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Freetaxes com Part Five -   Standard Deduction and Itemized Deductions After you have figured your adjusted gross income, you are ready to subtract the deductions used to figure taxable income. Freetaxes com You can subtract either the standard deduction or itemized deductions. Freetaxes com Itemized deductions are deductions for certain expenses that are listed on Schedule A (Form 1040). Freetaxes com The ten chapters in this part discuss the standard deduction, each itemized deduction, and a limit on some of your itemized deductions if your adjusted gross income is more than certain amounts. Freetaxes com See chapter 20 for the factors to consider when deciding whether to subtract the standard deduction or itemized deductions. Freetaxes com Table of Contents 20. Freetaxes com   Standard DeductionWhat's New Introduction Standard Deduction Amount Standard Deduction for Dependents Who Should ItemizeWhen to itemize. Freetaxes com Married persons who filed separate returns. Freetaxes com 21. Freetaxes com   Medical and Dental ExpensesWhat's New Introduction Useful Items - You may want to see: What Are Medical Expenses? What Expenses Can You Include This Year?Community property states. Freetaxes com How Much of the Expenses Can You Deduct? Whose Medical Expenses Can You Include?Yourself Spouse Dependent Decedent What Medical Expenses Are Includible?Insurance Premiums Meals and Lodging Transportation Disabled Dependent Care Expenses How Do You Treat Reimbursements?Insurance Reimbursement Damages for Personal Injuries How Do You Figure and Report the Deduction on Your Tax Return?What Tax Form Do You Use? Impairment-Related Work Expenses Health Insurance Costs for Self-Employed Persons 22. Freetaxes com   TaxesIntroductionIndian tribal government. Freetaxes com Useful Items - You may want to see: Tests To Deduct Any Tax Income TaxesState and Local Income Taxes Foreign Income Taxes General Sales TaxesMotor vehicles. Freetaxes com Real Estate TaxesReal estate taxes for prior years. Freetaxes com Examples. Freetaxes com Form 1099-S. Freetaxes com Real Estate-Related Items You Cannot Deduct Personal Property Taxes Taxes and Fees You Cannot Deduct Where To Deduct 23. Freetaxes com   Interest ExpenseIntroduction Useful Items - You may want to see: Home Mortgage InterestAmount Deductible Points Mortgage Insurance Premiums Form 1098, Mortgage Interest Statement Investment InterestInvestment Property Allocation of Interest Expense Limit on Deduction Items You Cannot DeductPersonal Interest Allocation of Interest How To ReportMore than one borrower. Freetaxes com Mortgage proceeds used for business or investment. Freetaxes com 24. Freetaxes com   ContributionsIntroduction Useful Items - You may want to see: Organizations That Qualify To Receive Deductible ContributionsTypes of Qualified Organizations Contributions You Can DeductContributions From Which You Benefit Expenses Paid for Student Living With You Out-of-Pocket Expenses in Giving Services Contributions You Cannot DeductContributions to Individuals Contributions to Nonqualified Organizations Contributions From Which You Benefit Value of Time or Services Personal Expenses Appraisal Fees Contributions of PropertyException. Freetaxes com Household items. Freetaxes com Deduction more than $500. Freetaxes com Form 1098-C. Freetaxes com Filing deadline approaching and still no Form 1098-C. Freetaxes com Exception 1—vehicle used or improved by organization. Freetaxes com Exception 2—vehicle given or sold to needy individual. Freetaxes com Deduction $500 or less. Freetaxes com Right to use property. Freetaxes com Tangible personal property. Freetaxes com Future interest. Freetaxes com Determining Fair Market Value Giving Property That Has Decreased in Value Giving Property That Has Increased in Value When To DeductChecks. Freetaxes com Text message. Freetaxes com Credit card. Freetaxes com Pay-by-phone account. Freetaxes com Stock certificate. Freetaxes com Promissory note. Freetaxes com Option. Freetaxes com Borrowed funds. Freetaxes com Limits on DeductionsCarryovers Records To KeepCash Contributions Noncash Contributions Out-of-Pocket Expenses How To Report 25. Freetaxes com   Nonbusiness Casualty and Theft LossesWhat's New Introduction Useful Items - You may want to see: CasualtyFamily pet. Freetaxes com Progressive deterioration. Freetaxes com Damage from corrosive drywall. Freetaxes com Theft Loss on Deposits Proof of Loss Figuring a LossDecrease in Fair Market Value Adjusted Basis Insurance and Other Reimbursements Single Casualty on Multiple Properties Deduction Limits$100 Rule 10% Rule When To Report Gains and LossesDisaster Area Loss How To Report Gains and Losses 26. Freetaxes com   Car Expenses and Other Employee Business ExpensesWhat's New Introduction Useful Items - You may want to see: Travel ExpensesTraveling Away From Home Tax Home Temporary Assignment or Job What Travel Expenses Are Deductible? Travel in the United States Travel Outside the United States Conventions Entertainment Expenses50% Limit What Entertainment Expenses Are Deductible? What Entertainment Expenses Are Not Deductible? Gift Expenses Transportation ExpensesArmed Forces reservists. Freetaxes com Parking fees. Freetaxes com Advertising display on car. Freetaxes com Car pools. Freetaxes com Hauling tools or instruments. Freetaxes com Union members' trips from a union hall. Freetaxes com Car Expenses RecordkeepingHow To Prove Expenses How Long To Keep Records and Receipts How To ReportGifts. Freetaxes com Statutory employees. Freetaxes com Reimbursements Completing Forms 2106 and 2106-EZ Special Rules 27. Freetaxes com   Tax Benefits for Work-Related EducationWhat's New Introduction Useful Items - You may want to see: Qualifying Work-Related EducationEducation Required by Employer or by Law Education To Maintain or Improve Skills Education To Meet Minimum Requirements Education That Qualifies You for a New Trade or Business What Expenses Can Be DeductedUnclaimed reimbursement. Freetaxes com Transportation Expenses Travel Expenses No Double Benefit Allowed Reimbursements Deducting Business ExpensesSelf-Employed Persons Employees Performing Artists and Fee-Basis Officials Impairment-Related Work Expenses Recordkeeping 28. Freetaxes com   Miscellaneous DeductionsWhat's New Introduction Useful Items - You may want to see: Deductions Subject to the 2% LimitUnreimbursed Employee Expenses (Line 21) Tax Preparation Fees (Line 22) Other Expenses (Line 23) Deductions Not Subject to the 2% LimitList of Deductions Nondeductible ExpensesList of Nondeductible Expenses 29. Freetaxes com   Limit on Itemized DeductionsIntroduction Useful Items - You may want to see: Are You Subject to the Limit? Which Itemized Deductions Are Limited? Which Itemized Deductions Are Not Limited? How Do You Figure the Limit?Example. Freetaxes com Prev  Up  Next   Home   More Online Publications
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Buying a New Car

Whether you are buying or leasing a vehicle, these tips will help you get the best deal and avoid problems.

  • Check out different vehicles. Do your research first and compare vehicles. You can go to the website of every car manufacturer and review every model of car available. In fact, most manufacturer sites will even let you use drop down menus to “build” an electronic version of your dream car. Then, when you decide which model, colors, and accessories you want, you can hit the locate dealer button and find the closest showroom that has your car.
  • Research the dealer’s price for the car and options. It’s easier to get the best price when you know what the dealer paid for a vehicle. The dealer invoice price is available at a number of websites and in printed pricing guides. Consumer Reports provides the wholesale price; this figure factors in dealer incentives from a manufacturer and is a more accurate estimate of what a dealer is paying for a vehicle.
  • Special Discounts. Determine if you qualify for special discounts or rebates for military personnel, students or other qualifying groups.
  • Negotiate. Negotiate up from the invoice price instead of down from the inflated price to get a good deal.
  • Find out if the manufacturer is offering rebates that will lower the cost. Two websites that offer this information are Carsdirect.com and Autopedia.com.
