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File tax 1040ez free online 4. File tax 1040ez free online   Communications and Air Transportation Taxes Table of Contents Uncollected Tax Report Communications TaxLocal-only service. File tax 1040ez free online Private communication service. File tax 1040ez free online Exemptions Credits or Refunds Air Transportation TaxesTransportation of Persons by Air International Air Travel Facilities Transportation of Property by Air Special Rules on Transportation Taxes Excise taxes are imposed on amounts paid for certain facilities and services. File tax 1040ez free online If you receive any payment on which tax is imposed, you are required to collect the tax, file returns, and pay the tax over to the government. File tax 1040ez free online If you fail to collect and pay over the taxes, you may be liable for the trust fund recovery penalty. File tax 1040ez free online See chapter 14, later. File tax 1040ez free online Uncollected Tax Report A separate report is required to be filed by collecting agents of communications services and air transportation taxes if the person from whom the facilities or services tax (the tax) is required to be collected (the taxpayer) refuses to pay the tax, or it is impossible for the collecting agent to collect the tax. File tax 1040ez free online The report must contain the name and address of the taxpayer, the type of facility provided or service rendered, the amount paid for the facility or service (the amount on which the tax is based), and the date paid. File tax 1040ez free online Regular method taxpayers. File tax 1040ez free online   For regular method taxpayers, the report must be filed by the due date of the Form 720 on which the tax would have been reported. File tax 1040ez free online Alternative method taxpayers. File tax 1040ez free online   For alternative method taxpayers, the report must be filed by the due date of the Form 720 that includes an adjustment to the separate account for the uncollected tax. File tax 1040ez free online See Alternative method in  chapter 11. File tax 1040ez free online Where to file. File tax 1040ez free online    Do not file the uncollected tax report with Form 720. File tax 1040ez free online Instead, mail the report to: Internal Revenue Service Excise Tax Program SE:S:SP:EX MS C9-109 5000 Ellin Rd. File tax 1040ez free online  Lanham, MD 20706 Communications Tax A 3% tax is imposed on amounts paid for local telephone service and teletypewriter exchange service. File tax 1040ez free online Local telephone service. File tax 1040ez free online   This includes access to a local telephone system and the privilege of telephonic quality communication with most people who are part of the system. File tax 1040ez free online Local telephone service also includes any facility or services provided in connection with this service. File tax 1040ez free online The tax applies to lease payments for certain customer premises equipment (CPE) even though the lessor does not also provide access to a local telecommunications system. File tax 1040ez free online Local-only service. File tax 1040ez free online   Local-only service is local telephone service as described above, provided under a plan that does not include long distance telephone service or that separately states the charge for local service on the bill to customers. File tax 1040ez free online Local-only service also includes any facility or services provided in connection with this service, even though these services and facilities may also be used with long-distance service. File tax 1040ez free online Private communication service. File tax 1040ez free online   Private communication service is not local telephone service. File tax 1040ez free online Private communication service includes accessory-type services provided in connection with a Centrex, PBX, or other similar system for dual use accessory equipment. File tax 1040ez free online However, the charge for the service must be stated separately from the charge for the basic system, and the accessory must function, in whole or in part, in connection with intercommunication among the subscriber's stations. File tax 1040ez free online Teletypewriter exchange service. File tax 1040ez free online   This includes access from a teletypewriter or other data station to a teletypewriter exchange system and the privilege of intercommunication by that station with most persons having teletypewriter or other data stations in the same exchange system. File tax 1040ez free online Figuring the tax. File tax 1040ez free online   The tax is based on the sum of all charges for local telephone service included in the bill. File tax 1040ez free online However, if the bill groups individual items for billing and tax purposes, the tax is based on the sum of the individual items within that group. File tax 1040ez free online The tax on the remaining items not included in any group is based on the charge for each item separately. File tax 1040ez free online Do not include in the tax base state or local sales or use taxes that are separately stated on the taxpayer's bill. File tax 1040ez free online Exemptions Payments for certain services or payments from certain users are exempt from the communications tax. File tax 1040ez free online Nontaxable service. File tax 1040ez free online   Nontaxable service means bundled service and long distance service. File tax 1040ez free online Nontaxable service also includes pre-paid telephone cards and pre-paid cellular service. File tax 1040ez free online Bundled service. File tax 1040ez free online   