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File Extension

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File Extension

File extension 1. File extension   Bona Fide Residence Table of Contents Presence TestDays of Presence in the United States or Relevant Possession Significant Connection Tax HomeExceptions Closer ConnectionException for Year of Move Special Rules in the Year of a MoveYear of Moving to a Possession Year of Moving From a Possession Reporting a Change in Bona Fide ResidenceWho Must File Penalty for Not Filing Form 8898 In order to qualify for certain tax benefits (see chapter 3), you must be a bona fide resident of American Samoa, the CNMI, Guam, Puerto Rico, or the USVI for the entire tax year. File extension Generally, you are a bona fide resident of one of these possessions (the relevant possession) if, during the tax year, you: Meet the presence test, Do not have a tax home outside the relevant possession, and Do not have a closer connection to the United States or to a foreign country than to the relevant possession. File extension Special rule for members of the U. File extension S. File extension Armed Forces. File extension   If you are a member of the U. File extension S. File extension Armed Forces who qualified as a bona fide resident of the relevant possession in an earlier tax year, your absence from that possession during the current tax year in compliance with military orders will not affect your status as a bona fide resident. File extension Likewise, being in a possession solely in compliance with military orders will not qualify you for bona fide residency. File extension Also see the special income source rule for members of the U. File extension S. File extension Armed Forces in chapter 2, under Compensation for Labor or Personal Services . File extension Special rule for civilian spouse of active duty member of the U. File extension S. File extension Armed Forces. File extension   If you are the civilian spouse of an active duty servicemember, under Military Spouses Residency Relief Act (MSRRA) you can choose to keep your prior residence or domicile for tax purposes (tax residence) when accompanying the servicemember spouse, who is relocating under military orders, to a new military duty station in one of the 50 states, the District of Columbia, or a U. File extension S. File extension possession. File extension Before relocating, you and your spouse must have the same tax residence. File extension If you are a civilian spouse and choose to keep your prior tax residence after such relocation, the source of income for services performed (for example, wages, salaries, tips, or self-employment) by you is considered to be (the jurisdiction of) the prior tax residence. File extension As a result, the amount of income tax withholding (from Form(s) W-2, Wage and Tax Statement) that you are able to claim on your federal return, as well as the need to file a state or U. File extension S. File extension possession return, may be affected. File extension For more information, consult with state, local, or U. File extension S. File extension possession tax authorities regarding your tax obligations under MSRRA. File extension Presence Test If you are a U. File extension S. File extension citizen or resident alien, you will satisfy the presence test for the entire tax year if you meet one of the following conditions. File extension You were present in the relevant possession for at least 183 days during the tax year. File extension You were present in the relevant possession for at least 549 days during the 3-year period that includes the current tax year and the 2 immediately preceding tax years. File extension During each year of the 3-year period, you must be present in the relevant possession for at least 60 days. File extension You were present in the United States for no more than 90 days during the tax year. File extension You had earned income in the United States of no more than a total of $3,000 and were present for more days in the relevant possession than in the United States during the tax year. File extension Earned income is pay for personal services performed, such as wages, salaries, or professional fees. File extension You had no significant connection to the United States during the tax year. File extension Special rule for nonresident aliens. File extension   Conditions (1) through (5) above do not apply to nonresident aliens of the United States. File extension Instead, nonresident aliens must meet the substantial presence test discussed in chapter 1 of Publication 519. File extension In that discussion, substitute the name of the possession for “United States” and “U. File extension S. File extension ” wherever they appear. File extension Disregard the discussion in that chapter about a Closer Connection to a Foreign Country. File extension Days of Presence in the United States or Relevant Possession Generally, you are treated as being present in the United States or in the relevant possession on any day that you are physically present in that location at any time during the day. File extension Days of presence in a possession. File extension   You are considered to be present in the relevant possession on any of the following days. File extension Any day you are physically present in that possession at any time during the day. File extension Any day you are outside of the relevant possession in order to receive, or to accompany any of the following family members to receive, qualifying medical treatment (see Qualifying Medical Treatment , later). File extension Your parent. File extension Your spouse. File extension Your child, who is your son, daughter, stepson, or stepdaughter. File extension This includes an adopted child or child lawfully placed with you for legal adoption. File extension This also includes a foster child who is placed with you by an authorized placement agency or by judgment, decree, or other order of any court of competent jurisdiction. File extension Any day you are outside the relevant possession because you leave or are unable to return to the relevant possession during any: 14-day period within which a major disaster occurs in the relevant possession for which a Federal Emergency Management Agency (FEMA) notice of a federal declaration of a major disaster is issued in the Federal Register, or Period for which a mandatory evacuation order is in effect for the geographic area in the relevant possession in which your main home is located. File extension   If, during a single day, you are physically present: In the United States and in the relevant possession, that day is considered a day of presence in the relevant possession; or In two possessions, that day is considered a day of presence in the possession where your tax home is located (see Tax Home , later). File extension Days of presence in the United States. File extension   You are considered to be present in the United States on any day that you are physically present in the United States at any time during the day. File extension However, do not count the following days as days of presence in the United States. File extension Any day you are temporarily present in the United States in order to receive, or to accompany a parent, spouse, or child who is receiving, qualifying medical treatment. File extension “Child” is defined under item 2c earlier. File extension “Qualifying medical treatment” is defined later. File extension Any day you are temporarily present in the United States because you leave or are unable to return to the relevant possession during any: 14-day period within which a major disaster occurs in the relevant possession for which a Federal Emergency Management Agency (FEMA) notice of a federal declaration of a major disaster is issued in the Federal Register, or Period for which a mandatory evacuation order is in effect for the geographic area in the relevant possession in which your main home is located. File extension Any day you are in the United States for less than 24 hours when you are traveling between two places outside the United States. File extension Any day you are temporarily present in the United States as a professional athlete to compete in a charitable sports event (defined later). File extension Any day you are temporarily in the United States as a student (defined later). File extension Any day you are in the United States serving as an elected representative of the relevant possession, or serving full time as an elected or appointed official or employee of the government of that possession (or any of its political subdivisions). File extension Qualifying Medical Treatment Such treatment is generally provided by (or under the supervision of) a physician for an illness, injury, impairment, or physical or mental condition. File extension The treatment generally involves: Any period of inpatient care that requires an overnight stay in a hospital or hospice, and any period immediately before or after that inpatient care to the extent it is medically necessary, or Any temporary period of inpatient care in a residential medical care facility for medically necessary rehabilitation services. File extension With respect to each qualifying medical treatment, you must prepare (or obtain) and maintain documentation supporting your claim that such treatment meets the criteria to be considered days of presence in the relevant possession. File extension You must be able to produce this documentation within 30 days if requested by the IRS or tax administrator for the relevant possession. File extension You must keep the following documentation. File extension Records that provide: The patient's name and relationship to you (if the medical treatment is provided to a person you accompany); The name and address of the hospital, hospice, or residential medical care facility where the medical treatment was provided; The name, address, and telephone number of the physician who provided the medical treatment; The date(s) on which the medical treatment was provided; and Receipt(s) of payment for the medical treatment. File extension Signed certification by the providing or supervising physician that the medical treatment met the requirements for being qualified medical treatment, and setting forth: The patient's name, A reasonably detailed description of the medical treatment provided by (or under the supervision of) the physician, The dates on which the medical treatment was provided, and The medical facts that support the physician's certification and determination that the treatment was medically necessary. File extension Charitable Sports Event A charitable sports event is one that meets all of the following conditions. File extension The main purpose is to benefit a qualified charitable organization. File extension The entire net proceeds go to charity. File extension Volunteers perform substantially all the work. File extension In figuring the days of presence in the United States, you can exclude only the days on which you actually competed in the charitable sports event. File extension You cannot exclude the days on which you were in the United States to practice for the event, to perform promotional or other activities related to the event, or to travel between events. File extension Student To qualify as a student, you must be, during some part of each of any 5 calendar months during the calendar year: A full-time student at a school that has a regular teaching