordained, commissioned, or licensed minister of a church as an employee of the United States, the District of Columbia, a foreign government, or any of their political subdivisions. Federal amended tax return These services are not ministerial services even if you are performing sacerdotal functions or conducting religious worship. Federal amended tax return (For example, if you perform services as a chaplain in the Armed Forces of the United States, those services are not ministerial services. Federal amended tax return ) Services you perform in a government-owned and operated hospital. Federal amended tax return (These services are considered performed by a government employee, not by a minister as part of the ministry. Federal amended tax return ) However, services that you perform at a church-related hospital or health and welfare institution, or a private nonprofit hospital, are considered to be part of the ministry and are considered ministerial services. Federal amended tax return Books or articles. Federal amended tax return   Writing religious books or articles is considered to be in the exercise of your ministry and is considered a ministerial service. Federal amended tax return   This rule also applies to members of religious orders and to Christian Science practitioners and readers. Federal amended tax return Members of Religious Orders Services you perform as a member of a religious order in the exercise of duties required by the order are ministerial services. Federal amended tax return The services are considered ministerial because you perform them as an agent of the order. Federal amended tax return For example, if the order directs you to perform services for another agency of the supervising church or an associated institution, you are considered to perform the services as an agent of the order. Federal amended tax return However, if the order directs you to work outside the order, this employment will not be considered a duty required by the order unless: Your services are the kind that are ordinarily performed by members of the order, and Your services are part of the duties that must be exercised for, or on behalf of, the religious order as its agent. Federal amended tax return Effect of employee status. Federal amended tax return   Ordinarily, if your services are not considered directed or required of you by the order, you and the outside party for whom you work are considered employee and employer. Federal amended tax return In this case, your earnings from the services are taxed under the rules that apply to employees in general, not under the rules for services provided as agent for the order. Federal amended tax return This result is true even if you have taken a vow of poverty. Federal amended tax return Example. Federal amended tax return Pat Brown and Chris Green are members of a religious order and have taken vows of poverty. Federal amended tax return They renounce all claims to their earnings. Federal amended tax return The earnings belong to the order. Federal amended tax return Pat is a licensed attorney. Federal amended tax return The superiors of the order instructed her to get a job with a law firm. Federal amended tax return Pat joined a law firm as an employee and, as she requested, the firm made the salary payments directly to the order. Federal amended tax return Chris is a secretary. Federal amended tax return The superiors of the order instructed him to accept a job with the business office of the church that supervises the order. Federal amended tax return Chris took the job and gave all his earnings to the order. Federal amended tax return Pat's services are not duties required by the order. Federal amended tax return Her earnings are subject to social security and Medicare tax under FICA and to federal income tax. Federal amended tax return Chris' services are duties required by the order. Federal amended tax return He is acting as an agent of the order and not as an employee of a third party. Federal amended tax return He does not include the earnings in gross income, and they are not subject to income tax withholding or to social security and Medicare tax under FICA or SECA. Federal amended tax return Christian Science Practitioners and Readers Services you perform as a Christian Science practitioner or reader in the exercise of your profession are ministerial services. Federal amended tax return Amounts you receive for performing these services are generally subject to SE tax. Federal amended tax return You may request an exemption from SE tax, discussed next, which applies only to those services. Federal amended tax return Exemption From Self-Employment (SE) Tax You can request an exemption from SE tax if you are a member of the clergy (minister, member of a religious order, or Christian Science practitioner or reader) or a member of a recognized religious sect. Federal amended tax return Generally, members of religious orders who have taken a vow of poverty are already exempt from paying SE tax, as discussed earlier under Members of Religious Orders under Social Security Coverage. Federal amended tax return They do not have to request the exemption. Federal amended tax return Who cannot be exempt. Federal amended tax return   You cannot be exempt from SE tax if you made one of the following elections to be covered under social security. Federal amended tax return These elections are irrevocable. Federal amended tax return You elected to be covered under social security by filing Form 2031, Revocation of Exemption From Self-Employment Tax for Use by Ministers, Members of Religious Orders, and Christian Science Practitioners, for your 1986, 1987, 2000, or 2001 tax year. Federal amended tax return You elected before 1968 to be covered under social security for your ministerial services. Federal amended tax return Requesting exemption. Federal amended tax return    Table 2, earlier, briefly summarizes the procedure for requesting exemption from the SE tax. Federal amended tax return More detailed explanations follow. Federal amended tax return If you are a minister, member of a religious order, or Christian Science practitioner, an approved exemption only applies to earnings you receive for ministerial services, discussed earlier. Federal amended tax return It does not apply to any other self-employment income. Federal amended tax return Table 2. Federal amended tax return The Self-Employment Tax Exemption Application and Approval Process   Who Can Apply Members of the Clergy Members of Recognized  Religious Sects How File Form 4361 File Form 4029 When File by the due date (including extensions) of your income tax return for the second tax year in which you had at least $400 of net earnings from self-employment (at least part from ministerial services) File anytime Approval If approved, you will receive an approved copy of Form 4361 If approved, you will receive an approved copy of Form 4029 Effective Date For all tax years after 1967 in which you have at least $400 of net earnings from self-employment For all tax years beginning with the first year you meet the eligibility requirements discussed later Members of the Clergy To claim the exemption from SE tax, you must meet all of the following conditions. Federal amended tax return You file Form 4361, described below under Requesting Exemption—Form 4361 . Federal amended tax return You are conscientiously opposed to public insurance because of your individual religious considerations (not because of your general conscience), or you are opposed because of the principles of your religious denomination. Federal amended tax return You file for other than economic reasons. Federal amended tax return You inform the ordaining, commissioning, or licensing body of your church or order that you are opposed to public insurance if you are a minister or a member of a religious order (other than a vow-of-poverty member). Federal amended tax return This requirement does not apply to Christian Science