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Previous Year Tax Forms

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Previous Year Tax Forms

Previous year tax forms 12. Previous year tax forms   Business Deduction for Work-Related Education Table of Contents What's New Introduction Qualifying Work-Related EducationEducation Required by Employer or by Law Education To Maintain or Improve Skills Education To Meet Minimum Requirements Education That Qualifies You for a New Trade or Business What Expenses Can Be DeductedUnclaimed reimbursement. Previous year tax forms Transportation Expenses Travel Expenses No Double Benefit Allowed How To Treat ReimbursementsAccountable Plans Nonaccountable Plans Deducting Business ExpensesSelf-Employed Persons Employees Performing Artists and Fee-Basis Officials Impairment-Related Work Expenses Recordkeeping Illustrated Example What's New Standard mileage rate. Previous year tax forms  Generally, if you claim a business deduction for work-related education and you drive your car to and from school, the amount you can deduct for miles driven from January 1, 2013 through December 31, 2013, is 56. Previous year tax forms 5 cents per mile. Previous year tax forms For more information, see Transportation Expenses under What Expenses Can Be Deducted, later. Previous year tax forms Introduction This chapter discusses work-related education expenses that you may be able to deduct as business expenses. Previous year tax forms To claim such a deduction, you must: Itemize your deductions on Schedule A (Form 1040 or 1040NR) if you are an employee, File Schedule C (Form 1040), Profit or Loss From Business, Schedule C-EZ (Form 1040), Net Profit From Business, or Schedule F (Form 1040), Profit or Loss From Farming if you are self-employed, and Have expenses for education that meet the requirements discussed under Qualifying Work-Related Education , later. Previous year tax forms What is the tax benefit of taking a business deduction for work-related education. Previous year tax forms   If you are an employee and can itemize your deductions, you may be able to claim a deduction for the expenses you pay for your work-related education. Previous year tax forms Your deduction will be the amount by which your qualifying work-related education expenses plus other job and certain miscellaneous expenses (except for impairment-related work expenses of disabled individuals) is greater than 2% of your adjusted gross income. Previous year tax forms An itemized deduction reduces the amount of your income subject to tax. Previous year tax forms   If you are self-employed, you deduct your expenses for qualifying work-related education directly from your self-employment income. Previous year tax forms This reduces the amount of your income subject to both income tax and self-employment tax. Previous year tax forms   Your work-related education expenses may also qualify you for other tax benefits, such as the American opportunity and lifetime learning credits. Previous year tax forms You may qualify for these other benefits even if you do not meet the requirements listed above. Previous year tax forms   Also, your work-related education expenses may qualify you to claim more than one tax benefit. Previous year tax forms Generally, you may claim any number of benefits as long as you use different expenses to figure each one. Previous year tax forms Qualifying Work-Related Education You can deduct the costs of qualifying work-related education as business expenses. Previous year tax forms This is education that meets at least one of the following two tests. Previous year tax forms The education is required by your employer or the law to keep your present salary, status, or job. Previous year tax forms The required education must serve a bona fide business purpose of your employer. Previous year tax forms The education maintains or improves skills needed in your present work. Previous year tax forms However, even if the education meets one or both of the above tests, it is not qualifying work-related education if it: Is needed to meet the minimum educational requirements of your present trade or business, or Is part of a program of study that will qualify you for a new trade or business. Previous year tax forms You can deduct the costs of qualifying work-related education as a business expense even if the education could lead to a degree. Previous year tax forms Use Figure 12-1, Does Your Work-Related Education Qualify as a quick check to see if your education qualifies. Previous year tax forms Education Required by Employer or by Law Once you have met the minimum educational requirements for your job, your employer or the law may require you to get more education. Previous year tax forms This additional education is qualifying work-related education if all three of the following requirements are met. Previous year tax forms It is required for you to keep your present salary, status, or job, The requirement serves a bona fide business purpose of your employer, and The education is not part of a program that will qualify you for a new trade or business. Previous year tax forms When you get more education than your employer or the law requires, the additional education can be qualifying work-related education only if it maintains or improves skills required in your present work. Previous year tax forms See Education To Maintain or Improve Skills , later. Previous year tax forms Example. Previous year tax forms You are a teacher who has satisfied the minimum requirements for teaching. Previous year tax forms Your employer requires you to take an additional college course each year to keep your teaching job. Previous year tax forms If the courses will not qualify you for a new trade or business, they are qualifying work-related education even if you eventually receive a master's degree and an increase in salary because of this extra education. Previous year tax forms This image is too large to be displayed in the current screen. Previous year tax forms Please click the link to view the image. Previous year tax forms Figure 12-1 Education To Maintain or Improve Skills If your education is not required by your employer or the law, it can be qualifying work-related education only if it maintains or improves skills needed in your present work. Previous year tax forms This could include refresher courses, courses on current developments, and academic or vocational courses. Previous year tax forms Example. Previous year tax forms You repair televisions, radios, and stereo systems for XYZ Store. Previous year tax forms To keep up with the latest changes, you take special courses in radio and stereo service. Previous year tax forms These courses maintain and improve skills required in your work. Previous year tax forms Maintaining skills vs. Previous year tax forms qualifying for new job. Previous year tax forms   Education to maintain or improve skills needed in your present work is not qualifying education if it will also qualify you for a new trade or business. Previous year tax forms Education during temporary absence. Previous year tax forms   If you stop working for a year or less in order to get education to maintain or improve skills needed in your present work and then return to the same general type of work, your absence is considered temporary. Previous year tax forms Education that you get during a temporary absence is qualifying work-related education if it maintains or improves skills needed in your present work. Previous year tax forms Example. Previous year tax forms You quit your biology research job to become a full-time biology graduate student for 1 year. Previous year tax forms If you return to work in biology research after completing the courses, the education is related to your present work even if you do not go back to work with the same employer. Previous year tax forms Education during indefinite absence. Previous year tax forms   If you stop work for more than a year, your absence from your job is considered indefinite. Previous year tax forms Education during an indefinite absence, even if it maintains or improves skills needed in the work from which you are absent, is considered to qualify you for a new trade or business. Previous year tax forms Therefore, it is not qualifying work-related education. Previous year tax forms Education To Meet Minimum Requirements Education you need to meet the minimum educational requirements for your present trade or business is not qualifying work-related education. Previous year tax forms The minimum educational requirements are determined by: Laws and regulations, Standards of your profession, trade, or business, and Your employer. Previous year tax forms Once you have met the minimum educational requirements that were in effect when you were hired, you do not have to meet any new minimum educational requirements. Previous year tax forms This means that if the minimum requirements change after you were hired, any education you need to meet the new requirements can be qualifying education. Previous year tax forms You have not necessarily met the minimum educational requirements of your trade or business simply because you are already doing the work. Previous year tax forms Example 1. Previous year tax forms You are a full-time engineering student. Previous year tax forms Although you have not received your degree or certification, you work part time as an engineer for a firm that will employ you as a full-time engineer after you finish college. Previous year tax forms Although your college engineering courses improve your skills in your present job, they are also needed to meet the minimum job requirements for a full-time engineer. Previous year tax forms The education is not qualifying work-related education. Previous year tax forms Example 2. Previous year tax forms You are an accountant and you have met the minimum educational requirements of your employer. Previous year tax forms Your employer later changes the minimum educational requirements and requires you to take college courses to keep your job. Previous year tax forms These additional courses can be qualifying work-related education because you have already satisfied the minimum requirements that were in effect when you were hired. Previous year tax forms Requirements for Teachers States or school districts usually set the minimum educational requirements for teachers. Previous year tax forms The requirement is the college degree or the minimum number of college hours usually required of a person hired for that position. Previous year tax forms If there are no requirements, you will have met the minimum educational requirements when you become a faculty member. Previous year tax forms The determination of whether you are a faculty member of an educational institution must be made on the basis of the particular practices of the institution. Previous year tax forms You generally will be considered a faculty member when one or more of the following occurs. Previous year tax forms You have tenure. Previous year tax forms Your years of service count toward obtaining tenure. Previous year tax forms You have a vote in faculty decisions. Previous year tax forms Your school makes contributions for you to a retirement plan other than social security or a similar program. Previous year tax forms Example 1. Previous year tax forms The law in your state requires beginning secondary school teachers to have a bachelor's degree, including 10 professional education courses. Previous year tax forms In addition, to keep the job a teacher must complete a fifth year of training within 10 years from the date of hire. Previous year tax forms If the employing school certifies to the state Department of Education that qualified teachers cannot be found, the school can hire persons with only 3 years of college. Previous year tax forms However, to keep their jobs, these teachers must get a bachelor's degree and the required professional education courses within 3 years. Previous year tax forms Under these facts, the bachelor's degree, whether or not it includes the 10 professional education courses, is considered the minimum educational requirement for qualification as a teacher in your state. Previous year tax forms If you have all the required education except the fifth year, you have met the minimum educational requirements. Previous year tax forms The fifth year of training is qualifying work-related education unless it is part of a program of study that will qualify you for a new trade or business. Previous year tax forms Example 2. Previous year tax forms Assume the same facts as in Example 1 except that you have a bachelor's degree and only six professional education courses. Previous year tax forms The additional four education courses can be qualifying work-related education. Previous year tax forms Although you do not have all the required courses, you have already met the minimum educational requirements. Previous year tax forms Example 3. Previous year tax forms Assume the same facts as in Example 1 except that you are hired with only 3 years of college. Previous year tax forms The courses you take that lead to a bachelor's degree (including those in education) are not qualifying work-related education. Previous year tax forms They are needed to meet the minimum educational requirements for employment as a teacher. Previous year tax forms Example 4. Previous year tax forms You have a bachelor's degree and you work as a temporary instructor at a university. Previous year tax forms At the same time, you take graduate courses toward an advanced degree. Previous year tax forms The rules of the university state that you can become a faculty member only if you get a graduate degree. Previous year tax forms Also, you can keep your job as an instructor only as long as you show satisfactory progress toward getting this degree. Previous year tax forms You have not met the minimum educational requirements to qualify you as a faculty member. Previous year tax forms The graduate courses are not qualifying work-related education. Previous year tax forms Certification in a new state. Previous year tax forms   Once you have met the minimum educational requirements for teachers for your state, you are considered to have met the minimum educational requirements in all states. Previous year tax forms This is true even if you must get additional education to be certified in another state. Previous year tax forms Any additional education you need is qualifying work-related education. Previous year tax forms You have already met the minimum requirements for teaching. Previous year tax forms Teaching in another state is not a new trade or business. Previous year tax forms Example. Previous year tax forms You hold a permanent teaching certificate in State A and are employed as a teacher in that state for several years. Previous year tax forms You move to State B and are promptly hired as a teacher. Previous year tax forms You are required, however, to complete certain prescribed courses to get a permanent teaching certificate in State B. Previous year tax forms These additional courses are qualifying work-related education because the teaching position in State B involves the same general kind of work for which you were qualified in State A. Previous year tax forms Education That Qualifies You for a New Trade or Business Education that is part of a program of study that will qualify you for a new trade or business is not qualifying work-related education. Previous year tax forms This is true even if you do not plan to enter that trade or business. Previous year tax forms If you are an employee, a change of duties that involves the same general kind of work is not a new trade or business. Previous year tax forms Example 1. Previous year tax forms You are an