  • Get price quotes from several dealers. Find out if the amounts quoted are the prices before or after rebates are deducted.
  • Avoid low-value extras such as credit insurance, auto club memberships, extended warranties, rust proofing and upholstery finishes. You do not have to purchase credit insurance in order to get a loan.
  • Hybrid-electric cars are becoming popular among consumers interested in fuel economy and reducing their negative impact on the environment. These cars combine the benefits of gasoline engines and electric motors and can be configured to achieve different objectives such as improved fuel economy, increased power, or additional auxiliary power.

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Freetaxes com 4. Freetaxes com   Tax Withholding and Estimated Tax Table of Contents What's New for 2014 Reminders Introduction Useful Items - You may want to see: Tax Withholding for 2014Salaries and Wages Tips Taxable Fringe Benefits Sick Pay Pensions and Annuities Gambling Winnings Unemployment Compensation Federal Payments Backup Withholding Estimated Tax for 2014Who Does Not Have To Pay Estimated Tax Who Must Pay Estimated Tax How To Figure Estimated Tax When To Pay Estimated Tax How To Figure Each Payment How To Pay Estimated Tax Credit for Withholding and Estimated Tax for 2013Withholding Estimated Tax Underpayment Penalty for 2013 What's New for 2014 Tax law changes for 2014. Freetaxes com  When you figure how much income tax you want withheld from your pay and when you figure your estimated tax, consider tax law changes effective in 2014. Freetaxes com For more information, see Publication 505. Freetaxes com Reminders Estimated tax safe harbor for higher income taxpayers. Freetaxes com  If your 2013 adjusted gross income was more than $150,000 ($75,000 if you are married filing a separate return), you must pay the smaller of 90% of your expected tax for 2014 or 110% of the tax shown on your 2013 return to avoid an estimated tax penalty. Freetaxes com Introduction This chapter discusses how to pay your tax as you earn or receive income during the year. Freetaxes com In general, the federal income tax is a pay-as-you-go tax. Freetaxes com There are two ways to pay as you go. Freetaxes com Withholding. Freetaxes com If you are an employee, your employer probably withholds income tax from your pay. Freetaxes com Tax also may be withheld from certain other income, such as pensions, bonuses, commissions, and gambling winnings. Freetaxes com The amount withheld is paid to the IRS in your name. Freetaxes com Estimated tax. Freetaxes com If you do not pay your tax through withholding, or do not pay enough tax that way, you may have to pay estimated tax. Freetaxes com People who are in business for themselves generally will have to pay their tax this way. Freetaxes com Also, you may have to pay estimated tax if you receive income such as dividends, interest, capital gains, rent, and royalties. Freetaxes com Estimated tax is used to pay not only income tax, but self-employment tax and alternative minimum tax as well. Freetaxes com This chapter explains these methods. Freetaxes com In addition, it also explains the following. Freetaxes com Credit for withholding and estimated tax. Freetaxes com When you file your 2013 income tax return, take credit for all the income tax withheld from your salary, wages, pensions, etc. Freetaxes com , and for the estimated tax you paid for 2013. Freetaxes com Also take credit for any excess social security or railroad retirement tax withheld (discussed in chapter 37). Freetaxes com Underpayment penalty. Freetaxes com If you did not pay enough tax during the year, either through withholding or by making estimated tax payments, you may have to pay a penalty. Freetaxes com In most cases, the IRS can figure this penalty for you. Freetaxes com See Underpayment Penalty for 2013 at the end of this chapter. Freetaxes com Useful Items - You may want to see: Publication 505 Tax Withholding and Estimated Tax Form (and Instructions) W-4 Employee's Withholding Allowance Certificate W-4P Withholding Certificate for Pension or Annuity Payments W-4S Request for Federal Income Tax Withholding From Sick Pay W-4V Voluntary Withholding Request 1040-ES Estimated Tax for Individuals 2210 Underpayment of Estimated Tax by Individuals, Estates, and Trusts 2210-F Underpayment of Estimated Tax by Farmers and Fishermen Tax Withholding for 2014 This section discusses income tax withholding on: Salaries and wages, Tips, Taxable fringe benefits, Sick pay, Pensions and annuities, Gambling winnings, Unemployment compensation, and Certain federal payments. Freetaxes com This section explains the rules for withholding tax from each of these types of income. Freetaxes com This section also covers backup withholding on interest, dividends, and other payments. Freetaxes com Salaries and Wages Income tax is withheld from the pay of most employees. Freetaxes com Your pay includes your regular pay, bonuses, commissions, and vacation allowances. Freetaxes com It also includes reimbursements and other expense allowances paid under a nonaccountable plan. Freetaxes com See Supplemental Wages , later, for more information about reimbursements and allowances paid under a nonaccountable plan. Freetaxes com If your income is low enough that you will not have to pay income tax for the year, you may be exempt from withholding. Freetaxes com This is explained under Exemption From Withholding , later. Freetaxes com You can ask your employer to withhold income tax from noncash wages and other wages not subject to withholding. Freetaxes com If your employer does not agree to withhold tax, or if not enough is withheld, you may have to pay estimated tax, as discussed later under Estimated Tax for 2014 . Freetaxes com Military retirees. Freetaxes com   Military retirement pay is treated in the same manner as regular pay for income tax withholding purposes, even though it is treated as a pension or annuity for other tax purposes. Freetaxes com Household workers. Freetaxes com   If you are a household worker, you can ask your employer to withhold income tax from your pay. Freetaxes com A household worker is an employee who performs household work in a private home, local college club, or local fraternity or sorority chapter. Freetaxes com   Tax is withheld only if you want it withheld and your employer agrees to withhold it. Freetaxes com If you do not have enough income tax withheld, you may have to pay estimated tax, as discussed later under Estimated Tax for 2014 . Freetaxes com Farmworkers. Freetaxes com   Generally, income tax is withheld from your cash wages for work on a farm unless your employer does both of these: Pays you cash wages of less than $150 during the year, and Has expenditures for agricultural labor totaling less than $2,500 during the year. Freetaxes com Differential wage payments. Freetaxes com    When employees are on leave from employment for military duty, some employers make up the difference between the military pay and civilian pay. Freetaxes com Payments to an employee who is on active duty for a period of more than 30 days will be subject to income tax withholding, but not subject to social security or Medicare taxes. Freetaxes com The wages and withholding will be reported on Form W-2, Wage and Tax Statement. Freetaxes com   The credit employers can claim for differential wages paid to activated military reservists is scheduled to expire for wages paid after December 31, 2013. Freetaxes com Determining Amount of Tax Withheld Using Form W-4 The amount of income tax your employer withholds from your regular pay depends on two things. Freetaxes com The amount you earn in each payroll period. Freetaxes com The information you give your employer on Form W-4. Freetaxes com Form W-4 includes four types of information that your employer will use to figure your withholding. Freetaxes com Whether to withhold at the single rate or at the lower married rate. Freetaxes com How many withholding allowances you claim (each allowance reduces the amount withheld). Freetaxes com Whether you want an additional amount withheld. Freetaxes com Whether you are claiming an exemption from withholding in 2014. Freetaxes com See Exemption From Withholding , later. Freetaxes com Note. Freetaxes com You must specify a filing status and a number of withholding allowances on Form W-4. Freetaxes com You cannot specify only a dollar amount of withholding. Freetaxes com New Job When you start a new job, you must fill out Form W-4 and give it to your employer. Freetaxes com Your employer should have copies of the form. Freetaxes com If you need to change the information later, you must fill out a new form. Freetaxes com If you work only part of the year (for example, you start working after the beginning of the year), too much tax may be withheld. Freetaxes com You may be able to avoid overwithholding if your employer agrees to use the part-year method. Freetaxes com See Part-Year Method in chapter 1 of Publication 505 for more information. Freetaxes com Employee also receiving pension income. Freetaxes com   If you receive pension or annuity income and begin a new job, you will need to file Form W-4 with your new employer. Freetaxes com However, you