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Income Tax For Students

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Income Tax For Students

Income tax for students 10. Income tax for students   Indoor Tanning Services Tax Table of Contents The tax on indoor tanning service is 10% of the amount paid for that service. Income tax for students The tax is paid by the person paying for the services and is collected by the person receiving payment for the indoor tanning services. Income tax for students Definition of indoor tanning services. Income tax for students   Indoor tanning service means a service employing any electronic product designed to incorporate one or more ultraviolet lamps and intended for the irradiation of an individual by ultraviolet radiation, with wavelengths in air between 200 and 400 nanometers, to induce skin tanning. Income tax for students The term does not include phototherapy service performed by, and on the premises of, a licensed medical professional (such as a dermatologist, psychologist, or registered nurse). Income tax for students See regulations section 49. Income tax for students 5000B-1 for more information, and special rules for qualified physical fitness facilities, undesignated payment cards, and bundled payments. Income tax for students File Form 720. Income tax for students   The person receiving the payment for indoor tanning services (collector) must collect and remit the tax and file the return. Income tax for students If the tax is not collected for any reason, the collector is liable for the tax. Income tax for students The collector is not required to make semimonthly deposits of the tax. Income tax for students Prev  Up  Next   Home   More Online Publications
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Page Last Reviewed or Updated: 26-Mar-2014

The Income Tax For Students

Income tax for students 2. Income tax for students   Employees' Pay Table of Contents Introduction Topics - This chapter discusses: Useful Items - You may want to see: Tests for Deducting PayTest 1—Reasonableness Test 2—For Services Performed Kinds of PayAwards Bonuses Education Expenses Fringe Benefits Loans or Advances Property Reimbursements for Business Expenses Sick and Vacation Pay Introduction You can generally deduct the amount you pay your employees for the services they perform. Income tax for students The pay may be in cash, property, or services. Income tax for students It may include wages, salaries, bonuses, commissions, or other non-cash compensation such as vacation allowances and fringe benefits. Income tax for students For information about deducting employment taxes, see chapter 5. Income tax for students You can claim employment credits, such as the following, if you hire individuals who meet certain requirements. Income tax for students Empowerment zone employment credit (Form 8844). Income tax for students Indian employment credit (Form 8845). Income tax for students Work opportunity credit (Form 5884). Income tax for students Credit for employer differential wage payments (Form 8932). Income tax for students Reduce your deduction for employee wages by the amount of employment credits you claim. Income tax for students For more information about these credits, see the form on which the credit is claimed. Income tax for students Topics - This chapter discusses: Tests for deducting pay Kinds of pay Useful Items - You may want to see: Publication 15 (Circular E), Employer's Tax Guide 15-A Employer's Supplemental Tax Guide 15-B Employer's Tax Guide to Fringe Benefits See chapter 12 for information about getting publications and forms. Income tax for students Tests for Deducting Pay To be deductible, your employees' pay must be an ordinary and necessary business expense and you must pay or incur it. Income tax for students These and other requirements that apply to all business expenses are explained in chapter 1. Income tax for students In addition, the pay must meet both of the following tests. Income tax for students Test 1. Income tax for students It must be reasonable. Income tax for students Test 2. Income tax for students It must be for services performed. Income tax for students The form or method of figuring the pay does not affect its deductibility. Income tax for students For example, bonuses and commissions based on sales or earnings, and paid under an agreement made before the services were performed, are both deductible. Income tax for students Test 1—Reasonableness You must be able to prove that the pay is reasonable. Income tax for students Whether the pay is reasonable depends on the circumstances that existed when you contracted for the services, not those that exist when reasonableness is questioned. Income tax for students If the pay is excessive, the excess pay is disallowed as a deduction. Income tax for students Factors to consider. Income tax for students   Determine the reasonableness of pay by the facts and circumstances. Income tax for students Generally, reasonable pay is the amount that a similar business would pay for the same or similar services. Income tax for students   To determine if pay is reasonable, also consider the following items and any other pertinent facts. Income tax for students The duties performed by the employee. Income tax for students The volume of business handled. Income tax for students The character and amount