accountant. Previous year tax forms Your employer requires you to get a law degree at your own expense. Previous year tax forms You register at a law school for the regular curriculum that leads to a law degree. Previous year tax forms Even if you do not intend to become a lawyer, the education is not qualifying because the law degree will qualify you for a new trade or business. Previous year tax forms Example 2. Previous year tax forms You are a general practitioner of medicine. Previous year tax forms You take a 2-week course to review developments in several specialized fields of medicine. Previous year tax forms The course does not qualify you for a new profession. Previous year tax forms It is qualifying work- related education because it maintains or improves skills required in your present profession. Previous year tax forms Example 3. Previous year tax forms While working in the private practice of psychiatry, you enter a program to study and train at an accredited psychoanalytic institute. Previous year tax forms The program will lead to qualifying you to practice psychoanalysis. Previous year tax forms The psychoanalytic training does not qualify you for a new profession. Previous year tax forms It is qualifying work-related education because it maintains or improves skills required in your present profession. Previous year tax forms Bar or CPA Review Course Review courses to prepare for the bar examination or the certified public accountant (CPA) examination are not qualifying work-related education. Previous year tax forms They are part of a program of study that can qualify you for a new profession. Previous year tax forms Teaching and Related Duties All teaching and related duties are considered the same general kind of work. Previous year tax forms A change in duties in any of the following ways is not considered a change to a new business. Previous year tax forms Elementary school teacher to secondary school teacher. Previous year tax forms Teacher of one subject, such as biology, to teacher of another subject, such as art. Previous year tax forms Classroom teacher to guidance counselor. Previous year tax forms Classroom teacher to school administrator. Previous year tax forms What Expenses Can Be Deducted If your education meets the requirements described earlier under Qualifying Work-Related Education you can generally deduct your education expenses as business expenses. Previous year tax forms If you are not self-employed, you can deduct business expenses only if you itemize your deductions. Previous year tax forms You cannot deduct expenses related to tax-exempt and excluded income. Previous year tax forms Deductible expenses. Previous year tax forms   The following education expenses can be deducted. Previous year tax forms Tuition, books, supplies, lab fees, and similar items. Previous year tax forms Certain transportation and travel costs. Previous year tax forms Other education expenses, such as costs of research and typing when writing a paper as part of an educational program. Previous year tax forms Nondeductible expenses. Previous year tax forms   You cannot deduct personal or capital expenses. Previous year tax forms For example, you cannot deduct the dollar value of vacation time or annual leave you take to attend classes. Previous year tax forms This amount is a personal expense. Previous year tax forms Unclaimed reimbursement. Previous year tax forms   If you do not claim reimbursement that you are entitled to receive from your employer, you cannot deduct the expenses that apply to that unclaimed reimbursement. Previous year tax forms Example. Previous year tax forms Your employer agrees to pay your education expenses if you file a voucher showing your expenses. Previous year tax forms You do not file a voucher and you do not get reimbursed. Previous year tax forms Because you did not file a voucher, you cannot deduct the expenses on your tax return. Previous year tax forms Transportation Expenses If your education qualifies, you can deduct local transportation costs of going directly from work to school. Previous year tax forms If you are regularly employed and go to school on a temporary basis, you can also deduct the costs of returning from school to home. Previous year tax forms Temporary basis. Previous year tax forms   You go to school on a temporary basis if either of the following situations applies to you. Previous year tax forms Your attendance at school is realistically expected to last 1 year or less and does indeed last for 1 year or less. Previous year tax forms Initially, your attendance at school is realistically expected to last 1 year or less, but at a later date your attendance is reasonably expected to last more than 1 year. Previous year tax forms Your attendance is temporary up to the date you determine it will last more than 1 year. Previous year tax forms If you are in either situation (1) or (2) above, your attendance is not temporary if facts and circumstances indicate otherwise. Previous year tax forms Attendance not on a temporary basis. Previous year tax forms   You do not go to school on a temporary basis if either of the following situations apply to you. Previous year tax forms Your attendance at school is realistically expected to last more than 1 year. Previous year tax forms It does not matter how long you actually attend. Previous year tax forms Initially, your attendance at school is realistically expected to last 1 year or less, but at a later date your attendance is reasonably expected to last more than 1 year. Previous year tax forms Your attendance is not temporary after the date you determine it will last more than 1 year. Previous year tax forms Deductible Transportation Expenses If you are regularly employed and go directly from home to school on a temporary basis, you can deduct the round-trip costs of transportation between your home and school. Previous year tax forms This is true regardless of the location of the school, the distance traveled, or whether you attend school on nonwork days. Previous year tax forms Transportation expenses include the actual costs of bus, subway, cab, or other fares, as well as the costs of using your car. Previous year tax forms Transportation expenses do not include amounts spent for travel, meals, or lodging while you are away from home overnight. Previous year tax forms Example 1. Previous year tax forms You regularly work in a nearby town, and go directly from work to home. Previous year tax forms You also attend school every work night for 3 months to take a course that improves your job skills. Previous year tax forms Since you are attending school on a temporary basis, you can deduct your daily round-trip transportation expenses in going between home and school. Previous year tax forms This is true regardless of the distance traveled. Previous year tax forms Example 2. Previous year tax forms Assume the same facts as in Example 1 except that on certain nights you go directly from work to school and then home. Previous year tax forms You can deduct your transportation expenses from your regular work site to school and then home. Previous year tax forms Example 3. Previous year tax forms Assume the same facts as in Example 1 except that you attend the school for 9 months on Saturdays, nonwork days. Previous year tax forms Since you are attending school on a temporary basis, you can deduct your round-trip transportation expenses in going between home and school. Previous year tax forms Example 4. Previous year tax forms Assume the same facts as in Example 1 except that you attend classes twice a week for 15 months. Previous year tax forms Since your attendance in school is not considered temporary, you cannot deduct your transportation expenses in going between home and school. Previous year tax forms If you go directly from work to school, you can deduct the one-way transportation expenses of going from work to school. Previous year tax forms If you go from work to home to school and return home, your transportation expenses cannot be more than if you had gone directly from work to school. Previous year tax forms Using your car. Previous year tax forms    If you use your car (whether you own or lease it) for transportation to school, you can deduct your actual expenses or use the standard mileage rate to figure the amount you can deduct. Previous year tax forms The standard mileage rate for miles driven from January 1, 2013 through December 31, 2013, is 56. Previous year tax forms 5 cents per mile. Previous year tax forms Whichever method you use, you can also deduct parking fees and tolls. Previous year tax forms See Publication 463, chapter 4, for information on deducting your actual expenses of using a car. Previous year tax forms Travel Expenses You can deduct expenses for travel, meals (see 50% limit on meals , later), and lodging if you travel overnight mainly to obtain qualifying work-related education. Previous year tax forms Travel expenses for qualifying work-related education are treated the same as travel expenses for other employee business purposes. Previous year tax forms For more information, see chapter 1 of Publication 463. Previous year tax forms You cannot deduct expenses for personal activities such as sightseeing, visiting, or entertaining. Previous year tax forms Mainly personal travel. Previous year tax forms   If your travel away from home is mainly personal, you cannot deduct all of your expenses for travel, meals, and lodging. Previous year tax forms You can deduct only your expenses for lodging and 50% of your expenses for meals during the time you attend the qualified educational activities. Previous year tax forms   Whether a trip's purpose is mainly personal or educational depends upon the facts and circumstances. Previous year tax forms An important factor is the comparison of time spent on personal activities with time spent on educational activities. Previous year tax forms If you spend more time on personal activities, the trip is considered mainly educational only if you can show a substantial nonpersonal reason for traveling to a particular location. Previous year tax forms Example 1. Previous year tax forms John works in Newark, New Jersey. Previous year tax forms He traveled to Chicago to take a deductible 1-week course at the request of his employer. Previous year tax forms His main reason for going to Chicago was to take the course. Previous year tax forms While there, he took a sightseeing trip, entertained some friends, and took a side trip to Pleasantville for a day. Previous year tax forms Since the trip was mainly for business, John can deduct his round-trip airfare to Chicago. Previous year tax forms He cannot deduct his transportation expenses of going to Pleasantville. Previous year tax forms He can deduct only the meals (subject to the 50% limit) and lodging connected with his educational activities. Previous year tax forms Example 2. Previous year tax forms Sue works in Boston. Previous year tax forms She went to a university in Michigan to take a course for work. Previous year tax forms The course is qualifying work-related education. Previous year tax forms She took one course, which is one-fourth of a full course load of study. Previous year tax forms She spent the rest of the time on personal activities. Previous year tax forms Her reasons for taking the course in Michigan were all personal. Previous year tax forms Sue's trip is mainly personal because three-fourths of her time is considered personal time. Previous year tax forms She cannot deduct the cost of her round-trip train ticket to Michigan. Previous year tax forms She can deduct one-fourth of the meals (subject to the 50% limit) and lodging costs for the time she attended the university. Previous year tax forms Example 3. Previous year tax forms Dave works in Nashville and recently traveled to California to take a 2-week seminar. Previous year tax forms The seminar is qualifying work-related education. Previous year tax forms While there, he spent an extra 8 weeks on personal activities. Previous year tax forms The facts, including the extra 8-week stay, show that his main purpose was to take a vacation. Previous year tax forms Dave cannot deduct his round-trip airfare or his meals and lodging for the 8 weeks. Previous year tax forms He can deduct only his expenses for meals (subject to the 50% limit) and lodging for the 2 weeks he attended the seminar. Previous year tax forms Cruises and conventions. Previous year tax forms   Certain cruises and conventions offer seminars or courses as part of their itinerary. Previous year tax forms Even if the seminars or courses are work related, your deduction for travel may be limited. Previous year tax forms This applies to: Travel by ocean liner, cruise ship, or other form of luxury water transportation, and Conventions outside the North American area. Previous year tax forms   For a discussion of the limits on travel expense deductions that apply to cruises and conventions, see Luxury Water Travel and Conventions in chapter 1 of Publication 463. Previous year tax forms 50% limit on meals. Previous year tax forms   You can deduct only 50% of the cost of your meals while traveling away from home to obtain qualifying work-related education. Previous year tax forms If you were reimbursed for the meals, see How To Treat Reimbursements , later. Previous year tax forms   Employees must use Form 2106 or Form 2106-EZ to apply the 50% limit. Previous year tax forms Travel as Education You cannot deduct the cost of travel as a form of education even if it is directly related to your duties in your work or business. Previous year tax forms Example. Previous year tax forms You are a French language teacher. Previous year tax forms While on sabbatical leave granted for travel, you traveled through France to improve your knowledge of the French language. Previous year tax forms You chose your itinerary and most of your activities to improve your French language skills. Previous year tax forms You cannot deduct your travel expenses as education expenses. Previous year tax forms This is true even if you spent most of your time learning French by visiting French schools and families, attending movies or plays, and engaging in similar activities. Previous year tax forms No Double Benefit Allowed You cannot do either of the following. Previous year tax forms Deduct work-related education expenses as business expenses if you benefit from these expenses under any other provision of the law, for example, as a tuition and fees deduction. Previous year tax forms Deduct work-related education expenses paid with tax-free scholarship, grant, or employer-provided educational assistance. Previous year tax forms See Adjustments to Qualifying Work-Related Education Expenses, next. Previous year tax forms Adjustments to Qualifying Work-Related Education Expenses If you pay qualifying work-related education expenses with certain tax-free funds, you cannot claim a deduction for those amounts. Previous year tax forms You must reduce the qualifying expenses by the amount of such expenses allocable to the tax-free educational assistance. Previous year tax forms Tax-free educational assistance. Previous year tax forms   This includes: The tax-free part of scholarships and fellowships (see Tax-Free Scholarships and Fellowships in chapter 1, Scholarships, Fellowships, Grants, and Tuition Reductions), Pell grants (see Pell Grants and Other Title IV Need-Based Education Grants in chapter 1, Scholarships, Fellowships, Grants, and Tuition Reductions). Previous year tax forms Employer-provided educational assistance (see chapter 11, Employer-Provided Educational Assistance ), Veterans' educational assistance (see Veterans' Benefits in chapter 1, Scholarships, Fellowships, Grants, and Tuition Reductions), and Any other