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I Need To File My 2011 Tax Return

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I Need To File My 2011 Tax Return

I need to file my 2011 tax return 6. I need to file my 2011 tax return   How To Report Table of Contents Where To ReportGifts. I need to file my 2011 tax return Statutory employees. I need to file my 2011 tax return Vehicle Provided by Your Employer ReimbursementsAccountable Plans Nonaccountable Plans Rules for Independent Contractors and Clients How To Use Per Diem Rate TablesThe Two Substantiation Methods Transition Rules Completing Forms 2106 and 2106-EZInformation on use of cars. I need to file my 2011 tax return Standard mileage rate. I need to file my 2011 tax return Actual expenses. I need to file my 2011 tax return Car rentals. I need to file my 2011 tax return Hours of service limits. I need to file my 2011 tax return Allocating your reimbursement. I need to file my 2011 tax return 1. I need to file my 2011 tax return Limit on meals and entertainment. I need to file my 2011 tax return 2. I need to file my 2011 tax return Limit on miscellaneous itemized deductions. I need to file my 2011 tax return 3. I need to file my 2011 tax return Limit on total itemized deductions. I need to file my 2011 tax return Special Rules This chapter explains where and how to report the expenses discussed in this publication. I need to file my 2011 tax return It discusses reimbursements and how to treat them under accountable and nonaccountable plans. I need to file my 2011 tax return It also explains rules for independent contractors and clients, fee-basis officials, certain performing artists, Armed Forces reservists, and certain disabled employees. I need to file my 2011 tax return The chapter ends with illustrations of how to report travel, entertainment, gift, and car expenses on Forms 2106 and 2106-EZ. I need to file my 2011 tax return Where To Report This section provides general information on where to report the expenses discussed in this publication. I need to file my 2011 tax return Self-employed. I need to file my 2011 tax return   You must report your income and expenses on Schedule C (Form 1040) or Schedule C-EZ (Form 1040) if you are a sole proprietor, or on Schedule F (Form 1040) if you are a farmer. I need to file my 2011 tax return You do not use Form 2106 or 2106-EZ. I need to file my 2011 tax return    If you claim car or truck expenses, you must provide certain information on the use of your vehicle. I need to file my 2011 tax return You provide this information on Schedule C (Form 1040), Schedule C-EZ (Form 1040), or Form 4562. I need to file my 2011 tax return   If you file Schedule C (Form 1040): Report your travel expenses, except meals, on line 24a, Report your deductible meals (actual cost or standard meal allowance) and entertainment on line 24b, Report your gift expenses and transportation expenses, other than car expenses, on line 27a, and Report your car expenses on line 9. I need to file my 2011 tax return Complete Part IV of the form unless you have to file Form 4562 for depreciation or amortization. I need to file my 2011 tax return   If you file Schedule C-EZ (Form 1040), report the total of all business expenses on line 2. I need to file my 2011 tax return You can only include 50% of your meals and entertainment in that total. I need to file my 2011 tax return If you include car expenses, you must also complete Part III of the form. I need to file my 2011 tax return    If you file Schedule F (Form 1040): Report your car expenses on line 10. I need to file my 2011 tax return Attach Form 4562 and provide information on the use of your car in Part V of Form 4562. I need to file my 2011 tax return Report all other business expenses discussed in this publication on line 32. I need to file my 2011 tax return You can only include 50% of your meals and entertainment on that line. I need to file my 2011 tax return See your form instructions for more information on how to complete your tax return. I need to file my 2011 tax return Both self-employed and an employee. I need to file my 2011 tax return   If you are both self-employed and an employee, you must keep separate records for each business activity. I need to file my 2011 tax return Report your business expenses for self-employment on Schedule C (Form 1040), Schedule C-EZ (Form 1040), or Schedule F (Form 1040), as discussed earlier. I need to file my 2011 tax return Report your business expenses for your work as an employee on Form 2106 or 2106-EZ, as discussed next. I need to file my 2011 tax return Employees. I need to file my 2011 tax return    If you are an employee, you generally must complete Form 2106 to deduct your travel, transportation, and entertainment expenses. I need to file my 2011 tax return However, you can use the shorter Form 2106-EZ instead of Form 2106 if you meet all of the following conditions. I need to file my 2011 tax return You are an employee deducting expenses attributable to your job. I need to file my 2011 tax return You were not reimbursed by your employer for your expenses (amounts included in box 1 of your Form W-2 are not considered reimbursements). I need to file my 2011 tax return If you claim car expenses, you use the standard mileage rate. I need to file my 2011 tax return   For more information on how to report your expenses on Forms 2106 and 2106-EZ, see Completing Forms 2106 and 2106-EZ , later. I need to file my 2011 tax return Gifts. I need to file my 2011 tax return   If you did not receive any reimbursements (or the reimbursements were all included in box 1 of your Form W-2), the only business expense you are claiming is for gifts, and the Special Rules discussed later do not apply to you, do not complete Form 2106 or 2106-EZ. I need to file my 2011 tax return Instead, claim the amount of your deductible gifts directly on line 21 of Schedule A (Form 1040). I need to file my 2011 tax return Statutory employees. I need to file my 2011 tax return    If you received a Form W-2 and the “Statutory employee” box in box 13 was checked, report your income and expenses related to that income on Schedule C (Form 1040) or Schedule C-EZ (Form 1040). I need to file my 2011 tax return Do not complete Form 2106 or 2106-EZ. I need to file my 2011 tax return   Statutory employees include full-time life insurance salespersons, certain agent or commission drivers, traveling salespersons, and certain homeworkers. I need to file my 2011 tax return If you are entitled to a reimbursement from your employer but you do not claim it, you cannot claim a deduction for the expenses to which that unclaimed reimbursement applies. I need to file my 2011 tax return Reimbursement for personal expenses. I need to file my 2011 tax return    If your employer reimburses you for nondeductible personal expenses, such as for vacation trips, your employer must report the reimbursement as wage income in box 1 of your Form W-2. I need to file my 2011 tax return You cannot deduct personal expenses. I need to file my 2011 tax return Income-producing property. I need to file my 2011 tax return   If you have travel or transportation expenses related to income-producing property, report your deductible expenses on the form appropriate for that activity. I need to file my 2011 tax return   For example, if you have rental real estate income and expenses, report your expenses on Schedule E (Form 1040), Supplemental Income and Loss. I need to file my 2011 tax return See Publication 527, Residential Rental Property, for more information on the rental of real estate. I need to file my 2011 tax return If you have deductible investment-related transportation expenses, report them on Schedule A (Form 1040), line 23. I need to file my 2011 tax return Vehicle Provided by Your Employer If your employer provides you with a car, you may be able to deduct the actual expenses of operating that car for business purposes. I need to file my 2011 tax return The amount you can deduct depends on the amount that your employer included in your income and the business and personal miles you drove during the year. I need to file my 2011 tax return You cannot use the standard mileage rate. I need to file my 2011 tax return Value reported on Form W-2. I need to file my 2011 tax return   Your employer can figure and report either the actual value of your personal use of the car or the value of the car as if you used it only for personal purposes (100% income inclusion). I need to file my 2011 tax return Your employer must separately state the amount if 100% of the annual lease value was included in your income. I need to file my 2011 tax return If you are unsure of the amount included on your Form W-2, ask your employer. I need to file my 2011 tax return Full value included in your income. I need to file my 2011 tax return   You can deduct the value of the business use of an employer-provided car if your employer reported 100% of the value of the car in your income. I need to file my 2011 tax return On your 2013 Form W-2, the amount of the value will be included in box 1, Wages, tips, other compensation, and box 14. I need to file my 2011 tax return    To claim your expenses, complete Form 2106, Part II, Sections A and C. I need to file my 2011 tax return Enter your actual expenses on line 23 of Section C and include the entire value of the employer-provided car on line 25. I need to file my 2011 tax return Complete the rest of the form. I need to file my 2011 tax return Less than full value included in your income. I need to file my 2011 tax return   If less than the full annual lease value of the car was included on your Form W-2, this means that your Form W-2 only includes the value of your personal use of the car. I need to file my 2011 tax return Do not enter this value on your Form 2106 because it is not deductible. I need to file my 2011 tax return   If you paid any actual costs (that your employer did not provide or reimburse you for) to operate the car, you can deduct the business portion of those costs. I need to file my 2011 tax return Examples of costs that you may have are gas, oil, and repairs. I need to file my 2011 tax return Complete Form 2106, Part II, Sections A and C. I need to file my 2011 tax return Enter your actual costs on line 23 of Section C and leave line 25 blank. I need to file my 2011 tax return Complete the rest of the form. I need to file my 2011 tax return Reimbursements This section explains what to do when you receive an advance or are reimbursed for any of the employee business expenses discussed in this publication. I need to file my 2011 tax return If you received an advance, allowance, or reimbursement for your expenses, how you report this amount and your expenses depends on whether your employer reimbursed you under an accountable plan or a nonaccountable plan. I need to file my 2011 tax return This section explains the two types of plans, how per diem and car allowances simplify proving the amount of your expenses, and the tax treatment of your reimbursements and expenses. I need to file my 2011 tax return It also covers rules for independent contractors. I need to file my 2011 tax return No reimbursement. I need to file my 2011 tax return   You are not reimbursed or given an allowance for your expenses if you are paid a salary or commission with the understanding that you will pay your own expenses. I need to file my 2011 tax return In this situation, you have no reimbursement or allowance arrangement, and you do not have to read this section on reimbursements. I need to file my 2011 tax return Instead, see Completing Forms 2106 and 2106-EZ , later, for information on completing your tax return. I need to file my 2011 tax return Reimbursement, allowance, or advance. I need to file my 2011 tax return   A reimbursement or other expense allowance arrangement is a system or plan that an employer uses to pay, substantiate, and recover the expenses, advances, reimbursements, and amounts charged to the employer for employee business expenses. I need to file my 2011 tax return Arrangements include per diem and car allowances. I need to file my 2011 tax return    A per diem allowance is a fixed amount of daily reimbursement your employer gives you for your lodging, meals, and incidental expenses when you are away from home on business. I need to file my 2011 tax return (The term “ incidental expenses ” is defined in chapter 1 under Standard Meal Allowance. I need to file my 2011 tax return ) A car allowance is an amount your employer gives you for the business use of your car. I need to file my 2011 tax return   Your employer should tell you what method of reimbursement is used and what records you must provide. I need to file my 2011 tax return Employers. I need to file my 2011 tax return   If you are an employer and you reimburse employee business expenses, how you treat this reimbursement on your employee's Form W-2 depends in part on whether you have an accountable plan. I need to file my 2011 tax return Reimbursements treated as paid under an accountable plan, as explained next, are not reported as pay. I need to file my 2011 tax return Reimbursements treated as paid under nonaccountable plans , as explained later, are reported as pay. I need to file my 2011 tax return See Publication 15 (Circular E), Employer's Tax Guide, for information on employee pay. I need to file my 2011 tax return Accountable Plans To be an accountable plan, your employer's reimbursement or allowance arrangement must include all of the following rules: Your expenses must have a business connection — that is, you must have paid or incurred deductible expenses while performing services as an employee of your employer. I need to file my 2011 tax return You must adequately account to your employer for these expenses within a reasonable period of time. I need to file my 2011 tax return You must return any excess reimbursement or allowance within a reasonable period of time. I need to file my 2011 tax return “ Adequate accounting ” and “ returning excess reimbursements ” are discussed later. I need to file my 2011 tax return An excess reimbursement or allowance is any amount you are paid that is more than the business-related expenses that you adequately accounted for to your employer. I need to file my 2011 tax return Reasonable period of time. I need to file my 2011 tax return   The definition of reasonable period of time depends on the facts and circumstances of your situation. I need to file my 2011 tax return However, regardless of the facts and circumstances of your situation, actions that take place within the times specified in the following list will be treated as taking place within a reasonable period of time. I need to file my 2011 tax return You receive an advance within 30 days of the time you have an expense. I need to file my 2011 tax return You adequately account for your expenses within 60 days after they were paid or incurred. I need to file my 2011 tax return You return any excess reimbursement within 120 days after the expense was paid or incurred. I need to file my 2011 tax return You are given a periodic statement (at least quarterly) that asks you to either return or adequately account for outstanding advances and you comply within 120 days of the statement. I need to file my 2011 tax return Employee meets accountable plan rules. I need to file my 2011 tax return   If you meet the three rules for accountable plans, your employer should not include any reimbursements in your income in box 1 of your Form W-2. I need to file my 2011 tax return If your expenses equal your reimbursements, you do not complete Form 2106. I need to file my 2011 tax return You have no deduction since your expenses and reimbursement are equal. I need to file my 2011 tax return    If your employer included reimbursements in box 1 of your Form W-2 and you meet all the rules for accountable plans, ask your employer for a corrected Form W-2. I need to file my 2011 tax return Accountable plan rules not met. I need to file my 2011 tax return   Even though you are reimbursed under an accountable plan, some of your expenses may not meet all three rules. I need to file my 2011 tax return All reimbursements that fail to meet all three rules for accountable plans are generally treated as having been reimbursed under a nonaccountable plan (discussed later). I need to file my 2011 tax return Failure to return excess reimbursements. I need to file my 2011 tax return   If you are reimbursed under an accountable plan, but you fail to return, within a reasonable time, any amounts in excess of the substantiated amounts, the amounts paid in excess of the substantiated expenses are treated as paid under a nonaccountable plan. I need to file my 2011 tax return See Reasonable period of time , earlier, and Returning Excess Reimbursements , later. I need to file my 2011 tax return Reimbursement of nondeductible expenses. I need to file my 2011 tax return   You may be reimbursed under your employer's accountable plan for expenses related to that employer's business, some of which are deductible as employee business expenses and some of which are not deductible. I need to file my 2011 tax return The reimbursements you receive for the nondeductible expenses do not meet rule (1) for accountable plans, and they are treated as paid under a nonaccountable plan. I need to file my 2011 tax return Example. I need to file my 2011 tax return Your employer's plan reimburses you for travel expenses while away from home on business and also for meals when you work late at the office, even though you are not away from home. I need to file my 2011 tax return The part of the arrangement that reimburses you for the nondeductible meals when you work late at the office is treated as paid under a nonaccountable plan. I need to file my 2011 tax return The employer makes the decision whether to reimburse employees under an accountable plan or a nonaccountable plan. I need to file my 2011 tax return If you are an employee who receives payments under a nonaccountable plan, you cannot convert these amounts to payments under an accountable plan by voluntarily accounting to your employer for the expenses and voluntarily returning excess reimbursements to the employer. I need to file my 2011 tax return Adequate Accounting One of the rules for an accountable plan is that you must adequately account to your employer for your expenses. I need to file my 2011 tax return You adequately account by giving your employer a statement of expense, an account book, a diary, or a similar record in which you entered each expense at or near the time you had it, along with documentary evidence (such as receipts) of your travel, mileage, and other employee business expenses. I need to file my 2011 tax return (See Table 5-1 in chapter 5 for details you need to enter in your record and documents you need to prove certain expenses. I need to file my 2011 tax return ) A per diem or car allowance satisfies the adequate accounting requirement under certain conditions. I need to file my 2011 tax return See Per Diem and Car Allowances , later. I need to file my 2011 tax return You must account for all amounts you received from your employer during the year as advances, reimbursements, or allowances. I need to file my 2011 tax return This includes amounts you charged to your employer by credit card or other method. I need to file my 2011 tax return You must give your employer the same type of records and supporting information that you would have to give to the IRS if the IRS questioned a deduction on your return. I need to file my 2011 tax return You must pay back the amount of any reimbursement or other expense allowance for which you do not adequately account or that is more than the amount for which you accounted. I need to file my 2011 tax return Per Diem and Car Allowances If your employer reimburses you for your expenses using a per diem or a car allowance, you can generally use the allowance as proof for the amount of your expenses. I need to file my 2011 tax return A per diem or car allowance satisfies the adequate accounting requirements for the amount of your expenses only if all the following conditions apply. I need to file my 