Bundled service is local and long distance service provided under a plan that does not separately state the charge for the local telephone service. File tax 1040ez free online Bundled service includes plans that provide both local and long distance service for either a flat monthly fee or a charge that varies with the elapsed transmission time for which the service is used. File tax 1040ez free online Telecommunications companies provide bundled service for both landlines and wireless (cellular) service. File tax 1040ez free online If Voice over Internet Protocol service provides both local and long distance service and the charges are not separately stated, such service is bundled service. File tax 1040ez free online   The method for sending or receiving a call, such as on a landline telephone, wireless (cellular), or some other method, does not affect whether a service is local-only or bundled. File tax 1040ez free online Long distance service. File tax 1040ez free online   Long distance service is telephonic quality communication with persons whose telephones are outside the local telephone system of the caller. File tax 1040ez free online Pre-paid telephone cards (PTC). File tax 1040ez free online   A PTC will be treated as bundled service unless a PTC expressly states it is for local-only service. File tax 1040ez free online Generally, the person responsible for collecting the tax is the carrier who transfers the PTC to the transferee. File tax 1040ez free online The transferee is the first person that is not a carrier to whom a PTC is transferred by the carrier. File tax 1040ez free online The transferee is the person liable for the tax and is eligible to request a credit or refund. File tax 1040ez free online For more information, see Regulations section 49. File tax 1040ez free online 4251-4. File tax 1040ez free online   The holder is the person that purchases a PTC to use and not to resell. File tax 1040ez free online Holders are not liable for the tax and cannot request a credit or refund. File tax 1040ez free online Pre-paid cellular telephones. File tax 1040ez free online   Rules similar to the PTC rules described above apply to pre-paid cellular telephones. File tax 1040ez free online The transferee is the person eligible to request the credit or refund. File tax 1040ez free online Installation charges. File tax 1040ez free online   The tax does not apply to payments received for the installation of any instrument, wire, pole, switchboard, apparatus, or equipment. File tax 1040ez free online However, the tax does apply to payments for the repair or replacement of those items incidental to ordinary maintenance. File tax 1040ez free online Answering services. File tax 1040ez free online   The tax does not apply to amounts paid for a private line, an answering service, and a one-way paging or message service if they do not provide access to a local telephone system and the privilege of telephonic communication as part of the local telephone system. File tax 1040ez free online Mobile radio telephone service. File tax 1040ez free online   The tax does not apply to payments for a two-way radio service that does not provide access to a local telephone system. File tax 1040ez free online Coin-operated telephones. File tax 1040ez free online   The tax for local telephone service does not apply to payments made for services by inserting coins in public coin-operated telephones. File tax 1040ez free online But the tax applies if the coin-operated telephone service is furnished for a guaranteed amount. File tax 1040ez free online Figure the tax on the amount paid under the guarantee plus any fixed monthly or other periodic charge. File tax 1040ez free online Telephone-operated security systems. File tax 1040ez free online   The tax does not apply to amounts paid for telephones used only to originate calls to a limited number of telephone stations for security entry into a building. File tax 1040ez free online In addition, the tax does not apply to any amounts paid for rented communication equipment used in the security system. File tax 1040ez free online News services. File tax 1040ez free online   The tax on teletypewriter exchange service does not apply to charges for the following news services. File tax 1040ez free online Services dealing exclusively with the collection or dissemination of news for or through the public press or radio or television broadcasting. File tax 1040ez free online Services used exclusively in the collection or dissemination of news by a news ticker service furnishing a general news service similar to that of the public press. File tax 1040ez free online This exemption applies to payments received for messages from one member of the news media to another member (or to or from their bona fide correspondents). File tax 1040ez free online For the exemption to apply, the charge for these services must be billed in writing to the person paying for the service and that person must certify in writing that the services are used for an exempt purpose. File tax 1040ez free online Services not exempted. File tax 1040ez free online   The tax applies to amounts paid by members of the news media for local telephone service. File tax 1040ez free online International organizations and the American Red Cross. File tax 1040ez free online   The tax does not apply to communication services furnished to an international organization or to the American National Red Cross. File tax 1040ez free online Nonprofit hospitals. File tax 1040ez free online   The tax does not apply to telephone services furnished to income tax-exempt nonprofit