nontaxable (tax-free) payments (other than gifts or inheritances) received as educational assistance. Previous year tax forms Amounts that do not reduce qualifying work-related education expenses. Previous year tax forms   Do not reduce the qualifying work-related education expenses by amounts paid with funds the student receives as: Payment for services, such as wages, A loan, A gift, An inheritance, or A withdrawal from the student's personal savings. Previous year tax forms Also, do not reduce the qualifying work-related education expenses by any scholarship or fellowship reported as income on the student's return or any scholarship which, by its terms, cannot be applied to qualifying work-related education expenses. Previous year tax forms How To Treat Reimbursements How you treat reimbursements depends on the arrangement you have with your employer. Previous year tax forms There are two basic types of reimbursement arrangements—accountable plans and nonaccountable plans. Previous year tax forms You can tell the type of plan you are reimbursed under by the way the reimbursement is reported on your Form W-2. Previous year tax forms Note. Previous year tax forms The following rules about reimbursement arrangements also apply to expense allowances received from your employer. Previous year tax forms Accountable Plans To be an accountable plan, your employer's reimbursement arrangement must require you to meet all three of the following rules. Previous year tax forms Your expenses must have a business connection. Previous year tax forms This means your expenses must be deductible under the rules for qualifying work-related education explained earlier. Previous year tax forms You must adequately account to your employer for your expenses within a reasonable period of time. Previous year tax forms You must return any reimbursement or allowance in excess of the expenses accounted for within a reasonable period of time. Previous year tax forms If you are reimbursed under an accountable plan, your employer should not include any reimbursement in your income in box 1 of your Form W-2. Previous year tax forms If your employer included reimbursements in box 1 of your Form W-2 and you meet all three rules for accountable plans, ask your employer for a corrected Form W-2. Previous year tax forms Accountable plan rules not met. Previous year tax forms   Even though you are reimbursed under an accountable plan, some of your expenses may not meet all three rules for accountable plans. Previous year tax forms Those expenses that fail to meet the three rules are treated as having been reimbursed under a Nonaccountable Plan (discussed later). Previous year tax forms Expenses equal reimbursement. Previous year tax forms   Under an accountable plan, if your expenses equal your reimbursement, you do not complete Form 2106 or 2106-EZ. Previous year tax forms Because your expenses and reimbursements are equal, you do not have a deduction. Previous year tax forms Excess expenses. Previous year tax forms   If your expenses are more than your reimbursement, you can deduct your excess expenses. Previous year tax forms This is discussed later, under Deducting Business Expenses . Previous year tax forms Allocating your reimbursements for meals. Previous year tax forms   Because your excess meal expenses are subject to the 50% limit, you must figure them separately from your other expenses. Previous year tax forms If your employer paid you a single amount to cover both meals and other expenses, you must allocate the reimbursement so that you can figure your excess meal expenses separately. Previous year tax forms Make the allocation as follows. Previous year tax forms Divide your meal expenses by your total expenses. Previous year tax forms Multiply your total reimbursement by the result from (1). Previous year tax forms This is the allocated reimbursement for your meal expenses. Previous year tax forms Subtract the amount figured in (2) from your total reimbursement. Previous year tax forms The difference is the allocated reimbursement for your other expenses of qualifying work-related education. Previous year tax forms Example. Previous year tax forms Your employer paid you an expense allowance of $2,000 under an accountable plan. Previous year tax forms The allowance was to cover all of your expenses of traveling away from home to take a 2-week training course for work. Previous year tax forms There was no indication of how much of the reimbursement was for each type of expense. Previous year tax forms Your actual expenses equal $2,500 ($425 for meals + $700 lodging + $150 transportation expenses + $1,225 for books and tuition). Previous year tax forms Using the steps listed above, allocate the reimbursement between the $425 meal expenses and the $2,075 other expenses. Previous year tax forms   1. Previous year tax forms $425 meal expenses  $2,500 total expenses = . Previous year tax forms 17   2. Previous year tax forms $2,000 (reimbursement)×. Previous year tax forms 17     =$340 (allocated reimbursement for meal expenses)   3. Previous year tax forms $2,000 (reimbursement)−$340 (meals)     = $1,660 (allocated reimbursement for other qualifying work-related education expenses) Your excess meal expenses are $85 ($425 − $340) and your excess other expenses are $415 ($2,075 − $1,660). Previous year tax forms After you apply the 50% limit to your meals, you have a deduction for work-related education expenses of $458 (($85 × 50%) + $415). Previous year tax forms Nonaccountable Plans 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 and report the total in box 1 of your Form W-2. Previous year tax forms You can deduct your expenses regardless of whether they are more than, less than, or equal to your reimbursement. Previous year tax forms This is discussed later under Deducting Business Expenses . Previous year tax forms An illustrated example of a nonaccountable plan, using Form 2106-EZ, is shown at the end of this chapter. Previous year tax forms Reimbursements for nondeductible expenses. Previous year tax forms   Reimbursements you received for nondeductible expenses are treated as paid under a nonaccountable plan. Previous year tax forms You must include them in your income. Previous year tax forms For example, you must include in your income reimbursements your employer gave you for expenses of education that: You need to meet the minimum educational requirements for your job, or Is part of a program of study that can qualify you for a new trade or business. Previous year tax forms   For more information on accountable and nonaccountable plans, see chapter 6 of Publication 463. Previous year tax forms Deducting Business Expenses Self-employed persons and employees report their business expenses differently. Previous year tax forms The following information explains what forms you must use to deduct the cost of your qualifying work-related education as a business expense. Previous year tax forms Self-Employed Persons If you are self-employed, you must report the cost of your qualifying work-related education on the appropriate form used to report your business income and expenses (generally Schedule C (Form 1040), Schedule C-EZ (Form 1040), or Schedule F (Form 1040)). Previous year tax forms If your education expenses include expenses for a car or truck, travel, or meals, report those expenses the same way you report other business expenses for those items. Previous year tax forms See the instructions for the form you file for information on how to complete it. Previous year tax forms Employees If you are an employee, you can deduct the cost of qualifying work-related education only if you: Did not receive (and were not entitled to receive) any reimbursement from your employer, Were reimbursed under a nonaccountable plan (amount is included in box 1 of Form W-2), or Received reimbursement under an accountable plan, but the amount received was less than your expenses for which you claimed reimbursement. Previous year tax forms If either (1) or (2) applies, you can deduct the total qualifying cost. Previous year tax forms If (3) applies, you can deduct only the qualifying costs that were more than your reimbursement. Previous year tax forms In order to deduct the cost of your qualifying work-related education as a business expense, include the amount with your deduction for any other employee business expenses on Schedule A (Form 1040), line 21, or Schedule A (Form 1040NR), line 7. Previous year tax forms (Special rules for expenses of certain performing artists and fee-basis officials and for impairment-related work expenses are explained later. Previous year tax forms ) This deduction (except for impairment-related work expenses of disabled individuals) is subject to the 2%-of-adjusted-gross-income limit that applies to most miscellaneous itemized deductions. Previous year tax forms Form 2106 or 2106-EZ. Previous year tax forms   To figure your deduction for employee business expenses, including qualifying work-related education, you generally must complete Form 2106 or 2106-EZ. Previous year tax forms Form not required. Previous year tax forms   Do not complete either Form 2106 or 2106-EZ if: All reimbursements, if any, are included in box 1 of your Form W-2, and You are not claiming travel, transportation, meal, or entertainment expenses. Previous year tax forms   If you meet both of these requirements, enter the expenses directly on Schedule A (Form 1040), line 21, or Schedule A (Form 1040NR), line 7. Previous year tax forms (Special rules for expenses of certain Performing Artists and Fee-Basis Officials and for Impairment-Related Work Expenses are explained later. Previous year tax forms ) Using Form 2106-EZ. Previous year tax forms   This form is shorter and easier to use than Form 2106. Previous year tax forms Generally, you can use this form if: All reimbursements, if any, are included in box 1 of your Form W-2, and You are using the standard mileage rate if you are claiming vehicle expenses. Previous year tax forms   If you do not meet both of these requirements, use Form 2106. Previous year tax forms Performing Artists and Fee-Basis Officials If you are a qualified performing artist, or a state (or local) government official who is paid in whole or in part on a fee basis, you can deduct the cost of your qualifying work-related education as an adjustment to gross income rather than as an itemized deduction. Previous year tax forms Include the cost of your qualifying work-related education with any other employee business expenses on Form 1040, line 24, or Form 1040NR, line 35. Previous year tax forms You do not have to itemize your deductions on Schedule A (Form 1040 or 1040NR), and, therefore, the deduction is not subject to the 2%-of-adjusted-gross-income limit. Previous year tax forms You must complete Form 2106 or 2106-EZ to figure your deduction even if you meet the requirements described earlier under Form not required . Previous year tax forms For more information on qualified performing artists, see chapter 6 of Publication 463. Previous year tax forms Impairment-Related Work Expenses If you are disabled and have impairment-related work expenses that are necessary for you to be able to get qualifying work-related education, you can deduct these expenses on Schedule A (Form 1040), line 28, or Schedule A (Form 1040NR), line 14. Previous year tax forms They are not subject to the 2%-of-adjusted-gross-income limit. Previous year tax forms To deduct these expenses, you must complete Form 2106 or 2106-EZ even if you meet the requirements described earlier under Form not required . Previous year tax forms For more information on impairment-related work expenses, see chapter 6 of Publication 463. Previous year tax forms Recordkeeping You must keep records as proof of any deduction claimed on your tax return. Previous year tax forms Generally, you should keep your records for 3 years from the date of filing the tax return and claiming the deduction. Previous year tax forms If you are an employee who is reimbursed for expenses and you give your records and documentation to your employer, you do not have to keep duplicate copies of this information. Previous year tax forms However, you should keep your records for a 3-year period if: You claim deductions for expenses that are more than your reimbursement, Your employer does not use adequate accounting procedures to verify expense accounts, You are related to your employer, or Your expenses are reimbursed under a nonaccountable plan. Previous year tax forms Examples of records to keep. Previous year tax forms   If any of the above cases apply to you, you must be able to prove that your expenses are deductible. Previous year tax forms You should keep adequate records or have sufficient evidence that will support your expenses. Previous year tax forms Estimates or approximations do not qualify as proof of an expense. Previous year tax forms Some examples of what can be used to help prove your expenses are: Documents, such as transcripts, course descriptions, catalogs, etc. Previous year tax forms , showing periods of enrollment in educational institutions, principal subjects studied, and descriptions of educational activity. Previous year tax forms Canceled checks and receipts to verify amounts you spent for: Tuition and books, Meals and lodging while away from home overnight for educational purposes, Travel and transportation, and Other education expenses. Previous year tax forms Statements from your employer explaining whether the education was necessary for you to keep your job, salary, or status; how the education helped maintain or improve skills needed in your job; how much reimbursement you received; and, if you are a teacher, the type of certificate and subjects taught. Previous year tax forms Complete information about any scholarship or fellowship grants, including amounts you received during the year. Previous year tax forms Illustrated Example Victor Jones teaches math at a private high school in North Carolina. Previous year tax forms He was selected to attend a 3-week math seminar at a university in California. Previous year tax forms The seminar will improve his skills in his current job and is qualifying work-related education. Previous year tax forms He was reimbursed for his expenses under his employer's nonaccountable plan, so his reimbursement of $2,100 is included in the wages shown in box 1 of his Form W-2. Previous year tax forms Victor will file Form 1040. Previous year tax forms His actual expenses for the seminar are as follows:   Lodging   $1,050     Meals   526     Airfare   550     Taxi fares   50     Tuition and books   400     Total Expenses   $2,576   Victor files Form 2106-EZ with his tax return. Previous year tax forms He shows his expenses for the seminar in Part I of the form. Previous year tax forms He enters $1,650 ($1,050 + $550 + $50) on line 3 to account for his lodging, airfare, and taxi fares. Previous year tax forms He enters $400 on line 4 for his tuition and books. Previous year tax forms On the line provided for total meals and entertainment expenses, Victor enters $526 for meal expenses. Previous year tax forms He multiplies that amount by 50% and enters the result, $263, on line 5. Previous year tax forms On line 6, Victor totals the amounts from lines 3 through 5. Previous year tax forms He carries the total, $2,313, to Schedule A (Form 1040), line 21. Previous year tax forms Since he does not claim any vehicle expenses, Victor leaves Part II blank. Previous year tax forms His filled-in form is shown on the next page. Previous year tax forms This image is too large to be displayed in the current screen. Previous year tax forms Please click the link to view the image. Previous year tax forms Form 2106-EZ for V. Previous year tax forms Jones Prev  Up  Next   Home   More Online Publications