2011 tax return Your employer reasonably limits payments of your expenses to those that are ordinary and necessary in the conduct of the trade or business. I need to file my 2011 tax return The allowance is similar in form to and not more than the federal rate (defined later). I need to file my 2011 tax return You prove the time (dates), place, and business purpose of your expenses to your employer (as explained in Table 5-1 ) within a reasonable period of time. I need to file my 2011 tax return You are not related to your employer (as defined next). I need to file my 2011 tax return If you are related to your employer, you must be able to prove your expenses to the IRS even if you have already adequately accounted to your employer and returned any excess reimbursement. I need to file my 2011 tax return If the IRS finds that an employer's travel allowance practices are not based on reasonably accurate estimates of travel costs (including recognition of cost differences in different areas for per diem amounts), you will not be considered to have accounted to your employer. I need to file my 2011 tax return In this case, you must be able to prove your expenses to the IRS. I need to file my 2011 tax return Related to employer. I need to file my 2011 tax return   You are related to your employer if: Your employer is your brother or sister, half brother or half sister, spouse, ancestor, or lineal descendant, Your employer is a corporation in which you own, directly or indirectly, more than 10% in value of the outstanding stock, or Certain relationships (such as grantor, fiduciary, or beneficiary) exist between you, a trust, and your employer. I need to file my 2011 tax return You may be considered to indirectly own stock, for purposes of (2), if you have an interest in a corporation, partnership, estate, or trust that owns the stock or if a member of your family or your partner owns the stock. I need to file my 2011 tax return The federal rate. I need to file my 2011 tax return   The federal rate can be figured using any one of the following methods. I need to file my 2011 tax return For per diem amounts: The regular federal per diem rate. I need to file my 2011 tax return The standard meal allowance. I need to file my 2011 tax return The high-low rate. I need to file my 2011 tax return For car expenses: The standard mileage rate. I need to file my 2011 tax return A fixed and variable rate (FAVR). I need to file my 2011 tax return    For per diem amounts, use the rate in effect for the area where you stop for sleep or rest. I need to file my 2011 tax return Regular federal per diem rate. I need to file my 2011 tax return   The regular federal per diem rate is the highest amount that the federal government will pay to its employees for lodging, meals, and incidental expenses (or meals and incidental expenses only) while they are traveling away from home in a particular area. I need to file my 2011 tax return The rates are different for different locations. I need to file my 2011 tax return Your employer should have these rates available. I need to file my 2011 tax return You can also find federal per diem rates at www. I need to file my 2011 tax return gsa. I need to file my 2011 tax return gov/perdiem. I need to file my 2011 tax return The standard meal allowance. I need to file my 2011 tax return   The standard meal allowance (discussed in chapter 1) is the federal rate for meals and incidental expenses (M&IE). I need to file my 2011 tax return The rate for most small localities in the United States is $46 a day. I need to file my 2011 tax return Most major cities and many other localities qualify for higher rates. I need to file my 2011 tax return You can find this information on the Internet at www. I need to file my 2011 tax return gsa. I need to file my 2011 tax return gov/perdiem. I need to file my 2011 tax return   You receive an allowance only for meals and incidental expenses when your employer does one of the following. I need to file my 2011 tax return Provides you with lodging (furnishes it in kind). I need to file my 2011 tax return Reimburses you, based on your receipts, for the actual cost of your lodging. I need to file my 2011 tax return Pays the hotel, motel, etc. I need to file my 2011 tax return , directly for your lodging. I need to file my 2011 tax return Does not have a reasonable belief that you had (or will have) lodging expenses, such as when you stay with friends or relatives or sleep in the cab of your truck. I need to file my 2011 tax return Figures the allowance on a basis similar to that used in computing your compensation, such as number of hours worked or miles traveled. I need to file my 2011 tax return High-low rate. I need to file my 2011 tax return   This is a simplified method of computing the federal per diem rate for travel within the continental United States. I need to file my 2011 tax return It eliminates the need to keep a current list of the per diem rates for each city. I need to file my 2011 tax return   Under the high-low method, the per diem amount for travel during January through September of 2013 is $242 (including $65 for M&IE) for certain high-cost locations. I need to file my 2011 tax return All other areas have a per diem amount of $163 (including $52 for M&IE). I need to file my 2011 tax return For more information, see Notice 2012-63, which can be found on the Internet at www. I need to file my 2011 tax return irs. I need to file my 2011 tax return gov/irb/2012-42_IRB/ar12. I need to file my 2011 tax return html. I need to file my 2011 tax return    Effective October 1, 2013, the per diem rate for certain high-cost locations increased to $251 (including $65 for M&IE). I need to file my 2011 tax return The rate for all other locations increased to $170 (including $52 for M&IE). I need to file my 2011 tax return Employers who did not use the high-low method during the first 9 months of 2013 cannot begin to use it before 2014. I need to file my 2011 tax return For more information, see Notice 2013-65, which can be found on the Internet at www. I need to file my 2011 tax return irs. I need to file my 2011 tax return gov/pub/irs-drop/n-13–65. I need to file my 2011 tax return pdf and Revenue Procedure 2011-47 at www. I need to file my 2011 tax return irs. I need to file my 2011 tax return gov/irb/2011-42_IRB/ar12. I need to file my 2011 tax return html. I need to file my 2011 tax return Prorating the standard meal allowance on partial days of travel. I need to file my 2011 tax return   The standard meal allowance is for a full 24-hour day of travel. I need to file my 2011 tax return If you travel for part of a day, such as on the days you depart and return, you must prorate the full-day M&IE rate. I need to file my 2011 tax return This rule also applies if your employer uses the regular federal per diem rate or the high-low rate. I need to file my 2011 tax return   You can use either of the following methods to figure the federal M&IE for that day. I need to file my 2011 tax return Method 1: For the day you depart, add 3/4 of the standard meal allowance amount for that day. I need to file my 2011 tax return For the day you return, add 3/4 of the standard meal allowance amount for the preceding day. I need to file my 2011 tax return Method 2: Prorate the standard meal allowance using any method you consistently apply in accordance with reasonable business practice. I need to file my 2011 tax return For example, an employer can treat 2 full days of per diem (that includes M&IE) paid for travel away from home from 9 a. I need to file my 2011 tax return m. I need to file my 2011 tax return of one day to 5 p. I need to file my 2011 tax return m. I need to file my 2011 tax return of the next day as being no more than the federal rate. I need to file my 2011 tax return This is true even though a federal employee would be limited to a reimbursement of M&IE for only 1½ days of the federal M&IE rate. I need to file my 2011 tax return The standard mileage rate. I need to file my 2011 tax return   This is a set rate per mile that you can use to compute your deductible car expenses. I need to file my 2011 tax return For 2013, the standard mileage rate for the cost of operating your car for business use is 56½ cents per mile. I need to file my 2011 tax return Fixed and variable rate (FAVR). I need to file my 2011 tax return   This is an allowance your employer may use to reimburse your car expenses. I need to file my 2011 tax return Under this method, your employer pays an allowance that includes a combination of payments covering fixed and variable costs, such as a cents-per-mile rate to cover your variable operating costs (such as gas, oil, etc. I need to file my 2011 tax return ) plus a flat amount to cover your fixed costs (such as depreciation (or lease payments), insurance, etc. I need to file my 2011 tax return ). I need to file my 2011 tax return If your employer chooses to use this method, your employer will request the necessary records from you. I need to file my 2011 tax return Reporting your expenses with a per diem or car allowance. I need to file my 2011 tax return   If your reimbursement is in the form of an allowance received under an accountable plan, the following facts affect your reporting. I need to file my 2011 tax return The federal rate. I need to file my 2011 tax return Whether the allowance or your actual expenses were more than the federal rate. I need to file my 2011 tax return The following discussions explain where to report your expenses depending upon how the amount of your allowance compares to the federal rate. I need to file my 2011 tax return Allowance less than or equal to the federal rate. I need to file my 2011 tax return   If your allowance is less than or equal to the federal rate, the allowance will not be included in box 1 of your Form W-2. I need to file my 2011 tax return You do not need to report the related expenses or the allowance on your return if your expenses are equal to or less than the allowance. I need to file my 2011 tax return   However, if your actual expenses are more than your allowance, you can complete Form 2106 and deduct the excess amount on Schedule A (Form 1040). I need to file my 2011 tax return If you are using actual expenses, you must be able to prove to the IRS the total amount of your expenses and reimbursements for the entire year. I need to file my 2011 tax return If you are using the standard meal allowance or the standard mileage rate, you do not have to prove that amount. I need to file my 2011 tax return Example 1. I need to file my 2011 tax return In April, Jeremy takes a 2-day business trip to Denver. I need to file my 2011 tax return The federal rate for Denver is $215 per day. I need to file my 2011 tax return As required by his employer's accountable plan, he accounts for the time (dates), place, and business purpose of the trip. I need to file my 2011 tax return His employer reimburses him $215 a day ($430 total) for living expenses. I need to file my 2011 tax return Jeremy's living expenses in Denver are not more than $215 a day. I need to file my 2011 tax return Jeremy's employer does not include any of the reimbursement on his Form W-2 and Jeremy does not deduct the expenses on his return. I need to file my 2011 tax return Example 2. I need to file my 2011 tax return In June, Matt takes a 2-day business trip to Boston. I need to file my 2011 tax return Matt's employer uses the high-low method to reimburse employees. I need to file my 2011 tax return Since Boston is a high-cost area, Matt is given an advance of $242 a day ($484 total) for his lodging, meals, and incidental expenses. I need to file my 2011 tax return Matt's actual expenses totaled $700. I need to file my 2011 tax return Since Matt's $700 of expenses are more than his $484 advance, he includes the excess expenses when he itemizes his deductions. I need to file my 2011 tax return Matt completes Form 2106 (showing all of his expenses and reimbursements). I need to file my 2011 tax return He must also allocate his reimbursement between his meals and other expenses as discussed later under Completing Forms 2106 and 2106-EZ . I need to file my 2011 tax return Example 3. I need to file my 2011 tax return Nicole drives 10,000 miles in 2013 for business. I need to file my 2011 tax return Under her employer's accountable plan, she accounts for the time (dates), place, and business purpose of each trip. I need to file my 2011 tax return Her employer pays her a mileage allowance of 40 cents a mile. I need to file my 2011 tax return Since Nicole's $5,650 expense computed under the standard mileage rate (10,000 miles x 56½ cents) is more than her $4,000 reimbursement (10,000 miles × 40 cents), she itemizes her deductions to claim the excess expense. I need to file my 2011 tax return Nicole completes Form 2106 (showing all her expenses and reimbursements) and enters $1,650 ($5,650 − $4,000) as an itemized deduction. I need to file my 2011 tax return Allowance more than the federal rate. I need to file my 2011 tax return   If your allowance is more than the federal rate, your employer must include the allowance amount up to the federal rate in box 12 of your Form W-2. I need to file my 2011 tax return This amount is not taxable. I need to file my 2011 tax return However, the excess allowance will be included in box 1 of your Form W-2. I need to file my 2011 tax return You must report this part of your allowance as if it were wage income. I need to file my 2011 tax return   If your actual expenses are less than or equal to the federal rate, you do not complete Form 2106 or claim any of your expenses on your return. I need to file my 2011 tax return   However, if your actual expenses are more than the federal rate, you can complete Form 2106 and deduct those excess expenses. I need to file my 2011 tax return You must report on Form 2106 your reimbursements up to the federal rate (as shown in box 12 of your Form W-2) and all your expenses. I need to file my 2011 tax return You should be able to prove these amounts to the IRS. I need to file my 2011 tax return Example 1. I need to file my 2011 tax return Laura lives and works in Austin. I need to file my 2011 tax return In July her employer sent her to Albuquerque for 4 days on business. I need to file my 2011 tax return Laura's employer paid the hotel directly for her lodging and reimbursed Laura $65 a day ($260 total) for meals and incidental expenses. I need to file my 2011 tax return Laura's actual meal expenses were not more than the federal rate for Albuquerque, which is $56 per day. I need to file my 2011 tax return Table 6-1. I need to file my 2011 tax return Reporting Travel, Entertainment, Gift, and Car Expenses and Reimbursements IF the type of reimbursement (or  other expense allowance)  arrangement is under: THEN the employer reports on Form W-2: AND the employee reports on  Form 2106: * An accountable plan with: Actual expense reimbursement: Adequate accounting made and excess returned. I need to file my 2011 tax return No amount. I need to file my 2011 tax return No amount. I need to file my 2011 tax return Actual expense reimbursement: Adequate accounting and return of excess both required but excess not returned. I need to file my 2011 tax return The excess amount as wages in box 1. I need to file my 2011 tax return No amount. I need to file my 2011 tax return Per diem or mileage allowance up to the federal rate: Adequate accounting made and excess returned. I need to file my 2011 tax return No amount. I need to file my 2011 tax return All expenses and reimbursements only if excess expenses are claimed. I need to file my 2011 tax return Otherwise, form is not filed. I need to file my 2011 tax return Per diem or mileage allowance up to the federal rate: Adequate accounting and return of excess both required but excess not returned. I need to file my 2011 tax return The excess amount as wages in box 1. I need to file my 2011 tax return The amount up to the federal rate is reported only in box 12—it is not reported in box 1. I need to file my 2011 tax return No amount. I need to file my 2011 tax return Per diem or mileage allowance exceeds the federal rate: Adequate accounting up to the federal rate only and excess not returned. I need to file my 2011 tax return The excess amount as wages in box 1. I need to file my 2011 tax return The amount up to the federal rate is reported only in box 12—it is not reported in box 1. I need to file my 2011 tax return All expenses (and reimbursements reported on Form W-2, box 12) only if expenses in excess of the federal rate are claimed. I need to file my 2011 tax return Otherwise, form is not filed. I need to file my 2011 tax return A nonaccountable plan with: Either adequate accounting or return of excess, or both, not required by plan. I need to file my 2011 tax return The entire amount as wages in box 1. I need to file my 2011 tax return All expenses. I need to file my 2011 tax return No reimbursement plan: The entire amount as wages in box 1. I need to file my 2011 tax return All expenses. I need to file my 2011 tax return * You may be able to use Form 2106-EZ. I need to file my 2011 tax return See Completing Forms 2106 and 2106-EZ . I need to file my 2011 tax return Her employer included the $36 that was more than the federal rate (($65 − $56) × 4) in box 1 of Laura's Form W-2. I need to file my 2011 tax return Her employer shows $224 ($56 a day × 4) in box 12 of her Form W-2. I need to file my 2011 tax return This amount is not included in Laura's income. I need to file my 2011 tax return Laura does not have to complete Form 2106; however, she must include the $36 in her gross income as wages (by reporting the total amount shown in box 1 of her Form W-2). I need to file my 2011 tax return Example 2. I need to file my 2011 tax return Joe also lives in Austin and works for the same employer as Laura. I need to file my 2011 tax return In May the employer sent Joe to San Diego for 4 days and paid the hotel directly for Joe's hotel bill. I need to file my 2011 tax return The employer reimbursed Joe $75 a day for his meals and incidental expenses. I need to file my 2011 tax return The federal rate for San Diego is $71 a day. I need to file my 2011 tax return Joe can prove that his actual meal expenses totaled $380. I need to file my 2011 tax return His employer's accountable plan will not pay more than $75 a day for travel to San Diego, so Joe does not give his employer the records that prove that he actually spent $380. I need to file my 2011 tax return However, he does account for the time, place, and business purpose of the trip. I need to file my 2011 tax return This is Joe's only business trip this year. I need to file my 2011 tax return Joe was reimbursed $300 ($75 × 4 days), which is $16 more than the federal rate of $284 ($71 × 4 days). I need to file my 2011 tax return The employer includes the $16 as income on Joe's Form W-2 in box 1. I need to file my 2011 tax return The employer also enters $284 in box 12 of Joe's Form W-2. I need to file my 2011 tax return Joe completes Form 2106 to figure his deductible expenses. I need to file my 2011 tax return He enters the total of his actual expenses for the year ($380) on Form 2106. I need to file my 2011 tax return He also enters the reimbursements that were not included in his income ($284). I need to file my 2011 tax return His total deductible expense, before the 50% limit, is $96. I need to file my 2011 tax return After he figures the 50% limit on his unreimbursed meals and entertainment, he will include the balance, $48, as an itemized deduction. I need to file my 2011 tax return Example 3. I need to file my 2011 tax return Debbie drives 10,000 miles in 2013 for business. I need to file my 2011 tax return Under her employer's accountable plan, she gets reimbursed 60 cents a mile, which is more than the standard mileage rate. I need to file my 2011 tax return Her total reimbursement is $6,000. I need to file my 2011 tax return Debbie's employer must include the reimbursement amount up to the standard mileage rate, $5,650 (10,000 × 56½ cents), in box 12 of her Form W-2. I need to file my 2011 tax return That amount is not taxable. I need to file my 