can choose to split your withholding allowances between your pension and job in any manner. Freetaxes com Changing Your Withholding During the year changes may occur to your marital status, exemptions, adjustments, deductions, or credits you expect to claim on your tax return. Freetaxes com When this happens, you may need to give your employer a new Form W-4 to change your withholding status or your number of allowances. Freetaxes com If the changes reduce the number of allowances you are claiming or changes your marital status from married to single, you must give your employer a new Form W-4 within 10 days. Freetaxes com Generally, you can submit a new Form W-4 whenever you wish to change the number of your withholding allowances for any other reason. Freetaxes com Changing your withholding for 2015. Freetaxes com   If events in 2014 will decrease the number of your withholding allowances for 2015, you must give your employer a new Form W-4 by December 1, 2014. Freetaxes com If the event occurs in December 2014, submit a new Form W-4 within 10 days. Freetaxes com Checking Your Withholding After you have given your employer a Form W-4, you can check to see whether the amount of tax withheld from your pay is too little or too much. Freetaxes com If too much or too little tax is being withheld, you should give your employer a new Form W-4 to change your withholding. Freetaxes com You should try to have your withholding match your actual tax liability. Freetaxes com If not enough tax is withheld, you will owe tax at the end of the year and may have to pay interest and a penalty. Freetaxes com If too much tax is withheld, you will lose the use of that money until you get your refund. Freetaxes com Always check your withholding if there are personal or financial changes in your life or changes in the law that might change your tax liability. Freetaxes com Note. Freetaxes com You cannot give your employer a payment to cover withholding on salaries and wages for past pay periods or a payment for estimated tax. Freetaxes com Completing Form W-4 and Worksheets Form W-4 has worksheets to help you figure how many withholding allowances you can claim. Freetaxes com The worksheets are for your own records. Freetaxes com Do not give them to your employer. Freetaxes com Multiple jobs. Freetaxes com   If you have income from more than one job at the same time, complete only one set of Form W-4 worksheets. Freetaxes com Then split your allowances between the Forms W-4 for each job. Freetaxes com You cannot claim the same allowances with more than one employer at the same time. Freetaxes com You can claim all your allowances with one employer and none with the other(s), or divide them any other way. Freetaxes com Married individuals. Freetaxes com   If both you and your spouse are employed and expect to file a joint return, figure your withholding allowances using your combined income, adjustments, deductions, exemptions, and credits. Freetaxes com Use only one set of worksheets. Freetaxes com You can divide your total allowances any way, but you cannot claim an allowance that your spouse also claims. Freetaxes com   If you and your spouse expect to file separate returns, figure your allowances using separate worksheets based on your own individual income, adjustments, deductions, exemptions, and credits. Freetaxes com Alternative method of figuring withholding allowances. Freetaxes com   You do not have to use the Form W-4 worksheets if you use a more accurate method of figuring the number of withholding allowances. Freetaxes com For more information, see Alternative method of figuring withholding allowances under Completing Form W-4 and Worksheets in Publication 505, chapter 1. Freetaxes com Personal Allowances Worksheet. Freetaxes com   Use the Personal Allowances Worksheet on Form W-4 to figure your withholding allowances based on exemptions and any special allowances that apply. Freetaxes com Deduction and Adjustments Worksheet. Freetaxes com   Use the Deduction and Adjustments Worksheet on Form W-4 if you plan to itemize your deductions, claim certain credits, or claim adjustments to the income on your 2014 tax return and you want to reduce your withholding. Freetaxes com Also, complete this worksheet when you have changes to these items to see if you need to change your withholding. Freetaxes com Two-Earners/Multiple Jobs Worksheet. Freetaxes com   You may need to complete the Two-Earners/Multiple Jobs Worksheet on Form W-4 if you have more than one job, a working spouse, or are also receiving a pension. Freetaxes com Also, on this worksheet you can add any additional withholding necessary to cover any amount you expect to owe other than income tax, such as self-employment tax. Freetaxes com Getting the Right Amount of Tax Withheld In most situations, the tax withheld from your pay will be close to the tax you figure on your return if you follow these two rules. Freetaxes com You accurately complete all the Form W-4 worksheets that apply to you. Freetaxes com You give your employer a new Form W-4 when changes occur. Freetaxes com But because the worksheets and withholding methods do not account for all possible situations, you may not be getting the right amount withheld. Freetaxes com This is most likely to happen in the following situations. Freetaxes com You are married and both you and your spouse work. Freetaxes com You have more than one job at a time. Freetaxes com You have nonwage income, such as interest, dividends, alimony, unemployment compensation, or self-employment income. Freetaxes com You will owe additional amounts with your return, such as self-employment tax. Freetaxes com Your withholding is based on obsolete Form W-4 information for a substantial part of the year. Freetaxes com Your earnings are more than the amount shown under Check your withholding in the instructions at the top of page 1 of Form W-4. Freetaxes com You work only part of the year. Freetaxes com You change the number of your withholding allowances during the year. Freetaxes com Cumulative wage method. Freetaxes com   If you change the number of your withholding allowances during the year, too much or too little tax may have been withheld for the period before you made the change. Freetaxes com You may be able to compensate for this if your employer agrees to use the cumulative wage withholding method for the rest of the year. Freetaxes com You must ask your employer in writing to use this method. Freetaxes com   To be eligible, you must have been paid for the same kind of payroll period (weekly, biweekly, etc. Freetaxes com ) since the beginning of the year. Freetaxes com Publication 505 To make sure you are getting the right amount of tax withheld, get Publication 505. Freetaxes com It will help you compare the total tax to be withheld during the year with the tax you can expect to figure on your return. Freetaxes com It also will help you determine how much, if any, additional withholding is needed each payday to avoid owing tax when you file your return. Freetaxes com If you do not have enough tax withheld, you may have to pay estimated tax, as explained under Estimated Tax for 2014 , later. Freetaxes com You can use the IRS Withholding Calculator at www. Freetaxes com irs. Freetaxes com gov/Individuals, instead of Publication 505 or the worksheets included with Form W-4, to determine whether you need to have your withholding increased or decreased. Freetaxes com Rules Your Employer Must Follow It may be helpful for you to know some of the withholding rules your employer must follow. Freetaxes com These rules can affect how to fill out your Form W-4 and how to handle problems that may arise. Freetaxes com New Form W-4. Freetaxes com   When you start a new job, your employer should have you complete a Form W-4. Freetaxes com Beginning with your first payday, your employer will use the information you give on the form to figure your withholding. Freetaxes com   If you later fill out a new Form W-4, your employer can put it into effect as soon as possible. Freetaxes com The deadline for putting it into effect is the start of the first payroll period ending 30 or more days after you turn it in. Freetaxes com No Form W-4. Freetaxes com   If you do not give your employer a completed Form W-4, your employer must withhold at the highest rate, as if you were single and claimed no withholding allowances. Freetaxes com Repaying withheld tax. Freetaxes com   If you find you are having too much tax withheld because you did not claim all the withholding allowances you are entitled to, you should give your employer a new Form W-4. Freetaxes com Your employer cannot repay any of the tax previously withheld. Freetaxes com Instead, claim the full amount withheld when you file your tax return. Freetaxes com   However, if your employer has withheld more than the correct amount of tax for the Form W-4 you have in effect, you do not have to fill out a new Form W-4 to have your withholding lowered to the correct amount. Freetaxes com Your employer can repay the amount that was withheld incorrectly. Freetaxes com If you are not repaid, your Form W-2 will reflect the full amount actually withheld, which you would claim when you file your tax return. Freetaxes com Exemption From