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H&r Block Advantage

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H&r block advantage Publication 80 - Main Content Table of Contents Introduction 1. H&r block advantage Employer Identification Number (EIN) 2. H&r block advantage Who Are Employees?Tests. H&r block advantage Business Owned and Operated by Spouses Farm Crew Leaders 3. H&r block advantage Employee's Social Security Number (SSN)Registering for SSNVS. H&r block advantage 4. H&r block advantage Wages and Other CompensationFringe Benefits 5. H&r block advantage TipsOrdering rule. H&r block advantage 6. H&r block advantage Social Security and Medicare Taxes for FarmworkersThe $150 Test or the $2,500 Test 7. H&r block advantage How To Figure Social Security and Medicare TaxesHousehold and agricultural employers. H&r block advantage 8. H&r block advantage Depositing TaxesPayment with Return When To Deposit How To Deposit Deposit Penalties 9. H&r block advantage Employer's ReturnsReporting Adjustments to Form 941-SS, 944-SS, 944, or 943 Current Period Adjustments Prior Period Adjustments 10. H&r block advantage Wage and Tax StatementsWaiver. H&r block advantage 11. H&r block advantage Federal Unemployment (FUTA) Tax—U. H&r block advantage S. H&r block advantage Virgin Islands Employers Only How To Get Tax Help Introduction This publication is for employers whose principal place of business is in the U. H&r block advantage S. H&r block advantage Virgin Islands, Guam, American Samoa, or the Commonwealth of the Northern Mariana Islands, or who have employees who are subject to income tax withholding for any of these jurisdictions. H&r block advantage Employers and employees in these areas are generally subject to social security and Medicare taxes under the Federal Insurance Contributions Act (FICA). H&r block advantage See section 6 and section 7 for more information. H&r block advantage This publication summarizes employer responsibilities to collect, pay, and report these taxes. H&r block advantage Whenever the term “United States” is used in this publication, it includes U. H&r block advantage S. H&r block advantage Virgin Islands, Guam, American Samoa, and the Commonwealth of the Northern Mariana Islands. H&r block advantage This publication also provides employers in the U. H&r block advantage S. H&r block advantage Virgin Islands with a summary of their responsibilities in connection with the tax under the Federal Unemployment Tax Act, known as FUTA tax. H&r block advantage See section 11 for more information. H&r block advantage Except as shown in the table in section 12, social security, Medicare, and FUTA taxes apply to every employer who pays taxable wages to employees or who has employees who report tips. H&r block advantage This publication does not include information relating to the self-employment tax (for social security and Medicare of self-employed persons). H&r block advantage See Publication 570, Tax Guide for Individuals With Income From U. H&r block advantage S. H&r block advantage Possessions, if you need this information. H&r block advantage This publication also does not include information relating to income tax withholding. H&r block advantage In U. H&r block advantage S. H&r block advantage Virgin Islands, Guam, American Samoa, and the Commonwealth of the Northern Mariana Islands, contact your local tax department for information about income tax withholding. H&r block advantage See Publication 15 (Circular E), for information on U. H&r block advantage S. H&r block advantage federal income tax withholding. H&r block advantage Comments and suggestions. H&r block advantage   We welcome your comments about this publication and your suggestions for future editions. H&r block advantage   You can write to us at the following address: Internal Revenue Service Tax Forms and Publications Division 1111 Constitution Ave. H&r block advantage NW, IR-6526 Washington, DC 20224   We respond to many letters by telephone. H&r block advantage Therefore, it would be helpful if you would include your daytime phone number, including the area code, in your correspondence. H&r block advantage    You can also send us comments from www. H&r block advantage irs. H&r block advantage gov/formspubs. H&r block advantage Click on More Information and then click on Comment on Tax Forms and Publications. H&r block advantage   Although we cannot respond individually to each comment received, we do appreciate your feedback and will consider your comments as we revise our tax forms, instructions, and publications. H&r block advantage 1. H&r block advantage Employer Identification Number (EIN) An employer identification number (EIN) is a nine-digit number that the IRS issues. H&r block advantage Its format is 00-0000000. H&r block advantage It is used to identify the tax accounts of employers and certain other organizations and entities that have no employees. H&r block advantage Use your EIN on all of the items that you send to the IRS and SSA for your business. H&r block advantage If you do not have an EIN, you may apply for one online. H&r block advantage Go to IRS. H&r block advantage gov and click on the Apply for an EIN Online link under Tools. H&r block advantage You may also apply for an EIN by calling 1-800-829-4933, (U. H&r block advantage S. H&r block advantage Virgin Islands only) or 267-941-1099 (toll call), or you can fax or mail Form SS-4, Application for Employer Identification Number, to the IRS. H&r block advantage Do not use a social security number (SSN) in place of an EIN. H&r block advantage If you do not have an EIN by the time a return is due, file a paper return and enter “Applied For” and the date that you applied for it in the space shown for the number. H&r block advantage If you took over another employer's business, do not use that employer's EIN. H&r block advantage You should have only one EIN. H&r block advantage If you have more than one, write to the IRS office where you file your returns using the “without a payment” address in the Instructions for Form 941-SS, Instructions for Form 944, or Instructions for Form 943. H&r block advantage Or call the IRS Business & Specialty Tax Line at 1-800-829-4933 (U. H&r block advantage S. H&r block advantage Virgin Islands only) or 267-941-1000 (toll call). H&r block advantage Persons who are deaf, hard of hearing, or have a speech disability (TDD/TTY users) in the U. H&r block advantage S. H&r block advantage Virgin Islands may call 1-800-829-4059. H&r block advantage The IRS will tell you which EIN to use. H&r block advantage For more information, see Publication 1635, Employer Identification Number: Understanding Your EIN, or Publication 583, Starting a Business and Keeping Records. H&r block advantage 2. H&r block advantage Who Are Employees? Generally, employees are defined either under common law or under special statutes for certain situations. H&r block advantage See Publication 15-A, Employer's Supplemental Tax Guide, for details on statutory employees and nonemployees. H&r block advantage Employee status under common law. H&r block advantage   Generally, a worker who performs services for you is your employee if you can control what will be done and how it will be done. H&r block advantage This is so even when you give the employee freedom of action. H&r block advantage What matters is that you have the right to control the details of how the services are performed. H&r block advantage See Publication 15-A for more information on how to determine whether an individual providing services is an independent contractor or an employee. H&r block advantage    Generally, people in business for themselves are not employees. H&r block advantage For example, doctors, lawyers, veterinarians, and others in an independent trade in which they offer their services to the public are usually not employees. H&r block advantage However, if the business is incorporated, corporate officers who work in the business are employees of the corporation. H&r block advantage   If an employer-employee relationship exists, it does not matter what it is called. H&r block advantage The employee may be called an agent or independent contractor. H&r block advantage It also does not matter how payments are measured or paid, what they are called, or if the employee works full or part time. H&r block advantage Statutory employees. H&r block advantage   There are also some special definitions of employees for social security, Medicare, and FUTA taxes. H&r block advantage   While the following persons may not be common law employees, they are considered employees for social security and Medicare purposes if the conditions under Tests , discussed later, are met. H&r block advantage a. H&r block advantage   An agent (or commission) driver who delivers food or beverages (other than milk) or picks up and delivers laundry or dry cleaning for someone else. H&r block advantage b. H&r block advantage   A full-time life insurance salesperson who sells primarily for one company. H&r block advantage c. H&r block advantage   A homeworker who works by the guidelines of the person for whom the work is done, with materials furnished by and returned to that person or to someone that person designates. H&r block advantage d. H&r block advantage   A traveling or city salesperson (other than an agent-driver or commission-driver) who works full time (except for sideline sales activities) for one firm or person getting orders from customers. H&r block advantage The orders must be for merchandise for resale or supplies for use in the customer's business. H&r block advantage The customers must be retailers, wholesalers, contractors, or operators of hotels, restaurants, or other businesses dealing with food or lodging. H&r block advantage Tests. H&r block advantage   Withhold social security and Medicare taxes from statutory employees' wages if all three of the following tests apply. H&r block advantage The service contract states or implies that almost all of the services are to be performed personally by them. H&r block advantage They have little or no investment in the equipment and property used to perform the services (other than an investment in transportation facilities). H&r block advantage The services are performed on a continuing basis for the same payer. H&r block advantage Persons in a or d, earlier, are also employees for FUTA tax purposes if tests 1 through 3 are met (U. H&r block advantage S. H&r block advantage Virgin Islands only). H&r block advantage   Publication 15-A gives examples of the employer-employee relationship. H&r block advantage Statutory nonemployees. H&r block advantage   Certain direct sellers, qualified real estate agents, and certain companion sitters are, by law, considered nonemployees. H&r block advantage They are generally treated as self-employed for employment tax purposes. H&r block advantage See Publication 15-A for details. H&r block advantage H-2A agricultural workers. H&r block advantage   On Form W-2, do not check box 13 (Statutory employee) as H-2A workers are not statutory employees. H&r block advantage Treating employees as nonemployees. H&r block advantage   If you incorrectly treated an employee as a nonemployee and did not withhold social security and Medicare taxes, you will be liable for the taxes. H&r block advantage See Treating employees as nonemployees in section 2 of Publication 15 (Circular E), for details on Internal Revenue Code section 3509, which may apply. H&r block advantage IRS help. H&r block advantage   If you want the IRS to determine if a worker is an employee, file Form SS-8, Determination of Worker Status for Purposes of Federal Employment Taxes and Income Tax Withholding. H&r block advantage Voluntary Classification Settlement Program (VCSP). H&r block advantage   Employers who are currently treating their workers (or a class or group of workers) as independent contractors or other nonemployees and want to voluntarily reclassify their workers as employees for future tax periods may be eligible to participate in the VCSP if certain requirements are met. H&r block advantage To apply, use Form 