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Tax Extension 2011

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Tax Extension 2011

Tax extension 2011 2. Tax extension 2011   Simplified Employee Pensions (SEPs) Table of Contents Topics - This chapter discusses: Useful Items - You may want to see: Setting Up a SEPWhen not to use Form 5305-SEP. Tax extension 2011 How Much Can I Contribute?Contribution Limits Deducting ContributionsDeduction Limit for Contributions for Participants Deduction Limit for Self-Employed Individuals Carryover of Excess SEP Contributions When To Deduct Contributions Where To Deduct Contributions Salary Reduction Simplified Employee Pensions (SARSEPs)SARSEP ADP test. Tax extension 2011 Deferral percentage. Tax extension 2011 Employee compensation. Tax extension 2011 Compensation of self-employed individuals. Tax extension 2011 Choice not to treat deferrals as compensation. Tax extension 2011 Limit on Elective Deferrals Tax Treatment of Deferrals Distributions (Withdrawals) Additional TaxesEffects on employee. Tax extension 2011 Reporting and Disclosure Requirements Topics - This chapter discusses: Setting up a SEP How much can I contribute Deducting contributions Salary reduction simplified employee pensions (SARSEPs) Distributions (withdrawals) Additional taxes Reporting and disclosure requirements Useful Items - You may want to see: Publication 590 Individual Retirement Arrangements (IRAs) 3998 Choosing A Retirement Solution for Your Small Business 4285 SEP Checklist 4286 SARSEP Checklist 4333 SEP Retirement Plans for Small Businesses 4336 SARSEP for Small Businesses 4407 SARSEP—Key Issues and Assistance Forms (and Instructions) W-2 Wage and Tax Statement 1040 U. Tax extension 2011 S. Tax extension 2011 Individual Income Tax Return 5305-SEP Simplified Employee Pension—Individual Retirement Accounts Contribution Agreement 5305A-SEP Salary Reduction Simplified Employee Pension—Individual Retirement Accounts Contribution Agreement 8880 Credit for Qualified Retirement Savings Contributions 8881 Credit for Small Employer Pension Plan Startup Costs A SEP is a written plan that allows you to make contributions toward your own retirement and your employees' retirement without getting involved in a more complex qualified plan. Tax extension 2011 Under a SEP, you make contributions to a traditional individual retirement arrangement (called a SEP-IRA) set up by or for each eligible employee. Tax extension 2011 A SEP-IRA is owned and controlled by the employee, and you make contributions to the financial institution where the SEP-IRA is maintained. Tax extension 2011 SEP-IRAs are set up for, at a minimum, each eligible employee (defined below). Tax extension 2011 A SEP-IRA may have to be set up for a leased employee (defined in chapter 1), but does not need to be set up for excludable employees (defined later). Tax extension 2011 Eligible employee. Tax extension 2011   An eligible employee is an individual who meets all the following requirements. Tax extension 2011 Has reached age 21. Tax extension 2011 Has worked for you in at least 3 of the last 5 years. Tax extension 2011 Has received at least $550 in compensation from you in 2013. Tax extension 2011 This amount remains the same in 2014. Tax extension 2011    You can use less restrictive participation requirements than those listed, but not more restrictive ones. Tax extension 2011 Excludable employees. Tax extension 2011   The following employees can be excluded from coverage under a SEP. Tax extension 2011 Employees covered by a union agreement and whose retirement benefits were bargained for in good faith by the employees' union and you. Tax extension 2011 Nonresident alien employees who have received no U. Tax extension 2011 S. Tax extension 2011 source wages, salaries, or other personal services compensation from you. Tax extension 2011 For more information about nonresident aliens, see Publication 519, U. Tax extension 2011 S. Tax extension 2011 Tax Guide for Aliens. Tax extension 2011 Setting Up a SEP There are three basic steps in setting up a SEP. Tax extension 2011 You must execute a formal written agreement to provide benefits to all eligible employees. Tax extension 2011 You must give each eligible employee certain information about the SEP. Tax extension 2011 A SEP-IRA must be set up by or for each eligible employee. Tax extension 2011 Many financial institutions will help you set up a SEP. Tax extension 2011 Formal written agreement. Tax extension 2011   You must execute a formal written agreement to provide benefits to all eligible employees under a SEP. Tax extension 2011 You can satisfy the written agreement requirement by adopting an IRS model SEP using Form 5305-SEP. Tax extension 2011 However, see When not to use Form 5305-SEP, below. Tax extension 2011   If you adopt an IRS model SEP using Form 5305-SEP, no prior IRS approval or determination letter is required. Tax extension 2011 Keep the original form. Tax extension 2011 Do not file it with the IRS. Tax extension 2011 Also, using Form 5305-SEP will usually relieve you from filing annual retirement plan information returns with the IRS and the Department of Labor. Tax extension 2011 See the Form 5305-SEP instructions for details. Tax extension 2011 If you choose not to use Form 5305-SEP, you should seek professional advice in adopting a SEP. Tax extension 2011 When not to use Form 5305-SEP. Tax extension 2011   You cannot use Form 5305-SEP if any of the following apply. Tax extension 2011 You currently maintain any other qualified retirement plan other than another SEP. Tax extension 2011 You have any eligible employees for whom IRAs have not been set up. Tax extension 2011 You use the services of leased employees, who are not your common-law employees (as described in chapter 1). Tax extension 2011 You are a member of any of the following unless all eligible employees of all the members of these groups, trades, or businesses participate under the SEP. Tax extension 2011 An affiliated service group described in section 414(m). Tax extension 2011 A controlled group of corporations described in section 414(b). Tax extension 2011 Trades or businesses under common control described in section 414(c). Tax extension 2011 You do not pay the cost of the SEP contributions. Tax extension 2011 Information you must give to employees. Tax extension 2011   You must give each eligible employee a copy of Form 5305-SEP, its instructions, and the other information listed in the Form 5305-SEP instructions. Tax extension 2011 An IRS model SEP is not considered adopted until you give each employee this information. Tax extension 2011 Setting up the employee's SEP-IRA. Tax extension 2011   A SEP-IRA must be set up by or for each eligible employee. Tax extension 2011 SEP-IRAs can be set up with banks, insurance companies, or other qualified financial institutions. Tax extension 2011 You send SEP contributions to the financial institution where the SEP-IRA is maintained. Tax extension 2011 Deadline for setting up a SEP. Tax extension 2011   You can set up a SEP for any year as late as the due date (including extensions) of your income tax return for that year. Tax extension 2011 