2011 tax return Her employer must also include $350 ($6,000 − $5,650) in box 1 of her Form W-2. I need to file my 2011 tax return This is the reimbursement that is more than the standard mileage rate. I need to file my 2011 tax return If Debbie's expenses are equal to or less than the standard mileage rate, she would not complete Form 2106. I need to file my 2011 tax return If her expenses are more than the standard mileage rate, she would complete Form 2106 and report her total expenses and reimbursement (shown in box 12 of her Form W-2). I need to file my 2011 tax return She would then claim the excess expenses as an itemized deduction. I need to file my 2011 tax return Returning Excess Reimbursements Under an accountable plan, you are required to return any excess reimbursement or other expense allowances for your business expenses to the person paying the reimbursement or allowance. I need to file my 2011 tax return Excess reimbursement means any amount for which you did not adequately account within a reasonable period of time. I need to file my 2011 tax return For example, if you received a travel advance and you did not spend all the money on business-related expenses or you do not have proof of all your expenses, you have an excess reimbursement. I need to file my 2011 tax return “ Adequate accounting ” and “ reasonable period of time ” were discussed earlier in this chapter. I need to file my 2011 tax return Travel advance. I need to file my 2011 tax return   You receive a travel advance if your employer provides you with an expense allowance before you actually have the expense, and the allowance is reasonably expected to be no more than your expense. I need to file my 2011 tax return Under an accountable plan, you are required to adequately account to your employer for this advance and to return any excess within a reasonable period of time. I need to file my 2011 tax return   If you do not adequately account for or do not return any excess advance within a reasonable period of time, the amount you do not account for or return will be treated as having been paid under a nonaccountable plan (discussed later). I need to file my 2011 tax return Unproved amounts. I need to file my 2011 tax return   If you do not prove that you actually traveled on each day for which you received a per diem or car allowance (proving the elements described in Table 5-1 ), you must return this unproved amount of the travel advance within a reasonable period of time. I need to file my 2011 tax return If you do not do this, the unproved amount will be considered paid under a nonaccountable plan (discussed later). I need to file my 2011 tax return Per diem allowance more than federal rate. I need to file my 2011 tax return   If your employer's accountable plan pays you an allowance that is higher than the federal rate, you do not have to return the difference between the two rates for the period you can prove business-related travel expenses. I need to file my 2011 tax return However, the difference will be reported as wages on your Form W-2. I need to file my 2011 tax return This excess amount is considered paid under a nonaccountable plan (discussed later). I need to file my 2011 tax return Example. I need to file my 2011 tax return Your employer sends you on a 5-day business trip to Phoenix in March 2013 and gives you a $400 ($80 × 5 days) advance to cover your meals and incidental expenses. I need to file my 2011 tax return The federal per diem for meals and incidental expenses for Phoenix is $71. I need to file my 2011 tax return Your trip lasts only 3 days. I need to file my 2011 tax return Under your employer's accountable plan, you must return the $160 ($80 × 2 days) advance for the 2 days you did not travel. I need to file my 2011 tax return For the 3 days you did travel you do not have to return the $27 difference between the allowance you received and the federal rate for Phoenix (($80 − $71) × 3 days). I need to file my 2011 tax return However, the $27 will be reported on your Form W-2 as wages. I need to file my 2011 tax return Nonaccountable Plans A nonaccountable plan is a reimbursement or expense allowance arrangement that does not meet one or more of the three rules listed earlier under Accountable Plans. I need to file my 2011 tax return In addition, even if your employer has an accountable plan, the following payments will be treated as being paid under a nonaccountable plan: Excess reimbursements you fail to return to your employer, and Reimbursement of nondeductible expenses related to your employer's business. I need to file my 2011 tax return See Reimbursement of nondeductible expenses , earlier, under Accountable Plans. I need to file my 2011 tax return An arrangement that repays you for business expenses by reducing the amount reported as your wages, salary, or other pay will be treated as a nonaccountable plan. I need to file my 2011 tax return This is because you are entitled to receive the full amount of your pay whether or not you have any business expenses. I need to file my 2011 tax return If you are not sure if the reimbursement or expense allowance arrangement is an accountable or nonaccountable plan, ask your employer. I need to file my 2011 tax return Reporting your expenses under a nonaccountable plan. I need to file my 2011 tax return   Your employer will combine the amount of any reimbursement or other expense allowance paid to you under a nonaccountable plan with your wages, salary, or other pay. I need to file my 2011 tax return Your employer will report the total in box 1 of your Form W-2. I need to file my 2011 tax return    You must complete Form 2106 or 2106-EZ and itemize your deductions to deduct your expenses for travel, transportation, meals, or entertainment. I need to file my 2011 tax return Your meal and entertainment expenses will be subject to the 50% limit discussed in chapter 2. I need to file my 2011 tax return Also, your total expenses will be subject to the 2%-of-adjusted-gross-income limit that applies to most miscellaneous itemized deductions. I need to file my 2011 tax return Example 1. I need to file my 2011 tax return Kim's employer gives her $1,000 a month ($12,000 total for the year) for her business expenses. I need to file my 2011 tax return Kim does not have to provide any proof of her expenses to her employer, and Kim can keep any funds that she does not spend. I need to file my 2011 tax return Kim is being reimbursed under a nonaccountable plan. I need to file my 2011 tax return Her employer will include the $12,000 on Kim's Form W-2 as if it were wages. I need to file my 2011 tax return If Kim wants to deduct her business expenses, she must complete Form 2106 or 2106-EZ and itemize her deductions. I need to file my 2011 tax return Example 2. I need to file my 2011 tax return Kevin is paid $2,000 a month by his employer. I need to file my 2011 tax return On days that he travels away from home on business, his employer designates $50 a day of his salary as paid to reimburse his travel expenses. I need to file my 2011 tax return Because his employer would pay Kevin his monthly salary whether or not he was traveling away from home, the arrangement is a nonaccountable plan. I need to file my 2011 tax return No part of the $50 a day designated by his employer is treated as paid under an accountable plan. I need to file my 2011 tax return Rules for Independent Contractors and Clients This section provides rules for independent contractors who incur expenses on behalf of a client or customer. I need to file my 2011 tax return The rules cover the reporting and substantiation of certain expenses discussed in this publication, and they affect both independent contractors and their clients or customers. I need to file my 2011 tax return You are considered an independent contractor if you are self-employed and you perform services for a customer or client. I need to file my 2011 tax return Accounting to Your Client If you received a reimbursement or an allowance for travel, entertainment, or gift expenses that you incurred on behalf of a client, you should provide an adequate accounting of these expenses to your client. I need to file my 2011 tax return If you do not account to your client for these expenses, you must include any reimbursements or allowances in income. I need to file my 2011 tax return You must keep adequate records of these expenses whether or not you account to your client for these expenses. I need to file my 2011 tax return If you do not separately account for and seek reimbursement for meals and entertainment in connection with providing services for a client, you are subject to the 50% limit on those expenses. I need to file my 2011 tax return See 50% Limit in chapter 2. I need to file my 2011 tax return Adequate accounting. I need to file my 2011 tax return   As a self-employed person, you adequately account by reporting your actual expenses. I need to file my 2011 tax return You should follow the recordkeeping rules in chapter 5 . I need to file my 2011 tax return How to report. I need to file my 2011 tax return   For information on how to report expenses on your tax return, see Self-employed at the beginning of this chapter. I need to file my 2011 tax return Required Records for Clients or Customers If you are a client or customer, you generally do not have to keep records to prove the reimbursements or allowances you give, in the course of your business, to an independent contractor for travel or gift expenses incurred on your behalf. I need to file my 2011 tax return However, you must keep records if: You reimburse the contractor for entertainment expenses incurred on your behalf, and The contractor adequately accounts to you for these expenses. I need to file my 2011 tax return Contractor adequately accounts. I need to file my 2011 tax return   If the contractor adequately accounts to you for entertainment expenses, you (the client or customer) must keep records documenting each element of the expense, as explained in chapter 5 . I need to file my 2011 tax return Use your records as proof for a deduction on your tax return. I need to file my 2011 tax return If entertainment expenses are accounted for separately, you are subject to the 50% limit on entertainment. I need to file my 2011 tax return If the contractor adequately accounts to you for reimbursed amounts, you do not have to report the amounts on an information return. I need to file my 2011 tax return Contractor does not adequately account. I need to file my 2011 tax return    If the contractor does not adequately account to you for allowances or reimbursements of entertainment expenses, you do not have to keep records of these items. I need to file my 2011 tax return You are not subject to the 50% limit on entertainment in this case. I need to file my 2011 tax return You can deduct the reimbursements or allowances as payment for services if they are ordinary and necessary business expenses. I need to file my 2011 tax return However, you must file Form 1099-MISC to report amounts paid to the independent contractor if the total of the reimbursements and any other fees is $600 or more during the calendar year. I need to file my 2011 tax return How To Use Per Diem Rate Tables This section contains information about the per diem rate substantiation methods available and the choice of rates you must make for the last 3 months of the year. I need to file my 2011 tax return The Two Substantiation Methods High-low method. I need to file my 2011 tax return   IRS notices list the localities that are treated under the high-low substantiation method as high-cost localities for all or part of the year. I need to file my 2011 tax return Notice 2012–63, available at www. I need to file my 2011 tax return irs. I need to file my 2011 tax return gov/irb/2012–42_IRB/ar12. I need to file my 2011 tax return html, lists the localities that are eligible for $242 ($65 meals and incidental expenses (M&IE)) per diem, effective October 1, 2012. I need to file my 2011 tax return For travel on or after October 1, 2012, all other localities within CONUS are eligible for $163 ($52 M&IE) per diem under the high-low method. I need to file my 2011 tax return   Notice 2013–65, available at www. I need to file my 2011 tax return irs. I need to file my 2011 tax return gov/pub/irs-drop/n-13–65. I need to file my 2011 tax return pdf, lists the localities that are eligible for $251 ($65 M&IE) per diem, effective October 1, 2013. I need to file my 2011 tax return For travel on or after October 1, 2013, the per diem for all other localities increased to $170 ($52 M&IE). I need to file my 2011 tax return Regular federal per diem rate method. I need to file my 2011 tax return   Regular federal per diem rates are published by the General Services Administration (GSA). I need to file my 2011 tax return Both tables include the separate rate for meals and incidental expenses (M&IE) for each locality. I need to file my 2011 tax return The rates listed for FY2013 at www. I need to file my 2011 tax return gsa. I need to file my 2011 tax return gov/perdiem are effective October 1, 2012 and those listed for FY2014 are effective October 1, 2013. I need to file my 2011 tax return The standard rate for all locations within CONUS not specifically listed for FY2013 is $123 ($77 for lodging and $46 for M&IE). I need to file my 2011 tax return For FY2014, this rate increased to $129 ($83 for lodging and $46 for M&IE). I need to file my 2011 tax return Transition Rules The transition period covers the last 3 months of the calendar year, from the time that new rates are effective (generally October 1) through December 31. I need to file my 2011 tax return During this period, you generally may change to the new rates or finish out the year with the rates you had been using. I need to file my 2011 tax return High-low method. I need to file my 2011 tax return   If you use the high-low substantiation method, when new rates become effective (generally October 1) you can either continue with the rates you used for the first part of the year or change to the new rates. I need to file my 2011 tax return However, you must continue using the high-low method for the rest of the calendar year (through December 31). I need to file my 2011 tax return If you are an employer, you must use the same rates for all employees reimbursed under the high-low method during that calendar year. I need to file my 2011 tax return   The new rates and localities for the high-low method are included each year in a notice that is generally published in mid-to-late-September. I need to file my 2011 tax return You can find the notice in the weekly Internal Revenue Bulletin (IRB) on the Internet at www. I need to file my 2011 tax return irs. I need to file my 2011 tax return gov/irb. I need to file my 2011 tax return Federal per diem rate method. I need to file my 2011 tax return   New CONUS per diem rates become effective on October 1 of each year and remain in effect through September 30 of the following year. I need to file my 2011 tax return Employees being reimbursed under the per diem rate method during the first 9 months of a year (January 1–September 30) must continue under the same method through the end of that calendar year (December 31). I need to file my 2011 tax return However, for travel by these employees from October 1 through December 31, you can choose to continue using the same per diem rates or use the new rates. I need to file my 2011 tax return   The new federal CONUS per diem rates are published each year, generally early in September, on the Internet. I need to file my 2011 tax return Go to www. I need to file my 2011 tax return gsa. I need to file my 2011 tax return gov/perdiem. I need to file my 2011 tax return Per diem rates for localities listed for FY2014 may change at any time. I need to file my 2011 tax return To be sure you have the most current rate, check www. I need to file my 2011 tax return gsa. I need to file my 2011 tax return gov/perdiem. I need to file my 2011 tax return Completing Forms 2106 and 2106-EZ This section briefly describes how employees complete Forms 2106 and 2106-EZ. I need to file my 2011 tax return Table 6-1 explains what the employer reports on Form W-2 and what the employee reports on Form 2106. I need to file my 2011 tax return The instructions for the forms have more information on completing them. I need to file my 2011 tax return If you are self-employed, do not file Form 2106 or 2106-EZ. I need to file my 2011 tax return Report your expenses on Schedule C (Form 1040), Schedule C-EZ (Form 1040), or Schedule F (Form 1040). I need to file my 2011 tax return See the instructions for the form that you must file. I need to file my 2011 tax return Form 2106-EZ. I need to file my 2011 tax return   You may be able to use the shorter Form 2106-EZ to claim your employee business expenses. I need to file my 2011 tax return You can use this form if you meet all the following conditions. I need to file my 2011 tax return You are an employee deducting ordinary and necessary expenses attributable to your job. I need to file my 2011 tax return You were not reimbursed by your employer for your expenses (amounts included in box 1 of your Form W-2 are not considered reimbursements). I need to file my 2011 tax return If you are claiming car expenses, you are using the standard mileage rate. I need to file my 2011 tax return Car expenses. I need to file my 2011 tax return   If you used a car to perform your job as an employee, you may be able to deduct certain car expenses. I need to file my 2011 tax return These are generally figured on Form 2106, Part II, and then claimed on Form 2106, Part I, line 1, Column A. I need to file my 2011 tax return Car expenses using the standard mileage rate can also be figured on Form 2106-EZ by completing Part II and Part I, line 1. I need to file my 2011 tax return Information on use of cars. I need to file my 2011 tax return   If you claim any deduction for the business use of a car, you must answer certain questions and provide information about the use of the car. I need to file my 2011 tax return The information relates to the following items. I need to file my 2011 tax return Date placed in service. I need to file my 2011 tax return Mileage (total, business, commuting, and other personal mileage). I need to file my 2011 tax return Percentage of business use. I need to file my 2011 tax return After-work use. I need to file my 2011 tax return Use of other vehicles. I need to file my 2011 tax return Whether you have evidence to support the deduction. I need to file my 2011 tax return Whether or not the evidence is written. I need to file my 2011 tax return Employees must complete Form 2106, Part II, Section A, or Form 2106-EZ, Part II, to provide this information. I need to file my 2011 tax return Standard mileage rate. I need to file my 2011 tax return   If you claim a deduction based on the standard mileage rate instead of your actual expenses, you must complete Form 2106, Part II, Section B. I need to file my 2011 tax return The amount on line 22 (Section B) is carried to Form 2106, Part I, line 1. I need to file my 2011 tax return In addition, on Part 1, line 2, you can deduct parking fees and tolls that apply to the business use of the car. I need to file my 2011 tax return If you file Form 2106-EZ, complete Part I, line 1, for the standard mileage rate and line 2 for parking fees and tolls. I need to file my 2011 tax return See Standard Mileage Rate in chapter 4 for information on using this rate. I need to file my 2011 tax return Actual expenses. I need to file my 2011 tax return   If you claim a deduction based on actual car expenses, you cannot use Form 2106-EZ. I need to file my 2011 tax return You must complete Form 2106, Part II, Section C. I need to file my 2011 tax return In addition, unless you lease your car, you must complete Section D to show your depreciation deduction and any section 179 deduction you claim. I need to file my 2011 tax return   If you are still using a car that is fully depreciated, continue to complete Section C. I need to file my 2011 tax return Since you have no depreciation deduction, enter zero on line 28. I need to file