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How To File Late Tax Returns

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How To File Late Tax Returns

How to file late tax returns 36. How to file late tax returns   Earned Income Credit (EIC) Table of Contents What's New Reminders Introduction Useful Items - You may want to see: Do You Qualify for the Credit?If Improper Claim Made in Prior Year Part A. How to file late tax returns Rules for EveryoneRule 1. How to file late tax returns Your AGI Must Be Less Than: Rule 2. How to file late tax returns You Must Have a Valid Social Security Number (SSN) Rule 3. How to file late tax returns Your Filing Status Cannot Be Married Filing Separately Rule 4. How to file late tax returns You Must Be a U. How to file late tax returns S. How to file late tax returns Citizen or Resident Alien All Year Rule 5. How to file late tax returns You Cannot File Form 2555 or Form 2555-EZ Rule 6. How to file late tax returns Your Investment Income Must Be $3,300 or Less Rule 7. How to file late tax returns You Must Have Earned Income Part B. How to file late tax returns Rules If You Have a Qualifying ChildRule 8. How to file late tax returns Your Child Must Meet the Relationship, Age, Residency, and Joint Return Tests Rule 9. How to file late tax returns Your Qualifying Child Cannot Be Used By More Than One Person To Claim the EIC Rule 10. How to file late tax returns You Cannot Be a Qualifying Child of Another Taxpayer Part C. How to file late tax returns Rules If You Do Not Have a Qualifying ChildRule 11. How to file late tax returns You Must Be at Least Age 25 but Under Age 65 Rule 12. How to file late tax returns You Cannot Be the Dependent of Another Person Rule 13. How to file late tax returns You Cannot Be a Qualifying Child of Another Taxpayer Rule 14. How to file late tax returns You Must Have Lived in the United States More Than Half of the Year Part D. How to file late tax returns Figuring and Claiming the EICRule 15. How to file late tax returns Your Earned Income Must Be Less Than: IRS Will Figure the EIC for You How To Figure the EIC Yourself ExamplesExample 1. How to file late tax returns John and Janet Smith (Form 1040A) Example 2. How to file late tax returns Kelly Green (Form 1040EZ) What's New Earned income amount is more. How to file late tax returns  The maximum amount of income you can earn and still get the credit has increased. How to file late tax returns You may be able to take the credit if: You have three or more qualifying children and you earned less than $46,227 ($51,567 if married filing jointly), You have two qualifying children and you earned less than $43,038 ($48,378 if married filing jointly), You have one qualifying child and you earned less than $37,870 ($43,210 if married filing jointly), or You do not have a qualifying child and you earned less than $14,340 ($19,680 if married filing jointly). How to file late tax returns Your adjusted gross income also must be less than the amount in the above list that applies to you. How to file late tax returns For details, see Rules 1 and 15. How to file late tax returns Investment income amount is more. How to file late tax returns  The maximum amount of investment income you can have and still get the credit has increased to $3,300. How to file late tax returns See Rule 6. How to file late tax returns Reminders Increased EIC on certain joint returns. How to file late tax returns  A married person filing a joint return may get more EIC than someone with the same income but a different filing status. How to file late tax returns As a result, the EIC table has different columns for married persons filing jointly than for everyone else. How to file late tax returns When you look up your EIC in the EIC Table, be sure to use the correct column for your filing status and the number of children you have. How to file late tax returns Online help. How to file late tax returns  You can use the EITC Assistant at www. How to file late tax returns irs. How to file late tax returns gov/eitc to find out if you are eligible for the credit. How to file late tax returns The EITC Assistant is available in English and Spanish. How to file late tax returns EIC questioned by IRS. How to file late tax returns  The IRS may ask you to provide documents to prove you are entitled to claim the EIC. How to file late tax returns We will tell you what documents to send us. How to file late tax returns These may include: birth certificates, school records, medical records, etc. How to file late tax returns The process of establishing your eligibility will delay your refund. How to file late tax returns Introduction The earned income credit (EIC) is a tax credit for certain people who work and have less than $51,567 of earned income. How to file late tax returns A tax credit usually means more money in your pocket. How to file late tax returns It reduces the amount of tax you owe. How to file late tax returns The EIC may also give you a refund. How to file late tax returns How do you get the earned income credit?   To claim the EIC, you must: Qualify by meeting certain rules, and File a tax return, even if you: Do not owe any tax, Did not earn enough money to file a return, or Did not have income taxes withheld from your pay. How to file late tax returns When you complete your return, you can figure your EIC by using a worksheet in the instructions for Form 1040, Form 1040A, or Form 1040EZ. How to file late tax returns Or, if you prefer, you can let the IRS figure the credit for you. How to file late tax returns How will this chapter help you?   This chapter will explain the following. How to file late tax returns The rules you must meet to qualify for the EIC. How to file late tax returns How to figure the EIC. How to file late tax returns Useful Items - You may want to see: Publication 596 Earned Income Credit (EIC) Form (and Instructions) Schedule EIC Earned Income Credit (Qualifying Child Information) 8862 Information To Claim Earned Income Credit After Disallowance Do You Qualify for the Credit? To qualify to claim the EIC, you must first meet all of the rules explained in Part A, Rules for Everyone . How to file late tax returns Then you must meet the rules in Part B, Rules If You Have a Qualifying Child , or Part C, Rules If You Do Not Have a Qualifying Child . How to file late tax returns There is one final rule you must meet in Part D, Figuring and Claiming the EIC . How to file late tax returns You qualify for the credit if you meet all the rules in each part that applies to you. How to file late tax returns If you have a qualifying child, the rules in Parts A, B, and D apply to you. How to file late tax returns If you do not have a qualifying child, the rules in Parts A, C, and D apply to you. How to file late tax returns Table 36-1, Earned Income Credit in a Nutshell. How to file late tax returns   Use Table 36–1 as a guide to Parts A, B, C, and D. How to file late tax returns The table is a summary of all the rules in each part. How to file late tax returns Do you have a qualifying child?   You have a qualifying child only if you have a child who meets the four tests described in Rule 8 and illustrated in Figure 36–1. How to file late tax returns If Improper Claim Made in Prior Year If your EIC for any year after 1996 was denied or reduced for any reason other than a math or clerical error, you must attach a completed Form 8862 to your next tax return to claim the EIC. How to file late tax returns You must also qualify to claim the EIC by meeting all the rules described in this chapter. How to file late tax returns However, if your EIC was denied or reduced as a result of a math or clerical error, do not attach Form 8862 to your next tax return. How to file late tax returns For example, if your arithmetic is incorrect, the IRS can correct it. How to file late tax returns If you do not provide a correct social security number, the IRS can deny the EIC. How to file late tax returns These kinds of errors are called math or clerical errors. How to file late tax returns If your EIC for any year after 1996 was denied and it was determined that your error was due to reckless or intentional disregard of the EIC rules, then you cannot claim the EIC for the next 2 years. How to file late tax returns If your error was due to fraud, then you cannot claim the EIC for the next 10 years. How to file late tax returns More information. How to file late tax returns   See chapter 5 in Publication 596 for more detailed information about the disallowance period and Form 8862. How to file late tax returns Part A. How to file late tax returns Rules for Everyone This part of the chapter discusses Rules 1 through 7. How to file late tax returns You must meet all seven rules to qualify for the earned income credit. How to file late tax returns If you do not meet all seven rules, you cannot get the credit and you do not need to read the rest of the chapter. How to file late tax returns If you meet all seven rules in this part, then read either Part B or Part C (whichever applies) for more rules you must meet. How to file late tax returns Rule 1. How to file late tax returns Your AGI Must Be Less Than: $46,227 ($51,567 for married filing jointly) if you have three or more qualifying children, $43,038 ($48,378 for married filing jointly) if you have two qualifying children, $37,870 ($43,210 for married filing jointly) if you have one qualifying child, or $14,340 ($19,680 for married filing jointly) if you do not have a qualifying child. How to file late tax returns Adjusted gross income (AGI). How to file late tax returns   AGI is the amount on line 38 (Form 1040), line 22 (Form 1040A), or line 4 (Form 1040EZ). How to file late tax returns If your AGI is equal to or more than the applicable limit listed above, you cannot claim the EIC. How to file late tax returns Example. How to file late tax returns Your AGI is $38,550, you are single, and you have one qualifying child. How to file late tax returns You cannot claim the EIC because your AGI is not less than $37,870. How to file late tax returns However, if your filing status was married filing jointly, you might be able to claim the EIC because your AGI is less than $43,210. How to file late tax returns Community property. How to file late tax returns   If you are married, but qualify to file as head of household under special rules for married taxpayers living apart (see Rule 3 ), and live in a state that has community property laws, your AGI includes that portion of both your and your spouse's wages that you are required to include in gross income. How to file late tax returns This is different from the community property rules that apply under Rule 7 . How to file late tax returns Rule 2. How to file late tax returns You Must Have a Valid Social Security Number (SSN) To claim the EIC, you (and your spouse, if filing a joint return) must have a valid SSN issued by the Social Security Administration (SSA). How to file late tax returns Any qualifying child listed on Schedule EIC also must have a valid SSN. How to file late tax returns (See Rule 8 if you have a qualifying child. How to file late tax returns ) If your social security card (or your spouse's, if filing a joint return) says “Not valid for employment” and your SSN was issued so that you (or your spouse) could get a federally funded benefit, you cannot get the EIC. How to file late tax returns An example of a federally funded benefit is Medicaid. How to file late tax returns If you have a card with the legend “Not valid for employment” and your immigration status has changed so that you are now a U. How to file late tax returns S. How to file late tax returns citizen or permanent resident, ask the SSA for a new social security card without the legend. How to file late tax returns U. How to file late tax returns S. How to file late tax returns citizen. How to file late tax returns   If you were a U. How to file late tax returns S. How to file late tax returns citizen when you received your SSN, you have a valid SSN. How to file late tax returns Valid for work only with INS or DHS authorization. How to file late tax returns   If your social security card reads “Valid for work only with INS authorization” or “Valid for work only with DHS authorization,” you have a valid SSN, but only if that authorization is still valid. How to file late tax returns SSN missing or incorrect. How to file late tax returns   If an SSN for you or your spouse is missing from your tax return or is incorrect, you may not get the EIC. How to file late tax returns Other taxpayer identification number. How to file late tax returns   You cannot get the EIC if, instead of an SSN, you (or your spouse, if filing a joint return) have an individual taxpayer identification number (ITIN). How to file late tax returns ITINs are issued by the Internal Revenue Service to noncitizens who cannot get an SSN. How to file late tax returns No SSN. How to file late tax returns   If you do not have a valid SSN, put “No” next to line 64a (Form 1040), line 38a (Form 1040A), or line 8a (Form 1040EZ). How to file late tax returns You cannot claim the EIC. How to file late tax returns Getting an SSN. How to file late tax returns   If you (or your spouse, if filing a joint return) do not have an SSN, you can apply for one by filing Form SS-5, Application for a Social Security Card, with the SSA. How to file late tax returns You can get Form SS-5 online at www. How to file late tax returns socialsecurity. How to file late tax returns gov, from your local SSA office, or by calling the SSA at 1-800-772-1213. How to file late tax returns Filing deadline approaching and still no SSN. How to file late tax returns   If the filing deadline is approaching and you still do not have an SSN, you have two choices. How to file late tax returns Request an automatic 6-month extension of time to file your return. How to file late tax returns You can get this extension by filing Form 4868, Application for Automatic Extension of Time to File U. How to file late tax returns S. How to file late tax returns Individual Income Tax Return. How to file late tax returns For more information, see chapter 1 . How to file late tax returns File the return on time without claiming the EIC. How to file late tax returns After receiving the SSN, file an amended return (Form 1040X, Amended U. How to file late tax returns S. How to file late tax returns Individual Income Tax Return) claiming the EIC. How to file late tax returns Attach a filled-in Schedule EIC if you have a qualifying child. How to file late tax returns Table 36-1. How to file late tax returns Earned Income Credit in a Nutshell First, you must meet all the rules in this column. How to file late tax returns Second, you must meet all the rules in one of these columns, whichever applies. How to file late tax returns Third, you must meet the rule in this column. How to file late tax returns Part A. How to file late tax returns  Rules for Everyone Part B. How to file late tax returns  Rules If You Have a Qualifying Child Part C. How to file late tax returns  Rules If You Do Not Have a Qualifying Child Part D. How to file late tax returns  Figuring and Claiming the EIC 1. How to file late tax returns Your adjusted gross income (AGI) must be less than: • $46,227 ($51,567 for married filing jointly) if you have three or more qualifying children,  • $43,038 ($48,378 for married filing jointly) if you have two qualifying children,  • $37,870 ($43,210 for married filing jointly) if you have one qualifying child, or   • $14,340 ($19,680 for married filing jointly) if you do not have a qualifying child. How to file late tax returns 2. How to file late tax returns You must have a valid social security number. How to file late tax returns  3. How to file late tax returns Your filing status cannot be “Married filing separately. How to file late tax returns ” 4. How to file late tax returns You must be a U. How to file late tax returns S. How to file late tax returns citizen or resident alien all year. How to file late tax returns  5. How to file late tax returns You cannot file Form 2555 or Form 2555-EZ (relating to foreign earned income). How to file late tax returns  6. How to file late tax returns Your investment income must be $3,300 or less. How to file late tax returns  7. How to file late tax returns You must have earned income. How to file late tax returns 8. How to file late tax returns Your child must meet the relationship, age, residency, and joint return tests. How to file late tax returns  9. How to file late tax returns Your qualifying child cannot be used by more than one person to claim the EIC. How to file late tax returns  10. How to file late tax returns You cannot be a qualifying child of another person. How to file late tax returns 11. How to file late tax returns You must be at least age 25 but under age 65. How to file late tax returns  12. How to file late tax returns You cannot be the dependent of another person. How to file late tax returns  13. How to file late tax returns You cannot be a qualifying child of another person. How to file late tax returns  14. How to file late tax returns You must have lived in the United States more than half of the year. How to file late tax returns 15. How to file late tax returns Your earned income must be less than: • $46,227 ($51,567 for married filing jointly) if you have three or more qualifying children,  • $43,038 ($48,378 for married filing jointly) if you have two qualifying children,  • $37,870 ($43,210 for married filing jointly) if you have one qualifying child, or   • $14,340 ($19,680 for married filing jointly) if you do not have a qualifying child. How to file late tax returns Rule 3. How to file late tax returns Your Filing Status Cannot Be Married Filing Separately If you are married, you usually must file a joint return to claim the EIC. How to file late tax returns Your filing status cannot be “Married filing separately. How to file late tax returns ” Spouse did not live with you. How to file late tax returns   If you are married and your spouse did not live in your home at any time during the last 6 months of the year, you may be able to file as head of household, instead of married filing separately. How to file late tax returns In that case, you may be able to claim the EIC. How to file late tax returns For detailed information about filing as head of household, see chapter 2 . How to file late tax returns Rule 4. How to file late tax returns You Must Be a U. How to file late tax returns S. How to file late tax returns Citizen or Resident Alien All Year If you (or your spouse, if married) were a nonresident alien for any part of the year, you cannot claim the earned income credit unless your filing status is married filing jointly. How to file late tax returns You can use that filing status only if one spouse is a U. How to file late tax returns S. How to file late tax returns citizen or resident alien and you choose to treat the nonresident spouse as a U. How to file late tax returns S. How to file late tax returns resident. How to file late tax returns If you make this choice, you and your spouse are taxed on your worldwide income. How to file late tax returns If you (or your spouse, if married) were a nonresident alien for any part of the year and your filing status is not married filing jointly, enter “No” on the dotted line next to line 64a (Form 1040) or in the space to the left of line 38a (Form 1040A). How to file late tax returns If you need more information on making this choice, get Publication 519, U. How to file late tax returns S. How to file late tax returns Tax Guide for Aliens. How to file late tax returns Rule 5. How to file late tax returns You Cannot File Form 2555 or Form 2555-EZ You cannot claim the earned income credit if you file Form 2555, Foreign Earned Income, or Form 2555-EZ, Foreign Earned Income Exclusion. How to file late tax returns You file these forms to exclude income earned in foreign countries from your gross income, or to deduct or exclude a foreign housing amount. How to file late tax returns U. How to file late tax returns S. How to file late tax returns possessions are not foreign countries. How to file late tax returns See Publication 54, Tax Guide for U. How to file late tax returns S. How to file late tax returns Citizens and Resident Aliens Abroad, for more detailed information. How to file late tax returns Rule 6. How to file late tax returns Your Investment Income Must Be $3,300 or Less You cannot claim the earned income credit unless your investment income is $3,300 or less. How to file late tax returns If your investment income is more than $3,300, you cannot claim the credit. How to file late tax returns For most people, investment income is the total of the following amounts. How to file late tax returns Taxable interest (line 8a of Form 1040 or 1040A). How to file late tax returns Tax-exempt interest (line 8b of Form 1040 or 1040A). How to file late tax returns Dividend income (line 9a of Form 1040 or 1040A). How to file late tax returns Capital gain net income (line 13 of Form 1040, if more than zero, or line 10 of Form 1040A). How to file late tax returns If you file Form 1040EZ, your investment income is the total of the amount of line 2 and the amount of any tax-exempt interest you wrote to the right of