of responsibility. Income tax for students The complexities of your business. Income tax for students The amount of time required. Income tax for students The cost of living in the locality. Income tax for students The ability and achievements of the individual employee performing the service. Income tax for students The pay compared with the gross and net income of the business, as well as with distributions to shareholders if the business is a corporation. Income tax for students Your policy regarding pay for all your employees. Income tax for students The history of pay for each employee. Income tax for students Test 2—For Services Performed You must be able to prove the payment was made for services actually performed. Income tax for students Employee-shareholder salaries. Income tax for students   If a corporation pays an employee who is also a shareholder a salary that is unreasonably high considering the services actually performed, the excessive part of the salary may be treated as a constructive dividend to the employee-shareholder. Income tax for students The excessive part of the salary would not be allowed as a salary deduction by the corporation. Income tax for students For more information on corporate distributions to shareholders, see Publication 542, Corporations. Income tax for students Kinds of Pay Some of the ways you may provide pay to your employees in addition to regular wages or salaries are discussed next. Income tax for students For specialized and detailed information on employees' pay and the employment tax treatment of employees' pay, see Publications 15, 15-A, and 15-B. Income tax for students Awards You can generally deduct amounts you pay to your employees as awards, whether paid in cash or property. Income tax for students If you give property to an employee as an employee achievement award, your deduction may be limited. Income tax for students Achievement awards. Income tax for students   An achievement award is an item of tangible personal property that meets all the following requirements. Income tax for students It is given to an employee for length of service or safety achievement. Income tax for students It is awarded as part of a meaningful presentation. Income tax for students It is awarded under conditions and circumstances that do not create a significant likelihood of disguised pay. Income tax for students Length-of-service award. Income tax for students    An award will qualify as a length-of-service award only if either of the following applies. Income tax for students The employee receives the award after his or her first 5 years of employment. Income tax for students The employee did not receive another length-of-service award (other than one of very small value) during the same year or in any of the prior 4 years. Income tax for students Safety achievement award. Income tax for students    An award for safety achievement will qualify as an achievement award unless one of the following applies. Income tax for students It is given to a manager, administrator, clerical employee, or other professional employee. Income tax for students During the tax year, more than 10% of your employees, excluding those listed in (1), have already received a safety achievement award (other than one of very small value). Income tax for students Deduction limit. Income tax for students   Your deduction for the cost of employee achievement awards given to any one employee during the tax year is limited to the following. Income tax for students $400 for awards that are not qualified plan awards. Income tax for students $1,600 for all awards, whether or not qualified plan awards. Income tax for students   A qualified plan award is an achievement award given as part of an established written plan or program that does not favor highly compensated employees as to eligibility or benefits. Income tax for students   A highly compensated employee is an employee who meets either of the following tests. Income tax for students The employee was a 5% owner at any time during the year or the preceding year. Income tax for students The employee received more than $115,000 in pay for the preceding year. Income tax for students You can choose to ignore test (2) if the employee was not also in the top 20% of employees ranked by pay for the preceding year. Income tax for students   An award is not a qualified plan award if the average cost of all the employee achievement awards given during the tax year (that would be qualified plan awards except for this limit) is more than $400. Income tax for students To figure this average cost, ignore awards of nominal value. Income tax for students Deduct achievement awards as a nonwage business expense on your return or business schedule. Income tax for students You may not owe employment taxes on the value of some achievement awards you provide to an employee. Income tax for students See Publication 15-B. Income tax for students Bonuses You can generally deduct a bonus paid to an employee if you intended the bonus as additional pay for services, not as a gift, and the services were performed. Income tax for students However, the total bonuses, salaries, and other pay must be reasonable for the services performed. Income tax for students If the bonus is paid in property, see Property , later. Income tax for students Gifts of nominal value. Income tax for students    If, to