my 2011 tax return In this case, do not complete Section D. I need to file my 2011 tax return Car rentals. I need to file my 2011 tax return   If you claim car rental expenses on Form 2106, line 24a, you may have to reduce that expense by an inclusion amount as described in chapter 4. I need to file my 2011 tax return If so, you can show your car expenses and any inclusion amount as follows. I need to file my 2011 tax return Compute the inclusion amount without taking into account your business use percentage for the tax year. I need to file my 2011 tax return Report the inclusion amount from (1) on Form 2106, Part II, line 24b. I need to file my 2011 tax return Report on line 24c the net amount of car rental expenses (total car rental expenses minus the inclusion amount computed in (1)). I need to file my 2011 tax return The net amount of car rental expenses will be adjusted on Form 2106, Part II, line 27, to reflect the percentage of business use for the tax year. I need to file my 2011 tax return Transportation expenses. I need to file my 2011 tax return   Show your transportation expenses that did not involve overnight travel on Form 2106, line 2, Column A, or on Form 2106-EZ, Part I, line 2. I need to file my 2011 tax return Also include on this line business expenses you have for parking fees and tolls. I need to file my 2011 tax return Do not include expenses of operating your car or expenses of commuting between your home and work. I need to file my 2011 tax return Employee business expenses other than meals and entertainment. I need to file my 2011 tax return   Show your other employee business expenses on Form 2106, lines 3 and 4, Column A, or Form 2106-EZ, lines 3 and 4. I need to file my 2011 tax return Do not include expenses for meals and entertainment on those lines. I need to file my 2011 tax return Line 4 is for expenses such as gifts, educational expenses (tuition and books), office-in-the-home expenses, and trade and professional publications. I need to file my 2011 tax return    If line 4 expenses are the only ones you are claiming, you received no reimbursements (or the reimbursements were all included in box 1 of your Form W-2), and the Special Rules discussed later do not apply to you, do not complete Form 2106 or 2106-EZ. I need to file my 2011 tax return Claim these amounts directly on Schedule A (Form 1040), line 21. I need to file my 2011 tax return List the type and amount of each expense on the dotted lines and include the total on line 21. I need to file my 2011 tax return Meal and entertainment expenses. I need to file my 2011 tax return   Show the full amount of your expenses for business-related meals and entertainment on Form 2106, line 5, Column B. I need to file my 2011 tax return Include meals while away from your tax home overnight and other business meals and entertainment. I need to file my 2011 tax return Enter 50% of the line 8, Column B, meal and entertainment expenses on line 9, Column B. I need to file my 2011 tax return   If you file Form 2106-EZ, enter the full amount of your meals and entertainment on the line to the left of line 5 and multiply the total by 50%. I need to file my 2011 tax return Enter the result on line 5. I need to file my 2011 tax return Hours of service limits. I need to file my 2011 tax return   If you are subject to the Department of Transportation's “hours of service” limits (as explained earlier under Individuals subject to “hours of service” limits in chapter 2), use 80% instead of 50% for meals while away from your tax home. I need to file my 2011 tax return Reimbursements. I need to file my 2011 tax return   Enter on Form 2106, line 7 (you cannot use Form 2106-EZ) the amounts your employer (or third party) reimbursed you that were not reported to you in box 1 of your Form W-2. I need to file my 2011 tax return This includes any amount reported under code L in box 12 of Form W-2. I need to file my 2011 tax return Allocating your reimbursement. I need to file my 2011 tax return   If you were reimbursed under an accountable plan and want to deduct excess expenses that were not reimbursed, you may have to allocate your reimbursement. I need to file my 2011 tax return This is necessary when your employer pays your reimbursement in the following manner: Pays you a single amount that covers meals and/or entertainment, as well as other business expenses, and Does not clearly identify how much is for deductible meals and/or entertainment. I need to file my 2011 tax return You must allocate that single payment so that you know how much to enter on Form 2106, line 7, Column A and Column B. I need to file my 2011 tax return Example. I need to file my 2011 tax return Rob's employer paid him an expense allowance of $12,000 this year under an accountable plan. I need to file my 2011 tax return The $12,000 payment consisted of $5,000 for airfare and $7,000 for meals, entertainment, and car expenses. I need to file my 2011 tax return The employer did not clearly show how much of the $7,000 was for the cost of deductible meals and entertainment. I need to file my 2011 tax return Rob actually spent $14,000 during the year ($5,500 for airfare, $4,500 for meals and entertainment, and $4,000 for car expenses). I need to file my 2011 tax return Since the airfare allowance was clearly identified, Rob knows that $5,000 of the payment goes in Column A, line 7, of Form 2106. I need to file my 2011 tax return To allocate the remaining $7,000, Rob uses the worksheet from the Instructions for Form 2106. I need to file my 2011 tax return His completed worksheet follows. I need to file my 2011 tax return Reimbursement Allocation Worksheet (Keep for your records)   1. I need to file my 2011 tax return Enter the total amount of reimbursements your employer gave you that were not reported to you in box 1 of Form W-2 $7,000   2. I need to file my 2011 tax return Enter the total amount of your expenses for the periods covered by this reimbursement 8,500   3. I need to file my 2011 tax return Of the amount on line 2, enter your total expense for meals and entertainment 4,500   4. I need to file my 2011 tax return Divide line 3 by line 2. I need to file my 2011 tax return Enter the result as a decimal (rounded to at least three places) . I need to file my 2011 tax return 529   5. I need to file my 2011 tax return Multiply line 1 by line 4. I need to file my 2011 tax return Enter the result here and in Column B, line 7 3,703   6. I need to file my 2011 tax return Subtract line 5 from line 1. I need to file my 2011 tax return Enter the result here and in Column A, line 7 $3,297 On line 7 of Form 2106, Rob enters $8,297 ($5,000 airfare and $3,297 of the $7,000) in Column A and $3,703 (of the $7,000) in Column B. I need to file my 2011 tax return After you complete the form. I need to file my 2011 tax return   After you have completed your Form 2106 or 2106-EZ, follow the directions on that form to deduct your expenses on the appropriate line of your tax return. I need to file my 2011 tax return For most taxpayers, this is line 21 of Schedule A (Form 1040). I need to file my 2011 tax return However, if you are a government official paid on a fee basis, a performing artist, an Armed Forces reservist, or a disabled employee with impairment-related work expenses, see Special Rules , later. I need to file my 2011 tax return Limits on employee business expenses. I need to file my 2011 tax return   Your employee business expenses may be subject to either of the limits described next. I need to file my 2011 tax return They are figured in the following order on the specified form. I need to file my 2011 tax return 1. I need to file my 2011 tax return Limit on meals and entertainment. I need to file my 2011 tax return   Certain meal and entertainment expenses are subject to a 50% limit. I need to file my 2011 tax return If you are an employee, you figure this limit on line 9 of Form 2106 or line 5 of Form 2106-EZ. I need to file my 2011 tax return (See 50% Limit in chapter 2. I need to file my 2011 tax return ) 2. I need to file my 2011 tax return Limit on miscellaneous itemized deductions. I need to file my 2011 tax return   If you are an employee, deduct your employee business expenses (as figured on Form 2106 or 2106-EZ) on line 21 of Schedule A (Form 1040). I need to file my 2011 tax return Most miscellaneous itemized deductions, including employee business expenses, are subject to a 2%-of-adjusted-gross-income limit. I need to file my 2011 tax return This limit is figured on line 26 of Schedule A (Form 1040). I need to file my 2011 tax return 3. I need to file my 2011 tax return Limit on total itemized deductions. I need to file my 2011 tax return   If your adjusted gross income (line 38 of Form 1040) is more than $300,000 ($150,000 if you are married filing separately), the total of certain itemized deductions, including employee business expenses, may be limited. I need to file my 2011 tax return See your form instructions for information on how to figure this limit. I need to file my 2011 tax return Special Rules This section discusses special rules that apply only to Armed Forces reservists, government officials who are paid on a fee basis, performing artists, and disabled employees with impairment-related work expenses. I need to file my 2011 tax return Armed Forces Reservists Traveling More Than 100 Miles From Home If you are a member of a reserve component of the Armed Forces of the United States and you travel more than 100 miles away from home in connection with your performance of services as a member of the reserves, you can deduct your travel expenses as an adjustment to gross income rather than as a miscellaneous itemized deduction. I need to file my 2011 tax return The amount of expenses you can deduct as an adjustment to gross income is limited to the regular federal per diem rate (for lodging, meals, and incidental expenses) and the standard mileage rate (for car expenses) plus any parking fees, ferry fees, and tolls. I need to file my 2011 tax return See Per Diem and Car Allowances , earlier, for more information. I need to file my 2011 tax return Any expenses in excess of these amounts can be claimed only as a miscellaneous itemized deduction subject to the 2% limit. I need to file my 2011 tax return Member of a reserve component. I need to file my 2011 tax return   You are a member of a reserve component of the Armed Forces of the United States if you are in the Army, Navy, Marine Corps, Air Force, or Coast Guard Reserve; the Army National Guard of the United States; the Air National Guard of the United States; or the Reserve Corps of the Public Health Service. I need to file my 2011 tax return How to report. I need to file my 2011 tax return   If you have reserve-related travel that takes you more than 100 miles from home, you should first complete Form 2106 or Form 2106-EZ. I need to file my 2011 tax return Then include your expenses for reserve travel over 100 miles from home, up to the federal rate, from Form 2106, line 10, or Form 2106-EZ, line 6, in the total on Form 1040, line 24. I need to file my 2011 tax return Subtract this amount from the total on Form 2106, line 10, or Form 2106-EZ, line 6, and deduct the balance as an itemized deduction on Schedule A (Form 1040), line 21. I need to file my 2011 tax return   You cannot deduct expenses of travel that does not take you more than 100 miles from home as an adjustment to gross income. I need to file my 2011 tax return Instead, you must complete Form 2106 or 2106-EZ and deduct those expenses as an itemized deduction on Schedule A (Form 1040), line 21. I need to file my 2011 tax return Officials Paid on a Fee Basis Certain fee-basis officials can claim their employee business expenses whether or not they itemize their other deductions on Schedule A (Form 1040). I need to file my 2011 tax return Fee-basis officials are persons who are employed by a state or local government and who are paid in whole or in part on a fee basis. I need to file my 2011 tax return They can deduct their business expenses in performing services in that job as an adjustment to gross income rather than as a miscellaneous itemized deduction. I need to file my 2011 tax return If you are a fee-basis official, include your employee business expenses from Form 2106, line 10, or Form 2106-EZ, line 6, in the total on Form 1040, line 24. I need to file my 2011 tax return Expenses of Certain Performing Artists If you are a performing artist, you may qualify to deduct your employee business expenses as an adjustment to gross income rather than as a miscellaneous itemized deduction. I need to file my 2011 tax return To qualify, you must meet all of the following requirements. I need to file my 2011 tax return During the tax year, you perform services in the performing arts as an employee for at least two employers. I need to file my 2011 tax return You receive at least $200 each from any two of these employers. I need to file my 2011 tax return Your related performing-arts business expenses are more than 10% of your gross income from the performance of those services. I need to file my 2011 tax return Your adjusted gross income is not more than $16,000 before deducting these business expenses. I need to file my 2011 tax return Special rules for married persons. I need to file my 2011 tax return   If you are married, you must file a joint return unless you lived apart from your spouse at all times during the tax year. I need to file my 2011 tax return If you file a joint return, you must figure requirements (1), (2), and (3) separately for both you and your spouse. I need to file my 2011 tax return However, requirement (4) applies to your and your spouse's combined adjusted gross income. I need to file my 2011 tax return Where to report. I need to file my 2011 tax return   If you meet all of the above requirements, you should first complete Form 2106 or 2106-EZ. I need to file my 2011 tax return Then you include your performing-arts-related expenses from Form 2106, line 10, or Form 2106-EZ, line 6, in the total on Form 1040, line 24. I need to file my 2011 tax return   If you do not meet all of the above requirements, you do not qualify to deduct your expenses as an adjustment to gross income. I need to file my 2011 tax return Instead, you must complete Form 2106 or 2106-EZ and deduct your employee business expenses as an itemized deduction on Schedule A (Form 1040), line 21. I need to file my 2011 tax return Impairment-Related Work Expenses of Disabled Employees If you are an employee with a physical or mental disability, your impairment-related work expenses are not subject to the 2%-of-adjusted-gross-income limit that applies to most other employee business expenses. I need to file my 2011 tax return After you complete Form 2106 or 2106-EZ, enter your impairment-related work expenses from Form 2106, line 10, or Form 2106-EZ, line 6, on Schedule A (Form 1040), line 28, and identify the type and amount of this expense on the dotted line next to line 28. I need to file my 2011 tax return Enter your employee business expenses that are unrelated to your disability from Form 2106, line 10, or Form 2106-EZ, line 6, on Schedule A (Form 1040), line 21. I need to file my 2011 tax return Impairment-related work expenses are your allowable expenses for attendant care at your workplace and other expenses in connection with your workplace that are necessary for you to be able to work. I need to file my 2011 tax return You are disabled if you have: A physical or mental disability (for example, blindness or deafness) that functionally limits your being employed, or A physical or mental impairment (for example, a sight or hearing impairment) that substantially limits one or more of your major life activities, such as performing manual tasks, walking, speaking, breathing, learning, or working. I need to file my 2011 tax return You can deduct impairment-related expenses as business expenses if they are: Necessary for you to do your work satisfactorily, For goods and services not required or used, other than incidentally, in your personal activities, and Not specifically covered under other income tax laws. I need to file my 2011 tax return Example 1. I need to file my 2011 tax return You are blind. I need to file my 2011 tax return You must use a reader to do your work. I need to file my 2011 tax return You use the reader both during your regular working hours at your place of work and outside your regular working hours away from your place of work. I need to file my 2011 tax return The reader's services are only for your work. I need to file my 2011 tax return You can deduct your expenses for the reader as business expenses. I need to file my 2011 tax return Example 2. I need to file my 2011 tax return You are deaf. I need to file my 2011 tax return You must use a sign language interpreter during meetings while you are at work. I need to file my 2011 tax return The interpreter's services are used only for your work. I need to file my 2011 tax return You can deduct your expenses for the interpreter as business expenses. I need to file my 2011 tax return Prev  Up  Next   Home   More Online Publications
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I need to file my 2011 tax return Publication 15-A - Main Content Table of Contents 1. I need to file my 2011 tax return Who Are Employees?Independent Contractors Common-Law Employees Statutory Employees Statutory Nonemployees Misclassification of Employees 2. I need to file my 2011 tax return Employee or Independent Contractor?Common-Law Rules Industry Examples 3. I need to file my 2011 tax return Employees of Exempt OrganizationsSocial security and Medicare taxes. I need to file my 2011 tax return FUTA tax. I need to file my 2011 tax return 4. I need to file my 2011 tax return Religious Exemptions and Special Rules for MinistersForm W-2. I need to file my 2011 tax return Self-employed. I need to file my 2011 tax return Employees. I need to file my 2011 tax return 5. I need to file my 2011 tax return Wages and Other CompensationRelocating for Temporary Work Assignments Employee Achievement Awards Scholarship and Fellowship Payments Outplacement Services Withholding for Idle Time Back Pay Supplemental Unemployment Benefits Golden Parachute Payments Interest-Free and Below-Market-Interest-Rate Loans Leave Sharing Plans Nonqualified Deferred Compensation Plans Tax-Sheltered Annuities Contributions to a Simplified Employee Pension (SEP) SIMPLE Retirement Plans 6. I need to file my 2011 tax return Sick Pay ReportingSick Pay Payments That Are Not Sick Pay Sick Pay Plan Third-Party Payers of Sick Pay Social Security, Medicare, and FUTA Taxes on Sick Pay Income Tax Withholding on Sick Pay Depositing and Reporting Example of Figuring and Reporting Sick Pay 7. I need to file my 2011 tax return Special Rules for Paying TaxesCommon Paymaster Agents Reporting Agents Employee's Portion of Taxes Paid by Employer International Social Security Agreements 8. I need to file my 2011 tax return Pensions and AnnuitiesFederal Income Tax Withholding 9. I need to file my 2011 tax return Alternative Methods for Figuring WithholdingTerm of continuous employment. I need to file my 2011 tax return Formula Tables for Percentage Method Withholding (for Automated Payroll Systems) Wage Bracket Percentage Method Tables (for Automated Payroll Systems) Combined Federal Income Tax, Employee Social Security Tax, and Employee Medicare Tax Withholding Tables 10. I need to file my 2011 tax return Tables for Withholding on Distributions of Indian Gaming Profits to Tribal MembersWithholding Tables How To Get Tax Help 1. I need to file my 2011 tax return Who Are Employees? Before you can know how to treat payments that you make to workers for services, you must first know the business relationship that exists between you and the person performing the services. I need to file my 2011 tax return The person performing the services may be: An independent contractor, A common-law employee, A statutory employee, or A statutory nonemployee. I need to file my 2011 tax return This discussion explains these four categories. I need to file my 2011 tax return A later discussion, Employee or Independent Contractor in section 2, points