staff, course of study, and regularly enrolled body of students in attendance, or A student taking a full-time, on-farm training course given by a school described in (1) above or by a state, county, or local government agency. File extension The 5 calendar months do not have to be consecutive. File extension Full-time student. File extension   A full-time student is a person who is enrolled for the number of hours or courses the school considers to be full-time attendance. File extension However, school attendance exclusively at night is not considered full-time attendance. File extension School. File extension   The term “school” includes elementary schools, middle schools, junior and senior high schools, colleges, universities, and technical, trade, and mechanical schools. File extension It does not include on-the-job training courses, correspondence schools, and schools offering courses only through the Internet. File extension Significant Connection One way in which you can meet the presence test is to have no significant connection to the United States during the tax year. File extension This section looks at the factors that determine if a significant connection exists. File extension You are treated as having a significant connection to the United States if you: Have a permanent home in the United States, Are currently registered to vote in any political subdivision of the United States, or Have a spouse or child (see item 2c under Days of presence in a possession , earlier) who is under age 18 whose main home is in the United States, other than: A child who is in the United States because he or she is the child of divorced or legally separated parents and is living with a custodial parent under a custodial decree or multiple support agreement, or A child who is in the United States as a student. File extension For the purpose of determining if you have a significant connection to the United States, the term “spouse” does not include a spouse from whom you are legally separated under a decree of divorce or separate maintenance. File extension Permanent home. File extension   A permanent home generally includes an accommodation such as a house, an apartment, or a furnished room that is either owned or rented by you or your spouse. File extension The dwelling unit must be available at all times, continuously, not only for short stays. File extension Exception for rental property. File extension   If you or your spouse own the dwelling unit and at any time during the tax year it is rented to someone else at fair rental value, it will be considered your permanent home only if you or your spouse use that property for personal purposes for more than the greater of: 14 days, or 10% of the number of days during that tax year that the property is rented to others at a fair rental value. File extension   You are treated as using rental property for personal purposes on any day the property is not being rented to someone else at fair rental value for the entire day. File extension   A day of personal use of a dwelling unit is also any day that the unit is used by any of the following persons. File extension You or any other person who has an interest in it, unless you rent it to another owner as his or her main home under a shared equity financing agreement. File extension A member of your family or a member of the family of any other person who has an interest in it, unless the family member uses the dwelling unit as his or her main home and pays a fair rental price. File extension Family includes only brothers and sisters, half-brothers and half-sisters, spouses, ancestors (parents, grandparents, etc. File extension ), and lineal descendants (children, grandchildren, etc. File extension ). File extension Anyone under an arrangement that lets you use some other dwelling unit. File extension Anyone at less than a fair rental price. File extension   However, any day you spend working substantially full time repairing and maintaining (not improving) your property is not counted as a day of personal use. File extension Whether your property is used mainly for this purpose is determined in light of all the facts and circumstances, such as: The amount of time you devote to repair and maintenance work, How often during the tax year you perform repair and maintenance work on this property, and The presence and activities of companions. File extension   See Publication 527, Residential Rental Property, for more information about personal use of a dwelling unit. File extension Example—significant connection. File extension Ann Green, a U. File extension S. File extension citizen, is a sales representative for a company based in Guam. File extension Ann lives with her spouse and young children in their house in Guam, where she is also registered to vote. File extension Her business travel requires her to spend 120 days in the United States and another 120 days in foreign countries. File extension When traveling on business, Ann generally stays at hotels but sometimes stays with her brother, who lives in the United States. File extension Ann's stays are always of short duration and she asks her brother's permission to stay with him. File extension Her brother's house is not her permanent home, nor does she have any other accommodations in the United States that would be considered her permanent home. File extension Ann satisfies the presence test because she has no significant connection to the United States. File extension Example—presence test. File extension Eric and Wanda Brown live for part of the year in a condominium, which they own, in the CNMI. File extension They also own a house in Maine where they live for 120 days every year to be near their grown children and grandchildren. File extension The Browns are retired and their only income is from pension payments, dividends, interest, and social security benefits. File extension In 2013, they spent only 175 days in the CNMI because of a 70-day vacation to Europe and Asia. File extension Thus, in 2013, the Browns were not present in the CNMI for at least 183 days, were present in the United States for more than 90 days, and had a significant connection to the United States because of their permanent home. File extension However, the Browns still satisfied the presence test with respect to the CNMI because they had no earned income in the United States and were physically present for more days in the CNMI than in the United States. File extension Tax Home You will have met the tax home test if you did not have a tax home outside the relevant possession during any part of the tax year. File extension Your tax home is your regular or main place of business, employment, or post of duty regardless of where you maintain your family home. File extension If you do not have a regular or main place of business because of the nature of your work, then your tax home is the place where you regularly live. File extension If you do not fit either of these categories, you are considered an itinerant and your tax home is wherever you work. File extension Exceptions There are some special rules regarding tax home that provide exceptions to the general rule stated above. File extension Students and Government Officials Disregard the following days when determining whether you have a tax home outside the relevant possession. File extension Days you were temporarily in the United States as a student (see Student under Days of Presence in the United States or Relevant Possession, earlier). File extension Days you were in the United States serving as an elected representative of the relevant possession, or serving full time as an elected or appointed official or employee of the government of that possession (or any of its political subdivisions). File extension Seafarers You will not be considered to have a tax home outside the relevant possession solely because you are employed on a ship or other seafaring vessel that is predominantly used in local and international waters. File extension For this purpose, a vessel is considered to be predominantly used in local and international waters if, during the tax year, the total amount of time it is used in international waters and in the waters within 3 miles of the relevant possession exceeds the total amount of time it is used in the territorial waters of the United States, another possession, or any foreign country. File extension Example. File extension In 2013, Sean Silverman, a U. File extension S. File extension citizen, was employed by a fishery and spent 250 days at sea on a fishing vessel. File extension When not at sea, Sean lived with his spouse at a house they own in American Samoa. File extension The fishing vessel on which Sean works departs and arrives at various ports in American Samoa, other possessions, and foreign countries, but was in international or American Samoa's local waters for 225 days. File extension For purposes of determining bona fide residency of American Samoa, Sean will not be considered to have a tax home outside that possession solely because of his employment on board the fishing vessel. File extension Year of Move If you are moving to or from a possession during the year, you may still be able to meet the tax home test for that year. File extension See Special Rules in the Year of a Move , later in this chapter. File extension Closer Connection You will have met the closer connection test if, during any part of the tax year, you do not have a closer connection to the United States or a foreign country than to the relevant U. File extension S. File extension possession. File extension You will be considered to have a closer connection to a possession than to the United States or to a foreign country if you have maintained more significant contacts with the possession(s) than with the United States or foreign country. File extension In determining if you have maintained more significant contacts with the relevant possession, the facts and circumstances to be considered include, but are not limited to, the following. File extension The location of your permanent home. File extension The location of your family. File extension The location of personal belongings, such as automobiles, furniture, clothing, and jewelry owned by you and your family. File extension The location of social, political, cultural, professional, or religious organizations with which you have a current relationship. File extension The location where you conduct your routine personal banking activities. File extension The location where you conduct business activities (other than those that go into determining your tax home). File extension The location of the jurisdiction in which you hold a driver's license. File extension The location of the jurisdiction in which you vote. File extension The location of charitable organizations to which you contribute. File extension The country of residence you designate on forms and documents. File extension The types of official forms and documents you file, such as Form W-8BEN, Certificate of Foreign Status of Beneficial Owner for United States Tax Withholding and Reporting (Individuals), or Form W-9, Request for Taxpayer Identification Number and Certification. File extension Your connections to the relevant possession will be compared to the total of your connections with the United States and foreign countries. File extension Your answers to the questions on Form 8898, Part III, will help establish the jurisdiction to