practitioners or readers. Federal amended tax return You establish that the organization that ordained, commissioned, or licensed you, or your religious order, is a tax-exempt religious organization. Federal amended tax return You establish that the organization is a church or a convention or association of churches. Federal amended tax return You did not make an election discussed earlier under Who cannot be exempt . Federal amended tax return You sign and return the statement the IRS mails to you to certify that you are requesting an exemption based on the grounds listed on the statement. Federal amended tax return Requesting Exemption—Form 4361 To request exemption from SE tax, file Form 4361 in triplicate (original and two copies) with the IRS. Federal amended tax return The IRS will return to you a copy of the Form 4361 that you filed indicating whether it has approved your exemption. Federal amended tax return If it is approved, keep the approved copy of Form 4361 in your permanent records. Federal amended tax return When to file. Federal amended tax return   File Form 4361 by the date your income tax return is due, including extensions, for the second tax year in which both of the following are true. Federal amended tax return You have net earnings from self-employment of at least $400. Federal amended tax return Any part of those net earnings was from ministerial services you performed as a: Minister, Member of a religious order, or Christian Science practitioner or reader. Federal amended tax return The 2 years do not have to be consecutive tax years. Federal amended tax return    The approval process can take some time, so you should file Form 4361 as soon as possible. Federal amended tax return Example 1. Federal amended tax return Rev. Federal amended tax return Lawrence Jaeger, a clergyman ordained in 2013, has net self-employment earnings as a minister of $450 in 2013 and $500 in 2014. Federal amended tax return He must file his application for exemption by the due date, including extensions, for his 2014 income tax return. Federal amended tax return However, if Rev. Federal amended tax return Jaeger does not receive IRS approval for an exemption by April 15, 2015, his SE tax for 2014 is due by that date. Federal amended tax return Example 2. Federal amended tax return Rev. Federal amended tax return Louise Wolfe has only $300 in net self-employment earnings as a minister in 2013, but earned more than $400 in 2012 and expects to earn more than $400 in 2014. Federal amended tax return She must file her application for exemption by the due date, including extensions, for her 2014 income tax return. Federal amended tax return However, if she does not receive IRS approval for an exemption by April 15, 2015, her SE tax for 2014 is due by that date. Federal amended tax return Example 3. Federal amended tax return In 2011, Rev. Federal amended tax return David Moss was ordained a minister and had $700 in net self-employment earnings as a minister. Federal amended tax return In 2012, he received $1,000 as a minister, but his related expenses were over $1,000. Federal amended tax return Therefore, he had no net self-employment earnings as a minister in 2012. Federal amended tax return Also in 2012, he opened a book store and had $8,000 in net self-employment earnings from the store. Federal amended tax return In 2013, he had net self-employment earnings of $1,500 as a minister and $10,000 net self-employment earnings from the store. Federal amended tax return Rev. Federal amended tax return Moss had net earnings from self-employment in 2011 and 2013 that were $400 or more each year, and part of the self-employment earnings in each of those years was for his services as a minister. Federal amended tax return Thus, he must file his application for exemption by the due date, including extensions, for his 2013 income tax return. Federal amended tax return Death of individual. Federal amended tax return   The right to file an application for exemption ends with an individual's death. Federal amended tax return A surviving spouse, executor, or administrator cannot file an exemption application for a deceased clergy member. Federal amended tax return Effective date of exemption. Federal amended tax return   An approved exemption is effective for all tax years after 1967 in which you have $400 or more of net earnings from self-employment and any part of those earnings is for services as a member of the clergy. Federal amended tax return Once the exemption is approved, it is irrevocable. Federal amended tax return Example. Federal amended tax return Rev. Federal amended tax return Trudy Austin, ordained in 2010, had $400 or more in net self-employment earnings as a minister in both 2010 and 2013. Federal amended tax return She files an application for exemption on February 20, 2014. Federal amended tax return If an exemption is granted, it is effective for 2010 and the following years. Federal amended tax return Refunds of SE tax. Federal amended tax return   If, after receiving an approved Form 4361, you find that you overpaid SE tax, you can file a claim for refund on Form 1040X. Federal amended tax return Generally, for a refund, you must file Form 1040X within 3 years from the date you filed the return or within 2 years from the date you paid the tax, whichever is later. Federal amended tax return A return you filed, or tax you paid, before the due date is considered to have been filed or paid on the due date. Federal amended tax return   If you file a claim after the 3-year period but within 2 years from the time you paid the tax, the credit or refund will not be more than the tax you paid within the 2 years immediately before you file the claim. Federal amended tax return Members of Recognized Religious Sects If you are a member of a recognized religious sect, or a division of a recognized religious sect, you can apply for an exemption from payment of social security and Medicare taxes on both your self-employment income and the wages you earn from an employer who also has an exemption. Federal amended tax return Exception. Federal amended tax return   If you received social security benefits or payments, or anyone else received these benefits or payments based on your wages or self-employment income, you cannot apply. Federal amended tax return However, if you pay your benefits back, you may be considered for exemption. Federal amended tax return Contact your local Social Security Administration office to find out the amount you must pay back. Federal amended tax return Eligibility requirements. Federal amended tax return   To claim this exemption from SE tax, all the following requirements must be met. Federal amended tax return You must file Form 4029, discussed later under Requesting Exemption—Form 4029 . Federal amended tax return As a follower of the established teachings of the sect or division, you must be conscientiously opposed to accepting benefits of any private or public insurance that makes payments for death, disability, old age, retirement, or medical care, or provides services for medical care. Federal amended tax return You must waive all rights to receive any social security payment or benefit and agree that no benefits or payments will be made to anyone else based on your wages and self-employment income. Federal amended tax return The Commissioner of Social Security must determine that: Your sect or division has the established teachings as described in (2) above, It is the practice, and has been for a substantial period of time, for members of the sect or division to provide for their dependent members in a manner that is reasonable in view of the members' general level of living, and The sect or division has existed at all times since December 31, 1950. Federal amended tax return Requesting Exemption—Form 4029 To request the exemption, file Form 4029 in triplicate (original and two copies) with the Social Security Administration at the address shown on