hospitals for their use. File tax 1040ez free online Also, the tax does not apply to amounts paid by these hospitals to provide local telephone service in the homes of their personnel who must be reached during their off-duty hours. File tax 1040ez free online Nonprofit educational organizations. File tax 1040ez free online   The tax does not apply to payments received for services and facilities furnished to a nonprofit educational organization for its use. File tax 1040ez free online A nonprofit educational organization is one that satisfies all the following requirements. File tax 1040ez free online It normally maintains a regular faculty and curriculum. File tax 1040ez free online It normally has a regularly enrolled body of pupils or students in attendance at the place where its educational activities are regularly carried on. File tax 1040ez free online It is exempt from income tax under section 501(a). File tax 1040ez free online This includes a school operated by an organization exempt under section 501(c)(3) if the school meets the above qualifications. File tax 1040ez free online Qualified blood collector organizations. File tax 1040ez free online   The tax does not apply to telephone services furnished to qualified blood collector organizations for their use. File tax 1040ez free online A qualified blood collector organization is one that is: Described in section 501(c)(3) and exempt from tax under section 501(a), Primarily engaged in the activity of collecting human blood, Registered with the IRS, and Registered by the Food and Drug Administration to collect blood. File tax 1040ez free online Federal, state, and local government. File tax 1040ez free online   The tax does not apply to communication services provided to the government of the United States, the government of any state or its political subdivisions, the District of Columbia, or the United Nations. File tax 1040ez free online Treat an Indian tribal government as a state for the exemption from the communications tax only if the services involve the exercise of an essential tribal government function. File tax 1040ez free online Exemption certificate. File tax 1040ez free online   Any form of exemption certificate will be acceptable if it includes all the information required by the Internal Revenue Code and Regulations. File tax 1040ez free online See Regulations section 49. File tax 1040ez free online 4253-11. File tax 1040ez free online File the certificate with the provider of the communication services. File tax 1040ez free online An exemption certificate is not required for nontaxable services. File tax 1040ez free online   The following users that are exempt from the communications tax do not have to file an annual exemption certificate after they have filed the initial certificate to claim an exemption from the communications tax. File tax 1040ez free online The American National Red Cross and other international organizations. File tax 1040ez free online Nonprofit hospitals. File tax 1040ez free online Nonprofit educational organizations. File tax 1040ez free online Qualified blood collector organizations. File tax 1040ez free online State and local governments. File tax 1040ez free online   The federal government does not have to file any exemption certificate. File tax 1040ez free online   All other organizations must furnish exemption certificates when required. File tax 1040ez free online Credits or Refunds If tax is collected and paid over for nontaxable services, or for certain services or users exempt from the communications tax, the collector or taxpayer may claim a credit or refund if it has repaid the tax to the person from whom the tax was collected or obtained the consent of that person to the allowance of the credit or refund. File tax 1040ez free online Alternatively, the person who paid the tax may claim a refund. File tax 1040ez free online For more information on how to file for credits or refunds, see the Instructions for Form 720 or Form 8849. File tax 1040ez free online Collectors. File tax 1040ez free online   The collector may request a credit or refund if it has repaid the tax to the person from whom the tax was collected, or obtained the consent of that person to the allowance of the credit or refund. File tax 1040ez free online These requirements also apply to nontaxable service refunds. File tax 1040ez free online Collectors using the regular method for deposits. File tax 1040ez free online   Collectors using the regular method for deposits must use Form 720X to request a credit or refund if the collector has repaid the tax to the person from whom the tax was collected, or obtained the consent of that person to the allowance of the credit or refund. File tax 1040ez free online Collectors using the alternative method for deposits. File tax 1040ez free online   Collectors using the alternative method for deposits must adjust their separate accounts for the credit or refund if it has repaid the tax to the person from whom the tax was collected, or obtained the consent of that person to the allowance of the credit or refund. File tax 1040ez free online For more information, see the Instructions for Form 720. File tax 1040ez free online Air Transportation Taxes Taxes are imposed on amounts paid for: Transportation of persons by air, Use of international air travel facilities, and Transportation of property by air. File tax 1040ez free online Transportation of Persons by Air The tax on transportation of persons by air is made up of the: Percentage tax, and Domestic-segment tax. File tax 1040ez free online Percentage tax. File tax 