Credit for startup costs. Tax extension 2011   You may be able to claim a tax credit for part of the ordinary and necessary costs of starting a SEP that first became effective in 2013. Tax extension 2011 For more information, see Credit for startup costs under Reminders, earlier. Tax extension 2011 How Much Can I Contribute? The SEP rules permit you to contribute a limited amount of money each year to each employee's SEP-IRA. Tax extension 2011 If you are self-employed, you can contribute to your own SEP-IRA. Tax extension 2011 Contributions must be in the form of money (cash, check, or money order). Tax extension 2011 You cannot contribute property. Tax extension 2011 However, participants may be able to transfer or roll over certain property from one retirement plan to another. Tax extension 2011 See Publication 590 for more information about rollovers. Tax extension 2011 You do not have to make contributions every year. Tax extension 2011 But if you make contributions, they must be based on a written allocation formula and must not discriminate in favor of highly compensated employees (defined in chapter 1). Tax extension 2011 When you contribute, you must contribute to the SEP-IRAs of all participants who actually performed personal services during the year for which the contributions are made, including employees who die or terminate employment before the contributions are made. Tax extension 2011 Contributions are deductible within limits, as discussed later, and generally are not taxable to the plan participants. Tax extension 2011 A SEP-IRA cannot be a Roth IRA. Tax extension 2011 Employer contributions to a SEP-IRA will not affect the amount an individual can contribute to a Roth or traditional IRA. Tax extension 2011 Unlike regular contributions to a traditional IRA, contributions under a SEP can be made to participants over age 70½. Tax extension 2011 If you are self-employed, you can also make contributions under the SEP for yourself even if you are over 70½. Tax extension 2011 Participants age 70½ or over must take required minimum distributions. Tax extension 2011 Time limit for making contributions. Tax extension 2011   To deduct contributions for a year, you must make the contributions by the due date (including extensions) of your tax return for the year. Tax extension 2011 Contribution Limits Contributions you make for 2013 to a common-law employee's SEP-IRA cannot exceed the lesser of 25% of the employee's compensation or $51,000. Tax extension 2011 Compensation generally does not include your contributions to the SEP. Tax extension 2011 The SEP plan document will specify how the employer contribution is determined and how it will be allocated to participants. Tax extension 2011 Example. Tax extension 2011 Your employee, Mary Plant, earned $21,000 for 2013. Tax extension 2011 The maximum contribution you can make to her SEP-IRA is $5,250 (25% x $21,000). Tax extension 2011 Contributions for yourself. Tax extension 2011   The annual limits on your contributions to a common-law employee's SEP-IRA also apply to contributions you make to your own SEP-IRA. Tax extension 2011 However, special rules apply when figuring your maximum deductible contribution. Tax extension 2011 See Deduction Limit for Self-Employed Individuals , later. Tax extension 2011 Annual compensation limit. Tax extension 2011   You cannot consider the part of an employee's compensation over $255,000 when figuring your contribution limit for that employee. Tax extension 2011 However, $51,000 is the maximum contribution for an eligible employee. Tax extension 2011 These limits are $260,000 and $52,000, respectively, in 2014. Tax extension 2011 Example. Tax extension 2011 Your employee, Susan Green, earned $210,000 for 2013. Tax extension 2011 Because of the maximum contribution limit for 2013, you can only contribute $51,000 to her SEP-IRA. Tax extension 2011 More than one plan. Tax extension 2011   If you contribute to a defined contribution plan (defined in chapter 4), annual additions to an account are limited to the lesser of $51,000 or 100% of the participant's compensation. Tax extension 2011 When you figure this limit, you must add your contributions to all defined contribution plans maintained by you. Tax extension 2011 Because a SEP is considered a defined contribution plan for this limit, your contributions to a SEP must be added to your contributions to other defined contribution plans you maintain. Tax extension 2011 Tax treatment of excess contributions. Tax extension 2011   Excess contributions are your contributions to an employee's SEP-IRA (or to your own SEP-IRA) for 2013 that exceed the lesser of the following amounts. Tax extension 2011 25% of the employee's compensation (or, for you, 20% of your net earnings from self-employment). Tax extension 2011 $51,000. Tax extension 2011 Excess contributions are included in the employee's income for the year and are treated as contributions by the employee to his or her SEP-IRA. Tax extension 2011 For more information on employee tax treatment of excess contributions, see chapter 1 in Publication 590. Tax extension 2011 Reporting on Form W-2. Tax extension 2011   Do not include SEP contributions on your employee's Form W-2 unless contributions were made under a salary reduction arrangement (discussed later). Tax extension 2011 Deducting Contributions Generally, you can deduct the contributions you make each year to each employee's SEP-IRA. Tax extension 2011 If you are self-employed, you can deduct the contributions you make each year to your own SEP-IRA. Tax extension 2011 Deduction Limit for Contributions for Participants The most you can deduct for your contributions to you or your employee's SEP-IRA is the lesser of the following amounts. Tax extension 2011 Your contributions (including any excess contributions carryover). Tax extension 2011 25% of the compensation (limited to $255,000 per participant) paid to the participants during 2013 from the business that has the plan, not to exceed $51,000 per participant. Tax extension 2011 In 2014, the amounts in (2) above are $260,000 and $52,000, respectively. Tax extension 2011 Deduction Limit for Self-Employed Individuals If you contribute to your own SEP-IRA, you must make a special computation to figure your maximum deduction for these contributions. Tax extension 2011 When figuring the deduction for contributions made to your own SEP-IRA, compensation is your net earnings from self-employment (defined in chapter 1), which takes into account both the following deductions. Tax extension 2011 The deduction for the deductible part of your self-employment tax. Tax extension 2011 The deduction for contributions to your own SEP-IRA. Tax extension 2011 The deduction for contributions to your own SEP-IRA and your net earnings depend on each other. Tax extension 2011 For this reason, you determine the deduction for contributions to your own SEP-IRA indirectly by reducing the contribution rate called for in your plan. Tax extension 2011 To do this, use the Rate Table for Self-Employed or the Rate Worksheet for Self-Employed, whichever is appropriate for your plan's contribution rate, in chapter 5. Tax extension 2011 Then