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Taxact sign 13. Taxact sign   Employment Taxes Table of Contents What's New for 2013 What's New for 2014 Reminders Important Dates for 2014 Introduction Topics - This chapter discusses: Useful Items - You may want to see: Farm Employment Family Employees Crew Leaders Social Security and Medicare TaxesReligious exemption. Taxact sign Wage limit. Taxact sign Federal Income Tax WithholdingNew Form W-4 for 2014. Taxact sign Required Notice to Employees About Earned Income Credit (EIC) Reporting and Paying Social Security, Medicare, and Withheld Federal Income TaxesElectronic deposit requirement. Taxact sign Federal Unemployment (FUTA) TaxReporting and Paying FUTA Tax What's New for 2013 Social security and Medicare tax for 2013. Taxact sign  The employee tax rate for social security is 6. Taxact sign 2%. Taxact sign Previously, the employee tax rate for social security was 4. Taxact sign 2%. Taxact sign The employer tax rate for social security remains unchanged at 6. Taxact sign 2%. Taxact sign The social security wage base limit is $113,700. Taxact sign The Medicare tax rate is 1. Taxact sign 45% each for the employee and employer, unchanged from 2012. Taxact sign There is no wage base limit for Medicare tax. Taxact sign Additional Medicare Tax. Taxact sign  In addition to withholding Medicare tax at 1. Taxact sign 45%, you must withhold a 0. Taxact sign 9% Additional Medicare Tax from wages you pay to an employee in excess of $200,000 in a calendar year. Taxact sign 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. Taxact sign Additional Medicare Tax is only imposed on the employee. Taxact sign There is no employer share of Additional Medicare Tax. Taxact sign All wages that are subject to Medicare tax are subject to Additional Medicare Tax withholding if paid in excess of the $200,000 threshold. Taxact sign 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), Employer's Tax Guide. Taxact sign For more information on Additional Medicare Tax, visit IRS. Taxact sign gov and enter “Additional Medicare Tax” in the search box. Taxact sign Leave-based donation programs to aid victims of Hurricane Sandy. Taxact sign  Under these programs, employees may donate their vacation, sick, or personal leave in exchange for employer cash payments made before January 1, 2014, to qualified tax-exempt organizations providing relief for the victims of Hurricane Sandy. Taxact sign The donated leave will not be included in the income or wages of the employee. Taxact sign The employer may deduct the cash payments as business expenses or charitable contributions. Taxact sign For more information, see Notice 2012-69, 2012-51 I. Taxact sign R. Taxact sign B. Taxact sign 712, available at www. Taxact sign irs. Taxact sign gov/irb/2012-51_IRB/ar09. Taxact sign html. Taxact sign Work opportunity tax credit for qualified tax-exempt organizations hiring qualified veterans extended. Taxact sign  The work opportunity tax credit is now available for eligible unemployed veterans who begin work before January 1, 2014. Taxact sign Previously, the credit was available for unemployed veterans who began work on or after November 22, 2011, and before January 1, 2013. Taxact sign Qualified tax-exempt organizations that hire eligible unemployed veterans can claim the work opportunity tax credit against their payroll tax liability using Form 5884-C, Work Opportunity Credit for Qualified Tax-Exempt Organizations Hiring Qualified Veterans. Taxact sign For more information, visit IRS. Taxact sign gov and enter “work opportunity credit” in the search box. Taxact sign What's New for 2014 Social security and Medicare tax for 2014. Taxact sign  The employee and employer tax rates for social security and the maximum amount of wages subject to social security tax for 2014 will be discussed in Publication 51 (Circular A), Agricultural Employer's Tax Guide (For use in 2014). Taxact sign The Medicare tax rate for 2014 will also be discussed in Publication 51 (Circular A) (For use in 2014). Taxact sign There is no limit on the amount of wages subject to Medicare tax. Taxact sign Reminders Additional employment tax information for farmers. Taxact sign  See Publication 51 (Circular A) for more detailed guidance on employment taxes. Taxact sign For the latest information about employment tax developments impacting farmers, go to www. Taxact sign irs. Taxact sign gov/pub51. Taxact sign Correcting a previously filed Form 943. Taxact sign  If you discover an error on a previously filed Form 943, Employer's Annual Federal Tax Return for Agricultural Employees, make the correction using Form 943-X, Adjusted Employer's Annual Federal Tax Return for Agricultural Employees or Claim for Refund. Taxact sign Form 943-X is filed separately from Form 943. Taxact sign For more information on correcting Form 943, see the Instructions for Form 943-X. Taxact sign Federal tax deposits must be made by electronic funds transfer. Taxact sign  You must use electronic funds transfer to make all federal tax deposits. Taxact sign Generally, electronic funds transfers are made using the Electronic Federal Tax Payment System (EFTPS). Taxact sign 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. Taxact sign Also, you may arrange for your financial institution to initiate a same-day wire payment on your behalf. Taxact sign EFTPS is a free service provided by the Department of Treasury. Taxact sign Services provided by your tax professional, financial institution, payroll service, or other third party may have a fee. Taxact sign For more information on making federal tax deposits, see section 7 of Publication 51 (Circular A). Taxact sign To get more information about EFTPS or to enroll in EFTPS, visit www. Taxact sign eftps. Taxact sign gov or call 1-800-555-4477 or 1-800-733-4829 (TDD). Taxact sign Additional information about EFTPS is also available in Publication 966, Electronic Federal Tax Payment System: A Guide To Getting Started. Taxact sign Important Dates for 2014 You should take the action indicated by the dates listed. Taxact sign See By February 15 and On February 16 for Form W-4, Employee's Withholding Allowance Certificate, information. Taxact sign Due dates for deposits of withheld federal income taxes, social security taxes, and Medicare taxes are not listed here. Taxact sign For these dates, see Publication 509, Tax Calendars (For use in 2014). Taxact sign Note. Taxact sign  If any date shown below for filing a return, furnishing a form, or depositing taxes falls on a Saturday, Sunday, or legal holiday, the due date is the next business day. Taxact sign A statewide legal holiday delays a filing or furnishing due date only if the IRS office where you are required to file a return or furnish a form is located in that state. Taxact sign For any due date, you will meet the “file” or “furnish” date requirement if the envelope containing the tax return or form is properly addressed, contains sufficient postage, and is postmarked by the U. Taxact sign S. Taxact sign Postal Service by the due date, or sent by an IRS-designated delivery service by the due date. Taxact sign See Private delivery services in Publication 51 (Circular A). Taxact sign Federal tax deposits can only be made by electronic funds transfer and are governed by legal holidays in the District of Columbia. Taxact sign Statewide holidays no longer apply. Taxact sign For a list of legal holidays that delay the due date of a federal tax deposit, see section 7 of Publication 51 (Circular A). Taxact sign Fiscal year taxpayers. Taxact sign  The due dates listed below apply whether you use a calendar or a fiscal year. Taxact sign By January 31. Taxact sign   File Form 943 with the IRS. Taxact sign If you deposited all Form 943 taxes when due, you have 10 additional days to file. Taxact sign Furnish each employee with a completed Form W-2, Wage and Tax Statement. Taxact sign Furnish each recipient to whom you paid $600 or more in nonemployee compensation with a completed Form 1099 (for example, Form 1099-MISC). Taxact sign File Form 940, Employer's Annual Federal Unemployment (FUTA) Tax Return, with the IRS. Taxact sign If you deposited all the FUTA tax when due, you have 10 additional days to file. Taxact sign File Form 945, Annual Return of Withheld Federal Income Tax, with the IRS to report any nonpayroll income tax withheld