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Fill Out 1040x Form Online

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Fill out 1040x form online Publication 51 - Main Content Table of Contents 1. Fill out 1040x form online Taxpayer Identification NumbersWhen you receive your EIN. Fill out 1040x form online Registering for SSNVS. Fill out 1040x form online 2. Fill out 1040x form online Who Are Employees?Crew Leaders Business Owned and Operated by Spouses 3. Fill out 1040x form online Wages and Other Compensation 4. Fill out 1040x form online Social Security and Medicare TaxesThe $150 Test or the $2,500 Test Social Security and Medicare Tax Withholding 5. Fill out 1040x form online Federal Income Tax WithholdingImplementation of lock-in letter. Fill out 1040x form online Seasonal employees and employees not currently performing services. Fill out 1040x form online Termination and re-hire of employees. Fill out 1040x form online How To Figure Federal Income Tax Withholding 6. Fill out 1040x form online Required Notice to Employees About Earned Income Credit (EIC) 7. Fill out 1040x form online Depositing TaxesWhen To Deposit How To Deposit Deposit Penalties Employers of Both Farm and Nonfarm Workers 8. Fill out 1040x form online Form 943 9. Fill out 1040x form online Reporting Adjustments on Form 943Current Year Adjustments Prior Year Adjustments 10. Fill out 1040x form online Federal Unemployment (FUTA) Tax 11. Fill out 1040x form online Reconciling Wage Reporting Forms 13. Fill out 1040x form online Federal Income Tax Withholding MethodsWage Bracket Method Percentage Method Alternative Methods of Federal Income Tax Withholding How To Get Tax Help 1. Fill out 1040x form 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. Fill out 1040x form 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. Fill out 1040x form online Employer identification number (EIN). Fill out 1040x form online   An employer identification number (EIN) is a nine-digit number that the IRS issues. Fill out 1040x form online The digits are arranged as follows: 00-0000000. Fill out 1040x form online It is used to identify the tax accounts of employers and certain others who have no employees. Fill out 1040x form online Use your EIN on all of the items that you send to the IRS and SSA. Fill out 1040x form online   If you do not have an EIN, you may apply for one online. Fill out 1040x form online Visit IRS. Fill out 1040x form online gov and click on the Apply for an EIN Online link under Tools. Fill out 1040x form 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. Fill out 1040x form online Do not use a SSN in place of an EIN. Fill out 1040x form 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. Fill out 1040x form online If you took over another employer's business, do not use that employer's EIN. Fill out 1040x form online   You should have only one EIN. Fill out 1040x form 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). Fill out 1040x form 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. Fill out 1040x form online The IRS will tell you which EIN to use. Fill out 1040x form online   For more information, see Publication 1635 or Publication 583. Fill out 1040x form online When you receive your EIN. Fill out 1040x form 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). Fill out 1040x form 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. Fill out 1040x form 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. Fill out 1040x form 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. Fill out 1040x form online Social security number (SSN). Fill out 1040x form online   An employee's social security number (SSN) consists of nine digits arranged as follows: 000-00-0000. Fill out 1040x form 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. Fill out 1040x form online Do not accept a social security card that says “Not valid for employment. Fill out 1040x form online ” A social security number issued with this legend does not permit employment. Fill out 1040x form online You may, but are not required to, photocopy the social security card if the employee provides it. Fill out 1040x form 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. Fill out 1040x form online See Publication 1586, Reasonable Cause Regulations & Requirements for Missing and Incorrect Name/TINs. Fill out 1040x form online Applying for a social security card. Fill out 1040x form 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. Fill out 1040x form 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. Fill out 1040x form online socialsecurity. Fill out 1040x form online gov/online/ss-5. Fill out 1040x form online html. Fill out 1040x form online The employee must complete and sign Form SS-5; it cannot be filed by the employer. Fill out 1040x form 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. Fill out 1040x form online Applying for a social security number. Fill out 1040x form 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. Fill out 1040x form online If you are filing electronically, enter all zeros (000-00-0000) in the social security number field. Fill out 1040x form 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. Fill out 1040x form online Furnish Copies B, C, and 2 of Form W-2c to the employee. Fill out 1040x form 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. Fill out 1040x form online For more information, visit SSA's Employer W-2 Filing Instructions & Information webpage at www. Fill out 1040x form online socialsecurity. Fill out 1040x form online gov/employer. Fill out 1040x form online Advise your employee to correct the SSN on his or her original Form W-2. Fill out 1040x form online Correctly record the employee's name and SSN. Fill out 1040x form online   Record the name and number of each employee as they are shown on the employee's social security card. Fill out 1040x form 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. Fill out 1040x form 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. Fill out 1040x form 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. Fill out 1040x form 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. Fill out 1040x form online IRS individual taxpayer identification numbers (ITINs) for aliens. Fill out 1040x form online   Do not accept an ITIN in place of an SSN for employee identification or for work. Fill out 1040x form 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. Fill out 1040x form online S. Fill out 1040x form online employment. Fill out 1040x form online The ITIN is a nine-digit number formatted like an SSN (for example, NNN-NN-NNNN). Fill out 1040x form 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). Fill out 1040x form online    An individual with an ITIN who later becomes eligible to work in the United States must obtain an SSN. Fill out 1040x form 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. Fill out 1040x form online Do not use an ITIN in place of an SSN on Form W-2. Fill out 1040x form online Verification of social security numbers. Fill out 1040x form 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. Fill out 1040x form online Visit www. Fill out 1040x form online socialsecurity. Fill out 1040x form online gov/employer/ssnv. Fill out 1040x form online htm for more information. Fill out 1040x form online Registering for SSNVS. Fill out 1040x form online   You must register online and receive authorization from your employer to use SSNVS. Fill out 1040x form online To register, visit SSA's website at www. Fill out 1040x form online socialsecurity. Fill out 1040x form online gov/employer and click on the Business Services Online link. Fill out 1040x form online Follow the registration instructions to obtain a user identification (ID) and password. Fill out 1040x form online You will need to provide the following information about yourself and your company. Fill out 1040x form online Name. Fill out 1040x form online SSN. Fill out 1040x form online Date of birth. Fill out 1040x form online Type of employer. Fill out 1040x form online EIN. Fill out 1040x form online Company name, address, and telephone number. Fill out 1040x form online Email address. Fill out 1040x form online When you have completed the online registration process, SSA will mail a one-time activation code to your employer. Fill out 1040x form online You must enter the activation code online to use SSNVS. Fill out 1040x form online 2. Fill out 1040x form online Who Are Employees? Generally, employees are defined either under common law or under statutes for certain situations. Fill out 1040x form online See Publication 15-A for details on statutory employees and nonemployees. Fill out 1040x form online Employee status under common law. Fill out 1040x form 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. Fill out 1040x form online This is so even when you give the employee freedom of action. Fill out 1040x form online What matters is that you have the right to control the details of how the services are performed. Fill out 1040x form online See Publication 15-A for more information on how to determine whether an individual providing services is an independent contractor or an employee. Fill out 1040x form online If an employer-employee relationship exists, it does not matter what it is called. Fill out 1040x form online The employee may be called an agent or independent contractor. Fill out 1040x form 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. Fill out 1040x form online You are responsible for withholding and paying employment taxes for your employees. Fill out 1040x form online You are also required to file employment tax returns. Fill out 1040x form online These requirements do not apply to amounts that you pay to independent contractors. Fill out 1040x form online The rules discussed in this publication apply only to workers who are your employees. Fill out 1040x form 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. Fill out 1040x form 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. Fill out 1040x form 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. Fill out 1040x form 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. Fill out 1040x form online Crew Leaders If you are a crew leader, you are an employer of farmworkers. Fill out 1040x form 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. Fill out 1040x form 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. Fill out 1040x form online For FUTA tax rules, see section 10. Fill out 1040x form 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. Fill out 1040x form online See Publication 541, Partnerships, for more details. Fill out 1040x form online The partnership is considered the employer of any employees, and is liable for any employment taxes due on wages paid to its employees. Fill out 1040x form online Exception—Qualified joint venture. Fill out 1040x form 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. Fill out 1040x form 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). Fill out 1040x form 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. Fill out 1040x form online Each spouse must also file a separate Schedule SE to pay self-employment taxes, as applicable. Fill out 1040x form online   Spouses using the qualified joint venture rules are treated as sole proprietors for federal tax purposes and generally do not need an EIN. Fill out 1040x form 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. Fill out 1040x form online Generally, filing as a qualified joint venture will not increase the spouses' total tax owed on the joint income tax return. Fill out 1040x form 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. Fill out 1040x form online    Note. Fill out 1040x form online If your spouse is your employee, not your partner, you must pay social security and Medicare taxes for him or her. Fill out 1040x form online   For more information on qualified joint ventures, visit IRS. Fill out 1040x form online gov and enter “qualified joint venture” in the search box. Fill out 1040x form online Exception—Community income. Fill out 1040x form 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. Fill out 1040x form online S. Fill out 1040x form online possession, you can treat the business either as a sole proprietorship (of the spouse who carried on the business) or a partnership. Fill out 1040x form online You may still make an election to be taxed as a qualified joint venture instead of a partnership. Fill out 1040x form online See Exception—Qualified joint venture , earlier in this section. Fill out 1040x form online 3. Fill out 1040x form online Wages and Other Compensation Cash wages that you pay to employees for farmwork are generally subject to social security tax and Medicare tax. Fill out 1040x form online You may also be required to withhold, deposit, and report Additional Medicare Tax. Fill out 1040x form online See section 4 for more information. Fill out 1040x form online If the wages are subject to social security and Medicare taxes, they are also subject to federal income tax withholding. Fill out 1040x form online You may also be liable for FUTA tax, which is not withheld by you or paid by the employee. Fill out 1040x form online FUTA tax is discussed in section 10. Fill out 1040x form online Cash wages include checks, money orders, etc. Fill out 1040x form online Do not count as cash wages the value of food, lodging, and other noncash items. Fill out 1040x form online For more information on what payments are considered taxable