Withholding If you claim exemption from withholding, your employer will not withhold federal income tax from your wages. Freetaxes com The exemption applies only to income tax, not to social security or Medicare tax. Freetaxes com You can claim exemption from withholding for 2014 only if both of the following situations apply. Freetaxes com For 2013 you had a right to a refund of all federal income tax withheld because you had no tax liability. Freetaxes com For 2014 you expect a refund of all federal income tax withheld because you expect to have no tax liability. Freetaxes com Students. Freetaxes com   If you are a student, you are not automatically exempt. Freetaxes com See chapter 1 to find out if you must file a return. Freetaxes com If you work only part time or only during the summer, you may qualify for exemption from withholding. Freetaxes com Age 65 or older or blind. Freetaxes com   If you are 65 or older or blind, use Worksheet 1-3 or 1-4 in chapter 1 of Publication 505, to help you decide if you qualify for exemption from withholding. Freetaxes com Do not use either worksheet if you will itemize deductions, claim exemptions for dependents, or claim tax credits on your 2014 return. Freetaxes com Instead, see Itemizing deductions or claiming exemptions or credits in chapter 1 of Publication 505. Freetaxes com Claiming exemption from withholding. Freetaxes com   To claim exemption, you must give your employer a Form W-4. Freetaxes com Do not complete lines 5 and 6. Freetaxes com Enter “Exempt” on line 7. Freetaxes com   If you claim exemption, but later your situation changes so that you will have to pay income tax after all, you must file a new Form W-4 within 10 days after the change. Freetaxes com If you claim exemption in 2014, but you expect to owe income tax for 2015, you must file a new Form W-4 by December 1, 2014. Freetaxes com   Your claim of exempt status may be reviewed by the IRS. Freetaxes com An exemption is good for only 1 year. Freetaxes com   You must give your employer a new Form W-4 by February 15 each year to continue your exemption. Freetaxes com Supplemental Wages Supplemental wages include bonuses, commissions, overtime pay, vacation allowances, certain sick pay, and expense allowances under certain plans. Freetaxes com The payer can figure withholding on supplemental wages using the same method used for your regular wages. Freetaxes com However, if these payments are identified separately from your regular wages, your employer or other payer of supplemental wages can withhold income tax from these wages at a flat rate. Freetaxes com Expense allowances. Freetaxes com   Reimbursements or other expense allowances paid by your employer under a nonaccountable plan are treated as supplemental wages. Freetaxes com   Reimbursements or other expense allowances paid under an accountable plan that are more than your proven expenses are treated as paid under a nonaccountable plan if you do not return the excess payments within a reasonable period of time. Freetaxes com   For more information about accountable and nonaccountable expense allowance plans, see Reimbursements in chapter 26. Freetaxes com Penalties You may have to pay a penalty of $500 if both of the following apply. Freetaxes com You make statements or claim withholding allowances on your Form W-4 that reduce the amount of tax withheld. Freetaxes com You have no reasonable basis for those statements or allowances at the time you prepare your Form W-4. Freetaxes com There is also a criminal penalty for willfully supplying false or fraudulent information on your Form W-4 or for willfully failing to supply information that would increase the amount withheld. Freetaxes com The penalty upon conviction can be either a fine of up to $1,000 or imprisonment for up to 1 year, or both. Freetaxes com These penalties will apply if you deliberately and knowingly falsify your Form W-4 in an attempt to reduce or eliminate the proper withholding of taxes. Freetaxes com A simple error or an honest mistake will not result in one of these penalties. Freetaxes com For example, a person who has tried to figure the number of withholding allowances correctly, but claims seven when the proper number is six, will not be charged a W-4 penalty. Freetaxes com Tips The tips you receive while working on your job are considered part of your pay. Freetaxes com You must include your tips on your tax return on the same line as your regular pay. Freetaxes com However, tax is not withheld directly from tip income, as it is from your regular pay. Freetaxes com Nevertheless, your employer will take into account the tips you report when figuring how much to withhold from your regular pay. Freetaxes com See chapter 6 for information on reporting your tips to your employer. Freetaxes com For more information on the withholding rules for tip income, see Publication 531, Reporting Tip Income. Freetaxes com How employer figures amount to withhold. Freetaxes com   The tips you report to your employer are counted as part of your income for the month you report them. Freetaxes com Your employer can figure your withholding in either of two ways. Freetaxes com By withholding at the regular rate on the sum of your pay plus your reported tips. Freetaxes com By withholding at the regular rate on your pay plus a percentage of your reported tips. Freetaxes com Not enough pay to cover taxes. Freetaxes com   If your regular pay is not enough for your employer to withhold all the tax (including income tax and social security and Medicare taxes (or the equivalent railroad retirement tax)) due on your pay plus your tips, you can give your employer money to cover the shortage. Freetaxes com See Giving your employer money for taxes in chapter 6. Freetaxes com Allocated tips. Freetaxes com   Your employer should not withhold income tax, Medicare tax, social security tax, or railroad retirement tax on any allocated tips. Freetaxes com Withholding is based only on your pay plus your reported tips. Freetaxes com Your employer should refund to you any incorrectly withheld tax. Freetaxes com See Allocated Tips in chapter 6 for more information. Freetaxes com Taxable Fringe Benefits The value of certain noncash fringe benefits you receive from your employer is considered part of your pay. Freetaxes com Your employer generally must withhold income tax on these benefits from your regular pay. Freetaxes com For information on fringe benefits, see Fringe Benefits under Employee Compensation in chapter 5. Freetaxes com Although the value of your personal use of an employer-provided car, truck, or other highway motor vehicle is taxable, your employer can choose not to withhold income tax on that amount. Freetaxes com Your employer must notify you if this choice is made. Freetaxes com For more information on withholding on taxable fringe benefits, see chapter 1 of Publication 505. Freetaxes com Sick Pay Sick pay is a payment to you to replace your regular wages while you are temporarily absent from work due to sickness or personal injury. Freetaxes com To qualify as sick pay, it must be paid under a plan to which your employer is a party. Freetaxes com If you receive sick pay from your employer or an agent of your employer, income tax must be withheld. Freetaxes com An agent who does not pay regular wages to you may choose to withhold income tax at a flat rate. Freetaxes com However, if you receive sick pay from a third party who is not acting as an agent of your employer, income tax will be withheld only if you choose to have it withheld. Freetaxes com See Form W-4S , later. Freetaxes com If you receive payments under a plan in which your employer does not participate (such as an accident or health plan where you paid all the premiums), the payments are not sick pay and usually are not taxable. Freetaxes com Union agreements. Freetaxes com   If you receive sick pay under a collective bargaining agreement between your union and your employer, the agreement may determine the amount of income tax withholding. Freetaxes com See your union representative or your employer for more information. Freetaxes com Form W-4S. Freetaxes com   If you choose to have income tax withheld from sick pay paid by a third party, such as an insurance company, you must fill out Form W-4S. Freetaxes com Its instructions contain a worksheet you can use to figure the amount you want withheld. Freetaxes com They also explain restrictions that may apply. Freetaxes com   Give the completed form to the payer of your sick pay. Freetaxes com The payer must withhold according to your directions on the form. Freetaxes com Estimated tax. Freetaxes com   If you do not request withholding on Form W-4S, or if you do not have enough tax withheld, you may have to make estimated tax payments. Freetaxes com If you do not pay enough tax, either through estimated tax or withholding, or a combination of both, you may have to pay a penalty. Freetaxes com See Underpayment Penalty for 2013 at the end of this chapter. Freetaxes com Pensions and Annuities Income tax usually will be withheld from your pension or annuity distributions unless you choose not to have it withheld. Freetaxes com This rule applies to distributions from: A traditional individual retirement arrangement (IRA); A life insurance company under an endowment, annuity, or life insurance contract; A pension, annuity, or profit-sharing plan; A stock bonus plan; and Any other plan that defers the time you receive compensation. Freetaxes com The amount withheld depends on whether you receive payments spread out over more than 1 year (periodic payments), within 1 year (nonperiodic payments), or as an eligible rollover distribution (ERD). Freetaxes com Income tax withholding from an ERD is mandatory. Freetaxes com More information. Freetaxes com   For more information on taxation of annuities and distributions (including ERDs) from qualified retirement plans, see chapter 10. Freetaxes com For information on IRAs, see chapter 17. Freetaxes com For more information on withholding on pensions and annuities, including a discussion of Form W-4P, see Pensions and Annuities in chapter 1 of Publication 505. Freetaxes com Gambling Winnings Income tax is withheld at a flat 25% rate from certain kinds of gambling winnings. Freetaxes com Gambling winnings of more than $5,000 from the following sources are subject to income tax withholding. Freetaxes com Any sweepstakes; wagering pool, including payments made to winners of poker tournaments; or lottery. Freetaxes com Any other wager, if the proceeds are at least 300 times the amount of the bet. Freetaxes com It does not matter whether your winnings are paid in cash, in property, or as an annuity. Freetaxes com Winnings not paid in cash are taken into account at their fair market value. Freetaxes com Exception. Freetaxes com   Gambling winnings from bingo, keno, and slot machines generally are not subject to income tax withholding. Freetaxes com However, you may need to provide the payer with a social security number to avoid withholding. Freetaxes com See Backup withholding on gambling winnings in chapter 1 of Publication 505. Freetaxes com If you receive gambling winnings not subject to withholding, you may need to pay estimated tax. Freetaxes com See Estimated Tax for 2014 , later. Freetaxes com If you do not pay enough tax, either through withholding or estimated tax, or a combination of both, you may have to pay a penalty. Freetaxes com See Underpayment Penalty for 2013 at the end of this chapter. Freetaxes com Form W-2G. Freetaxes com   If a payer withholds income tax from your gambling winnings, you should receive a Form W-2G, Certain Gambling Winnings, showing the amount you won and the amount withheld. Freetaxes com Report the tax withheld on line 62 of Form 1040. Freetaxes com Unemployment Compensation You can choose to have income tax withheld from unemployment compensation. Freetaxes com To make this choice, fill out Form W-4V (or a similar form provided by the payer) and give it to the payer. Freetaxes com All unemployment compensation is taxable. Freetaxes com So, if you do not have income tax withheld, you may have to pay estimated tax. Freetaxes com See Estimated Tax for 2014 , later. Freetaxes com If you do not pay enough tax, either through withholding or estimated tax, or a combination of both, you may have to pay a penalty. Freetaxes com For information, see Underpayment Penalty for 2013 at the end of this chapter. Freetaxes com Federal Payments You can choose to have income tax withheld from certain federal payments you receive. Freetaxes com These payments are: Social security benefits, Tier 1 railroad retirement benefits, Commodity credit corporation loans you choose to include in your gross income, Payments under the Agricultural Act of 1949 (7 U. Freetaxes com S. Freetaxes com C. Freetaxes com 1421 et. Freetaxes com seq. Freetaxes com ), as amended, or title II of the Disaster Assistance Act of 1988, that are treated as insurance proceeds and that you receive because: Your crops were destroyed or damaged by drought, flood, or any other natural disaster, or You were unable to plant crops because of a natural disaster described in (a), and Any other payment under Federal law as determined by the Secretary. Freetaxes com To make this choice, fill out Form W-4V (or a similar form provided by the payer) and give it to the payer. Freetaxes com If you do not choose to have income tax withheld, you may have to pay estimated tax. Freetaxes com See Estimated Tax for 2014 , later. Freetaxes com If you do not pay enough tax, either through withholding or estimated tax, or a combination of both, you may have to pay a penalty. Freetaxes com For information, see Underpayment Penalty for 2013 at the end of this chapter. Freetaxes com More information. Freetaxes com   For more information about the tax treatment of social security and railroad retirement benefits, see chapter 11. Freetaxes com Get Publication 225, Farmer's Tax Guide, for information about the tax treatment of commodity credit corporation loans or crop disaster payments. Freetaxes com Backup Withholding Banks or other businesses that pay you certain kinds of income must file an information return (Form 1099) with the IRS. Freetaxes com The information return shows how much you were paid during the year. Freetaxes com It also includes your name and taxpayer identification number (TIN). Freetaxes com TINs are explained in chapter 1 under Social Security Number (SSN) . Freetaxes com These payments generally are not subject to withholding. Freetaxes com However, “backup” withholding is required in certain situations. Freetaxes com Backup withholding can apply to most kinds of payments that are reported on Form 1099. Freetaxes com The payer must withhold at a flat 28% rate in the following situations. Freetaxes com You do not give the payer your TIN in the required manner. Freetaxes com The IRS notifies the payer that the TIN you gave is incorrect. Freetaxes com You are required, but fail, to certify that you are not subject to backup withholding. Freetaxes com The IRS notifies the payer to start withholding on interest or dividends because you have underreported interest or dividends on your income tax return. Freetaxes com The IRS will do this only after it has mailed you four notices over at least a 210-day period. Freetaxes com See Backup Withholding in chapter 1 of Publication 505 for more information. Freetaxes com Penalties. Freetaxes com   There are civil and criminal penalties for giving false information to avoid backup withholding. Freetaxes com The civil penalty is $500. Freetaxes com The criminal penalty, upon conviction, is a fine of up to $1,000 or imprisonment of up to 1 year, or both. Freetaxes com Estimated Tax for 2014 Estimated tax is the method used to pay tax on income that is not subject to withholding. Freetaxes com This includes income from self-employment, interest, dividends, alimony, rent, gains from the sale of assets, prizes, and awards. Freetaxes com You also may have to pay estimated tax if the amount of income tax being withheld from your salary, pension, or other income is not enough. Freetaxes com Estimated tax is used to pay both income tax and self-employment tax, as well as other taxes and amounts reported on your tax return. Freetaxes com If you do not pay enough tax, either through withholding or estimated tax, or a combination of both, you may have to pay a penalty. Freetaxes com If you do not pay enough by the due date of each payment period (see When To Pay Estimated Tax , later), you may be charged a penalty even if you are due a refund when you file your tax return. Freetaxes com For information on when the penalty applies, see Underpayment Penalty for 2013 at the end of this chapter. Freetaxes com Who Does Not Have To Pay Estimated Tax If you receive salaries or wages, you can avoid having to pay estimated tax by asking your employer to take more tax out of your earnings. Freetaxes com To do this, give a new Form W-4 to your employer. Freetaxes com See chapter 1 of Publication 505. Freetaxes com Estimated tax not required. Freetaxes com   You do not have to pay estimated tax for 2014 if you meet all three of the following conditions. Freetaxes com You had no tax liability for 2013. Freetaxes com You were a U. Freetaxes com S. Freetaxes com citizen or resident alien for the whole year. Freetaxes com Your 2013 tax year covered a 12-month period. Freetaxes com   You had no tax liability for 2013 if your total tax was zero or you did not have to file an income tax return. Freetaxes com For the definition of “total tax” for 2013, see Publication 505, chapter 2. Freetaxes com Who Must Pay Estimated Tax If you owe additional tax for 2013, you may have to pay estimated tax for 2014. Freetaxes com You can use the following general rule as a guide during the year to see if you will have enough withholding, or if you should increase your withholding or make estimated tax payments. Freetaxes com General rule. Freetaxes com   In most cases, you must pay estimated tax for 2014 if both of the following apply. Freetaxes com You expect to owe at least $1,000 in tax for 2014, after subtracting your withholding and refundable credits. Freetaxes com You expect your withholding plus your refundable credits to be less than the smaller of: 90% of the tax to be shown on your 2014 tax return, or 100% of the tax shown on your 2013 tax return (but see Special rules for farmers, fishermen, and higher income taxpayers, later). Freetaxes