out the differences between an independent contractor and an employee and gives examples from various types of occupations. I need to file my 2011 tax return If an individual who works for you is not an employee under the common-law rules (see section 2), you generally do not have to withhold federal income tax from that individual's pay. I need to file my 2011 tax return However, in some cases you may be required to withhold under the backup withholding requirements on these payments. I need to file my 2011 tax return See Publication 15 (Circular E) for information on backup withholding. I need to file my 2011 tax return Independent Contractors People such as doctors, veterinarians, and auctioneers who follow an independent trade, business, or profession in which they offer their services to the public, are generally not employees. I need to file my 2011 tax return However, whether such people are employees or independent contractors depends on the facts in each case. I need to file my 2011 tax return The general rule is that an individual is an independent contractor if you, the person for whom the services are performed, have the right to control or direct only the result of the work and not the means and methods of accomplishing the result. I need to file my 2011 tax return Common-Law Employees Under common-law rules, anyone who performs services for you is generally your employee if you have the right to control what will be done and how it will be done. I need to file my 2011 tax return This is so even when you give the employee freedom of action. I need to file my 2011 tax return What matters is that you have the right to control the details of how the services are performed. I need to file my 2011 tax return For a discussion of facts that indicate whether an individual providing services is an independent contractor or employee, see section 2. I need to file my 2011 tax return If you have an employer-employee relationship, it makes no difference how it is labeled. I need to file my 2011 tax return The substance of the relationship, not the label, governs the worker's status. I need to file my 2011 tax return It does not matter whether the individual is employed full time or part time. I need to file my 2011 tax return For employment tax purposes, no distinction is made between classes of employees. I need to file my 2011 tax return Superintendents, managers, and other supervisory personnel are all employees. I need to file my 2011 tax return An officer of a corporation is generally an employee; however, an officer who performs no services or only minor services, and neither receives nor is entitled to receive any pay, is not considered an employee. I need to file my 2011 tax return A director of a corporation is not an employee with respect to services performed as a director. I need to file my 2011 tax return You generally have to withhold and pay income, social security, and Medicare taxes on wages that you pay to common-law employees. I need to file my 2011 tax return However, the wages of certain employees may be exempt from one or more of these taxes. I need to file my 2011 tax return See Employees of Exempt Organizations (section 3) and Religious Exemptions and Special Rules for Ministers (section 4). I need to file my 2011 tax return Leased employees. I need to file my 2011 tax return   Under certain circumstances, a firm that furnishes workers to other firms is the employer of those workers for employment tax purposes. I need to file my 2011 tax return For example, a temporary staffing service may provide the services of secretaries, nurses, and other similarly trained workers to its clients on a temporary basis. I need to file my 2011 tax return   The staffing service enters into contracts with the clients under which the clients specify the services to be provided and a fee is paid to the staffing service for each individual furnished. I need to file my 2011 tax return The staffing service has the right to control and direct the worker's services for the client, including the right to discharge or reassign the worker. I need to file my 2011 tax return The staffing service hires the workers, controls the payment of their wages, provides them with unemployment insurance and other benefits, and is the employer for employment tax purposes. I need to file my 2011 tax return For information on employee leasing as it relates to pension plan qualification requirements, see Leased employee in Publication 560, Retirement Plans for Small Business. I need to file my 2011 tax return Additional information. I need to file my 2011 tax return   For more information about the treatment of special types of employment, the treatment of special types of payments, and similar subjects, see Publication 15 (Circular E) or Publication 51 (Circular A), Agricultural Employer's Tax Guide. I need to file my 2011 tax return Statutory Employees If workers are independent contractors under the common law rules, such workers may nevertheless be treated as employees by statute, (also known as “statutory employees”) for certain employment tax purposes. I need to file my 2011 tax return This would happen if they fall within any one of the following four categories and meet the three conditions described next under Social security and Medicare taxes . I need to file my 2011 tax return A driver who distributes beverages (other than milk) or meat, vegetable, fruit, or bakery products; or who picks up and delivers laundry or dry cleaning, if the driver is your agent or is paid on commission. I need to file my 2011 tax return A full-time life insurance sales agent whose principal business activity is selling life insurance or annuity contracts, or both, primarily for one life insurance company. I need to file my 2011 tax return An individual who works at home on materials or goods that you supply and that must be returned to you or to a person you name, if you also furnish specifications for the work to be done. I need to file my 2011 tax return A full-time traveling or city salesperson who works on your behalf and turns in orders to you from wholesalers, retailers, contractors, or operators of hotels, restaurants, or other similar establishments. I need to file my 2011 tax return The goods sold must be merchandise for resale or supplies for use in the buyer's business operation. I need to file my 2011 tax return The work performed for you must be the salesperson's principal business activity. I need to file my 2011 tax return See Salesperson in section 2. I need to file my 2011 tax return Social security and Medicare taxes. I need to file my 2011 tax return   You must withhold social security and Medicare taxes from the wages of statutory employees if all three of the following conditions apply. I need to file my 2011 tax return The service contract states or implies that substantially all the services are to be performed personally by them. I need to file my 2011 tax return They do not have a substantial investment in the equipment and property used to perform the services (other than an investment in facilities for transportation, such as a car or truck). I need to file my 2011 tax return The services are performed on a continuing basis for the same payer. I need to file my 2011 tax return Federal unemployment (FUTA) tax. I need to file my 2011 tax return   For FUTA tax (the unemployment tax paid under the Federal Unemployment Tax Act), the term “employee” means the same as it does for social security and Medicare taxes, except that it does not include statutory employees defined above in categories 2 and 3. I need to file my 2011 tax return Any individual who is a statutory employee described above under category 1 or 4 is also an employee for FUTA tax purposes and subject to FUTA tax. I need to file my 2011 tax return Income tax. I need to file my 2011 tax return   Do not withhold federal income tax from the wages of statutory employees. I need to file my 2011 tax return Reporting payments to statutory employees. I need to file my 2011 tax return   Furnish Form W-2 to a statutory employee, and check “Statutory employee” in box 13. I need to file my 2011 tax return Show your payments to the employee as “other compensation” in box 1. I need to file my 2011 tax return Also, show social security wages in box 3, social security tax withheld in box 4, Medicare wages in box 5, and Medicare tax withheld in box 6. I need to file my 2011 tax return The statutory employee can deduct his or her trade or business expenses from the payments shown on Form W-2. I need to file my 2011 tax return He or she reports earnings as a statutory employee on line 1 of Schedule C (Form 1040), Profit or Loss From Business, or Schedule C-EZ (Form 1040), Net Profit From Business. I need to file my 2011 tax return A statutory employee's business expenses are deductible on Schedule C (Form 1040) or C-EZ (Form 1040) and are not subject to the reduction by 2% of his or her adjusted gross income that applies to common-law employees. I need to file my 2011 tax return H-2A agricultural workers. I need to file my 2011 tax return   On Form W-2, do not check box 13 (Statutory employee), as H-2A workers are not statutory employees. I need to file my 2011 tax return Statutory Nonemployees There are three categories of statutory nonemployees: direct sellers, licensed real estate agents, and certain companion sitters. I need to file my 2011 tax return Direct sellers and licensed real estate agents are treated as self-employed for all federal tax purposes, including income and employment taxes, if: Substantially all payments for their services as direct sellers or real estate agents are directly related to sales or other output, rather than to the number of hours worked, and Their services are performed under a written contract providing that they will not be treated as employees for federal tax purposes. I need to file my 2011 tax return Direct sellers. I need to file my 2011 tax return   Direct sellers include persons falling within any of the following three groups. I need to file my 2011 tax return Persons engaged in selling (or soliciting the sale of) consumer products in the home or place of business other than in a permanent retail establishment. I need to file my 2011 tax return Persons engaged in selling (or soliciting the sale of) consumer products to any buyer on a buy-sell basis, a deposit-commission basis, or any similar basis prescribed by regulations, for resale in the home or at a place of business other than in a permanent retail establishment. I need to file my 2011 tax return Persons engaged in the trade or business of delivering or distributing newspapers or shopping news (including any services directly related to such delivery or distribution). I need to file my 2011 tax return   Direct selling includes activities of individuals who attempt to increase direct sales activities of their direct sellers and who earn income based on the productivity of their direct sellers. I need to file my 2011 tax return Such activities include providing motivation and encouragement; imparting skills, knowledge, or experience; and recruiting. I need to file my 2011 tax return Licensed real estate agents. I need to file my 2011 tax return   This category includes individuals engaged in appraisal activities for real estate sales if they earn income based on sales or other output. I need to file my 2011 tax return Companion sitters. I need to file my 2011 tax return   Companion sitters are individuals who furnish personal attendance, companionship, or household care services to children or to individuals who are elderly or disabled. I need to file my 2011 tax return A person engaged in the trade or business of putting the sitters in touch with individuals who wish to employ them (that is, a companion sitting placement service) will not be treated as the employer of the sitters if that person does not receive or pay the salary or wages of the sitters and is compensated by the sitters or the persons who employ them on a fee basis. I need to file my 2011 tax return Companion sitters who are not employees of a companion sitting placement service are generally treated as self-employed for all federal tax purposes. I need to file my 2011 tax return Misclassification of Employees Consequences of treating an employee as an independent contractor. I need to file my 2011 tax return   If you classify an employee as an independent contractor and you have no reasonable basis for doing so, you are liable for employment taxes for that worker and the relief provision, discussed next, will not apply. I need to file my 2011 tax return See section 2 in Publication 15 (Circular E) for more information. I need to file my 2011 tax return Relief provision. I need to file my 2011 tax return   If you have a reasonable basis for not treating a worker as an employee, you may be relieved from having to pay employment taxes for that worker. I need to file my 2011 tax return To get this relief, you must file all required federal information returns on a basis consistent with your treatment of the worker. I need to file my 2011 tax return You (or your predecessor) must not have treated any worker holding a substantially similar position as an employee for any periods beginning after 1977. I need to file my 2011 tax return Technical service specialists. I need to file my 2011 tax return   This relief provision does not apply for a technical services specialist you provide to another business under an arrangement between you and the other business. I need to file my 2011 tax return A technical service specialist is an engineer, designer, drafter, computer programmer, systems analyst, or other similarly skilled worker engaged in a similar line of work. I need to file my 2011 tax return   This limit on the application of the rule does not affect the determination of whether such workers are employees under the common-law rules. I need to file my 2011 tax return The common-law rules control whether the specialist is treated as an employee or an independent contractor. I need to file my 2011 tax return However, if you directly contract with a technical service specialist to provide services for your business and not for another business, you may still be entitled to the relief provision. I need to file my 2011 tax return Test proctors and room supervisors. I need to file my 2011 tax return   The consistent treatment requirement does not apply to services performed after December 31, 2006, by an individual as a test proctor or room supervisor assisting in the administration of college entrance or placement examinations if the individual: Is performing the services for a section 501(c) organization exempt from tax under section 501(a) of the code, and Is not otherwise treated as an employee of the organization for employment taxes. I need to file my 2011 tax return Voluntary Classification Settlement Program (VCSP). I need to file my 2011 tax return   Employers who are currently treating their workers (or a class or group of workers) as independent contractors or other nonemployees and want to voluntarily reclassify their workers as employees for future tax periods may be eligible to participate in the VCSP if certain requirements are met. I need to file my 2011 tax return To apply, use Form 8952, Application for Voluntary Classification Settlement Program (VCSP). I need to file my 2011 tax return For more information, visit IRS. I need to file my 2011 tax return gov and enter “VCSP” in the search box. I need to file my 2011 tax return 2. I need to file my 2011 tax return Employee or Independent Contractor? An employer must generally withhold federal income taxes, withhold and pay over social security and Medicare taxes, and pay unemployment tax on wages paid to an employee. I need to file my 2011 tax return An employer does not generally have to withhold or pay over any federal taxes on payments to independent contractors. I need to file my 2011 tax return Common-Law Rules To determine whether an individual is an employee or an independent contractor under the common law, the relationship of the worker and the business must be examined. I need to file my 2011 tax return In any employee-independent contractor determination, all information that provides evidence of the degree of control and the degree of independence must be considered. I need to file my 2011 tax return Facts that provide evidence of the degree of control and independence fall into three categories: behavioral control, financial control, and the type of relationship of the parties. I need to file my 2011 tax return These facts are discussed next. I need to file my 2011 tax return Behavioral control. I need to file my 2011 tax return   Facts that show whether the business has a right to direct and control how the worker does the task for which the worker is hired include the type and degree of: Instructions that the business gives to the worker. I need to file my 2011 tax return   An employee is generally subject to the business' instructions about when, where, and how to work. I need to file my 2011 tax return All of the following are examples of types of instructions about how to do work. I need to file my 2011 tax return When and where to do the work. I need to file my 2011 tax return What tools or equipment to use. I need to file my 2011 tax return What workers to hire or to assist with the work. I need to file my 2011 tax return Where to purchase supplies and services. I need to file my 2011 tax return What work must be performed by a specified  individual. I need to file my 2011 tax return What order or sequence to follow. I need to file my 2011 tax return   The amount of instruction needed varies among different jobs. I need to file my 2011 tax return Even if no instructions are given, sufficient behavioral control may exist if the employer has the right to control how the work results are achieved. I need to file my 2011 tax return A business may lack the knowledge to instruct some highly specialized professionals; in other cases, the task may require little or no instruction. I need to file my 2011 tax return The key consideration is whether the business has retained the right to control the details of a worker's performance or instead has given up that right. I need to file my 2011 tax return Training that the business gives to the worker. I need to file my 2011 tax return   An employee may be trained to perform services in a particular manner. I need to file my 2011 tax return Independent contractors ordinarily use their own methods. I need to file my 2011 tax return Financial control. I need to file my 2011 tax return   Facts that show whether the business has a right to control the business aspects of the worker's job include: The extent to which the worker has unreimbursed business expenses. I need to file my 2011 tax return   Independent contractors are more likely to have unreimbursed expenses than are employees. I need to file my 2011 tax return Fixed ongoing costs that are incurred regardless of whether work is currently being performed are especially important. I need to file my 2011 tax return However, employees may also incur unreimbursed expenses in connection with the services that they perform for their employer. I need to file my 2011 tax return The extent of the worker's investment. I need to file my 2011 tax return   An independent contractor often has a significant investment in the facilities or tools he or she uses in performing services for someone else. I need to file my 2011 tax return However, a significant investment is not necessary for independent contractor status. I need to file my 2011 tax return The extent to which the worker makes his or her services available to the relevant market. I need to file my 2011 tax return   An independent contractor is generally free to seek out business opportunities. I need to file my 2011 tax return Independent contractors often advertise, maintain a visible business location, and are available to work in the relevant market. I need to file my 2011 tax return How the business pays the worker. I need to file my 2011 tax return   An employee is generally guaranteed a regular wage amount for an hourly, weekly, or other period of time. I