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Www. Www.myfreetax.com myfreetax. Www.myfreetax.com com 9. Www.myfreetax.com   Worksheets Table of Contents When Should I Figure MAC?Checking the Previous Year's Contributions Available Worksheets Chapter 2 introduced you to the term maximum amount contributable (MAC). Www.myfreetax.com Generally, your MAC is the lesser of your: Limit on annual additions (chapter 3), or Limit on elective deferrals (chapter 4). Www.myfreetax.com The worksheets in this chapter can help you figure the cost of incidental life insurance, your includible compensation, your limit on annual additions, your limit on elective deferrals, your limit on catch-up contributions, and your MAC. Www.myfreetax.com After completing the worksheets, you should maintain them with your 403(b) records for that year. Www.myfreetax.com Do not attach them to your tax return. Www.myfreetax.com At the end of the year or the beginning of the next year, you should compare your estimated compensation figures with your actual figures. Www.myfreetax.com If your compensation is the same as, or more than, the projected amounts and the calculations are correct, then you should simply file these worksheets with your other tax records for the year. Www.myfreetax.com If your compensation was lower than your estimated figures, you will need to check the amount contributed during the year to determine if contributions are more than your MAC. Www.myfreetax.com When Should I Figure MAC? At the beginning of each year, you should figure your MAC using a conservative estimate of your compensation. Www.myfreetax.com Should your income change during the year, you should refigure your MAC based on a revised conservative estimate. Www.myfreetax.com By doing this, you will be able to determine if contributions to your 403(b) account should be increased or decreased for the year. Www.myfreetax.com Checking the Previous Year's Contributions At the beginning of the following year, you should refigure your MAC based on your actual earned income. Www.myfreetax.com At the end of the current year or the beginning of the next year, you should check your contributions to be sure you did not exceed your MAC. Www.myfreetax.com This means refiguring your limit based on your actual compensation figures for the year. Www.myfreetax.com This will allow you to determine if the amount contributed is more than the allowable amounts, and possibly avoid additional taxes. Www.myfreetax.com Available Worksheets The following worksheets have been provided to help you figure your MAC. Www.myfreetax.com Worksheet A. Www.myfreetax.com Cost of Incidental Life Insurance. Www.myfreetax.com Worksheet B. Www.myfreetax.com Includible Compensation for Your Most Recent Year of Service Worksheet C. Www.myfreetax.com Limit on Catch-Up Contributions. Www.myfreetax.com ??? Worksheet 1. Www.myfreetax.com Maximum Amount Contributable (MAC). Www.myfreetax.com Worksheet A. Www.myfreetax.com Cost of Incidental Life Insurance Note. Www.myfreetax.com Use this worksheet to figure the cost of incidental life insurance included in your annuity contract. Www.myfreetax.com This amount will be used to figure includible compensation for your most recent year of service. Www.myfreetax.com 1. Www.myfreetax.com Enter the value of the contract (amount payable upon your death) 1. Www.myfreetax.com   2. Www.myfreetax.com Enter the cash value in the contract at the end of the year 2. Www.myfreetax.com   3. Www.myfreetax.com Subtract line 2 from line 1. Www.myfreetax.com This is the value of your current life insurance protection 3. Www.myfreetax.com   4. Www.myfreetax.com Enter your age on your birthday nearest the beginning of the policy year 4. Www.myfreetax.com   5. Www.myfreetax.com Enter the 1-year term premium for $1,000 of life insurance based on your age. Www.myfreetax.com (From Figure 3-1) 5. Www.myfreetax.com   6. Www.myfreetax.com Divide line 3 by $1,000 6. Www.myfreetax.com   7. Www.myfreetax.com Multiply line 6 by line 5. Www.myfreetax.com This is the cost of your incidental life insurance 7. Www.myfreetax.com   Worksheet B. Www.myfreetax.com Includible Compensation for Your Most Recent Year of Service1 Note. Www.myfreetax.com Use this worksheet to figure includible compensation for your most recent year of service. Www.myfreetax.com 1. Www.myfreetax.com Enter your includible wages from the employer maintaining your 403(b) account for your most recent year of service 1. Www.myfreetax.com   2. Www.myfreetax.com Enter elective deferrals excluded from your gross income for your most recent year of service2 2. Www.myfreetax.com   3. Www.myfreetax.com Enter amounts contributed or deferred by your employer under a cafeteria plan for your most recent year of service 3. Www.myfreetax.com   4. Www.myfreetax.com Enter amounts contributed or deferred by your employer according to your election to your 457 account (a nonqualified plan of a state or local government or of a tax-exempt organization) for your most recent year of service 4. Www.myfreetax.com   5. Www.myfreetax.com Enter pre-tax contributions (employer's contributions made on your behalf according to your election) to a qualified transportation fringe benefit plan for your most recent year of service 5. Www.myfreetax.com   6. Www.myfreetax.com Enter your foreign earned income exclusion for your most recent year of service 6. Www.myfreetax.com   