8952, Application for Voluntary Classification Settlement Program (VCSP). H&r block advantage For more information, visit IRS. H&r block advantage gov and enter “VCSP” in the search box. H&r block advantage Business Owned and Operated by Spouses If you and your spouse jointly own and operate a business and share in the profits and losses, you are partners in a partnership, whether or not you have a formal partnership agreement. H&r block advantage See Publication 541, Partnerships, for more details. H&r block advantage The partnership is considered the employer of any employees, and is liable for any employment taxes due on wages paid to its employees. H&r block advantage Exception—Qualified Joint Venture. H&r block advantage   If you and your spouse materially participate as the only members of a jointly owned and operated business, and you file a joint Form 1040, U. H&r block advantage S. H&r block advantage Individual Income Tax Return, or joint Form 1040-SS, U. H&r block advantage S. H&r block advantage Self-Employment Tax Return—U. H&r block advantage S. H&r block advantage Virgin Islands, Guam, American Samoa, the Commonwealth of the Northern Mariana Islands, or Puerto Rico, you can make a joint election to be taxed as a qualified joint venture instead of a partnership. H&r block advantage See the Instructions for Schedule C (Form 1040) or the Instructions for Form 1040-SS. H&r block advantage Spouses electing qualified joint venture status are treated as sole proprietors for federal tax purposes. H&r block advantage Either of the sole proprietor spouses may report and pay the employment taxes due on wages paid to the employees, using the EIN of that spouse’s sole proprietorship. H&r block advantage For more information on qualified joint ventures, visit IRS. H&r block advantage gov and enter “qualified joint venture” in the search box. H&r block advantage Farm Crew Leaders You are an employer of farmworkers if you are a crew leader. H&r block advantage 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. H&r block advantage 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. H&r block advantage 3. H&r block advantage Employee's Social Security Number (SSN) An employee's social security number (SSN) consists of nine digits separated as follows: 000-00-0000. H&r block advantage You must get each employee's name and SSN and enter them on Form W-2AS, W-2CM, W-2GU, or W-2VI. H&r block advantage If you do not report the employee's correct name and SSN, you may owe a penalty unless you have reasonable cause. H&r block advantage See Publication 1586, Reasonable Cause Regulations and Requirements for Missing and Incorrect Name/TINs, for information on the requirement to solicit the employee's SSN. H&r block advantage Employee's social security card. H&r block advantage   You should ask the employee to show you his or her social security card. H&r block advantage The employee may show the card if it is available. H&r block advantage Do not accept a social security card that says “Not valid for employment. H&r block advantage ” A social security number issued with this legend does not permit employment. H&r block advantage You may, but you are not required to, photocopy the social security card if the employee provides it. H&r block advantage If an employee does not have a social security card or needs a new one, the employee should apply for one on Form SS-5 and submit the necessary documentation. H&r block advantage The employee must complete and sign Form SS-5; it cannot be filed by the employer. H&r block advantage 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. H&r block advantage If your employee has applied for an SSN but has not received the card before you must file your Form W-2 reports, and you are filing your reports on paper, enter “Applied For” in box d. H&r block advantage Enter all zeroes in the SSN field if filing electronically. H&r block advantage When the employee receives the SSN, file Copy A of Form W-2c with SSA to show the employee's SSN. H&r block advantage Correctly record the employee's name and SSN. H&r block advantage   Record the name and number of each employee as they appear on his or her social security card. H&r block advantage If the 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. H&r block advantage Continue to use the old name until the employee shows you the replacement social security card with the corrected name. H&r block advantage   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-2AS, W-2CM, W-2GU, or W-2VI. H&r block advantage 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. H&r block advantage Where to get and file social security number application forms. H&r block advantage    U. H&r block advantage S. H&r block advantage Virgin Islands—U. H&r block advantage S. H&r block advantage Social Security Administration, 8000 Nisky Center, First Floor, Suite 2, St. H&r block advantage Thomas, VI 00802. H&r block advantage  Guam—U. H&r block advantage S. H&r block advantage Social Security Administration, 655 Harmon Loop Road, Suite 300, Dededo, GU 96929. H&r block advantage  American Samoa—U. H&r block advantage S. H&r block advantage Social Security Administration, Pago Plaza, Suite 117, Pago Pago, AS 96799. H&r block advantage  Commonwealth of the Northern Mariana Islands—U. H&r block advantage S. H&r block advantage Social Security Administration, MH Building, Suite 201, Saipan, MP 96950. H&r block advantage Verification of social security numbers. H&r block advantage   Employers and authorized reporting agents can use the Social Security Number Verification Service (SSNVS) to instantly verify up to 10 names and SSNs (per screen) at a time, or submit an electronic file of up to 250,000 names and SSNs and usually receive the results the next business day. H&r block advantage Visit www. H&r block advantage socialsecurity. H&r block advantage gov/employer/ssnv. H&r block advantage htm for more information. H&r block advantage Registering for SSNVS. H&r block advantage   You must register online and receive authorization from your employer to use SSNVS. H&r block advantage To register, visit SSA's website at www. H&r block advantage ssa. H&r block advantage gov/employer and click on the Business Services Online link. H&r block advantage Follow the registration instructions to obtain a user identification (ID) and password. H&r block advantage You will need to provide the following information about yourself and your company. H&r block advantage Name. H&r block advantage SSN. H&r block advantage Date of birth. H&r block advantage Type of employer. H&r block advantage EIN. H&r block advantage Company name, address, and telephone number. H&r block advantage Email address. H&r block advantage   When you have completed the online registration process, SSA will mail a one-time activation code to your employer. H&r block advantage You must enter the activation code online to use SSNVS. H&r block advantage 4. H&r block advantage Wages and Other Compensation Generally, all wages are subject to social security and Medicare tax (and FUTA tax for U. H&r block advantage S. H&r block advantage Virgin Islands employers). H&r block advantage However, wages subject to social security tax and FUTA tax are limited by a wage base amount that you pay to each employee for the year. H&r block advantage The wage base for social security tax is $117,000 for 2014. H&r block advantage After you pay $117,000 to an employee in 2014, including tips, do not withhold social security tax on any amount that you later pay to the employee for the year. H&r block advantage The wage base for FUTA tax is $7,000 for 2014. H&r block advantage All wages are subject to Medicare tax. H&r block advantage The wages may be in cash or in other forms, such as an automobile for personal use. H&r block advantage Wages include salaries, vacation allowances, bonuses, commissions, and fringe benefits. H&r block advantage It does not matter how payments are measured or paid. H&r block advantage See the table in section 12 for exceptions to social security, Medicare, and FUTA taxes on wages. H&r block advantage See section 5 and section 6 for a discussion of how the rules apply to tips and farmworkers. H&r block advantage Social security and Medicare taxes apply to most payments of sick pay, including payments by third parties such as insurance companies. H&r block advantage Special rules apply to the reporting of third-party sick pay. H&r block advantage For details, see Publication 15-A. H&r block advantage Determine the value of noncash pay (such as goods, lodging, and meals) by its fair market value. H&r block advantage However, see Fringe Benefits , later in this section. H&r block advantage Except for farmworkers and household employees, this kind of pay may be subject to social security, Medicare, and FUTA taxes. H&r block advantage Back pay, including retroactive wage increases (but not amounts paid as liquidated damages), is taxed as ordinary wages in the year paid. H&r block advantage For information on reporting back pay to the Social Security Administration, see Publication 957, Reporting Back Pay and Special Wage Payments to the Social Security Administration. H&r block advantage Travel and business expenses. H&r block advantage   Payments to your employee for travel and other necessary expenses of your business generally are included in taxable wages if (a) your employee is not required to or does not substantiate timely those expenses to you with receipts or other documentation, or (b) you advance an amount to your employee for business expenses and your employee is not required to or does not return timely any amount that he or she does not substantiate. H&r block advantage Sick pay. H&r block advantage   In general, sick pay is any amount that you pay, under a plan that you take part in, to an employee because of sickness or injury. H&r block advantage These amounts are sometimes paid by a third party, such as an insurance company. H&r block advantage In either case, these payments are subject to social security and Medicare taxes (and FUTA tax for U. H&r block advantage S. H&r block advantage Virgin Islands employers). H&r block advantage Sick pay becomes exempt from these taxes after the end of 6 calendar months after the calendar month the employee last worked for the employer. H&r block advantage Publication 15-A explains the employment tax rules that apply to sick pay, disability benefits, and similar payments to employees. H&r block advantage Fringe Benefits Generally, fringe benefits are includible in the gross income of an employee and are subject to employment taxes. H&r block advantage Examples of fringe benefits include the use of an automobile, aircraft flights that you provide, free or discounted commercial airline flights, vacations, discounts on property or services, memberships in country clubs or other social clubs, and tickets to entertainment or sporting events. H&r block advantage In general, the amount included in the employee's income is the excess of the fair market value of the benefit over the sum of any amount paid for it by the employee and any amount excluded by law. H&r block advantage For more information, see Publication 15-B, Employer's Tax Guide to Fringe Benefits. H&r block advantage When fringe benefits are treated as paid. H&r block advantage   You can choose to treat certain noncash fringe benefits (including personal use of an automobile provided by you) as paid by the pay period, quarter, or on any other basis that you choose, but they must be treated as paid at least annually. H&r block advantage You do not have to make a formal choice of payment dates or notify the IRS. H&r block advantage You do not have to use the same basis for all employees. H&r block advantage You may change methods as often as you like, as long as all benefits provided in a calendar year are treated as paid no later than December 31 of the calendar year. H&r block advantage However, see Special accounting rule for fringe benefits provided during November and December , later in this section. H&r block advantage   You can treat the value of a single taxable noncash