wages, see Publication 15 (Circular E). Fill out 1040x form online Commodity wages. Fill out 1040x form online   Commodity wages are not cash and are not subject to social security and Medicare taxes or federal income tax withholding. Fill out 1040x form online However, noncash payments, including commodity wages, are treated as cash wages (see above) if the substance of the transaction is a cash payment. Fill out 1040x form online These noncash payments are subject to social security and Medicare taxes and federal income tax withholding. Fill out 1040x form online Other compensation. Fill out 1040x form online   Publications 15-A and 15-B discuss other forms of compensation that may be taxable. Fill out 1040x form online Family members. Fill out 1040x form 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. Fill out 1040x form online However, certain exemptions may apply for your child, spouse, or parent. Fill out 1040x form online See the table, How Do Employment Taxes Apply to Farmwork , in section 12. Fill out 1040x form online Household employees. Fill out 1040x form 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. Fill out 1040x form 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. Fill out 1040x form 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. Fill out 1040x form online   For more information, see Publication 926, Household Employer's Tax Guide. Fill out 1040x form online    Wages for household work may not be a deductible farm expense. Fill out 1040x form online See Publication 225, Farmer's Tax Guide. Fill out 1040x form online Share farmers. Fill out 1040x form online   You do not have to withhold or pay social security and Medicare taxes on amounts paid to share farmers under share-farming arrangements. Fill out 1040x form online Compensation paid to H-2A visa holders. Fill out 1040x form 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. Fill out 1040x form online On Form W-2, do not check box 13 (Statutory employee), as H-2A workers are not statutory employees. Fill out 1040x form 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. Fill out 1040x form online In that case, the worker must give the employer a completed Form W-4. Fill out 1040x form online Federal income tax withheld should be reported in box 2 of Form W-2. Fill out 1040x form online These reporting rules apply when the H-2A worker provides his or her taxpayer identification number (TIN) to the employer. Fill out 1040x form 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. Fill out 1040x form online 4. Fill out 1040x form 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. Fill out 1040x form online You may also be required to withhold Additional Medicare Tax. Fill out 1040x form online For more information, see Additional Medicare Tax withholding , later. Fill out 1040x form 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. Fill out 1040x form 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). Fill out 1040x form online The $150 test applies separately to each farmworker that you employ. Fill out 1040x form online If you employ a family of workers, each member is treated separately. Fill out 1040x form online Do not count wages paid by other employers. Fill out 1040x form online The total that you pay for farmwork (cash and noncash) to all your employees is $2,500 or more during the year. Fill out 1040x form online Exceptions. Fill out 1040x form 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. Fill out 1040x form 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. Fill out 1040x form online Social Security and Medicare Tax Withholding The social security tax rate is 6. Fill out 1040x form online 2%, for both the employee and employer, on the first $117,000 paid to each employee. Fill out 1040x form online You must withhold at this rate from each employee and pay a matching amount. Fill out 1040x form online The Medicare tax rate is 1. Fill out 1040x form online 45% each for the employee and employer on all wages. Fill out 1040x form online You must withhold at this rate from each employee and pay a matching amount. Fill out 1040x form online There is no wage base limit for Medicare tax; all covered wages are subject to Medicare tax. Fill out 1040x form online Social security and Medicare taxes apply to most payments of sick pay, including payments made by third parties such as insurance companies. Fill out 1040x form online For details, see Publication 15-A. Fill out 1040x form online Additional Medicare Tax withholding. Fill out 1040x form online   In addition to withholding Medicare tax at 1. Fill out 1040x form online 45%, you must withhold a 0. Fill out 1040x form online 9% Additional Medicare Tax from wages you pay to an employee in excess of $200,000 in a calendar year. Fill out 1040x form 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. Fill out 1040x form online Additional Medicare Tax is only imposed on the employee. Fill out 1040x form online There is no employer share of Additional Medicare Tax. Fill out 1040x form 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. Fill out 1040x form 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). Fill out 1040x form online For more information on Additional Medicare Tax, visit IRS. Fill out 1040x form online gov and enter “Additional Medicare Tax” in the search box. Fill out 1040x form online Employee share paid by employer. Fill out 1040x form 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. Fill out 1040x form online If you do not withhold the taxes, however, you must still pay them. Fill out 1040x form online Any employee social security and Medicare taxes that you pay is additional income to the employee. Fill out 1040x form 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. Fill out 1040x form online Also, do not count the additional income as wages for FUTA tax purposes. Fill out 1040x form online Different rules apply to employer payments of social security and Medicare taxes for non-household and non-agricultural employees. Fill out 1040x form online See section 7 of Publication 15-A. Fill out 1040x form online Withholding social security and Medicare taxes on nonresident alien employees. Fill out 1040x form 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. Fill out 1040x form online S. Fill out 1040x form online citizen or resident alien. Fill out 1040x form online However, see Publication 515, Withholding of Tax on Nonresident Aliens and Foreign Entities, for exceptions to this general rule. Fill out 1040x form online Also see Compensation paid to H-2A visa holders in section 3. Fill out 1040x form online Religious exemption. Fill out 1040x form online    An exemption from social security and Medicare taxes is available to members of a recognized religious sect opposed to public insurance. Fill out 1040x form online This exemption is available only if both the employee and the employer are members of the sect. Fill out 1040x form online   For more information, see Publication 517, Social Security and Other Information for Members of the Clergy and Religious Workers. Fill out 1040x form online 5. Fill out 1040x form 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. Fill out 1040x form online The amount to withhold is figured on gross wages before taking out social security and Medicare taxes, union dues, insurance, etc. Fill out 1040x form online You may use one of several methods to determine the amount of federal income tax withholding. Fill out 1040x form online They are discussed in section 13. Fill out 1040x form online Form W-4. Fill out 1040x form 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. Fill out 1040x form 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. Fill out 1040x form online Advise your employees to use the IRS Withholding Calculator on the IRS website at www. Fill out 1040x form online irs. Fill out 1040x form online gov/individuals for help in determining how many withholding allowances to claim on their Form W-4. Fill out 1040x form online   Ask each new employee to give you a signed Form W-4 when starting work. Fill out 1040x form online Make the form effective with the first wage payment. Fill out 1040x form 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. Fill out 1040x form online Forms in Spanish. Fill out 1040x form online   You can provide Formulario W-4(SP) in place of Form W-4 to your Spanish-speaking employees. Fill out 1040x form online For more information, see Publicación 17(SP). Fill out 1040x form online Effective date of Form W-4. Fill out 1040x form online   A Form W-4 remains in effect until the employee gives you a new one. Fill out 1040x form online When you receive a new Form W-4, do not adjust withholding for pay periods before the effective date of the new form. Fill out 1040x form online Do not adjust withholding retroactively. Fill out 1040x form 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. Fill out 1040x form 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. Fill out 1040x form online A Form W-4 that makes a change for the next calendar year will not take effect in the current calendar year. Fill out 1040x form online Completing Form W-4. Fill out 1040x form online   The amount of federal income tax withholding is based on marital status and withholding allowances. Fill out 1040x form online Your employees may not base their withholding amounts on a fixed dollar amount or percentage. Fill out 1040x form 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. Fill out 1040x form online   Employees may claim fewer withholding allowances than they are entitled to claim. Fill out 1040x form 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. Fill out 1040x form online   See Publication 505, Tax Withholding and Estimated Tax, for more information about completing Form W-4. Fill out 1040x form online Along with Form W-4, you may wish to order Publication 505 for use by your employees. Fill out 1040x form online    Do not accept any withholding or estimated tax payments from your employees in addition to withholding based on their Form W-4. Fill out 1040x form 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. Fill out 1040x form online Exemption from federal income tax withholding. Fill out 1040x form 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. Fill out 1040x form online See the Form W-4 instructions for more information. Fill out 1040x form online However, the wages are still subject to social security and Medicare taxes. Fill out 1040x form online   A Form W-4 claiming exemption from withholding is effective when it is filed with the employer and only for that calendar year. Fill out 1040x form 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. Fill out 1040x form 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. Fill out 1040x form 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. Fill out 1040x form online Withholding income taxes on the wages of nonresident alien employees. Fill out 1040x form online   In general, you must withhold federal income taxes on the wages of nonresident alien employees. Fill out 1040x form online However, see Publication 515 for exceptions to this general rule. Fill out 1040x form online Also see Compensation paid to H-2A visa workers in section 3. Fill out 1040x form online Withholding adjustment for nonresident alien employees. Fill out 1040x form 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. Fill out 1040x form 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. Fill out 1040x form online See Withholding adjustment for nonresident alien employees in section 9 of Publication 15 (Circular E). Fill out 1040x form online Nonresident alien employee's Form W-4. Fill out 1040x form 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. Fill out 1040x form 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. Fill out 1040x form 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. Fill out 1040x form online Form 8233. Fill out 1040x form 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. Fill out 1040x form online See Publication 515 for details. Fill out 1040x form online IRS review of requested Forms W-4. Fill out 1040x form online   When requested by the IRS, you must make original Forms W-4 available for inspection by an IRS employee. Fill out 1040x form online You may also be directed to send certain Forms W-4 to the IRS. Fill out 1040x form 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. Fill out 1040x form 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. Fill out 1040x form 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. Fill out 1040x form online When we refer to Form W-4, the same rules apply to Formulario W-4(SP), its Spanish translation. Fill out 1040x form 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). Fill out 1040x form 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”). Fill out 1040x form online Initial lock-in letter. Fill out 1040x form online   The IRS uses information reported on Form W-2 to identify employees with withholding compliance problems. Fill out 1040x form 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. Fill out 1040x form 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. Fill out 1040x form 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. Fill out 1040x form online You may follow any reasonable business practice to furnish the employee copy to the employee. Fill out 1040x form online Implementation of lock-in letter. Fill out 1040x form 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. Fill out 