the words “Form 1040EZ” on line 2. How to file late tax returns However, see Rule 6 in chapter 1 of Publication 596 if: You are filing Schedule E (Form 1040), Form 4797, or Form 8814, or You are reporting income from the rental of personal property on Form 1040, line 21. How to file late tax returns Rule 7. How to file late tax returns You Must Have Earned Income This credit is called the “earned income” credit because, to qualify, you must work and have earned income. How to file late tax returns If you are married and file a joint return, you meet this rule if at least one spouse works and has earned income. How to file late tax returns If you are an employee, earned income includes all the taxable income you get from your employer. How to file late tax returns If you are self-employed or a statutory employee, you will figure your earned income on EIC Worksheet B in the instructions for Form 1040. How to file late tax returns Earned Income Earned income includes all of the following types of income. How to file late tax returns Wages, salaries, tips, and other taxable employee pay. How to file late tax returns Employee pay is earned income only if it is taxable. How to file late tax returns Nontaxable employee pay, such as certain dependent care benefits and adoption benefits, is not earned income. How to file late tax returns But there is an exception for nontaxable combat pay, which you can choose to include in earned income, as explained below. How to file late tax returns Net earnings from self-employment. How to file late tax returns Gross income received as a statutory employee. How to file late tax returns Wages, salaries, and tips. How to file late tax returns   Wages, salaries, and tips you receive for working are reported to you on Form W-2, in box 1. How to file late tax returns You should report these on line 1 (Form 1040EZ) or line 7 (Forms 1040A and 1040). How to file late tax returns Nontaxable combat pay election. How to file late tax returns   You can elect to include your nontaxable combat pay in earned income for the earned income credit. How to file late tax returns Electing to include nontaxable combat pay in earned income may increase or decrease your EIC. How to file late tax returns Figure the credit with and without your nontaxable combat pay before making the election. How to file late tax returns   If you make the election, you must include in earned income all nontaxable combat pay you received. How to file late tax returns If you are filing a joint return and both you and your spouse received nontaxable combat pay, you can each make your own election. How to file late tax returns In other words, if one of you makes the election, the other one can also make it but does not have to. How to file late tax returns   The amount of your nontaxable combat pay should be shown in box 12 of your Form W-2 with code “Q. How to file late tax returns ” Self-employed persons and statutory employees. How to file late tax returns   If you are self-employed or received income as a statutory employee, you must use the Form 1040 instructions to see if you qualify to get the EIC. How to file late tax returns Approved Form 4361 or Form 4029 This section is for persons who have an approved: Form 4361, Application for Exemption From Self-Employment Tax for Use by Ministers, Members of Religious Orders and Christian Science Practitioners, or Form 4029, Application for Exemption From Social Security and Medicare Taxes and Waiver of Benefits. How to file late tax returns Each approved form exempts certain income from social security taxes. How to file late tax returns Each form is discussed here in terms of what is or is not earned income for the EIC. How to file late tax returns Form 4361. How to file late tax returns   Whether or not you have an approved Form 4361, amounts you received for performing ministerial duties as an employee count as earned income. How to file late tax returns This includes wages, salaries, tips, and other taxable employee compensation. How to file late tax returns A nontaxable housing allowance or the nontaxable rental value of a home is not earned income. How to file late tax returns Also, amounts you received for performing ministerial duties, but not as an employee, do not count as earned income. How to file late tax returns Examples include fees for performing marriages and honoraria for delivering speeches. How to file late tax returns Form 4029. How to file late tax returns   Whether or not you have an approved Form 4029, all wages, salaries, tips, and other taxable employee compensation count as earned income. How to file late tax returns However, amounts you received as a self-employed individual do not count as earned income. How to file late tax returns Also, in figuring earned income, do not subtract losses on Schedule C, C-EZ, or F from wages on line 7 of Form 1040. How to file late tax returns Disability Benefits If you retired on disability, taxable benefits you receive under your employer's disability retirement plan are considered earned income until you reach minimum retirement age. How to file late tax returns Minimum retirement age generally is the earliest age at which you could have received a pension or annuity if you were not disabled. How to file late tax returns You must report your taxable disability payments on line 7 of either Form 1040 or Form 1040A until you reach minimum retirement age. How to file late tax returns Beginning on the day after you reach minimum retirement age, payments you receive are taxable as a pension and are not considered earned income. How to file late tax returns Report taxable pension payments on Form 1040, lines 16a and 16b (or Form 1040A, lines 12a and 12b). How to file late tax returns Disability insurance payments. How to file late tax returns   Payments you received from a disability insurance policy that you paid the premiums for are not earned income. How to file late tax returns It does not matter whether you have reached minimum retirement age. How to file late tax returns If this policy is through your employer, the amount may be shown in box 12 of your Form W-2 with code “J. How to file late tax returns ” Income That Is Not Earned Income Examples of items that are not earned income include interest and dividends, pensions and annuities, social security and railroad retirement benefits (including disability benefits), alimony and child support, welfare benefits, workers' compensation benefits, unemployment compensation (insurance), nontaxable foster care payments, and veterans' benefits, including VA rehabilitation payments. How to file late tax returns Do not include any of these items in your earned income. How to file late tax returns Earnings while an inmate. How to file late tax returns   Amounts received for work performed while an inmate in a penal institution are not earned income when figuring the earned income credit. How to file late tax returns This includes amounts for work performed while in a work release program or while in a halfway house. How to file late tax returns Workfare payments. How to file late tax returns   Nontaxable workfare payments are not earned income for the EIC. How to file late tax returns These are cash payments certain people receive from a state or local agency that administers public assistance programs funded under the federal Temporary Assistance for Needy Families (TANF) program in return for certain work activities such as (1) work experience activities (including remodeling or repairing public housing) if private sector employment is not available, or (2) community service program activities. How to file late tax returns Community property. How to file late tax returns   If you are married, but qualify to file as head of household under special rules for married taxpayers living apart (see Rule 3 ), and live in a state that has community property laws, your earned income for the EIC does not include any amount earned by your spouse that is treated as belonging to you under those laws. How to file late tax returns That amount is not earned income for the EIC, even though you must include it in your gross income on your income tax return. How to file late tax returns Your earned income includes the entire amount you earned, even if part of it is treated as belonging to your spouse under your state's community property laws. How to file late tax returns Nevada, Washington, and California domestic partners. How to file late tax returns   If you are a registered domestic partner in Nevada, Washington, or California, the same rules apply. How to file late tax returns Your earned income for the EIC does not include any amount earned by your partner. How to file late tax returns Your earned income includes the entire amount you earned. How to file late tax returns For details, see Publication 555. How to file late tax returns Conservation Reserve Program (CRP) payments. How to file late tax returns   If you were receiving social security retirement benefits or social security disability benefits at the time you received any CRP payments, your CRP payments are not earned income for the EIC. How to file late tax returns Nontaxable military pay. How to file late tax returns   Nontaxable pay for members of the Armed Forces is not considered earned income for the EIC. How to file late tax returns Examples of nontaxable military pay are combat pay, the Basic Allowance for Housing (BAH), and the Basic Allowance for Subsistence (BAS). How to file late tax returns See Publication 3, Armed Forces' Tax Guide, for more information. How to file late tax returns    Combat pay. How to file late tax returns You can elect to include your nontaxable combat pay in earned income for the EIC. How to file late tax returns See Nontaxable combat pay election, earlier. How to file late tax returns Part B. How to file late tax returns Rules If You Have a Qualifying Child If you have met all of the rules in Part A , read Part B to see if you have a qualifying child. How to file late tax returns Part B discusses Rules 8 through 10. How to file late tax returns You must meet all three of these rules, in addition to the rules in Parts A and D , to qualify for the earned income credit with a qualifying child. How to file late tax returns You must file Form 1040 or Form 1040A to claim the EIC with a qualifying child. How to file late tax returns (You cannot file Form 1040EZ. How to file late tax returns ) You also must complete Schedule EIC and attach it to your return. How to file late tax returns If you meet all the rules in Part A and this part, read Part D to find out what to do next. How to file late tax returns If you do not meet Rule 8, you do not have a qualifying child. How to file late tax returns Read Part C to find out if you can get the earned income credit without a qualifying child. How to file late tax returns Rule 8. How to file late tax returns Your Child Must Meet the Relationship, Age, Residency, and Joint Return Tests Your child is a qualifying child if your child meets four tests. How to file late tax returns The four tests are: Relationship, Age, Residency, and Joint return. How to file late tax returns The four tests are illustrated in Figure 36–1. How to file late tax returns The paragraphs that follow contain more information about each test. How to file late tax returns Relationship Test To be your qualifying child, a child must be your: Son, daughter, stepchild, foster child, or a descendant of any of them (for example, your grandchild), or Brother, sister, half brother, half sister, stepbrother, stepsister, or a descendant of any of them (for example, your niece or nephew). How to file late tax returns The following definitions clarify the relationship test. How to file late tax returns Adopted child. How to file late tax returns   An adopted child is always treated as your own child. How to file late tax returns The term “adopted child” includes a child who was lawfully placed with you for legal adoption. How to file late tax returns Foster child. How to file late tax returns   For the EIC, a person is your foster child if the child is placed with you by an authorized placement agency or by judgement, decree, or other order of any court of competent jurisdiction. How to file late tax returns An authorized placement agency includes a state or local government agency. How to file late tax returns It also includes a tax-exempt organization licensed by a state. How to file late tax returns In addition, it includes an Indian tribal government or an organization authorized by an Indian tribal government to place Indian children. How to file late tax returns Example. How to file late tax returns Debbie, who is 12 years old, was placed in your care 2 years ago by an authorized agency responsible for placing children in foster homes. How to file late tax returns Debbie is your foster child. How to file late tax returns Age Test Your child must be: Under age 19 at the end of 2013 and younger than you (or your spouse, if filing jointly), Under age 24 at the end of 2013, a student, and younger than you (or your spouse, if filing jointly), or Permanently and totally disabled at any time during 2013, regardless of age. How to file late tax returns    The following examples and definitions clarify the age test. How to file late tax returns Example 1—child not under age 19. How to file late tax returns Your son turned 19 on December 10. How to file late tax returns Unless he was permanently and totally disabled or a student, he is not a qualifying child because, at the end of the year, he was not under age 19. How to file late tax returns Example 2—child not younger than you or your spouse. How to file late tax returns Your 23-year-old brother, who is a full-time student and unmarried, lives with you and your spouse. How to file late tax returns He is not disabled. How to file late tax returns Both you and your spouse are 21 years old and you file a joint return. How to file late tax returns Your brother is not your qualifying child because he is not younger than you or your spouse. How to file late tax returns Example 3—child younger than your spouse but not younger than you. How to file late tax returns The facts are the same as in Example 2 except that your spouse is 25 years old. How to file late tax returns Because your brother is younger than your spouse, he is your qualifying child even though he is not younger than you. How to file late tax returns Student defined. How to file late tax returns   To qualify as a student, your child must be, during some part of each of any 5 calendar months during the calendar year: A full-time student at a school that has a regular teaching staff, course of study, and regular student body at the school, or A student taking a full-time, on-farm training course given by a school described in (1), or a state, county, or local government. How to file late tax returns The 5 calendar months need not be consecutive. How to file late tax returns   A full-time student is a student who is enrolled for the number of hours or courses the school considers to be full-time attendance. How to file late tax returns School defined. How to file late tax returns   A school can be an elementary school, junior or senior high school, college, university, or technical, trade, or mechanical school. How to file late tax returns However, on-the-job training courses, correspondence schools, and schools offering courses only through the Internet do not count as schools for the EIC. How to file late tax returns Vocational high school students. How to file late tax returns   Students who work in co-op jobs in private industry as a part of a school's regular course of classroom and practical training are considered full-time students. How to file late tax returns Permanently and totally disabled. How to file late tax returns   Your child is permanently and totally disabled if both of the following apply. How to file late tax returns He or she cannot engage in any substantial gainful activity because of a physical or mental condition. How to file late tax returns A doctor determines the condition has lasted or can be expected to last continuously for at least a year or can lead to death. How to file late tax returns Residency Test Your child must have lived with you in the United States for more than half of 2013. How to file late tax returns The following definitions clarify the residency test. How to file late tax returns United States. How to file late tax returns   This means the 50 states and the District of Columbia. How to file late tax returns It does not include Puerto Rico or U. How to file late tax returns S. How to file late tax returns possessions such as Guam. How to file late tax returns Homeless shelter. How to file late tax returns   Your home can be any location where you regularly live. How to file late tax returns You do not need a traditional home. How to file late tax returns For example, if your child lived with you for more than half the year in one or more homeless shelters, your child meets the residency test. How to file late tax returns Military personnel stationed outside the United States. How to file late tax returns    U. How to file late tax returns S. How to file late tax returns military personnel stationed outside the United States on extended active duty are considered to live in the United States during that duty period for purposes of the EIC. How to file late tax returns Figure 36-1. How to file late tax returns Tests for Qualifying Child Please click here for the text description of the image. How to file late tax returns Qualifying child Extended active duty. How to file late tax returns   Extended active duty means you are called or ordered to duty for an indefinite period or for a period of more than 90 days. How to file late tax returns Once you begin serving your extended active duty, you are still considered to have been on extended active duty even if you do not serve more than 90 days. How to file late tax returns Birth or death of a child. How to file late tax returns   A child who was born or died in 2013 is treated as having lived with you for more than half of 2013 if your home was the child's home for more than half the time he or she was alive in 2013. How to file late tax returns Temporary absences. How to file late tax returns   Count time that you or your child is away from home on a temporary absence due to a special circumstance as time the child lived with you. How to file late tax returns Examples of a special circumstance include illness, school attendance, business, vacation, military service, and detention in a juvenile facility. How to file late tax returns Kidnapped child. How to file late tax returns    A kidnapped child is treated as living with you for more than half of the year if the child lived with you for more than half the part of the year before the date of the kidnapping. How to file late tax returns The child must be presumed by law enforcement authorities to have been kidnapped by someone who is not a member of your family or your child's family. How to file late tax returns This treatment applies for all years until the child is returned. How to file late tax returns However, the last year this treatment can apply is the earlier of: The year there is a determination that the child is dead, or The year the child would have reached age 18. How to file late tax returns   If your qualifying child has been kidnapped and meets these requirements, enter “KC,” instead of a number, on line 6 of Schedule EIC. How to file late tax returns Joint Return Test To meet this test, the child cannot file a joint return for the year. How to file late tax returns Exception. How to file late tax returns   An exception to the joint return test applies if your child and his or her spouse file a joint return only to claim a refund of income tax withheld or estimated tax paid. How to file late tax returns Example 1—child files joint return. How to file late tax returns You supported your 18-year-old daughter, and she lived with you all year while her husband was in the Armed Forces. How to file late tax returns He earned $25,000 for the year. How to file late tax returns The couple files a joint return. How to file late tax returns Because your daughter and her husband filed a joint return, she is not your qualifying child. How to file late tax returns Example 2—child files joint return only to claim a refund of withheld tax. How to file late tax returns Your 18-year-old son and his 17-year-old wife had $800 of wages from part-time jobs and no other income. How to file late tax returns They do not have a child. How to file late tax returns Neither is required to file a tax return. How to file late tax returns Taxes were taken out of their pay, so they filed a joint return only to get a refund of the withheld taxes. How to file late tax returns The exception to the joint return test applies, so your son may be your qualifying child if all the other tests are met. How to file late tax returns Example 3—child files joint return to claim American opportunity credit. How to file late tax returns The facts are the same as in Example 2 except no taxes were taken out of your son's pay. How to file late tax returns He and his wife are not required to file a tax return, but they file a joint return to claim an