fringe benefit as paid on one or more dates in the same calendar year, even if the employee gets the entire benefit at one time. H&r block advantage However, once you elect the payment dates, you must report the taxes on your return in the same tax period in which you treated them as paid. H&r block advantage This election does not apply to a fringe benefit where real property or investment personal property is transferred. H&r block advantage Withholding social security and Medicare taxes on fringe benefits. H&r block advantage   You add the value of fringe benefits to regular wages for a payroll period and figure social security and Medicare taxes on the total. H&r block advantage   If you withhold less than the required amount of social security and Medicare taxes from the employee in a calendar year but report and pay the proper amount, you may recover the taxes from the employee. H&r block advantage Depositing taxes on fringe benefits. H&r block advantage   Once you choose payment dates for taxable noncash fringe benefits, you must deposit taxes in the same deposit period that you treat the fringe benefits as paid. H&r block advantage You may make a reasonable estimate of the value of the fringe benefits. H&r block advantage In general, the value of taxable noncash fringe benefits provided in a calendar year must be determined by January 31 of the following year. H&r block advantage   You may claim a refund of overpayments or elect to have any overpayment applied to the next employment tax return. H&r block advantage If deposits are underpaid, see Deposit Penalties in section 8. H&r block advantage Valuation of vehicles provided to employees. H&r block advantage    If you provide a vehicle to your employees, you may either determine the actual value of the benefit for the entire calendar year, taking into account the business use of the vehicle, or consider the entire use for the calendar year as personal and include 100% of the value of the vehicle in the employee's income. H&r block advantage For reporting information to employees, see the box 14 instructions in the General Instructions for Forms W-2 and W-3. H&r block advantage Special accounting rule for fringe benefits provided during November and December. H&r block advantage   You may choose to treat the value of taxable noncash fringe benefits provided during November and December as paid in the next year. H&r block advantage However, this applies only to those benefits that you actually provided during November and December, not to those you merely treated as paid during those months. H&r block advantage   If you use this rule, you must notify each affected employee between the time of the employee's last paycheck of the calendar year and at or near the time that you give the employee Form W-2AS, W-2CM, W-2GU, or W-2VI. H&r block advantage If you use the special accounting rule, your employee must also use it for the same period that you use it. H&r block advantage You cannot use this rule for a fringe benefit of real property or tangible or intangible real property of a kind normally held for investment that is transferred to your employee. H&r block advantage 5. H&r block advantage Tips Tips that your employee receives from customers are generally subject to social security and Medicare withholding. H&r block advantage Your employee must report cash tips to you by the 10th of the month after the month that the tips are received. H&r block advantage The report should include tips you paid over to the employee for charge customers, tips the employee received directly from customers, and tips received from other employees under any tip-sharing arrangement. H&r block advantage Both directly and indirectly tipped employees must report tips to you. H&r block advantage The report should not include tips that the employee paid out to other employees. H&r block advantage No report is required for months when tips are less than $20. H&r block advantage Your employees report tips on Form 4070, Employee's Report of Tips to Employer, or on a similar statement. H&r block advantage They may also use Form 4070A, Employee's Daily Record of Tips, to keep a record of their tips. H&r block advantage Both forms are included in Publication 1244, Employee's Daily Record of Tips and Report to Employer, available at IRS. H&r block advantage gov. H&r block advantage The statement must be signed by the employee and must include: The employee's name, address, and SSN, Your name and address, The month or period that the report covers, and The total tips received during the month or period. H&r block advantage You are permitted to establish a system for electronic tip reporting by employees. H&r block advantage See Regulations section 31. H&r block advantage 6053-1(d). H&r block advantage Collecting taxes on tips. H&r block advantage   You must collect the employee social security and Medicare taxes on the employee's tips. H&r block advantage You can also collect these taxes from the employee's wages or from other funds that he or she makes available. H&r block advantage Stop collecting the employee social security tax when his or her total wages and tips for 2014 reach $117,000. H&r block advantage Collect the employee Medicare tax for the whole year on all wages and tips. H&r block advantage   You are responsible for the employer social security tax on wages and tips until the wages (including tips) reach the wage base limit. H&r block advantage You are responsible for the employer Medicare tax for the whole year on all wages and tips. H&r block advantage File Form 941-SS (or Form 944) to report withholding and employer taxes on tips. H&r block advantage The withholding rules for withholding an employee's share of Medicare tax on tips also apply to withholding the Additional Medicare Tax once wages and tips exceed $200,000 in the calendar year. H&r block advantage Ordering rule. H&r block advantage   If, by the 10th of the month after the month you received an employee's report on tips, you do not have enough employee funds available to deduct the employee social security and Medicare tax on tips, you no longer have to collect it and are not liable for it. H&r block advantage Reporting tips. H&r block advantage   Report tips and any collected and uncollected social security in boxes 1, 5, 7, and 12 on Forms W-2AS, W-2CM, W-2GU, or W-2VI and on Form 941-SS, lines 5b, 5c, and 5d (Form 944, lines 4b, 4c, and 4d). H&r block advantage Do not include any uncollected Additional Medicare Tax in box 12 of Form W-2. H&r block advantage Report an adjustment on Form 941-SS, line 9 (Form 944, line 6), for the uncollected social security and Medicare taxes. H&r block advantage The table in section 12 shows how tips are treated for FUTA tax purposes. H&r block advantage   Revenue Ruling 2012-18 provides guidance for employers regarding social security and Medicare taxes imposed on tips, including information on the reporting of the employer share of social security and Medicare taxes under section 3121(q), the difference between tips and service charges, and the section 45B credit. H&r block advantage See Revenue Ruling 2012-18, 2012-26 I. H&r block advantage R. H&r block advantage B. H&r block advantage 1032, available at www. H&r block advantage irs. H&r block advantage gov/irb/2012-26_IRB/ar07. H&r block advantage html. H&r block advantage 6. H&r block advantage Social Security and Medicare Taxes for Farmworkers The tests described below apply only to services that are defined as agricultural labor (farmwork). H&r block advantage 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. H&r block advantage 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. H&r block advantage 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. H&r block advantage A “share farmer” working for you is not your employee. H&r block advantage However, the share farmer may be subject to self-employment tax. H&r block advantage In general, share farming is an arrangement in which certain commodity products are shared between the farmer and the owner (or tenant) of the land. H&r block advantage For details, see Regulations section 31. H&r block advantage 3121(b)(16)-1. H&r block advantage The $150 Test or the $2,500 Test All cash wages that you pay to any employee for farmwork are subject to social security and Medicare taxes if either of the following two tests is met. H&r block advantage You pay cash wages to the employee of $150 or more in a year (count all cash wages paid on a time, piecework, or other basis) for farmwork. H&r block advantage The $150 test applies separately to each farmworker that you employ. H&r block advantage If you employ a family of workers, each member is treated separately. H&r block advantage Do not count wages paid by other employers. H&r block advantage The total that you pay for farmwork (cash and noncash) to all of your employees is $2,500 or more during the year. H&r block advantage Exceptions. H&r block advantage   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 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 home to the farm, and Had been employed in agriculture less than 13 weeks in the preceding calendar year. H&r block advantage   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. H&r block advantage 7. H&r block advantage How To Figure Social Security and Medicare Taxes The tax rate for social security is 6. H&r block advantage 2% (amount withheld) each for the employer and employee (12. H&r block advantage 4% total). H&r block advantage The social security wage base limit is $117,000. H&r block advantage The tax rate for Medicare is 1. H&r block advantage 45% (amount withheld) each for the employee and employer (2. H&r block advantage 9% total). H&r block advantage There is no wage base limit for Medicare tax; all covered wages are subject to Medicare tax. H&r block advantage Multiply each wage payment by these percentages to figure the tax to withhold from employees. H&r block advantage Employers report both the employee and employer shares on Forms 941-SS, 944, or Form 943 (farm employment). H&r block advantage See section 5 for information on tips. H&r block advantage Additional Medicare Tax withholding. H&r block advantage   In addition to withholding Medicare tax at 1. H&r block advantage 45%, you must withhold a 0. H&r block advantage 9% Additional Medicare Tax from wages you pay to an employee in excess of $200,000 in a calendar year. H&r block advantage 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. H&r block advantage Additional Medicare Tax is only imposed on the employee. H&r block advantage There is no employer share of Additional Medicare Tax. H&r block advantage 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. H&r block advantage   For more information on what wages are subject to Medicare tax, see the chart Special Rules for Various Types of Employment and Payments in section 12. H&r block advantage For more information on Additional Medicare Tax, visit IRS. H&r block advantage gov and enter “Additional Medicare Tax” in the search box. H&r block advantage Deducting the tax. H&r block advantage   Deduct the employee tax from each wage payment. H&r block advantage If you are not sure that the wages that you pay to a farmworker during the year will be taxable, you may either deduct the tax when you make the payments or wait until the $2,500 test or the $150 test explained in section 6 has been met. H&r block advantage Employee's portion of taxes paid by employer. H&r block advantage   If you pay your employee's social security and Medicare taxes without deducting them from the employee's pay, you must include the amount of the payments in the employee's wages for social security and Medicare taxes. H&r block advantage This increase in the employee's wage payment for your payment of the employee's social security and Medicare taxes is also subject to employee social security and Medicare taxes. H&r block advantage This again increases the amount of the additional taxes that you must pay. H&r block advantage Household and agricultural employers. H&r block advantage   This discussion does not apply to household