during 2013. Taxact sign If you deposited all Form 945 taxes when due, you have 10 additional days to file. Taxact sign By February 15. Taxact sign  Ask for a new Form W-4 or Formulario W-4(SP), Certificado de Exención de Retenciones del Empleado, from each employee who claimed exemption from federal income tax withholding last year. Taxact sign On February 16. Taxact sign  Any Form W-4 claiming exemption from withholding for the previous year has now expired. Taxact sign Begin withholding for any employee who previously claimed exemption from withholding but has not given you a new Form W-4 for the current year. Taxact sign If the employee does not give you a new Form W-4, withhold taxes based on the last valid Form W-4 you have for the employee that does not claim exemption from withholding or, if one does not exist, as if he or she is single with zero withholding allowances. Taxact sign If the employee furnishes a new Form W-4 claiming exemption from withholding after February 15, you may apply the exemption to future wages, but do not refund taxes withheld while the exempt status was not in place. Taxact sign By February 28. Taxact sign   File paper Forms 1099 and 1096. Taxact sign File Copy A of all paper Forms 1099 with Form 1096, Annual Summary and Transmittal of U. Taxact sign S. Taxact sign Information Returns, with the IRS. Taxact sign For electronically filed returns, see By March 31 below. Taxact sign File paper Forms W-2 and W-3. Taxact sign File Copy A of all paper Forms W-2 with Form W-3, Transmittal of Wage and Tax Statements, with the Social Security Administration (SSA). Taxact sign For electronically filed returns, see By March 31 below. Taxact sign By March 31. Taxact sign   File electronic Forms W-2 and 1099. Taxact sign File electronic Forms W-2 with the SSA and Forms 1099 with the IRS. Taxact sign For more information on reporting Form W-2 information to the SSA electronically, visit the SSA's Employer W-2 Filing Instructions & Information webpage at www. Taxact sign socialsecurity. Taxact sign gov/employer. Taxact sign For information on filing information returns electronically with the IRS, see Publication 1220, Specifications for Filing Forms 1097, 1098, 1099, 3921, 3922, 5498, 8935, and W-2G Electronically. Taxact sign By April 30, July 31, October 31, and January 31. Taxact sign   Deposit FUTA taxes. Taxact sign Deposit FUTA tax due if it is more than $500. Taxact sign Before December 1. Taxact sign  Remind employees to submit a new Form W-4 if their withholding allowances have changed or will change for the next year. Taxact sign Introduction You are generally required to withhold federal income tax from the wages of your employees. Taxact sign You may also be subject to social security and Medicare taxes under the Federal Insurance Contributions Act (FICA) and federal unemployment tax under the Federal Unemployment Tax Act (FUTA). Taxact sign You must also withhold Additional Medicare Tax from wages you pay to an employee in excess of $200,000 in a calendar year. Taxact sign This chapter includes information about these taxes. Taxact sign You must also pay self-employment tax on your net earnings from farming. Taxact sign See chapter 12 for information on self-employment tax. Taxact sign Topics - This chapter discusses: Farm employment, Family employees, Crew leaders, Social security and Medicare taxes, Additional Medicare Tax withholding, Federal income tax withholding, Reporting and paying social security, Medicare, and withheld federal income taxes, and FUTA tax. Taxact sign Useful Items - You may want to see: Publication 15 (Circular E), Employer's Tax Guide 15-A Employer's Supplemental Tax Guide 15-B Employer's Tax Guide to Fringe Benefits 51 (Circular A), Agricultural Employer's Tax Guide 926 Household Employer's Tax Guide Form (and Instructions) W-2 Wage and Tax Statement W-4 Employee's Withholding Allowance Certificate W-9 Request for Taxpayer Identification Number and Certification 940 Employer's Annual Federal Unemployment (FUTA) Tax Return 943 Employer's Annual Federal Tax Return for Agricultural Employees 943-X Adjusted Employer's Annual Federal Tax Return for Agricultural Employees or Claim for Refund See chapter 16 for information about getting publications and forms. Taxact sign Farm Employment In general, you are an employer of farmworkers if your employees do any of the following types of work. Taxact sign Raising or harvesting agricultural or horticultural products on a farm, including raising and feeding of livestock. Taxact sign Operating, managing, conserving, improving, or maintaining your farm and its tools and equipment. Taxact sign Services performed in salvaging timber, or clearing land of brush and other debris, left by a hurricane (also known as hurricane labor). Taxact sign Handling, processing, or packaging any agricultural or horticultural commodity if you produced more than half of the commodity (for a group of up to 20 unincorporated operators, all of the commodity). Taxact sign Work related to cotton ginning, turpentine, gum resin products, or the operation and maintenance of irrigation facilities. Taxact sign For more information, see Publication 51 (Circular A). Taxact sign 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. Taxact sign This is so even when you give the employee freedom of action. Taxact sign What matters is that you have the right to control the details of how the services are performed. Taxact sign You are responsible for withholding and paying employment taxes for your employees. Taxact sign You are also required to file employment tax returns. Taxact sign These requirements do not apply to amounts that you pay to independent contractors. Taxact sign See Publication 15-A for more information on how to determine whether an individual providing services is an independent contractor or an employee. Taxact sign If you employ a family of workers, each worker subject to your control (not just the head of the family) is an employee. Taxact sign Special rules apply to crew leaders. Taxact sign See Crew Leaders , later. Taxact sign Employer identification number (EIN). Taxact sign   If you have employees, you must have an EIN. Taxact sign If you do not have an EIN, you may apply for one online. Taxact sign Go to IRS. Taxact sign gov and click on the Apply for an EIN Online link under Tools. Taxact sign You may also apply for an EIN by calling 1-800-829-4933 or 1-800-829-4059 (TDD/TTY for persons who are deaf, hard of hearing, or have a speech disability). Taxact sign The hours of operation for both numbers are Monday–Friday form 7:00 a. Taxact sign m. Taxact sign –7:00 p. Taxact sign m. Taxact sign local time (Alaska and Hawaii follow Pacific time). Taxact sign You can also fax or mail Form SS-4, Application for Employer Identification Number, to the IRS. Taxact sign Employee's social security number (SSN). Taxact sign   An employee who does not have an SSN should submit Form SS-5, Application for a Social Security Card, to the Social Security Administration (SSA). Taxact sign Form SS-5 is available from any SSA office or by calling 1-800-772-1213 (operates 24 hours per day). Taxact sign It is also available from the SSA's website at www. Taxact sign socialsecurity. Taxact sign gov. Taxact sign   The employee must furnish evidence of age, identity, and U. Taxact sign S. Taxact sign citizenship or lawful immigration status permitting employment with the Form SS-5. Taxact sign An employee who is age 18 or older must appear in person with this evidence at an SSA office. Taxact sign Form I-9. Taxact sign    You must verify that each new employee is legally eligible to work in the United States. Taxact sign This includes completing the Form I-9, Employment Eligibility Verification. Taxact sign Form I-9 is available from the U. Taxact sign S. Taxact sign Citizenship and Immigration Services (USCIS) offices or by calling the Bureau of Citizenship and Immigration Services Forms Request Line at 1-800-870-3676. Taxact sign Form I-9 is also available from the USCIS website at www. Taxact sign uscis. Taxact sign gov. Taxact sign You can also contact the USCIS at 1-800-375-5283 for more information. Taxact sign New hire reporting. Taxact sign   You are required to report any new employee to a designated state new hire registry. Taxact sign Many states accept a copy of Form W-4 with employer