American opportunity credit of $124 and get a refund of that amount. How to file late tax returns Because claiming the American opportunity credit is their reason for filing the return, they are not filing it only to get a refund of income tax withheld or estimated tax paid. How to file late tax returns The exception to the joint return test does not apply, so your son is not your qualifying child. How to file late tax returns Married child. How to file late tax returns   Even if your child does not file a joint return, if your child was married at the end of the year, he or she cannot be your qualifying child unless: You can claim an exemption for the child, or The reason you cannot claim an exemption for the child is that you let the child's other parent claim the exemption under the Special rule for divorced or separated parents (or parents who live apart) , described later. How to file late tax returns Social security number. How to file late tax returns   The qualifying child must have a valid social security number (SSN) unless the child was born and died in 2013 and you attach to your return a copy of the child's birth certificate, death certificate, or hospital records showing a live birth. How to file late tax returns You cannot claim the EIC on the basis of a qualifying child if: The qualifying child's SSN is missing from your tax return or is incorrect, The qualifying child's social security card says “Not valid for employment” and was issued for use in getting a federally funded benefit, or Instead of an SSN, the qualifying child has: An individual taxpayer identification number (ITIN), which is issued to a noncitizen who cannot get an SSN, or An adoption taxpayer identification number (ATIN), which is issued to adopting parents who cannot get an SSN for the child being adopted until the adoption is final. How to file late tax returns   If you have more than one qualifying child and only one has a valid SSN, you can use only that child to claim the EIC. How to file late tax returns For more information about SSNs, see Rule 2 . How to file late tax returns Rule 9. How to file late tax returns Your Qualifying Child Cannot Be Used By More Than One Person To Claim the EIC Sometimes a child meets the tests to be a qualifying child of more than one person. How to file late tax returns However, only one of these persons can actually treat the child as a qualifying child. How to file late tax returns Only that person can use the child as a qualifying child to take all of the following tax benefits (provided the person is eligible for each benefit). How to file late tax returns The exemption for the child. How to file late tax returns The child tax credit. How to file late tax returns Head of household filing status. How to file late tax returns The credit for child and dependent care expenses. How to file late tax returns The exclusion for dependent care benefits. How to file late tax returns The EIC. How to file late tax returns The other person cannot take any of these benefits based on this qualifying child. How to file late tax returns In other words, you and the other person cannot agree to divide these tax benefits between you. How to file late tax returns The other person cannot take any of these tax benefits unless he or she has a different qualifying child. How to file late tax returns The tiebreaker rules explained next explain who, if anyone, can claim the EIC when more than one person has the same qualifying child. How to file late tax returns However, the tiebreaker rules do not apply if the other person is your spouse and you file a joint return. How to file late tax returns Tiebreaker rules. How to file late tax returns   To determine which person can treat the child as a qualifying child to claim the six tax benefits just listed, the following tiebreaker rules apply. How to file late tax returns If only one of the persons is the child's parent, the child is treated as the qualifying child of the parent. How to file late tax returns If the parents file a joint return together and can claim the child as a qualifying child, the child is treated as the qualifying child of the parents. How to file late tax returns If the parents do not file a joint return together but both parents claim the child as a qualifying child, the IRS will treat the child as the qualifying child of the parent with whom the child lived for the longer period of time during the year. How to file late tax returns If the child lived with each parent for the same amount of time, the IRS will treat the child as the qualifying child of the parent who had the higher adjusted gross income (AGI) for the year. How to file late tax returns If no parent can claim the child as a qualifying child, the child is treated as the qualifying child of the person who had the highest AGI for the year. How to file late tax returns If a parent can claim the child as a qualifying child but no parent does so claim the child, the child is treated as the qualifying child of the person who had the highest AGI for the year, but only if that person's AGI is higher than the highest AGI of any of the child's parents who can claim the child. How to file late tax returns If the child's parents file a joint return with each other, this rule can be applied by treating the parents' total AGI as divided evenly between them. How to file late tax returns See Example 8 . How to file late tax returns   Subject to these tiebreaker rules, you and the other person may be able to choose which of you claims the child as a qualifying child. How to file late tax returns See Examples 1 through 13 . How to file late tax returns   If you cannot claim the EIC because your qualifying child is treated under the tiebreaker rules as the qualifying child of another person for 2013, you may be able to take the EIC using a different qualifying child, but you cannot take the EIC using the rules in Part C for people who do not have a qualifying child. How to file late tax returns If the other person cannot claim the EIC. How to file late tax returns   If you and someone else have the same qualifying child but the other person cannot claim the EIC because he or she is not eligible or his or her earned income or AGI is too high, you may be able to treat the child as a qualifying child. How to file late tax returns See Examples 6 and 7 . How to file late tax returns But you cannot treat the child as a qualifying child to claim the EIC if the other person uses the child to claim any of the other six tax benefits listed earlier. How to file late tax returns Examples. How to file late tax returns The following examples may help you in determining whether you can claim the EIC when you and someone else have the same qualifying child. How to file late tax returns Example 1. How to file late tax returns You and your 2-year-old son Jimmy lived with your mother all year. How to file late tax returns You are 25 years old, unmarried, and your AGI is $9,000. How to file late tax returns Your only income was $9,000 from a part-time job. How to file late tax returns Your mother's only income was $20,000 from her job, and her AGI is $20,000. How to file late tax returns Jimmy's father did not live with you or Jimmy. How to file late tax returns The special rule explained later for divorced or separated parents (or parents who live apart) does not apply. How to file late tax returns Jimmy is a qualifying child of both you and your mother because he meets the relationship, age, residency, and joint return tests for both you and your mother. How to file late tax returns However, only one of you can treat him as a qualifying child to claim the EIC (and the other tax benefits listed earlier for which that person qualifies). How to file late tax returns He is not a qualifying child of anyone else, including his father. How to file late tax returns If you do not claim Jimmy as a qualifying child for the EIC or any of the other tax benefits listed earlier, your mother can treat him as a qualifying child to claim the EIC (and any of the other tax benefits listed earlier for which she qualifies). How to file late tax returns Example 2. How to file late tax returns The facts are the same as in Example 1 except your AGI is $25,000. How to file late tax returns Because your mother's AGI is not higher than yours, she cannot claim Jimmy as a qualifying child. How to file late tax returns Only you can claim him. How to file late tax returns Example 3. How to file late tax returns The facts are the same as in Example 1 except that you and your mother both claim Jimmy as a qualifying child. How to file late tax returns In this case, you as the child's parent will be the only one allowed to claim Jimmy as a qualifying child for the EIC and the other tax benefits listed earlier for which you qualify. How to file late tax returns The IRS will disallow your mother's claim to the EIC and any of the other tax benefits listed earlier unless she has another qualifying child. How to file late tax returns Example 4. How to file late tax returns The facts are the same as in Example 1 except that you also have two other young children who are qualifying children of both you and your mother. How to file late tax returns Only one of you can claim each child. How to file late tax returns However, if your mother's AGI is higher than yours, you can allow your mother to claim one or more of the children. How to file late tax returns For example, if you claim one child, your mother can claim the other two. How to file late tax returns Example 5. How to file late tax returns The facts are the same as in Example 1 except that you are only 18 years old. How to file late tax returns This means you are a qualifying child of your mother. How to file late tax returns Because of Rule 10 , discussed next, you cannot claim the EIC and cannot claim Jimmy as a qualifying child. How to file late tax returns Only your mother may be able to treat Jimmy as a qualifying child to claim the EIC. How to file late tax returns If your mother meets all the other requirements for claiming the EIC and you do not claim Jimmy as a qualifying child for any of the other tax benefits listed earlier, your mother can claim both you and Jimmy as qualifying children for the EIC. How to file late tax returns Example 6. How to file late tax returns The facts are the same as in Example 1 except that your mother earned $50,000 from her job. How to file late tax returns Because your mother's earned income is too high for her to claim the EIC, only you can claim the EIC using your son. How to file late tax returns Example 7. How to file late tax returns The facts are the same as in Example 1 except that you earned $50,000 from your job and your AGI is $50,500. How to file late tax returns Your earned income is too high for you to claim the EIC. How to file late tax returns But your mother cannot claim the EIC either, because her AGI is not higher than yours. How to file late tax returns Example 8. How to file late tax returns The facts are the same as in Example 1 except that you and Jimmy's father are married to each other, live with Jimmy and your mother, and have an AGI of $30,000 on a joint return. How to file late tax returns If you and your husband do not claim Jimmy as a qualifying child for the EIC or any of the other tax benefits listed earlier, your mother can claim him instead. How to file late tax returns Even though the AGI on your joint return, $30,000, is more than your mother's AGI of $20,000, for this purpose half of the joint AGI can be treated as yours and half as your husband's. How to file late tax returns In other words, each parent's AGI can be treated as $15,000. How to file late tax returns Example 9. How to file late tax returns You, your husband, and your 10-year-old son Joey lived together until August 1, 2013, when your husband moved out of the household. How to file late tax returns In August and September, Joey lived with you. How to file late tax returns For the rest of the year, Joey lived with your husband, who is Joey's father. How to file late tax returns Joey is a qualifying child of both you and your husband because he lived with each of you for more than half the year and because he met the relationship, age, and joint return tests for both of you. How to file late tax returns At the end of the year, you and your husband still were not divorced, legally separated, or separated under a written separation agreement, so the special rule for divorced or separated parents (or parents who live apart) does not apply. How to file late tax returns You and your husband will file separate returns. How to file late tax returns Your husband agrees to let you treat Joey as a qualifying child. How to file late tax returns This means, if your husband does not claim Joey as a qualifying child for any of the tax benefits listed earlier, you can claim him as a qualifying child for any tax benefit listed earlier for which you qualify. How to file late tax returns However, your filing status is married filing separately, so you cannot claim the EIC or the credit for child and dependent care expenses. How to file late tax returns See Rule 3 . How to file late tax returns Example 10. How to file late tax returns The facts are the same as in Example 9 except that you and your husband both claim Joey as a qualifying child. How to file late tax returns In this case, only your husband will be allowed to treat Joey as a qualifying child. How to file late tax returns This is because, during 2013, the boy lived with him longer than with you. How to file late tax returns You cannot claim the EIC (either with or without a qualifying child). How to file late tax returns However, your husband's filing status is married filing separately, so he cannot claim the EIC or the credit for child and dependent care expenses. How to file late tax returns See Rule 3 . How to file late tax returns Example 11. How to file late tax returns You, your 5-year-old son and your son's father lived together all year. How to file late tax returns You and your son's father are not married. How to file late tax returns Your son is a qualifying child of both you and his father because he meets the relationship, age, residency, and joint return tests for both you and his father. How to file late tax returns Your earned income and AGI are $12,000, and your son's father's earned income and AGI are $14,000. How to file late tax returns Neither of you had any other income. How to file late tax returns Your son's father agrees to let you treat the child as a qualifying child. How to file late tax returns This means, if your son's father does not claim your son as a qualifying child for the EIC or any of the other tax benefits listed earlier, you can claim him as a qualifying child for the EIC and any of the other tax benefits listed earlier for which you qualify. How to file late tax returns Example 12. How to file late tax returns The facts are the same as in Example 11 except that you and your son's father both claim your son as a qualifying child. How to file late tax returns In this case, only your son's father will be allowed to treat your son as a qualifying child. How to file late tax returns This is because his AGI, $14,000, is more than your AGI, $12,000. How to file late tax returns You cannot claim the EIC (either with or without a qualifying child). How to file late tax returns Example 13. How to file late tax returns You and your 7-year-old niece, your sister's child, lived with your mother all year. How to file late tax returns You are 25 years old, and your AGI is $9,300. How to file late tax returns Your only income was from a part-time job. How to file late tax returns Your mother's AGI is $15,000. How to file late tax returns Her only income was from her job. How to file late tax returns Your niece's parents file jointly, have an AGI of less than $9,000, and do not live with you or their child. How to file late tax returns Your niece is a qualifying child of both you and your mother because she meets the relationship, age, residency, and joint return tests for both you and your mother. How to file late tax returns However, only your mother can treat her as a qualifying child. How to file late tax returns This is because your mother's AGI, $15,000, is more than your AGI, $9,300. How to file late tax returns Special rule for divorced or separated parents (or parents who live apart). How to file late tax returns   A child will be treated as the qualifying child of his or her noncustodial parent (for purposes of claiming an exemption and the child tax credit, but not for the EIC) if all of the following statements are true. How to file late tax returns The parents: Are divorced or legally separated under a decree of divorce or separate maintenance, Are separated under a written separation agreement, or Lived apart at all times during the last 6 months of 2013, whether or not they are or were married. How to file late tax returns The child received over half of his or her support for the year from the parents. How to file late tax returns The child is in the custody of one or both parents for more than half of 2013. How to file late tax returns Either of the following statements is true. How to file late tax returns The custodial parent signs Form 8332 or a substantially similar statement that he or she will not claim the child as a dependent for the year, and the noncustodial parent attaches the form or statement to his or her return. How to file late tax returns If the divorce decree or separation agreement went into effect after 1984 and before 2009, the noncustodial parent may be able to attach certain pages from the decree or agreement instead of Form 8332. How to file late tax returns A pre-1985 decree of divorce or separate maintenance or written separation agreement that applies to 2013 provides that the noncustodial parent can claim the child as a dependent, and the noncustodial parent provides at least $600 for support of the child during 2013. How to file late tax returns  For details, see chapter 3. How to file late tax returns Also see Applying Rule 9 to divorced or separated parents (or parents who live apart) , next. How to file late tax returns Applying Rule 9 to divorced or separated parents (or parents who live apart). How to file late tax returns   If a child is treated as the qualifying child of the noncustodial parent under the special rule just described for children of divorced or separated parents (or parents who live apart), only the noncustodial parent can claim an exemption and the child tax credit for the child. How to file late tax returns However, the custodial parent, if eligible, or another eligible taxpayer can claim the child as a qualifying child for the EIC and other tax benefits listed earlier in this chapter. How to file late tax returns If the child is the qualifying child of more than one person for these benefits, then the tiebreaker rules determine which person can treat the child as a qualifying child. How to file late tax returns Example 1. How to file late tax returns You and your 5-year-old son lived all year with your mother, who paid the entire cost of keeping up the home. How to file late tax returns Your AGI is $10,000. How to file late tax returns Your mother’s AGI is $25,000. How to file late tax returns Your son's father did not live with you or your son. How to file late tax returns Under the special rule for children of divorced or separated parents (or parents who live apart), your son is treated as the qualifying child of his father, who can claim an exemption and the child tax credit for the child. How to file late tax returns However, your son's father cannot claim your son as a qualifying child for head of household filing status, the credit for child and dependent care expenses, the exclusion for dependent care benefits, or the EIC. How to file late tax returns You and your mother did not have any child care expenses or dependent care benefits. How to file late tax returns If you do not claim your son as a qualifying child, your mother can claim him as a qualifying child for the EIC and head of household filing status, if she qualifies for these tax benefits. How to file late tax returns Example 2. How to file late tax returns The facts are the same as in Example 1 except that your AGI is $25,000 and your mother's AGI is $21,000. How to file late tax returns Your mother cannot claim your son as a qualifying child for any purpose because her AGI is not higher than yours. How to file late tax returns Example 3. How to file late tax returns The facts are the same as in Example 1 except that you and your mother both claim your son as a qualifying child for the EIC. How to file late tax returns Your mother also claims him as a qualifying child for head of household filing status. How to file late tax returns You as the child's parent will be the only one allowed to claim your son as a qualifying child for the EIC. How to file late tax returns The IRS will disallow your mother's claim to the EIC and head of household filing status unless she has another qualifying child. How to file late tax returns Rule 10. How to file late tax returns You Cannot Be a Qualifying Child of Another Taxpayer You are a qualifying child of another taxpayer (your parent, guardian, foster parent, etc. How to file late tax returns ) if all of the following statements are true. How to file late tax returns You are that person's son, daughter, stepchild, foster child, or a descendant of any of them. How to file late tax returns Or, you are that person's brother, sister, half brother, half sister, stepbrother, or stepsister (or a descendant of any of them). How to file late tax returns You were: Under age 19 at the end of the year and younger than that person (or that person's spouse, if the person files jointly), Under age 24 at the end of the year, a student, and younger than that person (or that person's spouse, if the person files jointly), or Permanently and totally disabled, regardless of age. How to file late tax returns You lived with that person in the United States for more than half of the year. How to file late tax returns You are not filing a joint return for the year (or are filing a joint return only to claim a refund of withheld income tax or estimated tax paid). How to file late tax returns For more details about the tests to be a qualifying child, see Rule 8 . How to file late tax returns If you are a qualifying child of another taxpayer, you cannot claim the EIC. How to file late tax returns This is true even if the person for whom you are a qualifying child does not claim the EIC or meet all of the rules to claim the EIC. How to file late tax returns Put “No” beside line 64a (Form 1040) or line 38a (Form 1040A). How to file late tax returns Example. How to file late tax returns You and your daughter lived with your mother all year. How to file late tax returns You are 22 years old, unmarried, and attended a trade school full time. How to file late tax returns You had a part-time job and earned $5,700. How to file late tax returns You had no other income. How to file late tax returns Because you meet the relationship, age, residency, and joint return tests, you are a qualifying child of your mother. How to file late tax returns She can claim the EIC if she meets all the other requirements. How to file late tax returns Because you are your mother's qualifying child, you cannot claim the EIC. How to file late tax returns This is so even if your mother cannot or does not claim the EIC. How to file late tax returns Child of person not required to file a return. How to file late tax returns   You are not the qualifying child of another taxpayer (and so may qualify to claim the EIC) if the person for whom you meet the relationship, age, residency, and joint return tests is not required to file an income tax return and either: Does not file an income tax return, or Files a return only to get a refund of income tax withheld or estimated tax paid. How to file late tax returns Example. How to file late tax returns The facts are the same as in the last example except your mother had no gross income, is not required to file a 2013 tax return, and does not file a 2013 tax return. How to file late tax returns As a result, you are not your mother's qualifying child. How to file late tax returns You can claim the EIC if you meet all the other requirements to do so. How to file late tax returns   See Rule 10 in Publication 596 for additional examples. How to file late tax returns Part C. How to file late tax returns Rules If You Do Not Have a Qualifying Child Read this part if you: Do not have a qualifying child, and Have met all the rules in Part A . How to file late tax returns  Part C discusses Rules 11 through 14. How to file late tax returns You must meet all four of these rules, in addition to the rules in Parts A and D , to qualify for the earned income credit without a qualifying child. How to file late tax returns If you have a qualifying child, the rules in this part do not apply to you. How to file late tax returns You can claim the credit only if you meet all the rules in Parts A, B, and D. How to file late tax returns See Rule 8 to find out if you have a qualifying child. How to file late tax returns Rule 11. How to file late tax returns You Must Be at Least Age 25 but Under Age 65 You must be at least age 25 but under age 65 at the end of 2013. How to file late tax returns If you are married filing a joint return, either you or your spouse must be at least age 25 but under age 65 at the end of 2013. How to file late tax returns It does not matter which spouse meets the age test, as long as one of the spouses does. How to file late tax returns You meet the age test if you were born after December 31, 1948, and before January 2, 1989. How to file late tax returns If you are married filing a joint return, you meet the age test if either you or your spouse was born after December 31, 1948, and before January 2, 1989. How to file late tax returns If neither you nor your spouse meets the age test, you cannot claim the EIC. How to file late tax returns Put “No” next to line 64a (Form 1040), line 38a (Form 1040A), or line 8a (Form 1040EZ). How to file late tax returns Death of spouse. How to file late tax returns   If you are filing a joint return with your spouse who died in 2013, you meet the age test if your spouse was at least age 25 but under age 65 at the time of death. How to file late tax returns Example 1. How to file late tax returns You are age 28 and unmarried. How to file late tax returns You meet the age test. How to file late tax returns Example 2—spouse meets age test. How to file late tax returns You are married and filing a joint return. How to file late tax returns You are age 23 and your spouse is age 27. How to file late tax returns You meet the age test because your spouse is at least age 25 but under age 65. How to file late tax returns Example 3—spouse dies in 2013. How to file late tax returns You are married and filing a joint return with your spouse who died in August 2013. How to file late tax returns You are age 67. How to file late tax returns Your spouse would have become age 65 in November 2013. How to file late tax returns Because your spouse was under age 65 when she died, you meet the age test. How to file late tax returns Rule 12. How to file late tax returns You Cannot Be the Dependent of Another Person If you are not filing a joint return, you meet this rule if: You checked box 6a on Form 1040 or 1040A, or You did not check the “You” box on line 5 of Form 1040EZ, and you entered $10,000 on that line. How to file late tax returns If you are filing a joint return, you meet this rule if: You checked both box 6a and box 6b on Form 1040 or 1040A, or You and your spouse did not check either the “You” box or the “Spouse” box on line 5 of Form 1040EZ, and you entered $20,000 on that line. How to file late tax returns If you are not sure whether someone else can claim you (or your spouse, if filing a joint return) as a dependent, read the rules for claiming a dependent in chapter 3. How to file late tax returns If someone else can claim you (or your spouse, if filing a joint return) as a dependent on his or her return, but does not, you still cannot claim the credit. How to file late tax returns Example 1. How to file late tax returns In 2013, you were age 25, single, and living at home with your parents. How to file late tax returns You worked and were not a student. How to file late tax returns You earned $7,500. How to file late tax returns Your parents cannot claim you as a dependent. How to file late tax returns When you file your return, you claim an exemption for yourself by not checking the “You” box on line 5 of your Form 1040EZ and by entering $10,000 on that line. How to file late tax returns You meet this rule. How to file late tax returns You can claim the EIC if you meet all the other requirements. How to file late tax returns Example 2. How to file late tax returns The facts are the same as in Example 1 , except that you earned $2,000. How to file late tax returns Your parents can claim you as a dependent but decide not to. How to file late tax returns You do not meet this rule. How to file late tax returns You cannot claim the credit because your parents could have claimed you as a dependent. How to file late tax returns Joint returns. How to file late tax returns   You generally cannot be claimed as a dependent by another person if you are married and file a joint return. How to file late tax returns   However, another person may be able to claim you as a dependent if you and your spouse file a joint return only to get a refund of income tax withheld or estimated tax paid. How to file late tax returns But neither you nor your spouse can be claimed as a dependent by another person if you claim the EIC on your joint return. How to file late tax returns Example 1. How to file late tax returns You are 26 years old. How to file late tax returns You and your wife live with your parents and had $800 of wages from part-time jobs and no other income. How to file late tax returns Neither you nor your wife is required to file a tax return. How to file late tax returns You do not have a child. How to file late tax returns Taxes were taken out of your pay, so you file a joint return only to get a refund of the withheld taxes. How to file late tax returns Your parents are not disqualified from claiming an exemption for you just because you filed a joint return. How to file late tax returns They can claim exemptions for you and your wife if all the other tests to do so are met. How to file late tax returns Example 2. How to file late tax returns The facts are the same as in Example 1 except no taxes were taken out of your pay. How to file late tax returns Also, you and your wife are not required to file a tax return, but you file a joint return to claim an EIC of $63 and get a refund of that amount. How to file late tax returns Because claiming the EIC is your reason for filing the return, you are not filing it only to get a refund of income tax withheld or estimated tax paid. How to file late tax returns Your parents cannot claim an exemption for either you or your wife. How to file late tax returns Rule 13. How to file late tax returns You Cannot Be a Qualifying Child of Another Taxpayer You are a qualifying child of another taxpayer (your parent, guardian, foster parent, etc. How to file late tax returns ) if all of the following statements are true. How to file late tax returns You are that person's son, daughter, stepchild, foster child, or a descendant of any of them. How to file late tax returns Or, you are that person's brother, sister, half brother, half sister, stepbrother, or stepsister (or a descendant of any of them). How to file late tax returns You were: Under age 19 at the end of the year and younger than that person (or that person's spouse, if the person files jointly), Under age 24 at the end of the year, a student (as defined in Rule 8 ), and younger than that person (or that person's spouse, if the person files jointly), or Permanently and totally disabled, regardless of age. How to file late tax returns You lived with that person in the United States for more than half of the year. How to file late tax returns You are not filing a joint return for the year (or are filing a joint return only to claim a refund of withheld income tax or estimated tax paid). How to file late tax returns For more details about the tests to be a qualifying child, see Rule 8 . How to file late tax returns If you are a qualifying child of another taxpayer, you cannot claim the EIC. How to file late tax returns This is true even if the person for whom you are a qualifying child does not claim the EIC or meet all of the rules to claim the EIC. How to file late tax returns Put “No” next to line 64a (Form 1040), line 38a (Form 1040A), or line 8a (Form 1040EZ). How to file late tax returns Example. How to file late tax returns You lived with your mother all year. How to file late tax returns You are age 26, unmarried, and permanently and totally disabled. How to file late tax returns Your only income was from a community center where you went three days a week to answer telephones. How to file late tax returns You earned $5,000 for the year and provided more than half of your own support. How to file late tax returns Because you meet the relationship, age, residency, and joint return tests, you are a qualifying child of your mother for the EIC. How to file late tax returns She can claim the EIC if she meets all the other requirements. How to file late tax returns Because you are a qualifying child of your mother, you cannot claim the EIC. How to file late tax returns This is so even if your mother cannot or does not claim the EIC. How to file late tax returns Joint returns. How to file late tax returns   You generally cannot be a qualifying child of another taxpayer if you are married and file a joint return. How to file late tax returns   However, you may be a qualifying child of another taxpayer if you and your spouse file a joint return for the year only to get a refund of income tax withheld or estimated tax paid. How to file late tax returns But neither you nor your spouse can be a qualifying child of another taxpayer if you claim the EIC on your joint return. How to file late tax returns Child of person not required to file a return. How to file late tax returns   You are not the qualifying child of another taxpayer (and so may qualify to claim the EIC) if the person for whom you meet the relationship, age, residency, and joint return tests is not required to file an income tax return and either: Does not file an income tax return, or Files a return only to get a refund of income tax withheld or estimated tax paid. How to file late tax returns Example. How to file late tax returns You lived all year with your father. How to file late tax returns You are 27 years old, unmarried, permanently and totally disabled, and earned $13,000. How to file late tax returns You have no other income, no children, and provided more than half of your own support. How to file late tax returns Your father had no gross income, is not required to file a 2013 tax return, and does not file a 2013 tax return. How to file late tax returns As a result, you are not your father's qualifying child. How to file late tax returns You can claim the EIC if you meet all the other requirements to do so. How to file late tax returns   See Rule 13 in Publication 596 for additional examples. How to file late tax returns Rule 14. How to file late tax returns You Must Have Lived in the United States More Than Half of the Year Your home (and your spouse's, if filing a joint return) must have been in the United States for more than half the year. How to file late tax returns If it was not, put “No” next to line 64a (Form 1040), line 38a (Form 1040A), or line 8a (Form 1040EZ). How to file late tax returns United States. How to file late tax returns   This means the 50 states and the District of Columbia. How to file late tax returns It does not include Puerto Rico or U. How to file late tax returns S. How to file late tax returns possessions such as Guam. How to file late tax returns Homeless shelter. How to file late tax returns   Your home can be any location where you regularly live. How to file late tax returns You do not need a traditional home. How to file late tax returns If you lived in one or more homeless shelters in the United States for more than half the year, you meet this rule. How to file late tax returns Military personnel stationed outside the United States. How to file late tax returns   U. How to file late tax returns S. How to file late tax returns military personnel stationed outside the United States on extended active duty (defined in Rule 8 ) are considered to live in the United States during that duty period for purposes of the EIC. How to file late tax returns Part D. How to file late tax returns Figuring and Claiming the EIC Read this part if you have met all the rules in Parts A and B, or all the rules in Parts A and C. How to file late tax returns Part D discusses Rule 15 . How to file late tax returns You must meet this rule, in addition to the rules in Parts A and B , or Parts A and C , to qualify for the earned income credit. How to file late tax returns This part of the chapter also explains how to figure the amount of your credit. How to file late tax returns You have two choices. How to file late tax returns Have the IRS figure the EIC for you. How to file late tax returns If you want to do this, see IRS Will Figure the EIC for You . How to file late tax returns Figure the EIC yourself. How to file late tax returns If you want to do this, see How To Figure the EIC Yourself . How to file late tax returns Rule 15. How to file late tax returns Your Earned Income Must Be Less Than: $46,227 ($51,567 for married filing jointly) if you have three or more qualifying children, $43,038 ($48,378 for married filing jointly) if you have two qualifying children, $37,870 ($43,210 for married filing jointly) if you have one qualifying child, or $14,340 ($19,680 for married filing jointly) if you do not have a qualifying child. How to file late tax returns Earned income generally means wages, salaries, tips, other taxable employee pay, and net earnings from self-employment. How to file late tax returns Employee pay is earned income only if it is taxable. How to file late tax returns Nontaxable employee pay, such as certain dependent care benefits and adoption benefits, is not earned income. How to file late tax returns But there is an exception for nontaxable combat pay, which you can choose to include in earned income. How to file late tax returns Earned income is explained in detail in Rule 7 . How to file late tax returns Figuring earned income. How to file late tax returns   If you are self-employed, a statutory employee, or a member of the clergy or a church employee who files Schedule SE (Form 1040), you will figure your earned income when you fill out Part 4 of EIC Worksheet B in the Form 1040 instructions. How to file late tax returns   Otherwise, figure your earned income by using the worksheet in Step 5 of the Form 1040 instructions for lines 64a and 64b or the Form 1040A instructions for lines 38a and 38b, or the worksheet in Step 2 of the Form 1040EZ instructions for lines 8a and 8b. How to file late tax returns   When using one of those worksheets to figure your earned income, you will start with the amount on line 7 (Form 1040 or Form 1040A) or line 1 (Form 1040EZ). How to file late tax returns You will then reduce that amount by any amount included on that line and described in the following list: Scholarship or fellowship grants not reported on a Form W-2, Inmate's income, and Pension or annuity from deferred compensation plans. How to file late tax returns Scholarship or fellowship grants not reported on a Form W-2. How to file late tax returns   A scholarship or fellowship grant that was not reported to you on a Form W-2 is not considered earned income for the earned income credit. How to file late tax returns Inmate's income. How to file late tax returns   Amounts received for work performed while an inmate in a penal institution are not earned income for the earned income credit. How to file late tax returns This includes amounts received for work performed while in a work release program or while in a halfway house. How to file late tax returns If you received any amount for work done while an inmate in a penal institution and that amount is included in the total on line 7 (Form 1040 or Form 1040A) or line 1 (Form 1040EZ), put “PRI” and the amount on the dotted line next to line 7 (Form 1040), in the space to the left of the entry space for line 7 (Form 1040A), or in the space to the left of line 1 (Form 1040EZ). How to file late tax returns Pension or annuity from deferred compensation plans. How to file late tax returns   A pension or annuity from a nonqualified deferred compensation plan or a nongovernmental section 457 plan is not considered earned income for the earned income credit. How to file late tax returns If you received such an amount and it was included in the total on line 7 (Form 1040 or Form 1040A) or line 1 (Form 1040EZ), put “DFC” and the amount on the dotted line next to line 7 (Form 1040), in the space to the left of the entry space for line 7 (Form 1040A), or in the space to the left of line 1 (Form 1040EZ). How to file late tax returns This amount may be reported in box 11 of your Form W-2. How to file late tax returns If you received such an amount but box 11 is blank, contact your employer for the amount received as a pension or annuity. How to file late tax returns Clergy. How to file late tax returns   If you are a member of the clergy who files Schedule SE and the amount on line 2 of that schedule includes an amount that was also reported on line 7 (Form 1040), subtract that amount from the amount on line 7 (Form 1040) and enter the result in the first space of the worksheet in Step 5 of the Form 1040 instructions for lines 64a and 64b. How to file late tax returns Put “Clergy” on the dotted line next to line 64a (Form 1040). How to file late tax returns Church employees. How to file late tax returns    A church employee means an employee (other than a minister or member of a religious order) of a church or qualified church-controlled organization that is exempt from employer social security and Medicare taxes. How to file late tax returns If you received wages as a
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Understanding Your CP211C Notice