figure your maximum deduction by using the Deduction Worksheet for Self-Employed in chapter 5. Tax extension 2011 Carryover of Excess SEP Contributions If you made SEP contributions that are more than the deduction limit (nondeductible contributions), you can carry over and deduct the difference in later years. Tax extension 2011 However, the carryover, when combined with the contribution for the later year, is subject to the deduction limit for that year. Tax extension 2011 If you also contributed to a defined benefit plan or defined contribution plan, see Carryover of Excess Contributions under Employer Deduction in chapter 4 for the carryover limit. Tax extension 2011 Excise tax. Tax extension 2011   If you made nondeductible (excess) contributions to a SEP, you may be subject to a 10% excise tax. Tax extension 2011 For information about the excise tax, see Excise Tax for Nondeductible (Excess) Contributions under Employer Deduction in chapter 4. Tax extension 2011 When To Deduct Contributions When you can deduct contributions made for a year depends on the tax year on which the SEP is maintained. Tax extension 2011 If the SEP is maintained on a calendar year basis, you deduct the yearly contributions on your tax return for the year within which the calendar year ends. Tax extension 2011 If you file your tax return and maintain the SEP using a fiscal year or short tax year, you deduct contributions made for a year on your tax return for that year. Tax extension 2011 Example. Tax extension 2011 You are a fiscal year taxpayer whose tax year ends June 30. Tax extension 2011 You maintain a SEP on a calendar year basis. Tax extension 2011 You deduct SEP contributions made for calendar year 2013 on your tax return for your tax year ending June 30, 2014. Tax extension 2011 Where To Deduct Contributions Deduct the contributions you make for your common-law employees on your tax return. Tax extension 2011 For example, sole proprietors deduct them on Schedule C (Form 1040) or Schedule F (Form 1040), Profit or Loss From Farming; partnerships deduct them on Form 1065, U. Tax extension 2011 S. Tax extension 2011 Return of Partnership Income; and corporations deduct them on Form 1120, U. Tax extension 2011 S. Tax extension 2011 Corporation Income Tax Return, or Form 1120S, U. Tax extension 2011 S. Tax extension 2011 Income Tax Return for an S Corporation. Tax extension 2011 Sole proprietors and partners deduct contributions for themselves on line 28 of Form 1040. Tax extension 2011 (If you are a partner, contributions for yourself are shown on the Schedule K-1 (Form 1065), Partner's Share of Income, Deductions, Credits, etc. Tax extension 2011 , you receive from the partnership. Tax extension 2011 ) Remember that sole proprietors and partners can't deduct as a business expense contributions made to a SEP for themselves, only those made for their common-law employees. Tax extension 2011 Salary Reduction Simplified Employee Pensions (SARSEPs) A SARSEP is a SEP set up before 1997 that includes a salary reduction arrangement. Tax extension 2011 (See the Caution, next. Tax extension 2011 ) Under a SARSEP, your employees can choose to have you contribute part of their pay to their SEP-IRAs rather than receive it in cash. Tax extension 2011 This contribution is called an “elective deferral” because employees choose (elect) to set aside the money, and they defer the tax on the money until it is distributed to them. Tax extension 2011 You are not allowed to set up a SARSEP after 1996. Tax extension 2011 However, participants (including employees hired after 1996) in a SARSEP set up before 1997 can continue to have you contribute part of their pay to the plan. Tax extension 2011 If you are interested in setting up a retirement plan that includes a salary reduction arrangement, see chapter 3. Tax extension 2011 Who can have a SARSEP?   A SARSEP set up before 1997 is available to you and your eligible employees only if all the following requirements are met. Tax extension 2011 At least 50% of your employees eligible to participate choose to make elective deferrals. Tax extension 2011 You have 25 or fewer employees who were eligible to participate in the SEP at any time during the preceding year. Tax extension 2011 The elective deferrals of your highly compensated employees meet the SARSEP ADP test. Tax extension 2011 SARSEP ADP test. Tax extension 2011   Under the SARSEP ADP test, the amount deferred each year by each eligible highly compensated employee as a percentage of pay (the deferral percentage) cannot be more than 125% of the average deferral percentage (ADP) of all non-highly compensated employees eligible to participate. Tax extension 2011 A highly compensated employee is defined in chapter 1. Tax extension 2011 Deferral percentage. Tax extension 2011   The deferral percentage for an employee for a year is figured as follows. Tax extension 2011   The elective employer contributions (excluding certain catch-up contributions)  paid to the SEP for the employee for the year     The employee's compensation (limited to $255,000 in 2013)   The instructions for Form 5305A-SEP have a worksheet you can use to determine whether the elective deferrals of your highly compensated employees meet the SARSEP ADP test. Tax extension 2011 Employee compensation. Tax extension 2011   For figuring the deferral percentage, compensation is generally the amount you pay to the employee for the year. Tax extension 2011 Compensation includes the elective deferral and other amounts deferred in certain employee benefit plans. Tax extension 2011 See Compensation in chapter 1. Tax extension 2011 Elective deferrals under the SARSEP are included in figuring your employees' deferral percentage even though they are not included in the income of your employees for income tax purposes. Tax extension 2011 Compensation of self-employed individuals. Tax extension 2011   If you are self-employed, compensation is your net earnings from self-employment as defined in chapter 1. Tax extension 2011   Compensation does not include tax-free items (or deductions related to them) other than foreign earned income and housing cost amounts. Tax extension 2011 Choice not to treat deferrals as compensation. Tax extension 2011   You can choose not to treat elective deferrals (and other amounts deferred in certain employee benefit plans) for a year as compensation under your SARSEP. Tax extension 2011 Limit on Elective Deferrals The most a participant can choose to defer for calendar year 2013 is the lesser of the following amounts. Tax extension 2011 25% of the participant's compensation (limited to $255,000 of the participant's compensation). Tax extension 2011 $17,500. Tax extension 2011 The $17,500 limit applies to the total elective deferrals the employee makes for the year to a SEP and any of the following. Tax extension 2011 Cash or deferred arrangement (section 401(k) plan). Tax extension 2011 Salary reduction arrangement under a tax-sheltered annuity plan (section 403(b) plan). Tax extension 2011 SIMPLE IRA plan. Tax extension 2011 In 2014, the $255,000 limit increases to $260,000 and the $17,500 limit remains at $17,500. Tax extension 2011 Catch-up contributions. Tax