which you have a closer connection. File extension Example—closer connection to the United States. File extension Marcos Reyes, a U. File extension S. File extension citizen, moved to Puerto Rico in 2013 to start an investment consulting and venture capital business. File extension His spouse and two teenage children remained in California to allow the children to complete high school. File extension He traveled back to the United States regularly to see his spouse and children, to engage in business activities, and to take vacations. File extension Marcos had an apartment available for his full-time use in Puerto Rico, but remained a joint owner of the residence in California where his spouse and children lived. File extension Marcos and his family had automobiles and personal belongings such as furniture, clothing, and jewelry located at both residences. File extension Although Marcos was a member of the Puerto Rico Chamber of Commerce, he also belonged to and had current relationships with social, political, cultural, and religious organizations in California. File extension Marcos received mail in California, including bank and brokerage statements and credit card bills. File extension He conducted his personal banking activities in California. File extension He held a California driver's license and was also registered to vote there. File extension Based on all of the particular facts and circumstances pertaining to Marcos, he was not a bona fide resident of Puerto Rico in 2013 because he had a closer connection to the United States than to Puerto Rico. File extension Closer connection to another possession. File extension   Generally, possessions are not treated as foreign countries. File extension Therefore, a closer connection to a possession other than the relevant possession will not be treated as a closer connection to a foreign country. File extension Example—tax home and closer connection to possession. File extension Pearl Blackmon, a U. File extension S. File extension citizen, is a permanent employee of a hotel in Guam, but works only during the tourist season. File extension For the remainder of each year, Pearl lives with her spouse and children in the CNMI, where she has no outside employment. File extension Most of Pearl's personal belongings, including her automobile, are located in the CNMI. File extension She is registered to vote in, and has a driver's license issued by, the CNMI. File extension She does her personal banking in the CNMI and routinely lists her CNMI address as her permanent address on forms and documents. File extension Pearl satisfies the presence test with respect to both Guam and the CNMI. File extension She satisfies the tax home test with respect to Guam, because her regular place of business is in Guam. File extension Pearl satisfies the closer connection test with respect to both Guam and the CNMI, because she does not have a closer connection to the United States or to any foreign country. File extension Pearl is considered a bona fide resident of Guam, the location of her tax home. File extension Exception for Year of Move If you are moving to or from a possession during the year, you may still be able to meet the closer connection test for that year. File extension See Special Rules in the Year of a Move , next. File extension Special Rules in the Year of a Move If you are moving to or from a possession during the year, you may still be able to meet the tax home and closer connection tests for that year. File extension Year of Moving to a Possession You will satisfy the tax home and closer connection tests in the tax year of changing your residence to the relevant possession if you meet all of the following. File extension You have not been a bona fide resident of the relevant possession in any of the 3 tax years immediately preceding your move. File extension In the year of the move, you do not have a tax home outside the relevant possession or a closer connection to the United States or a foreign country than to the relevant possession during any of the last 183 days of the tax year. File extension You are a bona fide resident of the relevant possession for each of the 3 tax years immediately following your move. File extension Example. File extension Dwight Wood, a U. File extension S. File extension citizen, files returns on a calendar year basis. File extension He lived in the United States from January 2007 through May 2013. File extension In June 2013 he moved to the USVI, purchased a house, and accepted a permanent job with a local employer. File extension From July 1 through December 31, 2013 (more than 183 days), Dwight's principal place of business was in the USVI and, during that time, he did not have a closer connection to the United States or a foreign country than to the USVI. File extension If he is a bona fide resident of the USVI during all of 2014 through 2016, he will satisfy the tax home and closer connection tests for 2013. File extension If Dwight also satisfies the presence test in 2013, he will be considered a bona fide resident of the USVI for the entire 2013 tax year. File extension Year of Moving From a Possession In the year you cease to be a bona fide resident of American Samoa, the CNMI, Guam, or the USVI, you will satisfy the tax home and closer connection tests with respect to the relevant possession if you meet all of the following. File extension You have been a bona fide resident of the relevant possession for each of the 3 tax years immediately preceding your change of residence. File extension In the year of the move, you do not have a tax home outside the relevant possession or a closer connection to the United States or a foreign country than to the relevant possession during any of the first 183 days of the tax year. File extension You are not a bona fide resident of the relevant possession for any of the 3 tax years immediately following your move. File extension Example. File extension Jean Aspen, a U. File extension S. File extension citizen, files returns on a calendar year basis. File extension From January 2010 through December 2012, Jean was a bona fide resident of American Samoa. File extension Jean continued to live there until September 6, 2013, when she accepted new employment and moved to Hawaii. File extension Jean's principal place of business from January 1 through September 5, 2013 (more than 183 days), was in American Samoa, and during that period Jean did not have a closer connection to the United States or a foreign country than to American Samoa. File extension If Jean continues to live and work in Hawaii for the rest of 2013 and throughout years 2014 through 2016, she will satisfy the tax home and closer connection tests for 2013 with respect to American Samoa. File extension If Jean also satisfies the presence test in 2013, she will be considered a bona fide resident for the entire 2013 tax year. File extension Puerto Rico You will be considered a bona fide resident of Puerto Rico for the part of the tax year preceding the date on which you move if you: Are a U. File extension S. File extension citizen, Are a bona fide resident of Puerto Rico for at least 2 tax years immediately preceding the tax year of the move, Cease to be a bona fide resident of Puerto Rico during the tax year, Cease to have a tax home in Puerto Rico during the tax year, and Have a closer connection to Puerto Rico than to the United States or a foreign country throughout the part of the tax year preceding the date on which you cease to have a tax home in Puerto Rico. File extension Example. File extension Randy White, a U. File extension S. File extension citizen, files returns on a calendar year basis. File extension For all of 2011 and 2012, Randy was a bona fide resident of Puerto Rico. File extension From January through April 2013, Randy continued to reside and maintain his principal place of business in and closer connection to Puerto Rico. File extension On May 5, 2013, Randy moved and changed his tax home to Nevada. File extension Later that year he established a closer connection to the United States than to Puerto Rico. File extension Randy did not satisfy the presence test for 2013 with respect to Puerto Rico, nor the tax home or closer connection tests. File extension However, because Randy was a bona fide resident of Puerto Rico for at least 2 tax years before he moved to Nevada in 2013, he was a bona fide resident of Puerto Rico from January 1 through May 4, 2013. File extension Reporting a Change in Bona Fide Residence If you became or ceased to be a bona fide resident of a U. File extension S. File extension possession, you may need to file Form 8898. File extension This applies to the U. File extension S. File extension possessions of American Samoa, the CNMI, Guam, Puerto Rico, and the USVI. File extension Who Must File You must file Form 8898 for the tax year in which you meet both of the following conditions. File extension Your worldwide gross income (defined below) in that tax year is more than $75,000. File extension You meet one of the following. File extension You take a position for U. File extension S. File extension tax purposes that you became a bona fide resident of a U. File extension S. File extension possession after a tax year for which you filed a U. File extension S. File extension income tax return as a citizen or resident alien of the United States but not as a bona fide resident of the possession. File extension You are a citizen or resident alien of the United States who takes the position for U. File extension S. File extension tax purposes that you ceased to be a bona fide resident of a U. File extension S. File extension possession after a tax year for which you filed an income tax return (with the IRS, the possession tax authority, or both) as a bona fide resident of the possession. File extension You take the position for U. File extension S. File extension tax purposes that you became a bona fide resident of Puerto Rico or American Samoa after a tax year for which you were required to file an income tax return as a bona fide resident of the CNMI, Guam, or the USVI. File extension Worldwide gross income. File extension   Worldwide gross income means all income you received in the form of money, goods, property, and services, including any income from sources outside the United States (even if you can exclude part or all of it) and before any deductions, credits, or rebates. File extension Example. File extension You are a U. File extension S. File extension citizen who moved to the CNMI in December 2012, but did not become a bona fide resident of that possession until the 2013 tax year. File extension You must file Form 8898 for the 2013 tax year if your worldwide gross income for that year was more than $75,000. File extension Penalty for Not Filing Form 8898 If you are required to file Form 8898 for any tax year and you fail to file it, you may owe a penalty of $1,000. File extension You may also owe this penalty if you do not include all the information required by the form or the form includes incorrect information. File extension In either case, you will not owe this penalty if you can show that such failure is due to reasonable cause and not willful neglect. File extension This is in addition to any criminal penalty that may be imposed. File extension Prev  Up  Next   Home   More Online Publications
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Frequently Asked Questions: Do I Need a PTIN?