information added. Taxact sign Visit the Office of Child Support Enforcement website at www. Taxact sign acf. Taxact sign hhs. Taxact sign gov/programs/cse/newhire for more information. Taxact sign Family Employees Generally, the wages you pay to family members who are your employees are subject to employment taxes. Taxact sign However, certain exemptions may apply to wages paid to your child, spouse, or parent. Taxact sign Exemptions for your child. Taxact sign   Payments for the services of your child under age 18 who works for you in your trade or business (including a farm) are not subject to social security and Medicare taxes. Taxact sign However, see Nonexempt services of a child or spouse , later. Taxact sign Payments for the services of your child under age 21 employed by you in other than a trade or business, such as payments for household services in your home, are also not subject to social security or Medicare taxes. Taxact sign Payments for the services of your child under age 21 employed by you, whether or not in your trade or business, are not subject to FUTA tax. Taxact sign Although not subject to social security, Medicare, or FUTA tax, the child's wages still may be subject to federal income tax withholding. Taxact sign Exemptions for your spouse. Taxact sign   Payments for the services of your spouse who works for you in your trade or business are subject to federal income tax withholding and social security and Medicare taxes, but not FUTA tax. Taxact sign   Payments for the services of your spouse employed by you in other than a trade or business, such as payments for household services in your home, are not subject to social security, Medicare, or FUTA taxes. Taxact sign Nonexempt services of a child or spouse. Taxact sign   Payments for the services of your child or spouse are subject to federal income tax withholding as well as social security, Medicare, and FUTA taxes if he or she works for any of the following entities. Taxact sign A corporation, even if it is controlled by you. Taxact sign A partnership, even if you are a partner. Taxact sign This does not apply to wages paid to your child if each partner is a parent of the child. Taxact sign An estate or trust, even if it is the estate of a deceased parent. Taxact sign In these situations, the child or spouse is considered to work for the corporation, partnership, or estate, not you. Taxact sign Exemptions for your parent. Taxact sign   Payments for the services of your parent employed by you in your trade or business are subject to federal income tax withholding and social security and Medicare taxes. Taxact sign Social security and Medicare taxes do not apply to wages paid to your parent for services not in your trade or business, but they do apply to payments for household services in your home if both the following conditions are satisfied. Taxact sign 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. Taxact sign 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. Taxact sign   Wages you pay to your parent are not subject to FUTA tax, regardless of the type of services provided. Taxact sign Qualified joint venture. Taxact sign   If spouses elect to be treated as a qualified joint venture instead of a partnership, either spouse may report and pay the employment taxes due on the wages paid to employees using the EIN of that spouse's sole proprietorship. Taxact sign For more information about qualified joint ventures, see chapter 12. Taxact sign Crew Leaders If farmworkers are provided by a crew leader, the crew leader may be the employer of the workers. Taxact sign Social security and Medicare taxes. Taxact sign   For social security and Medicare tax purposes, the crew leader is the employer of the workers if both of the following requirements are met. Taxact sign The crew leader pays (either on his or her own behalf or on behalf of the farmer) the workers for their farm labor. Taxact sign The crew leader has not entered into a written agreement with the farmer under which the crew leader is designated as an employee of the farmer. Taxact sign Federal income tax withholding. Taxact sign   If the crew leader is the employer for social security and Medicare tax purposes, the crew leader is the employer for federal income tax withholding purposes. Taxact sign Federal unemployment (FUTA) tax. Taxact sign   For FUTA tax purposes, the crew leader is the employer of the workers if, in addition to the earlier requirements, either of the following requirements are met. Taxact sign The crew leader is registered under the Migrant and Seasonal Agricultural Worker Protection Act. Taxact sign Substantially all crew members operate or maintain mechanized equipment provided by the crew leader as part of the service to the farmer. Taxact sign   The farmer is the employer of workers furnished by a crew leader in all other situations. Taxact sign In addition, the farmer is the employer of workers furnished by a registered crew leader if the workers are the employees of the farmer under the common-law test. Taxact sign For example, some farmers employ individuals to recruit farmworkers exclusively for them. Taxact sign Although these individuals may be required to register under the Migrant and Seasonal Agricultural Worker Protection Act, the workers are employed directly by the farmer. Taxact sign The farmer is the employer in these cases. Taxact sign For information about common-law employees, see section 1 of Publication 15-A. Taxact sign For information about crew leaders, see the Department of Labor website at www. Taxact sign dol. Taxact sign gov/whd/regs/compliance/whdfs49. Taxact sign htm. Taxact sign Social Security and Medicare Taxes All cash wages you pay to an employee during the year for farmwork are subject to social security and Medicare taxes if you meet either of the following tests. Taxact sign You pay the employee $150 or more in cash wages (count all wages paid on a time, piecework, or other basis) during the year for farmwork (the $150 test). Taxact sign The $150 test applies separately to each farmworker that you employ. Taxact sign If you employ a family of workers, each member is treated separately. Taxact sign Do not count wages paid by other employers. Taxact sign You pay cash and noncash wages of $2,500 or more during the year to all your employees for farmwork (the $2,500 test). Taxact sign If the $2,500 test for the group is not met, the $150 test for an employee still applies. Taxact sign Exceptions. Taxact sign   Annual cash wages of less than $150 you pay to a seasonal farmworker are not subject to social security and Medicare taxes, even if you pay $2,500 or more to all your farmworkers. Taxact sign However, these wages count toward the $2,500 test for determining whether other farmworkers' wages are subject to social security and Medicare taxes. Taxact sign   A seasonal farmworker is a worker who: Works as a hand-harvest laborer, Is paid piece rates in an operation usually paid on this basis in the region of employment, Commutes daily from his or her permanent home to the farm, and Worked in agriculture less than 13 weeks in the preceding calendar year. Taxact sign   See Family Employees , earlier, for certain exemptions from social security and Medicare taxes that apply to your child, spouse, and parent. Taxact sign Religious exemption. Taxact sign   An exemption from social security and Medicare taxes is available to members of a recognized religious group or division opposed to public insurance. Taxact sign This exemption is available only if both the employee and the employer are members of the group or division. Taxact sign   For more information, see Publication 517, Social Security and Other Information for Members of the Clergy and Religious Workers. Taxact sign Cash wages. Taxact sign   Only cash wages paid to farmworkers are subject to social security and Medicare taxes. Taxact sign Cash wages include checks, money orders, and any kind of money or cash. Taxact sign   Only cash wages subject to social security and Medicare taxes are credited to your employees for social security benefit purposes. Taxact sign Payments not subject to these taxes, such as commodity wages, do not contribute to your employees' social security coverage. Taxact sign For information about social security benefits, contact the SSA at 1-800-772-1213 or online at www. Taxact sign