promote employee goodwill, you distribute food or merchandise of nominal value to your employees at holidays, you can deduct the cost of these items as a nonwage business expense. Income tax for students Your deduction for de minimis gifts of food or drink are not subject to the 50% deduction limit that generally applies to meals. Income tax for students For more information on this deduction limit, see Meals and lodging , later. Income tax for students Education Expenses If you pay or reimburse education expenses for an employee, you can deduct the payments if they are part of a qualified educational assistance program. Income tax for students Deduct them on the “Employee benefit programs” or other appropriate line of your tax return. Income tax for students For information on educational assistance programs, see Educational Assistance in section 2 of Publication 15-B. Income tax for students Fringe Benefits A fringe benefit is a form of pay for the performance of services. Income tax for students You can generally deduct the cost of fringe benefits. Income tax for students You may be able to exclude all or part of the value of some fringe benefits from your employees' pay. Income tax for students You also may not owe employment taxes on the value of the fringe benefits. Income tax for students See Table 2-1, Special Rules for Various Types of Fringe Benefits, in Publication 15-B for details. Income tax for students Your deduction for the cost of fringe benefits for activities generally considered entertainment, amusement, or recreation, or for a facility used in connection with such an activity (for example, a company aircraft) for certain officers, directors, and more-than-10% shareholders is limited. Income tax for students Certain fringe benefits are discussed next. Income tax for students See Publication 15-B for more details on these and other fringe benefits. Income tax for students Meals and lodging. Income tax for students   You can usually deduct the cost of furnishing meals and lodging to your employees. Income tax for students Deduct the cost in whatever category the expense falls. Income tax for students For example, if you operate a restaurant, deduct the cost of the meals you furnish to employees as part of the cost of goods sold. Income tax for students If you operate a nursing home, motel, or rental property, deduct the cost of furnishing lodging to an employee as expenses for utilities, linen service, salaries, depreciation, etc. Income tax for students Deduction limit on meals. Income tax for students   You can generally deduct only 50% of the cost of furnishing meals to your employees. Income tax for students However, you can deduct the full cost of the following meals. Income tax for students Meals whose value you include in an employee's wages. Income tax for students Meals that qualify as a de minimis fringe benefit as discussed in section 2 of Publication 15-B. Income tax for students This generally includes meals you furnish to employees at your place of business if more than half of these employees are provided the meals for your convenience. Income tax for students Meals you furnish to your employees at the work site when you operate a restaurant or catering service. Income tax for students Meals you furnish to your employees as part of the expense of providing recreational or social activities, such as a company picnic. Income tax for students Meals you are required by federal law to furnish to crew members of certain commercial vessels (or would be required to furnish if the vessels were operated at sea). Income tax for students This does not include meals you furnish on vessels primarily providing luxury water transportation. Income tax for students Meals you furnish on an oil or gas platform or drilling rig located offshore or in Alaska. Income tax for students This includes meals you furnish at a support camp that is near and integral to an oil or gas drilling rig located in Alaska. Income tax for students Employee benefit programs. Income tax for students   Employee benefit programs include the following. Income tax for students Accident and health plans. Income tax for students Adoption assistance. Income tax for students Cafeteria plans. Income tax for students Dependent care assistance. Income tax for students Education assistance. Income tax for students Life insurance coverage. Income tax for students Welfare benefit funds. Income tax for students   You can generally deduct amounts you spend on employee benefit programs on the applicable line of your tax return. Income tax for students For example, if you provide dependent care by operating a dependent care facility for your employees, deduct your costs in whatever categories they fall (utilities, salaries, etc. Income tax for students ). Income tax for students Life insurance coverage. Income tax for students   You cannot deduct the cost of life insurance coverage for you, an employee, or any person with a financial interest in your business, if you are directly or indirectly the beneficiary of the policy. Income tax for students See Regulations section 1. Income tax for students 264-1 for more information. Income tax for students Welfare benefit funds. Income tax for students   A welfare benefit fund is a funded plan (or a funded arrangement having the effect of a plan) that provides welfare benefits to your employees, independent