the form. Federal amended tax return The sect or division must complete part of the form. Federal amended tax return The IRS will return to you a copy of the Form 4029 that you filed indicating whether it has approved your exemption. Federal amended tax return If it is approved, keep the approved copy of Form 4029 in your permanent records. Federal amended tax return When to file. Federal amended tax return   You can file Form 4029 at any time. Federal amended tax return   If you have an approved exemption from SE tax and for some reason that approved exemption ended, you must file a new Form 4029 if you subsequently meet the eligibility requirements, discussed earlier. Federal amended tax return See Effective date of exemption next for information on when the newly approved exemption would become effective. Federal amended tax return    If you have a previously approved exemption from SE tax and you change membership to another recognized religious sect, without any change to your eligibility requirements, then you do not need to file a new Form 4029. Federal amended tax return Effective date of exemption. Federal amended tax return   An approved exemption from SE tax generally is effective for all tax years beginning with the first year you meet the eligibility requirements discussed earlier. Federal amended tax return (For example, if you meet the eligibility requirements in 2011, you file Form 4029 in 2012, and the IRS approves your exemption in 2013, your exemption is effective for tax year 2011 and all later years. Federal amended tax return )   The exemption will end if you fail to meet the eligibility requirements or if the Commissioner of Social Security determines that the sect or division fails to meet them. Federal amended tax return You must notify the IRS within 60 days if you are no longer a member of the religious group, or if you no longer follow the established teachings of this group. Federal amended tax return The exemption will end for the tax year where you or your sect/division first fails to meet the eligibility requirements. Federal amended tax return Refunds of SE tax paid. Federal amended tax return    To get a refund of any SE tax you paid while the exemption was in effect, file Form 1040X. Federal amended tax return For information on filing this form, see Refunds of SE tax under Requesting Exemption—Form 4361, earlier. Federal amended tax return Exemption From FICA Taxes Generally, under FICA, the employer and the employee each pay half of the social security and Medicare tax. Federal amended tax return Both the employee and the employer, if they meet the eligibility requirements discussed earlier, can apply to be exempt from their share of FICA taxes on wages paid by the employer to the employee. Federal amended tax return A partnership in which each partner holds a religious exemption from social security and Medicare is an employer for this purpose. Federal amended tax return If the employer's application is approved, the exemption will apply only to FICA taxes on wages paid to employees who also received an approval of identical applications. Federal amended tax return Information for employers. Federal amended tax return   If you have an approved Form 4029 and you have an employee who has an approved Form 4029, do not report wages you paid to the employee as social security and Medicare wages. Federal amended tax return   If you have an employee who does not have an approved Form 4029, you must withhold the employee's share of social security and Medicare taxes and pay the employer's share. Federal amended tax return Form W-2. Federal amended tax return   When preparing a Form W-2 for an employee with an approved Form 4029, enter “Form 4029” in box 14, “Other. Federal amended tax return ” Do not make any entries in boxes 3, 4, 5, or 6. Federal amended tax return Forms 941, 943, and 944. Federal amended tax return   If both you and your employee have received approved Forms 4029, do not include these exempt wages on the following forms. Federal amended tax return Instead, follow the instructions given below. Federal amended tax return Form 941, Employer's QUARTERLY Federal Tax Return: check the box on line 4 and enter “Form 4029” in the empty space below the check box. Federal amended tax return Form 943, Employer's Annual Federal Tax Return for Agricultural Employees: enter “Form 4029” on the dotted line next to the lines 2 and 4 entry spaces. Federal amended tax return Form 944, Employer's ANNUAL Federal Tax Return: check the box on line 3 and enter “Form 4029” in the empty space below the check box. Federal amended tax return Effective date. Federal amended tax return   An approved exemption from FICA becomes effective on the first day of the first calendar quarter after the quarter in which you file Form 4029. Federal amended tax return The exemption will end on the last day of the calendar quarter before the quarter in which the employer, employee, sect, or division fails to meet the requirements. Federal amended tax return Self-Employment Tax: Figuring Net Earnings There are two methods for figuring your net earnings from self-employment as a member of the clergy or a religious worker. Federal amended tax return Regular method. Federal amended tax return Nonfarm optional method. Federal amended tax return You may find Worksheets 1 through 4 helpful in figuring your net earnings from self-employment. Federal amended tax return Blank worksheets are in the back of this publication, after the Comprehensive Example. Federal amended tax return Regular Method Most people use the regular method. Federal amended tax return Under this method, figure your net earnings from self-employment by totaling your gross income for services you performed as a minister, a member of a religious order who has not taken a vow of poverty, or a Christian Science practitioner or reader. Federal amended tax return Then, subtract your allowable business deductions and multiply the difference by 92. Federal amended tax return 35% (. Federal amended tax return 9235). Federal amended tax return Use Schedule SE (Form 1040) to figure your net earnings and SE tax. Federal amended tax return If you are an employee of a church that elected to exclude you from FICA coverage, figure net earnings by multiplying your church wages shown on Form W-2 by 92. Federal amended tax return 35% (. Federal amended tax return 9235). Federal amended tax return Do not reduce your wages by any business deductions when making this computation. Federal amended tax return Use Schedule SE (Form 1040), Section B, to figure your net earnings and SE tax. Federal amended tax return If you have an approved exemption, or you are automatically exempt, do not include the income or deductions from ministerial services in figuring your net earnings from self-employment. Federal amended tax return Amounts included in gross income. Federal amended tax return   To figure your net earnings from self-employment (on Schedule SE (Form 1040)), include in gross income: Salaries and fees for your ministerial services (discussed earlier), Offerings you receive for marriages, baptisms, funerals, masses, etc. Federal amended tax return , The value of meals and lodging provided to you, your spouse, and your dependents for your employer's convenience, The fair rental value of a parsonage provided to you (including the cost of utilities that are furnished) and the rental allowance (including an amount for payment of utilities) paid to you, and Any amount a church pays toward your income tax or SE tax, other than withholding the amount from your salary. Federal amended tax return This amount is also subject to income tax. Federal amended tax return   For the income tax treatment of items (2) and (4), see Income Tax: Income and Expenses , later. Federal amended tax return Example. Federal amended tax return Pastor Roger Adams receives an annual salary of $39,000 as a full-time minister. Federal amended tax return The $39,000 