1040x form online You must begin withholding tax on the basis of the notice for any wages paid after the date specified in the notice. Fill out 1040x form 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. Fill out 1040x form online Seasonal employees and employees not currently performing services. Fill out 1040x form 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. Fill out 1040x form 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. Fill out 1040x form online You reasonably expect the employee to resume services within 12 months of the date of the notice. Fill out 1040x form 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. Fill out 1040x form online Termination and re-hire of employees. Fill out 1040x form 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. Fill out 1040x form 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. Fill out 1040x form online Modification notice. Fill out 1040x form 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. Fill out 1040x form online The modification notice may change the marital status and/or the number of withholding allowances permitted. Fill out 1040x form online You must withhold federal income tax based on the effective date specified in the modification notice. Fill out 1040x form online New Form W-4 after IRS notice. Fill out 1040x form 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. Fill out 1040x form 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. Fill out 1040x form 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. Fill out 1040x form 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. Fill out 1040x form online Otherwise, disregard any subsequent Forms W-4 provided by the employee and withhold based on the IRS notice or modification notice. Fill out 1040x form online Substitute Forms W-4. Fill out 1040x form online   You are encouraged to have your employees use the official version of Form W-4 to claim withholding allowances or exemption from withholding. Fill out 1040x form online Call the IRS at 1-800-TAX-FORM (1-800-829-3676) or visit IRS. Fill out 1040x form online gov to obtain copies of Form W-4. Fill out 1040x form online   You may use a substitute version of Form W-4 to meet your business needs. Fill out 1040x form 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. Fill out 1040x form 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. Fill out 1040x form 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. Fill out 1040x form online However, continue to use any valid Forms W-4 developed by your employees that you accepted before October 11, 2007. Fill out 1040x form online Invalid Forms W-4. Fill out 1040x form online   Any unauthorized change or addition to Form W-4 makes it invalid. Fill out 1040x form online This includes taking out any language by which the employee certifies that the form is correct. Fill out 1040x form 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. Fill out 1040x form online An employee who submits a false Form W-4 may be subject to a $500 penalty. Fill out 1040x form 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. Fill out 1040x form online   When you get an invalid Form W-4, do not use it to figure federal income tax withholding. Fill out 1040x form online Tell the employee that it is invalid and ask for another one. Fill out 1040x form online If the employee does not give you a valid one, withhold taxes as if the employee was single and claiming no withholding allowances. Fill out 1040x form online However, if you have an earlier Form W-4 for this worker that is valid, withhold as you did before. Fill out 1040x form online   For additional information about these rules, see Treasury Decision 9337, 2007-35 I. Fill out 1040x form online R. Fill out 1040x form online B. Fill out 1040x form online 455, available at www. Fill out 1040x form online irs. Fill out 1040x form online gov/irb/2007-35_IRB/ar10. Fill out 1040x form online html. Fill out 1040x form online Amounts exempt from levy on wages, salary, and other income. Fill out 1040x form 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. Fill out 1040x form 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. Fill out 1040x form 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. Fill out 1040x form online How To Figure Federal Income Tax Withholding There are several ways to figure federal income tax withholding. Fill out 1040x form online Wage bracket tables. Fill out 1040x form online See section 13 for directions on how to use the tables. Fill out 1040x form online Percentage method. Fill out 1040x form online See section 13 for directions on how to use the percentage method. Fill out 1040x form online Alternative formula tables for percentage method withholding. Fill out 1040x form online See Publication 15-A. Fill out 1040x form online Wage bracket percentage method withholding tables. Fill out 1040x form online See Publication 15-A. Fill out 1040x form online Other alternative methods. Fill out 1040x form online See Publication 15-A. Fill out 1040x form 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. Fill out 1040x form online If an employee wants additional federal tax withheld, have the employee show the extra amount on Form W-4. Fill out 1040x form online Supplemental wages. Fill out 1040x form online   Supplemental wages are wage payments to an employee that are not regular wages. Fill out 1040x form 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. Fill out 1040x form online Other payments subject to the supplemental wage rules include taxable fringe benefits and expense allowances paid under a nonaccountable plan. Fill out 1040x form 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. Fill out 1040x form 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. Fill out 1040x form 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. Fill out 1040x form online Withhold a flat 25% (no other percentage allowed). Fill out 1040x form online If the supplemental wages are paid concurrently with regular wages, add the supplemental wages to the concurrently paid regular wages. Fill out 1040x form 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. Fill out 1040x form online Figure the income tax withholding as if the total of the regular wages and supplemental wages is a single payment. Fill out 1040x form online Subtract the tax withheld from the regular wages. Fill out 1040x form online Withhold the remaining tax from the supplemental wages. Fill out 1040x form 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. Fill out 1040x form 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. Fill out 1040x form 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. Fill out 1040x form online    Separate rules apply to any supplemental wages exceeding $1 million that you pay to an individual during the year. Fill out 1040x form online See section 7 in Publication 15 (Circular E) for details. Fill out 1040x form 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. Fill out 1040x form online 6. Fill out 1040x form 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. Fill out 1040x form 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. Fill out 1040x form online This is because eligible employees may get a refund of the amount of EIC that is more than the tax that they owe. Fill out 1040x form 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. Fill out 1040x form 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. Fill out 1040x form 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. Fill out 1040x form 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. Fill out 1040x form online If Form W-2 is not required, you must notify the employee by February 7, 2014. Fill out 1040x form online 7. Fill out 1040x form online Depositing Taxes Generally, you must deposit both the employer and employee shares of social security and Medicare taxes and federal income tax withheld. Fill out 1040x form online You must use electronic funds transfer to make all federal tax deposits. Fill out 1040x form online See How To Deposit , later in this section. Fill out 1040x form 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. Fill out 1040x form online For more information, see COBRA premium assistance credit under Introduction. Fill out 1040x form online Payment with return. Fill out 1040x form online   You may make payments with Forms 943 or 945 instead of depositing if one of the following applies. Fill out 1040x form 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. Fill out 1040x form 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. Fill out 1040x form online You are a monthly schedule depositor and make a payment in accordance with the Accuracy of Deposits Rule discussed later in this section. Fill out 1040x form online This payment may be $2,500 or more. Fill out 1040x form online Only monthly schedule depositors, defined later, are allowed to make an Accuracy of Deposits Rule payment with the return. Fill out 1040x form online Semiweekly schedule depositors must timely deposit the amount. Fill out 1040x form online See Accuracy of Deposits Rule and How To Deposit, later in this section. Fill out 1040x form 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. Fill out 1040x form online See Employers of Both Farm and Nonfarm Workers, later in this section. Fill out 1040x form online The rules for determining when to deposit Form 943 taxes are discussed below. Fill out 1040x form online See section 10 for the separate rules that apply to FUTA tax. Fill out 1040x form online Under these rules, you are classified as either a monthly schedule depositor or a semiweekly schedule depositor. Fill out 1040x form 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. Fill out 1040x form online The terms identify which set of rules you must follow when you incur a tax liability (for example, when you have a payday). Fill out 1040x form 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. Fill out 1040x form online If you reported $50,000 or less of Form 943 taxes for the lookback period, you are a monthly schedule depositor. Fill out 1040x form online If you reported more than $50,000 of Form 943 taxes for the lookback period, you are a semiweekly schedule depositor. Fill out 1040x form online Lookback period. Fill out 1040x form online   The lookback period is the second calendar year preceding the current calendar year. Fill out 1040x form online For example, the lookback period for 2014 is 2012. Fill out 1040x form online Example of deposit schedule based on lookback period. Fill out 1040x form online Rose Co. Fill out 1040x form online reported taxes on Form 943 as follows. Fill out 1040x form online 2012 — $48,000 2013 — $60,000 Rose Co. Fill out 1040x form 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. Fill out 1040x form online However, for 2015, Rose Co. Fill out 1040x form 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. Fill out 1040x form online Adjustments to lookback period taxes. Fill out 1040x form online   To determine your taxes for the lookback period, use only the tax that you reported on the original return (Form 943, line 9). Fill out 1040x form online Do not include adjustments shown on Form 943-X, Adjusted Employer's Annual Federal Tax Return for Agricultural Employees or Claim for Refund. Fill out 1040x form online Example of adjustments. Fill out 1040x form online An employer originally reported total tax of $45,000 for the lookback period in 2012. Fill out 1040x form 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. Fill out 1040x form online The total tax reported in the lookback period is still $45,000. Fill out 1040x form online The $10,000 adjustment is also not treated as part of the 2014 taxes. Fill out 1040x form online Deposit period. Fill out 1040x form online   The term “deposit period” refers to the period during which tax liabilities are accumulated for each required deposit due date. Fill out 1040x form online For monthly schedule depositors, the deposit period is a calendar month. Fill out 1040x form online The deposit periods for semiweekly schedule depositors are Wednesday through Friday and Saturday through Tuesday. Fill out 1040x form 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. Fill out 1040x form online You must deposit Form 943 taxes on payments made during a calendar month by the 15th day of the following month. Fill out 1040x form online Monthly schedule example. Fill out 1040x form online   Red Co. Fill out 1040x form online is a seasonal employer and a monthly schedule depositor. Fill out 1040x form online It pays wages each Friday. Fill out 1040x form online It paid wages during August 2014, but did not pay any wages during September. Fill out 1040x form online Red Co. Fill out 1040x form online must deposit the combined tax liabilities for the August paydays by September 15. Fill out 1040x form online Red Co. Fill out 1040x form 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. Fill out 1040x form online New employers. Fill out 1040x form 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. Fill out 1040x form 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). Fill out 1040x form 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. Fill out 1040x form online Under the semiweekly deposit schedule, deposit Form 943 taxes for payments made on Wednesday, Thursday, and/or Friday by the following Wednesday. Fill out 1040x form online Deposit amounts accumulated for payments made on Saturday, Sunday, Monday, and/or Tuesday