a. General Guidance

b. PTIN Scenarios

c. Supervised, Non-Signing, and Non-1040 Preparers

d. SSN Requirements for Obtaining a PTIN


a. General Guidance


1. Who needs a Preparer Tax Identification Number (PTIN)? (revised 2/22/12)

A PTIN must be obtained by all enrolled agents, as well as all tax return preparers who are compensated for preparing, or assisting in the preparation of, all or substantially all of any U.S. federal tax return, claim for refund, or other tax form submitted to the IRS except the following:

Form SS-4, Application for Employer Identification Number;
Form SS-8, Determination of Worker Status for Purposes of Federal Employment Taxes and Income Tax Withholding;
Form SS-16, Certificate of Election of Coverage under FICA;
Form W-2 series of returns;
Form W-7, Application for IRS Individual Taxpayer Identification Number;
Form W-8BEN, Certificate of Foreign Status of Beneficial Owner for United States Tax Withholding;
Form 870, Waiver of Restrictions on Assessment and Collection of Deficiency in Tax and Acceptance of Overassessment;
Form 872, Consent to Extend the Time to Assess Tax;
Form 906, Closing Agreement On Final Determination Covering Specific Matters;
Form 1098 series;
Form 1099 series;
Form 2848, Power of Attorney and Declaration of Representative;
Form 3115, Application for Change in Accounting Method;
Form 4029, Application for Exemption From Social Security and Medicare Taxes and Waiver of Benefits;
Form 4361, Application for Exemption From Self-Employment Tax for Use by Ministers, Members of Religious Orders and Christian Science Practitioners;
Form 4419, Application for Filing Information Returns Electronically;
Form 5300, Application for Determination for Employee Benefit Plan;
Form 5307, Application for Determination for Adopters of Master or Prototype or Volume Submitter Plans;
Form 5310, Application for Determination for Terminating Plan;
Form 5500 series;
Form 8027, Employer’s Annual Information Return of Tip Income and Allocated Tips;
Form 8288-A, Statement of Withholding on Dispositions by Foreign Persons of U.S. Real Property Interests;
Form 8288-B, Application for Withholding Certificate for Dispositions by Foreign Persons of U.S. Real Property Interests;
Form 8508, Request for Waiver From Filing Information Returns Electronically;
Form 8717, User Fee for Employee Plan Determination, Opinion, and Advisory Letter Request;
Form 8809, Application for Extension of Time to File Information Return;
Form 8821, Tax Information Authorization;
Form 8942, Application for Certification of Qualified Investments Eligible for Credits and Grants Under the Qualifying Therapeutic Discovery Project Program

Refer to the scenarios for additional guidance.

2. Are individuals who are active attorneys and certified public accountants required to obtain a PTIN if they do not prepare all or substantially all of any tax return? (revised 2/22/12)

Attorneys and certified public accountants do not need to obtain a PTIN unless they prepare for compensation all or substantially all of a federal tax return or claim for refund.

3. Are enrolled retirement plan agents required to obtain a PTIN? (posted 11/4/11)

Enrolled Retirement Plan Agents are only required to obtain a PTIN if they prepare or assist in the preparation of all or substantially all of any tax return or claim for refund that is not on the list of forms exempt from the PTIN requirement. ERPAs that prepare only Form 5300 or 5500 series returns are not required to obtain a PTIN. See Notice 2011-91 for more information.

4. Can multiple individuals or one office share one PTIN? (revised 6/9/11)

No, every individual who, for compensation, prepares or assists in the preparation of a tax return or claim for refund must have his or her own PTIN and each tax return preparer may only obtain one PTIN.