and agricultural employers. H&r block advantage If you pay a household or agricultural employee's social security and Medicare taxes, these payments must be included in the employee's wages. H&r block advantage However, this wage increase due to the tax payments is not subject to social security or Medicare taxes as discussed in this section. H&r block advantage See Publication 15-A for details. H&r block advantage Sick pay payments. H&r block advantage   Social security and Medicare taxes apply to most payments of sick pay, including payments made by third parties such as insurance companies. H&r block advantage For details on third-party payers of sick pay, see Publication 15-A. H&r block advantage 8. H&r block advantage Depositing Taxes You must deposit social security and Medicare taxes if your tax liability (Form 941-SS, line 10; Form 944, line 7; or Form 943, line 11) is $2,500 or more for the tax return period. H&r block advantage You must make the deposit by electronic funds transfer. H&r block advantage For more information about electronic funds transfers, see How To Deposit , later in this section. H&r block advantage Payment with Return $2,500 rule. H&r block advantage   Instead of making deposits during the current quarter, you can pay your total Form 941-SS tax liability when you timely file Form 941-SS if: Your total Form 941-SS tax liability for either the current quarter or the preceding quarter is less than $2,500 and You do not incur a $100,000 next-day deposit obligation during the current quarter. H&r block advantage   If you are not sure your total liability for the current quarter will be less than $2,500, (and your liability for the preceding quarter was not less than $2,500), make deposits using the semiweekly or monthly rules so you won't be subject to failure to deposit penalties. H&r block advantage Employers who have been notified to file Form 944 can pay their tax liability due for the fourth quarter with Form 944, if their fourth quarter tax liability is less than $2,500. H&r block advantage Employers must have deposited any tax liability due for the first, second, and third quarters, according to the deposit rules, in order to avoid failure-to-deposit penalties for deposits due during those quarters. H&r block advantage Only monthly schedule depositors are allowed to make an Accuracy of Deposits Rule payment with the return. H&r block advantage Semiweekly schedule depositors must timely deposit the amount. H&r block advantage See Accuracy of Deposits Rule and How To Deposit, later in this section. H&r block advantage When To Deposit Under the rules discussed below, the only difference between farm and nonfarm workers' employment tax deposit rules is the lookback period. H&r block advantage Therefore, farm and nonfarm workers are discussed together except where noted. H&r block advantage Depending on your total taxes reported during a lookback period (discussed later), you are either a monthly schedule depositor or a semiweekly schedule depositor. H&r block advantage The terms “monthly schedule depositor” and “semiweekly schedule depositor” do not refer to how often you pay your employees or how often you are required to make deposits. H&r block advantage The terms identify which set of rules that you must follow when a tax liability arises (for example, when you have a payday). H&r block advantage You will need to determine your deposit schedule for a calendar year based on the total employment taxes reported on Forms 941-SS, line 10; Form 944, line 7; or Form 943, line 9, for your lookback period (defined below). H&r block advantage If you filed both Forms 941-SS and 941 during the lookback period, combine the tax liabilities for these returns for purposes of determining your deposit schedule. H&r block advantage Determine your deposit schedule for Form 943 separately from Forms 941-SS and 941. H&r block advantage Lookback period for employers of nonfarm workers. H&r block advantage   The lookback period for Form 941-SS (or Form 941) consists of four quarters beginning July 1 of the second preceding year and ending June 30 of the prior year. H&r block advantage These four quarters are your lookback period even if you did not report any taxes for any of the quarters. H&r block advantage For 2014, the lookback period is July 1, 2012, through June 30, 2013. H&r block advantage    Table 1. H&r block advantage Lookback Period for Calendar Year 2014 Lookback Period July 1, 2012 Oct. H&r block advantage 1, 2012 Jan. H&r block advantage 1, 2013 Apr. H&r block advantage 1, 2013 through through through through Sep. H&r block advantage 30, 2012 Dec. H&r block advantage 31, 2012 Mar. H&r block advantage 31, 2013 June 30, 2013    The lookback period for Form 944 is the second calendar year preceding the current calendar year. H&r block advantage For example, the lookback period for calendar year 2014 is calendar year 2012. H&r block advantage In addition, for employers who filed Form 944 for 2012 or for 2013 and will file Form 941-SS (or Form 941) for 2014, the lookback period for 2014 is the second calendar year preceding the current calendar year, that is, 2012. H&r block advantage Lookback period for employers of farmworkers. H&r block advantage   The lookback period for Form 943 is the second calendar year preceding the current calendar year. H&r block advantage The lookback period for calendar year 2014 is calendar year 2012. H&r block advantage Adjustments to lookback period taxes. H&r block advantage   To determine your taxes for the lookback period, use only the tax that you reported on the original returns (Forms 941-SS, 943, or 944). H&r block advantage Do not include any adjustments shown on Form 941-X, 943-X, or 944-X. H&r block advantage Example. H&r block advantage   An employer originally reported total taxes of $45,000 for the lookback period. H&r block advantage The employer discovered during January 2014 that the tax reported during the lookback period was understated by $10,000 and corrected this error by filing Form 941-X. H&r block advantage The employer is a monthly schedule depositor for 2014 because the lookback period tax liabilities are based on the amounts originally reported, and they were $50,000 or less. H&r block advantage Deposit Period The term “deposit period” refers to the period during which tax liabilities are accumulated for each required deposit due date. H&r block advantage For monthly schedule depositors, the deposit period is a calendar month. H&r block advantage The deposit periods for semiweekly schedule depositors are Wednesday through Friday and Saturday through Tuesday. H&r block advantage Monthly Deposit Schedule If your total tax reported for the lookback period is $50,000 or less, you are a monthly schedule depositor for the current year. H&r block advantage You must deposit taxes on wage payments made during a calendar month by the 15th day of the following month. H&r block advantage New employers. H&r block advantage   Your tax liability for any quarter in the lookback period before the date you started or acquired your business is considered to be zero. H&r block advantage Therefore, you are a monthly schedule depositor for the first calendar year of your business (but see the $100,000 Next-Day Deposit Rule , later in this section). H&r block advantage Semiweekly Deposit Schedule If your total tax reported for the lookback period is more than $50,000, you are a semiweekly schedule depositor for the current year. H&r block advantage If you are a semiweekly schedule depositor, you must deposit on Wednesday and/or Friday, depending on what day of the week that you make wage payments, as follows. H&r block advantage Deposit taxes on wage payments made on Wednesday, Thursday, and/or Friday by the following Wednesday. H&r block advantage Deposit taxes on wage payments made on Saturday, Sunday, Monday, and/or Tuesday by the following Friday. H&r block advantage Semiweekly depositors are generally 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. H&r block advantage 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 on the following Wednesday. H&r block advantage If you made no additional payments on Saturday through Tuesday, no deposit is due on Friday. H&r block advantage Semiweekly deposit period spanning two quarters. H&r block advantage   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. H&r block advantage Example. H&r block advantage   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. H&r block advantage Both deposits will be due on Friday, April 4, 2014 (3 business days from the end of the semiweekly deposit period). H&r block advantage Examples of Monthly and Semiweekly Schedules Employers of nonfarm workers. H&r block advantage   Rose Co. H&r block advantage reported Form 941-SS taxes as follows: 2013 Lookback Period 3rd Quarter 2011 $12,000 4th Quarter 2011 12,000 1st Quarter 2012 12,000 2nd Quarter 2012 12,000   $48,000 2014 Lookback Period 3rd Quarter 2012 $12,000 4th Quarter 2012 12,000 1st Quarter 2013 12,000 2nd Quarter 2013 15,000   $51,000 Rose Co. H&r block advantage is a monthly schedule depositor for 2013 because its taxes for the four quarters in its lookback period ($48,000 for the 3rd quarter of 2011 through the 2nd quarter of 2012) were not more than $50,000. H&r block advantage However, for 2014, Rose Co. H&r block advantage is a semiweekly schedule depositor because the total taxes for the four quarters in its lookback period ($51,000 for the 3rd quarter of 2012 through the 2nd quarter of 2013) exceeded $50,000. H&r block advantage Employers of farmworkers. H&r block advantage   Red Co. H&r block advantage reported taxes on its 2012 Form 943, line 9, of $48,000. H&r block advantage On its 2013 Form 943, line 11, it reported taxes of $60,000. H&r block advantage   Red Co. H&r block advantage is a monthly schedule depositor for 2014 because its taxes for its lookback period ($48,000 for calendar year 2012) were not more than $50,000. H&r block advantage However, for 2015, Red Co. H&r block advantage is a semiweekly schedule depositor because the total taxes for its lookback period ($60,000 for calendar year 2013) exceeded $50,000. H&r block advantage New agricultural employers. H&r block advantage   New agricultural employers filing Form 943 are monthly schedule depositors for the first and second calendar years of their business because their taxes for the lookback period (2 years) are considered to be zero. H&r block advantage However, see the $100,000 Next-Day Deposit Rule , later in this section. H&r block advantage Deposits on Business Days Only If a deposit due date falls 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. H&r block advantage A business day is any day other than a Saturday, Sunday, or legal holiday. H&r block advantage For example, if a deposit is required to be made on Friday, but Friday is a legal holiday, the deposit is considered timely if it is made by the following Monday (if Monday is a business day). H&r block advantage Semiweekly schedule depositors have at least 3 business days to make a deposit. H&r block advantage 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 required deposit. H&r block advantage For example, if a semiweekly schedule depositor accumulated taxes for payments made 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). H&r block advantage Legal holiday. H&r block advantage   The term “legal holiday” means any legal holiday in the District of Columbia. H&r block advantage Legal holidays for 2014 are listed below. H&r block advantage January 1—New Year's Day January 20—Birthday of Martin Luther King, Jr. H&r block advantage 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 Application of Monthly and Semiweekly Schedules The following examples illustrate the procedure for determining the deposit date under the two different deposit schedules. H&r block advantage Monthly schedule example. H&r block advantage   Spruce Co. H&r block advantage is a monthly schedule depositor with seasonal employees. H&r block advantage It paid wages each Friday during August but did not pay any wages during September. H&r block advantage Under the