We denied your request to extend the time to file your Exempt Organization Return because your Form 8868, Application for Extension of Time To File an Exempt Organization Return, wasn't received on time. A request for an extension of the time to file your Exempt Organization Return must be received on or before the due date of your return.


What you need to do

  • File your required Exempt Organization Return immediately to limit any late filing penalties. If your Exempt Organization Return is filed after the due date of the return (including any extensions), the return is considered late and subject to late filing penalties.
  • We encourage you to use electronic filing – the fastest and easiest way to file.

You may want to

  • Visit www.irs.gov/Charities-&-Non-Profits to learn about approved e-File providers, what types of returns can be filed electronically, and whether you are required to file electronically.

Answers to Common Questions

Q. Where can I go for more information about tax-exempt organizations?

A. For more information on Employee Benefit Plans, see Tax Information for Charities & Other Non-Profits.

Q. Can I get help over the phone?

A. If you have questions and/or need help, you can call 1-877-829-5500. Personal assistance is available Monday through Friday, 7:00 a.m. to 7:00 p.m. CT.


Tips for next year

Be sure to mail your Form 8868 on or before the due date of your return.

Page Last Reviewed or Updated: 24-Jan-2014

Printable samples of this notice (PDF)

 

 

How to get help

  • Call the 1-800 number listed on the top right corner of your notice.
  • Authorize someone (e.g., accountant) to contact the IRS on your behalf using Form 2848.
  • See if you qualify for help from a Low Income Taxpayer Clinic.
     