extension 2011   A SARSEP can permit participants who are age 50 or over at the end of the calendar year to also make catch-up contributions. Tax extension 2011 The catch-up contribution limit for 2013 is $5,500 and remains at $5,500 for 2014. Tax extension 2011 Elective deferrals are not treated as catch-up contributions for 2013 until they exceed the elective deferral limit (the lesser of 25% of compensation or $17,500), the SARSEP ADP test limit discussed earlier, or the plan limit (if any). Tax extension 2011 However, the catch-up contribution a participant can make for a year cannot exceed the lesser of the following amounts. Tax extension 2011 The catch-up contribution limit. Tax extension 2011 The excess of the participant's compensation over the elective deferrals that are not catch-up contributions. Tax extension 2011   Catch-up contributions are not subject to the elective deferral limit (the lesser of 25% of compensation or $17,500 in 2013 and in 2014). Tax extension 2011 Overall limit on SEP contributions. Tax extension 2011   If you also make nonelective contributions to a SEP-IRA, the total of the nonelective and elective contributions to that SEP-IRA cannot exceed the lesser of 25% of the employee's compensation or $51,000 for 2013 ($52,000 for 2014). Tax extension 2011 The same rule applies to contributions you make to your own SEP-IRA. Tax extension 2011 See Contribution Limits , earlier. Tax extension 2011 Figuring the elective deferral. Tax extension 2011   For figuring the 25% limit on elective deferrals, compensation does not include SEP contributions, including elective deferrals or other amounts deferred in certain employee benefit plans. Tax extension 2011 Tax Treatment of Deferrals Elective deferrals that are not more than the limits discussed earlier under Limit on Elective Deferrals are excluded from your employees' wages subject to federal income tax in the year of deferral. Tax extension 2011 However, these deferrals are included in wages for social security, Medicare, and federal unemployment (FUTA) tax. Tax extension 2011 Excess deferrals. Tax extension 2011   For 2013, excess deferrals are the elective deferrals for the year that are more than the $17,500 limit discussed earlier. Tax extension 2011 For a participant who is eligible to make catch-up contributions, excess deferrals are the elective deferrals that are more than $23,000. Tax extension 2011 The treatment of excess deferrals made under a SARSEP is similar to the treatment of excess deferrals made under a qualified plan. Tax extension 2011 See Treatment of Excess Deferrals under Elective Deferrals (401(k) Plans) in chapter 4. Tax extension 2011 Excess SEP contributions. Tax extension 2011   Excess SEP contributions are elective deferrals of highly compensated employees that are more than the amount permitted under the SARSEP ADP test. Tax extension 2011 You must notify your highly compensated employees within 2½ months after the end of the plan year of their excess SEP contributions. Tax extension 2011 If you do not notify them within this time period, you must pay a 10% tax on the excess. Tax extension 2011 For an explanation of the notification requirements, see Rev. Tax extension 2011 Proc. Tax extension 2011 91-44, 1991-2 C. Tax extension 2011 B. Tax extension 2011 733. Tax extension 2011 If you adopted a SARSEP using Form 5305A-SEP, the notification requirements are explained in the instructions for that form. Tax extension 2011 Reporting on Form W-2. Tax extension 2011   Do not include elective deferrals in the “Wages, tips, other compensation” box of Form W-2. Tax extension 2011 You must, however, include them in the “Social security wages” and “Medicare wages and tips” boxes. Tax extension 2011 You must also include them in box 12. Tax extension 2011 Mark the “Retirement plan” checkbox in box 13. Tax extension 2011 For more information, see the Form W-2 instructions. Tax extension 2011 Distributions (Withdrawals) As an employer, you cannot prohibit distributions from a SEP-IRA. Tax extension 2011 Also, you cannot make your contributions on the condition that any part of them must be kept in the account after you have made your contributions to the employee's accounts. Tax extension 2011 Distributions are subject to IRA rules. Tax extension 2011 Generally, you or your employee must begin to receive distributions from a SEP-IRA by April 1 of the first year after the calendar year in which you or your employee reaches age 70½. Tax extension 2011 For more information about IRA rules, including the tax treatment of distributions, rollovers, required distributions, and income tax withholding, see Publication 590. Tax extension 2011 Additional Taxes The tax advantages of using SEP-IRAs for retirement savings can be offset by additional taxes that may be imposed for all the following actions. Tax extension 2011 Making excess contributions. Tax extension 2011 Making early withdrawals. Tax extension 2011 Not making required withdrawals. Tax extension 2011 For information about these taxes, see chapter 1 in Publication 590. Tax extension 2011 Also, a SEP-IRA may be disqualified, or an excise tax may apply, if the account is involved in a prohibited transaction, discussed next. Tax extension 2011 Prohibited transaction. Tax extension 2011   If an employee improperly uses his or her SEP-IRA, such as by borrowing money from it, the employee has engaged in a prohibited transaction. Tax extension 2011 In that case, the SEP-IRA will no longer qualify as an IRA. Tax extension 2011 For a list of prohibited transactions, see Prohibited Transactions in chapter 4. Tax extension 2011 Effects on employee. Tax extension 2011   If a SEP-IRA is disqualified because of a prohibited transaction, the assets in the account will be treated as having been distributed to the employee on the first day of the year in which the transaction occurred. Tax extension 2011 The employee must include in income the fair market value of the assets (on the first day of the year) that is more than any cost basis in the account. Tax extension 2011 Also, the employee may have to pay the additional tax for making early withdrawals. Tax extension 2011 Reporting and Disclosure Requirements If you set up a SEP using Form 5305-SEP, you must give your eligible employees certain information about the SEP when you set it up. Tax extension 2011 See Setting Up a SEP , earlier. Tax extension 2011 Also, you must give your eligible employees a statement each year showing any contributions to their SEP-IRAs. Tax extension 2011 You must also give them notice of any excess contributions. Tax extension 2011 For details about other information you must give them, see the instructions for Form 5305-SEP or Form 5305A-SEP (for a salary reduction SEP). Tax extension 2011 Even if you did not use Form 5305-SEP or Form 5305A-SEP to set up your SEP, you must give your employees information similar to that described above. Tax extension 2011 For more information, see the instructions for either Form 5305-SEP or Form 5305A-SEP. Tax extension 2011 Prev  Up  Next   Home   More Online Publications
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Taxpayer Identification Numbers (TIN)