monthly deposit schedule, Spruce Co. H&r block advantage must deposit the combined tax liabilities for the four August paydays by September 15. H&r block advantage Spruce Co. H&r block advantage does not have a deposit requirement for September (due by October 15) because no wages were paid and, therefore, it did not have a tax liability for September. H&r block advantage Semiweekly schedule example. H&r block advantage   Green, Inc. H&r block advantage is a semiweekly schedule depositor and pays wages once each month on the last Friday of the month. H&r block advantage Although Green, Inc. H&r block advantage , has a semiweekly deposit schedule, it will deposit just once a month because it pays wages only once a month. H&r block advantage The deposit, however, will be made under the semiweekly deposit schedule as follows: Green, Inc. H&r block advantage ’s tax liability for the April 25, 2014 (Friday), payday must be deposited by April 30, 2014 (Wednesday). H&r block advantage Under the semiweekly deposit schedule, liabilities for wages paid on Wednesday through Friday must be deposited by the following Wednesday. H&r block advantage $100,000 Next-Day Deposit Rule If you accumulate taxes of $100,000 or more on any day during a deposit period, you must deposit by the close of the next business day, whether you are a monthly or a semiweekly schedule depositor. H&r block advantage For purposes of the $100,000 rule, do not continue accumulating taxes after the end of a deposit period. H&r block advantage For example, if a semiweekly schedule depositor has accumulated taxes of $95,000 on Tuesday and $10,000 on Wednesday, the $100,000 next-day deposit rule does not apply because the $10,000 is accumulated in the next deposit period. H&r block advantage Thus, $95,000 must be deposited by Friday and $10,000 must be deposited by the following Wednesday. H&r block advantage 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. H&r block advantage For example, Fir Co. H&r block advantage is a semiweekly schedule depositor. H&r block advantage On Monday, Fir Co. H&r block advantage accumulates taxes of $110,000 and must deposit on Tuesday, the next business day. H&r block advantage On Tuesday, Fir Co. H&r block advantage accumulates additional taxes of $30,000. H&r block advantage Because the $30,000 is not added to the previous $110,000 and is less than $100,000, Fir Co. H&r block advantage does not have to deposit the $30,000 until Friday (following the semiweekly deposit schedule). H&r block advantage If you are a monthly schedule depositor and you accumulate a $100,000 tax liability on any day during a month, you become a semiweekly schedule depositor on the next day and remain so for the remainder of the calendar year and for the following calendar year. H&r block advantage Example. H&r block advantage   Elm, Inc. H&r block advantage started its business on May 1, 2014. H&r block advantage On May 8, it paid wages for the first time and accumulated a tax liability of $40,000. H&r block advantage On Friday, May 9, Elm, Inc. H&r block advantage paid wages and accumulated a liability of $60,000, making its accumulated Form 941-SS tax liability total $100,000. H&r block advantage Elm, Inc. H&r block advantage must deposit $100,000 by Monday, May 12, the next business day. H&r block advantage Because this was the first year of its business, the tax liability for its lookback period is considered to be zero, and it would be a monthly schedule depositor based on the lookback rules. H&r block advantage However, because Elm, Inc. H&r block advantage accumulated $100,000 on May 9, it became a semiweekly schedule depositor on May 10. H&r block advantage It will be a semiweekly schedule depositor for the remainder of 2014 and for 2015. H&r block advantage Accuracy of Deposits Rule You are required to deposit 100% of your tax liability on or before the deposit due date. H&r block advantage However, penalties will not be applied for depositing less than 100% if both of the following conditions are met. H&r block advantage Any deposit shortfall does not exceed the greater of $100 or 2% of the amount of taxes otherwise required to be deposited, and The deposit shortfall is paid or deposited by the shortfall makeup date as described below. H&r block advantage Makeup date for deposit shortfall: Monthly schedule depositor. H&r block advantage Deposit or pay the shortfall by the due date of your Form 941-SS, 944, or 943 for the period in which the shortfall occurred. H&r block advantage You may pay the shortfall with your return even if the amount is $2,500 or more. H&r block advantage Semiweekly schedule depositor. H&r block advantage Deposit by the earlier of: The first Wednesday or Friday (whichever comes first) that comes on or after the 15th of the month following the month in which the shortfall occurred, or The return due date for the period in which the shortfall occurred. H&r block advantage For example, if a semiweekly schedule depositor filing Form 941-SS has a deposit shortfall during July 2014, the shortfall makeup date is August 15, 2014 (Friday). H&r block advantage However, if the shortfall occurred on the required April 2 (Wednesday), deposit date for a March 28 (Friday) pay date, the return due date for the March 28 pay date (April 30) would come before the May 16 (Friday) shortfall makeup date. H&r block advantage In this case, the shortfall must be deposited by April 30, 2014. H&r block advantage 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-SS or 944 taxes). H&r block advantage Form 943 taxes and Form 941-SS (or Form 944) taxes are not combined for purposes of applying any of the deposit rules. H&r block advantage If a deposit is due, deposit the Form 941-SS (or Form 944) taxes and Form 943 taxes separately, as discussed next. H&r block advantage How To Deposit You must deposit employment taxes by electronic funds transfer. H&r block advantage See Payment with Return , earlier in this section, for exceptions explaining when taxes may be paid with the tax return instead of being deposited. H&r block advantage Electronic deposit requirement. H&r block advantage   You must use electronic funds transfer to make all federal tax deposits (such as deposits of employment tax, excise tax, and corporate income tax). H&r block advantage Generally, electronic fund transfers are made using the Electronic Federal Tax Payment System (EFTPS). H&r block advantage 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. H&r block advantage   EFTPS is a free service provided by the Department of the Treasury. H&r block advantage To get more information or to enroll in EFTPS, call 1-800-555-4477 (U. H&r block advantage S. H&r block advantage Virgin Islands only) or 303-967-5916 (toll call). H&r block advantage You can also visit the EFTPS website at www. H&r block advantage eftps. H&r block advantage gov. H&r block advantage Additional information about EFTPS is also available in Publication 966. H&r block advantage When you receive your EIN. H&r block advantage   If you are a new employer that indicated a federal tax obligation when requesting an EIN, you will be pre-enrolled in EFTPS. H&r block advantage You will receive information about Express Enrollment in your Employer Identification Number (EIN) Package and an additional mailing containing your EFTPS personal identification number (PIN) and instructions for activating your PIN. H&r block advantage Follow the steps in your “How to Activate Your Enrollment” brochure to activate your enrollment and begin making your payroll tax deposits. H&r block advantage 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. H&r block advantage Deposit record. H&r block advantage   For your records, an Electronic Funds Transfer (EFT) Trace Number will be provided with each successful payment. H&r block advantage The number can be used as a receipt or to trace the payment. H&r block advantage Depositing on time. H&r block advantage   For deposits made by EFTPS to be on time, you must initiate the deposit by 8 p. H&r block advantage m. H&r block advantage Eastern time the day before the date the deposit is due. H&r block advantage If you use a third party to make deposits on your behalf, they may have different cutoff times. H&r block advantage Same-day payment option. H&r block advantage   If you fail to initiate a deposit transaction on EFTPS by 8 p. H&r block advantage m. H&r block advantage 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). H&r block advantage To use the same-day payment method, you will need to make arrangements with your financial institution ahead of time. H&r block advantage Please check with your financial institution regarding availability, deadlines, and costs. H&r block advantage Your financial institution may charge you a fee for payments made this way. H&r block advantage To learn more about the information you will need to provide your financial institution to make a same-day wire payment, please visit www. H&r block advantage eftps. H&r block advantage gov to download the Same-Day Payment Worksheet. H&r block advantage How to claim credit for overpayments. H&r block advantage   If you deposited more than the right amount of taxes for a tax period, you can choose on Form 941-SS, 941, 944, or 943 for that tax period to have the overpayment refunded or applied as a credit to your next return. H&r block advantage Do not ask EFTPS to request a refund from the IRS for you. H&r block advantage Deposit Penalties Penalties may apply if you do not make required deposits on time or if you make deposits of less than the required amount. H&r block advantage 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. H&r block advantage The IRS may also waive 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. H&r block advantage For amounts not properly or timely deposited, the penalty rates are as follows. H&r block advantage 2% - Deposits made 1 to 5 days late. H&r block advantage 5% - Deposits made 6 to 15 days late. H&r block advantage 10% - Deposits made 16 or more days late. H&r block advantage Also applies to amounts paid within 10 days of the date of the first notice that the IRS sent asking for the tax due. H&r block advantage 10% - Amounts (that should have been deposited) paid directly to the IRS or paid with your tax return (but see Payment with Return , earlier in this section, for exceptions). H&r block advantage 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. H&r block advantage Late deposit penalty amounts are determined using calendar days, starting from the due date of the liability. H&r block advantage Special rule for former Form 944 filers. H&r block advantage    If you filed Form 944 for the prior year and must file Forms 941-SS for the current year because your employment tax liability for the prior year exceeded the Form 944 eligibility requirement ($1,000 or less), the failure-to-deposit penalty will not apply to a late deposit of employment taxes for the first month of the current year if the taxes are deposited in full by March 15 of the current year. H&r block advantage Order in which deposits are applied. H&r block advantage   Deposits generally are applied to the most recent tax liability within the return period (quarter or year). H&r block advantage However, if you receive a failure-to-deposit penalty notice, you may designate how your payment is 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. H&r block advantage Follow the instructions on the penalty notice that you received. H&r block advantage For more information on designating deposits, see Revenue Procedure 2001-58. H&r block advantage You can find Revenue Procedure 2001-58 on page 579 of Internal Revenue Bulletin 2001-50 at www. H&r block advantage irs. H&r block advantage gov/pub/irs-irbs/irb01-50. H&r block advantage pdf. H&r block advantage Example. H&r block advantage Cedar, Inc. H&r block advantage is required to make a deposit of $1,000 on July 15 and $1,500 on August 15. H&r block advantage It does not make the deposit on July 15. H&r block advantage On August 15, Cedar, Inc. H&r block advantage deposits $2,000. H&r block advantage 