1040ez free online   A tax of 7. File tax 1040ez free online 5% applies to amounts paid for taxable transportation of persons by air. File tax 1040ez free online Amounts paid for transportation include charges for layover or waiting time and movement of aircraft in deadhead service. File tax 1040ez free online Mileage awards. File tax 1040ez free online   The percentage tax may apply to an amount paid (in cash or in kind) to an air carrier (or any related person) for the right to provide mileage awards for, or other reductions in the cost of, any transportation of persons by air. File tax 1040ez free online For example, this applies to mileage awards purchased by credit card companies, telephone companies, restaurants, hotels, and other businesses. File tax 1040ez free online   Generally, the percentage tax does not apply to amounts paid for mileage awards where the mileage awards cannot, under any circumstances, be redeemed for air transportation that is subject to the tax. File tax 1040ez free online Until regulations are issued, the following rules apply to mileage awards. File tax 1040ez free online Amounts paid for mileage awards that cannot be redeemed for taxable transportation beginning and ending in the United States are not subject to the tax. File tax 1040ez free online For this rule, mileage awards issued by a foreign air carrier are considered to be usable only on that foreign air carrier and thus not redeemable for taxable transportation beginning and ending in the United States. File tax 1040ez free online Therefore, amounts paid to a foreign air carrier for mileage awards are not subject to the tax. File tax 1040ez free online Amounts paid by an air carrier to a domestic air carrier for mileage awards that can be redeemed for taxable transportation are not subject to the tax to the extent those miles will be awarded in connection with the purchase of taxable transportation. File tax 1040ez free online Amounts paid by an air carrier to a domestic air carrier for mileage awards that can be redeemed for taxable transportation are subject to the tax to the extent those miles will not be awarded in connection with the purchase of taxable transportation. File tax 1040ez free online Domestic-segment tax. File tax 1040ez free online   The domestic-segment tax is a flat dollar amount for each segment of taxable transportation for which an amount is paid. File tax 1040ez free online However, see Rural airports, later. File tax 1040ez free online A segment is a single takeoff and a single landing. File tax 1040ez free online The amount of the domestic-segment tax is in the Instructions for Form 720. File tax 1040ez free online Charter flights. File tax 1040ez free online    If an aircraft is chartered, the domestic-segment tax for each segment of taxable transportation is figured by multiplying the tax by the number of passengers transported on the aircraft. File tax 1040ez free online Rural airports. File tax 1040ez free online   The domestic-segment tax does not apply to a segment to or from a rural airport. File tax 1040ez free online An airport is a rural airport for a calendar year if fewer than 100,000 commercial passengers departed from the airport by air during the second preceding calendar year (the 100,000 passenger rule), and one of the following is true: The airport is not located within 75 miles of another airport from which 100,000 or more commercial passengers departed during the second preceding calendar year, The airport was receiving essential air service subsidies as of August 5, 1997, or The airport is not connected by paved roads to another airport. File tax 1040ez free online   To apply the 100,000 passenger rule to any airport described in (3) above, only count commercial passengers departing from the airport by air on flight segments of at least 100 miles. File tax 1040ez free online   An updated list of rural airports can be found on the Department of Transportation website at www. File tax 1040ez free online dot. File tax 1040ez free online gov and enter the phrase “Essential Air Service” in the search box. File tax 1040ez free online Taxable transportation. File tax 1040ez free online   Taxable transportation is transportation by air that meets either of the following tests. File tax 1040ez free online It begins and ends either in the United States or at any place in Canada or Mexico not more than 225 miles from the nearest point on the continental United States boundary (this is the 225-mile zone). File tax 1040ez free online It is directly or indirectly from one port or station in the United States to another port or station in the United States, but only if it is not a part of uninterrupted international air transportation, discussed later. File tax 1040ez free online Round trip. File tax 1040ez free online   A round trip is considered two separate trips. File tax 1040ez free online The first trip is from the point of departure to the destination. File tax 1040ez free online The second trip is the return trip from that destination. File tax 1040ez free online Uninterrupted international air transportation. File tax 1040ez free online   This means transportation entirely by air that does not begin and end in the United States or in the 225-mile zone if there is not more than a 12-hour scheduled interval between arrival and departure at any station in the United States. File tax 1040ez free online For a special rule that applies to military personnel, see Exemptions, later. File tax 1040ez free online Transportation between the continental U. File tax 1040ez free online S. File tax 1040ez free online and