socialsecurity. Taxact sign gov. Taxact sign Noncash wages. Taxact sign    Noncash wages include food, lodging, clothing, transportation passes, and other goods and services. Taxact sign Noncash wages paid to farmworkers, including commodity wages, are not subject to social security and Medicare taxes. Taxact sign However, they are subject to these taxes if the substance of the transaction is a cash payment. Taxact sign For information on lodging provided as a condition of employment, see Publication 15-B. Taxact sign   Report the value of noncash wages in box 1 of Form W-2 together with cash wages. Taxact sign Do not show noncash wages in box 3 or in box 5, (unless the substance of the transaction is a cash payment). Taxact sign Tax rates and social security wage limit. Taxact sign   For 2013, the employer and the employee will pay the following taxes. Taxact sign The employer and employee each pay 6. Taxact sign 2% of cash wages for social security tax (old-age, survivors, and disability insurance). Taxact sign The employer and employee each pay 1. Taxact sign 45% of cash wages for Medicare tax (hospital insurance). Taxact sign The employee pays 0. Taxact sign 9% of cash wages in excess of $200,000 for Additional Medicare Tax. Taxact sign Wage limit. Taxact sign   The limit on wages subject to the social security tax for 2013 is $113,700. Taxact sign There is no limit on wages subject to the Medicare tax. Taxact sign All covered wages are subject to the Medicare tax. Taxact sign Additionally, all wages in excess of $200,000 are subject to Additional Medicare Tax withholding. Taxact sign Paying employee's share. Taxact sign   If you would rather pay the employee's share of social security and Medicare taxes without deducting it from his or her wages, you may do so. Taxact sign It is additional income to the employee. Taxact sign You must include it in box 1 of the employee's Form W-2, but do not count it as social security and Medicare wages (boxes 3 and 5 on Form W-2) or as wages for federal unemployment (FUTA) tax purposes. Taxact sign Example. Taxact sign Jane operates a small family fruit farm. Taxact sign She employs day laborers in the picking season to enable her to timely get her crop to market. Taxact sign She does not deduct the employees' share of social security and Medicare taxes from their pay; instead, she pays it on their behalf. Taxact sign When her accountant, Susan, prepares the employees' Forms W-2, she adds each employee's share of social security and Medicare taxes paid by Jane to the employee's wage income (box 1 of Form W-2), but does not include it in box 3 (social security wages) or box 5 (Medicare wages and tips). Taxact sign For 2013, Jane paid Mary $1,000 during the year. Taxact sign Susan enters $1,076. Taxact sign 50 in box 1 of Mary's Form W-2 ($1,000 wages plus $76. Taxact sign 50 social security and Medicare taxes paid for Mary). Taxact sign She enters $1,000 in boxes 3 and 5 of Mary's Form W-2. Taxact sign Additional Medicare Tax. Taxact sign   In addition to withholding Medicare tax at 1. Taxact sign 45%, you must withhold a 0. Taxact sign 9% Additional Medicare Tax from wages you pay to an employee in excess of $200,000 in a calendar year. Taxact sign 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. Taxact sign Additional Medicare Tax is only imposed on the employee. Taxact sign There is no employer share of Additional Medicare Tax. Taxact sign All wages that are subject to Medicare tax are subject to Additional Medicare Tax withholding if paid in excess of the $200,000 threshold. Taxact sign   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). Taxact sign For more information on Additional Medicare Tax, visit IRS. Taxact sign gov and enter “Additional Medicare Tax” in the search box. Taxact sign Federal Income Tax Withholding If the cash wages you pay to farmworkers are subject to social security and Medicare taxes, they are also subject to federal income tax withholding. Taxact sign Although noncash wages are subject to federal income tax, withhold income tax only if you and the employee agree to do so. Taxact sign The amount to withhold is figured on gross wages without taking out social security and Medicare taxes, union dues, insurance, etc. Taxact sign Form W-4. Taxact sign   Generally, the amount of federal income tax you withhold is based on the employee's marital status and withholding allowances claimed on the employee's Form W-4. Taxact sign In general, an employee can claim withholding allowances on Form W-4 equal to the number of exemptions the employee will be entitled to claim on his or her tax return. Taxact sign An employee may also be able to claim a special withholding allowance and allowances for estimated deductions and credits. Taxact sign   Do not withhold federal income tax from the wages of an employee who, by filing Form W-4, certifies that he or she had no federal income tax liability last year and anticipates no liability for the current year. Taxact sign   You should give each new employee a Form W-4 as soon as you hire the employee. Taxact sign For Spanish-speaking employees, you may use Formulario W-4(SP) which is the Spanish translation of Form W-4. Taxact sign Have the employee complete and return the form to you before the first payday. Taxact sign If the employee does not return the completed form, you must withhold federal income tax as if the employee is single and claims no withholding allowances. Taxact sign New Form W-4 for 2014. Taxact sign   You should make the 2014 Form W-4 available to your employees and encourage them to check their income tax withholding for 2014. Taxact sign Those employees who owed a large amount of tax or received a large refund for 2013 may want to submit a new Form W-4. Taxact sign You cannot accept substitute Forms W-4 developed by employees. Taxact sign How to figure withholding. Taxact sign   You can use one of several methods to determine the amount to withhold. Taxact sign The methods are described in Publication 51 (Circular A), which contains tables showing the correct amount of federal income tax you should withhold. Taxact sign Publication 51 (Circular A) also contains additional information about federal income tax withholding. Taxact sign Nonemployee compensation. Taxact sign   Generally, you do not have to withhold federal income tax on payments for services to individuals who are not your employees. Taxact sign However, you may be required to report these payments on Form 1099-MISC, Miscellaneous Income, and to withhold under the backup withholding rules. Taxact sign For more information, see the Instructions for Form 1099-MISC. Taxact sign Required Notice to Employees About Earned Income Credit (EIC) You must provide notification about EIC to each employee who worked for you at any time during the year and from whom you did not withhold any federal income tax. Taxact sign However, you do not have to notify employees who claim exemption from federal income tax withholding on Form W-4. Taxact sign You meet the notification requirement by giving each employee any of the following. Taxact sign Form W-2, which contains EIC notification on the back of Copy B. Taxact sign A substitute Form W-2 with the exact EIC wording shown on the back of copy B of Form W-2. Taxact sign Notice 797, Possible Federal Tax Refund Due to the Earned Income Credit (EIC). Taxact sign Your own written statement with the exact wording of Notice 797. Taxact sign For more information, see Publication 51 (Circular A). Taxact sign Reporting and Paying Social Security, Medicare, and Withheld Federal Income Taxes You must withhold federal income, social security, and Medicare taxes required to be withheld from the salaries and wages of your employees. Taxact sign You are liable for the payment of these taxes to the federal government whether or not you collect them from your employees. Taxact sign If, for example, you withhold less than the correct tax from an employee's wages, you are still liable for the full amount. Taxact sign You must also pay the employer's share of social security and Medicare taxes. Taxact sign There is no employer share of Additional Medicare Tax. Taxact sign Form 943. Taxact sign   Report withheld federal income tax, social security tax, and Medicare tax on Form 943. Taxact sign Your 2013 Form 943 is due by January 31, 2014 (or February 10, 2014, if you