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. H&r block advantage Accordingly, $500 of the July 15 liability remains undeposited. H&r block advantage The penalty on this underdeposit will apply as explained earlier. H&r block advantage Trust fund recovery penalty. H&r block advantage   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. H&r block advantage The penalty is the full amount of the unpaid trust fund tax. H&r block advantage This penalty may apply to you if these unpaid taxes cannot be immediately collected from the employer or business. H&r block advantage   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. H&r block advantage   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, or any other person or entity that is responsible for collecting, accounting for, and paying over trust fund taxes. H&r block advantage A responsible person also may include one who signs checks for the business or otherwise has authority to cause the spending of business funds. H&r block advantage    Willfully means voluntarily, consciously, and intentionally. H&r block advantage A responsible person acts willfully if the person knows 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. H&r block advantage “Averaged” failure-to-deposit penalty. H&r block advantage   The IRS may assess an “averaged” failure-to-deposit (FTD) penalty of 2% to 10% if you are a monthly schedule depositor and did not properly complete Form 941-SS, line 14, when your tax liability shown on Form 941-SS, line 10, was $2,500 or more. H&r block advantage IRS may also assess this penalty of 2% to 10% if you are a semiweekly schedule depositor and your tax liability shown on Form 941-SS, line 10, was $2,500 or more and you did any of the following. H&r block advantage Completed Form 941-SS, line 14, instead of Schedule B (Form 941). H&r block advantage Failed to attach a properly completed Schedule B (Form 941). H&r block advantage Completed Schedule B (Form 941) incorrectly, for example, by entering tax deposits instead of tax liabilities in the numbered spaces. H&r block advantage   The IRS figures the penalty by allocating your total tax liability shown on Form 941-SS, line 10, equally throughout the tax period. H&r block advantage Your deposits and payments may not be counted as timely because IRS does not know the actual dates of your tax liabilities. H&r block advantage   You can avoid the penalty by reviewing your return before filing it. H&r block advantage Follow these steps before filing your Form 941-SS. H&r block advantage If you are a monthly schedule depositor, report your tax liabilities (not your deposits) in the monthly entry spaces on Form 941-SS, line 14. H&r block advantage If you are a semiweekly schedule depositor, report your tax liabilities (not your deposits) on Schedule B (Form 941) in the lines that represent the dates you paid your employees. H&r block advantage Verify that your total liability shown on Form 941-SS, line 14, or the bottom of Schedule B (Form 941) equals your tax liability shown on Form 941-SS,  line 10. H&r block advantage Do not show negative amounts on Form 941-SS, line 14, or Schedule B (Form 941). H&r block advantage For prior period errors, do not adjust your tax liabilities reported on your current Form 941-SS, line 14, or on Schedule B (Form 941). H&r block advantage Instead, file an adjusted return (Form 941-X (if you are adjusting a previously filed Form 941-SS) or Form 944-X (if you are adjusting a previously filed Form 944-SS or 944)) if you are also adjusting your tax liability. H&r block advantage If you are only adjusting your deposits in response to a failure-to-deposit penalty notice, see the Instructions for Schedule B (Form 941) (if you previously filed Form 941-SS) or the Instructions for Form 944-X (if you previously filed Form 944-SS or 944). H&r block advantage If you filed Form 944 for 2013 and line 7 was $2,500 or more, you were required to complete Form 944, lines 13a–13m, or attach Form 945-A, Annual Record of Federal Tax Liability. H&r block advantage If you failed to complete lines 13a–13m, or failed to attach Form 945-A, whichever was required, IRS may assess an “averaged” failure-to-deposit (FTD) penalty. H&r block advantage 9. H&r block advantage Employer's Returns General instructions. H&r block advantage   File Forms 941-SS (or Form 944) for nonfarm workers and Form 943 for farmworkers. H&r block advantage (U. H&r block advantage S. H&r block advantage Virgin Islands employers may be required to file Form 940 for the combined wages of nonfarm workers and farmworkers. H&r block advantage ) Employers with employees subject to U. H&r block advantage S. H&r block advantage income tax withholding. H&r block advantage   If you have both employees who are subject to U. H&r block advantage S. H&r block advantage income tax withholding and employees who are not subject to U. H&r block advantage S. H&r block advantage income tax withholding, you must file only Form 941 (or Form 944) and include all your employees’ wages on that form. H&r block advantage Nonfarm employers. H&r block advantage   File Form 941-SS for the calendar quarter in which you first pay wages for nonfarm workers and for each quarter thereafter unless you are a seasonal employer or file a final return. H&r block advantage Due dates for each quarter of the calendar year are as follows. H&r block advantage Quarter Due Jan. H&r block advantage , Feb. H&r block advantage , Mar. H&r block advantage Apr. H&r block advantage 30 Apr. H&r block advantage , May, June July 31 July, Aug. H&r block advantage , Sept. H&r block advantage Oct. H&r block advantage 31 Oct. H&r block advantage , Nov. H&r block advantage , Dec. H&r block advantage Jan. H&r block advantage 31   However, if you deposited all taxes when due for the quarter, you have 10 additional days from the due dates to file the return. H&r block advantage If the due date for filing your return falls on a Saturday, Sunday, or legal holiday, you may file on the next business day. H&r block advantage   If you closed your business or stopped paying wages and do not have to file returns in the future, check the box on line 15 of your final Form 941-SS and show the date final wages were paid. H&r block advantage Form 944. H&r block advantage   If IRS notified you to file Form 944, file your 2013 Form 944 by January 31, 2014, or by February 10, 2014 (if you deposited all taxes when due). H&r block advantage Household employers reporting social security and Medicare taxes. H&r block advantage   If you are a sole proprietor and file Forms 941-SS (or Form 944) for business employees, you may include taxes for household employees on your Forms 941-SS (or Form 944). H&r block advantage Otherwise, report social security and Medicare taxes for household employees on Schedule H (Form 1040), Household Employment Taxes. H&r block advantage See Publication 926, Household Employer's Tax Guide, for more information. H&r block advantage Employers of farmworkers. H&r block advantage   Every employer of farmworkers must file a Form 943 for each calendar year beginning with the first year the employer pays $2,500 or more for farmwork or employs a farmworker who meets the $150 test described in section 6. H&r block advantage   File a Form 943 each year for all taxable wages paid for farmwork. H&r block advantage You may report household workers in a private home on a farm operated for profit on Form 943. H&r block advantage Do not report wages for farmworkers on Form 941-SS or 944. H&r block advantage   Send Form 943 to the IRS by January 31 of the following year. H&r block advantage Send it with payment of any taxes due that you are not required to deposit. H&r block advantage If you deposited all taxes when due, you have 10 additional days to file. H&r block advantage Penalties. H&r block advantage   For each whole or part month that a return is not filed when required (disregarding any extensions of the filing deadline), there is a failure-to-file penalty of 5% of the unpaid tax due with that return. H&r block advantage The maximum penalty is generally 25% of the tax due. H&r block advantage Also, for each whole or part month that the tax is paid late (disregarding any extensions of the payment deadline), there is a failure-to-pay penalty of 0. H&r block advantage 5% per month of the amount of tax. H&r block advantage For individual filers only, the failure-to-pay penalty is reduced from 0. H&r block advantage 5% per month to 0. H&r block advantage 25% per month if an installment agreement is in effect. H&r block advantage You must have filed your return on or before the due date of the return to qualify for the reduced penalty. H&r block advantage The maximum amount of the failure-to-pay penalty is also 25% of the tax due. H&r block advantage If both penalties apply in any month, the failure-to-file penalty is reduced by the amount of the failure-to-pay penalty. H&r block advantage The penalties will not be charged if you have a reasonable cause for failing to file or pay. H&r block advantage If you receive a penalty notice, you can provide an explanation of why you believe reasonable cause exists. H&r block advantage Reporting Adjustments to Form 941-SS, 944-SS, 944, or 943 Current Period Adjustments Make current period adjustments for fractions of cents, sick pay, tips, and group-term life insurance on your Form 941-SS, 944, or 943. H&r block advantage See the Instructions for Form 941-SS, Instructions for Form 944, or Instructions for Form 943 for information on how to report these adjustments. H&r block advantage Prior Period Adjustments Forms for prior period adjustments. H&r block advantage   Use Form 941-X or Form 944-X to make a correction after you discover an error on a previously filed Form 941 or Form 944. H&r block advantage There are also Forms 943-X, 945-X, and CT-1X to report corrections on the corresponding returns. H&r block advantage Form 941-X and Form 944-X also replace Form 843, Claim for Refund and Request for Abatement, for employers to request a refund or abatement of overreported employment taxes. H&r block advantage Continue to use Form 843 when requesting a refund or abatement of assessed interest or penalties. H&r block advantage See Revenue Ruling 2009-39, 2009-52 I. H&r block advantage R. H&r block advantage B. H&r block advantage 951, for examples of how the interest-free adjustment and claim for refund rules apply in 10 different situations. H&r block advantage You can find Revenue Ruling 2009-39, at www. H&r block advantage irs. H&r block advantage gov/irb/2009-52_IRB/ar14. H&r block advantage html. H&r block advantage Background. H&r block advantage   Treasury Decision 9405 changed the process for making interest-free adjustments to employment taxes reported on Forms 941-SS, 943, 944-SS, and 944, and for filing a claim for refund of employment taxes. H&r block advantage Treasury Decision 9405, 2008-32 I. H&r block advantage R. H&r block advantage B. H&r block advantage 293, is available at www. H&r block advantage irs. H&r block advantage gov/irb/2008-32_IRB/ar13. H&r block advantage html. H&r block advantage You will use the adjustment process if you underreported employment taxes and are making a payment, or if you overreported employment taxes and will be applying the credit to the Form 941-SS, 943, or 944 period during which you file Forms 941-X, 943-X, or 944-X, respectively. H&r block advantage You will use the claim process if you overreported employment taxes and are requesting a refund or abatement of the overreported amount. H&r block advantage We use the terms “correct” and “corrections” to include interest-free adjustments under sections 6205 and 6413, and claims for refund and abatement under sections 6402, 6414, and 6404 of the Internal Revenue Code. H&r block advantage Correcting employment taxes. H&r block advantage   When you discover an error on a previously filed Form 941-SS, 943, 944-SS, or 944, you must: Correct that error using Form 941-X, Form 943-X, or Form 944-X, File a separate Form 941-X, Form 943-X, or Form 944-X for
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SOI Tax Stats - Statistics by Form