by the following Friday. Fill out 1040x form 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. Fill out 1040x form 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. Fill out 1040x form online If you made no additional payments on Saturday through Tuesday, no deposit is due on Friday. Fill out 1040x form online Semiweekly schedule depositors must complete Form 943-A, Agricultural Employer's Record of Federal Tax Liability, and submit it with Form 943. Fill out 1040x form online Semiweekly Deposit Schedule IF the payday falls on a. Fill out 1040x form online . Fill out 1040x form online . Fill out 1040x form online THEN deposit taxes by the following. Fill out 1040x form online . Fill out 1040x form online . Fill out 1040x form online Wednesday, Thursday, and/or Friday Wednesday Saturday, Sunday, Monday, and/or Tuesday Friday Semiweekly schedule example. Fill out 1040x form online   Green, Inc. Fill out 1040x form online , is a semiweekly schedule depositor and pays wages once each month on the last Friday of the month. Fill out 1040x form online Green, Inc. Fill out 1040x form online , will deposit only once a month, but the deposit will be made under the semiweekly deposit schedule as follows. Fill out 1040x form online Green, Inc. Fill out 1040x form online 's tax liability for the April 25, 2014 (Friday), wage payment must be deposited by April 30, 2014 (Wednesday). Fill out 1040x form online Semiweekly deposit period spanning two quarters. Fill out 1040x form 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. Fill out 1040x form 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. Fill out 1040x form online Both deposits will be due Friday, April 4, 2014 (3 business days from the end of the semiweekly deposit period). Fill out 1040x form 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. Fill out 1040x form online A business day is any day other than a Saturday, Sunday, or legal holiday. Fill out 1040x form 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). Fill out 1040x form online Semiweekly schedule depositors   will always have 3 business days to make a deposit. Fill out 1040x form 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. Fill out 1040x form 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). Fill out 1040x form online Legal holiday. Fill out 1040x form online   The term “legal holiday” means any legal holiday in the District of Columbia. Fill out 1040x form online Legal holidays for 2014 are listed below. Fill out 1040x form online January 1— New Year's Day January 20— Birthday of Martin Luther King, Jr. Fill out 1040x form 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. Fill out 1040x form online For purposes of the $100,000 rule, do not continue accumulating a tax liability after the end of a deposit period. Fill out 1040x form 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. Fill out 1040x form online Thus, $95,000 must be deposited by Friday and $10,000 must be deposited by the following Wednesday. Fill out 1040x form 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. Fill out 1040x form online For example, Fir Co. Fill out 1040x form online is a semiweekly schedule depositor. Fill out 1040x form online On Monday, Fir Co. Fill out 1040x form online accumulates taxes of $110,000 and must deposit this amount on Tuesday, the next business day. Fill out 1040x form online On Tuesday, Fir Co. Fill out 1040x form online accumulates additional taxes of $30,000. Fill out 1040x form online Because the $30,000 is not added to the previous $110,000 and is less than $100,000, Fir Co. Fill out 1040x form online does not have to deposit the $30,000 until Friday (following the semiweekly deposit schedule). Fill out 1040x form 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. Fill out 1040x form online Example of the $100,000 next-day deposit rule. Fill out 1040x form online   Elm, Inc. Fill out 1040x form online , started its business on May 1, 2014. Fill out 1040x form online Because Elm, Inc. Fill out 1040x form online , is a new employer, the taxes for its lookback period are considered to be zero; therefore, Elm, Inc. Fill out 1040x form online , is a monthly schedule depositor. Fill out 1040x form online On May 8, Elm, Inc. Fill out 1040x form online , paid wages for the first time and accumulated taxes of $50,000. Fill out 1040x form online On May 9 (Friday), Elm, Inc. Fill out 1040x form online , paid wages and accumulated taxes of $60,000, for a total of $110,000. Fill out 1040x form online Because Elm, Inc. Fill out 1040x form online , accumulated $110,000 on May 9, it must deposit $110,000 by May 12 (Monday), the next business day. Fill out 1040x form online Elm, Inc. Fill out 1040x form online , became a semiweekly schedule depositor on May 10. Fill out 1040x form online It will be a semiweekly schedule depositor for the remainder of 2014 and for 2015. Fill out 1040x form online Accuracy of Deposits Rule You are required to deposit 100% of your tax liability on or before the deposit due date. Fill out 1040x form online However, penalties will not be applied for depositing less than 100% if both of the following conditions are met. Fill out 1040x form online Any deposit shortfall does not exceed the greater of $100 or 2% of the amount of taxes otherwise required to be deposited. Fill out 1040x form online The deposit shortfall is paid or deposited by the shortfall makeup date as described below. Fill out 1040x form 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. Fill out 1040x form online You may pay the shortfall with your Form 943 even if the amount is $2,500 or more. Fill out 1040x form 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. Fill out 1040x form online For example, if a semiweekly schedule depositor has a deposit shortfall during February 2014, the shortfall makeup date is March 19, 2014 (Wednesday). Fill out 1040x form online How To Deposit You must deposit employment taxes by electronic funds transfer. Fill out 1040x form 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. Fill out 1040x form online Electronic deposit requirement. Fill out 1040x form 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). Fill out 1040x form online Generally, electronic funds transfers are made using the Electronic Federal Tax Payment System (EFTPS). Fill out 1040x form 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. Fill out 1040x form online   EFTPS is a free service provided by the Department of Treasury. Fill out 1040x form 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). Fill out 1040x form online You can also visit the EFTPS website at www. Fill out 1040x form online eftps. Fill out 1040x form online gov. Fill out 1040x form online Additional information about EFTPS is also available in Publication 966. Fill out 1040x form online New employers that have a federal tax obligation will be pre-enrolled in EFTPS. Fill out 1040x form 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. Fill out 1040x form online See When you receive your EIN in section 1 for more information. Fill out 1040x form online Deposit record. Fill out 1040x form online   For your records, an Electronic Funds Transfer (EFT) Trace Number will be provided with each successful payment. Fill out 1040x form online The number can be used as a receipt or to trace the payment. Fill out 1040x form online Depositing on time. Fill out 1040x form online   For deposits made by EFTPS to be on time, you must initiate the deposit by 8 p. Fill out 1040x form online m. Fill out 1040x form online Eastern time the day before the date a deposit is due. Fill out 1040x form online If you use a third party to make a deposit on your behalf, they may have different cutoff times. Fill out 1040x form online Same-day payment option. Fill out 1040x form online   If you fail to initiate a deposit transaction on EFTPS by 8 p. Fill out 1040x form online m. Fill out 1040x form 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). Fill out 1040x form online To use the same-day payment method, you will need to make arrangements with your financial institution ahead of time. Fill out 1040x form online Please check with your financial institution regarding availability, deadlines, and costs. Fill out 1040x form online Your financial institution may charge you a fee for payments made this way. Fill out 1040x form 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. Fill out 1040x form online eftps. Fill out 1040x form online gov to download the Same-Day Payment Worksheet. Fill out 1040x form 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. Fill out 1040x form 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. Fill out 1040x form 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. Fill out 1040x form online For amounts not properly deposited or not deposited on time, the penalty rates are shown next. Fill out 1040x form online Penalty Charged for. Fill out 1040x form online . Fill out 1040x form online . Fill out 1040x form online 2% Deposits made 1 to 5 days late. Fill out 1040x form online 5% Deposits made 6 to 15 days late. Fill out 1040x form online 10% Deposits made 16 or more days late. Fill out 1040x form online Also applies to amounts paid within 10 days of the date of the first notice the IRS sent asking for the tax due. Fill out 1040x form online 10% Amounts (that should have been deposited) paid directly to the IRS or paid with your tax return. Fill out 1040x form online See Payment with return , earlier in this section, for exceptions. Fill out 1040x form 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. Fill out 1040x form online Late deposit penalty amounts are determined using calendar days, starting from the due date of the liability. Fill out 1040x form online Order in which deposits are applied. Fill out 1040x form online   Deposits generally are applied to the most recent tax liability within the year. Fill out 1040x form 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. Fill out 1040x form online Follow the instructions on the penalty notice that you received. Fill out 1040x form online For examples on how the IRS will apply deposits and more information on designating deposits, see Revenue Procedure 2001-58. Fill out 1040x form online You can find Revenue Procedure 2001-58 on page 579 of Internal Revenue Bulletin 2001-50 at www. Fill out 1040x form online irs. Fill out 1040x form online gov/pub/irs-irbs/irb01-50. Fill out 1040x form online pdf. Fill out 1040x form online Example. Fill out 1040x form online Cedar, Inc. Fill out 1040x form online , is required to make a deposit of $1,000 on July 15 and $1,500 on August 15. Fill out 1040x form online It does not make the deposit on July 15. Fill out 1040x form online On August 15, Cedar, Inc. Fill out 1040x form online , deposits $2,000. Fill out 1040x form 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. Fill out 1040x form online Accordingly, $500 of the July 15 liability remains undeposited. Fill out 1040x form online The penalty on this underdeposit will apply as explained above. Fill out 1040x form online Trust fund recovery penalty. Fill out 1040x form 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. Fill out 1040x form online The penalty is the full amount of the unpaid trust fund tax. Fill out 1040x form online This penalty may apply to you if these unpaid taxes cannot be immediately collected from the employer or business. Fill out 1040x form 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. Fill out 1040x form 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. Fill out 1040x form 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. Fill out 1040x form online    Willfully means voluntarily, consciously, and intentionally. Fill out 1040x form 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. Fill out 1040x form online “Average” failure-to-deposit penalty. Fill out 1040x form 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. Fill out 1040x form 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. Fill out 1040x form online Completed Form 943, line 17, instead of Form 943-A. Fill out 1040x form online Failed to attach a properly completed Form 943-A. Fill out 1040x form online Completed Form 943-A incorrectly, for example, by entering tax deposits instead of tax liabilities in the numbered spaces. Fill out 1040x form online   IRS figures the penalty by allocating your tax liability on Form 943, line 11, equally throughout the tax period. Fill out 1040x form online Your deposits and payments may not be counted as timely because IRS does not know the actual dates of your tax liabilities. Fill out 1040x form online   You can avoid the penalty by reviewing your return before filing it. Fill out 1040x form online Follow these steps before filing your Form 943. Fill out 1040x form 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. Fill out 1040x form 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. Fill out 1040x form 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. Fill out 1040x form online Do not show negative amounts on Form 943, line 17, or Form 943-A. Fill out 1040x form 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. Fill out 1040x form 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). Fill out 1040x form online Form 943 taxes and Form 941/944 taxes are not combined for purposes of applying any of the deposit schedule rules. Fill out 1040x form online If a deposit is due, deposi
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Understanding your CP04 Notice