made deposits on time in full payment of the taxes due for the year). Taxact sign Deposits. Taxact sign   Generally, you must deposit both the employer and employee shares of social security and Medicare taxes and federal income tax withheld during the year. Taxact sign However, you may make payments with Form 943 instead of depositing them if you accumulate less than a $2,500 tax liability (“Total taxes after adjustments” line on Form 943) during the year and you pay in full with a timely filed return. Taxact sign   For more information on deposit rules, see Publication 51 (Circular A). Taxact sign Electronic deposit requirement. Taxact sign   You must use electronic funds transfer to make all federal tax deposits. Taxact sign Generally, electronic funds transfers are made using EFTPS. Taxact sign 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. Taxact sign Also, you may arrange for your financial institution to initiate a same-day wire payment on your behalf. Taxact sign EFTPS is a free service provided by the Department of Treasury. Taxact sign Services provided by your tax professional, financial institution, payroll service, or other third party may have a fee. Taxact sign   For more information on making federal tax deposits, see section 7 of Publication 51 (Circular A). Taxact sign To get more information about EFTPS or to enroll in EFTPS, visit www. Taxact sign eftps. Taxact sign gov or call 1-800-555-4477 or 1-800-733-4829 (TDD). Taxact sign Additional information about EFTPS is also available in Publication 966. Taxact sign Form W-2. Taxact sign   By January 31, you must furnish each employee a Form W-2 showing total wages for the previous year and total federal income tax, social security tax, and Medicare tax withheld. Taxact sign However, if an employee stops working for you and requests the form earlier, you must give it to the employee within 30 days of the later of the following dates. Taxact sign The date the employee requests the form. Taxact sign The date you make your final payment of wages to the employee. Taxact sign Compensation paid to H-2A visa holders. Taxact sign   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. Taxact sign Compensation paid to H-2A workers for agricultural labor performed in connection with this visa is not subject to social security and Medicare taxes, and therefore should not be reported as wages subject to social security tax (line 2), Medicare tax (line 4), or Additional Medicare Tax (line 6) on Form 943, and should not be reported as social security wages (box 3) or Medicare wages (box 5) on Form W-2. Taxact sign   An employer is not required to withhold federal income tax from compensation it pays to an H-2A worker for agricultural labor performed in connection with this visa unless the worker asks for withholding and the employer agrees. Taxact sign In this case, the worker must give the employer a completed Form W-4. Taxact sign Federal income tax withheld should be reported on Form 943, line 8, and in box 2 of Form W-2. Taxact sign   These reporting rules apply when the H-2A worker provides his or her taxpayer identification number (TIN) to the employer. Taxact sign For the 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. Taxact sign Trust fund recovery penalty. Taxact sign   If you are responsible for withholding, accounting for, depositing, or paying federal withholding taxes and willfully fail to do so, you can be held liable for a penalty equal to the withheld tax not paid. Taxact sign A responsible person can be an officer of a corporation, a partner, a sole proprietor, or an employee of any form of business. Taxact sign A trustee or agent with authority over the funds of the business can also be held responsible for the penalty. Taxact sign   Willfully means voluntarily, consciously, and intentionally. Taxact sign Paying other expenses of the business instead of the taxes due is acting willfully. Taxact sign Consequences of treating an employee as an independent contractor. Taxact sign   If you classify an employee as an independent contractor and you have no reasonable basis for doing so, you may be held liable for employment taxes for that worker. Taxact sign See Publication 15-A for more information. Taxact sign Federal Unemployment (FUTA) Tax You must pay FUTA tax if you meet either of the following tests. Taxact sign You paid cash wages of $20,000 or more to farmworkers in any calendar quarter during the current or preceding calendar year. Taxact sign You employed 10 or more farmworkers for some part of at least 1 day during any 20 or more different calendar weeks during the current or preceding calendar year. Taxact sign These rules do not apply to exempt services of your spouse, your parents, or your children under age 21. Taxact sign See Family Employees , earlier. Taxact sign Alien farmworkers. Taxact sign   Wages paid to aliens admitted on a temporary basis to the United States to perform farmwork (also known as “H-2A visa workers”) are exempt from FUTA tax. Taxact sign However, include your employment of these workers and the wages you paid them to determine whether you meet either of the above tests. Taxact sign Commodity wages. Taxact sign   Payments in kind for farm labor are not cash wages. Taxact sign Do not count them to figure whether you are subject to FUTA tax or to figure how much tax you owe. Taxact sign Tax rate and credit. Taxact sign   The gross FUTA tax rate is 6. Taxact sign 0% of the first $7,000 cash wages you pay to each employee during the year. Taxact sign However, you are given a credit of up to 5. Taxact sign 4% of the first $7,000 cash wages you pay to each employee for the state unemployment tax you pay. Taxact sign If your state tax rate (experience rate) is less than 5. Taxact sign 4%, you may still be allowed the full 5. Taxact sign 4% credit. Taxact sign   If you do not pay the state tax, you cannot take the credit. Taxact sign If you are exempt from state unemployment tax for any reason, the full 6. Taxact sign 0% rate applies. Taxact sign See the Instructions for Form 940 for additional information. Taxact sign More information. Taxact sign   For more information on FUTA tax, see Publication 51 (Circular A). Taxact sign Reporting and Paying FUTA Tax The FUTA tax is imposed on you as the employer. Taxact sign It must not be collected or deducted from the wages of your employees. Taxact sign Form 940. Taxact sign   Report FUTA tax on Form 940. Taxact sign The 2013 Form 940 is due January 31, 2014 (or February 10, 2014, if you timely deposited the full amount of your 2013 FUTA tax). Taxact sign Deposits. Taxact sign   If at the end of any calendar quarter you owe, but have not yet deposited, more than $500 in FUTA tax for the year, you must make a deposit by the end of the following month. Taxact sign If the undeposited tax is $500 or less at the end of a quarter, you do not have to deposit it. Taxact sign You can add it to the tax for the next quarter. Taxact sign If the total undeposited tax is more than $500 at the end of the next quarter, a deposit will be required. Taxact sign If the total undeposited tax at the end of the 4th quarter is $500 or less, you can either make a deposit or pay it with your return by the January 31, 2014, due date. Taxact sign Electronic deposit requirement. Taxact sign   You must use electronic funds transfer to make all federal tax deposits. Taxact sign Generally, electronic funds transfers are made using EFTPS. Taxact sign 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. Taxact sign Also, you may arrange for your financial institution to initiate a same-day wire payment on your behalf. Taxact sign EFTPS is a free service provided by the Department of Treasury. Taxact sign Services provided by your tax professional, financial institution, payroll service, or other third party may have a fee. Taxact sign   For more information on making federal tax deposits, see section 7 of Publication 51 (Circular A). Taxact sign To get more information about EFTPS or to enroll in EFTPS, visit www. Taxact sign eftps. Taxact sign gov or call 1-800-555-4477 or 1-800-733-4829 (TDD). Taxact sign Additional information about EFTPS is also available in Publication 966. Taxact sign Prev  Up  Next   Home   More Online Publications
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IRS Provides Tax Relief to Victims of Hurricane Irene