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Find your specific topic by using these selected IRS form numbers and titles.


 

Form Number  

   Form Title

706

United States Estate (and Generation-Skipping Transfer) Tax Return 

706NA

United States Estate (and Generation-Skipping Transfer) Tax Return: Estate of Nonresident Not a Citizen of the United States

709

United States Gift (and Generation-Skipping Transfer) Tax Return

720

Quarterly Federal Excise Tax Return

940

Employer's Annual Federal Unemployment (FUTA) Tax Return

990

Return of Organization Exempt from Income Tax

990-PF

Return of Private Foundation

990-T

Exempt Organization Business Income Tax Return

1040

U.S. Individual Income Tax Return

1040, Schedule C

U.S. Individual Income Tax Return: Profit or Loss from Business

1040, Schedule F

U.S. Individual Income Tax Return: Profit or Loss from Farming

1041

U.S. Income Tax Return for Estates and Trusts

1042-S

Foreign Person's U.S. Source Income Subject to Withholding

1065

U.S. Partnership Return of Income

1116

Foreign Tax Credit: Individuals

1118

Foreign Tax Credit: Corporations

1120

U.S. Corporation Income Tax Return

1120-F

U.S. Income Tax Return of a Foreign Corporation

1120-FSC

U.S. Income Tax Return of a Foreign Sales Corporation

1120S

U.S. Income Tax Return for an S Corporation

2555

Foreign Earned Income: U.S. Citizens

3520

Annual Return to Report Transactions with Foreign Trusts and Receipt of Certain Foreign Gifts

5227

Split-Interest Trust Information Return

5471

Information Return of U.S. Person with Respect to Certain Foreign Corporations

5472

Information Return of a 25% Foreign-Owned U.S. Corporation or a Foreign Corporation Engaged in a U.S. Trade or Business

5500

Annual Return / Report of Employee Benefits Plan

5713

International Boycott Report

5735

Possessions Corporation Tax Credit under Sections 936 and 30A

8038

Information Return for Tax-Exempt Private Activity Bond Issues

8805

Foreign Partner's Information Statement of Section 1446 Withholding Tax

  


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Page Last Reviewed or Updated: 29-Jan-2014