Our records show that you or your spouse served in a combat zone, a qualified contingency operation, or a hazardous duty station during the tax year specified on your notice. As a result, you may be eligible for tax deferment.

Printable samples of this notice (PDF)

Tax publications you may find useful

How to get help

Calling the 1-800 number listed on the top right corner of your notice is the fastest way to get your questions answered.

You can also authorize someone (such as an accountant) to contact the IRS on your behalf using this Power of Attorney and Declaration of Representative (Form 2848).

Or you may qualify for help from a Low Income Taxpayer Clinic.
 


What you need to do

  • Read your notice carefully — it will explain why we are asking you to send us information about your service.
  • Complete section 1 of the Response form included with your notice and mail or fax it to us by the date shown on the notice. Be sure to include the required supporting documentation.

You may want to...


Answers to Common Questions

What deferments are available to those who serve in a combat zone?
The deadline for filing tax returns, paying taxes, filing claims for refund, and taking other actions with the IRS can be extended 180 days following your departure from a combat zone, contingency operation or hazardous duty station, if you served with the Armed Forces or were a civilian working in support of the Armed Forces.

If you are in the military or naval services on an assigned tour of duty outside the United States and Puerto Rico, serving in a combat zone, contingency operation or hazardous duty station for a period that includes the entire due date of the return, you can receive an automatic extension. Civilians working in these areas in support of the armed forces can qualify also if they provide a copy of their Letter of Authorization.

In addition to the 180 days, your deadline is extended by the number of days that were left for you to take the action with the IRS when you entered a combat zone (or began performing qualifying service outside the combat zone) or began serving in a contingency operation. For example, you had 3½ months (January 1 - April 15, 2010) to file your 2009 tax return. Any days of this 3½ month period that were left when you entered the combat zone (or the entire 3½ months if you entered the combat zone by January 1, 2010) are added to the 180 days when determining the last day allowed for filing your 2009 tax return.

If it's an automatic extension, why do I need to provide the requested information?
We need to update our records and verify that you are eligible to receive the automatic extension. We need the dates that you served or worked in a qualified area so that your account can be updated with the proper extension period.

What if I don't respond to the notice?
If we don't receive your completed Response form by the due date shown on your notice, you may be subject to collection action for any taxes, interest, or penalties that you owe.