Alaska or Hawaii. File tax 1040ez free online   This transportation is partially exempt from the tax on transportation of persons by air. File tax 1040ez free online The tax does not apply to the part of the trip between the point at which the route of transportation leaves or enters the continental United States (or a port or station in the 225-mile zone) and the point at which it enters or leaves Hawaii or Alaska. File tax 1040ez free online Leaving or entering occurs when the route of the transportation passes over either the United States border or a point 3 nautical miles (3. File tax 1040ez free online 45 statute miles) from low tide on the coast line, or when it leaves a port or station in the 225-mile zone. File tax 1040ez free online Therefore, this transportation is subject to the percentage tax on the part of the trip in U. File tax 1040ez free online S. File tax 1040ez free online airspace, the domestic-segment tax for each domestic segment, and the tax on the use of international air travel facilities, discussed later. File tax 1040ez free online Transportation within Alaska or Hawaii. File tax 1040ez free online   The tax on transportation of persons by air applies to the entire fare paid in the case of flights between any of the Hawaiian Islands, and between any ports or stations in the Aleutian Islands or other ports or stations elsewhere in Alaska. File tax 1040ez free online The tax applies even though parts of the flights may be over international waters or over Canada, if no point on the direct line of transportation between the ports or stations is more than 225 miles from the United States (Hawaii or Alaska). File tax 1040ez free online Package tours. File tax 1040ez free online   The air transportation taxes apply to “complimentary” air transportation furnished solely to participants in package holiday tours. File tax 1040ez free online The amount paid for these package tours includes a charge for air transportation even though it may be advertised as “free. File tax 1040ez free online ” This rule also applies to the tax on the use of international air travel facilities, discussed later. File tax 1040ez free online Liability for tax. File tax 1040ez free online   The person paying for taxable transportation is liable for the tax and, ordinarily, the person receiving the payment collects the tax, files the returns, and pays the tax over to the government. File tax 1040ez free online However, if payment is made outside the United States for a prepaid order, exchange order, or similar order, the person furnishing the initial transportation provided for under that order must collect the tax. File tax 1040ez free online    A travel agency that is an independent broker and sells tours on aircraft that it charters must collect the transportation tax, file the returns, and pay the tax over to the government. File tax 1040ez free online However, a travel agency that sells tours as the agent of an airline must collect the tax and remit it to the airline for the filing of returns and for the payment of the tax over to the government. File tax 1040ez free online An independent third party that is not under the airline's supervision or control, but is acting on behalf of, and receiving compensation from, a passenger, is not required to collect the tax and pay it to the government. File tax 1040ez free online For more information on resellers of air transportation, see Revenue Ruling 2006-52. File tax 1040ez free online You can find Revenue Ruling 2006-52 on page 761 of I. File tax 1040ez free online R. File tax 1040ez free online B. File tax 1040ez free online 2006-43 at www. File tax 1040ez free online irs. File tax 1040ez free online gov/pub/irs-irbs/irb06-43. File tax 1040ez free online pdf. File tax 1040ez free online   The fact that the aircraft does not use public or commercial airports in taking off and landing has no effect on the tax. File tax 1040ez free online But see Certain helicopter uses, later. File tax 1040ez free online   For taxable transportation that begins and ends in the United States, the tax applies regardless of whether the payment is made in or outside the United States. File tax 1040ez free online   If the tax is not paid when payment for the transportation is made, the air carrier providing the initial segment of the transportation that begins or ends in the United States becomes liable for the tax. File tax 1040ez free online Exemptions. File tax 1040ez free online   The tax on transportation of persons by air does not apply in the following situations. File tax 1040ez free online See also Special Rules on Transportation Taxes, later. File tax 1040ez free online Military personnel on international trips. File tax 1040ez free online   When traveling in uniform at their own expense, United States military personnel on authorized leave are deemed to be traveling in uninterrupted international air transportation (defined earlier) even if the scheduled interval between arrival and departure at any station in the United States is actually more than 12 hours. File tax 1040ez free online However, such personnel must buy their tickets within 12 hours after landing at the first domestic airport and accept the first available accommodation of the type called for by their tickets. File tax 1040ez free online The trip must begin or end outside the United States and the 225-mile zone. File tax 1040ez free online Certain helicopter uses. File tax 1040ez free online   The tax does not apply to air transportation by helicopter if the helicopter is used for any of the following purposes. File tax 1040ez free online