includes $5,000 that is designated as a rental allowance to pay utilities. Federal amended tax return His church owns a parsonage that has a fair rental value of $12,000 per year. Federal amended tax return The church gives Pastor Adams the use of the parsonage. Federal amended tax return He is not exempt from SE tax. Federal amended tax return He must include $51,000 ($39,000 plus $12,000) when figuring his net earnings for SE tax purposes. Federal amended tax return The results would be the same if, instead of the use of the parsonage and receipt of the rental allowance for utilities, Pastor Adams had received an annual salary of $51,000 of which $17,000 ($5,000 plus $12,000) per year was designated as a rental allowance. Federal amended tax return Overseas duty. Federal amended tax return   Your net earnings from self-employment are determined without any foreign earned income exclusion or the foreign housing exclusion or deduction if you are a U. Federal amended tax return S. Federal amended tax return citizen or resident alien serving abroad and living in a foreign country. Federal amended tax return   For information on excluding foreign earned income or the foreign housing amount, see Publication 54. Federal amended tax return Example. Federal amended tax return Diane Jones was the minister of a U. Federal amended tax return S. Federal amended tax return church in Mexico. Federal amended tax return She earned $35,000 in that position and was able to exclude it all for income tax purposes under the foreign earned income exclusion. Federal amended tax return The United States does not have a social security agreement with Mexico, so Mrs. Federal amended tax return Jones is subject to U. Federal amended tax return S. Federal amended tax return SE tax and must include $35,000 when figuring net earnings from self-employment. Federal amended tax return Specified U. Federal amended tax return S. Federal amended tax return possessions. Federal amended tax return    The exclusion from gross income for amounts derived from American Samoa or Puerto Rico does not apply in computing net earnings from self-employment. Federal amended tax return Also see Residents of Puerto Rico, the U. Federal amended tax return S. Federal amended tax return Virgin Islands, Guam, the CNMI, and American Samoa , earlier, under U. Federal amended tax return S. Federal amended tax return Citizens and Resident and Nonresident Aliens. Federal amended tax return Amounts not included in gross income. Federal amended tax return   Do not include the following amounts in gross income when figuring your net earnings from self-employment. Federal amended tax return Offerings that others made to the church. Federal amended tax return Contributions by your church to a tax-sheltered annuity plan set up for you, including any salary reduction contributions (elective deferrals) that are not included in your gross income. Federal amended tax return Pension payments or retirement allowances you receive for your past ministerial services. Federal amended tax return The rental value of a parsonage or a parsonage allowance provided to you after you retire. Federal amended tax return Allowable deductions. Federal amended tax return   When figuring your net earnings from self-employment, deduct all your expenses related to your ministerial services performed as a self-employed person. Federal amended tax return These are ministerial expenses you incurred while working other than as a common-law employee of the church. Federal amended tax return They include expenses incurred in performing marriages and baptisms, and in delivering speeches. Federal amended tax return Deduct these expenses on Schedule C or C-EZ (Form 1040), and carry the net amount to line 2 of Schedule SE (Form 1040), Section A or B. Federal amended tax return   Wages earned as a common-law employee (explained earlier) of a church are generally subject to self-employment tax unless an exemption is requested, as discussed earlier under Exemption From Self-Employment (SE) Tax . Federal amended tax return Subtract any allowable expenses (including unreimbursed employee business expenses) from those wages, include the net amount on line 2 of Schedule SE (Form 1040), Section A or B, and attach an explanation. Federal amended tax return Do not complete Schedule C or C-EZ (Form 1040). Federal amended tax return However, for income tax purposes, the expenses are allowed only as an itemized deduction on Schedule A (Form 1040) to the extent they exceed 2% of adjusted gross income. Federal amended tax return Employee reimbursement arrangements. Federal amended tax return   If you received an advance, allowance, or reimbursement for your employee expenses, how you report this amount and your employee expenses depends on whether your employer reimbursed you under an accountable plan or a nonaccountable plan. Federal amended tax return Ask your employer if you are not sure if it reimburses you using an accountable or a nonaccountable plan. Federal amended tax return Accountable plans. Federal amended tax return   To be an accountable plan, your employer's reimbursement arrangement must include all three of the following rules. Federal amended tax return Your expenses must have a business connection—that is, you must have paid or incurred deductible expenses while performing services as an employee of your employer. Federal amended tax return You must adequately account to your employer for these expenses within a reasonable period of time. Federal amended tax return You must return any excess reimbursement or allowance within a reasonable period of time. Federal amended tax return   The reimbursement is not reported on your Form W-2. Federal amended tax return Generally, if your expenses equal your reimbursement, you have no deduction. Federal amended tax return If your expenses are more than your reimbursement, you can deduct your excess expenses for SE tax and income tax purposes. Federal amended tax return Nonaccountable plan. Federal amended tax return   A nonaccountable plan is a reimbursement arrangement that does not meet all three of the rules listed under Accountable plans above. Federal amended tax return In addition, even if your employer has an accountable plan, the following payments will be treated as being paid under a nonaccountable plan. Federal amended tax return Excess reimbursements you fail to return to your employer. Federal amended tax return Reimbursement of nondeductible expenses related to your employer's business. Federal amended tax return   Your employer will combine any reimbursement paid to you under a nonaccountable plan with your wages, salary, or other compensation and report the combined total in box 1 of your Form W-2. Federal amended tax return Since reimbursements under a nonaccountable plan are included in your gross income, you can deduct your related expenses (for SE tax and income tax purposes) regardless of whether they are more than, less than, or equal to your reimbursement. Federal amended tax return   For more information on accountable and nonaccountable plans, see Publication 463, Travel, Entertainment, Gift, and Car Expenses. Federal amended tax return Married Couple Missionary Team If both spouses are duly ordained, commissioned, or licensed ministers of a church and have an agreement that each will perform specific services for which they are paid jointly or separately, they must divide the self-employment income according to the agreement. Federal amended tax return If the agreement is with one spouse only and the other spouse is not paid for any specific duties, amounts received for their services are included only in the self-employment income of the spouse having the agreement. Federal amended tax return Earnings Subject to SE Tax For 2013, the maximum net earnings from self-employment subject to social security (old age, survivors, and disability insurance) tax is $113,700 minus any wages and tips you earned that were subject