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The Previous Year Tax Forms

Previous year tax forms Publication 51 - Main Content Table of Contents 1. Previous year tax forms Taxpayer Identification NumbersWhen you receive your EIN. Previous year tax forms Registering for SSNVS. Previous year tax forms 2. Previous year tax forms Who Are Employees?Crew Leaders Business Owned and Operated by Spouses 3. Previous year tax forms Wages and Other Compensation 4. Previous year tax forms Social Security and Medicare TaxesThe $150 Test or the $2,500 Test Social Security and Medicare Tax Withholding 5. Previous year tax forms Federal Income Tax WithholdingImplementation of lock-in letter. Previous year tax forms Seasonal employees and employees not currently performing services. Previous year tax forms Termination and re-hire of employees. Previous year tax forms How To Figure Federal Income Tax Withholding 6. Previous year tax forms Required Notice to Employees About Earned Income Credit (EIC) 7. Previous year tax forms Depositing TaxesWhen To Deposit How To Deposit Deposit Penalties Employers of Both Farm and Nonfarm Workers 8. Previous year tax forms Form 943 9. Previous year tax forms Reporting Adjustments on Form 943Current Year Adjustments Prior Year Adjustments 10. Previous year tax forms Federal Unemployment (FUTA) Tax 11. Previous year tax forms Reconciling Wage Reporting Forms 13. Previous year tax forms Federal Income Tax Withholding MethodsWage Bracket Method Percentage Method Alternative Methods of Federal Income Tax Withholding How To Get Tax Help 1. Previous year tax forms Taxpayer Identification Numbers If you are required to withhold any federal income, social security, or Medicare taxes, you will need an employer identification number (EIN) for yourself. Previous year tax forms Also, you will need the SSN of each employee and the name of each employee as shown on the employee's social security card. Previous year tax forms Employer identification number (EIN). Previous year tax forms   An employer identification number (EIN) is a nine-digit number that the IRS issues. Previous year tax forms The digits are arranged as follows: 00-0000000. Previous year tax forms It is used to identify the tax accounts of employers and certain others who have no employees. Previous year tax forms Use your EIN on all of the items that you send to the IRS and SSA. Previous year tax forms   If you do not have an EIN, you may apply for one online. Previous year tax forms Visit IRS. Previous year tax forms gov and click on the Apply for an EIN Online link under Tools. Previous year tax forms You may also apply for an EIN by calling 1-800-829-4933, or you can fax or mail Form SS-4, Application for Employer Identification Number, to the IRS. Previous year tax forms Do not use a SSN in place of an EIN. Previous year tax forms   If you do not have an EIN by the time a return is due, write “Applied For” and the date you applied for it in the space shown for the number. Previous year tax forms If you took over another employer's business, do not use that employer's EIN. Previous year tax forms   You should have only one EIN. Previous year tax forms If you have more than one, and are not sure which one to use, call the toll-free Business and Specialty Tax Line at 1-800-829-4933 or 1-800-829-4059 (TDD/TTY for persons who are deaf, hard of hearing, or have a speech disability). Previous year tax forms Provide the EINs that you have, the name and address to which each number was assigned, and the address of your principal place of business. Previous year tax forms The IRS will tell you which EIN to use. Previous year tax forms   For more information, see Publication 1635 or Publication 583. Previous year tax forms When you receive your EIN. Previous year tax forms   If you are a new employer that indicated a federal tax obligation when requesting an EIN, you will be pre-enrolled in the Electronic Federal Tax Payment System (EFTPS). Previous year tax forms You will receive information in your Employer Identification Number (EIN) Package about Express Enrollment and an additional mailing containing your EFTPS personal identification number (PIN) and instructions for activating your PIN. Previous year tax forms Call the toll-free number located in your “How to Activate Your Enrollment” brochure to activate your enrollment and begin making your employment tax deposits. Previous year tax forms If you outsource any of your payroll and related tax duties to a third party payer, such as a payroll service provider or reporting agent, be sure to tell them about your EFTPS enrollment. Previous year tax forms Social security number (SSN). Previous year tax forms   An employee's social security number (SSN) consists of nine digits arranged as follows: 000-00-0000. Previous year tax forms You must obtain each employee's name and SSN as shown on the employee's social security card because you must enter them on Form W-2. Previous year tax forms Do not accept a social security card that says “Not valid for employment. Previous year tax forms ” A social security number issued with this legend does not permit employment. Previous year tax forms You may, but are not required to, photocopy the social security card if the employee provides it. Previous year tax forms If you do not show the employee's correct name and SSN on Form W-2, you may owe a penalty unless you have reasonable cause. Previous year tax forms See Publication 1586, Reasonable Cause Regulations & Requirements for Missing and Incorrect Name/TINs. Previous year tax forms Applying for a social security card. Previous year tax forms   Any employee who is legally eligible to work in the United States and does not have a social security card can get one by completing Form SS-5, Application for a Social Security Card, and submitting the necessary documentation to SSA. Previous year tax forms You can get Form SS-5 at SSA offices, by calling 1-800-772-1213 or 1-800-325-0778 (TTY), or from the SSA website at www. Previous year tax forms socialsecurity. Previous year tax forms gov/online/ss-5. Previous year tax forms html. Previous year tax forms The employee must complete and sign Form SS-5; it cannot be filed by the employer. Previous year tax forms You may be asked to supply a letter to accompany Form SS-5 if the employee has exceeded his or her yearly or lifetime limit for the number of replacement cards allowed. Previous year tax forms Applying for a social security number. Previous year tax forms   If you file Form W-2 on paper and your employee has applied for an SSN but does not have one when you must file Form W-2, enter “Applied For” on the form. Previous year tax forms If you are filing electronically, enter all zeros (000-00-0000) in the social security number field. Previous year tax forms When the employee receives the SSN, file Copy A of Form W-2c, Corrected Wage and Tax Statement, with the SSA to show the employee's SSN. Previous year tax forms Furnish Copies B, C, and 2 of Form W-2c to the employee. Previous year tax forms Up to 25 Forms W-2c per Form W-3c, Transmittal of Corrected Wage and Tax Statements, may be filed per session over the Internet, with no limit on the number of sessions. Previous year tax forms For more information, visit SSA's Employer W-2 Filing Instructions & Information webpage at www. Previous year tax forms socialsecurity. Previous year tax forms gov/employer. Previous year tax forms Advise your employee to correct the SSN on his or her original Form W-2. Previous year tax forms Correctly record the employee's name and SSN. Previous year tax forms   Record the name and number of each employee as they are shown on the employee's social security card. Previous year tax forms If the employee's name is not correct as shown on the card (for example, because of marriage or divorce), the employee should request a corrected card from the SSA. Previous year tax forms Continue to report the employee's wages under the old name until the employee shows you an updated social security card with the new name. Previous year tax forms   If the SSA issues the employee a replacement card after a name change, or a new card with a different social security number after a change in alien work status, file a Form W-2c to correct the name/SSN reported on the most recently filed Form W-2. Previous year tax forms It is not necessary to correct other years if the previous name and SSN were used for years before the most recent Form W-2. Previous year tax forms IRS individual taxpayer identification numbers (ITINs) for aliens. Previous year tax forms   Do not accept an ITIN in place of an SSN for employee identification or for work. Previous year tax forms An ITIN is issued for use by resident and nonresident aliens who need identification for tax purposes, but who are not eligible for U. Previous year tax forms S. Previous year tax forms employment. Previous year tax forms The ITIN is a nine-digit number formatted like an SSN (for example, NNN-NN-NNNN). Previous year tax forms However, it begins with the number “9” and has either a “7” or “8” as the fourth digit (for example, 9NN-7N-NNNN or 9NN-8N-NNNN). Previous year tax forms    An individual with an ITIN who later becomes eligible to work in the United States must obtain an SSN. Previous year tax forms If the individual is currently eligible to work in the United States, instruct the individual to apply for an SSN and follow the instructions under Applying for a social security number, earlier in this section. Previous year tax forms Do not use an ITIN in place of an SSN on Form W-2. Previous year tax forms Verification of social security numbers. Previous year tax forms   Employers and authorized reporting agents can use the Social Security Number Verification Service (SSNVS) to instantly verify up to 10 employee names and SSNs (per screen) at a time, or submit an electronic file of up to 250,000 names and SSNs and usually receive results the next business day. Previous year tax forms Visit www. Previous year tax forms socialsecurity. Previous year tax forms gov/employer/ssnv. Previous year tax forms htm for more information. Previous year tax forms Registering for SSNVS. Previous year tax forms   You must register online and receive authorization from your employer to use SSNVS. Previous year tax forms To register, visit SSA's website at www. Previous year tax forms socialsecurity. Previous year tax forms gov/employer and click on the Business Services Online link. Previous year tax forms Follow the registration instructions to obtain a user identification (ID) and password. Previous year tax forms You will need to provide the following information about yourself and your company. Previous year tax forms Name. Previous year tax forms SSN. Previous year tax forms Date of birth. Previous year tax forms Type of employer. Previous year tax forms EIN. Previous year tax forms Company name, address, and telephone number. Previous year tax forms Email address. Previous year tax forms When you have completed the online registration process, SSA will mail a one-time activation code to your employer. Previous year tax forms You must enter the activation code online to use SSNVS. Previous year tax forms 2. Previous year tax forms Who Are Employees? Generally, employees are defined either under common law or under statutes for certain situations. Previous year tax forms See Publication 15-A for details on statutory employees and nonemployees. Previous year tax forms Employee status under common law. Previous year tax forms   Generally, a worker who performs services for you is your employee if you have the right to control what will be done and how it will be done. Previous year tax forms This is so even when you give the employee freedom of action. Previous year tax forms What matters is that you have the right to control the details of how the services are performed. Previous year tax forms See Publication 15-A for more information on how to determine whether an individual providing services is an independent contractor or an employee. Previous year tax forms If an employer-employee relationship exists, it does not matter what it is called. Previous year tax forms The employee may be called an agent or independent contractor. Previous year tax forms It also does not matter how payments are measured or paid, what they are called, or if the employee works full or part time. Previous year tax forms You are responsible for withholding and paying employment taxes for your employees. Previous year tax forms You are also required to file employment tax returns. Previous year tax forms These requirements do not apply to amounts that you pay to independent contractors. Previous year tax forms The rules discussed in this publication apply only to workers who are your employees. Previous year tax forms In general, you are an employer of farmworkers if your employees: Raise or harvest agricultural or horticultural products on your farm (including the raising and feeding of livestock); Work in connection with the operation, management, conservation, improvement, or maintenance of your farm and its tools and equipment; Provide services relating to salvaging timber, or clearing land of brush and other debris, left by a hurricane (also known as hurricane labor); Handle, process, or package any agricultural or horticultural commodity if you produced over half of the commodity (for a group of up to 20 unincorporated operators, all of the commodity); or Do work for you related to cotton ginning, turpentine, gum resin products, or the operation and maintenance of irrigation facilities. Previous year tax forms For this purpose, the term “farm” includes stock, dairy, poultry, fruit, fur-bearing animal, and truck farms, as well as plantations, ranches, nurseries, ranges, greenhouses or other similar structures used primarily for the raising of agricultural or horticultural commodities, and orchards. Previous year tax forms Farmwork does not include reselling activities that do not involve any substantial activity of raising agricultural or horticultural commodities, such as a retail store or a greenhouse used primarily for display or storage. Previous year tax forms The table in section 12, How Do Employment Taxes Apply to Farmwork , distinguishes between farm and nonfarm activities, and also addresses rules that apply in special situations. Previous year tax forms Crew Leaders If you are a crew leader, you are an employer of farmworkers. Previous year tax forms A crew leader is a person who furnishes and pays (either on his or her own behalf or on behalf of the farm operator) workers to do farmwork for the farm operator. Previous year tax forms If there is no written agreement between you and the farm operator stating that you are his or her employee and if you pay the workers (either for yourself or for the farm operator), then you are a crew leader. Previous year tax forms For FUTA tax rules, see section 10. Previous year tax forms Business Owned and Operated by Spouses If you and your spouse jointly own and operate a farm or nonfarm business and share in the profits and losses, you are partners in a partnership, whether or not you have a formal partnership agreement. Previous year tax forms See Publication 541, Partnerships, for more details. Previous year tax forms The partnership is considered the employer of any employees, and is liable for any employment taxes due on wages paid to its employees. Previous year tax forms Exception—Qualified joint venture. Previous year tax forms   For tax years beginning after December 31, 2006, the Small Business and Work Opportunity Tax Act of 2007 (Public Law 110-28) provides that a “qualified joint venture,” whose only members are spouses filing a joint income tax return, can elect not to be treated as a partnership