The H&r Block Advantage

H&r block advantage 20. H&r block advantage   Standard Deduction Table of Contents What's New Introduction Standard Deduction Amount Standard Deduction for Dependents Who Should ItemizeWhen to itemize. H&r block advantage Married persons who filed separate returns. H&r block advantage What's New Standard deduction increased. H&r block advantage  The standard deduction for some taxpayers who do not itemize their deductions on Schedule A (Form 1040) is higher for 2013 than it was for 2012. H&r block advantage The amount depends on your filing status. H&r block advantage You can use the 2013 Standard Deduction Tables in this chapter to figure your standard deduction. H&r block advantage Introduction This chapter discusses the following topics. H&r block advantage How to figure the amount of your standard deduction. H&r block advantage The standard deduction for dependents. H&r block advantage Who should itemize deductions. H&r block advantage Most taxpayers have a choice of either taking a standard deduction or itemizing their deductions. H&r block advantage If you have a choice, you can use the method that gives you the lower tax. H&r block advantage The standard deduction is a dollar amount that reduces your taxable income. H&r block advantage It is a benefit that eliminates the need for many taxpayers to itemize actual deductions, such as medical expenses, charitable contributions, and taxes, on Schedule A (Form 1040). H&r block advantage The standard deduction is higher for taxpayers who: Are 65 or older, or Are blind. H&r block advantage You benefit from the standard deduction if your standard deduction is more than the total of your allowable itemized deductions. H&r block advantage Persons not eligible for the standard deduction. H&r block advantage   Your standard deduction is zero and you should itemize any deductions you have if: Your filing status is married filing separately, and your spouse itemizes deductions on his or her return, You are filing a tax return for a short tax year because of a change in your annual accounting period, or You are a nonresident or dual-status alien during the year. H&r block advantage You are considered a dual-status alien if you were both a nonresident and resident alien during the year. H&r block advantage Note. H&r block advantage If you are a nonresident alien who is married to a U. H&r block advantage S. H&r block advantage citizen or resident alien at the end of the year, you can choose to be treated as a U. H&r block advantage S. H&r block advantage resident. H&r block advantage (See Publication 519, U. H&r block advantage S. H&r block advantage Tax Guide for Aliens. H&r block advantage ) If you make this choice, you can take the standard deduction. H&r block advantage If an exemption for you can be claimed on another person's return (such as your parents' return), your standard deduction may be limited. H&r block advantage See Standard Deduction for Dependents, later. H&r block advantage Standard Deduction Amount The standard deduction amount depends on your filing status, whether you are 65 or older or blind, and whether an exemption can be claimed for you by another taxpayer. H&r block advantage Generally, the standard deduction amounts are adjusted each year for inflation. H&r block advantage The standard deduction amounts for most people are shown in Table 20-1. H&r block advantage Decedent's final return. H&r block advantage   The standard deduction for a decedent's final tax return is the same as it would have been had the decedent continued to live. H&r block advantage However, if the decedent was not 65 or older at the time of death, the higher standard deduction for age cannot be claimed. H&r block advantage Higher Standard Deduction for Age (65 or Older) If you are age 65 or older on the last day of the year and do not itemize deductions, you are entitled to a higher standard deduction. H&r block advantage You are considered 65 on the day before your 65th birthday. H&r block advantage Therefore, you can take a higher standard deduction for 2013 if you were born before January 2, 1949. H&r block advantage Use Table 20-2 to figure the standard deduction amount. H&r block advantage Higher Standard Deduction for Blindness If you are blind on the last day of the year and you do not itemize deductions, you are entitled to a higher standard deduction. H&r block advantage Not totally blind. H&r block advantage   If you are not totally blind, you must get a certified statement from an eye doctor (ophthalmologist or optometrist) that: You cannot see better than 20/200 in the better eye with glasses or contact lenses, or Your field of vision is 20 degrees or less. H&r block advantage   If your eye condition is not likely to improve beyond these limits, the statement should include this fact. H&r block advantage You must keep the statement in your records. H&r block advantage   If your vision can be corrected beyond these limits only by contact lenses that you can wear only briefly because of pain, infection, or ulcers, you can take the higher standard deduction for blindness if you otherwise qualify. H&r block advantage Spouse 65 or Older or Blind You can take the higher standard deduction if your spouse is age 65 or older or blind and: You file a joint return, or You file a separate return and can claim an exemption for your spouse because your spouse had no gross income and cannot be claimed as a dependent by another taxpayer. H&r block advantage You cannot claim the higher standard deduction for an individual other than yourself and your spouse. H&r block advantage Examples The following examples illustrate how to determine your standard deduction using Tables 20-1 and 20-2. H&r block advantage Example 1. H&r block advantage Larry, 46, and Donna, 33, are filing a joint return for 2013. H&r block advantage Neither is blind, and neither can be claimed as a dependent. H&r block advantage They decide not to itemize their deductions. H&r block advantage They use Table 20-1. H&r block advantage Their standard deduction is $12,200. H&r block advantage Example 2. H&r block advantage The facts are the same as in Example 1 except that Larry is blind at the end of 2013. H&r block advantage Larry and Donna use Table 20-2. H&r block advantage Their standard deduction is $13,400. H&r block advantage Example 3. H&r block advantage Bill and Lisa are filing a joint return for 2013. H&r block advantage Both are over age 65. H&r block advantage Neither is blind, and neither can be claimed as a dependent. H&r block advantage If they do not itemize deductions, they use Table 20-2. H&r block advantage Their standard deduction is $14,600. H&r block advantage Standard Deduction for Dependents The standard deduction for an individual who can be claimed as a dependent on another person's tax return is generally limited to the greater of: $1,000, or The individual's earned income for the year plus $350 (but not more than the regular standard deduction amount, generally $6,100). H&r block advantage However, if the individual is 65 or older or blind, the standard deduction may be higher. H&r block advantage If you (or your spouse, if filing jointly) can be claimed as a dependent on someone else's return, use Table 20-3 to determine your standard deduction. H&r block advantage Earned income defined. H&r block advantage   Earned income is salaries, wages, tips, professional fees, and other amounts received as pay for work you actually perform. H&r block advantage    For purposes of the standard deduction, earned income also includes any part of a scholarship or fellowship grant that you must include in your gross income. H&r block advantage See Scholarships and fellowships in chapter 12 for more information on what qualifies as a scholarship or fellowship grant. H&r block advantage Example 1. H&r block advantage Michael is single. H&r block advantage His parents can claim an exemption for him on their 2013 tax return. H&r block advantage He has interest income of $780 and wages of $150. H&r block advantage He has no itemized deductions. H&r block advantage Michael uses Table 20-3 to find his standard deduction. H&r block advantage He enters $150 (his earned income) on line 1, $500 ($150 + $350) on line 3, $1,000 (the larger of $500 and $1,000) on line 5, and $6,100 on line 6. H&r block advantage His standard deduction, on line 7a, is $1,000 (the smaller of $1,000 and $6,100). H&r block advantage Example 2. H&r block advantage Joe, a 22-year-old full-time college student, can be claimed as a dependent on his parents' 2013 tax return. H&r block advantage Joe is married and files a separate return. H&r block advantage His wife does not itemize deductions on her separate return. H&r block advantage Joe has $1,500 in interest income and wages of $3,800. H&r block advantage He has no itemized deductions. H&r block advantage Joe finds his standard deduction by using Table 20-3. H&r block advantage He enters his earned income, $3,800 on line 1. H&r block advantage He adds lines 1 and 2 and enters $4,150 on line 3. H&r block advantage On line 5, he enters $4,150, the larger of lines 3 and 4. H&r block advantage Because Joe is married filing a separate return, he enters $6,100 on line 6. H&r block advantage On line 7a he enters $4,150 as his standard deduction because it is smaller than $6,100, the amount on line 6. H&r block advantage Example 3. H&r block advantage Amy, who is single, can be claimed as a dependent on her parents' 2013 tax return. H&r block advantage She is 18 years old and blind. H&r block advantage She has interest income of $1,300 and wages of $2,900. H&r block advantage She has no itemized deductions. H&r block advantage Amy uses Table 20-3 to find her standard deduction. H&r block advantage She enters her wages of $2,900 on line 1. H&r block advantage She adds lines 1 and 2 and enters $3,250 on line 3. H&r block advantage On line 5, she enters $3,250, the larger of lines 3 and 4. H&r block advantage Because she is single, Amy enters $6,100 on line 6. H&r block advantage She enters $3,250 on line 7a. H&r block advantage This is the smaller of the amounts on lines 5 and 6. H&r block advantage Because she checked one box in the top part of the worksheet, she enters $1,500 on line 7b. H&r block advantage She then adds the amounts on lines 7a and 7b and enters her standard deduction of $4,750 on line 7c. H&r block advantage Example 4. H&r block advantage Ed is single. H&r block advantage His parents can claim an exemption for him on their 2013 tax return. H&r block advantage He has wages of $7,000, interest income of $500, and a business loss of $3,000. H&r block advantage He has no itemized deductions. H&r block advantage Ed uses Table 20-3 to figure his standard deduction. H&r block advantage He enters $4,000 ($7,000 - $3,000) on line 1. H&r block advantage He adds lines 1 and 2 and enters $4,350 on line 3. H&r block advantage On line 5 he enters $4,350, the larger of lines 3 and 4. H&r block advantage Because he is single, Ed enters $6,100 on line 6. H&r block advantage On line 7a he enters $4,350 as his standard deduction because it is smaller than $6,100, the amount on line 6. H&r block advantage Who Should Itemize You should itemize deductions if your total deductions are more than the standard deduction amount. H&r block advantage Also, you should itemize if you do not qualify for the standard deduction, as discussed earlier under Persons not eligible for the standard deduction . H&r block advantage You should first figure your itemized deductions and compare that amount to your standard deduction to make sure you are using the method that gives you the greater benefit. H&r block advantage You may be subject to a limit on some of your itemized deductions if your adjusted gross income is more than: $250,000 if single ($275,000 if head of household, $300,000 if married filing jointly or qualifying widow(er); or $150,000 if married filing separately). H&r block advantage See chapter 29 or the instructions for Schedule A (Form 1040) for more information on figuring the correct amount of your itemized deductions. H&r block advantage When to itemize. H&r block advantage   You may benefit from itemizing your deductions on Schedule A (Form 1040) if you: Do not qualify for the standard deduction, or the amount you can claim is limited, Had large uninsured medical and dental expenses during the year, Paid interest and taxes on your home, Had large unreimbursed employee business expenses or other miscellaneous deductions, Had large uninsured casualty or theft losses, Made large contributions to qualified charities, or Have total itemized deductions that are more than the standard deduction to which you otherwise are entitled. H&r block advantage These deductions are explained in chapters 21–28. H&r block advantage    If you decide to itemize your deductions, complete Schedule A and attach it to your Form 1040. H&r block advantage Enter the amount from Schedule A, line 29, on Form 1040, line 40. H&r block advantage Electing to itemize for state tax or other purposes. H&r block advantage   Even if your itemized deductions are less than your standard deduction, you can elect to itemize deductions on your federal return rather than take the standard deduction. H&r block advantage You may want to do this if, for example, the tax benefit of itemizing your deductions on your state tax return is greater than the tax benefit you lose on your federal return by not taking the standard deduction. H&r block advantage To make this election, you must check the box on line 30 of Schedule A. H&r block advantage Changing your mind. H&r block advantage   If you do not itemize your deductions and later find that you should have itemized — or if you itemize your deductions and later find you should not have — you can change your return by filing Form 1040X, Amended U. H&r block advantage S. H&r block advantage Individual Income Tax Return. H&r block advantage See Amended Returns and Claims for Refund in chapter 1 for more information on amended returns. H&r block advantage Married persons who filed separate returns. H&r block advantage   You can change methods of taking deductions only if you and your spouse both make the same changes. H&r block advantage Both of you must file a consent to assessment for any additional tax either one may owe as a result of the change. H&r block advantage    You and your spouse can use the method that gives you the lower total tax, even though one of you may pay more tax than you would have paid by using the other method. H&r block advantage You both must use the same method of claiming deductions. H&r block advantage If one itemizes deductions, the other should itemize because he or she will not qualify for the standard deduction. H&r block advantage See Persons not eligible for the standard deduction , earlier. H&r block advantage 2013 Standard Deduction Tables If you are married filing a separate return and your spouse itemizes deductions, or if you are a dual-status alien, you cannot take the standard deduction even if you were born before January 2, 1949, or are blind. H&r block advantage Table 20-1. H&r block advantage Standard Deduction Chart for Most People* If your filing status is. H&r block advantage . H&r block advantage . H&r block advantage Your standard deduction is: Single or Married filing separately $6,100 Married filing jointly or Qualifying widow(er) with dependent child 12,200 Head of household 8,950 *Do not use this chart if you were born before January 2, 1949, are blind, or if someone else can claim you (or your spouse if filing jointly) as a dependent. H&r block advantage Use Table 20-2 or 20-3 instead. H&r block advantage Table 20-2. H&r block advantage Standard Deduction Chart for People Born Before January 2, 1949, or Who are Blind Check the correct number of boxes below. H&r block advantage Then go to the chart. H&r block advantage You: Born before January 2, 1949 □ Blind □ Your spouse, if claiming spouse's exemption: Born before January 2, 1949 □ Blind □ Total number of boxes checked   IF  your filing status is. H&r block advantage . H&r block advantage . H&r block advantage AND the number in the box above is. H&r block advantage . H&r block advantage . H&r block advantage THEN your standard deduction is. H&r block advantage . H&r block advantage . H&r block advantage Single 1 $7,600   2 9,100 Married filing jointly 1 $13,400 or Qualifying 2 14,600 widow(er) with 3 15,800 dependent child 4 17,000 Married filing 1 $7,300 separately 2 8,500   3 9,700   4 10,900 Head of household 1 $10,450   2 11,950 *If someone else can claim you (or your spouse if filing jointly) as a dependent, use Table 20-3 instead. H&r block advantage Table 20-3. H&r block advantage Standard Deduction Worksheet for Dependents Use this worksheet only if someone else can claim you (or your spouse if filing jointly) as a dependent. H&r block advantage Check the correct number of boxes below. H&r block advantage Then go to the worksheet. H&r block advantage You:   Born before January 2, 1949 □ Blind □ Your spouse, if claiming spouse's exemption: Born before January 2, 1949 □ Blind □ Total number of boxes checked 1. H&r block advantage Enter your earned income (defined below). H&r block advantage If none, enter -0-. H&r block advantage 1. H&r block advantage   2. H&r block advantage Additional amount. H&r block advantage 2. H&r block advantage $350 3. H&r block advantage Add lines 1 and 2. H&r block advantage 3. H&r block advantage   4. H&r block advantage Minimum standard deduction. H&r block advantage 4. H&r block advantage $1,000 5. H&r block advantage Enter the larger of line 3 or line 4. H&r block advantage 5. H&r block advantage   6. H&r block advantage Enter the amount shown below for your filing status. H&r block advantage Single or Married filing separately—$6,100 Married filing jointly—$12,200 Head of household—$8,950 6. H&r block advantage   7. H&r block advantage Standard deduction. H&r block advantage         a. H&r block advantage Enter the smaller of line 5 or line 6. H&r block advantage If born after January 1, 1949, and not blind, stop here. H&r block advantage This is your standard deduction. H&r block advantage Otherwise, go on to line 7b. H&r block advantage 7a. H&r block advantage     b. H&r block advantage If born before January 2, 1949, or blind, multiply $1,500 ($1,200 if married) by the number in the box above. H&r block advantage 7b. H&r block advantage     c. H&r block advantage Add lines 7a and 7b. H&r block advantage This is your standard deduction for 2013. H&r block advantage 7c. H&r block advantage   Earned income includes wages, salaries, tips, professional fees, and other compensation received for personal services you performed. H&r block advantage It also includes any amount received as a scholarship that you must include in your income. H&r block advantage Prev  Up  Next   Home   More Online Publications