com Your 2013 tax return must cover all 12 months. Freetaxes com    If the result from using the general rule above suggests that you will not have enough withholding, complete the 2014 Estimated Tax Worksheet in Publication 505 for a more accurate calculation. Freetaxes com Special rules for farmers, fishermen, and higher income taxpayers. Freetaxes com   If at least two-thirds of your gross income for tax year 2013 or 2014 is from farming or fishing, substitute 662/3% for 90% in (2a) under the General rule, earlier. Freetaxes com If your AGI for 2013 was more than $150,000 ($75,000 if your filing status for 2014 is married filing a separate return), substitute 110% for 100% in (2b) under General rule , earlier. Freetaxes com See Figure 4-A and Publication 505, chapter 2 for more information. Freetaxes com Figure 4-A. Freetaxes com Do You Have To Pay Estimated Tax? Please click here for the text description of the image. Freetaxes com Figure 4-A Do You Have To Pay Estimated Tax? Aliens. Freetaxes com   Resident and nonresident aliens also may have to pay estimated tax. Freetaxes com Resident aliens should follow the rules in this chapter unless noted otherwise. Freetaxes com Nonresident aliens should get Form 1040-ES (NR), U. Freetaxes com S. Freetaxes com Estimated Tax for Nonresident Alien Individuals. Freetaxes com   You are an alien if you are not a citizen or national of the United States. Freetaxes com You are a resident alien if you either have a green card or meet the substantial presence test. Freetaxes com For more information about the substantial presence test, see Publication 519, U. Freetaxes com S. Freetaxes com Tax Guide for Aliens. Freetaxes com Married taxpayers. Freetaxes com   If you qualify to make joint estimated tax payments, apply the rules discussed here to your joint estimated income. Freetaxes com   You and your spouse can make joint estimated tax payments even if you are not living together. Freetaxes com   However, you and your spouse cannot make joint estimated tax payments if:  You are legally separated under a decree of divorce or separate maintenance, You and your spouse have different tax years, or Either spouse is a nonresident alien (unless that spouse elected to be treated as a resident alien for tax purposes (see chapter 1 of Publication 519)). Freetaxes com   If you do not qualify to make joint estimated tax payments, apply these rules to your separate estimated income. Freetaxes com Making joint or separate estimated tax payments will not affect your choice of filing a joint tax return or separate returns for 2014. Freetaxes com 2013 separate returns and 2014 joint return. Freetaxes com   If you plan to file a joint return with your spouse for 2014, but you filed separate returns for 2013, your 2013 tax is the total of the tax shown on your separate returns. Freetaxes com You filed a separate return if you filed as single, head of household, or married filing separately. Freetaxes com 2013 joint return and 2014 separate returns. Freetaxes com   If you plan to file a separate return for 2014 but you filed a joint return for 2013, your 2013 tax is your share of the tax on the joint return. Freetaxes com You file a separate return if you file as single, head of household, or married filing separately. Freetaxes com   To figure your share of the tax on the joint return, first figure the tax both you and your spouse would have paid had you filed separate returns for 2013 using the same filing status as for 2014. Freetaxes com Then multiply the tax on the joint return by the following fraction. Freetaxes com     The tax you would have paid had you filed a separate return   The total tax you and your spouse would have paid had you filed separate returns Example. Freetaxes com Joe and Heather filed a joint return for 2013 showing taxable income of $48,500 and a tax of $6,386. Freetaxes com Of the $48,500 taxable income, $40,100 was Joe's and the rest was Heather's. Freetaxes com For 2014, they plan to file married filing separately. Freetaxes com Joe figures his share of the tax on the 2013 joint return as follows. Freetaxes com   Tax on $40,100 based on a separate return $5,960     Tax on $8,400 based on a separate return 843     Total $6,803     Joe's percentage of total ($5,960 ÷ $6,803) 87. Freetaxes com 6%     Joe's share of tax on joint return  ($6,386 × 87. Freetaxes com 6%) $5,594   How To Figure Estimated Tax To figure your estimated tax, you must figure your expected adjusted gross income (AGI), taxable income, taxes, deductions, and credits for the year. Freetaxes com When figuring your 2014 estimated tax, it may be helpful to use your income, deductions, and credits for 2013 as a starting point. Freetaxes com Use your 2013 federal tax return as a guide. Freetaxes com You can use Form 1040-ES and Publication 505 to figure your estimated tax. Freetaxes com Nonresident aliens use Form 1040-ES (NR) and Publication 505 to figure estimated tax (see chapter 8 of Publication 519 for more information). Freetaxes com You must make adjustments both for changes in your own situation and for recent changes in the tax law. Freetaxes com For a discussion of these changes, visit IRS. Freetaxes com gov. Freetaxes com For more complete information on how to figure your estimated tax for 2014, see chapter 2 of Publication 505. Freetaxes com When To Pay Estimated Tax For estimated tax purposes, the tax year is divided into four payment periods. Freetaxes com Each period has a specific payment due date. Freetaxes com If you do not pay enough tax by the due date of each payment period, you may be charged a penalty even if you are due a refund when you file your income tax return. Freetaxes com The payment periods and due dates for estimated tax payments are shown next. Freetaxes com   For the period: Due date:*     Jan. Freetaxes com 1 – March 31 April 15     April 1 – May 31 June 16     June 1 – August 31 Sept. Freetaxes com 15     Sept. Freetaxes com 1– Dec. Freetaxes com 31 Jan. Freetaxes com 15, next year     *See Saturday, Sunday, holiday rule and January payment . Freetaxes com Saturday, Sunday, holiday rule. Freetaxes com   If the due date for an estimated tax payment falls on a Saturday, Sunday, or legal holiday, the payment will be on time if you make it on the next day that is not a Saturday, Sunday, or legal holiday. Freetaxes com January payment. Freetaxes com   If you file your 2014 Form 1040 or Form 1040A by January 31, 2015, and pay the rest of the tax you owe, you do not need to make the payment due on January 15, 2015. Freetaxes com Fiscal year taxpayers. Freetaxes com   If your tax year does not start on January 1, see the Form 1040-ES instructions for your payment due dates. Freetaxes com When To Start You do not have to make estimated tax payments until you have income on which you will owe income tax. Freetaxes com If you have income subject to estimated tax during the first payment period, you must make your first payment by the due date for the first payment period. Freetaxes com You can pay all your estimated tax at that time, or you can pay it in installments. Freetaxes com If you choose to pay in installments, make your first payment by the due date for the first payment period. Freetaxes com Make your remaining installment payments by the due dates for the later periods. Freetaxes com No income subject to estimated tax during first period. Freetaxes com    If you do not have income subject to estimated tax until a later payment period, you must make your first payment by the due date for that period. Freetaxes com You can pay your entire estimated tax by the due date for that period or you can pay it in installments by the due date for that period and the due dates for the remaining periods. Freetaxes com The following chart shows when to make installment payments. Freetaxes com If you first have income on which you must pay estimated tax: Make a payment  by:* Make later installments by:* Before April 1 April 15 June 16 Sept. Freetaxes com 15 Jan. Freetaxes com 15 next year April 1–May 31 June 16 Sept. Freetaxes com 15 Jan. Freetaxes com 15 next year June 1–Aug. Freetaxes com 31 Sept. Freetaxes com 15 Jan. Freetaxes com 15 next year After Aug. Freetaxes com 31 Jan. Freetaxes com 15 next year (None) *See Saturday, Sunday, holiday rule and January payment . Freetaxes com How much to pay to avoid a penalty. Freetaxes com   To determine how much you should pay by each payment due date, see How To Figure Each Payment, next. Freetaxes com How To Figure Each Payment You should pay enough estimated tax by the due date of each payment period to avoid a penalty for that period. Freetaxes com You can figure your required payment for each period by using either the regular installment method or the annualized income installment method. Freetaxes com These methods are described in chapter 2 of Publication 505. Freetaxes com If you do not pay enough during each payment period, you may be charged a penalty even if you are due a refund when you file your tax return. Freetaxes com If the earlier discussion of No income subject to estimated tax during first period or the later discussion of Change in estimated tax applies to you, you may benefit from reading Annualized Income Installment