for federal tax purposes. Previous year tax forms A qualified joint venture conducts a trade or business where: The only members of the joint venture are spouses who file a joint income tax return, Both spouses materially participate (see Material participation in the Instructions for Schedule C (Form 1040), line G) in the trade or business (mere joint ownership of property is not enough), Both spouses elect to not be treated as a partnership, and The business is co-owned by both spouses and is not held in the name of a state law entity such as a partnership or limited liability company (LLC). Previous year tax forms   To make the election, all items of income, gain, loss, deduction, and credit must be divided between the spouses, in accordance with each spouse's interest in the venture, and reported on separate Schedules C or F as sole proprietors. Previous year tax forms Each spouse must also file a separate Schedule SE to pay self-employment taxes, as applicable. Previous year tax forms   Spouses using the qualified joint venture rules are treated as sole proprietors for federal tax purposes and generally do not need an EIN. Previous year tax forms If employment taxes are owed by the qualified joint venture, either spouse may report and pay the employment taxes due on the wages paid to the employees using the EIN of that spouse's sole proprietorship. Previous year tax forms Generally, filing as a qualified joint venture will not increase the spouses' total tax owed on the joint income tax return. Previous year tax forms However, it gives each spouse credit for social security earnings on which retirement benefits are based and for Medicare coverage without filing a partnership return. Previous year tax forms    Note. Previous year tax forms If your spouse is your employee, not your partner, you must pay social security and Medicare taxes for him or her. Previous year tax forms   For more information on qualified joint ventures, visit IRS. Previous year tax forms gov and enter “qualified joint venture” in the search box. Previous year tax forms Exception—Community income. Previous year tax forms   If you and your spouse wholly own an unincorporated business as community property under the community property laws of a state, foreign country, or U. Previous year tax forms S. Previous year tax forms possession, you can treat the business either as a sole proprietorship (of the spouse who carried on the business) or a partnership. Previous year tax forms You may still make an election to be taxed as a qualified joint venture instead of a partnership. Previous year tax forms See Exception—Qualified joint venture , earlier in this section. Previous year tax forms 3. Previous year tax forms Wages and Other Compensation Cash wages that you pay to employees for farmwork are generally subject to social security tax and Medicare tax. Previous year tax forms You may also be required to withhold, deposit, and report Additional Medicare Tax. Previous year tax forms See section 4 for more information. Previous year tax forms If the wages are subject to social security and Medicare taxes, they are also subject to federal income tax withholding. Previous year tax forms You may also be liable for FUTA tax, which is not withheld by you or paid by the employee. Previous year tax forms FUTA tax is discussed in section 10. Previous year tax forms Cash wages include checks, money orders, etc. Previous year tax forms Do not count as cash wages the value of food, lodging, and other noncash items. Previous year tax forms For more information on what payments are considered taxable wages, see Publication 15 (Circular E). Previous year tax forms Commodity wages. Previous year tax forms   Commodity wages are not cash and are not subject to social security and Medicare taxes or federal income tax withholding. Previous year tax forms However, noncash payments, including commodity wages, are treated as cash wages (see above) if the substance of the transaction is a cash payment. Previous year tax forms These noncash payments are subject to social security and Medicare taxes and federal income tax withholding. Previous year tax forms Other compensation. Previous year tax forms   Publications 15-A and 15-B discuss other forms of compensation that may be taxable. Previous year tax forms Family members. Previous year tax forms   Generally, the wages that you pay to family members who are your employees are subject to social security and Medicare taxes, federal income tax withholding, and FUTA tax. Previous year tax forms However, certain exemptions may apply for your child, spouse, or parent. Previous year tax forms See the table, How Do Employment Taxes Apply to Farmwork , in section 12. Previous year tax forms Household employees. Previous year tax forms   The wages of an employee who performs household services, such as a maid, babysitter, gardener, or cook, in your home are not subject to social security and Medicare taxes if you pay that employee cash wages of less than $1,900 in 2014. Previous year tax forms   Social security and Medicare taxes do not apply to cash wages for housework in your private home if it was done by your spouse or your child under age 21. Previous year tax forms Nor do the taxes apply to housework done by your parent unless: You have a child living in your home who is under age 18 or has a physical or mental condition that requires care by an adult for at least 4 continuous weeks in a calendar quarter, and You are a widow or widower, or divorced and not remarried, or have a spouse in the home who, because of a physical or mental condition, cannot care for your child for at least 4 continuous weeks in the quarter. Previous year tax forms   For more information, see Publication 926, Household Employer's Tax Guide. Previous year tax forms    Wages for household work may not be a deductible farm expense. Previous year tax forms See Publication 225, Farmer's Tax Guide. Previous year tax forms Share farmers. Previous year tax forms   You do not have to withhold or pay social security and Medicare taxes on amounts paid to share farmers under share-farming arrangements. Previous year tax forms Compensation paid to H-2A visa holders. Previous year tax forms   Report compensation of $600 or more paid to foreign agricultural workers who entered the country on H-2A visas in box 1 of Form W-2 but do not report it as social security wages (box 3) or Medicare wages (box 5) on Form W-2 because compensation paid to H-2A workers for agricultural labor performed in connection with this visa is not subject to social security and Medicare taxes. Previous year tax forms On Form W-2, do not check box 13 (Statutory employee), as H-2A workers are not statutory employees. Previous year tax forms   An employer is not required to withhold federal income tax from compensation it pays an H-2A worker for agricultural labor performed in connection with this visa unless the worker asks for withholding and the employer agrees. Previous year tax forms In that case, the worker must give the employer a completed Form W-4. Previous year tax forms Federal income tax withheld should be reported in box 2 of Form W-2. Previous year tax forms These reporting rules apply when the H-2A worker provides his or her taxpayer identification number (TIN) to the employer. Previous year tax forms For rules relating to backup withholding and reporting when the H-2A worker does not provide a TIN, see the Instructions for Form 1099-MISC and the Instructions for Form 945. Previous year tax forms 4. Previous year tax forms Social Security and Medicare Taxes Generally, you must withhold social security and Medicare taxes on all cash wage payments that you make to your employees. Previous year tax forms You may also be required to withhold Additional Medicare Tax. Previous year tax forms For more information, see Additional Medicare Tax withholding , later. Previous year tax forms The $150 Test or the $2,500 Test All cash wages that you pay to an employee during the year for farmwork are subject to social security and Medicare taxes and federal income tax withholding if either of the two tests below is met. Previous year tax forms You pay cash wages to an employee of $150 or more in a year for farmwork (count all cash wages paid on a time, piecework, or other basis). Previous year tax forms The $150 test applies separately to each farmworker that you employ. Previous year tax forms If you employ a family of workers, each member is treated separately. Previous year tax forms Do not count wages paid by other employers. Previous year tax forms The total that you pay for farmwork (cash and noncash) to all your employees is $2,500 or more during the year. Previous year tax forms Exceptions. Previous year tax forms   The $150 and $2,500 tests do not apply to wages that you pay to a farmworker who receives less than $150 in annual cash wages and the wages are not subject to social security and Medicare taxes, or federal income tax withholding, even if you pay $2,500 or more in that year to all of your farmworkers if the farmworker: Is employed in agriculture as a hand-harvest laborer, Is paid piece rates in an operation that is usually paid on a piece-rate basis in the region of employment, Commutes daily from his or her permanent home to the farm, and Had been employed in agriculture less than 13 weeks in the preceding calendar year. Previous year tax forms   Amounts that you pay to these seasonal farmworkers, however, count toward the $2,500-or-more test to determine whether wages that you pay to other farmworkers are subject to social security and Medicare taxes. Previous year tax forms Social Security and Medicare Tax Withholding The social security tax rate is 6. Previous year tax forms 2%, for both the employee and employer, on the first $117,000 paid to each employee. Previous year tax forms You must withhold at this rate from each employee and pay a matching amount. Previous year tax forms The Medicare tax rate is 1. Previous year tax forms 45% each for the employee and employer on all wages. Previous year tax forms You must withhold at this rate from each employee and pay a matching amount. Previous year tax forms There is no wage base limit for Medicare tax; all covered wages are subject to Medicare tax. Previous year tax forms Social security and Medicare taxes apply to most payments of sick pay, including payments made by third parties such as insurance companies. Previous year tax forms For details, see Publication 15-A. Previous year tax forms Additional Medicare Tax withholding. Previous year tax forms   In addition to withholding Medicare tax at 1. Previous year tax forms 45%, you must withhold a 0. Previous year tax forms 9% Additional Medicare Tax from wages you pay to an employee in excess of $200,000 in a calendar year. Previous year tax forms You are required to begin withholding Additional Medicare Tax in the pay period in which you pay wages in excess of $200,000 to an employee and continue to withhold it each pay period until the end of the calendar year. Previous year tax forms Additional Medicare Tax is only imposed on the employee. Previous year tax forms There is no employer share of Additional Medicare Tax. Previous year tax forms All wages that are subject to Medicare tax are subject to Additional Medicare Tax withholding if paid in excess of the $200,000 withholding threshold. Previous year tax forms   For more information on what wages are subject to Medicare tax, see the chart, Special Rules for Various Types of Services and Payments, in section 15 of Publication 15 (Circular E). Previous year tax forms For more information on Additional Medicare Tax, visit IRS. Previous year tax forms gov and enter “Additional Medicare Tax” in the search box. Previous year tax forms Employee share paid by employer. Previous year tax forms   If you would rather pay a household or agricultural employee's share of the social security and Medicare taxes without withholding them from his or her wages, you may do so. Previous year tax forms If you do not withhold the taxes, however, you must still pay them. Previous year tax forms Any employee social security and Medicare taxes that you pay is additional income to the employee. Previous year tax forms Include it in box 1 of the employee's Form W-2, but do not count it as social security and Medicare wages and do not include it in boxes 3 and 5. Previous year tax forms Also, do not count the additional income as wages for FUTA tax purposes. Previous year tax forms Different rules apply to employer payments of social security and Medicare taxes for non-household and non-agricultural employees. Previous year tax forms See section 7 of Publication 15-A. Previous year tax forms Withholding social security and Medicare taxes on nonresident alien employees. Previous year tax forms   In general, if you pay wages to nonresident alien employees, you must withhold social security and Medicare taxes as you would for a U. Previous year tax forms S. Previous year tax forms citizen or resident alien. Previous year tax forms However, see Publication 515, Withholding of Tax on Nonresident Aliens and Foreign Entities, for exceptions to this general rule. Previous year tax forms Also see Compensation paid to H-2A visa holders in section 3. Previous year tax forms Religious exemption. Previous year tax forms    An exemption from social security and Medicare taxes is available to members of a recognized religious sect opposed to public insurance. Previous year tax forms This exemption is available only if both the employee and the employer are members of the sect. Previous year tax forms   For more information, see Publication 517, Social Security and Other Information for Members of the Clergy and Religious Workers. Previous year tax forms 5. Previous year tax forms Federal Income Tax Withholding Farmers and crew leaders must withhold federal income tax from the wages of farmworkers if the wages are subject to social security and Medicare taxes. Previous year tax forms The amount to withhold is figured on gross wages before taking out social security and Medicare taxes, union dues, insurance, etc. Previous year tax forms You may use one of several methods to determine the amount of federal income tax withholding. Previous year tax forms They are discussed in section 13. Previous year tax forms Form W-4. Previous year tax forms   To know how much federal income tax to withhold from employees' wages, you should have a Form W-4 on file for each employee. Previous year tax forms Encourage your employees to file an updated Form W-4 for 2014, especially if they owed taxes or received a large refund when filing their 2013 tax return. Previous year tax forms Advise your employees to use the IRS Withholding Calculator on the IRS website at www. Previous year tax forms irs. Previous year tax forms gov/individuals for help in determining how many withholding allowances to claim on their Form W-4. Previous year tax forms   Ask each new employee to give you a signed Form W-4 when starting work. Previous year tax forms Make the form effective with the first wage payment. Previous year tax forms If a new employee does not give you a completed Form W-4, withhold tax as if he or she is single, with no withholding allowances. Previous year tax forms Forms in Spanish. Previous year tax forms   You can provide Formulario W-4(SP) in place of Form W-4 to your Spanish-speaking employees. Previous year tax forms For more information, see Publicación 17(SP). Previous year tax forms Effective date of Form W-4. Previous year tax forms   A Form W-4 remains in effect until the employee gives you a new one. Previous year tax forms When you receive a new Form W-4, do not adjust withholding for pay periods before the effective date of the new form. Previous year tax forms Do not adjust withholding