5. If I don't have a PTIN, can I still prepare tax returns for compensation? (revised 10/10/13)

No. You must have a PTIN to prepare tax returns for compensation. 

6. Is there an age requirement for obtaining a PTIN? (posted 9/30/10)

Yes, applicants must be at least 18 years of age.

7. What penalties can be imposed against tax return preparers who don't have a current PTIN? (revised 2/22/12)

Failure to have a current PTIN could result in the imposition of Internal Revenue Code section 6695 penalties, injunction, and/or disciplinary action by the IRS Office of Professional Responsibility.

8. What is the difference between a PTIN and an EFIN? Does a preparer need both? (revised 2/22/12)

A Preparer Tax Identification Number (PTIN) is a number issued by the IRS to paid tax return preparers. It is used as the tax return preparer’s identification number and, when applicable, must be placed in the Paid Preparer section of a tax return that the tax return preparer prepared for compensation. There is an initial fee of $64.25 and an annual renewal fee of $63.00.

An Electronic Filing Identification Number (EFIN) is a number issued by the IRS to individuals or firms that have been approved as authorized IRS e-file providers.  It is included with all electronic return data transmitted to the IRS.  There is no fee for an EFIN.

Preparer Tax Identification Numbers are issued to individuals.  Electronic Filing Identification Numbers are issued to individuals or firms.  Most preparers need both.

9. If an employee of a business prepares the business’ tax returns as part of their job responsibilities, do they need to obtain a PTIN? (revised 9/28/10)

No. An employee who prepares his employer’s federal tax returns is not required to sign as a paid preparer. Accordingly, unless the employee prepares other federal tax returns for compensation, he or she is not required to register and obtain a PTIN.

10. Are e-file transmitters or intermediate service providers that do not prepare returns subject to the PTIN requirements? (revised 9/28/10)

No. E-file providers that assist in the formatting and transmission of tax returns electronically, but do not prepare all or substantially all of a federal tax return or claim for refund for compensation, are not required to obtain a PTIN.

11. Will the IRS share my PTIN application information with other people? (revised 4/19/12)

The law allows vendors and others to obtain the PTIN holder listing. PTIN holders are not allowed to opt out of the disclosure of their contact information because Freedom of Information Act (FOIA) laws make the information public. If you receive unwanted email solicitations due to this required disclosure, the Federal Trade Commission, Bureau of Consumer Protection can best advise you whether an email violates the CAN-SPAM Act of 2003 and how to report violations.

You should also review the PTIN application Privacy Policy.

In order to maintain privacy PTIN holders may want to review and/or update contact information


b. PTIN Scenarios


1. I am a tax return preparer, and I have a PTIN.  My firm employs a bookkeeper.  She gathers client receipts and invoices, and organizes and records all information for me.  Although I use the information that our bookkeeper has compiled, I prepare my clients’ tax returns and make all substantive determinations that go into computing the tax liability.  Does my bookkeeper need to have a PTIN? (posted 9/28/10)

No, she is not a tax return preparer, and is not required to have a PTIN.

2. I am a tax return preparer, and I have a PTIN.  Every tax filing season I hire two paid interns from the accounting program at a local college to help me during the busy season.  The interns perform data entry from the tax organizer that my clients fill out, and assemble the documentation that the clients have submitted.  Where clients have submitted incomplete information, or more information is needed, the interns may call clients to gather information missing from the tax organizer, but they are not allowed to provide advice or answer tax law questions.  I prepare and sign all my clients’ returns.  Do my interns need to have a PTIN?  (posted 9/28/10)

No, the interns are not tax return preparers, and are not required to have a PTIN.

3. Same facts as above, but in order to help my interns get exposure to the tax system, I allow them to work with clients who have very simple tax situations, and prepare the Form 1040-EZ.  I review the forms carefully, and sign them.  Are my interns required to have PTINs? (posted 9/28/10)

Yes, the interns are tax return preparers and are required to have a PTIN, whether or not they sign the returns.

4. I am a tax return preparer, and I have a PTIN.  I have an administrative assistant in the office who also performs data entry during tax filing season.  At times, clients call and provide him with information, which he records in the system.  Using the data he has entered, I meet with my clients and provide advice as needed.   I then prepare and sign their returns.  Is my administrative assistant required to have a PTIN? posted 9/28/10)

No, the administrative assistant is not a tax return preparer, and is not required to have a PTIN.

5. I am a retired tax professional, and I volunteer during the tax filing season.  I volunteer at a VITA site, where I prepare individual tax returns for lower-income individuals for no compensation.  Do I need to have a PTIN? (revised 10/10/13)

No, you are not required to have a PTIN.

6. I run a small tax return preparation business that is heavily software-based.  I employ four associates who sit with taxpayers and walk through a step-by-step software program that uses an “interview” process that results in a draft tax return.  I check and sign the returns, and I have a PTIN.  Do my four associates need to have a PTIN? (posted 9/28/10)

You will need to perform additional analysis to determine whether your four associates must have a PTIN.  The answer depends on the specific circumstances of your firm.  In general, if individuals prepare, or assist in preparing, all or substantially all of a tax return, including making determinations that affect tax liability, they must have a PTIN.

7. I am a reporting agent who prepares Forms 94X series returns for my clients for compensation.  I do not exercise any discretion or independent judgment on my client's underlying tax positions and I do not render tax advice to any of my clients.  Do I need a PTIN?  (revised 1/3/11)

No.  The PTIN regulations incorporate the carve-out from the definition of tax return preparer in Treasury Regulation section 301.7701–15(f) for individuals who provide only typing, reproduction, or other mechanical assistance in the preparation of a return or claim for refund.  Example one under Treasury Regulation section 301.7701-15(f)(6) provides that reporting agents who do not exercise any discretion or independent judgment on the client's underlying tax positions and who do not render tax advice to any clients are carved-out under this exception and, therefore, are not tax return preparers.

8. I am a reporting agent who prepares Forms 94X series returns for my clients for compensation.  On occasion, my clients ask me for assistance with issues such as determining whether their workers are employees or independent contractors for federal tax purposes.  Do I need a PTIN? (revised 1/3/11)

Yes.  The PTIN regulations require all tax return preparers who are compensated for preparing, or assisting in the preparation of, all or substantially all of a tax return or claim for refund of tax to register and obtain a PTIN.  The carve-out from the definition of tax return preparer for individuals who provide only typing, reproduction, or other mechanical assistance in the preparation of a return or claim for refund does not apply to reporting agents who render tax advice to any client (example two under Treasury Regulation section 301.7701-15(f)(6)).

9. I am a retirement plan administrator who prepares Forms 5500 and the accompanying schedules for my clients. I also prepare Forms 8955-SSA and Form 5558 for my clients. While the Form 5500 series returns are included in the list of forms exempted from the PTIN requirements in Notice 2011-6, the Forms 8955-SSA and Forms 5558 are not included in that list. Am I required to obtain a PTIN? (posted 3/4/11)

No. The Form 8955-SSA, Annual Registration Statement Identifying Separated Participants With Deferred Vested Participants, and Form 5558, Application for Extension of Time to File Certain Employee Plan Returns, are, for purposes of Notice 2011-6, part of the "Form 5500 series" of tax returns inasmuch as these forms are prepared either in conjunction with the filing of a retirement plan's Form 5500 filing or to request an extension of time to file a Form 5500 series tax return.