A Taxpayer Identification Number (TIN) is an identification number used by the Internal Revenue Service (IRS) in the administration of tax laws. It is issued either by the Social Security Administration (SSA) or by the IRS. A Social Security number (SSN) is issued by the SSA whereas all other TINs are issued by the IRS.
 

Taxpayer Identification Numbers

  • Social Security Number "SSN"
  • Employer Identification Number "EIN"
  • Individual Taxpayer Identification Number "ITIN"
  • Taxpayer Identification Number for Pending U.S. Adoptions "ATIN"
  • Preparer Taxpayer Identification Number "PTIN"
Note: The temporary IRS Numbers previously assigned are no longer valid.

Do I Need One?

A TIN must be furnished on returns, statements, and other tax related documents. For example a number must be furnished:

  • When filing your tax returns.
  • When claiming treaty benefits.

A TIN must be on a withholding certificate if the beneficial owner is claiming any of the following:

  • Tax treaty benefits (other than for income from marketable securities)
  • Exemption for effectively connected income
  • Exemption for certain annuities

When Claiming Exemptions for Dependent or Spouse:

You generally must list on your individual income tax return the social security number (SSN) of any person for whom you claim an exemption. If your dependent or spouse does not have and is not eligible to get an SSN, you must list the ITIN instead of an SSN. You do not need an SSN or ITIN for a child who was born and died in the same tax year. Instead of an SSN or ITIN, attach a copy of the child's birth certificate and write Died on the appropriate exemption line of your tax return.

How Do I Get A TIN?

SSN

You will need to complete Form SS-5, Application for a Social Security Card (PDF). You also must submit evidence of your identity, age, and U.S. citizenship or lawful alien status. For more information please see the Social Security web site.