retroactively. Previous year tax forms If an employee gives you a replacement Form W-4, begin withholding no later than the start of the first payroll period ending on or after the 30th day from the date when you received the replacement Form W-4. Previous year tax forms For exceptions, see Exemption from federal income tax withholding , IRS review of requested Forms W-4 , and Invalid Forms W-4 , later in this section. Previous year tax forms A Form W-4 that makes a change for the next calendar year will not take effect in the current calendar year. Previous year tax forms Completing Form W-4. Previous year tax forms   The amount of federal income tax withholding is based on marital status and withholding allowances. Previous year tax forms Your employees may not base their withholding amounts on a fixed dollar amount or percentage. Previous year tax forms However, the employee may specify a dollar amount to be withheld in addition to the amount of withholding based on filing status and withholding allowances claimed on Form W-4. Previous year tax forms   Employees may claim fewer withholding allowances than they are entitled to claim. Previous year tax forms They may do this to ensure that they have enough withholding or to offset other sources of taxable income that are not subject to withholding. Previous year tax forms   See Publication 505, Tax Withholding and Estimated Tax, for more information about completing Form W-4. Previous year tax forms Along with Form W-4, you may wish to order Publication 505 for use by your employees. Previous year tax forms    Do not accept any withholding or estimated tax payments from your employees in addition to withholding based on their Form W-4. Previous year tax forms If an employee wants additional withholding, he or she should submit a new Form W-4 and, if necessary, pay estimated tax by filing Form 1040-ES, Estimated Tax for Individuals, or by using the Electronic Federal Tax Payment System (EFTPS) to make estimated tax payments. Previous year tax forms Exemption from federal income tax withholding. Previous year tax forms   Generally, an employee may claim exemption from federal income tax withholding because he or she had no federal income tax liability last year and expects none this year. Previous year tax forms See the Form W-4 instructions for more information. Previous year tax forms However, the wages are still subject to social security and Medicare taxes. Previous year tax forms   A Form W-4 claiming exemption from withholding is effective when it is filed with the employer and only for that calendar year. Previous year tax forms To continue to be exempt from withholding in the next calendar year, an employee must give you a new Form W-4 by February 15. Previous year tax forms If the employee does not give you a new Form W-4 by February 15, withhold tax based on the last valid Form W-4 you have for the employee that did not claim an exemption from withholding or, if one does not exist, withhold as if he or she is single with zero withholding allowances. Previous year tax forms If the employee provides a new Form W-4 claiming an exemption from withholding on February 16 or later, you may apply the exemption to future wages, but do not refund taxes withheld while the exempt status was not in place. Previous year tax forms Withholding income taxes on the wages of nonresident alien employees. Previous year tax forms   In general, you must withhold federal income taxes on the wages of nonresident alien employees. Previous year tax forms However, see Publication 515 for exceptions to this general rule. Previous year tax forms Also see Compensation paid to H-2A visa workers in section 3. Previous year tax forms Withholding adjustment for nonresident alien employees. Previous year tax forms   A special procedure applies for figuring the amount of income tax to withhold from wages of nonresident alien employees performing services within the United States for wages paid in 2014. Previous year tax forms This procedure requires a special chart to be used with the withholding tables to determine the amount to withhold from the wages of the nonresident alien employee. Previous year tax forms See Withholding adjustment for nonresident alien employees in section 9 of Publication 15 (Circular E). Previous year tax forms Nonresident alien employee's Form W-4. Previous year tax forms   When completing Forms W-4, nonresident aliens are required to: Not claim exemption from income tax withholding; Request withholding as if they are single, regardless of their actual marital status; Claim only one allowance (if the nonresident alien is a resident of Canada, Mexico, or Korea, he or she may claim more than one allowance); and Write “Nonresident Alien” or “NRA” above the dotted line on line 6 of Form W-4. Previous year tax forms   If you maintain an electronic Form W-4 system, you should provide a field for nonresident alien employees to enter nonresident alien status in lieu of writing “Nonresident Alien” or “NRA” above the dotted line on line 6. Previous year tax forms    A nonresident alien employee may request additional withholding at his or her option for other purposes, although such additions should not be necessary for withholding to cover federal income tax liability related to employment. Previous year tax forms Form 8233. Previous year tax forms   If a nonresident alien employee claims a tax treaty exemption from withholding, the employee must submit Form 8233, Exemption from Withholding on Compensation for Independent (and Certain Dependent) Personal Services of a Nonresident Alien Individual, with respect to the income exempt under the treaty, instead of Form W-4. Previous year tax forms See Publication 515 for details. Previous year tax forms IRS review of requested Forms W-4. Previous year tax forms   When requested by the IRS, you must make original Forms W-4 available for inspection by an IRS employee. Previous year tax forms You may also be directed to send certain Forms W-4 to the IRS. Previous year tax forms You may receive a notice from the IRS requiring you to submit a copy of Form W-4 for one or more of your named employees. Previous year tax forms Send the requested copy or copies of Form W-4 to the IRS at the address provided and in the manner directed by the notice. Previous year tax forms The IRS may also require you to submit copies of Form W-4 to the IRS as directed by a revenue procedure or notice published in the Internal Revenue Bulletin. Previous year tax forms When we refer to Form W-4, the same rules apply to Formulario W-4(SP), its Spanish translation. Previous year tax forms   After submitting a copy of the requested Form W-4 to the IRS, continue to withhold federal income tax based on that Form W-4 if it is valid (see Invalid Forms W-4 , later in this section). Previous year tax forms However, if the IRS later notifies you in writing that the employee is not entitled to claim a complete exemption from withholding or more than the maximum number of withholding allowances specified by the IRS in the written notice, withhold federal income tax based on the effective date, marital status, and maximum number of withholding allowances specified in the notice (commonly referred to as a “lock-in letter”). Previous year tax forms Initial lock-in letter. Previous year tax forms   The IRS uses information reported on Form W-2 to identify employees with withholding compliance problems. Previous year tax forms In some cases, where a serious under-withholding problem is found to exist for a particular employee, the IRS may issue a lock-in letter to the employer specifying the maximum number of withholding allowances and marital status permitted for a specific employee. Previous year tax forms You will also receive a copy for the employee that identifies the maximum number of withholding allowances permitted and the process by which the employee can provide additional information to the IRS for purposes of determining the appropriate number of withholding allowances. Previous year tax forms If the employee is employed by you as of the date of the notice, you must furnish the employee copy to the employee within 10 business days of receipt. Previous year tax forms You may follow any reasonable business practice to furnish the employee copy to the employee. Previous year tax forms Implementation of lock-in letter. Previous year tax forms   When you receive the notice specifying the maximum number of withholding allowances and marital status permitted, you may not withhold immediately on the basis of the notice. Previous year tax forms You must begin withholding tax on the basis of the notice for any wages paid after the date specified in the notice. Previous year tax forms The delay between your receipt of the notice and the date to begin the withholding on the basis of the notice permits the employee to contact the IRS. Previous year tax forms Seasonal employees and employees not currently performing services. Previous year tax forms   If you receive a notice for an employee who is not currently performing services for you, you are still required to furnish the employee copy to the employee and withhold based on the notice if any of the following apply. Previous year tax forms You are paying wages for the employee's prior services and the wages are subject to income tax withholding on or after the date specified in the notice. Previous year tax forms You reasonably expect the employee to resume services within 12 months of the date of the notice. Previous year tax forms The employee is on a bona fide leave of absence that does not exceed 12 months or the employee has a right to reemployment after the leave of absence. Previous year tax forms Termination and re-hire of employees. Previous year tax forms   If you are required to furnish and withhold based on the notice and the employment relationship is terminated after the date of the notice, you must continue to withhold based on the notice if you continue to pay any wages subject to income tax withholding. Previous year tax forms You must also withhold based on the notice or modification notice (explained next) if the employee resumes the employment relationship with you within 12 months after the termination of the employment relationship. Previous year tax forms Modification notice. Previous year tax forms   After issuing the notice specifying the maximum number of withholding allowances and marital status permitted, the IRS may issue a subsequent notice (modification notice) that modifies the original notice. Previous year tax forms The modification notice may change the marital status and/or the number of withholding allowances permitted. Previous year tax forms You must withhold federal income tax based on the effective date specified in the modification notice. Previous year tax forms New Form W-4 after IRS notice. Previous year tax forms   After the IRS issues a notice or modification notice, if the employee provides you with a new Form W-4 claiming complete exemption from withholding or claims a marital status, a number of withholding allowances, and any additional withholding that results in less withholding than would result under the IRS notice or modification notice, you must disregard the new Form W-4. Previous year tax forms You are required to withhold on the basis of the notice or modification notice unless the IRS subsequently notifies you to withhold based on the new Form W-4. Previous year tax forms If the employee wants to put a new Form W-4 into effect that results in less withholding than required, the employee must contact the IRS. Previous year tax forms   If, after you receive an IRS notice or modification notice, your employee provides you with a new Form W-4 that does not claim exemption from federal income tax withholding and claims a marital status, a number of withholding allowances, and any additional withholding that results in more withholding than would result under the notice or modification notice, you must withhold tax on the basis of that new Form W-4. Previous year tax forms Otherwise, disregard any subsequent Forms W-4 provided by the employee and withhold based on the IRS notice or modification notice. Previous year tax forms Substitute Forms W-4. Previous year tax forms   You are encouraged to have your employees use the official version of Form W-4 to claim withholding allowances or exemption from withholding. Previous year tax forms Call the IRS at 1-800-TAX-FORM (1-800-829-3676) or visit IRS. Previous year tax forms gov to obtain copies of Form W-4. Previous year tax forms   You may use a substitute version of Form W-4 to meet your business needs. Previous year tax forms However, your substitute Form W-4 must contain language that is identical to the official Form W-4 and your form must meet all current IRS rules for substitute forms. Previous year tax forms At the time that you provide your substitute form to the employee, you must provide him or her with all tables, instructions, and worksheets from the current Form W-4. Previous year tax forms   You cannot accept a substitute Form W-4 developed by an employee, and the employee submitting such form will be treated as failing to furnish a Form W-4. Previous year tax forms However, continue to use any valid Forms W-4 developed by your employees that you accepted before October 11, 2007. Previous year tax forms Invalid Forms W-4. Previous year tax forms   Any unauthorized change or addition to Form W-4 makes it invalid. Previous year tax forms This includes taking out any language by which the employee certifies that the form is correct. Previous year tax forms A Form W-4 is also invalid if, by the date an employee gives it to you, he or she indicates in any way that it is false. Previous year tax forms An employee who submits a false Form W-4 may be subject to a $500 penalty. Previous year tax forms You may treat a Form W-4 as invalid if the employee wrote “exempt” on line 7 and also entered a number on line 5 or an amount on line 6. Previous year tax forms   When you get an invalid Form W-4, do not use it to figure federal income tax withholding. Previous year tax forms Tell the employee that it is invalid and ask for another one. Previous year tax forms If the employee does not give you a valid one, withhold taxes as if the employee was single and claiming no withholding allowances. Previous year tax forms However, if you have an earlier Form W-4 for this worker that is valid, withhold as you did before. Previous year tax forms   For additional information about these rules, see Treasury Decision 9337, 2007-35 I. Previous year tax forms R. Previous year tax forms B. Previous year tax forms 455, available at www. Previous year tax forms irs. Previous year tax forms gov/irb/2007-35_IRB/ar10. Previous year tax forms html. Previous year tax forms Amounts exempt from levy on wages, salary, and other income. Previous year tax forms   If you receive a Notice of Levy on Wages, Salary, and Other Income—Forms 668-W(ACS), 668-W(c)(DO), or 668-W(ICS), you must withhold amounts as described in the instructions for these forms. Previous year tax forms Publication 1494, Tables for Figuring Amount Exempt From Levy on Wages, Salary, and Other Income—Forms 668-W(ACS), 668-W(c)(DO), and 668-W(ICS), shows the exempt amount. Previous year tax forms If a levy issued in a prior year is still in effect and the taxpayer submits a new Statement of Exemptions and Filing Status, use the current year Publication 1494 to compute the exempt amount. Previous year tax forms How To Figure Federal Income Tax Withholding There are several ways to figure federal income tax withholding. Previous year tax forms Wage bracket tables. Previous year tax forms See section 13 for directions on how to use the tables. Previous year tax forms Percentage method. Previous year tax forms See section 