Method in chapter 2 of Publication 505 for information on how to avoid a penalty. Freetaxes com Underpayment penalty. Freetaxes com   Under the regular installment method, if your estimated tax payment for any period is less than one-fourth of your estimated tax, you may be charged a penalty for underpayment of estimated tax for that period when you file your tax return. Freetaxes com Under the annualized income installment method, your estimated tax payments vary with your income, but the amount required must be paid each period. Freetaxes com See chapter 4 of Publication 505 for more information. Freetaxes com Change in estimated tax. Freetaxes com   After you make an estimated tax payment, changes in your income, adjustments, deductions, credits, or exemptions may make it necessary for you to refigure your estimated tax. Freetaxes com Pay the unpaid balance of your amended estimated tax by the next payment due date after the change or in installments by that date and the due dates for the remaining payment periods. Freetaxes com Estimated Tax Payments Not Required You do not have to pay estimated tax if your withholding in each payment period is at least as much as: One-fourth of your required annual payment, or Your required annualized income installment for that period. Freetaxes com You also do not have to pay estimated tax if you will pay enough through withholding to keep the amount you owe with your return under $1,000. Freetaxes com How To Pay Estimated Tax There are several ways to pay estimated tax. Freetaxes com Credit an overpayment on your 2013 return to your 2014 estimated tax. Freetaxes com Pay by direct transfer from your bank account, or pay by credit or debit card using a pay-by-phone system or the Internet. Freetaxes com Send in your payment (check or money order) with a payment voucher from Form 1040-ES. Freetaxes com Credit an Overpayment If you show an overpayment of tax after completing your Form 1040 or Form 1040A for 2013, you can apply part or all of it to your estimated tax for 2014. Freetaxes com On line 75 of Form 1040, or line 44 of Form 1040A, enter the amount you want credited to your estimated tax rather than refunded. Freetaxes com Take the amount you have credited into account when figuring your estimated tax payments. Freetaxes com You cannot have any of the amount you credited to your estimated tax refunded to you until you file your tax return for the following year. Freetaxes com You also cannot use that overpayment in any other way. Freetaxes com Pay Online Paying online is convenient and secure and helps make sure we get your payments on time. Freetaxes com You can pay using either of the following electronic payment methods. Freetaxes com Direct transfer from your bank account. Freetaxes com Credit or debit card. Freetaxes com To pay your taxes online or for more information, go to www. Freetaxes com irs. Freetaxes com gov/e-pay. Freetaxes com Pay by Phone Paying by phone is another safe and secure method of paying electronically. Freetaxes com Use one of the following methods. Freetaxes com Direct transfer from your bank account. Freetaxes com Credit or debit card. Freetaxes com To pay by direct transfer from your bank account, call 1-800-555-4477 (English), 1-800-244-4829 (Espanol). Freetaxes com People who are deaf, hard of hearing, or have a speech disability and who have access to TTY/TDD can call 1-800-733-4829. Freetaxes com To pay using a credit or debit card, you can call one of the following service providers. Freetaxes com There is a convenience fee charged by these providers that varies by provider, card type, and payment amount. Freetaxes com WorldPay 1-888-9-PAY-TAXTM(1-888-972-9829) www. Freetaxes com payUSAtax. Freetaxes com com Official Payments Corporation 1-888-UPAY-TAXTM (1-888-872-9829) www. Freetaxes com officialpayments. Freetaxes com com Link2Gov Corporation 1-888-PAY-1040TM (1-888-729-1040) www. Freetaxes com PAY1040. Freetaxes com com For the latest details on how to pay by phone, go to www. Freetaxes com irs. Freetaxes com gov/e-pay. Freetaxes com Pay by Check or Money Order Using the Estimated Tax Payment Voucher Each payment of estimated tax by check or money order must be accompanied by a payment voucher from Form 1040-ES. Freetaxes com During 2013, if you: made at least one estimated tax payment but not by electronic means, did not use software or a paid preparer to prepare or file your return,  then you should receive a copy of the 2014 Form 1040-ES/V. Freetaxes com The enclosed payment vouchers will be preprinted with your name, address, and social security number. Freetaxes com Using the preprinted vouchers will speed processing, reduce the chance of error, and help save processing costs. Freetaxes com Use the window envelopes that came with your Form 1040-ES package. Freetaxes com If you use your own envelopes, make sure you mail your payment vouchers to the address shown in the Form 1040-ES instructions for the place where you live. Freetaxes com Note. Freetaxes com These criteria can change without notice. Freetaxes com If you do not receive a Form 1040-ES/V package and you are required to make an estimated tax payment, you should go to www. Freetaxes com irs. Freetaxes com gov and print a copy of Form 1040-ES which includes four blank payment vouchers. Freetaxes com Complete one of these and make your payment timely to avoid penalties for paying late. Freetaxes com Do not use the address shown in the Form 1040 or Form 1040A instructions for your estimated tax payments. Freetaxes com If you did not pay estimated tax last year, you can order Form 1040-ES from the IRS (see inside back cover of this publication) or download it from IRS. Freetaxes com gov. Freetaxes com Follow the instructions to make sure you use the vouchers correctly. Freetaxes com Joint estimated tax payments. Freetaxes com   If you file a joint return and are making joint estimated tax payments, enter the names and social security numbers on the payment voucher in the same order as they will appear on the joint return. Freetaxes com Change of address. Freetaxes com   You must notify the IRS if you are making estimated tax payments and you changed your address during the year. Freetaxes com Complete Form 8822, Change of Address, and mail it to the address shown in the instructions for that form. Freetaxes com Credit for Withholding and Estimated Tax for 2013 When you file your 2013 income tax return, take credit for all the income tax and excess social security or railroad retirement tax withheld from your salary, wages, pensions, etc. Freetaxes com Also take credit for the estimated tax you paid for 2013. Freetaxes com These credits are subtracted from your total tax. Freetaxes com Because these credits are refundable, you should file a return and claim these credits, even if you do not owe tax. Freetaxes com Two or more employers. Freetaxes com   If you had two or more employers in 2013 and were paid wages of more than $113,700, too much social security or tier 1 railroad retirement tax may have been withheld from your pay. Freetaxes com You may be able to claim the excess as a credit against your income tax when you file your return. Freetaxes com See Credit for Excess Social Security Tax or Railroad Retirement Tax Withheld in chapter 37. Freetaxes com Withholding If you had income tax withheld during 2013, you should be sent a statement by January 31, 2014, showing your income and the tax withheld. Freetaxes com Depending on the source of your income, you should receive: Form W-2, Wage and Tax Statement, Form W-2G, Certain Gambling Winnings, or A form in the 1099 series. Freetaxes com Forms W-2 and W-2G. Freetaxes com   If you file a paper return, always file Form W-2 with your income tax return. Freetaxes com File Form W-2G with your return only if it shows any federal income tax withheld from your winnings. Freetaxes com   You should get at least two copies of each form. Freetaxes com If you file a paper return, attach one copy to the front of your federal income tax return. Freetaxes com Keep one copy for your records. Freetaxes com You also should receive copies to file with your state and local returns. Freetaxes com Form W-2 Your employer is required to provide or send Form W-2 to you no later than January 31, 2014. Freetaxes com You should receive a separate Form W-2 from each employer you worked for. Freetaxes com If you stopped working before the end of 2013, your employer could have given you your Form W-2 at any time after you stopped working. Freetaxes com However, your employer must provide or send it to you by January 31, 2014. Freetaxes com If you ask for the form, your employer must send it to you within 30 days after receiving your written request or within 30 days after your final wage payment, whichever is later. Freetaxes com If you have not received your Form W-2 by January 31, you should ask your employer for it. Freetaxes com If you do not receive it by February 15, call the IRS. Freetaxes com Form W-2 shows your total pay and other compensation and the income tax, social security tax, and Medicare tax that was withheld during the year. Freetaxes com Include the federal income tax withheld (as shown in box 2 of Form W-2) on: Line 62 if you file Form 1040, Line 36 if