to social security tax. Federal amended tax return The tax rate for the social security part is 12. Federal amended tax return 4%. Federal amended tax return In addition, all of your net earnings are subject to the Medicare (hospital insurance) part of the SE tax. Federal amended tax return This tax rate is 2. Federal amended tax return 9%. Federal amended tax return The combined self-employment tax rate is 15. Federal amended tax return 3%. Federal amended tax return Additional Medicare Tax. Federal amended tax return   Beginning in 2013, a 0. Federal amended tax return 9% Additional Medicare Tax applies to Medicare wages, railroad retirement (RRTA) compensation, and self-employment income that are more than: $125,000 if married filing separately, $250,000 if married filing jointly, or $200,000 for any other filing status. Federal amended tax return Medicare wages and self-employment income are combined to determine if income exceeds the threshold. Federal amended tax return A self-employment loss is not considered for purposes of this tax. Federal amended tax return RRTA compensation is separately compared to the threshold. Federal amended tax return For more information, see Form 8959, Additional Medicare Tax, and its separate instructions. Federal amended tax return Nonfarm Optional Method You may be able to use the nonfarm optional method for figuring your net earnings from self-employment. Federal amended tax return In general, the nonfarm optional method is intended to permit continued coverage for social security and Medicare purposes when your income for the tax year is low. Federal amended tax return You may use the nonfarm optional method if you meet all the following tests. Federal amended tax return You are self-employed on a regular basis. Federal amended tax return You meet this test if your actual net earnings from self-employment were $400 or more in at least 2 of the 3 tax years before the one for which you use this method. Federal amended tax return The net earnings can be from either farm or nonfarm earnings or both. Federal amended tax return You have used this method less than 5 prior years. Federal amended tax return (There is a 5-year lifetime limit. Federal amended tax return ) The years do not have to be consecutive. Federal amended tax return Your net nonfarm profits were: Less than $5,024, and Less than 72. Federal amended tax return 189% of your gross nonfarm income. Federal amended tax return If you meet all three tests, use Table 3 to figure your net earnings from self-employment under the nonfarm optional method. Federal amended tax return Table 3. Federal amended tax return Figuring Nonfarm Net Earnings IF your gross nonfarm income is . Federal amended tax return . Federal amended tax return . Federal amended tax return THEN your net earnings are equal to . Federal amended tax return . Federal amended tax return . Federal amended tax return $6,960 or less Two-thirds of your gross nonfarm income. Federal amended tax return More than $6,960 $4,640. Federal amended tax return Actual net earnings. Federal amended tax return   Multiply your total earnings subject to SE tax by 92. Federal amended tax return 35% (. Federal amended tax return 9235) to get actual net earnings. Federal amended tax return Actual net earnings are equivalent to net earnings under the “Regular Method. Federal amended tax return ” More information. Federal amended tax return   For more information on the nonfarm optional method, see Publication 334, Tax Guide for Small Business, and the Schedule SE (Form 1040) instructions. Federal amended tax return Income Tax: Income and Expenses Some income and expense items are treated the same for both income tax and SE tax purposes and some are treated differently. Federal amended tax return Note. Federal amended tax return For purposes of this section, references to members of the clergy are only to ministers or members of a religious order. Federal amended tax return Income Items The tax treatment of offerings and fees, outside earnings, rental allowances, rental value of a parsonage, earnings of members of religious orders, and foreign earned income is discussed here. Federal amended tax return Offerings and Fees If you are a member of the clergy, you must include in your income offerings and fees you receive for marriages, baptisms, funerals, masses, etc. Federal amended tax return , in addition to your salary. Federal amended tax return If the offering is made to the religious institution, it is not taxable to you. Federal amended tax return Outside Earnings If you are a member of a religious organization and you give your outside earnings to the organization, you still must include the earnings in your income. Federal amended tax return However, you may be entitled to a charitable contribution deduction for the amount paid to the organization. Federal amended tax return For more information, see Publication 526. Federal amended tax return Exclusion of Rental Allowance and Fair Rental Value of a Parsonage Ordained, commissioned, or licensed ministers of the gospel may be able to exclude from income tax the rental allowance or fair rental value of a parsonage that is provided to them as pay for their services. Federal amended tax return Services include: Ministerial services, discussed earlier, Administrative duties and teaching at theological seminaries, and The ordinary duties of a minister performed as an employee of the United States (other than as a chaplain in the Armed Forces), a state, possession, political subdivision, or the District of Columbia. Federal amended tax return This exclusion applies only for income tax purposes. Federal amended tax return It does not apply for SE tax purposes, as discussed earlier under Amounts included in gross income under Self-Employment Tax: Figuring Net Earnings. Federal amended tax return Designation requirement. Federal amended tax return   The church or organization that employs you must officially designate the payment as a housing allowance before it makes the payment. Federal amended tax return It must designate a definite amount. Federal amended tax return It cannot determine the amount of the housing allowance at a later date. Federal amended tax return If the church or organization does not officially designate a definite amount as a housing allowance, you must include your total salary in your income. Federal amended tax return   If you are employed and paid by a local congregation, a resolution by a national church agency of your denomination does not effectively designate a housing allowance for you. Federal amended tax return The local congregation must officially designate the part of your salary that is a housing allowance. Federal amended tax return However, a resolution of a national church agency can designate your housing allowance if you are directly employed by the national agency. Federal amended tax return Rental allowances. Federal amended tax return   If you receive in your salary an amount officially designated as a rental allowance (including an amount to pay utility costs), you can exclude the allowance from your gross income if: You use the amount to provide or rent a home, and The amount is not more than reasonable pay for your services. Federal amended tax return   The amount you exclude cannot be more than the fair rental value of the home, including furnishings, plus the cost of utilities. Federal amended tax return Fair rental value of parsonage. Federal amended tax return   You can exclude from gross income the fair rental value of a house or parsonage, including utilities, furnished to you as part of your earnings. Federal amended tax return However, the exclusion cannot be more than the reasonable pay for your services. Federal amended tax return If you pay for the utilities, you can exclude any allowance designated for utility costs, up to your actual cost. Federal amended tax return Example. Federal amended tax return Rev. Federal amended tax return