IRS e-File, Free File to Remain Available to Irene Victims through Oct. 31

Updated 10/11, 9/29, 9/15, 9/14, 9/13, 9/12, 9/9, 9/8,  9/7, 9/2 2011 with expanded federal disaster area.

IR-2011-87, Sept. 1, 2011

WASHINGTON –– The Internal Revenue Service is providing tax relief to individual and business taxpayers impacted by Hurricane Irene.

The IRS announced today that certain taxpayers in Connecticut, Massachusetts, New Hampshire, New Jersey, New York, North Carolina, Pennsylvania, Puerto Rico and Vermont will receive tax relief, and other locations are expected to be added in coming days following additional damage assessments by the Federal Emergency Management Agency (FEMA).

The tax relief postpones certain tax filing and payment deadlines to Oct. 31, 2011. It includes corporations and businesses that previously obtained an extension until Sept. 15, 2011, to file their 2010 returns and individuals and businesses that received a similar extension until Oct. 17. It also includes the estimated tax payment for the third quarter of 2011, which would normally be due Sept. 15.

Full details, including the start date for the relief in various locations and information on how to claim a disaster loss by amending a prior-year tax return, can be found in tax relief announcements for individual states on this website.

The tax relief is part of a coordinated federal response to the damage caused by the hurricane and is based on local damage assessments by FEMA. For information on disaster recovery, individuals should visit disasterassistance.gov.

Tax Relief Available So Far

Filing and payment relief is currently available to taxpayers in federal disaster areas declared in Connecticut, Massachusetts, New Hampshire, New Jersey, New York, North Carolina, Pennsylvania, Puerto Rico and Vermont. The IRS expects to announce tax relief for taxpayers in other areas as damage assessments continue. The IRS encourages taxpayers and tax practitioners to monitor Tax Relief in Disaster Situations on this website for updates.

So far, IRS filing and payment relief applies to the following counties and municipalities:

  • In Connecticut: Fairfield, Hartford, Litchfield, Middlesex, New Haven, New London, Tolland and Windham;
  • In Massachusetts: Berkshire and Franklin;
  • In New Hampshire: Carroll and Grafton;
  • In New Jersey: Atlantic, Bergen, Burlington, Camden, Cape May, Cumberland, Essex, Gloucester, Hudson, Hunterdon, Mercer, Middlesex, Monmouth, Morris, Ocean, Passaic, Salem, Somerset, Sussex, Union and Warren;
  • In New York: Albany, Bronx, Clinton, Columbia, Delaware, Dutchess, Essex, Greene, Herkimer, Kings, Montgomery, Nassau, Orange, Otsego, Putnam, Queens, Rensselaer, Richmond, Rockland, Saratoga, Schenectady, Schoharie, Suffolk, Sullivan, Ulster, Warren, Washington and Westchester; 
  • In North Carolina: Beaufort, Bertie, Bladen, Brunswick, Camden, Carteret, Chowan, Columbus, Craven, Currituck, Dare, Duplin, Edgecombe, Gates, Greene, Halifax, Hertford, Hyde, Johnston, Jones, Lenoir, Martin, Nash, New Hanover, Northampton, Onslow, Pamlico, Pasquotank, Pender, Perquimans, Pitt, Sampson, Tyrrell, Vance, Warren, Washington, Wayne and Wilson;
  • In Pennsylvania: Bucks, Chester, Delaware, Lehigh, Luzerne, Monroe, Montgomery, Northampton, Philadelphia, Sullivan and Wyoming;
  • In Puerto Rico: Adjuntas, Arroyo, Aguas Buenas, Caguas, Canóvanas, Carolina, Cayey, Cidra, Ciales, Coamo, Comerío, Fajardo, Guaynabo, Gurabo, Humacao, Jayuya, Juncos, Las Piedras, Loíza, Luquillo, Naguabo, Naranjito, Orocovis, Patillas, Ponce, Río Grande,  San Juan, San Lorenzo, Trujillo Alto, Vega Baja, Vieques and Villalba;
  • In Vermont: Addison, Bennington, Caledonia, Chittenden, Franklin, Lamoille, Orleans, Orange, Rutland, Washington, Windham and Windsor;

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Page Last Reviewed or Updated: 12-Mar-2014