need to file my 2011 tax return This usually indicates that a worker is an employee, even when the wage or salary is supplemented by a commission. I need to file my 2011 tax return An independent contractor is often paid a flat fee or on a time and materials basis for the job. I need to file my 2011 tax return However, it is common in some professions, such as law, to pay independent contractors hourly. I need to file my 2011 tax return The extent to which the worker can realize a profit or loss. I need to file my 2011 tax return   An independent contractor can make a profit or loss. I need to file my 2011 tax return Type of relationship. I need to file my 2011 tax return   Facts that show the parties' type of relationship include: Written contracts describing the relationship the parties intended to create. I need to file my 2011 tax return Whether or not the business provides the worker with employee-type benefits, such as insurance, a pension plan, vacation pay, or sick pay. I need to file my 2011 tax return The permanency of the relationship. I need to file my 2011 tax return If you engage a worker with the expectation that the relationship will continue indefinitely, rather than for a specific project or period, this is generally considered evidence that your intent was to create an employer-employee relationship. I need to file my 2011 tax return The extent to which services performed by the worker are a key aspect of the regular business of the company. I need to file my 2011 tax return If a worker provides services that are a key aspect of your regular business activity, it is more likely that you will have the right to direct and control his or her activities. I need to file my 2011 tax return For example, if a law firm hires an attorney, it is likely that it will present the attorney's work as its own and would have the right to control or direct that work. I need to file my 2011 tax return This would indicate an employer-employee relationship. I need to file my 2011 tax return IRS help. I need to file my 2011 tax return   If you want the IRS to determine whether or not a worker is an employee, file Form SS-8, Determination of Worker Status for Purposes of Federal Employment Taxes and Income Tax Withholding, with the IRS. I need to file my 2011 tax return Industry Examples The following examples may help you properly classify your workers. I need to file my 2011 tax return Building and Construction Industry Example 1. I need to file my 2011 tax return Jerry Jones has an agreement with Wilma White to supervise the remodeling of her house. I need to file my 2011 tax return She did not advance funds to help him carry on the work. I need to file my 2011 tax return She makes direct payments to the suppliers for all necessary materials. I need to file my 2011 tax return She carries liability and workers' compensation insurance covering Jerry and others that he engaged to assist him. I need to file my 2011 tax return She pays them an hourly rate and exercises almost constant supervision over the work. I need to file my 2011 tax return Jerry is not free to transfer his assistants to other jobs. I need to file my 2011 tax return He may not work on other jobs while working for Wilma. I need to file my 2011 tax return He assumes no responsibility to complete the work and will incur no contractual liability if he fails to do so. I need to file my 2011 tax return He and his assistants perform personal services for hourly wages. I need to file my 2011 tax return Jerry Jones and his assistants are employees of Wilma White. I need to file my 2011 tax return Example 2. I need to file my 2011 tax return Milton Manning, an experienced tile setter, orally agreed with a corporation to perform full-time services at construction sites. I need to file my 2011 tax return He uses his own tools and performs services in the order designated by the corporation and according to its specifications. I need to file my 2011 tax return The corporation supplies all materials, makes frequent inspections of his work, pays him on a piecework basis, and carries workers' compensation insurance on him. I need to file my 2011 tax return He does not have a place of business or hold himself out to perform similar services for others. I need to file my 2011 tax return Either party can end the services at any time. I need to file my 2011 tax return Milton Manning is an employee of the corporation. I need to file my 2011 tax return Example 3. I need to file my 2011 tax return Wallace Black agreed with the Sawdust Co. I need to file my 2011 tax return to supply the construction labor for a group of houses. I need to file my 2011 tax return The company agreed to pay all construction costs. I need to file my 2011 tax return However, he supplies all the tools and equipment. I need to file my 2011 tax return He performs personal services as a carpenter and mechanic for an hourly wage. I need to file my 2011 tax return He also acts as superintendent and foreman and engages other individuals to assist him. I need to file my 2011 tax return The company has the right to select, approve, or discharge any helper. I need to file my 2011 tax return A company representative makes frequent inspections of the construction site. I need to file my 2011 tax return When a house is finished, Wallace is paid a certain percentage of its costs. I need to file my 2011 tax return He is not responsible for faults, defects of construction, or wasteful operation. I need to file my 2011 tax return At the end of each week, he presents the company with a statement of the amount that he has spent, including the payroll. I need to file my 2011 tax return The company gives him a check for that amount from which he pays the assistants, although he is not personally liable for their wages. I need to file my 2011 tax return Wallace Black and his assistants are employees of the Sawdust Co. I need to file my 2011 tax return Example 4. I need to file my 2011 tax return Bill Plum contracted with Elm Corporation to complete the roofing on a housing complex. I need to file my 2011 tax return A signed contract established a flat amount for the services rendered by Bill Plum. I need to file my 2011 tax return Bill is a licensed roofer and carries workers' compensation and liability insurance under the business name, Plum Roofing. I need to file my 2011 tax return He hires his own roofers who are treated as employees for federal employment tax purposes. I need to file my 2011 tax return If there is a problem with the roofing work, Plum Roofing is responsible for paying for any repairs. I need to file my 2011 tax return Bill Plum, doing business as Plum Roofing, is an independent contractor. I need to file my 2011 tax return Example 5. I need to file my 2011 tax return Vera Elm, an electrician, submitted a job estimate to a housing complex for electrical work at $16 per hour for 400 hours. I need to file my 2011 tax return She is to receive $1,280 every 2 weeks for the next 10 weeks. I need to file my 2011 tax return This is not considered payment by the hour. I need to file my 2011 tax return Even if she works more or less than 400 hours to complete the work, Vera Elm will receive $6,400. I need to file my 2011 tax return She also performs additional electrical installations under contracts with other companies, that she obtained through advertisements. I need to file my 2011 tax return Vera is an independent contractor. I need to file my 2011 tax return Trucking Industry Example. I need to file my 2011 tax return Rose Trucking contracts to deliver material for Forest, Inc. I need to file my 2011 tax return , at $140 per ton. I need to file my 2011 tax return Rose Trucking is not paid for any articles that are not delivered. I need to file my 2011 tax return At times, Jan Rose, who operates as Rose Trucking, may also lease another truck and engage a driver to complete the contract. I need to file my 2011 tax return All operating expenses, including insurance coverage, are paid by Jan Rose. I need to file my 2011 tax return All equipment is owned or rented by Jan and she is responsible for all maintenance. I need to file my 2011 tax return None of the drivers are provided by Forest, Inc. I need to file my 2011 tax return Jan Rose, operating as Rose Trucking, is an independent contractor. I need to file my 2011 tax return Computer Industry Example. I need to file my 2011 tax return Steve Smith, a computer programmer, is laid off when Megabyte, Inc. I need to file my 2011 tax return , downsizes. I need to file my 2011 tax return Megabyte agrees to pay Steve a flat amount to complete a one-time project to create a certain product. I need to file my 2011 tax return It is not clear how long that it will take to complete the project, and Steve is not guaranteed any minimum payment for the hours spent on the program. I need to file my 2011 tax return Megabyte provides Steve with no instructions beyond the specifications for the product itself. I need to file my 2011 tax return Steve and Megabyte have a written contract, which provides that Steve is considered to be an independent contractor, is required to pay federal and state taxes, and receives no benefits from Megabyte. I need to file my 2011 tax return Megabyte will file Form 1099-MISC, Miscellaneous Income, to report the amount paid to Steve. I need to file my 2011 tax return Steve works at home and is not expected or allowed to attend meetings of the software development group. I need to file my 2011 tax return Steve is an independent contractor. I need to file my 2011 tax return Automobile Industry Example 1. I need to file my 2011 tax return Donna Lee is a salesperson employed on a full-time basis by Bob Blue, an auto dealer. I need to file my 2011 tax return She works six days a week and is on duty in Bob's showroom on certain assigned days and times. I need to file my 2011 tax return She appraises trade-ins, but her appraisals are subject to the sales manager's approval. I need to file my 2011 tax return Lists of prospective customers belong to the dealer. I need to file my 2011 tax return She is required to develop leads and report results to the sales manager. I need to file my 2011 tax return Because of her experience, she requires only minimal assistance in closing and financing sales and in other phases of her work. I need to file my 2011 tax return She is paid a commission and is eligible for prizes and bonuses offered by Bob. I need to file my 2011 tax return Bob also pays the cost of health insurance and group-term life insurance for Donna. I need to file my 2011 tax return Donna is an employee of Bob Blue. I need to file my 2011 tax return Example 2. I need to file my 2011 tax return Sam Sparks performs auto repair services in the repair department of an auto sales company. I need to file my 2011 tax return He works regular hours and is paid on a percentage basis. I need to file my 2011 tax return He has no investment in the repair department. I need to file my 2011 tax return The sales company supplies all facilities, repair parts, and supplies; issues instructions on the amounts to be charged, parts to be used, and the time for completion of each job; and checks all estimates and repair orders. I need to file my 2011 tax return Sam is an employee of the sales company. I need to file my 2011 tax return Example 3. I need to file my 2011 tax return An auto sales agency furnishes space for Helen Bach to perform auto repair services. I need to file my 2011 tax return She provides her own tools, equipment, and supplies. I need to file my 2011 tax return She seeks out business from insurance adjusters and other individuals and does all of the body and paint work that comes to the agency. I need to file my 2011 tax return She hires and discharges her own helpers, determines her own and her helpers' working hours, quotes prices for repair work, makes all necessary adjustments, assumes all losses from uncollectible accounts, and receives, as compensation for her services, a large percentage of the gross collections from the auto repair shop. I need to file my 2011 tax return Helen is an independent contractor and the helpers are her employees. I need to file my 2011 tax return Attorney Example. I need to file my 2011 tax return Donna Yuma is a sole practitioner who rents office space and pays for the following items: telephone, computer, on-line legal research linkup, fax machine, and photocopier. I need to file my 2011 tax return Donna buys office supplies and pays bar dues and membership dues for three other professional organizations. I need to file my 2011 tax return Donna has a part-time receptionist who also does the bookkeeping. I need to file my 2011 tax return She pays the receptionist, withholds and pays federal and state employment taxes, and files a Form W-2 each year. I need to file my 2011 tax return For the past 2 years, Donna has had only three clients, corporations with which there have been long-standing relationships. I need to file my 2011 tax return Donna charges the corporations an hourly rate for her services, sending monthly bills detailing the work performed for the prior month. I need to file my 2011 tax return The bills include charges for long distance calls, on-line research time, fax charges, photocopies, postage, and travel, costs for which the corporations have agreed to reimburse her. I need to file my 2011 tax return Donna is an independent contractor. I need to file my 2011 tax return Taxicab Driver Example. I need to file my 2011 tax return Tom Spruce rents a cab from Taft Cab Co. I need to file my 2011 tax return for $150 per day. I need to file my 2011 tax return He pays the costs of maintaining and operating the cab. I need to file my 2011 tax return Tom Spruce keeps all fares that he receives from customers. I need to file my 2011 tax return Although he receives the benefit of Taft's two-way radio communication equipment, dispatcher, and advertising, these items benefit both Taft and Tom Spruce. I need to file my 2011 tax return Tom Spruce is an independent contractor. I need to file my 2011 tax return Salesperson To determine whether salespersons are employees under the usual common-law rules, you must evaluate each individual case. I need to file my 2011 tax return If a salesperson who works for you does not meet the tests for a common-law employee, discussed earlier in this section, you do not have to withhold federal income tax from his or her pay (see Statutory Employees in section 1). I need to file my 2011 tax return However, even if a salesperson is not an employee under the usual common-law rules for income tax withholding, his or her pay may still be subject to social security, Medicare, and FUTA taxes as a statutory employee. I need to file my 2011 tax return To determine whether a salesperson is an employee for social security, Medicare, and FUTA tax purposes, the salesperson must meet all eight elements of the statutory employee test. I need to file my 2011 tax return A salesperson is a statutory employee for social security, Medicare, and FUTA tax purposes if he or she: Works full time for one person or company except, possibly, for sideline sales activities on behalf of some other person, Sells on behalf of, and turns his or her orders over to, the person or company for which he or she works, Sells to wholesalers, retailers, contractors, or operators of hotels, restaurants, or similar establishments, Sells merchandise for resale, or supplies for use in the customer's business, Agrees to do substantially all of this work personally, Has no substantial investment in the facilities used to do the work, other than in facilities for transportation, Maintains a continuing relationship with the person or company for which he or she works, and Is not an employee under common-law rules. I need to file my 2011 tax return 3. I need to file my 2011 tax return Employees of Exempt Organizations Many nonprofit organizations are exempt from federal income tax. I need to file my 2011 tax return Although they do not have to pay federal income tax themselves, they must still withhold federal income tax from the pay of their employees. I need to file my 2011 tax return However, there are special social security, Medicare, and FUTA tax rules that apply to the wages that they pay their employees. I need to file my 2011 tax return Section 501(c)(3) organizations. I need to file my 2011 tax return   Nonprofit organizations that are exempt from federal income tax under section 501(c)(3) of the Internal Revenue Code include any community chest, fund, or foundation organized and operated exclusively for religious, charitable, scientific, testing for public safety, literary or educational purposes, fostering national or international amateur sports competition, or for the prevention of cruelty to children or animals. I need to file my 2011 tax return These organizations are usually corporations and are exempt from federal income tax under section 501(a). I need to file my 2011 tax return Social security and Medicare taxes. I need to file my 2011 tax return   Wages paid to employees of section 501(c)(3) organizations are subject to social security and Medicare taxes unless one of the following situations applies. I need to file my 2011 tax return The organization pays an employee less than $100 in a calendar year. I need to file my 2011 tax return The organization is a church or church-controlled organization opposed for religious reasons to the payment of social security and Medicare taxes and has filed Form 8274, Certification by Churches and Qualified Church-Controlled Organizations Electing Exemption From Employer Social Security and Medicare Taxes, to elect exemption from social security and Medicare taxes. I need to file my 2011 tax return The organization must have filed for exemption before the first date on which a quarterly employment tax return (Form 941) or annual employment tax return (Form 944) would otherwise be due. I need to file my 2011 tax return   An employee of a church or church-controlled organization that is exempt from social security and Medicare taxes must pay self-employment tax if the employee is paid $108. I need to file my 2011 tax return 28 or more in a year. I need to file my 2011 tax return However, an employee who is a member of a qualified religious sect can apply for an exemption from the self-employment tax by filing Form 4029, Application for Exemption From Social Security and Medicare Taxes and Waiver of Benefits. I need to file my 2011 tax return See Members of recognized religious sects opposed to insurance in section 4. I need to file my 2011 tax return FUTA tax. I need to file my 2011 tax return   An organization that is exempt from federal income tax under section 501(c)(3) of the Internal Revenue Code is also exempt from FUTA tax. I need to file my 2011 tax return This exemption cannot be waived. I need to file my 2011 tax return Do not file Form 940 to report wages paid by these organizations or pay the tax. I need to file my 2011 tax return Note. I need to file my 2011 tax return An organization wholly owned by a state or its political subdivision should contact the appropriate state official for information about reporting and getting social security and Medicare coverage for its employees. I need to file my 2011 tax return Other than section 501(c)(3) organizations. I need to file my 2011 tax return   Nonprofit organizations that are not section 501(c)(3) organizations may also be exempt from federal income tax under section 501(a) or section 521. I need to file my 2011 tax return However, these organizations are not exempt from withholding federal income, social security, or Medicare tax from their employees' pay, or from paying FUTA tax. I need to file my 2011 tax return Two special rules for social security, Medicare, and FUTA taxes apply. I need to file my 2011 tax return If an employee is paid less than $100 during a calendar year, his or her wages are not subject to social security and Medicare taxes. I need to file my 2011 tax return If an employee is paid less than $50 in a calendar quarter, his or her wages are not subject to FUTA tax for the quarter. I need to file my 2011 tax return The above rules do not apply to