13 for directions on how to use the percentage method. Previous year tax forms Alternative formula tables for percentage method withholding. Previous year tax forms See Publication 15-A. Previous year tax forms Wage bracket percentage method withholding tables. Previous year tax forms See Publication 15-A. Previous year tax forms Other alternative methods. Previous year tax forms See Publication 15-A. Previous year tax forms Employers with automated payroll systems will find the two alternative formula tables and the two alternative wage bracket percentage method tables in Publication 15-A useful. Previous year tax forms If an employee wants additional federal tax withheld, have the employee show the extra amount on Form W-4. Previous year tax forms Supplemental wages. Previous year tax forms   Supplemental wages are wage payments to an employee that are not regular wages. Previous year tax forms They include, but are not limited to, bonuses, commissions, overtime pay, accumulated sick leave, severance pay, awards, prizes, back pay and retroactive pay increases for current employees, and payments for nondeductible moving expenses. Previous year tax forms Other payments subject to the supplemental wage rules include taxable fringe benefits and expense allowances paid under a nonaccountable plan. Previous year tax forms   If you pay supplemental wages with regular wages but do not specify the amount of each, withhold federal income tax as if the total was a single payment for a regular payroll period. Previous year tax forms   If you pay supplemental wages separately (or combine them in a single payment and specify the amount of each), the federal income tax withholding method depends partly on whether you withhold federal income tax from your employee's regular wages. Previous year tax forms If you withheld federal income tax from an employee's regular wages in the current or immediately preceding calendar year, you can use one of the following methods for the supplemental wages. Previous year tax forms Withhold a flat 25% (no other percentage allowed). Previous year tax forms If the supplemental wages are paid concurrently with regular wages, add the supplemental wages to the concurrently paid regular wages. Previous year tax forms If there are no concurrently paid regular wages, add the supplemental wages to alternatively, either the regular wages paid or to be paid for the current payroll period or the regular wages paid for the preceding payroll period. Previous year tax forms Figure the income tax withholding as if the total of the regular wages and supplemental wages is a single payment. Previous year tax forms Subtract the tax withheld from the regular wages. Previous year tax forms Withhold the remaining tax from the supplemental wages. Previous year tax forms If there were other payments of supplemental wages paid during the payroll period made before the current payment of supplemental wages, aggregate all the payments of supplemental wages paid during the payroll period with the regular wages paid during the payroll period, calculate the tax on the total, subtract the tax already withheld from the regular wages and previous supplemental wage payments, and withhold the remaining tax from the current payment of supplemental wages. Previous year tax forms If you did not withhold federal income tax from the employee's regular wages in the current or immediately preceding calendar year, use method 1-b above. Previous year tax forms This would occur, for example, when the value of the employee's withholding allowances claimed on Form W-4 is more than the wages. Previous year tax forms    Separate rules apply to any supplemental wages exceeding $1 million that you pay to an individual during the year. Previous year tax forms See section 7 in Publication 15 (Circular E) for details. Previous year tax forms   Regardless of the method that you use to withhold federal income tax on supplemental wages, they are generally subject to social security, Medicare, and FUTA taxes. Previous year tax forms 6. Previous year tax forms Required Notice to Employees About Earned Income Credit (EIC) You must notify employees who have no federal income tax withheld that they may be able to claim a tax refund because of the EIC. Previous year tax forms Although you do not have to notify employees who claim exemption from withholding on Form W-4 about the EIC, you are encouraged to notify any employees whose wages for 2013 were less than $46,227 ($51,567 if married filing jointly) that they may be eligible to claim the credit for 2013. Previous year tax forms This is because eligible employees may get a refund of the amount of EIC that is more than the tax that they owe. Previous year tax forms You will meet the notification requirement if you issue to the employee Form W-2 with the EIC notice on the back of Copy B, or a substitute Form W-2 with the same statement. Previous year tax forms You may also meet the requirement by providing Notice 797, Possible Federal Tax Refund Due to the Earned Income Credit (EIC), or your own statement that contains the same wording. Previous year tax forms If a substitute Form W-2 is given to the employee on time but does not have the required statement, you must notify the employee within 1 week of the date that the substitute Form W-2 is given. Previous year tax forms If Form W-2 is required but is not given on time, you must give the employee Notice 797 or your written statement by the date that Form W-2 is required to be given. Previous year tax forms If Form W-2 is not required, you must notify the employee by February 7, 2014. Previous year tax forms 7. Previous year tax forms Depositing Taxes Generally, you must deposit both the employer and employee shares of social security and Medicare taxes and federal income tax withheld. Previous year tax forms You must use electronic funds transfer to make all federal tax deposits. Previous year tax forms See How To Deposit , later in this section. Previous year tax forms The credit against employment taxes for COBRA premium assistance payments is treated as a deposit of taxes on the first day of your return period. Previous year tax forms For more information, see COBRA premium assistance credit under Introduction. Previous year tax forms Payment with return. Previous year tax forms   You may make payments with Forms 943 or 945 instead of depositing if one of the following applies. Previous year tax forms You report less than a $2,500 tax liability for the year (Form 943, line 11; Form 945, line 3) and you pay in full with a return that is filed on time. Previous year tax forms However, if you are unsure that you will report less than $2,500, deposit under the rules explained in this section so that you will not be subject to failure-to-deposit penalties. Previous year tax forms You are a monthly schedule depositor and make a payment in accordance with the Accuracy of Deposits Rule discussed later in this section. Previous year tax forms This payment may be $2,500 or more. Previous year tax forms Only monthly schedule depositors, defined later, are allowed to make an Accuracy of Deposits Rule payment with the return. Previous year tax forms Semiweekly schedule depositors must timely deposit the amount. Previous year tax forms See Accuracy of Deposits Rule and How To Deposit, later in this section. Previous year tax forms When To Deposit If you employ both farm and nonfarm workers, do not combine the taxes reportable on Forms 941 or 944 with Form 943 to decide whether to make a deposit. Previous year tax forms See Employers of Both Farm and Nonfarm Workers, later in this section. Previous year tax forms The rules for determining when to deposit Form 943 taxes are discussed below. Previous year tax forms See section 10 for the separate rules that apply to FUTA tax. Previous year tax forms Under these rules, you are classified as either a monthly schedule depositor or a semiweekly schedule depositor. Previous year tax forms The terms “monthly schedule depositor” and “semiweekly schedule depositor” do not refer to how often your business pays its employees or how often you are required to make deposits. Previous year tax forms The terms identify which set of rules you must follow when you incur a tax liability (for example, when you have a payday). Previous year tax forms The deposit schedule that you must use for a calendar year is determined from the tax liability reported on your Form 943, line 9, for the lookback period, discussed next. Previous year tax forms If you reported $50,000 or less of Form 943 taxes for the lookback period, you are a monthly schedule depositor. Previous year tax forms If you reported more than $50,000 of Form 943 taxes for the lookback period, you are a semiweekly schedule depositor. Previous year tax forms Lookback period. Previous year tax forms   The lookback period is the second calendar year preceding the current calendar year. Previous year tax forms For example, the lookback period for 2014 is 2012. Previous year tax forms Example of deposit schedule based on lookback period. Previous year tax forms Rose Co. Previous year tax forms reported taxes on Form 943 as follows. Previous year tax forms 2012 — $48,000 2013 — $60,000 Rose Co. Previous year tax forms is a monthly schedule depositor for 2014 because its taxes for the lookback period ($48,000 for calendar year 2012) were not more than $50,000. Previous year tax forms However, for 2015, Rose Co. Previous year tax forms is a semiweekly schedule depositor because the total taxes before adjustment for its lookback period ($60,000 for calendar year 2013) exceeded $50,000. Previous year tax forms Adjustments to lookback period taxes. Previous year tax forms   To determine your taxes for the lookback period, use only the tax that you reported on the original return (Form 943, line 9). Previous year tax forms Do not include adjustments shown on Form 943-X, Adjusted Employer's Annual Federal Tax Return for Agricultural Employees or Claim for Refund. Previous year tax forms Example of adjustments. Previous year tax forms An employer originally reported total tax of $45,000 for the lookback period in 2012. Previous year tax forms The employer discovered during March 2014 that the tax reported for the lookback period was understated by $10,000 and corrected this error by filing Form 943-X. Previous year tax forms The total tax reported in the lookback period is still $45,000. Previous year tax forms The $10,000 adjustment is also not treated as part of the 2014 taxes. Previous year tax forms Deposit period. Previous year tax forms   The term “deposit period” refers to the period during which tax liabilities are accumulated for each required deposit due date. Previous year tax forms For monthly schedule depositors, the deposit period is a calendar month. Previous year tax forms The deposit periods for semiweekly schedule depositors are Wednesday through Friday and Saturday through Tuesday. Previous year tax forms Monthly Deposit Schedule If the tax liability reported on Form 943, line 9, for the lookback period is $50,000 or less, you are a monthly schedule depositor for the current year. Previous year tax forms You must deposit Form 943 taxes on payments made during a calendar month by the 15th day of the following month. Previous year tax forms Monthly schedule example. Previous year tax forms   Red Co. Previous year tax forms is a seasonal employer and a monthly schedule depositor. Previous year tax forms It pays wages each Friday. Previous year tax forms It paid wages during August 2014, but did not pay any wages during September. Previous year tax forms Red Co. Previous year tax forms must deposit the combined tax liabilities for the August paydays by September 15. Previous year tax forms Red Co. Previous year tax forms does not have a deposit requirement for September (that is, due by October 15, 2014) because no wages were paid in September; therefore, it did not have a tax liability for September. Previous year tax forms New employers. Previous year tax forms   For agricultural employers, your tax liability for any year in the lookback period before the date you started or acquired your business is considered to be zero. Previous year tax forms Therefore, you are a monthly schedule depositor for the first and second calendar years of your agricultural business (but see the $100,000 Next-Day Deposit Rule , later in this section). Previous year tax forms Semiweekly Deposit Schedule You are a semiweekly schedule depositor for a calendar year if the tax liability on Form 943, line 9, during your lookback period was more than $50,000. Previous year tax forms Under the semiweekly deposit schedule, deposit Form 943 taxes for payments made on Wednesday, Thursday, and/or Friday by the following Wednesday. Previous year tax forms Deposit amounts accumulated for payments made on Saturday, Sunday, Monday, and/or Tuesday by the following Friday. Previous year tax forms Semiweekly depositors are not required to deposit twice a week if their payments were in the same semiweekly period unless the $100,000 Next-Day Deposit Rule (discussed later in this section) applies. Previous year tax forms For example, if you made a payment on both Wednesday and Friday and incurred taxes of $10,000 for each pay date, deposit the $20,000 by the following Wednesday. Previous year tax forms If you made no additional payments on Saturday through Tuesday, no deposit is due on Friday. Previous year tax forms Semiweekly schedule depositors must complete Form 943-A, Agricultural Employer's Record of Federal Tax Liability, and submit it with Form 943. Previous year tax forms Semiweekly Deposit Schedule IF the payday falls on a. Previous year tax forms . Previous year tax forms . Previous year tax forms THEN deposit taxes by the following. Previous year tax forms . Previous year tax forms . Previous year tax forms Wednesday, Thursday, and/or Friday Wednesday Saturday, Sunday, Monday, and/or Tuesday Friday Semiweekly schedule example. Previous year tax forms   Green, Inc. Previous year tax forms , is a semiweekly schedule depositor and pays wages once each month on the last Friday of the month. Previous year tax forms Green, Inc. Previous year tax forms , will deposit only once a month, but the deposit will be made under the semiweekly deposit schedule as follows. Previous year tax forms Green, Inc. Previous year tax forms 's tax liability for the April 25, 2014 (Friday), wage payment must be deposited by April 30, 2014 (Wednesday). Previous year tax forms Semiweekly deposit period spanning two quarters. Previous year tax forms   If you have more than one pay date during a semiweekly period and the pay dates fall in different calendar quarters, you will need to make separate deposits for the separate liabilities. Previous year tax forms For example, if you have a pay date on Monday, March 31, 2014 (first quarter), and another pay date on Tuesday, April 1, 2014 (second quarter), two separate deposits will be required even though the pay dates fall within the same semiweekly period. Previous year tax forms Both deposits will be due Friday, April 4, 2014 (3 business days from the end of the semiweekly deposit period). Previous year tax forms Deposits on Business Days Only If a deposit is required to be made on a day that is not a business day, the deposit is considered timely if it is made by the close of the next business day. Previous year tax forms A business day is any day other than a Saturday, Sunday, or legal holiday. Previous year tax forms For example, if a deposit is required to be made on Friday and Friday is a legal holiday, the deposit is considered timely if it is made by the following Monday (if Monday is a business day). Previous year tax forms Semiweekly schedule depositors   will always have 3 business days to make a