Form SS-5 is also available by calling 1-800-772-1213 or visiting your local Social Security office. These services are free.

EIN

An Employer Identification Number (EIN) is also known as a federal tax identification number, and is used to identify a business entity. It is also used by estates and trusts which have income which is required to be reported on Form 1041, U.S. Income Tax Return for Estates and Trusts (PDF). Refer to Employer ID Numbers for more information.

The following form is available only to employers located in Puerto Rico, Solicitud de Número de Identificación Patronal (EIN) SS-4PR (PDF).

ITIN

An ITIN, or Individual Taxpayer Identification Number, is a tax processing number only available for certain nonresident and resident aliens, their spouses, and dependents who cannot get a Social Security Number (SSN). It is a 9-digit number, beginning with the number "9", formatted like an SSN (NNN-NN-NNNN).

To obtain an ITIN, you must complete IRS Form W-7, IRS Application for Individual Taxpayer Identification Number (PDF) . The Form W-7 requires documentation substantiating foreign/alien status and true identity for each individual. You may either mail the documentation, along with the Form W-7, to the address shown in the Form W-7 Instructions, present it at IRS walk-in offices, or process your application through an Acceptance Agent authorized by the IRS. Form W-7(SP), Solicitud de Número de Identificación Personal del Contribuyente del Servicio de Impuestos Internos (PDF) is available for use by Spanish speakers.

Acceptance Agents are entities (colleges, financial institutions, accounting firms, etc.) who are authorized by the IRS to assist applicants in obtaining ITINs. They review the applicant's documentation and forward the completed Form W-7 to IRS for processing.

NOTE: You cannot claim the earned income credit using an ITIN.

Foreign persons who are individuals should apply for a social security number (SSN, if permitted) on Form SS-5 with the Social Security Administration, or should apply for an Individual Taxpayer Identification Number (ITIN) on Form W-7. Effective immediately, each ITIN applicant must now:

  • Apply using the revised Form W-7, Application for IRS Individual Taxpayer Identification Number; and
  • Attach a federal income tax return to the Form W-7.

Applicants who meet one of the exceptions to the requirement to file a tax return (see the Instructions for Form W-7) must provide documentation to support the exception.

New W-7/ITIN rules were issued on December 17, 2003. For a summary of those rules, please see the new Form W-7 and its instructions.

For more detailed information on ITINs, refer to:

ATIN

An Adoption Taxpayer Identification Number (ATIN) is a temporary nine-digit number issued by the IRS to individuals who are in the process of legally adopting a U.S. citizen or resident child but who cannot get an SSN for that child in time to file their tax return.

Form W-7A, Application for Taxpayer Identification Number for Pending U.S. Adoptions (PDF) is used to apply for an ATIN. (NOTE: Do not use Form W-7A if the child is not a U.S. citizen or resident.)

PTIN

Beginning January 1, 2011, if you are a paid tax preparer you must use a valid Preparer Tax Identification Number (PTIN) on returns you prepare. Use of the PTIN no longer is optional. If you do not have a PTIN, you must get one by using the new IRS sign-up system. Even if you have a PTIN but you received it prior to September 28, 2010, you must apply for a new or renewed PTIN by using the new system. If all your authentication information matches, you may be issued the same number. You must have a PTIN if you, for compensation, prepare all or substantially all of any federal tax return or claim for refund.

If you do not want to apply for a PTIN online, use Form W-12, IRS Paid Preparer Tax Identification Number Application (PDF). The paper application will take 4-6 weeks to process.

If you are a foreign preparer who is unable to get a U.S. Social Security Number, please see the instructions on New Requirements for Tax Return Preparers: Frequently Asked Questions.

Foreign Persons and IRS Employer Identification Numbers

Foreign entities that are not individuals (i.e., foreign corporations, etc.) and that are required to have a federal Employer Identification Number (EIN) in order to claim an exemption from withholding because of a tax treaty (claimed on Form W-8BEN), need to submit Form SS-4 Application for Employer Identification Number to the Internal Revenue Service in order to apply for such an EIN. Those foreign entities filing Form SS-4 for the purpose of obtaining an EIN in order to claim a tax treaty exemption and which otherwise have no requirements to file a U.S. income tax return, employment tax return, or excise tax return, should comply with the following special instructions when filling out Form SS-4. When completing line 7b of Form SS-4, the applicant should write "N/A" in the block asking for an SSN or ITIN, unless the applicant already has an SSN or ITIN. When answering question 10 on Form SS-4, the applicant should check the "other" block and write or type in immediately after it one of the following phrases as most appropriate:

"For W-8BEN Purposes Only"
"For Tax Treaty Purposes Only"
"Required under Reg. 1.1441-1(e)(4)(viii)"
"897(i) Election"

If questions 11 through 17 on Form SS-4 do not apply to the applicant because he has no U.S. tax return filing requirement, such questions should be annotated "N/A". A foreign entity that completes Form SS-4 in the manner described above should be entered into IRS records as not having a filing requirement for any U.S. tax returns. However, if the foreign entity receives a letter from the IRS soliciting the filing of a U.S. tax return, the foreign entity should respond to the letter immediately by stating that it has no requirement to file any U.S. tax returns. Failure to respond to the IRS letter may result in a procedural assessment of tax by the IRS against the foreign entity. If the foreign entity later becomes liable to file a U.S. tax return, the foreign entity should not apply for a new EIN, but should instead use the EIN it was first issued on all U.S. tax returns filed thereafter.