Page Last Reviewed or Updated: 19-Feb-2014

The Fill Out 1040x Form Online

Fill out 1040x form online Internal Revenue Bulletin:  2013-7  February 11, 2013  Rev. Fill out 1040x form online Proc. Fill out 1040x form online 2013-16 Table of Contents SECTION 1. Fill out 1040x form online PURPOSE SECTION 2. Fill out 1040x form online BACKGROUND—HAMP AND THE HAMP PRINCIPAL REDUCTION ALTERNATIVE SECTION 3. Fill out 1040x form online BACKGROUND—APPLICABLE PROVISIONS OF LAW SECTION 4. Fill out 1040x form online FEDERAL INCOME TAX TREATMENT SECTION 5. Fill out 1040x form online INFORMATION-REPORTING OBLIGATIONS SECTION 6. Fill out 1040x form online HAMP-PRA BORROWERS’ REPORTING OF DISCHARGES OF INDEBTEDNESS UNDER HAMP-PRA SECTION 7. Fill out 1040x form online PENALTY RELIEF FOR 2012 SECTION 8. Fill out 1040x form online SCOPE AND EFFECTIVE DATE SECTION 9. Fill out 1040x form online DRAFTING INFORMATION SECTION 1. Fill out 1040x form online PURPOSE This revenue procedure provides guidance to mortgage loan holders, loan servicers, and borrowers who are participating in the Department of the Treasury’s (Treasury) and Department of Housing and Urban Development’s (HUD) Home Affordable Modification Program® (HAMP®). Fill out 1040x form online Under HAMP, a borrower may be eligible for principal reduction of the outstanding balance of a qualifying mortgage pursuant to the program’s Principal Reduction AlternativeSM (PRA). Fill out 1040x form online In appropriate cases, HAMP has been offering the PRA as part of a HAMP loan modification since the last quarter of 2010. Fill out 1040x form online Current plans call for HAMP to continue accepting new borrowers through the end of 2013. Fill out 1040x form online The Internal Revenue Service (Service) is providing this guidance to address the tax consequences for borrowers (HAMP-PRA borrowers) who are participating in the PRA and the reporting obligations for participating mortgage loan holders and servicers. Fill out 1040x form online SECTION 2. Fill out 1040x form online BACKGROUND—HAMP AND THE HAMP PRINCIPAL REDUCTION ALTERNATIVE . Fill out 1040x form online 01 To help distressed borrowers lower their monthly mortgage payments, Treasury and HUD established HAMP for mortgage loans that are not owned or guaranteed by the Federal National Mortgage Association (Fannie Mae) or the Federal Home Loan Mortgage Corporation (Freddie Mac). Fill out 1040x form online A description of the program can be found at www. Fill out 1040x form online makinghomeaffordable. Fill out 1040x form online gov. Fill out 1040x form online . Fill out 1040x form online 02 Under HAMP, a participating loan servicer, acting on behalf of the mortgage loan holder, must consider a sequence of modification steps for each eligible borrower’s mortgage loan until the borrower’s monthly payment is reduced to a monthly payment amount determined under the HAMP guidelines. Fill out 1040x form online These steps include a reduction in the mortgage loan’s interest rate, an extension of the mortgage loan’s term, and a reduction in the mortgage loan’s principal balance. Fill out 1040x form online . Fill out 1040x form online 03 In some cases, the unpaid principal balance of the modified mortgage loan is divided into (1) an amount that bears stated interest and that is used to calculate the borrower’s new monthly mortgage payment (the “Non-forbearance Portion”), and (2) a forbearance amount, which does not bear stated interest and on which periodic payments of stated principal are not required. Fill out 1040x form online The stated principal of the forbearance amount is due upon the earliest of the borrower’s transfer of the property, payoff of the balance on the Non-forbearance Portion of the mortgage loan, or maturity of the mortgage loan. Fill out 1040x form online However, as noted in section 2. Fill out 1040x form online 06 of this revenue procedure, a HAMP-PRA borrower sometimes may not have to pay all or a portion of the forbearance amount. Fill out 1040x form online (The forbearance amount associated with a HAMP-PRA principal reduction is called the “PRA Forbearance Amount. Fill out 1040x form online ”) . Fill out 1040x form online 04 If a mortgage loan is being considered for a HAMP modification and the amount owed on the mortgage loan is greater than 115 percent of the value of the property, then the servicer must consider whether principal reduction under PRA should be used as part of the HAMP modification. Fill out 1040x form online . Fill out 1040x form online 05 The first step toward a HAMP modification is a trial period plan, in which the borrower’s monthly mortgage payment is set at a monthly payment amount determined under the HAMP guidelines. Fill out 1040x form online The trial period plan effective date is the due date for the first of the reduced payments that are to be made under the trial period plan. Fill out 1040x form online (It is the first day of either the first or the second month after the servicer transmits the trial period notice to the borrower. Fill out 1040x form online ) In general, the trial period is three months, and, during this period, the borrower must satisfy certain conditions before the changes to the terms of the mortgage loan become permanent (the “Trial Period Conditions”). Fill out 1040x form online Specifically, depending on the borrower’s trial period payment history, the borrower’s compliance with HAMP and servicer guidelines, and his or her satisfaction of all other Trial Period Conditions, the borrower will be offered a permanent modification of the terms of the mortgage loan, including monthly mortgage payments that are lower than those under the old mortgage loan. Fill out 1040x form online Until the effective date of a permanent modification, the terms of the existing mortgage loan continue to apply. Fill out 1040x form online . Fill out 1040x form online 06 After the mortgage loan is permanently modified under HAMP, if the modified mortgage loan is in good standing on the first, second, or third annual anniversary of the trial period plan effective date (the “Three-year Period”), the servicer must reduce the unpaid principal balance of the mortgage loan on the respective anniversary date by one-third of the initial PRA Forbearance Amount. Fill out 1040x form online (The servicer allocates the entire reduction to the remaining PRA Forbearance Amount. Fill out 1040x form online ) In general, if a HAMP-PRA borrower’s mortgage loan is in good standing and if the HAMP-PRA borrower pays in full the Non-forbearance Portion of the mortgage loan prior to the reduction of the entire PRA Forbearance Amount, the servicer must reduce the remaining outstanding principal balance of the mortgage loan by the remaining PRA Forbearance Amount. Fill out 1040x form online . Fill out 1040x form online 07 In connection with every HAMP loan modification, the HAMP program administrator (acting on behalf of the federal government) provides incentives to the borrower, the servicer, and the investor (that is, the holder of the mortgage loan). Fill out 1040x form online If a HAMP loan modification includes a PRA principal reduction, the HAMP program administrator makes additional incentive payments to the investor. Fill out 1040x form online These additional incentives are called “PRA Investor Incentive Payments” and are generally spread over three years. Fill out 1040x form online The size of the PRA Investor Incentive Payments depends on the amount of principal reduced, the loan-to-value ratio at the time of the HAMP modification, and the loan’s payment history before the modification. Fill out 1040x form online The PRA Investor Incentive Payments range from 18 to 63 percent of the principal amounts reduced. Fill out 1040x form online For purposes of this revenue procedure, the excess of the initial PRA Forbearance Amount of a mortgage loan over the aggregate PRA Investor Incentive Payments scheduled to be paid with respect to that loan is called the “PRA Adjusted Forbearance Amount. Fill out 1040x form online ” . Fill out 1040x form online 08 A PRA Investor Incentive Payment is earned by the investor on each date on which the servicer reduces the unpaid principal balance of the mortgage loan by a portion of the PRA Forbearance Amount (generally, on the first three annual anniversaries of the trial period plan effective date). Fill out 1040x form online . Fill out 1040x form online 09 If a HAMP-PRA borrower’s early payment in full of the Non-forbearance Portion of the mortgage loan accelerates the reduction of the remaining PRA Forbearance Amount (described above in section 2. Fill out 1040x form online 06 of this revenue procedure), the remaining PRA Investor Incentive Payments from the HAMP program administrator are also accelerated. Fill out 1040x form online . Fill out 1040x form online 10 If, prior to completion of the Three-year Period, a mortgage loan ceases to be in good standing because of the HAMP-PRA borrower’s payment history, then the remaining PRA Forbearance Amount is not further reduced and is due when the HAMP-PRA borrower transfers the property, the HAMP-PRA borrower refinances, or otherwise pays off the Non-forbearance Portion of the mortgage loan, or the mortgage loan matures. Fill out 1040x form online SECTION 3. Fill out 1040x form online BACKGROUND—APPLICABLE PROVISIONS OF LAW . Fill out 1040x form online 01 Under § 61 of the Internal Revenue Code, except as otherwise provided in subtitle A, gross income means all income from whatever source derived, including income from discharge of indebtedness. Fill out 1040x form online See § 61(a)(12). Fill out 1040x form online . Fill out 1040x form online 02 Under § 1. Fill out 1040x form online 1001-3 of the Income Tax Regulations, if a debt instrument undergoes a significant modification, then the modification results in an exchange of the original debt instrument for the modified debt instrument. Fill out 1040x form online In general, an agreement to change a term of a debt instrument is a modification at the time the borrower and holder enter into the agreement, even if the change in term is not immediately effective. Fill out 1040x form online However, if the change is conditioned on reasonable closing conditions, a modification occurs on the closing date of the agreement. Fill out 1040x form online See § 1. Fill out 1040x form online 1001-3(c)(6). Fill out 1040x form online . Fill out 1040x form online 03 Under § 108(e)(10), in the case of a debt-for-debt exchange (including a deemed exchange under § 1. Fill out 1040x form online 1001-3), the borrower is treated as having satisfied the original debt instrument with an amount of money equal to the issue price of the new debt instrument. Fill out 1040x form online If the amount of debt satisfied in this manner exceeds that issue price, the borrower realizes discharge of indebtedness income on the exchange. Fill out 1040x form online See also § 1. Fill out 1040x form online 61-12(c). Fill out 1040x form online . Fill out 1040x form online 04 The issue price of a non-publicly traded debt instrument issued for non-publicly traded property generally reflects the amount of principal that the borrower is required to pay to the holder of the instrument. Fill out 1040x form online If a borrower has the ability to avoid paying certain amounts (including principal) without violating the terms of the instrument, the payment schedule for the instrument is generally determined based on an assumption that the borrower will avoid any requirement to make those payments. Fill out 1040x form online See, e. Fill out 1040x form online g. Fill out 1040x form online , §§ 1. Fill out 1040x form online 1272-1(c)(5) and 1. Fill out 1040x form online 1274-2(d). Fill out 1040x form online . Fill out 1040x form online 05 Under § 108(a), gross income does not include any amount that but for § 108(a) would be includible in gross income by reason of the discharge (in whole or in part) of a taxpayer’s indebtedness if (1) the indebtedness discharged is qualified principal residence indebtedness that is discharged before January 1, 2014, or (2) the discharge occurs when the taxpayer is insolvent. Fill out 1040x form online Section 108(a)(1)(E) and 108(a)(1)(B). Fill out 1040x form online (Although § 108 contains other exclusions as well, this revenue procedure focuses on these two exclusions because they are the most likely to apply to the greatest number of HAMP-PRA borrowers. Fill out 1040x form online ) . Fill out 1040x form online 06 Under §§ 108(h) and 163(h)(3)(B), qualified principal residence indebtedness is any indebtedness that is incurred by a borrower to buy, build, or substantially improve the borrower’s principal residence and is secured by that residence. Fill out 1040x form online . Fill out 1040x form online 07 Qualified principal residence indebtedness also includes a loan secured by the borrower’s principal residence that refinances qualified principal residence indebtedness, but only to the extent of the amount of the refinanced indebtedness. Fill out 1040x form online See §§ 108(h) and 163(h)(3)(B)(i). Fill out 1040x form online . Fill out 1040x form online 08 The maximum amount of discharged indebtedness that a borrower may exclude from gross income under the qualified principal residence indebtedness exclusion is $2,000,000 ($1,000,000 for a married individual filing a separate return). Fill out 1040x form online Under § 108(h)(4), if only part of the discharged indebtedness is qualified principal residence indebtedness, then the exclusion applies only to the amount of the discharged indebtedness that exceeds the amount of the loan (determined immediately before the discharge) that is not qualified principal residence indebtedness. Fill out 1040x form online . Fill out 1040x form online 09 Under § 108(a)(3), the insolvency exclusion applies to the lesser of the amount of the debt discharged or the amount by which the taxpayer is insolvent immediately before the discharge. Fill out 1040x form online . Fill out 1040x form online 10 Section 108(d)(3) provides that, for purposes of the insolvency exclusion, a taxpayer is insolvent to the extent that the taxpayer’s total liabilities exceed the fair market value of all of the taxpayer’s assets immediately before the discharge of indebtedness. Fill out 1040x form online Under § 108(a)(2)(C), the qualified principal residence indebtedness exclusion takes precedence over the insolvency exclusion when both exclusions apply to discharged indebtedness, unless the taxpayer elects to apply the insolvency exclusion. Fill out 1040x form online . Fill out 1040x form online 11 If an amount is excluded from gross income as a discharge of qualified principal residence indebtedness, the taxpayer must reduce the basis of the taxpayer’s principal residence. Fill out 1040x form online See § 108(h)(1). Fill out 1040x form online If a discharged amount is excluded from gross income because the taxpayer was insolvent when the discharge occurred, the taxpayer must reduce certain tax attributes (possibly including basis). Fill out 1040x form online See § 108(b). Fill out 1040x form online