deposit. Previous year tax forms That is, if any of the 3 weekdays after the end of a semiweekly period is a legal holiday, you will have an additional day for each day that is a legal holiday to make the deposit. Previous year tax forms For example, if a semiweekly schedule depositor accumulated taxes on Friday and the following Monday is a legal holiday, the deposit normally due on Wednesday may be made on Thursday (this allows 3 business days to make the deposit). Previous year tax forms Legal holiday. Previous year tax forms   The term “legal holiday” means any legal holiday in the District of Columbia. Previous year tax forms Legal holidays for 2014 are listed below. Previous year tax forms January 1— New Year's Day January 20— Birthday of Martin Luther King, Jr. Previous year tax forms February 17— Washington's Birthday April 16— District of Columbia Emancipation Day May 26— Memorial Day July 4— Independence Day September 1— Labor Day October 13— Columbus Day November 11— Veterans' Day November 27— Thanksgiving Day December 25— Christmas Day $100,000 Next-Day Deposit Rule If you accumulate $100,000 or more of Form 943 taxes (that is, taxes reported on Form 943, line 11) on any day during a deposit period, you must deposit the tax by the close of the next business day, whether you are a monthly or a semiweekly schedule depositor. Previous year tax forms For purposes of the $100,000 rule, do not continue accumulating a tax liability after the end of a deposit period. Previous year tax forms For example, if a semiweekly schedule depositor has accumulated a liability of $95,000 on a Tuesday (of a Saturday-through-Tuesday deposit period) and accumulated a $10,000 liability on Wednesday, the $100,000 next-day deposit rule does not apply because the $10,000 is accumulated in the next deposit period. Previous year tax forms Thus, $95,000 must be deposited by Friday and $10,000 must be deposited by the following Wednesday. Previous year tax forms However, once you accumulate at least $100,000 in a deposit period, stop accumulating at the end of that day and begin to accumulate anew on the next day. Previous year tax forms For example, Fir Co. Previous year tax forms is a semiweekly schedule depositor. Previous year tax forms On Monday, Fir Co. Previous year tax forms accumulates taxes of $110,000 and must deposit this amount on Tuesday, the next business day. Previous year tax forms On Tuesday, Fir Co. Previous year tax forms accumulates additional taxes of $30,000. Previous year tax forms Because the $30,000 is not added to the previous $110,000 and is less than $100,000, Fir Co. Previous year tax forms does not have to deposit the $30,000 until Friday (following the semiweekly deposit schedule). Previous year tax forms If you are a monthly schedule depositor and you accumulate a $100,000 tax liability on any day, you become a semiweekly schedule depositor on the next day and remain so for at least the rest of the calendar year and for the following calendar year. Previous year tax forms Example of the $100,000 next-day deposit rule. Previous year tax forms   Elm, Inc. Previous year tax forms , started its business on May 1, 2014. Previous year tax forms Because Elm, Inc. Previous year tax forms , is a new employer, the taxes for its lookback period are considered to be zero; therefore, Elm, Inc. Previous year tax forms , is a monthly schedule depositor. Previous year tax forms On May 8, Elm, Inc. Previous year tax forms , paid wages for the first time and accumulated taxes of $50,000. Previous year tax forms On May 9 (Friday), Elm, Inc. Previous year tax forms , paid wages and accumulated taxes of $60,000, for a total of $110,000. Previous year tax forms Because Elm, Inc. Previous year tax forms , accumulated $110,000 on May 9, it must deposit $110,000 by May 12 (Monday), the next business day. Previous year tax forms Elm, Inc. Previous year tax forms , became a semiweekly schedule depositor on May 10. Previous year tax forms It will be a semiweekly schedule depositor for the remainder of 2014 and for 2015. Previous year tax forms Accuracy of Deposits Rule You are required to deposit 100% of your tax liability on or before the deposit due date. Previous year tax forms However, penalties will not be applied for depositing less than 100% if both of the following conditions are met. Previous year tax forms Any deposit shortfall does not exceed the greater of $100 or 2% of the amount of taxes otherwise required to be deposited. Previous year tax forms The deposit shortfall is paid or deposited by the shortfall makeup date as described below. Previous year tax forms Makeup Date for Deposit Shortfall:    Monthly Schedule Depositor—Deposit the shortfall or pay it with your return by the due date of your Form 943. Previous year tax forms You may pay the shortfall with your Form 943 even if the amount is $2,500 or more. Previous year tax forms Semiweekly Schedule Depositor—Deposit by the earlier of (a) the first Wednesday or Friday (whichever comes first) that falls on or after the 15th of the month following the month in which the shortfall occurred, or (b) the due date for Form 943. Previous year tax forms For example, if a semiweekly schedule depositor has a deposit shortfall during February 2014, the shortfall makeup date is March 19, 2014 (Wednesday). Previous year tax forms How To Deposit You must deposit employment taxes by electronic funds transfer. Previous year tax forms See Payment with return , earlier in this section, for exceptions explaining when taxes may be paid with the tax return instead of being deposited. Previous year tax forms Electronic deposit requirement. Previous year tax forms   You must use electronic funds transfer to make all federal tax deposits (such as deposits of employment tax, excise tax, and corporate income tax). Previous year tax forms Generally, electronic funds transfers are made using the Electronic Federal Tax Payment System (EFTPS). Previous year tax forms If you do not want to use EFTPS, you can arrange for your tax professional, financial institution, payroll service, or other trusted third party to make electronic deposits on your behalf. Previous year tax forms   EFTPS is a free service provided by the Department of Treasury. Previous year tax forms To get more information or to enroll in EFTPS, call 1-800-555-4477 (business), 1-800-316-6541 (individual), or 1-800-733-4829 (TDD). Previous year tax forms You can also visit the EFTPS website at www. Previous year tax forms eftps. Previous year tax forms gov. Previous year tax forms Additional information about EFTPS is also available in Publication 966. Previous year tax forms New employers that have a federal tax obligation will be pre-enrolled in EFTPS. Previous year tax forms Call the toll-free number located in your Employer Identification Number (EIN) Package to activate your enrollment and begin making your tax deposit payments. Previous year tax forms See When you receive your EIN in section 1 for more information. Previous year tax forms Deposit record. Previous year tax forms   For your records, an Electronic Funds Transfer (EFT) Trace Number will be provided with each successful payment. Previous year tax forms The number can be used as a receipt or to trace the payment. Previous year tax forms Depositing on time. Previous year tax forms   For deposits made by EFTPS to be on time, you must initiate the deposit by 8 p. Previous year tax forms m. Previous year tax forms Eastern time the day before the date a deposit is due. Previous year tax forms If you use a third party to make a deposit on your behalf, they may have different cutoff times. Previous year tax forms Same-day payment option. Previous year tax forms   If you fail to initiate a deposit transaction on EFTPS by 8 p. Previous year tax forms m. Previous year tax forms Eastern time the day before the date a deposit is due, you can still make your deposit on time by using the Federal Tax Application (FTA). Previous year tax forms To use the same-day payment method, you will need to make arrangements with your financial institution ahead of time. Previous year tax forms Please check with your financial institution regarding availability, deadlines, and costs. Previous year tax forms Your financial institution may charge you a fee for payments made this way. Previous year tax forms To learn more about the information you will need to provide to your financial institution to make a same-day wire payment, visit www. Previous year tax forms eftps. Previous year tax forms gov to download the Same-Day Payment Worksheet. Previous year tax forms Deposit Penalties Penalties may apply if you do not make required deposits on time or if you make deposits for less than the required amount. Previous year tax forms The penalties do not apply if any failure to make a proper and timely deposit was due to reasonable cause and not to willful neglect. Previous year tax forms IRS may also waive deposit penalties if you inadvertently fail to deposit in the first quarter that a deposit is due, or the first quarter during which your frequency of deposits changed, if you timely filed your employment tax return. Previous year tax forms For amounts not properly deposited or not deposited on time, the penalty rates are shown next. Previous year tax forms Penalty Charged for. Previous year tax forms . Previous year tax forms . Previous year tax forms 2% Deposits made 1 to 5 days late. Previous year tax forms 5% Deposits made 6 to 15 days late. Previous year tax forms 10% Deposits made 16 or more days late. Previous year tax forms Also applies to amounts paid within 10 days of the date of the first notice the IRS sent asking for the tax due. Previous year tax forms 10% Amounts (that should have been deposited) paid directly to the IRS or paid with your tax return. Previous year tax forms See Payment with return , earlier in this section, for exceptions. Previous year tax forms 15% Amounts still unpaid more than 10 days after the date of the first notice that the IRS sent asking for the tax due or the day on which you received notice and demand for immediate payment, whichever is earlier. Previous year tax forms Late deposit penalty amounts are determined using calendar days, starting from the due date of the liability. Previous year tax forms Order in which deposits are applied. Previous year tax forms   Deposits generally are applied to the most recent tax liability within the year. Previous year tax forms If you receive a failure-to-deposit penalty notice, you may designate how your deposits are to be applied in order to minimize the amount of the penalty, if you do so within 90 days of the date of the notice. Previous year tax forms Follow the instructions on the penalty notice that you received. Previous year tax forms For examples on how the IRS will apply deposits and more information on designating deposits, see Revenue Procedure 2001-58. Previous year tax forms You can find Revenue Procedure 2001-58 on page 579 of Internal Revenue Bulletin 2001-50 at www. Previous year tax forms irs. Previous year tax forms gov/pub/irs-irbs/irb01-50. Previous year tax forms pdf. Previous year tax forms Example. Previous year tax forms Cedar, Inc. Previous year tax forms , is required to make a deposit of $1,000 on July 15 and $1,500 on August 15. Previous year tax forms It does not make the deposit on July 15. Previous year tax forms On August 15, Cedar, Inc. Previous year tax forms , deposits $2,000. Previous year tax forms Under the deposits rule, which applies deposits to the most recent tax liability, $1,500 of the deposit is applied to the August 15 deposit and the remaining $500 is applied to the July deposit. Previous year tax forms Accordingly, $500 of the July 15 liability remains undeposited. Previous year tax forms The penalty on this underdeposit will apply as explained above. Previous year tax forms Trust fund recovery penalty. Previous year tax forms   If federal income, social security, or Medicare taxes that must be withheld are not withheld or are not deposited or paid to the United States Treasury, the trust fund recovery penalty may apply. Previous year tax forms The penalty is the full amount of the unpaid trust fund tax. Previous year tax forms This penalty may apply to you if these unpaid taxes cannot be immediately collected from the employer or business. Previous year tax forms   The trust fund recovery penalty may be imposed on all persons who are determined by the IRS to be responsible for collecting, accounting for, and paying over these taxes, and who acted willfully in not doing so. Previous year tax forms   A responsible person can be an officer or employee of a corporation, a partner or employee of a partnership, an accountant, a volunteer director/trustee, or an employee of a sole proprietorship. Previous year tax forms A responsible person also may include one who signs checks for the business or otherwise has authority to cause the spending of business funds. Previous year tax forms    Willfully means voluntarily, consciously, and intentionally. Previous year tax forms A responsible person acts willfully if the person knows that the required actions of collecting, accounting for or paying over trust fund taxes are not taking place, or recklessly disregards obvious and known risks to the government's right to receive trust fund taxes. Previous year tax forms “Average” failure-to-deposit penalty. Previous year tax forms   IRS may assess an “averaged” failure-to-deposit penalty of 2% to 10% if you are a monthly schedule depositor and did not properly complete Form 943, line 17, when your tax liability shown on Form 943, line 11, was $2,500 or more. Previous year tax forms IRS may also assess this penalty of 2% to 10% if you are a semiweekly schedule depositor and your tax liability shown on Form 943, line 11, was $2,500 or more and you did any of the following. Previous year tax forms Completed Form 943, line 17, instead of Form 943-A. Previous year tax forms Failed to attach a properly completed Form 943-A. Previous year tax forms Completed Form 943-A incorrectly, for example, by entering tax deposits instead of tax liabilities in the numbered spaces. Previous year tax forms   IRS figures the penalty by allocating your tax liability on Form 943, line 11, equally throughout the tax period. Previous year tax forms Your deposits and payments may not be counted as timely because IRS does not know the actual dates of your tax liabilities. Previous year tax forms   You can avoid the penalty by reviewing your return before filing it. Previous year tax forms Follow these steps before filing your Form 943. Previous year tax forms If you are a monthly schedule depositor, report your tax liabilities (not your deposits) in the monthly entry spaces on Form 943, line 17. Previous year tax forms If you are a semiweekly schedule depositor, report your tax liabilities (not your deposits) on Form 943-A in the lines that represent the dates you paid your employees. Previous year tax forms Verify that your total liability shown on Form 943, line 17, or Form 943-A, line M, equals your tax liability shown on Form 943, line 11. Previous year tax forms Do not show negative amounts on Form 943, line 17, or Form 943-A. Previous year tax forms For prior period errors discovered after December 31, 2008, do not adjust your tax liabilities reported on Form 943, line 17, or on Form 943-A. Previous year tax forms Employers of Both Farm and Nonfarm Workers If you employ both farm and nonfarm workers, you must treat employment taxes for the farmworkers (Form 943 taxes) separately from employment taxes for the nonfarm workers (Form 941 and 944 taxes). Previous year tax forms Form 943 taxes and Form 941/944 taxes are not combined for purposes of applying any of the deposit schedule rules. Previous year tax forms If a deposit is due, deposi