To expedite the issuance of an EIN for a foreign entity, please call (267) 941-1099. This is not a toll-free call.

References/Related Topics

Page Last Reviewed or Updated: 17-Jan-2014

The Tax Extension 2011

Tax extension 2011 Publication 505 - Introductory Material Table of Contents IntroductionNonresident aliens. Tax extension 2011 Ordering forms and publications. Tax extension 2011 Tax questions. Tax extension 2011 What's New for 2014 Reminders Introduction The federal income tax is a pay-as-you-go tax. Tax extension 2011 You must pay the tax as you earn or receive income during the year. Tax extension 2011 There are two ways to pay as you go. Tax extension 2011 Withholding. Tax extension 2011 If you are an employee, your employer probably withholds income tax from your pay. Tax extension 2011 In addition, tax may be withheld from certain other income, such as pensions, bonuses, commissions, and gambling winnings. Tax extension 2011 The amount withheld is paid to the Internal Revenue Service (IRS) in your name. Tax extension 2011 Estimated tax. Tax extension 2011 If you do not pay your tax through withholding, or do not pay enough tax that way, you might have to pay estimated tax. Tax extension 2011 People who are in business for themselves generally will have to pay their tax this way. Tax extension 2011 You may have to pay estimated tax if you receive income such as dividends, interest, capital gains, rents, and royalties. Tax extension 2011 Estimated tax is used to pay not only income tax, but other taxes such as self-employment tax and alternative minimum tax. Tax extension 2011 This publication explains both of these methods. Tax extension 2011 It also explains how to take credit on your return for the tax that was withheld and for your estimated tax payments. Tax extension 2011 If you did not pay enough tax during the year, either through withholding or by making estimated tax payments, you may have to pay a penalty. Tax extension 2011 Generally, the IRS can figure this penalty for you. Tax extension 2011 This underpayment penalty, and the exceptions to it, are discussed in chapter 4. Tax extension 2011 Nonresident aliens. Tax extension 2011    Before completing Form W-4, nonresident alien employees should see the Instructions for Form 8233, Exemption From Withholding on Compensation for Independent (and Certain Dependent) Personal Services of a Nonresident Alien Individual. Tax extension 2011 Also see chapter 8 of Publication 519, U. Tax extension 2011 S. Tax extension 2011 Tax Guide for Aliens, for important information on withholding. Tax extension 2011 What's new for 2013 and 2014. Tax extension 2011   See What's New for 2014 in this Introduction, and What's New for 2013 in chapter 4. Tax extension 2011 Comments and suggestions. Tax extension 2011   We welcome your comments about this publication and your suggestions for future editions. Tax extension 2011   You can write to us at the following address: Internal Revenue Service Tax Forms and Publications Division 1111 Constitution Ave. Tax extension 2011 NW, IR-6526 Washington, DC 20224   We respond to many letters by telephone. Tax extension 2011 Therefore, it would be helpful if you would include your daytime phone number, including the area code, in your correspondence. Tax extension 2011   You can send your comments from www. Tax extension 2011 irs. Tax extension 2011 gov/formspubs/. Tax extension 2011 Click on “More Information” and then on Give us feedback on forms and publications. Tax extension 2011   Although we cannot respond individually to each comment received, we do appreciate your feedback and will consider your comments as we revise our tax products. Tax extension 2011 Ordering forms and publications. Tax extension 2011   Visit www. Tax extension 2011 irs. Tax extension 2011 gov/formspubs/ to download forms and publications, call 1-800-TAX-FORM (1-800-829-3676), or write to the address below and receive a response within 10 business days after your request is received. Tax extension 2011 Internal Revenue Service 1201 N. Tax extension 2011 Mitsubishi Motorway Bloomington, IL 61705-6613 Tax questions. Tax extension 2011   If you have a tax question, check the information available on IRS. Tax extension 2011 gov or call 1-800-829-1040. Tax extension 2011 We cannot answer tax questions sent to either of the above addresses. Tax extension 2011 What's New for 2014 Use your 2013 tax return as a guide in figuring your 2014 estimated tax, but be sure to consider the following. Tax extension 2011 Standard mileage rates. Tax extension 2011  The 2014 rate for business use of your vehicle is 56 cents per mile. Tax extension 2011 The rate for use of your vehicle to get medical care or move is 23½ cents per mile. Tax extension 2011 The rate of 14 cents per mile for charitable use is unchanged. Tax extension 2011 Personal exemption increased for certain taxpayers. Tax extension 2011  For 2014, the personal exemption amount is increased to $3,950 for taxpayers with adjusted gross income at or below $305,050 if married filing jointly or qualifying widow(er), $279,650 if head of household, $254,200 if single, or $152,525 if married filing separately. Tax extension 2011 The personal exemption amount for taxpayers with adjusted gross income above these thresholds may be reduced. Tax extension 2011 Limitation on itemized deductions. Tax extension 2011  For 2014, itemized deductions for taxpayers with adjusted gross income above $305,050 if married filing jointly or qualifying widow(er), $279,650 if head of household, $254,200 if single, and $152,525 if married filing separately may be reduced. Tax extension 2011 Health care coverage. Tax extension 2011  When you file your 2014 tax return in 2015, you will need to either (1) indicate on your return that you and your family had health care coverage throughout 2014, (2) claim an exemption from the health care coverage requirement for