10. Is an attorney or a certified public accountant required to obtain a PTIN if the attorney or certified public accountant only advises a client regarding an issue that is reflected on a claim for refund? (posted 3/4/11)

An attorney or certified public accountant is required to obtain a PTIN if the attorney or certified public accountant prepares, or assists in preparing, all or substantially all of a return or claim for refund. Under the authority of section 1.6109-2(h), however, an attorney or certified public accountant will not be required to obtain a PTIN if the attorney or certified public accountant only advises a client regarding an issue that is reflected on a claim for refund and neither the attorney or certified public accountant nor any person in the firm of the attorney or certified public accountant signs or is required to sign the claim for refund under Treasury Regulation sections 301.7701-15(b)(1) and 1.6695-1(b). The attorney or certified public accountant in question is still a nonsigning tax return preparer subject to penalty under section 6694 if the attorney or certified public accountant has prepared all or a substantial portion of the claim for refund within the meaning of Treasury Regulation section 301.7701-15(b)(3).

11. Our company prepares Forms 2290 for our clients.  It is the only federal tax form we prepare.  Are our employees subject to any of the new regulations? (revised 2/7/13)

Yes, any individual who receives compensation for preparing Forms 2290 is required to register with the IRS and obtain a PTIN.

12. If someone only prepares or assists with preparing Form 1023 for compensation, should they obtain a PTIN? (posted 3/7/12)
 
Generally yes.  More information about PTIN requirements for preparers of exempt organization forms is available here


c. Supervised, Non-Signing, and Non-1040 Preparers


1.  What is a supervised preparer?  Do supervised preparers need a PTIN? (revised 2/7/13)

A supervised preparer is a non-signing preparer who is employed by a law firm, CPA firm or other recognized firm (a firm that is at least 80 percent owned by attorneys, CPAs, or enrolled agents).  The returns they prepare are signed by a supervising attorney, CPA or enrolled agent at the firm. 

A supervised preparer does need a PTIN and must provide their supervisor’s PTIN on their PTIN application or renewal.

Additional guidance on supervised preparers is available in Notice 2011-6 (or view the Fact Sheet).

2. I own a tax preparation business and I review and sign all the returns my employees prepare.  Do they need PTINs?  (revised 2/7/13)

Yes.  Anyone you hire to prepare tax returns needs a PTIN regardless of whether you review and sign the returns.

3. What are the requirements for people who prepare returns other than the Form 1040 series? (revised 2/7/13)

Non-1040 preparers generally need a PTIN.  For exemptions to the PTIN requirement, see FAQ 1 at the top of this page under General Guidance

4. When multiple paid preparers are involved in preparation and/or review of a return, who is required to sign the return?  (posted 8/11/10)

Existing Treasury regulations under sections 1.6695-1(b) and 301.7701-15(b)(1) provide that a signing tax return preparer is the individual tax return preparer who has the primary responsibility for the overall accuracy of the preparation of a return.  The PTIN requirements, which require all preparers to register and obtain a PTIN, do not change the existing rules regarding who is the signing tax return preparer.

5. Are non-signing preparers disclosed on each return prepared even if another preparer reviews and signs it? (revised 2/7/13)

No, the names of non-signing preparers are not disclosed on the return.  Although there is no plan to expand the paid preparer section of the return to include non-signing preparers, they still are required to have a PTIN.

6. If I don't prepare any Form 1040 returns but prepare returns that flow-through to Forms 1040 such as Schedules K-1 for Forms 1065 or 1120S, how do I answer the question, &quotDo you prepare Form 1040 series tax returns?&quot (posted 10/12/11)
 
You should answer &quotno&quot.


d. SSN Requirements for Obtaining a PTIN


1. Is a social security number required to obtain a PTIN? (revised 4/13/11)

Individuals generally are required to provide their social security numbers when they obtain a PTIN.  However, U.S. citizens who have a conscientious objection to obtaining a social security number for religious reasons and foreign persons who are not eligible to obtain a social security number and have a permanent non-U.S. address may obtain a PTIN without a social security number.  These individuals are required to provide supplemental documentation to verify their identity and substantiate their eligibility for a PTIN under these specific exceptions.  See questions 2 and 3 below or Revenue Procedure 2010-41 for additional guidance.

Individuals who have an Individual Taxpayer Identification Number (ITIN) are not eligible for a PTIN unless they are foreign persons with a permanent non-U.S. address, and can provide documentation to support that status.

2. How do U.S. citizens without a social security number due to a conscientious objection for religious reasons obtain a PTIN? (updated 3/21/14)

U.S. citizens who have a conscientious objection to obtaining a social security number for religious reasons must complete Form W-12, IRS Paid Preparer Tax Identification Number (PTIN) Application, either online or on paper, and a paper Form 8945, PTIN Supplemental Application For U.S. Citizens Without a Social Security Number Due To Conscientious Religious Objection.

Documentation to substantiate identity, U.S. citizenship, and status as a member of a recognized religious group must accompany the Form 8945.  Documentation requirements and mailing information are included in the Form 8945 instructions. Allow 4-6 weeks to process your PTIN application.

3. How do foreign preparers without a social security number obtain a PTIN? (updated 3/21/14)

A foreign preparer who does not have and is not eligible to obtain a social security number and is neither a citizen of the U.S. nor a resident alien of the U.S. as defined in section 7701(b)(1)(A) will need to complete the Form W-12, IRS Paid Preparer Tax Identification Number (PTIN) Application, either online or on paper, and a paper Form 8946, PTIN Supplemental Application For Foreign Persons Without a Social Security Number. Only preparers that have a foreign (non-U.S.) address may file this form.

Individuals who have an Individual Taxpayer Identification Number (ITIN) are not eligible for a PTIN unless they are foreign persons with a permanent non-U.S. address.

Documentation to substantiate identity and eligibility must accompany the Form 8946. Documentation requirements and mailing information are included in the Form 8946 instructions.

Allow 4-6 weeks to process your PTIN application.  

4. I have a social security number, but have not filed an income tax return with the IRS. My individual income tax returns were filed with the Departamento de Hacienda (Puerto Rico). How do I obtain a PTIN? (updated 3/21/2014)

A Puerto Rican resident who has never filed a U.S. individual income tax return must submit a paper Form W-12 PTIN application. Ensure the address on Line 15 of the Form W-12 matches the information from your Hacienda tax return information. 