The Taxact Sign

Taxact sign Publication 590 - Introductory Material Table of Contents What's New for 2013 What's New for 2014 Reminders IntroductionOrdering forms and publications. Taxact sign Tax questions. Taxact sign Useful Items - You may want to see: Note. Taxact sign After 2013, Publication 590 will be split into two separate publications as follows. Taxact sign Publication 590-A, will focus on contributions to traditional IRAs as well as Roth IRAs. Taxact sign This publication will include the rules for rollover and conversion contributions. Taxact sign Publication 590-B, will focus on distributions from traditional IRAs as well as Roth IRAs. Taxact sign This publication will include the rules for required minimum distributions and IRA beneficiaries. Taxact sign What's New for 2013 Traditional IRA contribution and deduction limit. Taxact sign  The contribution limit to your traditional IRA for 2013 will be increased to the smaller of the following amounts: $5,500, or Your taxable compensation for the year. Taxact sign If you were age 50 or older before 2014, the most that can be contributed to your traditional IRA for 2013 will be the smaller of the following amounts: $6,500, or Your taxable compensation for the year. Taxact sign For more information, see How Much Can Be Contributed? in chapter 1. Taxact sign Roth IRA contribution limit. Taxact sign  If contributions on your behalf are made only to Roth IRAs, your contribution limit for 2013 will generally be the lesser of: $5,500, or Your taxable compensation for the year. Taxact sign If you were age 50 or older before 2014 and contributions on your behalf were made only to Roth IRAs, your contribution limit for 2013 will generally be the lesser of: $6,500, or Your taxable compensation for the year. Taxact sign However, if your modified adjusted gross income (AGI) is above a certain amount, your contribution limit may be reduced. Taxact sign For more information, see How Much Can Be Contributed? under Can You Contribute to a Roth IRA? in chapter 2. Taxact sign Modified AGI limit for traditional IRA contributions increased. Taxact sign  For 2013, if you were covered by a retirement plan at work, your deduction for contributions to a traditional IRA is reduced (phased out) if your modified AGI is: More than $95,000 but less than $115,000 for a married couple filing a joint return or a qualifying widow(er), More than $59,000 but less than $69,000 for a single individual or head of household, or Less than $10,000 for a married individual filing a separate return. Taxact sign If you either lived with your spouse or file a joint return, and your spouse was covered by a retirement plan at work, but you were not, your deduction is phased out if your modified AGI is more than $178,000 but less than $188,000. Taxact sign If your modified AGI is $188,000 or more, you cannot take a deduction for contributions to a traditional IRA. Taxact sign See How Much Can You Deduct? in chapter 1. Taxact sign Modified AGI limit for Roth IRA contributions increased. Taxact sign  For 2013, your Roth IRA contribution limit is reduced (phased out) in the following situations. Taxact sign Your filing status is married filing jointly or qualifying widow(er) and your modified AGI is at least $178,000. Taxact sign You cannot make a Roth IRA contribution if your modified AGI is $188,000 or more. Taxact sign Your filing status is single, head of household, or married filing separately and you did not live with your spouse at any time in 2013 and your modified AGI is at least $112,000. Taxact sign You cannot make a Roth IRA contribution if your modified AGI is $127,000 or more. Taxact sign Your filing status is married filing separately, you lived with your spouse at any time during the year, and your modified AGI is more than -0-. Taxact sign You cannot make a Roth IRA contribution if your modified AGI is $10,000 or more. Taxact sign See Can You Contribute to a Roth IRA? in chapter 2. Taxact sign Net Investment Income Tax. Taxact sign  For purposes of the Net Investment Income Tax (NIIT), net investment income does not include distributions from a qualified retirement plan (for example, 401(a), 403(a), 403(b), 457(b) plans, and IRAs). Taxact sign However, these distributions are taken into account when determining the modified adjusted gross income threshold. Taxact sign Distributions from a nonqualified retirement plan are included in net investment income. Taxact sign See Form 8960, Net Investment Income Tax—Individuals, Estates, and Trusts, and its instructions for more information. Taxact sign Kay Bailey Hutchison Spousal IRA. Taxact sign . Taxact sign  In 2013, spousal IRAs were renamed to Kay Bailey Hutchison Spousal IRAs. Taxact sign There are no changes to the rules regarding these IRAs. Taxact sign See Kay Bailey Hutchison Spousal IRA Limit in chapter 1 for more information. Taxact sign What's New for 2014 Modified AGI limit for traditional IRA contributions increased. Taxact sign  For 2014, if you are covered by a retirement plan at work, your deduction for contributions to a traditional IRA is reduced (phased out) if your modified AGI is: More than $96,000 but less than $116,000 for a married couple filing a joint return or a qualifying widow(er), More than $60,000 but less than $70,000 for a single individual or head of household, or Less than $10,000 for a married individual filing a separate return. Taxact sign If you either live with your spouse or file a joint return, and your spouse is covered by a retirement plan at work, but you are not, your deduction is phased out if your modified AGI is more than $181,000 but less than $191,000. Taxact sign If your modified AGI is $191,000 or more, you cannot take a deduction for contributions to a traditional IRA. Taxact sign Modified AGI limit for Roth IRA contributions increased. Taxact sign  For 2014, your Roth IRA contribution limit is reduced (phased out) in the following situations. Taxact sign Your filing status is married filing jointly or qualifying widow(er) and your modified AGI is at least $181,000. Taxact sign You cannot make a Roth IRA contribution if your modified AGI is $191,000 or more. Taxact sign Your filing status is single, head of household, or married filing separately and you did not live with your spouse at any time in 2014 and your modified AGI is at least $114,000. Taxact sign You cannot make a Roth IRA contribution if your modified AGI is $129,000 or more. Taxact sign Your filing status is married filing separately, you lived with your spouse at any time during the year, and your modified AGI is more than -0-. Taxact sign You cannot make a Roth IRA contribution if your modified AGI is $10,000 or more. Taxact sign Reminders Future developments. Taxact sign  For the latest information about developments related to Publication 590, such as legislation enacted after it was published, go to www. Taxact sign irs. Taxact sign gov/pub590. Taxact sign Simplified employee pension (SEP). Taxact sign  SEP IRAs are not covered in this publication. Taxact sign They are covered in Publication 560, Retirement Plans for Small Business. Taxact sign Deemed IRAs. Taxact sign  A qualified employer plan (retirement plan) can maintain a separate account or annuity under the plan (a deemed IRA) to receive voluntary employee contributions. Taxact sign If the separate account or annuity otherwise meets the requirements of an IRA, it will be subject only to IRA rules. Taxact sign An employee's account can be treated as a traditional IRA or a Roth IRA. Taxact sign For this purpose, a “qualified employer plan” includes: A qualified pension, profit-sharing, or stock bonus plan (section 401(a) plan), A qualified employee annuity plan (section 403(a) plan), A tax-sheltered annuity plan (section 403(b) plan), and A deferred compensation plan (section 457 plan) maintained by a state, a political subdivision of a state, or an agency or instrumentality of a state or political subdivision of a state. Taxact sign Contributions to both traditional and Roth IRAs. Taxact sign  For information on your combined contribution limit if you contribute to both traditional and Roth IRAs, see Roth IRAs and traditional IRAs under How Much Can Be Contributed? in chapter 2. Taxact sign Statement of required minimum distribution (RMD). Taxact sign  If an RMD is required from your IRA, the trustee, custodian, or issuer that held the IRA at the end of the preceding year must either report the amount of the RMD to you, or offer to calculate it for you. Taxact sign The report or offer must include the date by which the amount must be distributed. Taxact sign The report is due January 31 of the year in which the minimum distribution is required. Taxact sign It can be provided with the year-end fair market value statement that you normally get each year. Taxact sign No report is required for section 403(b) contracts (generally tax-sheltered annuities) or for IRAs of owners who have died. Taxact sign IRA interest. Taxact sign  Although interest earned from your IRA is generally not taxed in the year earned, it is not tax-exempt interest. Taxact sign Tax on your traditional IRA is generally deferred until you take a distribution. Taxact sign Do not report this interest on your return as tax-exempt interest. Taxact sign For more information on tax-exempt interest, see the instructions for your tax return. Taxact sign Photographs of missing children. Taxact sign  The Internal Revenue Service is a proud partner with the National Center for Missing and Exploited Children. Taxact sign Photographs of missing children selected by the Center may appear in this publication on pages that would otherwise be blank. Taxact sign 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. Taxact sign Introduction This publication discusses individual retirement arrangements (IRAs). Taxact sign An IRA is a personal savings plan that gives you tax advantages for setting aside money for retirement. Taxact sign What are some tax advantages of an IRA?   