contractors, or their beneficiaries. Income tax for students Welfare benefits are any benefits other than deferred compensation or transfers of restricted property. Income tax for students   Your deduction for contributions to a welfare benefit fund is limited to the fund's qualified cost for the tax year. Income tax for students If your contributions to the fund are more than its qualified cost, carry the excess over to the next tax year. Income tax for students   Generally, the fund's “qualified cost” is the total of the following amounts, reduced by the after-tax income of the fund. Income tax for students The cost you would have been able to deduct using the cash method of accounting if you had paid for the benefits directly. Income tax for students The contributions added to a reserve account that are needed to fund claims incurred but not paid as of the end of the year. Income tax for students These claims can be for supplemental unemployment benefits, severance pay, or disability, medical, or life insurance benefits. Income tax for students   For more information, see sections 419(c) and 419A of the Internal Revenue Code and the related regulations. Income tax for students Loans or Advances You generally can deduct as wages an advance you make to an employee for services performed if you do not expect the employee to repay the advance. Income tax for students However, if the employee performs no services, treat the amount you advanced as a loan. Income tax for students If the employee does not repay the loan, treat it as income to the employee. Income tax for students Below-market interest rate loans. Income tax for students   On certain loans you make to an employee or shareholder, you are treated as having received interest income and as having paid compensation or dividends equal to that interest. Income tax for students See Below-Market Loans in chapter 4. Income tax for students Property If you transfer property (including your company's stock) to an employee as payment for services, you can generally deduct it as wages. Income tax for students The amount you can deduct is the property's fair market value on the date of the transfer less any amount the employee paid for the property. Income tax for students You can claim the deduction only for the tax year in which your employee includes the property's value in income. Income tax for students Your employee is deemed to have included the value in income if you report it on Form W-2, Wage and Tax Statement, in a timely manner. Income tax for students You treat the deductible amount as received in exchange for the property, and you must recognize any gain or loss realized on the transfer, unless it is the company's stock transferred as payment for services. Income tax for students Your gain or loss is the difference between the fair market value of the property and its adjusted basis on the date of transfer. Income tax for students These rules also apply to property transferred to an independent contractor for services, generally reported on Form 1099-MISC, Miscellaneous Income. Income tax for students Restricted property. Income tax for students   If the property you transfer for services is subject to restrictions that affect its value, you generally cannot deduct it and do not report gain or loss until it is substantially vested in the recipient. Income tax for students However, if the recipient pays for the property, you must report any gain at the time of the transfer up to the amount paid. Income tax for students    “Substantially vested” means the property is not subject to a substantial risk of forfeiture. Income tax for students This means that the recipient is not likely to have to give up his or her rights in the property in the future. Income tax for students Reimbursements for Business Expenses You can generally deduct the amount you pay or reimburse employees for business expenses incurred for your business. Income tax for students However, your deduction may be limited. Income tax for students If you make the payment under an accountable plan, deduct it in the category of the expense paid. Income tax for students For example, if you pay an employee for travel expenses incurred on your behalf, deduct this payment as a travel expense. Income tax for students If you make the payment under a nonaccountable plan, deduct it as wages and include it in the employee's Form W-2. Income tax for students See Reimbursement of Travel, Meals, and Entertainment in chapter 11 for more information about deducting reimbursements and an explanation of accountable and nonaccountable plans. Income tax for students Sick and Vacation Pay Sick pay. Income tax for students   You can deduct amounts you pay to your employees for sickness and injury, including lump-sum amounts, as wages. Income tax for students However, your deduction is limited to amounts not compensated by insurance or other means. Income tax for students Vacation pay. Income tax for students   Vacation pay is an employee benefit. Income tax for students It includes amounts paid for unused vacation leave. Income tax for students You can deduct vacation pay only in the tax year in which the employee actually receives it. Income tax for students This rule applies regardless of whether you use the cash or accrual method of accounting. Income tax for students Prev  Up  Next   Home   More Online Publications