employees who work for pension plans and other similar organizations described in section 401(a). I need to file my 2011 tax return 4. I need to file my 2011 tax return Religious Exemptions and Special Rules for Ministers Special rules apply to the treatment of ministers for social security and Medicare tax purposes. I need to file my 2011 tax return An exemption from social security and Medicare taxes is available for ministers and certain other religious workers and members of certain recognized religious sects. I need to file my 2011 tax return For more information on getting an exemption, see Publication 517, Social Security and Other Information for Members of the Clergy and Religious Workers. I need to file my 2011 tax return Ministers. I need to file my 2011 tax return   Ministers are individuals who are duly ordained, commissioned, or licensed by a religious body constituting a church or church denomination. I need to file my 2011 tax return They are given the authority to conduct religious worship, perform sacerdotal functions, and administer ordinances and sacraments according to the prescribed tenets and practices of that religious organization. I need to file my 2011 tax return   Ministers are employees if they perform services in the exercise of ministry and are subject to your will and control. I need to file my 2011 tax return The common-law rules discussed in section 1 and section 2 should be applied to determine whether a minister is your employee or is self-employed. I need to file my 2011 tax return Whether the minister is an employee or self-employed, the earnings of a minister are not subject to federal income, social security, and Medicare tax withholding. I need to file my 2011 tax return However, even if the minister is a common law employee, the earnings as reported on the minister's Form 1040 are subject to self-employment tax and federal income tax. I need to file my 2011 tax return You do not withhold these taxes from wages earned by a minister, but if the minister is your employee, you may agree with the minister to voluntarily withhold tax to cover the minister's liability for self-employment tax and federal income tax. I need to file my 2011 tax return For more information, see Publication 517. I need to file my 2011 tax return Form W-2. I need to file my 2011 tax return   If your minister is an employee, report all taxable compensation as wages in box 1 on Form W-2. I need to file my 2011 tax return Include in this amount expense allowances or reimbursements paid under a nonaccountable plan, discussed in section 5 of Publication 15 (Circular E). I need to file my 2011 tax return Do not include a parsonage allowance (excludable housing allowance) in this amount. I need to file my 2011 tax return You may report a designated parsonage or rental allowance (housing allowance) and a utilities allowance, or the rental value of housing provided in a separate statement or in box 14 on Form W-2. I need to file my 2011 tax return Do not show on Form W-2, Form 941, or Form 944 any amount as social security or Medicare wages, or any withholding for social security or Medicare taxes. I need to file my 2011 tax return If you withheld federal income tax from the minister under a voluntary agreement, this amount should be shown in box 2 on Form W-2 as federal income tax withheld. I need to file my 2011 tax return For more information on ministers, see Publication 517. I need to file my 2011 tax return Exemptions for ministers and others. I need to file my 2011 tax return   Certain ordained ministers, Christian Science practitioners, and members of religious orders who have not taken a vow of poverty may apply to exempt their earnings from self-employment tax on religious grounds. I need to file my 2011 tax return The application must be based on conscientious opposition because of personal considerations to public insurance that makes payments in the event of death, disability, old age, or retirement, or that makes payments toward the cost of, or provides services for, medical care, including social security and Medicare benefits. I need to file my 2011 tax return The exemption applies only to qualified services performed for the religious organization. I need to file my 2011 tax return See Revenue Procedure 91-20, 1991-1 C. I need to file my 2011 tax return B. I need to file my 2011 tax return 524, for guidelines to determine whether an organization is a religious order or whether an individual is a member of a religious order. I need to file my 2011 tax return   To apply for the exemption, the employee should file Form 4361, Application for Exemption From Self-Employment Tax for Use by Ministers, Members of Religious Orders and Christian Science Practitioners. I need to file my 2011 tax return See Publication 517 for more information about claiming an exemption from self-employment tax using Form 4361. I need to file my 2011 tax return Members of recognized religious sects opposed to insurance. I need to file my 2011 tax return   If you belong to a recognized religious sect or to a division of such sect that is opposed to insurance, you may qualify for an exemption from the self-employment tax. I need to file my 2011 tax return To qualify, you must be conscientiously opposed to accepting the benefits of any public or private insurance that makes payments because of death, disability, old age, or retirement, or makes payments toward the cost of, or provides services for, medical care (including social security and Medicare benefits). I need to file my 2011 tax return If you buy a retirement annuity from an insurance company, you will not be eligible for this exemption. I need to file my 2011 tax return Religious opposition based on the teachings of the sect is the only legal basis for the exemption. I need to file my 2011 tax return In addition, your religious sect (or division) must have existed since December 31, 1950. I need to file my 2011 tax return Self-employed. I need to file my 2011 tax return   If you are self-employed and a member of a recognized religious sect opposed to insurance, you can apply for exemption by filing Form 4029 to waive all social security and Medicare benefits. I need to file my 2011 tax return Employees. I need to file my 2011 tax return   The social security and Medicare tax exemption available to the self-employed who are members of a recognized religious sect opposed to insurance is also available to their employees who are members of such a sect. I need to file my 2011 tax return This applies to partnerships only if each partner is a member of the sect. I need to file my 2011 tax return This exemption for employees applies only if both the employee and the employer are members of such a sect, and the employer has an exemption. I need to file my 2011 tax return To get the exemption, the employee must file Form 4029. I need to file my 2011 tax return   An employee of a church or church-controlled organization that is exempt from social security and Medicare taxes can also apply for an exemption on Form 4029. I need to file my 2011 tax return 5. I need to file my 2011 tax return Wages and Other Compensation Publication 15 (Circular E) provides a general discussion of taxable wages. I need to file my 2011 tax return Publication 15-B discusses fringe benefits. I need to file my 2011 tax return The following topics supplement those discussions. I need to file my 2011 tax return Relocating for Temporary Work Assignments If an employee is given a temporary work assignment away from his or her regular place of work, certain travel expenses reimbursed or paid directly by the employer in accordance with an accountable plan (see section 5 in Publication 15 (Circular E)) may be excludable from the employee's wages. I need to file my 2011 tax return Generally, a temporary work assignment in a single location is one that is realistically expected to last (and does in fact last) for 1 year or less. I need to file my 2011 tax return If the employee's new work assignment is indefinite, any living expenses reimbursed or paid by the employer (other than qualified moving expenses) must be included in the employee's wages as compensation. I need to file my 2011 tax return For the travel expenses to be excludable: The new work location must be outside of the city or general area of the employee's regular work place or post of duty, The travel expenses must otherwise qualify as deductible by the employee, and The expenses must be for the period during which the employee is at the temporary work location. I need to file my 2011 tax return If you reimburse or pay any personal expenses of an employee during his or her temporary work assignment, such as expenses for home leave for family members or for vacations, these amounts must be included in the employee's wages. I need to file my 2011 tax return See chapter 1 of Publication 463, Travel, Entertainment, Gift, and Car Expenses, and section 5 of Publication 15 (Circular E), for more information. I need to file my 2011 tax return These rules generally apply to temporary work assignments both inside and outside the U. I need to file my 2011 tax return S. I need to file my 2011 tax return Employee Achievement Awards Do not withhold federal income, social security, or Medicare taxes on the fair market value of an employee achievement award if it is excludable from your employee's gross income. I need to file my 2011 tax return To be excludable from your employee's gross income, the award must be tangible personal property (not cash, gift certificates, or securities) given to an employee for length of service or safety achievement, awarded as part of a meaningful presentation, and awarded under circumstances that do not indicate that the payment is disguised compensation. I need to file my 2011 tax return Excludable employee achievement awards also are not subject to FUTA tax. I need to file my 2011 tax return Limits. I need to file my 2011 tax return   The most that you can exclude for the cost of all employee achievement awards to the same employee for the year is $400. I need to file my 2011 tax return A higher limit of $1,600 applies to qualified plan awards. I need to file my 2011 tax return Qualified plan awards are employee achievement awards under a written plan that does not discriminate in favor of highly compensated employees. I need to file my 2011 tax return An award cannot be treated as a qualified plan award if the average cost per recipient of all awards under all of your qualified plans is more than $400. I need to file my 2011 tax return   If during the year an employee receives awards not made under a qualified plan and also receives awards under a qualified plan, the exclusion for the total cost of all awards to that employee cannot be more than $1,600. I need to file my 2011 tax return The $400 and $1,600 limits cannot be added together to exclude more than $1,600 for the cost of awards to any one employee during the year. I need to file my 2011 tax return Scholarship and Fellowship Payments Only amounts that you pay as a qualified scholarship to a candidate for a degree may be excluded from the recipient's gross income. I need to file my 2011 tax return A qualified scholarship is any amount granted as a scholarship or fellowship that is used for: Tuition and fees required to enroll in, or to attend, an educational institution, or Fees, books, supplies, and equipment that are required for courses at the educational institution. I need to file my 2011 tax return The exclusion from income does not apply to the portion of any amount received that represents payment for teaching, research, or other services required as a condition of receiving the scholarship or tuition reduction. I need to file my 2011 tax return These amounts are reportable on Form W-2. I need to file my 2011 tax return However, the exclusion will still apply for any amount received under two specific programs—the National Health Service Corps Scholarship Program and the Armed Forces Health Professions Scholarship and Financial Assistance Program—despite any service condition attached to those amounts. I need to file my 2011 tax return Any amounts that you pay for room and board are not excludable from the recipient's gross income. I need to file my 2011 tax return A qualified scholarship is not subject to social security, Medicare, and FUTA taxes, or federal income tax withholding. I need to file my 2011 tax return For more information, see Publication 970, Tax Benefits for Education. I need to file my 2011 tax return Outplacement Services If you provide outplacement services to your employees to help them find new employment (such as career counseling, resume assistance, or skills assessment), the value of these benefits may be income to them and subject to all withholding taxes. I need to file my 2011 tax return However, the value of these services will not be subject to any employment taxes if: You derive a substantial business benefit from providing the services (such as improved employee morale or business image) separate from the benefit that you would receive from the mere payment of additional compensation, and The employee would be able to deduct the cost of the services as employee business expenses if he or she had paid for them. I need to file my 2011 tax return However, if you receive no additional benefit from providing the services, or if the services are not provided on the basis of employee need, then the value of the services is treated as wages and is subject to federal income tax withholding and social security and Medicare taxes. I need to file my 2011 tax return Similarly, if an employee receives the outplacement services in exchange for reduced severance pay (or other taxable compensation), then the amount the severance pay is reduced is treated as wages for employment tax purposes. I need to file my 2011 tax return Withholding for Idle Time Payments made under a voluntary guarantee to employees for idle time (any time during which an employee performs no services) are wages for the purposes of social security, Medicare, and FUTA taxes, and federal income tax withholding. I need to file my 2011 tax return Back Pay Treat back pay as wages in the year paid and withhold and pay employment taxes as required. I need to file my 2011 tax return If back pay was awarded by a court or government agency to enforce a federal or state statute protecting an employee's right to employment or wages, special rules apply for reporting those wages to the Social Security Administration. I need to file my 2011 tax return These rules also apply to litigation actions and settlement agreements or agency directives that are resolved out of court and not under a court decree or order. I need to file my 2011 tax return Examples of pertinent statutes include, but are not limited to, the National Labor Relations Act, Fair Labor Standards Act, Equal Pay Act, and Age Discrimination in Employment Act. I need to file my 2011 tax return See Publication 957, Reporting Back Pay and Special Wage Payments to the Social Security Administration, and Form SSA-131, Employer Report of Special Wage Payments, for details. I need to file my 2011 tax return Supplemental Unemployment Benefits If you pay, under a plan, supplemental unemployment benefits to a former employee, all or part of the payments may be taxable and subject to federal income tax withholding, depending on how the plan is funded. I need to file my 2011 tax return Amounts that represent a return to the employee of amounts previously subject to tax are not taxable and are not subject to withholding. I need to file my 2011 tax return You should withhold federal income tax on the taxable part of the payments made, under a plan, to an employee who is involuntarily separated because of a reduction in force, discontinuance of a plant or operation, or other similar condition. I need to file my 2011 tax return It does not matter whether the separation is temporary or permanent. I need to file my 2011 tax return There are special rules that apply in determining whether benefits qualify as supplemental unemployment benefits that are excluded from wages for social security, Medicare, and FUTA tax purposes. I need to file my 2011 tax return To qualify as supplemental unemployment benefits for these purposes, the benefits must meet the following requirements. I need to file my 2011 tax return Benefits are paid only to unemployed former employees who are laid off by the employer. I need to file my 2011 tax return Eligibility for benefits depends on meeting prescribed conditions after termination. I need to file my 2011 tax return The amount of weekly benefits payable is based upon state unemployment benefits, other compensation allowable under state law, and the amount of regular weekly pay. I need to file my 2011 tax return The right to benefits does not accrue until a prescribed period after termination. I need to file my 2011 tax return Benefits are not attributable to the performance of particular services. I need to file my 2011 tax return No employee has any right to the benefits until qualified and eligible to receive benefits. I need to file my 2011 tax return Benefits may not be paid in a lump sum. I need to file my 2011 tax return Withholding on taxable supplemental unemployment benefits must be based on the withholding certificate (Form W-4) that the employee gave to you. I need to file my 2011 tax return Golden Parachute Payments A golden parachute payment, in general, is a payment made under a contract entered into by a corporation and key personnel. I need to file my 2011 tax return Under the agreement, the corporation agrees to pay certain amounts to its key personnel in the event of a change in ownership or control of the corporation. I need to file my 2011 tax return Payments to employees under golden parachute contracts are subject to social security, Medicare, and FUTA taxes, and federal income tax withholding. I need to file my 2011 tax return See Regulations section 1. I need to file my 2011 tax return 280G-1 for more information. I need to file my 2011 tax return No deduction is allowed to the corporation for any excess parachute payment. I need to file my 2011 tax return To determine the amount of the excess parachute payment, you must first determine if there is a parachute payment for purposes of section 280G. I need to file my 2011 tax return A parachute payment for purposes of section 280G is any payment that meets all of the following. I need to file my 2011 tax return The payment is in the nature of compensation. I need to file my 2011 tax return The payment is to, or for the benefit of, a disqualified individual. I need to file my 2011 tax return A disqualified individual is anyone who at any time during the 12-month period prior to and ending on the date of the change in ownership or control of the corporation (the disqualified individual determination period) was an employee or independent contractor and was, in regard to that corporation, a shareholder, an officer, or highly compensated individual. I need to file my 2011 tax return The payment is contingent on a change in ownership of the corporation, the effective control of the corporation, or the ownership of a substantial portion of the assets of the corporation. I need to file my 2011 tax return The payment has an aggregate present value of at least three times the individual's base amount. I need to file my 2011 tax return The base amount is the average annual compensation for service includible in the individual's gross income over the most recent 5 taxable years. I need to file my 2011 tax return An excess parachute payment amount is the excess of any parachute payment over the base amount. I need to file my 2011 tax return For more information, see Regulations section 1. I need to file my 2011 tax return 280G-1. I need to file my 2011 tax return The recipient of an excess parachute payment is subject to a 20% nondeductible excise tax. I need to file my 2011 tax return If the recipient is an employee, the 20% excise tax is to be withheld by the corporation. I need to file my 2011 tax return Example. I need to file my 2011 tax return An officer of a corporation receives a golden parachute payment