The How To File Late Tax Returns

How to file late tax returns Publication 15-B - Main Content Table of Contents 1. How to file late tax returns Fringe Benefit OverviewAre Fringe Benefits Taxable? Cafeteria Plans Simple Cafeteria Plans 2. How to file late tax returns Fringe Benefit Exclusion RulesAccident and Health Benefits Achievement Awards Adoption Assistance Athletic Facilities De Minimis (Minimal) Benefits Dependent Care Assistance Educational Assistance Employee Discounts Employee Stock Options Employer-Provided Cell Phones Group-Term Life Insurance Coverage Health Savings Accounts Lodging on Your Business Premises Meals Moving Expense Reimbursements No-Additional-Cost Services Retirement Planning Services Transportation (Commuting) Benefits Tuition Reduction Working Condition Benefits 3. How to file late tax returns Fringe Benefit Valuation RulesGeneral Valuation Rule Cents-Per-Mile Rule Commuting Rule Lease Value Rule Unsafe Conditions Commuting Rule 4. How to file late tax returns Rules for Withholding, Depositing, and ReportingTransfer of property. How to file late tax returns Amount of deposit. How to file late tax returns Limitation. How to file late tax returns Conformity rules. How to file late tax returns Election not to withhold income tax. How to file late tax returns How To Get Tax Help 1. How to file late tax returns Fringe Benefit Overview A fringe benefit is a form of pay for the performance of services. How to file late tax returns For example, you provide an employee with a fringe benefit when you allow the employee to use a business vehicle to commute to and from work. How to file late tax returns Performance of services. How to file late tax returns   A person who performs services for you does not have to be your employee. How to file late tax returns A person may perform services for you as an independent contractor, partner, or director. How to file late tax returns Also, for fringe benefit purposes, treat a person who agrees not to perform services (such as under a covenant not to compete) as performing services. How to file late tax returns Provider of benefit. How to file late tax returns   You are the provider of a fringe benefit if it is provided for services performed for you. How to file late tax returns You are considered the provider of a fringe benefit even if a third party, such as your client or customer, provides the benefit to your employee for services the employee performs for you. How to file late tax returns For example, if, in exchange for goods or services, your customer provides day care services as a fringe benefit to your employees for services they provide for you as their employer, then you are the provider of this fringe benefit even though the customer is actually providing the day care. How to file late tax returns Recipient of benefit. How to file late tax returns   The person who performs services for you is considered the recipient of a fringe benefit provided for those services. How to file late tax returns That person may be considered the recipient even if the benefit is provided to someone who did not perform services for you. How to file late tax returns For example, your employee may be the recipient of a fringe benefit you provide to a member of the employee's family. How to file late tax returns Are Fringe Benefits Taxable? Any fringe benefit you provide is taxable and must be included in the recipient's pay unless the law specifically excludes it. How to file late tax returns Section 2 discusses the exclusions that apply to certain fringe benefits. How to file late tax returns Any benefit not excluded under the rules discussed in section 2 is taxable. How to file late tax returns Including taxable benefits in pay. How to file late tax returns   You must include in a recipient's pay the amount by which the value of a fringe benefit is more than the sum of the following amounts. How to file late tax returns Any amount the law excludes from pay. How to file late tax returns Any amount the recipient paid for the benefit. How to file late tax returns The rules used to determine the value of a fringe benefit are discussed in section 3. How to file late tax returns   If the recipient of a taxable fringe benefit is your employee, the benefit is subject to employment taxes and must be reported on Form W-2, Wage and Tax Statement. How to file late tax returns However, you can use special rules to withhold, deposit, and report the employment taxes. How to file late tax returns These rules are discussed in section 4. How to file late tax returns   If the recipient of a taxable fringe benefit is not your employee, the benefit is not subject to employment taxes. How to file late tax returns However, you may have to report the benefit on one of the following information returns. How to file late tax returns If the recipient receives the benefit as: Use: An independent contractor Form 1099-MISC, Miscellaneous Income A partner Schedule K-1 (Form 1065), Partner's Share of Income, Deductions, Credits, etc. How to file late tax returns For more information, see the instructions for the forms listed above. How to file late tax returns Cafeteria Plans A cafeteria plan, including a flexible spending arrangement, is a written plan that allows your employees to choose between receiving cash or taxable benefits instead of certain qualified benefits for which the law provides an exclusion from wages. How to file late tax returns If an employee chooses to receive a qualified benefit under the plan, the fact that the employee could have received cash or a taxable benefit instead will not make the qualified benefit taxable. How to file late tax returns Generally, a cafeteria plan does not include any plan that offers a benefit that defers pay. How to file late tax returns However, a cafeteria plan can include a qualified 401(k) plan as a benefit. How to file late tax returns Also, certain life insurance plans maintained by educational institutions can be offered as a benefit even though they defer pay. How to file late tax returns Qualified benefits. How to file late tax returns   A cafeteria plan can include the following benefits discussed in section 2. How to file late tax returns Accident and health benefits (but not Archer medical savings accounts (Archer MSAs) or long-term care insurance). How to file late tax returns Adoption assistance. How to file late tax returns Dependent care assistance. How to file late tax returns Group-term life insurance coverage (including costs that cannot be excluded from wages). How to file late tax returns Health savings accounts (HSAs). How to file late tax returns Distributions from an HSA may be used to pay eligible long-term care insurance premiums or qualified long-term care services. How to file late tax returns Benefits not allowed. How to file late tax returns   A cafeteria plan cannot include the following benefits discussed in section 2. How to file late tax returns Archer MSAs. How to file late tax returns See Accident and Health Benefits in section 2. How to file late tax returns Athletic facilities. How to file late tax returns De minimis (minimal) benefits. How to file late tax returns Educational assistance. How to file late tax returns Employee discounts. How to file late tax returns Employer-provided cell phones. How to file late tax returns Lodging on your business premises. How to file late tax returns Meals. How to file late tax returns Moving expense reimbursements. How to file late tax returns No-additional-cost services. How to file late tax returns Transportation (commuting) benefits. How to file late tax returns Tuition reduction. How to file late tax returns Working condition benefits. How to file late tax returns It also cannot include scholarships or fellowships (discussed in Publication 970, Tax Benefits for Education). How to file late tax returns $2,500 limit on a health flexible spending arrangement (FSA). How to file late tax returns   For plan years beginning after December 31, 2012, a cafeteria plan may not allow an employee to request salary reduction contributions for a health FSA in excess of $2,500. How to file late tax returns For plan years beginning after December 31, 2013, the limit is unchanged at $2,500. How to file late tax returns   A cafeteria plan offering a health FSA must be amended to specify the $2,500 limit (or any lower limit set by the employer). How to file late tax returns While cafeteria plans generally must be amended on a prospective basis, an amendment that is adopted on or before December 31, 2014, may be made effective retroactively, provided that in operation the cafeteria plan meets the limit for plan years beginning after December 31, 2012. How to file late tax returns A cafeteria plan that does not limit health FSA contributions to the dollar limit is not a cafeteria plan and all benefits offered under the plan are includible in the employee's gross income. How to file late tax returns   For more information, see Notice 2012-40, 2012-26 I. How to file late tax returns R. How to file late tax returns B. How to file late tax returns 1046, available at www. How to file late tax returns irs. How to file late tax returns gov/irb/2012-26_IRB/ar09. How to file late tax returns html. How to file late tax returns Employee. How to file late tax returns   For these plans, treat the following individuals as employees. How to file late tax returns A current common-law employee. How to file late tax returns See section 2 in Publication 15 (Circular E) for more information. How to file late tax returns A full-time life insurance agent who is a current statutory employee. How to file late tax returns A leased employee who has provided services to you on a substantially full-time basis for at least a year if the services are performed under your primary direction or control. How to file late tax returns Exception for S corporation shareholders. How to file late tax returns   Do not treat a 2% shareholder of an S corporation as an employee of the corporation for this purpose. How to file late tax returns A 2% shareholder for this purpose is someone who directly or indirectly owns (at any time during the year) more than 2% of the corporation's stock or stock with more than 2% of the voting power. How to file late tax returns Treat a 2% shareholder as you would a partner in a partnership for fringe benefit purposes, but do not treat the benefit as a reduction in distributions to the 2% shareholder. How to file late tax returns Plans that favor highly compensated employees. How to file late tax returns   If your plan favors highly compensated employees as to eligibility to participate, contributions, or benefits, you must include in their wages the value of taxable benefits they could have selected. How to file late tax returns A plan you maintain under a collective bargaining agreement does not favor highly compensated employees. How to file late tax returns   A highly compensated employee for this purpose is any of the following employees. How to file late tax returns An officer. How to file late tax returns A shareholder who owns more than 5% of the voting power or value of all classes of the employer's stock. How to file late tax returns An employee who is highly compensated based on the facts and circumstances. How to file late tax returns A spouse or dependent of a person described in (1), (2), or (3). How to file late tax returns Plans that favor key employees. How to file late tax returns   If your plan favors key employees, you must include in their wages the value of taxable benefits they could have selected. How to file late tax returns A plan favors key employees if more than 25% of the total of the nontaxable benefits you provide for all employees under the plan go to key employees. How to file late tax returns However, a plan you maintain under a collective bargaining agreement does not favor key employees. How to file late tax returns   A key employee during 2014 is generally an employee who is either of the following. How to file late tax returns An officer having annual pay of more than $170,000. How to file late tax returns An employee who for 2014 is either of the following. How to file late tax returns A 5% owner of your business. How to file late tax returns A 1% owner of your business whose annual pay was more than $150,000. How to file late tax returns Simple Cafeteria Plans Eligible employers meeting contribution requirements and eligibility and participation requirements can establish a simple cafeteria plan. How to file late tax returns Simple cafeteria plans are treated as meeting the nondiscrimination requirements of a cafeteria plan and certain benefits under a cafeteria plan. How to file late tax returns Eligible employer. How to file late tax returns   You are an eligible employer if you employ an average of 100 or fewer employees during either of the 2 preceding years. How to file late tax returns If your business was not in existence throughout the preceding year, you are eligible if you reasonably expect to employ an average of 100 or fewer employees in the current year. How to file late tax returns If you establish a simple cafeteria plan in a year that you employ an average of 100 or fewer employees, you are considered an eligible employer for any subsequent year as long as you do not employ an average of 200 or more employees in a subsequent year. How to file late tax returns Eligibility and participation requirements. How to file late tax returns   These requirements are met if all employees who had at least 1,000 hours of service for the preceding plan year are eligible to participate and each employee eligible to participate in the plan may elect any benefit available under the plan. How to file late tax returns You may elect to exclude from the plan employees who: Are under age 21 before the close of the plan year, Have less than 1 year of service with you as of any day during the plan year, Are covered under a collective bargaining agreement, or Are nonresident aliens working outside the United States whose income did not come from a U. How to file late tax returns S. How to file late tax returns source. How to file late tax returns Contribution requirements. How to file late tax returns   You must make a contribution to provide qualified benefits on behalf of each qualified employee in an amount equal to: A uniform percentage (not less than 2%) of the employee’s compensation for the plan year, or An amount which is at least 6% of the employee’s compensation for the plan year or twice the amount of the salary reduction contributions of each qualified employee, whichever is less. How to file late tax returns If the contribution requirements are met using option (2), the rate of contribution to any salary reduction contribution of a highly compensated or key employee can not be greater than the rate of contribution to any other employee. How to file late tax returns More information. How to file late tax returns   For more information about cafeteria plans, see section 125 of the Internal Revenue Code and its regulations. How to file late tax returns 2. How to file late tax returns Fringe Benefit Exclusion Rules This section discusses the exclusion rules that apply to fringe benefits. How to file late tax returns These rules exclude all or part of the value of certain benefits from the recipient's pay. How to file late tax returns The excluded benefits are not subject to federal income tax withholding. How to file late tax returns Also, in most cases, they are not subject to social security, Medicare, or federal unemployment (FUTA) tax and are not reported on Form W-2. How to file late tax returns This section discusses the exclusion rules for the following fringe benefits. How to file late tax returns Accident and health benefits. How to file late tax returns Achievement awards. How to file late tax returns Adoption assistance. How to file late tax returns Athletic facilities. How to file late tax returns De minimis (minimal) benefits. How to file late tax returns Dependent care assistance. How to file late tax returns Educational assistance. How to file late tax returns Employee discounts. How to file late tax returns Employee stock options. How to file late tax returns Employer-provided cell phones. How to file late tax returns Group-term life insurance coverage. How to file late tax returns Health savings accounts (HSAs). How to file late tax returns Lodging on your business premises. How to file late tax returns Meals. How to file late tax returns Moving expense reimbursements. How to file late tax returns No-additional-cost services. How to file late tax returns Retirement planning services. How to file late tax returns Transportation (commuting) benefits. How to file late tax returns Tuition reduction. How to file late tax returns Working condition benefits. How to file late tax returns See Table 2-1, later, for an overview of the employment tax treatment of these benefits. How to file late tax returns Table 2-1. How to file late tax returns Special Rules for Various Types of Fringe Benefits (For more information, see the full discussion in this section. How to file late tax returns ) Treatment Under Employment Taxes Type of Fringe Benefit Income Tax Withholding Social Security and Medicare (including Additional Medicare Tax when wages are paid in excess of $200,000) Federal Unemployment (FUTA) Accident and health benefits Exempt1,2, except for long-term care benefits provided through a flexible spending or similar arrangement. How to file late tax returns Exempt, except for certain payments to S corporation employees who are 2% shareholders. How to file late tax returns Exempt Achievement awards Exempt1 up to $1,600 for qualified plan awards ($400 for nonqualified awards). How to file late tax returns Adoption assistance Exempt1,3 Taxable Taxable Athletic facilities Exempt if substantially all use during the calendar year is by employees, their spouses, and their dependent children and the facility is operated by the employer on premises owned or leased by the employer. How to file late tax returns De minimis (minimal) benefits Exempt Exempt Exempt Dependent care assistance Exempt3 up to certain limits, $5,000 ($2,500 for married employee filing separate return). How to file late tax returns Educational assistance Exempt up to $5,250 of benefits each year. How to file late tax returns (See Educational Assistance , later in this section. How to file late tax returns ) Employee discounts Exempt3 up to certain limits. How to file late tax returns (See Employee Discounts , later in this section. How to file late tax returns ) Employee stock options See Employee Stock Options , later in this section. How to file late tax returns Employer-provided cell phones Exempt if provided primarily for noncompensatory business purposes. How to file late tax returns Group-term life insurance coverage Exempt Exempt1,4, 7 up to cost of $50,000 of coverage. How to file late tax returns (Special rules apply to former employees. How to file late tax returns ) Exempt Health savings accounts (HSAs) Exempt for qualified individuals up to the HSA contribution limits. How to file late tax returns (See Health Savings Accounts , later in this section. How to file late tax returns ) Lodging on your business premises Exempt1 if furnished for your convenience as a condition of employment. How to file late tax returns Meals Exempt if furnished on your business premises for your convenience. How to file late tax returns Exempt if de minimis. How to file late tax returns Moving expense reimbursements Exempt1 if expenses would be deductible if the employee had paid them. How to file late tax returns No-additional-cost services Exempt3 Exempt3 Exempt3 Retirement planning services Exempt5 Exempt5 Exempt5 Transportation (commuting) benefits Exempt1 up to certain limits if for rides in a commuter highway vehicle and/or transit passes ($130), qualified parking ($250), or qualified bicycle commuting reimbursement6 ($20). How to file late tax returns (See Transportation (Commuting) Benefits , later in this section. How to file late tax returns ) Exempt if de minimis. How to file late tax returns Tuition reduction Exempt3 if for undergraduate education (or graduate education if the employee performs teaching or research activities). How to file late tax returns Working condition benefits Exempt Exempt Exempt 1 Exemption does not apply to S corporation employees who are 2% shareholders. How to file late tax returns 2 Exemption does not apply to certain highly compensated employees under a self-insured plan that favors those employees. How to file late tax returns 3 Exemption does not apply to certain highly compensated employees under a program that favors those employees. How to file late tax returns 4 Exemption does not apply to certain key employees under a plan that favors those employees. How to file late tax returns 5 Exemption does not apply to services for tax preparation, accounting, legal, or brokerage services. How to file late tax returns 6 If the employee receives a qualified bicycle commuting reimbursement in a qualified bicycle commuting month, the employee cannot receive commuter highway vehicle, transit pass, or qualified parking benefits in that same month. How to file late tax returns 7 You must include in your employee's wages the cost of group-term life insurance beyond $50,000 worth of coverage, reduced by the amount the employee paid toward the insurance. How to file late tax returns Report it as wages in boxes 1, 3, and 5 of the employee's Form W-2. How to file late tax returns Also, show it in box 12 with code “C. How to file late tax returns ” The amount is subject to social security and Medicare taxes, and you may, at your option, withhold federal income tax. How to file late tax returns Accident and Health Benefits This exclusion applies to contributions you make to an accident or health plan for an employee, including the following. How to file late tax returns Contributions to the cost of accident or health insurance including qualified long-term care insurance. How to file late tax returns Contributions to a separate trust or fund that directly or through insurance provides accident or health benefits. How to file late tax returns Contributions to Archer MSAs or health savings accounts (discussed in Publication 969, Health Savings Accounts and Other Tax-Favored Health Plans). How to file late tax returns This exclusion also applies to payments you directly or indirectly make to an employee under an accident or health plan for employees that are either of the following. How to file late tax returns Payments or reimbursements of medical expenses. How to file late tax returns Payments for specific injuries or illnesses (such as the loss of the use of an arm or leg). How to file late tax returns The payments must be figured without regard to any period of absence from work. How to file late tax returns Accident or health plan. How to file late tax returns   This is an arrangement that provides benefits for your employees, their spouses, their dependents, and their children (under age 27) in the event of personal injury or sickness. How to file late tax returns The plan may be insured or noninsured and does not need to be in writing. How to file late tax returns Employee. How to file late tax returns   For this exclusion, treat the following individuals as employees. How to file late tax returns A current common-law employee. How to file late tax returns A full-time life insurance agent who is a current statutory employee. How to file late tax returns A retired employee. How to file late tax returns A former employee you maintain coverage for based on the employment relationship. How to file late tax returns A widow or widower of an individual who died while an employee. How to file late tax returns A widow or widower of a retired employee. How to file late tax returns For the exclusion of contributions to an accident or health plan, a leased employee who has provided services to you on a substantially full-time basis for at least a year if the services are performed under your primary direction or control. How to file late tax returns Special rule for certain government plans. How to file late tax returns   For certain government accident and health plans, payments to a deceased plan participant's beneficiary may qualify for the exclusion from gross income if the other requirements for exclusion are met. How to file late tax returns See section 105(j) for details. How to file late tax returns Exception for S corporation shareholders. How to file late tax returns   Do not treat a 2% shareholder of an S corporation as an employee of the corporation for this purpose. How to file late tax returns A 2% shareholder is someone who directly or indirectly owns (at any time during the year) more than 2% of the corporation's stock or stock with more than 2% of the voting power. How to file late tax returns Treat a 2% shareholder as you would a partner in a partnership for fringe benefit purposes, but do not treat the benefit as a reduction in distributions to the 2% shareholder. How to file late tax returns Exclusion from wages. How to file late tax returns   You can generally exclude the value of accident or health benefits you provide to an employee from the employee's wages. How to file late tax returns Exception for certain long-term care benefits. How to file late tax returns   You cannot exclude contributions to the cost of long-term care insurance from an employee's wages subject to federal income tax withholding if the coverage is provided through a flexible spending or similar arrangement. How to file late tax returns This is a benefit program that reimburses specified expenses up to a maximum amount that is reasonably available to the employee and is less than five times the total cost of the insurance. How to file late tax returns However, you can exclude these contributions from the employee's wages subject to social security, Medicare, and federal unemployment (FUTA) taxes. How to file late tax returns S corporation shareholders. How to file late tax returns   Because you cannot treat a 2% shareholder of an S corporation as an employee for this exclusion, you must include the value of accident or health benefits you provide to the employee in the employee's wages subject to federal income tax withholding. How to file late tax returns However, you can exclude the value of these benefits (other than payments for specific injuries or illnesses) from the employee's wages subject to social security, Medicare, and FUTA taxes. How to file late tax returns Exception for highly compensated employees. How to file late tax returns   If your plan is a self-insured medical reimbursement plan that favors highly compensated employees, you must include all or part of the amounts you pay to these employees in their wages subject to federal income tax withholding. How to file late tax returns However, you can exclude these amounts (other than payments for specific injuries or illnesses) from the employee's wages subject to social security, Medicare, and FUTA taxes. How to file late tax returns   A self-insured plan is a plan that reimburses your employees for medical expenses not covered by an accident or health insurance policy. How to file late tax returns   A highly compensated employee for this exception is any of the following individuals. How to file late tax returns One of the five highest paid officers. How to file late tax returns An employee who owns (directly or indirectly) more than 10% in value of the employer's stock. How to file late tax returns An employee who is among the highest paid 25% of all employees (other than those