Joanna Baker is a full-time minister. Federal amended tax return The church allows her to use a parsonage that has an annual fair rental value of $24,000. Federal amended tax return The church pays her an annual salary of $67,000, of which $7,500 is designated for utility costs. Federal amended tax return Her actual utility costs during the year were $7,000. Federal amended tax return For income tax purposes, Rev. Federal amended tax return Baker excludes $31,000 from gross income ($24,000 fair rental value of the parsonage plus $7,000 from the allowance for utility costs). Federal amended tax return She will report $60,000 ($59,500 salary plus $500 of unused utility allowance). Federal amended tax return Her income for SE tax purposes, however, is $91,000 ($67,000 salary + $24,000 fair rental value of the parsonage). Federal amended tax return Home ownership. Federal amended tax return   If you own your home and you receive as part of your salary a housing or rental allowance, you may exclude from gross income the smallest of: The amount actually used to provide a home, The amount officially designated as a rental allowance, or The fair rental value of the home, including furnishings, utilities, garage, etc. Federal amended tax return Excess rental allowance. Federal amended tax return   You must include in gross income the amount of any rental allowance that is more than the smallest of: Your reasonable salary, The fair rental value of the home plus utilities, or The amount actually used to provide a home. Federal amended tax return   Include in the total on Form 1040, line 7. Federal amended tax return On the dotted line next to line 7, enter “Excess allowance” and the amount. Federal amended tax return You may deduct the home mortgage interest and real estate taxes paid on your home even though you pay all or part of those expenses with funds you get through a tax-free rental or parsonage allowance. Federal amended tax return However, you can only deduct these expenses as itemized deductions on Schedule A (Form 1040). Federal amended tax return Retired ministers. Federal amended tax return   If you are a retired minister, you can exclude from your gross income the rental value of a home (plus utilities) furnished to you by your church as a part of your pay for past services, or the part of your pension that was designated as a rental allowance. Federal amended tax return However, a minister's surviving spouse cannot exclude the rental value unless the rental value is for ministerial services he or she performs or performed. Federal amended tax return Teachers or administrators. Federal amended tax return   If you are a minister employed as a teacher or administrator by a church school, college, or university, you are performing ministerial services for purposes of the housing exclusion. Federal amended tax return However, if you perform services as a teacher or administrator on the faculty of a nonchurch college, you cannot exclude from your income a housing allowance or the value of a home that the college provides to you. Federal amended tax return    If you live in faculty lodging as an employee of an educational institution or academic health center, all or part of the value of that lodging may be nontaxable under a different rule. Federal amended tax return In Publication 525, see Faculty lodging in the discussion on meals and lodging under Fringe Benefits. Federal amended tax return   If you serve as a minister of music or minister of education, or serve in an administrative or other function of your religious organization, but are not authorized to perform substantially all of the religious duties of an ordained minister in your church (even if you are commissioned as a minister of the gospel), the housing exclusion does not apply to you. Federal amended tax return Theological students. Federal amended tax return   If you are a theological student serving a required internship as a part-time or assistant pastor, you cannot exclude a parsonage or rental allowance from your income unless you are ordained, commissioned, or licensed as a minister. Federal amended tax return Traveling evangelists. Federal amended tax return   You can exclude a designated rental allowance from out-of-town churches if you meet all of the following requirements. Federal amended tax return You are an ordained minister. Federal amended tax return You perform ministerial services at churches located away from your community. Federal amended tax return You actually use the rental allowance to maintain your permanent home. Federal amended tax return Cantors. Federal amended tax return   If you have a bona fide commission and your congregation employs you on a full-time basis to perform substantially all the religious functions of the Jewish faith, you can exclude a rental allowance from your gross income. Federal amended tax return Earnings—Members of Religious Orders Your earnings may be exempt from both income tax and SE tax if you are a member of a religious order who: Has taken a vow of poverty, Receives earnings for services performed as an agent of the order and in the exercise of duties required by the order, and Renounces the earnings and gives them to the order. Federal amended tax return See Members of Religious Orders , earlier, under Social Security Coverage. Federal amended tax return Foreign Earned Income Certain income may be exempt from income tax if you work in a foreign country or in a specified U. Federal amended tax return S. Federal amended tax return possession. Federal amended tax return Publication 54 discusses the foreign earned income exclusion. Federal amended tax return Publication 570, Tax Guide for Individuals With Income From U. Federal amended tax return S. Federal amended tax return Possessions, covers the rules for taxpayers with income from U. Federal amended tax return S. Federal amended tax return possessions. Federal amended tax return You can get these free publications from the Internal Revenue Service at IRS. Federal amended tax return gov or from most U. Federal amended tax return S. Federal amended tax return Embassies or consulates. Federal amended tax return Expense Items The tax treatment of ministerial trade or business expenses, expenses allocable to tax-free income, and health insurance costs is discussed here. Federal amended tax return Ministerial Trade or Business Expenses as an Employee When you figure your income tax, you must itemize your deductions on Schedule A (Form 1040) to claim allowable deductions for ministerial trade or business expenses incurred while working as an employee. Federal amended tax return You also may have to file Form 2106, Employee Business Expenses (or Form 2106-EZ, Unreimbursed Employee Business Expenses). Federal amended tax return You claim these expenses as miscellaneous itemized deductions that are subject to the 2%-of-adjusted-gross-income (AGI) limit. Federal amended tax return See Publication 529 for more information on this limit. Federal amended tax return However, you cannot deduct any of your employee business expenses that are allocable to tax-free income (discussed next). Federal amended tax return Expenses Allocable to Tax-Free Income If you receive a rental or parsonage allowance that is exempt from income tax (tax free), you must allocate a portion of the expenses of operating your ministry to that tax-free income. Federal amended tax return You cannot deduct the portion of your expenses that you allocate to your tax-free rental or parsonage allowance. Federal amended tax return Exception. Federal amended tax return   This rule does not apply to your deductions for home mortgage interest or real estate taxes on your home. Federal amended tax return Figuring the allocation. Federal amended tax return   Figure the portion of your otherwise deductible expenses that you cannot deduct (because you must allocate that portion to tax-free income) by multiplying the expenses by the following fraction:      Tax-free