Include the following with your W-12 application:

  • Check or money order for $64.25 (make payable to IRS Tax Pro PTIN Fee)  
  • An original, certified, or notarized copy of your social security card along with one other government issued document that contains a current photo ID. Examples of acceptable supporting documents are listed below. All documents must be a current original, certified, or notarized and must verify your name. Refer to Form W-12 instructions for complete information regarding acceptable supporting documentation and application requirements.
    Examples of acceptable supporting documents:
    - Passport/Passport Card
    - Driver's License
    - U.S. State ID Card
    - Military ID Card
    - National ID card

Return to Return Preparer Program FAQs

Page Last Reviewed or Updated: 21-Mar-2014

The File Extension

File extension 3. File extension   Savings Incentive Match Plans for Employees (SIMPLE) Table of Contents Introduction What Is a SIMPLE Plan?Eligible Employees How Are Contributions Made? How Much Can Be Contributed on Your Behalf?Matching contributions less than 3%. File extension Traditional IRA mistakenly moved to SIMPLE IRA. File extension When Can You Withdraw or Use Assets?Are Distributions Taxable? Introduction This chapter is for employees who need information about savings incentive match plans for employees (SIMPLE plans). File extension It explains what a SIMPLE plan is, contributions to a SIMPLE plan, and distributions from a SIMPLE plan. File extension Under a SIMPLE plan, SIMPLE retirement accounts for participating employees can be set up either as: Part of a 401(k) plan, or A plan using IRAs (SIMPLE IRA). File extension This chapter only discusses the SIMPLE plan rules that relate to SIMPLE IRAs. File extension See chapter 3 of Publication 560 for information on any special rules for SIMPLE plans that do not use IRAs. File extension If your employer maintains a SIMPLE plan, you must be notified, in writing, that you can choose the financial institution that will serve as trustee for your SIMPLE IRA and that you can roll over or transfer your SIMPLE IRA to another financial institution. File extension See Rollovers and Transfers Exception, later under When Can You Withdraw or Use Assets. File extension What Is a SIMPLE Plan? A SIMPLE plan is a tax-favored retirement plan that certain small employers (including self-employed individuals) can set up for the benefit of their employees. File extension See chapter 3 of Publication 560 for information on the requirements employers must satisfy to set up a SIMPLE plan. File extension A SIMPLE plan is a written agreement (salary reduction agreement) between you and your employer that allows you, if you are an eligible employee (including a self-employed individual), to choose to: Reduce your compensation (salary) by a certain percentage each pay period, and Have your employer contribute the salary reductions to a SIMPLE IRA on your behalf. File extension These contributions are called salary reduction contributions. File extension All contributions under a SIMPLE IRA plan must be made to SIMPLE IRAs, not to any other type of IRA. File extension The SIMPLE IRA can be an individual retirement account or an individual retirement annuity, described in chapter 1. File extension Contributions are made on behalf of eligible employees. File extension (See Eligible Employees below. File extension ) Contributions are also subject to various limits. File extension (See How Much Can Be Contributed on Your Behalf , later. File extension ) In addition to salary reduction contributions, your employer must make either matching contributions or nonelective contributions. File extension See How Are Contributions Made , later. File extension You may be able to claim a credit for contributions to your SIMPLE plan. File extension For more information, see chapter 4. File extension Eligible Employees You must be allowed to participate in your employer's SIMPLE plan if you: Received at least $5,000 in compensation from your employer during any 2 years prior to the current year, and Are reasonably expected to receive at least $5,000 in compensation during the calendar year for which contributions are made. File extension Self-employed individual. File extension   For SIMPLE plan purposes, the term employee includes a self-employed individual who received earned income. File extension Excludable employees. File extension   Your employer can exclude the following employees from participating in the SIMPLE plan. File extension Employees whose retirement benefits are covered by a collective bargaining agreement (union contract). File extension Employees who are nonresident aliens and received no earned income from sources within the United States. File extension Employees who would not have been eligible employees if an acquisition, disposition, or similar transaction had not occurred during the year. File extension Compensation. File extension   For purposes of the SIMPLE plan rules, your compensation for a year generally includes the following amounts. File extension Wages, tips, and other pay from your employer that is subject to income tax withholding. File extension Deferred amounts elected under any 401(k) plans, 403(b) plans, government (section 457) plans, SEP plans, and SIMPLE plans. File extension Self-employed individual compensation. File extension   For purposes of the SIMPLE plan rules, if you are self-employed, your compensation for a year is your net earnings from self-employment (Schedule SE (Form 1040), Section A, line 4, or Section B, line 6) before subtracting any contributions made to a SIMPLE IRA on your behalf. File extension   For these purposes, net earnings from self-employment include services performed while claiming exemption from self-employment tax as a member of a group conscientiously opposed to social security benefits. File extension How Are Contributions Made? Contributions under a salary reduction agreement are called salary reduction contributions. File extension They are made on your behalf by your employer. File extension Your employer must also make either matching contributions or nonelective contributions. File extension Salary reduction contributions. File extension   During the 60-day period before the beginning of any year, and during the 60-day period before you are eligible, you can choose salary reduction contributions expressed either as a percentage of compensation, or as a specific dollar amount (if your employer offers this choice). File extension You can choose to cancel the election at any time during the year. File extension   Salary reduction contributions are also referred to as “elective deferrals. File extension ”   Your employer cannot place restrictions on the contributions amount (such as by limiting the contributions percentage), except to comply with the salary reduction contributions limit, discussed under How Much Can Be Contributed on Your Behalf, later. File extension Matching contributions. File extension   Unless your employer chooses to make nonelective contributions, your employer must make contributions equal to the salary reduction contributions you choose (elect), but only up to certain limits. File extension See How Much Can Be Contributed on Your Behalf below. File extension These contributions are in addition to the salary reduction contributions and must be made to the SIMPLE IRAs of all eligible employees (defined earlier) who chose salary reductions. File extension These contributions are referred to as matching contributions. File extension   Matching contributions on behalf of a self-employed individual are not treated as salary reduction contributions. File extension Nonelective contributions. File extension   Instead of making matching contributions, your employer may be able to choose to make nonelective contributions on behalf of all eligible employees. File extension These nonelective contributions must be made on behalf of each eligible employee who has at least $5,000 of compensation from your employer, whether or not the employee chose salary reductions. File extension   One of the requirements your employer must satisfy is notifying the employees that the election was made. File extension For other requirements that your employer must satisfy, see chapter 3 of Publication 560. File extension How Much Can Be Contributed on Your Behalf? The limits on contributions to a SIMPLE IRA vary with the type of contribution that is made. File extension Salary reduction contributions limit. File extension   Salary reduction contributions (employee-chosen contributions or elective deferrals) that your employer can make on your behalf under a SIMPLE plan are limited to $12,000 for 2013. File extension The limitation remains at $12,000 for 2014. File extension If you are a participant in any other employer plans during 2013 and you have elective salary reductions or deferred compensation under those plans, the