Transporting individuals, equipment, or supplies in the exploration for, or the development or removal of, hard minerals, oil, or gas. File tax 1040ez free online Planting, cultivating, cutting, transporting, or caring for trees (including logging operations). File tax 1040ez free online Providing emergency medical transportation. File tax 1040ez free online   However, during a use described in items (1) or (2), the tax applies if the helicopter takes off from, or lands at, a facility eligible for assistance under the Airport and Airway Development Act of 1970, or otherwise uses services provided under section 44509 or 44913(b) or subchapter I of chapter 471 of title 49, United States Code. File tax 1040ez free online For item (1), treat each flight segment as a separate flight. File tax 1040ez free online Fixed-wing aircraft uses. File tax 1040ez free online   The tax does not apply to air transportation by fixed-wing aircraft if the fixed-wing aircraft is used for any of the following purposes. File tax 1040ez free online Planting, cultivating, cutting, transporting, or caring for trees (including logging operations). File tax 1040ez free online Providing emergency medical transportation. File tax 1040ez free online The aircraft must be equipped for and exclusively dedicated on that flight to acute care emergency medical services. File tax 1040ez free online   However, during a use described in item (1), the tax applies if the fixed-wing aircraft takes off from, or lands at, a facility eligible for assistance under the Airport and Airway Development Act of 1970, or otherwise uses services provided under section 44509 or 44913(b) or subchapter I of chapter 471 of title 49, United States Code. File tax 1040ez free online Skydiving. File tax 1040ez free online   The tax does not apply to any air transportation exclusively for the purpose of skydiving. File tax 1040ez free online Seaplanes. File tax 1040ez free online   The tax does not apply to any air transportation by seaplane for any segment consisting of a takeoff from, and a landing on, water if the places where the takeoff and landing occur are not receiving financial assistance from the Airport and Airways Trust Fund. File tax 1040ez free online Bonus tickets. File tax 1040ez free online   The tax does not apply to free bonus tickets issued by an airline company to its customers who have satisfied all requirements to qualify for the bonus tickets. File tax 1040ez free online However, the tax applies to amounts paid by customers for advance bonus tickets when customers have traveled insufficient mileage to fully qualify for the free advance bonus tickets. File tax 1040ez free online International Air Travel Facilities A tax per person is imposed (whether in or outside the United States) for international flights that begin or end in the United States. File tax 1040ez free online However, for a domestic segment that begins or ends in Alaska or Hawaii, a reduced tax per person applies only to departures. File tax 1040ez free online This tax does not apply if all the transportation is subject to the percentage tax, discussed earlier. File tax 1040ez free online It also doesn't apply if the surtax on fuel used in a fractional ownership program aircraft (discussed earlier) is imposed. File tax 1040ez free online See the Instructions for Form 720 for the tax rates. File tax 1040ez free online Transportation of Property by Air A tax of 6. File tax 1040ez free online 25% is imposed on amounts paid (whether in or outside the United States) for transportation of property by air. File tax 1040ez free online The fact that the aircraft may not use public or commercial airports in taking off and landing has no effect on the tax. File tax 1040ez free online The tax applies only to amounts paid to a person engaged in the business of transporting property by air for hire. File tax 1040ez free online The tax applies only to transportation (including layover time and movement of aircraft in deadhead service) that begins and ends in the United States. File tax 1040ez free online Thus, the tax does not apply to transportation of property by air that begins or ends outside the United States. File tax 1040ez free online Exemptions. File tax 1040ez free online   The tax on transportation of property by air does not apply in the following situations. File tax 1040ez free online See also Special Rules on Transportation Taxes, later. File tax 1040ez free online Cropdusting and firefighting service. File tax 1040ez free online   The tax does not apply to amounts paid for cropdusting or aerial firefighting service. File tax 1040ez free online Exportation. File tax 1040ez free online    The tax does not apply to payments for transportation of property by air in the course of exportation (including to United States possessions) by continuous movement, as evidenced by the execution of Form 1363, Export Exemption Certificate. File tax 1040ez free online See Form 1363 for more information. File tax 1040ez free online Certain helicopter and fixed-wing air ambulance uses. File tax 1040ez free online   The tax does not apply to amounts paid for the use of helicopters in construction to set heating and air conditioning units on roofs of buildings, to dismantle tower cranes, and to aid in construction of power lines and ski lifts. File tax 1040ez free online   The tax also does not apply to air transportation by helicopter or fixed-wing aircraft for the purpose of providing emergency medical services. File tax 1040ez free online The fixed-wing aircraft must be equipped for and exclusively dedicated on that flight to acute