rental or parsonage allowance     All income (taxable and tax free) earned from your ministry           When figuring the allocation, include the income and expenses related to the ministerial duties you perform both as an employee and as a self-employed person. Federal amended tax return    Reduce your otherwise deductible expenses only in figuring your income tax, not your SE tax. Federal amended tax return Example. Federal amended tax return Rev. Federal amended tax return Charles Ashford received $40,000 in earnings for ministerial services consisting of a $28,000 salary for ministerial services performed as an employee, $2,000 for weddings and baptisms performed as a self-employed person, and a $10,000 tax-free parsonage allowance. Federal amended tax return He incurred $4,000 of unreimbursed expenses connected with his earnings for ministerial services. Federal amended tax return $3,500 of the $4,000 is for employee expenses related to his ministerial salary, and $500 is related to the weddings and baptisms he performed as a self-employed person. Federal amended tax return Rev. Federal amended tax return Ashford figures the nondeductible (tax-free) portion of expenses related to his ministerial salary as follows: ($10,000 ÷ $40,000) x $3,500 = $875   Rev. Federal amended tax return Ashford figures the nondeductible (tax-free) portion of expenses related to his wedding and baptism income as follows: ($10,000 ÷ $40,000) x $500 = $125 Required statement. Federal amended tax return   If you receive a tax-free rental or parsonage allowance and have ministerial expenses, attach a statement to your tax return. Federal amended tax return The statement must contain all of the following information. Federal amended tax return A list of each item of taxable ministerial income by source (such as wages, salary, weddings, baptisms, etc. Federal amended tax return ) plus the amount. Federal amended tax return A list of each item of tax-free ministerial income by source (parsonage allowance) plus the amount. Federal amended tax return A list of each item of otherwise deductible ministerial expenses plus the amount. Federal amended tax return How you figured the nondeductible part of your otherwise deductible expenses. Federal amended tax return A statement that the other deductions claimed on your tax return are not allocable to your tax-free income. Federal amended tax return   See the attachments prepared for the Comprehensive Example , later. Federal amended tax return Following the example, you will find blank worksheets for your own use. Federal amended tax return Health Insurance Costs of Self-Employed Ministers If you are self-employed, you may be able to deduct the amount you paid in 2013 for medical and dental insurance and qualified long-term care insurance for you, your spouse, and your dependents. Federal amended tax return If you qualify, you can take this deduction as an adjustment to income on Form 1040, line 29. Federal amended tax return See the Instructions for Form 1040 to figure your deduction. Federal amended tax return The following special rules apply to the self-employed health insurance deduction. Federal amended tax return You cannot take a medical expense deduction on Schedule A (Form 1040) for any expenses you claim for purposes of the self-employed health insurance deduction. Federal amended tax return You cannot take the deduction for any month you are eligible to participate in a subsidized plan of your (or your spouse's) employer. Federal amended tax return The deduction cannot exceed your net earnings from the business under which the insurance plan is established. Federal amended tax return Your net earnings under this rule do not include the income you earned as a common-law employee (discussed earlier) of a church. Federal amended tax return More information. Federal amended tax return   For more information about the self-employed health insurance deduction, see chapter 6 in Publication 535. Federal amended tax return Deduction for SE Tax You can deduct one-half of your SE tax in figuring adjusted gross income. Federal amended tax return This is an income tax deduction only, on Form 1040, line 27. Federal amended tax return Do not claim this deduction in figuring net earnings from self-employment subject to SE tax. Federal amended tax return Income Tax Withholding and Estimated Tax The federal income tax is a pay-as-you-go tax. Federal amended tax return You must pay the tax as you earn or receive income during the year. Federal amended tax return An employee usually has income tax withheld from his or her wages or salary. Federal amended tax return However, your salary is not subject to federal income tax withholding if both of the following conditions apply. Federal amended tax return You are a duly ordained, commissioned, or licensed minister, a member of a religious order (who has not taken a vow of poverty), or a Christian Science practitioner or reader. Federal amended tax return Your salary is for ministerial services (see Ministerial Services , earlier). Federal amended tax return If your salary is not subject to withholding, or if you do not pay enough tax through withholding, you may need to make estimated tax payments to avoid penalties for not paying enough tax as you earn your income. Federal amended tax return You generally must make estimated tax payments if you expect to owe taxes, including SE tax, of $1,000 or more, when you file your return. Federal amended tax return Determine your estimated tax by using the worksheets in Publication 505, Tax Withholding and Estimated Tax. Federal amended tax return Pay the entire estimated tax for 2014 or the first installment by April 15, 2014. Federal amended tax return See Form 1040-ES for the different payment methods. Federal amended tax return The April 15 date applies whether or not your tax home and your abode are outside the United States and Puerto Rico. Federal amended tax return For more information, see chapter 2 of Publication 505. Federal amended tax return If you perform your services as a common-law employee of the church and your salary is not subject to income tax withholding, you can enter into a voluntary withholding agreement with the church to cover any income and SE tax that may be due. Federal amended tax return Filing Your Return You must file an income tax return for 2013 if your gross income was at least the amount shown in the third column of Table 4 above. Federal amended tax return Table 4. Federal amended tax return 2013 Filing Requirements for Most Taxpayers IF your filing status is . Federal amended tax return . Federal amended tax return . Federal amended tax return AND at the end of 2013 you were* . Federal amended tax return . Federal amended tax return . Federal amended tax return THEN file a return if your gross income** was at least . Federal amended tax return . Federal amended tax return . Federal amended tax return single under age 65 65 or older   $10,000 $11,500   married filing jointly*** under 65 (both spouses) 65 or older (one spouse) 65 or older (both spouses)   $20,000  $21,200  $22,400   married filing separately any age   $3,900   head of household under 65 65 or older   $12,850 $14,350   qualifying widow(er) with dependent child under 65 65 or older   $16,100  $17,300   * If you were born on January 1, 1949, you are considered to be age 65 at the end of 2013. Federal amended tax return ** Gross income means all income you received in the form of money, goods, property, and services that is not exempt from tax, including any income from sources outside the United States or from the sale of your main home (even if you can exclude part or all of it). Federal amended tax return Do not include any social security benefits unless (a) you are married filing a separate return and you lived with your spouse at any time in 2013, or (b) one-half of your social security benefits plus your other gross income and any tax-exempt interest is more than $25,000 ($32,000 if married filing jointly). Federal amended tax return If (a) or (b) applies, see the instructions for Form 1040, lines 20a and 20b, to figure the taxable part of social security benefits you must include in gross income. Federal amended tax return Gross income includes gains, but not losses, reported on Form 8949 or Schedule D (Form 1040). Federal amended tax return Gross income from a business means, for example, the amount on Schedule C (Form 1040), line 7, or Schedule F (Form 1040), line 9. Federal amended tax return But, in figuring gross income, do not reduce your income by any losses, including any loss on Schedule C (Form 1040), line 7, or Schedule F (Form 1040), line 9. Federal amended tax return *** If you did not live with your spouse at the end of 2013 (or on the date your spouse died) and your gross income was at least $3,900, you must file a return regardless of your age. Federal amended tax return Additional requirements. Federal amended tax return   Even if your income was less than the amount shown in Table 4, you must file an income tax return on Form 1040, and attach a completed Schedule SE (Form 1040), if:    You are not exempt from SE tax, and you have net earnings from self-employment (discussed earlier under Self-Employment Tax: Figuring Net Earnings ) of $400 or more in the tax year, You are exempt from SE tax on earnings from ministerial services and you have $400 or more of other net earnings subject to SE tax, or You had wages of $108. Federal amended tax return 28 or more from an electing church or church-controlled organization (see Coverage of Religious Workers (Church Employees) , earlier, under Social Security Coverage). Federal amended tax return Self-employment tax. Federal amended tax return   If you are liable for SE tax, you must file Schedule SE (Form 1040) with your return. Federal amended tax return   If you filed Form 4361 and did not receive approval from the IRS, you must pay SE tax on your ministerial earnings, as explained earlier. Federal amended tax return You should report ministerial earnings and expenses from nonemployee ministerial services on Schedule C or C-EZ (Form 1040). Federal amended tax return You should then carry the net amount over to line 2 of Schedule SE (Form 1040), Section A or B. Federal amended tax return However, if you were a duly ordained minister who was an employee of a church and you must pay SE tax on the wages you earned for those services, do not report those wages on Schedule C or C-EZ (Form 1040). Federal amended tax return Instead, report those wages less any allowable expenses (including any unreimbursed employee business expenses), on line 2 of Schedule SE (Form 1040), Section A or B, and attach an explanation. Federal amended tax return Note. Federal amended tax return For income tax purposes, the unreimbursed employee business expenses that you incurred as an employee of the church and subtracted from your wages on line 2 of Schedule SE (Form 1040) are allowed only as an itemized deduction on Schedule A (Form 1040) if they exceed 2% of your adjusted gross income. Federal amended tax return You cannot deduct these expenses on Schedule C or C-EZ (Form 1040) as a trade or business expense. Federal amended tax return Exemption from SE tax. Federal amended tax return   If you filed Form 4361 and received IRS approval not to be taxed on your ministerial earnings, and you do not have any other income subject to SE tax, do not file Schedule SE (Form 1040). Federal amended tax return Instead, enter “Exempt—Form 4361” on the dotted line next to Form 1040, line 56. Federal amended tax return However, if you had net earnings from another trade or business of $400 or more subject to SE tax, see line A at the top of Schedule SE (Form 1040), Section B. Federal amended tax return    If you filed Form 4029 and received IRS approval not to be taxed on those earnings, and you do not have any other income subject to SE tax, do not file Schedule SE (Form 1040). Federal amended tax return Instead, enter “Exempt—Form 4029” on the dotted line next to Form 1040, line 56. Federal amended tax return More information. Federal amended tax return   For more information on filing your return, including when and where to file it, see the Instructions for Form 1040. Federal amended tax return Retirement Savings Arrangements Retirement savings arrangements are plans that offer you a tax-favored way to save for your retirement. Federal amended tax return You generally can deduct your contributions to the plan. Federal amended tax return Your contributions and the earnings on them are not taxed until they are distributed. Federal amended tax return Retirement plans for the self-employed. Federal amended tax return   To set up one of the following plans you must be self-employed. Federal amended tax return SEP (simplified employee pension) plan. Federal amended tax return SIMPLE (savings incentive match plan for employees) plan. Federal amended tax return Qualified retirement plan (also called a Keogh or H. Federal amended tax return R. Federal amended tax return 10 plan). Federal amended tax return   The common-law rules determine whether you are an employee or a self-employed person for purposes of setting up a retirement plan. Federal amended tax return See Employment status for other tax purposes under Coverage of Members of the Clergy, earlier. Federal amended tax return This result is true even if your compensation for ministerial services (defined earlier) is subject to SE tax. Federal amended tax return   For example, if a congregation pays you a salary for performing ministerial services and you are subject to the congregation's control, you generally are a common-law employee. Federal amended tax return You are not a self-employed person for purposes of setting up a retirement plan. Federal amended tax return This result is true even if your salary is subject to SE tax. Federal amended tax return   On the other hand, amounts received directly from members of the congregation, such as fees for performing marriages, baptisms, or other personal services that you report on Schedule C or C-EZ (Form 1040), are earnings from self-employment for all tax purposes. Federal amended tax return   For more information on establishing a SEP, SIMPLE, or qualified retirement plan, see Publication 560, Retirement Plans for Small Business (SEP, SIMPLE, and Qualified Plans). Federal amended tax return Individual retirement arrangements (IRAs). Federal amended tax return   The traditional IRA and the Roth IRA are two individual retirement arrangements you can use to save money for your retirement. Federal amended tax return Generally, your maximum contribution for 2013 to either of these plans (or to a combination of the two) is the smaller of your taxable compensation or $5,500 ($6,500 if you are age 50 or older). Federal amended tax return   However, your maximum contribution to a Roth IRA will be further reduced or eliminated if your adjusted gross income is above a certain amount. Federal amended tax return You cannot deduct Roth IRA contributions, but if you satisfy certain requirements, all earnings in the Roth IRA are tax free and neither your nondeductible contributions nor any earnings on them are taxable when distributed. Federal amended tax return   If you contribute to a traditional IRA, your contribution may be deductible. Federal amended tax return However, your deduction may be reduced or eliminated if you or your spouse is covered by an employer retirement plan (including, but not limited to, a SEP, SIMPLE, or qualified retirement plan). Federal amended tax return   For more information on IRAs, see Publication 590. Federal amended tax return Tax-sheltered annuity plans. Federal amended tax return   Church employees, members of religious orders, and duly ordained, commissioned, or licensed ministers working as ministers or chaplains can participate in tax-sheltered annuity (403(b)) plans. Federal amended tax return For more