who can be excluded from the plan). How to file late tax returns   For more information on this exception, see section 105(h) of the Internal Revenue Code and its regulations. How to file late tax returns COBRA premiums. How to file late tax returns   The exclusion for accident and health benefits applies to amounts you pay to maintain medical coverage for a current or former employee under the Combined Omnibus Budget Reconciliation Act of 1986 (COBRA). How to file late tax returns The exclusion applies regardless of the length of employment, whether you directly pay the premiums or reimburse the former employee for premiums paid, and whether the employee's separation is permanent or temporary. How to file late tax returns Achievement Awards This exclusion applies to the value of any tangible personal property you give to an employee as an award for either length of service or safety achievement. How to file late tax returns The exclusion does not apply to awards of cash, cash equivalents, gift certificates, or other intangible property such as vacations, meals, lodging, tickets to theater or sporting events, stocks, bonds, and other securities. How to file late tax returns The award must meet the requirements for employee achievement awards discussed in chapter 2 of Publication 535, Business Expenses. How to file late tax returns Employee. How to file late tax returns   For this exclusion, treat the following individuals as employees. How to file late tax returns A current employee. How to file late tax returns A former common-law employee you maintain coverage for in consideration of or based on an agreement relating to prior service as an employee. How to file late tax returns A leased employee who has provided services to you on a substantially full-time basis for at least a year if the services are performed under your primary direction or control. How to file late tax returns Exception for S corporation shareholders. How to file late tax returns   Do not treat a 2% shareholder of an S corporation as an employee of the corporation for this purpose. How to file late tax returns A 2% shareholder is someone who directly or indirectly owns (at any time during the year) more than 2% of the corporation's stock or stock with more than 2% of the voting power. How to file late tax returns Treat a 2% shareholder as you would a partner in a partnership for fringe benefit purposes, but do not treat the benefit as a reduction in distributions to the 2% shareholder. How to file late tax returns Exclusion from wages. How to file late tax returns   You can generally exclude the value of achievement awards you give to an employee from the employee's wages if their cost is not more than the amount you can deduct as a business expense for the year. How to file late tax returns The excludable annual amount is $1,600 ($400 for awards that are not “qualified plan awards”). How to file late tax returns See chapter 2 of Publication 535 for more information about the limit on deductions for employee achievement awards. How to file late tax returns    To determine for 2014 whether an achievement award is a “qualified plan award” under the deduction rules described in Publication 535, treat any employee who received more than $115,000 in pay for 2013 as a highly compensated employee. How to file late tax returns   If the cost of awards given to an employee is more than your allowable deduction, include in the employee's wages the larger of the following amounts. How to file late tax returns The part of the cost that is more than your allowable deduction (up to the value of the awards). How to file late tax returns The amount by which the value of the awards exceeds your allowable deduction. How to file late tax returns Exclude the remaining value of the awards from the employee's wages. How to file late tax returns Adoption Assistance An adoption assistance program is a separate written plan of an employer that meets all of the following requirements. How to file late tax returns It benefits employees who qualify under rules set up by you, which do not favor highly compensated employees or their dependents. How to file late tax returns To determine whether your plan meets this test, do not consider employees excluded from your plan who are covered by a collective bargaining agreement, if there is evidence that adoption assistance was a subject of good-faith bargaining. How to file late tax returns It does not pay more than 5% of its payments during the year for shareholders or owners (or their spouses or dependents). How to file late tax returns A shareholder or owner is someone who owns (on any day of the year) more than 5% of the stock or of the capital or profits interest of your business. How to file late tax returns You give reasonable notice of the plan to eligible employees. How to file late tax returns Employees provide reasonable substantiation that payments or reimbursements are for qualifying expenses. How to file late tax returns For this exclusion, a highly compensated employee for 2014 is an employee who meets either of the following tests. How to file late tax returns The employee was a 5% owner at any time during the year or the preceding year. How to file late tax returns The employee received more than $115,000 in pay for the preceding year. How to file late tax returns You can choose to ignore test (2) if the employee was not also in the top 20% of employees when ranked by pay for the preceding year. How to file late tax returns You must exclude all payments or reimbursements you make under an adoption assistance program for an employee's qualified adoption expenses from the employee's wages subject to federal income tax withholding. How to file late tax returns However, you cannot exclude these payments from wages subject to social security, Medicare, and federal unemployment (FUTA) taxes. How to file late tax returns For more information, see the Instructions for Form 8839, Qualified Adoption Expenses. How to file late tax returns You must report all qualifying adoption expenses you paid or reimbursed under your adoption assistance program for each employee for the year in box 12 of the employee's Form W-2. How to file late tax returns Use code “T” to identify this amount. How to file late tax returns Exception for S corporation shareholders. How to file late tax returns   For this exclusion, do not treat a 2% shareholder of an S corporation as an employee of the corporation. How to file late tax returns A 2% shareholder is someone who directly or indirectly owns (at any time during the year) more than 2% of the corporation's stock or stock with more than 2% of the voting power. How to file late tax returns Treat a 2% shareholder as you would a partner in a partnership for fringe benefit purposes, including using the benefit as a reduction in distributions to the 2% shareholder. How to file late tax returns Athletic Facilities You can exclude the value of an employee's use of an on-premises gym or other athletic facility you operate from an employee's wages if substantially all use of the facility during the calendar year is by your employees, their spouses, and their dependent children. How to file late tax returns For this purpose, an employee's dependent child is a child or stepchild who is the employee's dependent or who, if both parents are deceased, has not attained the age of 25. How to file late tax returns On-premises facility. How to file late tax returns   The athletic facility must be located on premises you own or lease. How to file late tax returns It does not have to be located on your business premises. How to file late tax returns However, the exclusion does not apply to an athletic facility for residential use, such as athletic facilities that are part of a resort. How to file late tax returns Employee. How to file late tax returns   For this exclusion, treat the following individuals as employees. How to file late tax returns A current employee. How to file late tax returns A former employee who retired or left on disability. How to file late tax returns A widow or widower of an individual who died while an employee. How to file late tax returns A widow or widower of a former employee who retired or left on disability. How to file late tax returns A leased employee who has provided services to you on a substantially full-time basis for at least a year if the services are performed under your primary direction or control. How to file late tax returns A partner who performs services for a partnership. How to file late tax returns De Minimis (Minimal) Benefits You can exclude the value of a de minimis benefit you provide to an employee from the employee's wages. How to file late tax returns A de minimis benefit is any property or service you provide to an employee that has so little value (taking into account how frequently you provide similar benefits to your employees) that accounting for it would be unreasonable or administratively impracticable. How to file late tax returns Cash and cash equivalent fringe benefits (for example, use of gift card, charge card, or credit card), no matter how little, are never excludable as a de minimis benefit, except for occasional meal money or transportation fare. How to file late tax returns Examples of de minimis benefits include the following. How to file late tax returns Personal use of an employer-provided cell phone provided primarily for noncompensatory business purposes. How to file late tax returns See Employer-Provided Cell Phones , later in this section, for details. How to file late tax returns Occasional personal use of a company copying machine if you sufficiently control its use so that at least 85% of its use is for business purposes. How to file late tax returns Holiday gifts, other than cash, with a low fair market value. How to file late tax returns Group-term life insurance payable on the death of an employee's spouse or dependent if the face amount is not more than $2,000. How to file late tax returns Meals. How to file late tax returns See Meals , later in this section, for details. How to file late tax returns Occasional parties or picnics for employees and their guests. How to file late tax returns Occasional tickets for theater or sporting events. How to file late tax returns Transportation fare. How to file late tax returns See Transportation (Commuting) Benefits , later in this section, for details. How to file late tax returns Employee. How to file late tax returns   For this exclusion, treat any recipient of a de minimis benefit as an employee. How to file late tax returns Dependent Care Assistance This exclusion applies to household and dependent care services you directly or indirectly pay for or provide to an employee under a dependent care assistance program that covers only your employees. How to file late tax returns The services must be for a qualifying person's care and must be provided to allow the employee to work. How to file late tax returns These requirements are basically the same as the tests the employee would have to meet to claim the dependent care credit if the employee paid for the services. How to file late tax returns For more information, see Qualifying Person Test and Work-Related Expense Test in Publication 503, Child and Dependent Care Expenses. How to file late tax returns Employee. How to file late tax returns   For this exclusion, treat the following individuals as employees. How to file late tax returns A current employee. How to file late tax returns A leased employee who has provided services to you on a substantially full-time basis for at least a year if the services are performed under your primary direction or control. How to file late tax returns Yourself (if you are a sole proprietor). How to file late tax returns A partner who performs services for a partnership. How to file late tax returns Exclusion from wages. How to file late tax returns   You can exclude the value of benefits you provide to an employee under a dependent care assistance program from the employee's wages if you reasonably believe that the employee can exclude the benefits from gross income. How to file late tax returns   An employee can generally exclude from gross income up to $5,000 of benefits received under a dependent care assistance program each year. How to file late tax returns This limit is reduced to $2,500 for married employees filing separate returns. How to file late tax returns   However, the exclusion cannot be more than the smaller of the earned income of either the employee or employee's spouse. How to file late tax returns Special rules apply to determine the earned income of a spouse who is either a student or not able to care for himself or herself. How to file late tax returns For more information on the earned income limit, see Publication 503. How to file late tax returns Exception for highly compensated employees. How to file late tax returns   You cannot exclude dependent care assistance from the wages of a highly compensated employee unless the benefits provided under the program do not favor highly compensated employees and the program meets the requirements described in section 129(d) of the Internal Revenue Code. How to file late tax returns   For this exclusion, a highly compensated employee for 2014 is an employee who meets either of the following tests. How to file late tax returns The employee was a 5% owner at any time during the year or the preceding year. How to file late tax returns The employee received more than $115,000 in pay for the preceding year. How to file late tax returns You can choose to ignore test (2) if the employee was not also in the top 20% of employees when ranked by pay for the preceding year. How to file late tax returns Form W-2. How to file late tax returns   Report the value of all dependent care assistance you provide to an employee under a dependent care assistance program in box 10 of the employee's Form W-2. How to file late tax returns Include any amounts you cannot exclude from the employee's wages in boxes 1, 3, and 5. How to file late tax returns Report both the nontaxable portion of assistance (up to $5,000) and any assistance above the amount that is non-taxable to the employee. How to file late tax returns Example. How to file late tax returns   Company A provides a dependent care assistance flexible spending arrangement to its employees through a cafeteria plan. How to file late tax returns In addition, it provides occasional on-site dependent care to its employees at no cost. How to file late tax returns Emily, an employee of company A, had $4,500 deducted from her pay for the dependent care flexible spending arrangement. How to file late tax returns In addition, Emily used the on-site dependent care several times. How to file late tax returns The fair market value of the on-site care was $700. How to file late tax returns Emily's Form W-2 should report $5,200 of dependent care assistance in box 10 ($4,500 flexible spending arrangement plus $700 on-site dependent care). How to file late tax returns Boxes 1, 3, and 5 should include $200 (the amount in excess of the nontaxable assistance), and applicable taxes should be withheld on that amount. How to file late tax returns Educational Assistance This exclusion applies to educational assistance you provide to employees under an educational assistance program. How to file late tax returns The exclusion also applies to graduate level courses. How to file late tax returns Educational assistance means amounts you pay or incur for your employees' education expenses. How to file late tax returns These expenses generally include the cost of books, equipment, fees, supplies, and tuition. How to file late tax returns However, these expenses do not include the cost of a course or other education involving sports, games, or hobbies, unless the education: Has a reasonable relationship to your business, or Is required as part of a degree program. How to file late tax returns Education expenses do not include the cost of tools or supplies (other than textbooks) your employee is allowed to keep at the end of the course. How to file late tax returns Nor do they include the cost of lodging, meals, or transportation. How to file late tax returns Educational assistance program. How to file late tax returns   An educational assistance program is a separate written plan that provides educational assistance only to your employees. How to file late tax returns The program qualifies only if all of the following tests are met. How to file late tax returns The program benefits employees who qualify under rules set up by you that do not favor highly compensated employees. How to file late tax returns To determine whether your program meets this test, do not consider employees excluded from your program who are covered by a collective bargaining agreement if there is evidence that educational assistance was a subject of good-faith bargaining. How to file late tax returns The program does not provide more than 5% of its benefits during the year for shareholders or owners. How to file late tax returns A shareholder or owner is someone who owns (on any day of the year) more than 5% of the stock or of the capital or profits interest of your business. How to file late tax returns The program does not allow employees to choose to receive cash or other benefits that must be included in gross income instead of educational assistance. How to file late tax returns You give reasonable notice of the program to eligible employees. How to file late tax returns Your program can cover former employees if their employment is the reason for the coverage. How to file late tax returns   For this exclusion, a highly compensated employee for 2014 is an employee who meets either of the following tests. How to file late tax returns The employee was a 5% owner at any time during the year or the preceding year. How to file late tax returns The employee received more than $115,000 in pay for the preceding year. How to file late tax returns You can choose to ignore test (2) if the employee was not also in the top 20% of employees when ranked by pay for the preceding year. How to file late tax returns Employee. How to file late tax returns   For this exclusion, treat the following individuals as employees. How to file late tax returns A current employee. How to file late tax returns A former employee who retired, left on disability, or was laid off. How to file late tax returns A leased employee who has provided services to you on a substantially full-time basis for at least a year if the services are performed under your primary direction or control. How to file late tax returns Yourself (if you are a sole proprietor). How to file late tax returns A partner who performs services for a partnership. How to file late tax returns Exclusion from wages. How to file late tax returns   You can exclude up to $5,250 of educational assistance you provide to an employee under an educational assistance program from the employee's wages each year. How to file late tax returns Assistance over $5,250. How to file late tax returns   If you do not have an educational assistance plan, or you provide an employee with assistance exceeding $5,250, you must include the value of these benefits as wages, unless the benefits are working condition benefits. How to file late tax returns Working condition benefits may be excluded from wages. How to file late tax returns Property or a service provided is a working condition benefit to the extent that if the employee paid for it, the amount paid would have been deductible as a business or depreciation expense. How to file late tax returns See Working Condition Benefits , later, in this section. How to file late tax returns Employee Discounts This exclusion applies to a price reduction you give an employee on property or services you offer to customers in the ordinary course of the line of business in which the employee performs substantial services. How to file late tax returns However, it does not apply to discounts on real property or discounts on personal property of a kind commonly held for investment (such as stocks or bonds). How to file late tax returns Employee. How to file late tax returns   For this exclusion, treat the following individuals as employees. How to file late tax returns A current employee. How to file late tax returns A former employee who retired or left on disability. How to file late tax returns A widow or widower of an individual who died while an employee. How to file late tax returns A widow or widower of an employee who retired or left on disability. How to file late tax returns A leased employee who has provided services to you on a substantially full-time basis for at least a year if the services are performed under your primary direction or control. How to file late tax returns A partner who performs services for a partnership. How to file late tax returns Exclusion from wages. How to file late tax returns   You can generally exclude the value of an employee discount you provide an employee from the employee's wages, up to the following limits. How to file late tax returns For a discount on services, 20% of the price you charge nonemployee customers for the service. How to file late tax returns For a discount on merchandise or other property, your gross profit percentage times the price you charge nonemployee customers for the property. How to file late tax returns   Determine your gross profit percentage in the line of business based on all property you offer to customers (including employee customers) and your experience during the tax year immediately before the tax year in which the discount is available. How to file late tax returns To figure your gross profit percentage, subtract the total cost of the property from the total sales price of the property and divide the result by the total sales price of the property. How to file late tax returns Exception for highly compensated employees. How to file late tax returns   You cannot exclude from the wages of a highly compensated employee any part of the value of a discount that is not available on the same terms to one of the following groups. How to file late tax returns All of your employees. How to file late tax returns A group of employees defined under a reasonable classification you set up that does not favor highly compensated employees. How to file late tax returns   For this exclusion, a highly compensated employee for 2014 is an employee who meets either of the following tests. How to file late tax returns The employee was a 5% owner at any time during the year or the preceding year. How to file late tax returns The employee received more than $115,000 in pay for the preceding year. How to file late tax returns You can choose to ignore test (2) if the employee was not also in the top 20% of employees when ranked by pay for the preceding year. How to file late tax returns Employee Stock Options There are three kinds of stock options—incentive stock options, employee stock purchase plan options, and nonstatutory (nonqualified) stock options. How to file late tax returns Wages for social security, Medicare, and federal unemployment (FUTA) taxes do not include remuneration resulting from the exercise, after October 22, 2004, of an incentive stock option or under an employee stock purchase plan option, or from any disposition of stock acquired by exercising such an option. How to file late tax returns The IRS will not apply these taxes to an exercise before October 23, 2004, of an incentive stock option or an employee stock purchase plan option or to a disposition of stock acquired by such exercise. How to file late tax returns Additionally, federal income tax withholding is not required on the income resulting from a disqualifying disposition of stock acquired by the exercise after October 22, 2004, of an incentive stock option or under an employee stock purchase plan option, or on income equal to the discount portion of stock acquired by the exercise, after October 22, 2004, of an employee stock purchase plan option resulting from any disposition of the stock. How to file late tax returns The IRS will not apply federal income tax withholding upon the disposition of stock acquired by the exercise, before October 23, 2004, of an incentive stock option or an employee stock purchase plan option. How to file late tax returns However, the employer must report as income in box 1 of Form W-2, (a) the discount portion of stock acquired by the exercise of an employee stock purchase plan option upon disposition of the stock, and (b) the spread (between the exercise price and the fair market value of the stock at the time of exercise) upon a disqualifying disposition of stock acquired by the exercise of an incentive stock option or an employee stock purchase plan option. How to file late tax returns An employer must report the excess of the fair market value of stock received upon exercise of a nonstatutory stock option over the amount paid for the stock option on Form W-2 in boxes 1, 3 (up to the social security wage base), 5, and in box 12 using the code “V. How to file late tax returns ” See Regulations section 1. How to file late tax returns 83-7. How to file late tax returns An employee who transfers his or her interest in nonstatutory stock options to the employee's former spouse incident to a divorce is not required to include an amount in gross income upon the transfer. How to file late tax returns The former spouse, rather than the employee, is required to include an amount in gross income when the former spouse exercises the stock options. How to file late tax returns See Revenue Ruling 2002-22 and Revenue Ruling 2004-60 for details. How to file late tax returns You can find Revenue Ruling 2002-22 on page 849 of Internal Revenue Bulletin 2002-19 at www. How to file late tax returns irs. How to file late tax returns gov/pub/irs-irbs/irb02-19. How to file late tax returns pdf. How to file late tax returns See Revenue Ruling 2004-60, 2004-24 I. How to file late tax returns R. How to file late tax returns B. How to file late tax returns 1051, available at www. How to file late tax returns irs. How to file late tax returns gov/irb/2004-24_IRB/ar13. How to file late tax returns html. How to file late tax returns For more information about employee stock options, see sections 421, 422, and 423 of the Internal Revenue Code and their related regulations. How to file late tax returns Employer-Provided Cell Phones The value of an employer-provided cell phone, provided primarily for noncompensatory business reasons, is excludable from an employee's income as a working condition fringe benefit. How to file late tax returns Personal use of an employer-provided cell phone, provided primarily for noncompensatory business reasons, is excludable from an employee's income as a de minimis fringe benefit. How to file late tax returns For the rules relating to these types of benefits, see De Minimis (Minimal) Benefits , earlier in this section, and Working Condition Benefits , later in this section. How to file late tax returns Noncompensatory business purposes. How to file late tax returns   You provide a cell phone primarily for noncompensatory business purposes if there are substantial business reasons for providing the cell phone. How to file late tax returns Examples of substantial business reasons include the employer's: Need to contact the employee at all times for work-related emergencies, Requirement that the employee be available to speak with clients at times when the employee is away from the office, and Need to speak with clients located in other time zones at times outside the employee's normal workday. How to file late tax