salary reduction contributions under the SIMPLE plan also are included in the annual limit of $17,500 for 2013 on exclusions of salary reductions and other elective deferrals. File extension You, not your employer, are responsible for monitoring compliance with these limits. File extension Additional elective deferrals can be contributed to your SIMPLE plan if: You reached age 50 by the end of 2013, and No other elective deferrals can be made for you to the plan for the year because of limits or restrictions, such as the regular annual limit. File extension The most that can be contributed in additional elective deferrals to your SIMPLE plan is the lesser of the following two amounts. File extension $2,500 for 2013, or Your compensation for the year reduced by your other elective deferrals for the year. File extension The additional deferrals are not subject to any other contribution limit and are not taken into account in applying other contribution limits. File extension The additional deferrals are not subject to the nondiscrimination rules as long as all eligible participants are allowed to make them. File extension Matching employer contributions limit. File extension   Generally, your employer must make matching contributions to your SIMPLE IRA in an amount equal to your salary reduction contributions. File extension These matching contributions cannot be more than 3% of your compensation for the calendar year. File extension See Matching contributions less than 3% below. File extension Example 1. File extension In 2013, Joshua was a participant in his employer's SIMPLE plan. File extension His compensation, before SIMPLE plan contributions, was $41,600 ($800 per week). File extension Instead of taking it all in cash, Joshua elected to have 12. File extension 5% of his weekly pay ($100) contributed to his SIMPLE IRA. File extension For the full year, Joshua's salary reduction contributions were $5,200, which is less than the $12,000 limit on these contributions. File extension Under the plan, Joshua's employer was required to make matching contributions to Joshua's SIMPLE IRA. File extension Because his employer's matching contributions must equal Joshua's salary reductions, but cannot be more than 3% of his compensation (before salary reductions) for the year, his employer's matching contribution was limited to $1,248 (3% of $41,600). File extension Example 2. File extension Assume the same facts as in Example 1 , except that Joshua's compensation for the year was $408,163 and he chose to have 2. File extension 94% of his weekly pay contributed to his SIMPLE IRA. File extension In this example, Joshua's salary reduction contributions for the year (2. File extension 94% × $408,163) were equal to the 2013 limit for salary reduction contributions ($12,000). File extension Because 3% of Joshua's compensation ($12,245) is more than the amount his employer was required to match ($12,000), his employer's matching contributions were limited to $12,000. File extension In this example, total contributions made on Joshua's behalf for the year were $24,000 ($12,000 (Joshua's contributions) + $12,000 (matching contributions)), the maximum contributions permitted under a SIMPLE IRA for 2013. File extension Matching contributions less than 3%. File extension   Your employer can reduce the 3% limit on matching contributions for a calendar year, but only if: The limit is not reduced below 1%, The limit is not reduced for more than 2 years out of the 5-year period that ends with (and includes) the year for which the election is effective, and Employees are notified of the reduced limit within a reasonable period of time before the 60-day election period during which they can enter into salary reduction agreements. File extension   For purposes of applying the rule in item (2) in determining whether the limit was reduced below 3% for the year, any year before the first year in which your employer (or a former employer) maintains a SIMPLE IRA plan will be treated as a year for which the limit was 3%. File extension If your employer chooses to make nonelective contributions for a year, that year also will be treated as a year for which the limit was 3%. File extension Nonelective employer contributions limit. File extension   If your employer chooses to make nonelective contributions, instead of matching contributions, to each eligible employee's SIMPLE IRA, contributions must be 2% of your compensation for the entire year. File extension For 2013, only $255,000 of your compensation can be taken into account to figure the contribution limit. File extension   Your employer can substitute the 2% nonelective contribution for the matching contribution for a year if both of the following requirements are met. File extension Eligible employees are notified that a 2% nonelective contribution will be made instead of a matching contribution. File extension This notice is provided within a reasonable period during which employees can enter into salary reduction agreements. File extension Example 3. File extension Assume the same facts as in Example 2 , except that Joshua's employer chose to make nonelective contributions instead of matching contributions. File extension Because his employer's nonelective contributions are limited to 2% of up to $255,000 of Joshua's compensation, his employer's contribution to Joshua's SIMPLE IRA was limited to $5,100. File extension In this example, total contributions made on Joshua's behalf for the year were $17,100 (Joshua's salary reductions of $12,000 plus his employer's contribution of $5,100). File extension Traditional IRA mistakenly moved to SIMPLE IRA. File extension   If you mistakenly roll over or transfer an amount from a traditional IRA to a SIMPLE IRA, you can later recharacterize the amount as a contribution to another traditional IRA. File extension For more information, see Recharacterizations in chapter 1. File extension Recharacterizing employer contributions. File extension   You cannot recharacterize employer contributions (including elective deferrals) under a SEP or SIMPLE plan as contributions to another IRA. File extension SEPs are discussed in chapter 2 of Publication 560. File extension SIMPLE plans are discussed in this chapter. File extension Converting from a SIMPLE IRA. File extension   Generally, you can convert an amount in your SIMPLE IRA to a Roth IRA under the same rules explained in chapter 1 under Converting From Any Traditional IRA Into a Roth IRA . File extension    However, you cannot convert any amount distributed from the SIMPLE IRA during the 2-year period beginning on the date you first participated in any SIMPLE IRA plan maintained by your employer. File extension When Can You Withdraw or Use Assets? Generally, the same distribution (withdrawal) rules that apply to traditional IRAs apply to SIMPLE IRAs. File extension These rules are discussed in chapter 1. File extension Your employer cannot restrict you from taking distributions from a SIMPLE IRA. File extension Are Distributions Taxable? Generally, distributions from a SIMPLE IRA are fully taxable as ordinary income. File extension If the distribution is an early distribution (discussed in chapter 1), it may be subject to the additional tax on early distributions. File extension See Additional Tax on Early Distributions, later. File extension Rollovers and Transfers Exception Generally, rollovers and trustee-to-trustee transfers are not taxable distributions. File extension Two-year rule. File extension   To qualify as a tax-free rollover (or a tax-free trustee-to-trustee transfer), a rollover distribution (or a transfer) made from a SIMPLE IRA during the 2-year period beginning on the date on which you first participated in your employer's SIMPLE plan must be contributed (or transferred) to another SIMPLE IRA. File extension The 2-year period begins on the first day on which contributions made by your employer are deposited in your SIMPLE IRA. File extension   After the 2-year period, amounts in a SIMPLE IRA can be rolled over or transferred tax free to an IRA other than a SIMPLE IRA, or to a qualified plan, a tax-sheltered annuity plan (section 403(b) plan), or deferred compensation plan of a state or local government (section 457 plan). File extension Additional Tax on Early Distributions The additional tax on early distributions (discussed in chapter 1) applies to SIMPLE IRAs. File extension If a distribution is an early distribution and occurs during the 2-year period following the date on which you first participated in your employer's SIMPLE plan, the additional tax on early distributions is increased from 10% to 25%. File extension If a rollover distribution (or transfer) from a SIMPLE IRA does not satisfy the 2-year rule, and is otherwise an early distribution, the additional tax imposed because of the early distribution is increased from 10% to 25% of the amount distributed. File extension Prev  Up  Next   Home   More Online Publications