For further discussion of income from the discharge of indebtedness, the qualified principal residence indebtedness exclusion, the insolvency exclusion, and other exclusions from gross income that may apply, see Publication 4681, Canceled Debts, Foreclosures, Repossessions, and Abandonments (for Individuals). Fill out 1040x form online . Fill out 1040x form online 12 Taxpayers who exclude any discharged amounts from gross income report both the exclusion and the resulting reduction in basis or other tax attributes on Form 982, Reduction of Tax Attributes Due to Discharge of Indebtedness (and Section 1082 Basis Adjustment). Fill out 1040x form online See Form 982 instructions and Publication 4681. Fill out 1040x form online This form is to be filed with the tax return for the taxable year in which the amount is discharged but is excluded from gross income. Fill out 1040x form online . Fill out 1040x form online 13 Governmental payments made to or on behalf of individuals or other persons are included within the broad definition of gross income under § 61 unless an exception applies. Fill out 1040x form online See Notice 2003-18, 2003-1 C. Fill out 1040x form online B. Fill out 1040x form online 699, and Rev. Fill out 1040x form online Rul. Fill out 1040x form online 79-356, 1979-2 C. Fill out 1040x form online B. Fill out 1040x form online 28. Fill out 1040x form online However, if disbursements are made by a governmental unit to individuals in the interest of the general welfare (that is, are generally based on individual or family need) and the disbursements do not represent compensation for services, then the amounts disbursed are excluded from the income of the recipient (general welfare exclusion). Fill out 1040x form online See Rev. Fill out 1040x form online Rul. Fill out 1040x form online 2005-46, 2005-2 C. Fill out 1040x form online B. Fill out 1040x form online 120, and Rev. Fill out 1040x form online Rul. Fill out 1040x form online 75-246, 1975-1 C. Fill out 1040x form online B. Fill out 1040x form online 24. Fill out 1040x form online . Fill out 1040x form online 14 Under § 451 and § 1. Fill out 1040x form online 451-1(a), a taxpayer that uses the cash receipts and disbursements method of accounting includes income in gross income when the taxpayer actually or constructively receives the income. Fill out 1040x form online . Fill out 1040x form online 15 Section 6041 requires every person engaged in a trade or business (including the United States and its agencies) to (1) file an information return (Form 1099-MISC, Miscellaneous Income, is used for this purpose) for each calendar year in which the person makes, in the course of its trade or business, payments to another person of fixed or determinable income aggregating $600 or more, and (2) furnish a copy of the information return to that other person. Fill out 1040x form online See § 6041(a) and (d) and § 1. Fill out 1040x form online 6041-1(a)(1) and (b). Fill out 1040x form online . Fill out 1040x form online 16 Section 6050P requires applicable entities (including the United States and its agencies, financial entities, and any organization a significant trade or business of which is the lending of money) to (1) file an information return (Form 1099-C, Cancellation of Debt, is used for this purpose) for each calendar year in which it discharges indebtedness of another person of $600 or more, and (2) furnish a copy of the information return to that other person. Fill out 1040x form online See § 6050P(a)-(c) and §§ 1. Fill out 1040x form online 6050P-1(a) and 1. Fill out 1040x form online 6050P-2(a) and (d). Fill out 1040x form online . Fill out 1040x form online 17 Section 6721 imposes penalties with respect to information returns required to be filed with the Service. Fill out 1040x form online These penalties apply in the case of a failure to timely file an information return, a failure to include all required information on the return, or the inclusion of incorrect information on the return. Fill out 1040x form online Section 6724(d)(1) includes Forms 1099-MISC and 1099-C in the term “information return. Fill out 1040x form online ” . Fill out 1040x form online 18 Section 6722 imposes penalties with respect to payee statements required to be furnished to payees. Fill out 1040x form online These penalties apply in the case of a failure to timely furnish a payee statement, a failure to include all required information on the statement, or the inclusion of incorrect information on the payee statement. Fill out 1040x form online Section 6724(d)(2) includes in the term “payee statement” copies of Forms 1099-MISC and 1099-C that are required to be furnished to taxpayers. Fill out 1040x form online SECTION 4. Fill out 1040x form online FEDERAL INCOME TAX TREATMENT . Fill out 1040x form online 01 Because a HAMP modification with a PRA principal reduction is a significant modification, it results in a deemed debt-for-debt exchange in which the HAMP-PRA borrower satisfies the old mortgage loan by issuing a new one. Fill out 1040x form online See § 1. Fill out 1040x form online 1001-3. Fill out 1040x form online At the time of the modification, therefore, under § 108 and this revenue procedure, the HAMP-PRA borrower realizes discharge of indebtedness income equal to any excess of the adjusted issue price of the old mortgage loan (which was satisfied in the deemed exchange) over the issue price of the new (post-modification) mortgage loan. Fill out 1040x form online See also § 61(a)(12) and § 1. Fill out 1040x form online 61-12(c). Fill out 1040x form online . Fill out 1040x form online 02 A HAMP-PRA borrower has the ability to avoid payment of the PRA Adjusted Forbearance Amount. Fill out 1040x form online Because the HAMP-PRA borrower has this ability, that amount should not be taken into account in determining the issue price of the new mortgage loan. Fill out 1040x form online Because the issue price of the new mortgage loan does not include the PRA Adjusted Forbearance Amount, the PRA Adjusted Forbearance Amount contributes to the excess of the adjusted issue price of the old mortgage loan (which was satisfied in the deemed exchange) over the issue price of the new mortgage loan. Fill out 1040x form online . Fill out 1040x form online 03 On the other hand, the investor has not given up its right to receive the remainder of the PRA Forbearance Amount, because the HAMP program administrator is expected to make those payments on the HAMP-PRA borrower’s behalf by making the PRA Investor Incentive Payments. Fill out 1040x form online Because the remainder of the PRA Forbearance Amount is payable in this manner, that remainder is included in the issue price of the new mortgage loan. Fill out 1040x form online . Fill out 1040x form online 04 The Trial Period Conditions are reasonable closing conditions that must be satisfied before the changes to the terms of the mortgage loan become permanent. Fill out 1040x form online Therefore, for purposes of § 1. Fill out 1040x form online 1001-3, the date of the modification is the date of the permanent modification. Fill out 1040x form online . Fill out 1040x form online 05 Unless an exclusion applies, the HAMP-PRA borrower includes in gross income the discharge of indebtedness income described in section 4. Fill out 1040x form online 01 of this revenue procedure for the taxable year in which the permanent modification occurs. Fill out 1040x form online Under certain conditions, however, section 6 of this revenue procedure permits a borrower to report the discharge of indebtedness under HAMP-PRA over the Three-year Period. Fill out 1040x form online The qualified principal residence indebtedness exclusion under § 108(a)(1)(E) and the insolvency exclusion under § 108(a)(1)(B) are two exclusions that may apply to the discharge. Fill out 1040x form online . Fill out 1040x form online 06 The PRA Investor Incentive Payment is treated as a payment on the mortgage loan by the HAMP program administrator on behalf of the HAMP-PRA borrower. Fill out 1040x form online . Fill out 1040x form online 07 To the extent that the HAMP-PRA borrower uses the property as the HAMP-PRA borrower’s principal residence or the property is occupied by the HAMP-PRA borrower’s legal dependent, parent, or grandparent without rent being charged or collected, the HAMP-PRA borrower excludes from his or her gross income under the general welfare exclusion the PRA Investor Incentive Payments that the HAMP program administrator makes to the investor in the mortgage loan. Fill out 1040x form online This is consistent with Rev. Fill out 1040x form online Rul. Fill out 1040x form online 2009-19, 2009-28 I. Fill out 1040x form online R. Fill out 1040x form online B. Fill out 1040x form online 111, which addressed the treatment of Pay-for-Performance Success Payments. Fill out 1040x form online . Fill out 1040x form online 08 To the extent that the HAMP-PRA borrower uses the property as a rental property or holds the property vacant and available for rent, the HAMP-PRA borrower includes PRA Investor Incentive Payments in gross income. Fill out 1040x form online If the HAMP-PRA borrower uses the cash receipts and disbursements method of accounting, then the HAMP-PRA borrower includes a PRA Investor Incentive Payment in gross income in the taxable year in which it is applied as a payment on the HAMP-PRA borrower’s mortgage loan. Fill out 1040x form online . Fill out 1040x form online 09 As described in section 2. Fill out 1040x form online 09 of this revenue procedure, if a HAMP-PRA borrower pays in full the Non-forbearance Portion of the mortgage loan while the loan is in good standing and prior to completion of the Three-year Period, that payment accelerates both the reduction in the remaining PRA Forbearance Amount and the PRA Investor Incentive Payments from the HAMP program administrator. Fill out 1040x form online To the extent that the HAMP-PRA borrower is described in section 4. Fill out 1040x form online 07 of this revenue procedure, the HAMP-PRA borrower excludes from his or her gross income under the general welfare exclusion the accelerated PRA Investor Incentive Payments. Fill out 1040x form online To the extent that the HAMP-PRA borrower is described in section 4. Fill out 1040x form online 08 of this revenue procedure, the HAMP-PRA borrower includes in income in the year of the acceleration the remaining amount of the PRA Investor Incentive Payment. Fill out 1040x form online SECTION 5. Fill out 1040x form online INFORMATION-REPORTING OBLIGATIONS . Fill out 1040x form online 01 Under § 6050P, the investor is required to file a Form 1099-C with respect to a borrower who realizes discharge of indebtedness of $600 or more. Fill out 1040x form online A copy of this form is required to be furnished to the borrower. Fill out 1040x form online . Fill out 1040x form online 02 As stated in sections 4. Fill out 1040x form online 01 and 4. Fill out 1040x form online 04 of this revenue procedure, the HAMP-PRA discharge of indebtedness is realized at the time of the permanent modification of the mortgage loan. Fill out 1040x form online . Fill out 1040x form online 03 An investor is an applicable entity that is required under § 1. Fill out 1040x form online 6050P-1 and this revenue procedure to issue a Form 1099-C for discharge of indebtedness. Fill out 1040x form online Under § 1. Fill out 1040x form online 6050P-1(b)(2)(F), the permanent modification of a mortgage loan is an identifiable event. Fill out 1040x form online Identifiable events determine when Forms 1099-C have to be issued. Fill out 1040x form online Thus, the Form 1099-C is issued for the calendar year in which the permanent mortgage loan modification occurs. Fill out 1040x form online This rule under § 1. Fill out 1040x form online 6050P-1(b)(2)(F) applies even if, under section 6 of this revenue procedure, the HAMP-PRA borrower chooses to treat the HAMP-PRA discharge as being realized at the times when the unpaid principal balance of the new mortgage loan is reduced. Fill out 1040x form online . Fill out 1040x form online 04 The investor (or the loan servicer acting on behalf of the investor) reports the full amount of the discharge on the Form 1099-C regardless of whether some or all of the amount is excludible from income under the qualified principal residence indebtedness exclusion, the insolvency exclusion, or any other exclusion that may apply. Fill out 1040x form online That discharged amount will generally be the PRA Adjusted Forbearance Amount (which does not include the amounts expected to be satisfied by PRA Investor Incentive Payments). Fill out 1040x form online . Fill out 1040x form online 05 To the extent that PRA Investor Incentive Payments are made on behalf of a HAMP-PRA borrower who is described in section 4. Fill out 1040x form online 07 of this revenue procedure, the PRA Investor Incentive Payments are excluded from the gross income of the HAMP-PRA borrower, and thus they are not fixed or determinable income to the HAMP-PRA borrower. Fill out 1040x form online Under § 6041, these payments are not subject to information reporting. Fill out 1040x form online See Notice 2011-14, 2011-11 I. Fill out 1040x form online R. Fill out 1040x form online B. Fill out 1040x form online 544, 546. Fill out 1040x form online . Fill out 1040x form online 06 To the extent that PRA Investor Incentive Payments are made on behalf of a HAMP-PRA borrower who is described in section 4. Fill out 1040x form online 08 of this revenue procedure, the PRA Investor Incentive Payments are includible in gross income as fixed or determinable income in the taxable year required by the HAMP-PRA borrower’s method of accounting. Fill out 1040x form online The payment is subject to the information reporting requirements of § 6041, as described in section 3. Fill out 1040x form online 15 of this revenue procedure. Fill out 1040x form online Accordingly, the HAMP program administrator is required to issue a Form 1099-MISC reporting the PRA Investor Incentive Payment. Fill out 1040x form online SECTION 6. Fill out 1040x form online HAMP-PRA BORROWERS’ REPORTING OF DISCHARGES OF INDEBTEDNESS UNDER HAMP-PRA . Fill out 1040x form online 01 In general. Fill out 1040x form online The HAMP-PRA program began in the last quarter of 2010, and since that time there has been uncertainty about whether the amount of the discharge of indebtedness should be reported in the year of the permanent modification or over the Three-year Period (when the unpaid principal balance on the new mortgage loan is reduced). Fill out 1040x form online As a result, some HAMP-PRA borrowers have been reporting the discharge of indebtedness under HAMP-PRA over the Three-year Period. Fill out 1040x form online Given the temporary nature of the program and the issuance of this guidance after participation in the program has begun, in the interests of equitable and sound tax administration, HAMP-PRA borrowers may report discharges of indebtedness under HAMP-PRA under the rules in this section 6. Fill out 1040x form online A HAMP-PRA borrower may choose to report discharges of