returns Cell phones provided to promote goodwill, boost morale, or attract prospective employees. How to file late tax returns   You cannot exclude from an employee's wages the value of a cell phone provided to promote goodwill of an employee, to attract a prospective employee, or as a means of providing additional compensation to an employee. How to file late tax returns Additional information. How to file late tax returns   For additional information on the tax treatment of employer-provided cell phones, see Notice 2011-72, 2011-38 I. How to file late tax returns R. How to file late tax returns B. How to file late tax returns 407, available at  www. How to file late tax returns irs. How to file late tax returns gov/irb/2011-38_IRB/ar07. How to file late tax returns html. How to file late tax returns Group-Term Life Insurance Coverage This exclusion applies to life insurance coverage that meets all the following conditions. How to file late tax returns It provides a general death benefit that is not included in income. How to file late tax returns You provide it to a group of employees. How to file late tax returns See The 10-employee rule , later. How to file late tax returns It provides an amount of insurance to each employee based on a formula that prevents individual selection. How to file late tax returns This formula must use factors such as the employee's age, years of service, pay, or position. How to file late tax returns You provide it under a policy you directly or indirectly carry. How to file late tax returns Even if you do not pay any of the policy's cost, you are considered to carry it if you arrange for payment of its cost by your employees and charge at least one employee less than, and at least one other employee more than, the cost of his or her insurance. How to file late tax returns Determine the cost of the insurance, for this purpose, as explained under Coverage over the limit , later. How to file late tax returns Group-term life insurance does not include the following insurance. How to file late tax returns Insurance that does not provide general death benefits, such as travel insurance or a policy providing only accidental death benefits. How to file late tax returns Life insurance on the life of your employee's spouse or dependent. How to file late tax returns However, you may be able to exclude the cost of this insurance from the employee's wages as a de minimis benefit. How to file late tax returns See De Minimis (Minimal) Benefits , earlier in this section. How to file late tax returns Insurance provided under a policy that provides a permanent benefit (an economic value that extends beyond 1 policy year, such as paid-up or cash surrender value), unless certain requirements are met. How to file late tax returns See Regulations section 1. How to file late tax returns 79-1 for details. How to file late tax returns Employee. How to file late tax returns   For this exclusion, treat the following individuals as employees. How to file late tax returns A current common-law employee. How to file late tax returns A full-time life insurance agent who is a current statutory employee. How to file late tax returns An individual who was formerly your employee under (1) or (2). How to file late tax returns A leased employee who has provided services to you on a substantially full-time basis for at least a year if the services are performed under your primary direction and control. How to file late tax returns Exception for S corporation shareholders. How to file late tax returns   Do not treat a 2% shareholder of an S corporation as an employee of the corporation for this purpose. How to file late tax returns A 2% shareholder is someone who directly or indirectly owns (at any time during the year) more than 2% of the corporation's stock or stock with more than 2% of the voting power. How to file late tax returns Treat a 2% shareholder as you would a partner in a partnership for fringe benefit purposes, but do not treat the benefit as a reduction in distributions to the 2% shareholder. How to file late tax returns The 10-employee rule. How to file late tax returns   Generally, life insurance is not group-term life insurance unless you provide it to at least 10 full-time employees at some time during the year. How to file late tax returns   For this rule, count employees who choose not to receive the insurance unless, to receive it, they must contribute to the cost of benefits other than the group-term life insurance. How to file late tax returns For example, count an employee who could receive insurance by paying part of the cost, even if that employee chooses not to receive it. How to file late tax returns However, do not count an employee who must pay part or all of the cost of permanent benefits to get insurance, unless that employee chooses to receive it. How to file late tax returns A permanent benefit is an economic value extending beyond one policy year (for example, a paid-up or cash-surrender value) that is provided under a life insurance policy. How to file late tax returns Exceptions. How to file late tax returns   Even if you do not meet the 10-employee rule, two exceptions allow you to treat insurance as group-term life insurance. How to file late tax returns   Under the first exception, you do not have to meet the 10-employee rule if all the following conditions are met. How to file late tax returns If evidence that the employee is insurable is required, it is limited to a medical questionnaire (completed by the employee) that does not require a physical. How to file late tax returns You provide the insurance to all your full-time employees or, if the insurer requires the evidence mentioned in (1), to all full-time employees who provide evidence the insurer accepts. How to file late tax returns You figure the coverage based on either a uniform percentage of pay or the insurer's coverage brackets that meet certain requirements. How to file late tax returns See Regulations section 1. How to file late tax returns 79-1 for details. How to file late tax returns   Under the second exception, you do not have to meet the 10-employee rule if all the following conditions are met. How to file late tax returns You provide the insurance under a common plan covering your employees and the employees of at least one other employer who is not related to you. How to file late tax returns The insurance is restricted to, but mandatory for, all your employees who belong to, or are represented by, an organization (such as a union) that carries on substantial activities besides obtaining insurance. How to file late tax returns Evidence of whether an employee is insurable does not affect an employee's eligibility for insurance or the amount of insurance that employee gets. How to file late tax returns   To apply either exception, do not consider employees who were denied insurance for any of the following reasons. How to file late tax returns They were 65 or older. How to file late tax returns They customarily work 20 hours or less a week or 5 months or less in a calendar year. How to file late tax returns They have not been employed for the waiting period given in the policy. How to file late tax returns This waiting period cannot be more than 6 months. How to file late tax returns Exclusion from wages. How to file late tax returns   You can generally exclude the cost of up to $50,000 of group-term life insurance from the wages of an insured employee. How to file late tax returns You can exclude the same amount from the employee's wages when figuring social security and Medicare taxes. How to file late tax returns In addition, you do not have to withhold federal income tax or pay FUTA tax on any group-term life insurance you provide to an employee. How to file late tax returns Coverage over the limit. How to file late tax returns   You must include in your employee's wages the cost of group-term life insurance beyond $50,000 worth of coverage, reduced by the amount the employee paid toward the insurance. How to file late tax returns Report it as wages in boxes 1, 3, and 5 of the employee's Form W-2. How to file late tax returns Also, show it in box 12 with code “C. How to file late tax returns ” The amount is subject to social security and Medicare taxes, and you may, at your option, withhold federal income tax. How to file late tax returns   Figure the monthly cost of the insurance to include in the employee's wages by multiplying the number of thousands of dollars of all insurance coverage over $50,000 (figured to the nearest $100) by the cost shown in Table 2-2. How to file late tax returns For all coverage provided within the calendar year, use the employee's age on the last day of the employee's tax year. How to file late tax returns You must prorate the cost from the table if less than a full month of coverage is involved. How to file late tax returns Table 2-2. How to file late tax returns Cost Per $1,000 of Protection For 1 Month Age Cost Under 25 $ . How to file late tax returns 05 25 through 29 . How to file late tax returns 06 30 through 34 . How to file late tax returns 08 35 through 39 . How to file late tax returns 09 40 through 44 . How to file late tax returns 10 45 through 49 . How to file late tax returns 15 50 through 54 . How to file late tax returns 23 55 through 59 . How to file late tax returns 43 60 through 64 . How to file late tax returns 66 65 through 69 1. How to file late tax returns 27 70 and older 2. How to file late tax returns 06 You figure the total cost to include in the employee's wages by multiplying the monthly cost by the number of full months' coverage at that cost. How to file late tax returns Example. How to file late tax returns Tom's employer provides him with group-term life insurance coverage of $200,000. How to file late tax returns Tom is 45 years old, is not a key employee, and pays $100 per year toward the cost of the insurance. How to file late tax returns Tom's employer must include $170 in his wages. How to file late tax returns The $200,000 of insurance coverage is reduced by $50,000. How to file late tax returns The yearly cost of $150,000 of coverage is $270 ($. How to file late tax returns 15 x 150 x 12), and is reduced by the $100 Tom pays for the insurance. How to file late tax returns The employer includes $170 in boxes 1, 3, and 5 of Tom's Form W-2. How to file late tax returns The employer also enters $170 in box 12 with code “C. How to file late tax returns ” Coverage for dependents. How to file late tax returns   Group-term life insurance coverage paid by the employer for the spouse or dependents of an employee may be excludable from income as a de minimis fringe benefit if the face amount is not more than $2,000. How to file late tax returns If the face amount is greater than $2,000, the entire cost of the dependent coverage must be included in income unless the amount over $2,000 is purchased with employee contributions on an after-tax basis. How to file late tax returns The cost of the insurance is determined by using Table 2-2. How to file late tax returns Former employees. How to file late tax returns   When group-term life insurance over $50,000 is provided to an employee (including retirees) after his or her termination, the employee share of social security and Medicare taxes on that period of coverage is paid by the former employee with his or her tax return and is not collected by the employer. How to file late tax returns You are not required to collect those taxes. How to file late tax returns Use the table above to determine the amount of social security and Medicare taxes owed by the former employee for coverage provided after separation from service. How to file late tax returns Report those uncollected amounts separately in box 12 of Form W-2 using codes “M” and “N. How to file late tax returns ” See the General Instructions for Forms W-2 and W-3 and the Instructions for Form 941. How to file late tax returns Exception for key employees. How to file late tax returns   Generally, if your group-term life insurance plan favors key employees as to participation or benefits, you must include the entire cost of the insurance in your key employees' wages. How to file late tax returns This exception generally does not apply to church plans. How to file late tax returns When figuring social security and Medicare taxes, you must also include the entire cost in the employees' wages. How to file late tax returns Include the cost in boxes 1, 3, and 5 of Form W-2. How to file late tax returns However, you do not have to withhold federal income tax or pay FUTA tax on the cost of any group-term life insurance you provide to an employee. How to file late tax returns   For this purpose, the cost of the insurance is the greater of the following amounts. How to file late tax returns The premiums you pay for the employee's insurance. How to file late tax returns See Regulations section 1. How to file late tax returns 79-4T(Q&A 6) for more information. How to file late tax returns The cost you figure using Table 2-2. How to file late tax returns   For this exclusion, a key employee during 2014 is an employee or former employee who is one of the following individuals. How to file late tax returns See section 416(i) of the Internal Revenue Code for more information. How to file late tax returns An officer having annual pay of more than $170,000. How to file late tax returns An individual who for 2014 was either of the following. How to file late tax returns A 5% owner of your business. How to file late tax returns A 1% owner of your business whose annual pay was more than $150,000. How to file late tax returns   A former employee who was a key employee upon retirement or separation from service is also a key employee. How to file late tax returns   Your plan does not favor key employees as to participation if at least one of the following is true. How to file late tax returns It benefits at least 70% of your employees. How to file late tax returns At least 85% of the participating employees are not key employees. How to file late tax returns It benefits employees who qualify under a set of rules you set up that do not favor key employees. How to file late tax returns   Your plan meets this participation test if it is part of a cafeteria plan (discussed in section 1) and it meets the participation test for those plans. How to file late tax returns   When applying this test, do not consider employees who: Have not completed 3 years of service, Are part-time or seasonal, Are nonresident aliens who receive no U. How to file late tax returns S. How to file late tax returns source earned income from you, or Are not included in the plan but are in a unit of employees covered by a collective bargaining agreement, if the benefits provided under the plan were the subject of good-faith bargaining between you and employee representatives. How to file late tax returns   Your plan does not favor key employees as to benefits if all benefits available to participating key employees are also available to all other participating employees. How to file late tax returns Your plan does not favor key employees just because the amount of insurance you provide to your employees is uniformly related to their pay. How to file late tax returns S corporation shareholders. How to file late tax returns   Because you cannot treat a 2% shareholder of an S corporation as an employee for this exclusion, you must include the cost of all group-term life insurance coverage you provide the 2% shareholder in his or her wages. How to file late tax returns When figuring social security and Medicare taxes, you must also include the cost of this coverage in the 2% shareholder's wages. How to file late tax returns Include the cost in boxes 1, 3, and 5 of Form W-2. How to file late tax returns However, you do not have to withhold federal income tax or pay federal unemployment tax on the cost of any group-term life insurance coverage you provide to the 2% shareholder. How to file late tax returns Health Savings Accounts A Health Savings Account (HSA) is an account owned by a qualified individual who is generally your employee or former employee. How to file late tax returns Any contributions that you make to an HSA become the employee's property and cannot be withdrawn by you. How to file late tax returns Contributions to the account are used to pay current or future medical expenses of the account owner, his or her spouse, and any qualified dependent. How to file late tax returns The medical expenses must not be reimbursable by insurance or other sources and their payment from HSA funds (distribution) will not give rise to a medical expense deduction on the individual's federal income tax return. How to file late tax returns For more information about HSAs, visit the Department of Treasury's website at www. How to file late tax returns treasury. How to file late tax returns gov and enter “HSA” in the search box. How to file late tax returns Eligibility. How to file late tax returns   A qualified individual must be covered by a High Deductible Health Plan (HDHP) and not be covered by other health insurance except for permitted insurance listed under section 223(c)(3) or insurance for accidents, disability, dental care, vision care, or long-term care. How to file late tax returns For calendar year 2014, a qualifying HDHP must have a deductible of at least $1,250 for self-only coverage or $2,500 for family coverage and must limit annual out-of-pocket expenses of the beneficiary to $6,350 for self-only coverage and $12,700 for family coverage. How to file late tax returns   There are no income limits that restrict an individual's eligibility to contribute to an HSA nor is there a requirement that the account owner have earned income to make a contribution. How to file late tax returns Exceptions. How to file late tax returns   An individual is not a qualified individual if he or she can be claimed as a dependent on another person's tax return. How to file late tax returns Also, an employee's participation in a health flexible spending arrangement (FSA) or health reimbursement arrangement (HRA) generally disqualifies the individual (and employer) from making contributions to his or her HSA. How to file late tax returns However, an individual may qualify to participate in an HSA if he or she is participating in only a limited-purpose FSA or HRA or a post-deductible FSA. How to file late tax returns For more information, see Other employee health plans in Publication 969. How to file late tax returns Employer contributions. How to file late tax returns   Up to specified dollar limits, cash contributions to the HSA of a qualified individual (determined monthly) are exempt from federal income tax withholding, social security tax, Medicare tax, and FUTA tax. How to file late tax returns For 2014, you can contribute up to $3,300 for self-only coverage or $6,550 for family coverage to a qualified individual's HSA. How to file late tax returns   The contribution amounts listed above are increased by $1,000 for a qualified individual who is age 55 or older at any time during the year. How to file late tax returns For two qualified individuals who are married to each other and who each are age 55 or older at any time during the year, each spouse's contribution limit is increased by $1,000 provided each spouse has a separate HSA. How to file late tax returns No contributions can be made to an individual's HSA after he or she becomes enrolled in Medicare Part A or Part B. How to file late tax returns Nondiscrimination rules. How to file late tax returns    Your contribution amount to an employee's HSA must be comparable for all employees who have comparable coverage during the same period. How to file late tax returns Otherwise, there will be an excise tax equal to 35% of the amount you contributed to all employees' HSAs. How to file late tax returns   For guidance on employer comparable contributions to HSAs under section 4980G in instances where an employee has not established an HSA by December 31 and in instances where an employer accelerates contributions for the calendar year for employees who have incurred qualified medical expenses, see Regulations section 54. How to file late tax returns 4980G-4. How to file late tax returns Exception. How to file late tax returns   The Tax Relief and Health Care Act of 2006 allows employers to make larger HSA contributions for a nonhighly compensated employee than for a highly compensated employee. How to file late tax returns A highly compensated employee for 2014 is an employee who meets either of the following tests. How to file late tax returns The employee was a 5% owner at any time during the year or the preceding year. How to file late tax returns The employee received more than $115,000 in pay for the preceding year. How to file late tax returns You can choose to ignore test (2) if the employee was not also in the top 20% of employees when ranked by pay for the preceding year. How to file late tax returns Partnerships and S corporations. How to file late tax returns   Partners and 2% shareholders of an S corporation are not eligible for salary reduction (pre-tax) contributions to an HSA. How to file late tax returns Employer contributions to the HSA of a bona fide partner or 2% shareholder are treated as distributions or guaranteed payments as determined by the facts and circumstances. How to file late tax returns Cafeteria plans. How to file late tax returns   You may contribute to an employee's HSA using a cafeteria plan and your contributions are not subject to the statutory comparability rules. How to file late tax returns However, cafeteria plan nondiscrimination rules still apply. How to file late tax returns For example, contributions under a cafeteria plan to employee HSAs cannot be greater for higher-paid employees than they are for lower-paid employees. How to file late tax returns Contributions that favor lower-paid employees are not prohibited. How to file late tax returns Reporting requirements. How to file late tax returns   You must report your contributions to an employee's HSA in box 12 of Form W-2 using code “W. How to file late tax returns ” The trustee or custodian of the HSA, generally a bank or insurance company, reports distributions from the HSA using Form 1099-SA, Distributions From an HSA, Archer MSA, or Medicare Advantage MSA. How to file late tax returns Lodging on Your Business Premises You can exclude the value of lodging you furnish to an employee from the employee's wages if it meets the following tests. How to file late tax returns It is furnished on your business premises. How to file late tax returns It is furnished for your convenience. How to file late tax returns The employee must accept it as a condition of employment. How to file late tax returns Different tests may apply to lodging furnished by educational institutions. How to file late tax returns See section 119(d) of the Internal Revenue Code for details. How to file late tax returns The exclusion does not apply if you allow your employee to choose to receive additional pay instead of lodging. How to file late tax returns On your business premises. How to file late tax returns   For this exclusion, your business premises is generally your employee's place of work. How to file late tax returns For special rules that apply to lodging furnished in a camp located in a foreign country, see section 119(c) of the Internal Revenue Code and its regulations. How to file late tax returns For your convenience. How to file late tax returns   Whether or not you furnish lodging for your convenience as an employer depends on all the facts and circumstances. How to file late tax returns You furnish the lodging to your employee for your convenience if you do this for a substantial business reason other than to provide the employee with additional pay. How to file late tax returns This is true even if a law or an employment contract provides that the lodging is furnished as pay. How to file late tax returns However, a written statement that the lodging is furnished for your convenience is not sufficient. How to file late tax returns Condition of employment. How to file late tax returns   Lodging meets this test if you require your employees to accept the lodging because they need to live on your business premises to be able to properly perform their duties. How to file late tax returns Examples include employees who must be available at all times and employees who could not perform their required duties without being furnished the lodging. How to file late tax returns   It does not matter whether you must furnish the lodging as pay under the terms of an employment contract or a law fixing the terms of employment. How to file late tax returns Example. How to file late tax returns A hospital gives Joan, an employee of the hospital, the choice of living at the hospital free of charge or living elsewhere and receiving a cash allowance in addition to her regular salary. How to file late tax returns If Joan chooses to live at the hospital, the hospital cannot exclude the value of the lodging from her wages because she is not required to live at the hospital to properly perform the duties of her employment. How to file late tax returns S corporation shareholders. How to file late tax returns   For this exclusion, do not treat a 2% shareholder of an S corporation as an employee of the corporation. How to file late tax returns A 2% shareholder is someone who directly or indirectly owns (at any time during the year) more than 2% of the corporation's stock or stock with more than 2% of the voting power. How to file late tax returns Treat a 2% shareholder as you would a partner in a partnership for fringe benefit purposes, but do not treat the benefit as a reduction in distributions to the 2% shareholder. How to file late tax returns Meals This section discusses the exclusion rules that apply to de minimis meals and meals on your business premises. How to file late tax returns De Minimis Meals You can exclude any occasional meal or meal money you provide to an employee if it has so little value (taking into account how frequently you provide meals to your employees) that accounting for it would be unreasonable or administratively impracticable. How to file late tax returns The exclusion applies, for example, to the following items. How to file late tax returns Coffee, doughnuts, or soft drinks. How to file late tax returns Occasional meals or meal money provided to enable an employee to work overtime. How to file late tax returns However, the exclusion does not apply to meal money figured on the basis of hours worked. How to file late tax returns Occasional parties or picnics for employees and their guests. How to file late tax returns This exclusion also applies to meals you provide at an employer-operated eating facility for employees if the annual revenue from the facility equals or exceeds the direct costs of the facility. How to file late tax returns For this purpose, your revenue from providing a meal is considered equal to the facility's direct operating costs to provide that meal if its value can be excluded from an employee's wages as explained under Meals on Your Business Premises , later. How to file late tax returns If food or beverages you furnish to employees qualify as a de minimis benefit, you can deduct their full cost. How to file late tax returns The 50% limit on deductions for the cost of meals does not apply. How to file late tax returns The deduction limit on meals is discussed in chapter 2 of Publication 535. How to file late tax returns Employee. How to file late tax returns   For this exclusion, treat any recipient of a de minimis meal as