you file Form 1040A, or Line 7 if you file Form 1040EZ. Freetaxes com In addition, Form W-2 is used to report any taxable sick pay you received and any income tax withheld from your sick pay. Freetaxes com Form W-2G If you had gambling winnings in 2013, the payer may have withheld income tax. Freetaxes com If tax was withheld, the payer will give you a Form W-2G showing the amount you won and the amount of tax withheld. Freetaxes com Report the amounts you won on line 21 of Form 1040. Freetaxes com Take credit for the tax withheld on line 62 of Form 1040. Freetaxes com If you had gambling winnings, you must use Form 1040; you cannot use Form 1040A or Form 1040EZ. Freetaxes com The 1099 Series Most forms in the 1099 series are not filed with your return. Freetaxes com These forms should be furnished to you by January 31, 2014 (or, for Forms 1099-B, 1099-S, and certain Forms 1099-MISC, by February 15, 2014). Freetaxes com Unless instructed to file any of these forms with your return, keep them for your records. Freetaxes com There are several different forms in this series, including: Form 1099-B, Proceeds From Broker and Barter Exchange Transactions; Form 1099-DIV, Dividends and Distributions; Form 1099-G, Certain Government Payments; Form 1099-INT, Interest Income; Form 1099-K, Payment Card and Third Party Network Transactions; Form 1099-MISC, Miscellaneous Income; Form 1099-OID, Original Issue Discount; Form 1099-PATR, Taxable Distributions Received from Cooperatives; Form 1099-Q, Payments From Qualified Education Programs; Form 1099-R, Distributions From Pensions, Annuities, Retirement or Profit-Sharing Plans, IRAs, Insurance Contracts, etc. Freetaxes com ; Form 1099-S, Proceeds From Real Estate Transactions; Form RRB-1099, Payments by the Railroad Retirement Board. Freetaxes com If you received the types of income reported on some forms in the 1099 series, you may not be able to use Form 1040A or Form 1040EZ. Freetaxes com See the instructions to these forms for details. Freetaxes com Form 1099-R. Freetaxes com   Attach Form 1099-R to your paper return if box 4 shows federal income tax withheld. Freetaxes com Include the amount withheld in the total on line 62 of Form 1040 or line 36 of Form 1040A. Freetaxes com You cannot use Form 1040EZ if you received payments reported on Form 1099-R. Freetaxes com Backup withholding. Freetaxes com   If you were subject to backup withholding on income you received during 2013, include the amount withheld, as shown on your Form 1099, in the total on line 62 of Form 1040, line 36 of Form 1040A, or line 7 of Form 1040EZ. Freetaxes com Form Not Correct If you receive a form with incorrect information on it, you should ask the payer for a corrected form. Freetaxes com Call the telephone number or write to the address given for the payer on the form. Freetaxes com The corrected Form W-2G or Form 1099 you receive will have an “X” in the “CORRECTED” box at the top of the form. Freetaxes com A special form, Form W-2c, Corrected Wage and Tax Statement, is used to correct a Form W-2. Freetaxes com In certain situations, you will receive two forms in place of the original incorrect form. Freetaxes com This will happen when your taxpayer identification number is wrong or missing, your name and address are wrong, or you received the wrong type of form (for example, a Form 1099-DIV instead of a Form 1099-INT). Freetaxes com One new form you receive will be the same incorrect form or have the same incorrect information, but all money amounts will be zero. Freetaxes com This form will have an “X” in the “CORRECTED” box at the top of the form. Freetaxes com The second new form should have all the correct information, prepared as though it is the original (the “CORRECTED” box will not be checked). Freetaxes com Form Received After Filing If you file your return and you later receive a form for income that you did not include on your return, you should report the income and take credit for any income tax withheld by filing Form 1040X, Amended U. Freetaxes com S. Freetaxes com Individual Income Tax Return. Freetaxes com Separate Returns If you are married but file a separate return, you can take credit only for the tax withheld from your own income. Freetaxes com Do not include any amount withheld from your spouse's income. Freetaxes com However, different rules may apply if you live in a community property state. Freetaxes com Community property states are listed in chapter 2. Freetaxes com For more information on these rules, and some exceptions, see Publication 555, Community Property. Freetaxes com Fiscal Years If you file your tax return on the basis of a fiscal year (a 12-month period ending on the last day of any month except December), you must follow special rules to determine your credit for federal income tax withholding. Freetaxes com For a discussion of how to take credit for withholding on a fiscal year return, see Fiscal Years (FY) in chapter 3 of Publication 505. Freetaxes com Estimated Tax Take credit for all your estimated tax payments for 2013 on line 63 of Form 1040 or line 37 of Form 1040A. Freetaxes com Include any overpayment from 2012 that you had credited to your 2013 estimated tax. Freetaxes com You must use Form 1040 or Form 1040A if you paid estimated tax. Freetaxes com You cannot use Form 1040EZ. Freetaxes com Name changed. Freetaxes com   If you changed your name, and you made estimated tax payments using your old name, attach a brief statement to the front of your paper tax return indicating: When you made the payments, The amount of each payment, Your name when you made the payments, and Your social security number. Freetaxes com The statement should cover payments you made jointly with your spouse as well as any you made separately. Freetaxes com   Be sure to report the change to the Social Security Administration. Freetaxes com This prevents delays in processing your return and issuing any refunds. Freetaxes com Separate Returns If you and your spouse made separate estimated tax payments for 2013 and you file separate returns, you can take credit only for your own payments. Freetaxes com If you made joint estimated tax payments, you must decide how to divide the payments between your returns. Freetaxes com One of you can claim all of the estimated tax paid and the other none, or you can divide it in any other way you agree on. Freetaxes com If you cannot agree, you must divide the payments in proportion to each spouse's individual tax as shown on your separate returns for 2013. Freetaxes com Divorced Taxpayers If you made joint estimated tax payments for 2013, and you were divorced during the year, either you or your former spouse can claim all of the joint payments, or you each can claim part of them. Freetaxes com If you cannot agree on how to divide the payments, you must divide them in proportion to each spouse's individual tax as shown on your separate returns for 2013. Freetaxes com If you claim any of the joint payments on your tax return, enter your former spouse's social security number (SSN) in the space provided on the front of Form 1040 or Form 1040A. Freetaxes com If you divorced and remarried in 2013, enter your present spouse's SSN in that space and write your former spouse's SSN, followed by “DIV,” to the left of Form 1040, line 63, or Form 1040A, line 37. Freetaxes com Underpayment Penalty for 2013 If you did not pay enough tax, either through withholding or by making timely estimated tax payments, you will have an underpayment of estimated tax and you may have to pay a penalty. Freetaxes com Generally, you will not have to pay a penalty for 2013 if any of the following apply. Freetaxes com The total of your withholding and estimated tax payments was at least as much as your 2012 tax (or 110% of your 2012 tax if your AGI was more than $150,000, $75,000 if your 2013 filing status is married filing separately) and you paid all required estimated tax payments on time. Freetaxes com The tax balance due on your 2013 return is no more than 10% of your total 2013 tax, and you paid all required estimated tax payments on time. Freetaxes com Your total 2013 tax minus your withholding and refundable credits is less than $1,000. Freetaxes com You did not have a tax liability for 2012 and your 2012 tax year was 12 months, or You did not have any withholding taxes and your current year tax less any household employment taxes is less than $1,000. Freetaxes com See Publication 505, chapter 4, for a definition of “total tax” for 2012 and 2013. Freetaxes com Farmers and fishermen. Freetaxes com   Special rules apply if you are a farmer or fisherman. Freetaxes com See Farmers and Fishermen in chapter 4 of Publication 505 for more information. Freetaxes com IRS can figure the penalty for you. Freetaxes com   If you think you owe the penalty but you do not want to figure it yourself when you file your tax return, you may not have to. Freetaxes com Generally, the IRS will figure the penalty for you and send you a bill. Freetaxes com However, if you think you are able to lower or eliminate your penalty, you must complete Form 2210 or Form 2210-F and attach it to your paper return. Freetaxes com See chapter 4 of Publication 505. Freetaxes com Prev  Up  Next   Home   More Online Publications