care emergency medical services. File tax 1040ez free online Skydiving. File tax 1040ez free online   The tax does not apply to any air transportation exclusively for the purpose of skydiving. File tax 1040ez free online Excess baggage. File tax 1040ez free online    The tax does not apply to excess baggage accompanying a passenger on an aircraft operated on an established line. File tax 1040ez free online Surtax on fuel used in a fractional ownership program aircraft. File tax 1040ez free online   The tax does not apply if the surtax on fuel used in a fractional ownership program aircraft (discussed earlier) is imposed. File tax 1040ez free online Alaska and Hawaii. File tax 1040ez free online   For transportation of property to and from Alaska and Hawaii, the tax in general does not apply to the portion of the transportation that is entirely outside the continental United States (or the 225-mile zone if the aircraft departs from or arrives at an airport in the 225-mile zone). File tax 1040ez free online But the tax applies to flights between ports or stations in Alaska and the Aleutian Islands, as well as between ports or stations in Hawaii. File tax 1040ez free online The tax applies even though parts of the flights may be over international waters or over Canada, if no point on a line drawn from where the route of transportation leaves the United States (Alaska) to where it reenters the United States (Alaska) is more than 225 miles from the United States. File tax 1040ez free online Liability for tax. File tax 1040ez free online   The person paying for taxable transportation is liable for the tax and, ordinarily, the person engaged in the business of transporting property by air for hire receives the payment, collects the tax, files the returns, and pays the tax over to the government. File tax 1040ez free online   If tax is not paid when a payment is made outside the United States, the person furnishing the last segment of taxable transportation collects the tax from the person to whom the property is delivered in the United States. File tax 1040ez free online Special Rules on Transportation Taxes In certain circumstances, special rules apply to the taxes on transportation of persons and property by air. File tax 1040ez free online Aircraft used by affiliated corporations. File tax 1040ez free online   The taxes do not apply to payments received by one member of an affiliated group of corporations from another member for services furnished in connection with the use of an aircraft. File tax 1040ez free online However, the aircraft must be owned or leased by a member of the affiliated group and cannot be available for hire by a nonmember of the affiliated group. File tax 1040ez free online Determine whether an aircraft is available for hire by a nonmember of an affiliated group on a flight-by-flight basis. File tax 1040ez free online   For this rule, an affiliated group of corporations is any group of corporations connected with a common parent corporation through 80% or more of stock ownership. File tax 1040ez free online Small aircraft. File tax 1040ez free online   The taxes do not apply to transportation furnished by an aircraft having a maximum certificated takeoff weight of 6,000 pounds or less. File tax 1040ez free online However, the taxes do apply if the aircraft is operated on an established line. File tax 1040ez free online “Operated on an established line” means the aircraft operates with some degree of regularity between definite points. File tax 1040ez free online However, it does not include any time an aircraft is being operated on a flight that is solely for sightseeing. File tax 1040ez free online   Consider an aircraft to be operated on an established line if it is operated on a charter basis between two cities also served by that carrier on a regularly scheduled basis. File tax 1040ez free online   Also, the taxes apply if the aircraft is jet-powered, regardless of its maximum certificated takeoff weight or whether or not it is operated on an established line. File tax 1040ez free online Mixed load of persons and property. File tax 1040ez free online   If a single amount is paid for air transportation of persons and property, the payment must be allocated between the amount subject to the tax on transportation of persons and the amount subject to the tax on transportation of property. File tax 1040ez free online The allocation must be reasonable and supported by adequate records. File tax 1040ez free online Credits or refunds. File tax 1040ez free online   If tax is collected and paid over for air transportation that is not taxable air transportation, the collector may claim a credit or refund if it has repaid the tax to the person from whom the tax was collected or obtained the consent of that person to the allowance of the credit or refund. File tax 1040ez free online Alternatively, the person who paid the tax may claim a refund. File tax 1040ez free online For information on how to file for credits or refunds, see the Instructions for Form 720 or Form 8849. 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As a taxpayer, you have rights the IRS must respect in its dealings with you. Our tax toolkit at www.TaxpayerAdvocate.irs.gov can help you understand those rights and how to protect them. The Taxpayer Advocate Service (TAS), your voice at the IRS, has designed this site for individuals, businesses, and tax professionals alike.  Go to www.TaxpayerAdvocate.irs.gov to find:

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The File Tax 1040ez Free Online

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