some or all of 2014, or (3) make a payment if you do not have coverage or an exemption(s) for all 12 months of 2014. Tax extension 2011 For examples on how this payment works, go to www. Tax extension 2011 IRS. Tax extension 2011 gov/aca and click under the “Individuals & Families” section. Tax extension 2011 You may want to consider this when figuring your “Other taxes” on Line 12 of the 2014 Estimated Tax Worksheet (Worksheet 2-1). Tax extension 2011 For general information on these requirements, go to www. Tax extension 2011 IRS. Tax extension 2011 gov/aca. Tax extension 2011 Advance payments of the Premium Tax Credit. Tax extension 2011  If you buy health care insurance through the Health Insurance Marketplace, you may be eligible for advance payments of the Premium Tax Credit to help pay for your insurance coverage. Tax extension 2011 Receiving too little or too much in advance will affect your refund or balance due. Tax extension 2011 Promptly report changes in your income or family size to your Marketplace. Tax extension 2011 You may want to consider this when figuring your estimated taxes for 2014. Tax extension 2011 For more information, go to www. Tax extension 2011 IRS. Tax extension 2011 gov/aca and see Publication 5120 and Publication 5121. Tax extension 2011 http://www. Tax extension 2011 IRS. Tax extension 2011 gov/pub5120 Alternative minimum tax (AMT) exemption amount increased. Tax extension 2011  The AMT exemption amount is increased to $52,800 ($82,100 if married filing jointly or qualifying widow(er); $41,050 if married filing separately). Tax extension 2011 Lifetime learning credit income limits. Tax extension 2011  In order to claim a lifetime learning credit, your MAGI must be less than $54,000 ($108,000 if married filing jointly). Tax extension 2011 Retirement savings contribution credit income limits increased. Tax extension 2011  In order to claim this credit for 2014, your MAGI must be less than $30,000 ($60,000 if married filing jointly; $45,000 if head of household). Tax extension 2011 Adoption credit or exclusion. Tax extension 2011  The maximum adoption credit or exclusion for employer-provided adoption benefits has increased to $13,190. Tax extension 2011 In order to claim either the credit or exclusion, your MAGI must be less than $237,880. Tax extension 2011 Earned income credit (EIC). Tax extension 2011  You may be able to take the EIC in 2014 if: Three or more children lived with you and you earned less than $46,997 ($52,427 if married filing jointly), Two children lived with you and you earned less than $43,756 ($49,186 if married filing jointly), One child lived with you and you earned less than $38,511 ($43,941 if married filing jointly), or A child did not live with you and you earned less than $14,590 ($20,020 if married filing jointly). Tax extension 2011 Also, the maximum MAGI you can have and still get the credit has increased. Tax extension 2011 You may be able to take the credit if your MAGI is less than the amount in the above list that applies to you. Tax extension 2011 The maximum investment income you can have and get the credit has increased to $3,350. Tax extension 2011 Reminders Future developments. Tax extension 2011  The IRS has created a page on IRS. Tax extension 2011 gov for information about Publication 505 at www. Tax extension 2011 irs. Tax extension 2011 gov/pub505. Tax extension 2011 Information about any future developments affecting Publication 505 (such as legislation enacted after we release it) will be posted on that page. Tax extension 2011 Social security tax. Tax extension 2011   Generally, each employer for whom you work during the tax year must withhold social security tax up to the annual limit. Tax extension 2011 The annual limit is $117,000 in 2014. Tax extension 2011 Photographs of missing children. Tax extension 2011  The Internal Revenue Service is a proud partner with the National Center for Missing and Exploited Children. Tax extension 2011 Photographs of missing children selected by the Center may appear in this publication on pages that otherwise would be blank. Tax extension 2011 You can help bring these children home by looking at the photographs and calling 1-800-THE-LOST (1-800-843-5678) if you recognize a child. Tax extension 2011 Additional Medicare Tax. Tax extension 2011  Beginning in 2013, a 0. Tax extension 2011 9% Additional Medicare Tax applies to Medicare wages, Railroad Retirement Tax Act compensation, and self-employment income over a threshold amount based on your filing status. Tax extension 2011 You may need to include this amount when figuring your estimated tax. Tax extension 2011 See the instructions for line 12 of the 2014 Estimated Tax Worksheet. Tax extension 2011 You may also request that your employer deduct and withhold an additional amount of income tax withholding from your wages on Form W-4, Employee's Withholding Allowance Certificate. Tax extension 2011 For more information on Additional Medicare Tax, go to IRS. Tax extension 2011 gov and enter “Additional Medicare Tax” in the search box. Tax extension 2011 Net Investment Income Tax. Tax extension 2011  Beginning in 2013, you may be subject to Net Investment Income Tax (NIIT). Tax extension 2011 NIIT is a 3. Tax extension 2011 8% tax on the lesser of net investment income or the excess of your modified adjusted gross income (MAGI) over the threshold amount. Tax extension 2011 NIIT may need to be included when figuring estimated tax. Tax extension 2011 See the instructions for line 12 of the 2014 Estimated Tax Worksheet. Tax extension 2011 You may also request that your employer deduct and withhold an additional amount of income tax withholding from your wages on Form W-4. Tax extension 2011 For more information on NIIT, go to IRS. Tax extension 2011 gov and enter “Net Investment Income Tax” in the search box. Tax extension 2011 Prev  Up  Next   Home   More Online Publications