indebtedness under HAMP-PRA pursuant to the rules in this section 6 only if the borrower applies the same borrower option under section 6. Fill out 1040x form online 02 of this revenue procedure consistently to the taxable year of the permanent modification and to all subsequent taxable years. Fill out 1040x form online Thus, a HAMP-PRA borrower may not choose a borrower option under section 6. Fill out 1040x form online 02 of this revenue procedure if a statute of limitations has expired for any of the taxable years that are necessary for consistent application of that option. Fill out 1040x form online . Fill out 1040x form online 02 HAMP-PRA borrower options. Fill out 1040x form online A HAMP-PRA borrower may treat the HAMP-PRA discharge as being realized in either of the following ways— (1) One hundred percent of the PRA Adjusted Forbearance Amount at the time of the permanent modification; or (2) One third of the PRA Adjusted Forbearance Amount on each of the first three annual anniversaries of the trial period plan effective date (described in section 2. Fill out 1040x form online 06 of this revenue procedure), when, as required by the terms of the new mortgage loan, the servicer reduces the unpaid principal balance of the new mortgage loan. Fill out 1040x form online If some or all of the reduction in the unpaid principal balance is accelerated (as described in section 2. Fill out 1040x form online 06 of this revenue procedure) because the HAMP-PRA borrower prepays the Non-forbearance Portion of the mortgage loan, then the HAMP-PRA discharge represented by the amount of the reduction that was accelerated is treated as being realized at the time of the accelerated reduction. Fill out 1040x form online . Fill out 1040x form online 03 HAMP-PRA borrowers who choose to realize the HAMP-PRA discharge at the time of the permanent modification. Fill out 1040x form online (1) If a HAMP-PRA borrower chooses to treat the HAMP-PRA discharge as being realized at the time of the permanent modification, then for the taxable year in which the permanent modification occurs, the HAMP-PRA borrower reports on Form 982 the amount, if any, of the discharge that is excluded from gross income and includes in gross income any remaining discharge. Fill out 1040x form online (2) If a HAMP-PRA borrower’s mortgage loan was permanently modified under HAMP in 2010 or 2011, and if the borrower was reporting the discharge of indebtedness using the method described in section 6. Fill out 1040x form online 02(2) of this revenue procedure, then the borrower may change to reporting the discharge of indebtedness using the method described in section 6. Fill out 1040x form online 02(1) of this revenue procedure by filing a 2012 Form 982 with the borrower’s timely filed (with extensions) 2012 income tax return. Fill out 1040x form online This section 6. Fill out 1040x form online 03(2) applies only if the change to reporting the discharge using the method described in section 6. Fill out 1040x form online 02(1) of this revenue procedure does not change the borrower’s federal income tax liability (including any change in federal income tax liability due to a change in basis or tax attributes (under § 108(h)(1) or § 108(b))) for any taxable year prior to the borrower’s 2012 taxable year. Fill out 1040x form online To make this change, the borrower must— (i) Compute the amount of discharge of indebtedness that would be included in income under § 61(a)(12) or excluded from gross income under § 108, basing the computation of the discharge on the facts as of the year of the permanent modification; and (ii) Report on a 2012 Form 982 the reduction in basis or tax attributes (under § 108(h)(1) or § 108(b)) due to the permanent modification that the borrower would have reported on the Form 982 for the taxable year of the permanent modification, minus any reductions due to the permanent modification that the borrower actually reported on Forms 982 for taxable years prior to 2012. Fill out 1040x form online (3) Example. Fill out 1040x form online The following example illustrates the application of section 6. Fill out 1040x form online 03(2) of this revenue procedure. Fill out 1040x form online In 2010, B’s basis in B’s principal residence was $330,000. Fill out 1040x form online In 2010, B’s mortgage loan on the principal residence is permanently modified under HAMP-PRA. Fill out 1040x form online B realized $30,000 of cancellation of indebtedness from the permanent modification, all of which qualifies for the exclusion from income for qualified principal residence indebtedness under § 108(a)(1)(E). Fill out 1040x form online The trial period plan effective date also fell in 2010. Fill out 1040x form online B’s federal income tax return for 2010 was consistent with B’s reporting this discharge of indebtedness using the method described in section 6. Fill out 1040x form online 02(2) of this revenue procedure. Fill out 1040x form online That is, B’s 2010 return did not include income from discharge of indebtedness under HAMP-PRA, nor did the return contain a Form 982 reporting exclusion of any such discharge of indebtedness. Fill out 1040x form online The next year, B reported on line 10(b) of the 2011 Form 982 that B filed with B’s 2011 federal income tax return a $10,000 reduction in basis in the principal residence. Fill out 1040x form online For 2012, B chooses to change to reporting the discharge of indebtedness using the method described in section 6. Fill out 1040x form online 02(1) of this revenue procedure. Fill out 1040x form online Thus, B files a 2012 Form 982 with B’s timely filed (including extensions) 2012 federal income tax return, and on line 10(b) of that form, B reports a $20,000 basis reduction in the principal residence ($30,000 basis reduction that B would have excluded from income in 2010 using the method described in section 6. Fill out 1040x form online 02(1) of this revenue procedure, minus the $10,000 basis reduction that B reported on B’s 2011 Form 982). Fill out 1040x form online (4) If a HAMP-PRA borrower reports the entire HAMP-PRA discharge using the method described in section 6. Fill out 1040x form online 02(1) of this revenue procedure, and if that HAMP-PRA borrower’s mortgage loan ceases to be in good standing during the Three-year Period as described in section 2. Fill out 1040x form online 10 of this revenue procedure, then some or all of the anticipated reductions in the PRA Adjusted Forbearance Amount will not take place. Fill out 1040x form online Because the amount of these anticipated reductions was not included in determining the issue price of the new mortgage loan that, pursuant to § 1. Fill out 1040x form online 1001-3, the HAMP-PRA borrower is deemed to issue in satisfaction of the old mortgage loan, the issue price of the new mortgage loan was understated. Fill out 1040x form online Under these circumstances, the discharge of indebtedness income determined as of the date of the permanent modification will have been overstated. Fill out 1040x form online (5) The Service will not challenge a HAMP-PRA borrower who is described in section 6. Fill out 1040x form online 03(4) of this revenue procedure and who takes the following corrective measures: (i) If a HAMP-PRA borrower included any of the discharge of indebtedness in gross income, the HAMP-PRA borrower may file an amended return that does not include the amount of the discharge of indebtedness that was previously reported as gross income but that, because of the HAMP-PRA borrower’s failure to keep the new mortgage loan in good standing, was not ultimately discharged. Fill out 1040x form online The amended return should be for the taxable year in which the income was included (that is, the year of the permanent modification), provided the applicable statute of limitations remains open for that taxable year. Fill out 1040x form online (ii) If the HAMP-PRA borrower did not include any of the discharge of indebtedness in gross income (that is, if the HAMP-PRA borrower excluded all of it), the HAMP-PRA borrower may file a new Form 982 that the Service will treat as superseding the earlier Form 982. Fill out 1040x form online The new Form 982 will reflect the revised reduction in basis or in tax attributes (under § 108(h)(1) or § 108(b)). Fill out 1040x form online The new Form 982 should be the Form 982 for the year of the permanent modification and should be filed with the return for the taxable year in which the HAMP-PRA borrower’s mortgage loan ceased to be in good standing. Fill out 1040x form online . Fill out 1040x form online 04 HAMP-PRA borrowers who choose to treat the HAMP-PRA discharge as being realized on the dates on which the unpaid principal balance of the mortgage loan is reduced. Fill out 1040x form online (1) If a HAMP-PRA borrower chooses to realize the HAMP-PRA discharge at the times that the unpaid principal balance on the new mortgage loan is reduced, instead of at the time of the permanent modification, then the HAMP-PRA borrower’s federal income tax returns for the taxable year that contains the permanent modification and for the subsequent taxable years must not treat any of the discharge as being realized at the time of the permanent modification and must treat the entire HAMP-PRA discharge as being realized in the amounts—and at the times—of the reductions in the unpaid principal balance. Fill out 1040x form online Except as described in the last sentence of this paragraph, therefore, the income tax return for the year of the permanent modification must include no gross income from—nor report on Form 982 an exclusion of—any amount of the HAMP-PRA discharge. Fill out 1040x form online Instead, the HAMP-PRA discharge is included in gross income (or is reported on Form 982 as excluded from gross income) in the subsequent years in which the unpaid principal balance is reduced. Fill out 1040x form online If the first such reduction occurs in the year of the permanent modification, however, then the amount of any such reduction is reflected as an inclusion or exclusion on the federal income tax return for that year. Fill out 1040x form online (2) A HAMP-PRA borrower who has been using the method described in section 6. Fill out 1040x form online 02(1) of this revenue procedure may change to the method described in section 6. Fill out 1040x form online 02(2) but must comply with the consistency and open-year requirements described in section 6. Fill out 1040x form online 01 of this revenue procedure. Fill out 1040x form online SECTION 7. Fill out 1040x form online PENALTY RELIEF FOR 2012 . Fill out 1040x form online 01 The Service will not assert penalties under § 6721 or § 6722 against an investor for failing to timely file and furnish a 2012 Form 1099-C as required by section 5. Fill out 1040x form online 03 through 5. Fill out 1040x form online 04 and section 8. Fill out 1040x form online 02 of this revenue procedure with respect to discharge of indebtedness resulting from HAMP-PRA permanent modifications that take place during calendar year 2012 if the following requirements are satisfied: (1) Not later than February 28, 2013, a statement is sent to the HAMP-PRA borrower containing the following: (a) The HAMP-PRA borrower’s name, address, and taxpayer identification number; and (b) The date and amount of the discharge of indebtedness (as described in sections 4. Fill out 1040x form online 01 through 4. Fill out 1040x form online 04 of this revenue procedure) that is required to be reported for 2012. Fill out 1040x form online (2) Not later than March 28, 2013, a statement is sent to the Service. Fill out 1040x form online It must be in the form of a single statement that separately lists for each HAMP-PRA borrower the information specified in section 7. Fill out 1040x form online 01(1) of this revenue procedure. Fill out 1040x form online The statement should be sent to the Service at the following address: Internal Revenue Service Center Stop 6728AUSC Austin, TX 73301 . Fill out 1040x form online 02 The Service will not assert penalties under § 6721 or § 6722 with respect to any Forms 1099-MISC for 2012 that sections 5. Fill out 1040x form online 06 and 8. Fill out 1040x form online 02 of this revenue procedure require to be filed with the Service and furnished to taxpayers. Fill out 1040x form online . Fill out 1040x form online 03 Section 8. Fill out 1040x form online 03 and 8. Fill out 1040x form online 04 of this revenue procedure, below, describes penalty relief regarding Forms 1099-C and 1099-MISC for 2010 and 2011. Fill out 1040x form online SECTION 8. Fill out 1040x form online SCOPE AND EFFECTIVE DATE . Fill out 1040x form online 01 This revenue procedure applies to all borrowers, investors, and servicers who participate, or have participated, in the HAMP-PRA, regardless of when the permanent modification occurs. Fill out 1040x form online . Fill out 1040x form online 02 Section 5 of this revenue procedure is effective for Forms 1099-C and 1099-MISC due or filed after January 24, 2013. Fill out 1040x form online . Fill out 1040x form online 03 Because of the effective date in section 8. Fill out 1040x form online 02 of this revenue procedure, an investor is not subject to penalties under § 6721 or § 6722 on the grounds that the investor failed to timely file and furnish a 2010 or 2011 Form 1099-C as described in section 5. Fill out 1040x form online 03 through 5. Fill out 1040x form online 04 of this revenue procedure (or on the grounds that the investor filed or furnished a 2010 or 2011 Form 1099-C that is inconsistent with section 5. Fill out 1040x form online 03 through 5. Fill out 1040x form online 04 of this revenue procedure), provided that the investor demonstrates a good faith attempt to comply with the requirements of § 6050P and that the failure was not due to willful neglect. Fill out 1040x form online . Fill out 1040x form online 04 Because of the effective date in section 8. Fill out 1040x form online 02 of this revenue procedure, the Service will not assert penalties under § 6721 or § 6722 on the grounds of a failure to timely file and furnish a 2010 or 2011 Form 1099-MISC, as described in section 5. Fill out 1040x form online 06 of this revenue procedure. Fill out 1040x form online SECTION 9. Fill out 1040x form online DRAFTING INFORMATION The principal authors of this revenue procedure are Ronald J. Fill out 1040x form online Goldstein of the Office of Chief Counsel (Procedure and Administration); Shareen S. Fill out 1040x form online Pflanz and Sheldon A. Fill out 1040x form online Iskow of the Office of Chief Counsel (Income Tax and Accounting); and Andrea M. Fill out 1040x form online Hoffenson of the Office of Chief Counsel (Financial Institutions and Products). Fill out 1040x form online For further information regarding this revenue procedure, contact Procedure and Administration branch 1 at (202) 622-4910, Income Tax and Accounting branch 4 at (202) 622-4920, or Financial Institutions and Products branch 1 at (202) 622-3920 (not toll-free calls). Fill out 1040x form online Prev  Up  Next   Home   More Internal Revenue Bulletins