Two tax advantages of an IRA are that: Contributions you make to an IRA may be fully or partially deductible, depending on which type of IRA you have and on your circumstances, and Generally, amounts in your IRA (including earnings and gains) are not taxed until distributed. Taxact sign In some cases, amounts are not taxed at all if distributed according to the rules. Taxact sign What's in this publication?   This publication discusses traditional, Roth, and SIMPLE IRAs. Taxact sign It explains the rules for: Setting up an IRA, Contributing to an IRA, Transferring money or property to and from an IRA, Handling an inherited IRA, Receiving distributions (making withdrawals) from an IRA, and Taking a credit for contributions to an IRA. Taxact sign   It also explains the penalties and additional taxes that apply when the rules are not followed. Taxact sign To assist you in complying with the tax rules for IRAs, this publication contains worksheets, sample forms, and tables, which can be found throughout the publication and in the appendices at the back of the publication. Taxact sign How to use this publication. Taxact sign   The rules that you must follow depend on which type of IRA you have. Taxact sign Use Table I-1 to help you determine which parts of this publication to read. Taxact sign Also use Table I-1 if you were referred to this publication from instructions to a form. Taxact sign Comments and suggestions. Taxact sign   We welcome your comments about this publication and your suggestions for future editions. Taxact sign   You can write to us at the following address: Internal Revenue Service Tax Forms and Publications Division 1111 Constitution Ave. Taxact sign NW, IR-6526 Washington, DC 20224   We respond to many letters by telephone. Taxact sign Therefore, it would be helpful if you would include your daytime phone number, including the area code, in your correspondence. Taxact sign   You can send your comments from www. Taxact sign irs. Taxact sign gov/formspubs/. Taxact sign Click on “More Information” and then on “Comment on Tax Forms and Publications”. Taxact sign   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. Taxact sign Ordering forms and publications. Taxact sign   Visit www. Taxact sign irs. Taxact sign 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 days after your request is received. Taxact sign Internal Revenue Service 1201 N. Taxact sign Mitsubishi Motorway Bloomington, IL 61705-6613 Tax questions. Taxact sign   If you have a tax question, check the information available on IRS. Taxact sign gov or call 1-800-829-1040. Taxact sign We cannot answer tax questions sent to either of the above addresses. Taxact sign Useful Items - You may want to see: Publications 560 Retirement Plans for Small Business (SEP, SIMPLE, and Qualified Plans) 571 Tax-Sheltered Annuity Plans (403(b) Plans) 575 Pension and Annuity Income 939 General Rule for Pensions and Annuities Forms (and instructions) W-4P Withholding Certificate for Pension or Annuity Payments 1099-R Distributions From Pensions, Annuities, Retirement or Profit-Sharing Plans, IRAs, Insurance Contracts, etc. Taxact sign 5304-SIMPLE Savings Incentive Match Plan for Employees of Small Employers (SIMPLE)–Not for Use With a Designated Financial Institution 5305-S SIMPLE Individual Retirement Trust Account 5305-SA SIMPLE Individual Retirement Custodial Account 5305-SIMPLE Savings Incentive Match Plan for Employees of Small Employers (SIMPLE)–for Use With a Designated Financial Institution 5329 Additional Taxes on Qualified Plans (Including IRAs) and Other Tax-Favored Accounts 5498 IRA Contribution Information 8606 Nondeductible IRAs 8815 Exclusion of Interest From Series EE and I U. Taxact sign S. Taxact sign Savings Bonds Issued After 1989 8839 Qualified Adoption Expenses 8880 Credit for Qualified Retirement Savings Contributions See chapter 5 for information about getting these publications and forms. Taxact sign Table I-1. Taxact sign Using This Publication IF you need information on . Taxact sign . Taxact sign . Taxact sign THEN see . Taxact sign . Taxact sign . Taxact sign traditional IRAs chapter 1. Taxact sign Roth IRAs chapter 2, and parts of  chapter 1. Taxact sign SIMPLE IRAs chapter 3. Taxact sign the credit for qualified retirement savings contributions (the saver's credit) chapter 4. Taxact sign how to keep a record of your contributions to, and distributions from, your traditional IRA(s) appendix A. Taxact sign SEP IRAs and 401(k) plans Publication 560. Taxact sign Coverdell education savings accounts (formerly called education IRAs) Publication 970. Taxact sign IF for 2013, you received social security benefits, had taxable compensation, contributed to a traditional IRA, and you or your spouse was covered by an employer retirement plan, and you want to. Taxact sign . Taxact sign . Taxact sign THEN see . Taxact sign . Taxact sign . Taxact sign first figure your modified adjusted gross income (AGI) appendix B, worksheet 1. Taxact sign then figure how much of your traditional IRA contribution you can deduct appendix B, worksheet 2. Taxact sign and finally figure how much of your social security is taxable appendix B, worksheet 3. Taxact sign Table I-2. Taxact sign How Are a Traditional IRA and a Roth IRA Different? This table shows the differences between traditional and Roth IRAs. Taxact sign Answers in the middle column apply to traditional IRAs. Taxact sign Answers in the right column apply to Roth IRAs. Taxact sign Question Answer   Traditional IRA? Roth IRA? Is there an age limit on when I can open and contribute to a Yes. Taxact sign You must not have reached age  70½ by the end of the year. Taxact sign See Who Can Open a Traditional IRA? in chapter 1. Taxact sign No. Taxact sign You can be any age. Taxact sign See Can You Contribute to a Roth IRA? in chapter 2. Taxact sign If I earned more than $5,500 in 2013 ($6,500 if I was 50 or older by the end of 2013), is there a limit on how much I can contribute to a Yes. Taxact sign For 2013, you can contribute to a traditional IRA up to: $5,500, or $6,500 if you were age 50 or older by the end of 2013. Taxact sign  There is no upper limit on how much you can earn and still contribute. Taxact sign See How Much Can Be Contributed? in chapter 1. Taxact sign Yes. Taxact sign For 2013, you may be able to contribute to a Roth IRA up to: $5,500, or $6,500 if you were age 50 or older by the end of 2013,  but the amount you can contribute may be less than that depending on your income, filing status, and if you contribute to another IRA. Taxact sign See How Much Can Be Contributed? and Table 2-1 in chapter 2. Taxact sign Can I deduct contributions to a Yes. Taxact sign You may be able to deduct your contributions to a traditional IRA depending on your income, filing status, whether you are covered by a retirement plan at work, and whether you receive social security benefits. Taxact sign See How Much Can You Deduct? in chapter 1. Taxact sign No. Taxact sign You can never deduct contributions to a Roth IRA. Taxact sign See What Is a Roth IRA? in chapter 2. Taxact sign Do I have to file a form just because I contribute to a Not unless you make nondeductible contributions to your traditional IRA. Taxact sign In that case, you must file Form 8606. Taxact sign See Nondeductible Contributions in chapter 1. Taxact sign No. Taxact sign You do not have to file a form if you contribute to a Roth IRA. Taxact sign See Contributions not reported in chapter 2. Taxact sign Do I have to start taking distributions when I reach a certain age from a Yes. Taxact sign You must begin receiving required minimum distributions by April 1 of the year following the year you reach age 70½. Taxact sign See When Must You Withdraw Assets? (Required Minimum Distributions) in chapter 1. Taxact sign No. Taxact sign If you are the original owner of a Roth IRA, you do not have to take distributions regardless of your age. Taxact sign See Are Distributions Taxable? in chapter 2. Taxact sign However, if you are the beneficiary of a Roth IRA, you may have to take distributions. Taxact sign See Distributions After Owner's Death in chapter 2. Taxact sign How are distributions taxed from a Distributions from a traditional IRA are taxed as ordinary income, but if you made nondeductible contributions, not all of the distribution is taxable. Taxact sign See Are Distributions Taxable? in chapter 1. Taxact sign Distributions from a Roth IRA are not taxed as long as you meet certain criteria. Taxact sign See Are Distributions Taxable? in chapter 2. Taxact sign Do I have to file a form just because I receive distributions from a Not unless you have ever made a nondeductible contribution to a traditional IRA. Taxact sign If you have, file Form 8606. Taxact sign See Nondeductible Contributions in chapter 1. Taxact sign Yes. Taxact sign File Form 8606 if you received distributions from a Roth IRA (other than a rollover, qualified charitable distribution, one-time distribution to fund an HSA, recharacterization, certain qualified distributions, or a return of certain contributions). Taxact sign Prev  Up  Next   Home   More Online Publications