of $400,000. I need to file my 2011 tax return This is more than three times greater than his or her average compensation of $100,000 over the previous 5-year period. I need to file my 2011 tax return The excess parachute payment is $300,000 ($400,000 minus $100,000). I need to file my 2011 tax return The corporation cannot deduct the $300,000 and must withhold the excise tax of $60,000 (20% of $300,000). I need to file my 2011 tax return Reporting golden parachute payments. I need to file my 2011 tax return   Golden parachute payments to employees must be reported on Form W-2. I need to file my 2011 tax return See the General Instructions for Forms W-2 and W-3 for details. I need to file my 2011 tax return For nonemployee reporting of these payments, see Box 7. I need to file my 2011 tax return Nonemployee Compensation in the Instructions for Form 1099-MISC. I need to file my 2011 tax return Exempt payments. I need to file my 2011 tax return   Payments by most small business corporations and payments under certain qualified plans are exempt from the golden parachute rules. I need to file my 2011 tax return See section 280G(b)(5) and (6) for more information. I need to file my 2011 tax return Interest-Free and Below-Market-Interest-Rate Loans In general, if an employer lends an employee more than $10,000 at an interest rate less than the current applicable federal rate (AFR), the difference between the interest paid and the interest that would be paid under the AFR is considered additional compensation to the employee. I need to file my 2011 tax return This rule applies to a loan of $10,000 or less if one of its principal purposes is the avoidance of federal tax. I need to file my 2011 tax return This additional compensation to the employee is subject to social security, Medicare, and FUTA taxes, but not to federal income tax withholding. I need to file my 2011 tax return Include it in compensation on Form W-2 (or Form 1099-MISC for an independent contractor). I need to file my 2011 tax return The AFR is established monthly and published by the IRS each month in the Internal Revenue Bulletin. I need to file my 2011 tax return You can get these rates by calling 1-800-829-4933 or by visiting IRS. I need to file my 2011 tax return gov. I need to file my 2011 tax return For more information, see section 7872 and its related regulations. I need to file my 2011 tax return Leave Sharing Plans If you establish a leave sharing plan for your employees that allows them to transfer leave to other employees for medical emergencies, the amounts paid to the recipients of the leave are considered wages. I need to file my 2011 tax return These amounts are includible in the gross income of the recipients and are subject to social security, Medicare, and FUTA taxes, and federal income tax withholding. I need to file my 2011 tax return Do not include these amounts in the income of the transferors. I need to file my 2011 tax return These rules apply only to leave sharing plans that permit employees to transfer leave to other employees for medical emergencies. I need to file my 2011 tax return Nonqualified Deferred Compensation Plans Income Tax and Reporting Section 409A provides that all amounts deferred under a nonqualified deferred compensation (NQDC) plan for all tax years are currently includible in gross income (to the extent not subject to a substantial risk of forfeiture and not previously included in gross income) and subject to additional taxes, unless certain requirements are met pertaining to, among other things, elections to defer compensation and distributions under a NQDC plan. I need to file my 2011 tax return Section 409A also includes rules that apply to certain trusts or similar arrangements associated with NQDC plans if the trusts or arrangements are located outside of the United States, are restricted to the provision of benefits in connection with a decline in the financial health of the plan sponsor, or contributions are made to the trust during certain periods such as when a qualified plan of the service recipient is underfunded. I need to file my 2011 tax return Employers must withhold federal income tax (but not the additional Section 409A taxes) on any amount includible in gross income under section 409A. I need to file my 2011 tax return Other changes to the Internal Revenue Code provide that the deferrals under a NQDC plan must be reported separately on Form W-2 or Form 1099-MISC, whichever applies. I need to file my 2011 tax return Specific rules for reporting are provided in the instructions to the forms. I need to file my 2011 tax return The provisions do not affect the application or reporting of social security, Medicare, or FUTA taxes. I need to file my 2011 tax return The provisions do not prevent the inclusion of amounts in income or wages under other provisions of the Internal Revenue Code or common law principles, such as when amounts are actually or constructively received or irrevocably contributed to a separate fund. I need to file my 2011 tax return For more information about nonqualified deferred compensation plans, see Regulations sections 1. I need to file my 2011 tax return 409A-1 through 1. I need to file my 2011 tax return 409A-6. I need to file my 2011 tax return Notice 2008-113 provides guidance on the correction of certain operation failures of a NQDC plan. I need to file my 2011 tax return Notice 2008-113, 2008-51 I. I need to file my 2011 tax return R. I need to file my 2011 tax return B. I need to file my 2011 tax return 1305, is available at www. I need to file my 2011 tax return irs. I need to file my 2011 tax return gov/irb/2008-51_IRB/ar12. I need to file my 2011 tax return html. I need to file my 2011 tax return Also see Notice 2010-6, 2010-3 I. I need to file my 2011 tax return R. I need to file my 2011 tax return B. I need to file my 2011 tax return 275, available at www. I need to file my 2011 tax return irs. I need to file my 2011 tax return gov/irb/2010-03_IRB/ar08. I need to file my 2011 tax return html and Notice 2010-80, 2010-51 I. I need to file my 2011 tax return R. I need to file my 2011 tax return B. I need to file my 2011 tax return 853, available at www. I need to file my 2011 tax return irs. I need to file my 2011 tax return gov/irb/2010-51_IRB/ar08. I need to file my 2011 tax return html. I need to file my 2011 tax return Social security, Medicare, and FUTA taxes. I need to file my 2011 tax return   Employer contributions to nonqualified deferred compensation (NQDC) plans, as defined in the applicable regulations, are treated as wages subject to social security, Medicare, and FUTA taxes when the services are performed or the employee no longer has a substantial risk of forfeiting the right to the deferred compensation, whichever is later. I need to file my 2011 tax return   Amounts deferred are subject to social security, Medicare, and FUTA taxes at that time unless the amount that is deferred cannot be reasonably ascertained; for example, if benefits are based on final pay. I need to file my 2011 tax return If the value of the future benefit is based on any factors that are not yet reasonably ascertainable, you may choose to estimate the value of the future benefit and withhold and pay social security, Medicare, and FUTA taxes on that amount. I need to file my 2011 tax return You will have to determine later, when the amount is reasonably ascertainable, whether any additional taxes are required. I need to file my 2011 tax return If taxes are not paid before the amounts become reasonably ascertainable, when the amounts become reasonably ascertainable they are subject to social security, Medicare, and FUTA taxes on the amounts deferred plus the income attributable to those amounts deferred. I need to file my 2011 tax return For more information, see Regulations sections 31. I need to file my 2011 tax return 3121(v)(2)-1 and 31. I need to file my 2011 tax return 3306(r)(2)-1. I need to file my 2011 tax return Tax-Sheltered Annuities Employer payments made by a public educational institution or a tax-exempt organization to purchase a tax-sheltered annuity for an employee (annual deferrals) are included in the employee's social security and Medicare wages, if the payments are made because of a salary reduction agreement. I need to file my 2011 tax return However, they are not included in box 1 on Form W-2 in the year the deferrals are made and are not subject to federal income tax withholding. I need to file my 2011 tax return See Regulations section 31. I need to file my 2011 tax return 3121(a)(5)-2 for the definition of a salary reduction agreement. I need to file my 2011 tax return Contributions to a Simplified Employee Pension (SEP) An employer's SEP contributions to an employee's individual retirement arrangement (IRA) are excluded from the employee's gross income. I need to file my 2011 tax return These excluded amounts are not subject to social security, Medicare, or FUTA taxes, or federal income tax withholding. I need to file my 2011 tax return However, any SEP contributions paid under a salary reduction agreement (SARSEP) are included in wages for purposes of social security, Medicare, and FUTA taxes. I need to file my 2011 tax return See Publication 560 for more information about SEPs. I need to file my 2011 tax return Salary reduction simplified employee pensions (SARSEP) repealed. I need to file my 2011 tax return   You may not establish a SARSEP after 1996. I need to file my 2011 tax return However, SARSEPs established before January 1, 1997, may continue to receive contributions. I need to file my 2011 tax return SIMPLE Retirement Plans Employer and employee contributions to a savings incentive match plan for employees (SIMPLE) retirement account (subject to limitations) are excludable from the employee's income and are exempt from federal income tax withholding. I need to file my 2011 tax return An employer's nonelective (2%) or matching contributions are exempt from social security, Medicare, and FUTA taxes. I need to file my 2011 tax return However, an employee's salary reduction contributions to a SIMPLE are subject to social security, Medicare, and FUTA taxes. I need to file my 2011 tax return For more information about SIMPLE retirement plans, see Publication 560. I need to file my 2011 tax return 6. I need to file my 2011 tax return Sick Pay Reporting The IRS expects to change the third-party sick pay recap reporting and filing requirements for wages paid in 2014. I need to file my 2011 tax return Information about this change will be included in the revision of Publication 15-A that is expected to post to IRS. I need to file my 2011 tax return gov in December 2014. I need to file my 2011 tax return Special rules apply to the reporting of sick pay payments to employees. I need to file my 2011 tax return How these payments are reported depends on whether the payments are made by the employer or a third party, such as an insurance company. I need to file my 2011 tax return Sick pay is usually subject to social security, Medicare, and FUTA taxes. I need to file my 2011 tax return For exceptions, see Social Security, Medicare, and FUTA Taxes on Sick Pay , later in this section. I need to file my 2011 tax return Sick pay may also be subject to either mandatory or voluntary federal income tax withholding, depending on who pays it. I need to file my 2011 tax return Sick Pay Sick pay generally means any amount paid under a plan because of an employee's temporary absence from work due to injury, sickness, or disability. I need to file my 2011 tax return It may be paid by either the employer or a third party, such as an insurance company. I need to file my 2011 tax return Sick pay includes both short- and long-term benefits. I need to file my 2011 tax return It is often expressed as a percentage of the employee's regular wages. I need to file my 2011 tax return Payments That Are Not Sick Pay Sick pay does not include the following payments. I need to file my 2011 tax return Disability retirement payments. I need to file my 2011 tax return Disability retirement payments are not sick pay and are not discussed in this section. I need to file my 2011 tax return Those payments are subject to the rules for federal income tax withholding from pensions and annuities. I need to file my 2011 tax return See section 8. I need to file my 2011 tax return Workers' compensation. I need to file my 2011 tax return Payments because of a work-related injury or sickness that are made under a workers' compensation law are not sick pay and are not subject to employment taxes. I need to file my 2011 tax return But see Payments in the nature of workers' compensation—public employees next. I need to file my 2011 tax return Payments in the nature of workers' compensation—public employees. I need to file my 2011 tax return State and local government employees, such as police officers and firefighters, sometimes receive payments due to an injury in the line of duty under a statute that is not the general workers' compensation law of a state. I need to file my 2011 tax return If the statute limits benefits to work-related injuries or sickness and does not base payments on the employee's age, length of service, or prior contributions, the statute is “in the nature of” a workers' compensation law. I need to file my 2011 tax return Payments under a statute in the nature of a workers' compensation law are not sick pay and are not subject to employment taxes. I need to file my 2011 tax return For more information, see Regulations section 31. I need to file my 2011 tax return 3121(a)(2)-1. I need to file my 2011 tax return Medical expense payments. I need to file my 2011 tax return Payments under a definite plan or system for medical and hospitalization expenses, or for insurance covering these expenses, are not sick pay and are not subject to employment taxes. I need to file my 2011 tax return Payments unrelated to absence from work. I need to file my 2011 tax return Accident or health insurance payments unrelated to absence from work are not sick pay and are not subject to employment taxes. I need to file my 2011 tax return These include payments for: Permanent loss of a member or function of the body, Permanent loss of the use of a member or function of the body, or Permanent disfigurement of the body. I need to file my 2011 tax return Example. I need to file my 2011 tax return Donald was injured in a car accident and lost an eye. I need to file my 2011 tax return Under a policy paid for by Donald's employer, Delta Insurance Co. I need to file my 2011 tax return paid Donald $20,000 as compensation for the loss of his eye. I need to file my 2011 tax return Because the payment was determined by the type of injury and was unrelated to Donald's absence from work, it is not sick pay and is not subject to federal employment taxes. I need to file my 2011 tax return Sick Pay Plan A sick pay plan is a plan or system established by an employer under which sick pay is available to employees generally or to a class or classes of employees. I need to file my 2011 tax return This does not include a situation in which benefits are provided on a discretionary or occasional basis with merely an intention to aid particular employees in time of need. I need to file my 2011 tax return You have a sick pay plan or system if the plan is in writing or is otherwise made known to employees, such as by a bulletin board notice or your long and established practice. I need to file my 2011 tax return Some indications that you have a sick pay plan or system include references to the plan or system in the contract of employment, employer contributions to a plan, or segregated accounts for the payment of benefits. I need to file my 2011 tax return Definition of employer. I need to file my 2011 tax return   The employer for whom the employee normally works, a term used in the following discussion, is either the employer for whom the employee was working at the time that the employee became sick or disabled or the last employer for whom the employee worked before becoming sick or disabled, if that employer made contributions to the sick pay plan on behalf of the sick or disabled employee. I need to file my 2011 tax return Note. I need to file my 2011 tax return Contributions to a sick pay plan through a cafeteria plan (by direct employer contributions or salary reduction) are employer contributions unless they are after-tax employee contributions (that is, included in taxable wages). I need to file my 2011 tax return Third-Party Payers of Sick Pay Employer's agent. I need to file my 2011 tax return   An employer's agent is a third party that bears no insurance risk and is reimbursed on a cost-plus-fee basis for payment of sick pay and similar amounts. I need to file my 2011 tax return A third party may be your agent even if the third party is responsible for determining which employees are eligible to receive payments. I need to file my 2011 tax return For example, if a third party provides administrative services only, the third party is your agent. I need to file my 2011 tax return If the third party is paid an insurance premium and is not reimbursed on a cost-plus-fee basis, the third party is not your agent. I need to file my 2011 tax return Whether an insurance company or other third party is your agent depends on the terms of their agreement with you. I need to file my 2011 tax return   A third party that makes payments of sick pay as your agent is not considered the employer and generally has no responsibility for employment taxes. I need to file my 2011 tax return This responsibility remains with you. I need to file my 2011 tax return However, under an exception to this rule, the parties may enter into an agreement that makes the third-party agent responsible for employment taxes. I need to file my 2011 tax return In this situation, the third-party agent should use its own name and EIN (rather than your name and EIN) for the responsibilities that it has assumed. I need to file my 2011 tax return Third party not employer's agent. I need to file my 2011 tax return   A third party that makes payments of sick pay other than as an agent of the employer is liable for federal income tax withholding (if requested by the employee) and the employee part of the social security and Medicare taxes. I need to file my 2011 tax return   The third party is also liable for the employer part of the social security and Medicare taxes, and the FUTA tax, unless the third party transfers this liability to the employer for whom the employee normally works. I need to file my 2011 tax return This liability is transferred if the third party takes the following steps. I need to file my 2011 tax return Withholds the employee social security and Medicare taxes from the sick pay payments. I need to file my 2011 tax return Makes timely deposits of the employee social security and Medicare taxes. I need to file my 2011 tax return Notifies the employer for whom the employee normally works of the payments on which employee taxes were withheld and deposited. I need to file my 2011 tax return The third party must notify the employer within the time required for the third party's deposit of the employee part of the social security and Medicare taxes. I need to file my 2011 tax return For instance, if the third party is a monthly schedule depositor, it must notify the employer by the 15th day of the month following the month in which the sick pay payment is made because that is the day by which the deposit is required to be made. I need to file my 2011 tax return The third party should notify the employer as soon as information on payments is available so that an employer required to make electronic deposits can make them timely. I need to file my 2011 tax return For multi-employer plans, see the special rule discussed next. I need to file my 2011 tax return Multi-employer plan timing rule. I need to file my 2011 tax return   A special rule applies to sick pay payments made to employees by a third-party insurer under an insurance contract with a multi-employer plan established under a collectively bargained agreement. I need to file my 2011 tax return If the third-party insurer making the payments complies wi