7. Www.myfreetax.com Add lines 1, 2, 3, 4, 5, and 6 7. Www.myfreetax.com   8. Www.myfreetax.com Enter the cost of incidental life insurance that is part of your annuity contract for your most recent year of service 8. Www.myfreetax.com   9. Www.myfreetax.com Enter compensation that was both: Earned during your most recent year of service, and Earned while your employer was not qualified to maintain a 403(b) plan 9. Www.myfreetax.com   10. Www.myfreetax.com Add lines 8 and 9 10. Www.myfreetax.com   11. Www.myfreetax.com Subtract line 10 from line 7. Www.myfreetax.com This is your includible compensation for your most recent year of service 11. Www.myfreetax.com   1Use estimated amounts if figuring includible compensation before the end of the year. Www.myfreetax.com  2Elective deferrals made to a designated Roth account are not excluded from your gross income and should not be included on this line. Www.myfreetax.com Worksheet C. Www.myfreetax.com Limit on Catch-Up Contributions Note. Www.myfreetax.com If you will be age 50 or older by the end of the year, use this worksheet to figure your limit on catch-up contributions. Www.myfreetax.com 1. Www.myfreetax.com Maximum catch-up contributions 1. Www.myfreetax.com $5,500 2. Www.myfreetax.com Enter your includible compensation for your most recent year of service 2. Www.myfreetax.com   3. Www.myfreetax.com Enter your elective deferrals 3. Www.myfreetax.com   4. Www.myfreetax.com Subtract line 3 from line 2 4. Www.myfreetax.com   5. Www.myfreetax.com Enter the lesser of line 1 or line 4. Www.myfreetax.com This is your limit on catch-up contributions 5. Www.myfreetax.com   Worksheet 1. Www.myfreetax.com Maximum Amount Contributable (MAC) Note. Www.myfreetax.com Use this worksheet to figure your MAC. Www.myfreetax.com Part I. Www.myfreetax.com Limit on Annual Additions     1. Www.myfreetax.com Enter your includible compensation for your most recent year of service 1. Www.myfreetax.com   2. Www.myfreetax.com Maximum1: For 2013, enter $51,000 For 2014, enter $52,000 2. Www.myfreetax.com   3. Www.myfreetax.com Enter the lesser of line 1 or line 2. Www.myfreetax.com This is your limit on annual additions 3. Www.myfreetax.com     Caution: If you had only nonelective contributions, skip Part II and enter the amount from line 3 on line 18. Www.myfreetax.com     Part II. Www.myfreetax.com Limit on Elective Deferrals     4. Www.myfreetax.com Maximum contribution: For 2013, enter $17,500 For 2014, enter $17,500 4. Www.myfreetax.com     Note. Www.myfreetax.com If you have at least 15 years of service with a qualifying organization, complete lines 5 through 17. Www.myfreetax.com If not, enter zero (-0-) on line 16 and go to line 17. Www.myfreetax.com     5. Www.myfreetax.com Amount per year of service 5. Www.myfreetax.com $ 5,000 6. Www.myfreetax.com Enter your years of service 6. Www.myfreetax.com   7. Www.myfreetax.com Multiply line 5 by line 6 7. Www.myfreetax.com   8. Www.myfreetax.com Enter the total of all elective deferrals made for you by the qualifying organization for prior years 8. Www.myfreetax.com   9. Www.myfreetax.com Subtract line 8 from line 7. Www.myfreetax.com If zero or less, enter zero (-0-) 9. Www.myfreetax.com   10. Www.myfreetax.com Maximum increase in limit for long service 10. Www.myfreetax.com $15,000 11. Www.myfreetax.com Enter the total of additional pre-tax elective deferrals made in prior years under the 15-year rule 11. Www.myfreetax.com   12. Www.myfreetax.com Enter the aggregate amount of all designated Roth contributions permitted for prior years under the 15-year rule 12. Www.myfreetax.com   13. Www.myfreetax.com Add line 11 and line 12 13. Www.myfreetax.com   14. Www.myfreetax.com Subtract line 13 from line 10 14. Www.myfreetax.com   15. Www.myfreetax.com Maximum additional contributions 15. Www.myfreetax.com $ 3,000 16. Www.myfreetax.com Enter the least of lines 9, 14, or 15. Www.myfreetax.com This is your increase in the limit for long service 16. Www.myfreetax.com   17. Www.myfreetax.com Add lines 4 and 16. Www.myfreetax.com This is your limit on elective deferrals 17. Www.myfreetax.com     Part III. Www.myfreetax.com Maximum Amount Contributable     18. Www.myfreetax.com If you had only nonelective contributions, enter the amount from line 3. Www.myfreetax.com This is your MAC. Www.myfreetax.com    If you had only elective deferrals, enter the lesser of lines 3 or 17. Www.myfreetax.com This is your MAC. Www.myfreetax.com    If you had both elective deferrals and nonelective contributions, enter the amount from line 3. Www.myfreetax.com This is your MAC. Www.myfreetax.com (Use the amount on line 17 to determine if you have excess elective deferrals as explained in chapter 7. Www.myfreetax.com ) 18. Www.myfreetax.com   1If you participate in a 403(b) plan and a qualified plan, you must combine contributions made to your 403(b) account with contributions to a qualified plan and simplified employee pension plans of all corporations, partnerships, and sole proprietorships in which you have more than 50% control. Www.myfreetax.com You must also combine the contributions made to all 403(b) accounts on your behalf by your employer. Www.myfreetax.com Prev  Up  Next   Home   More Online Publications
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Www. Www.myfreetax.com myfreetax. Www.myfreetax.com com 1. Www.myfreetax.com   Filing and Paying Business Taxes Table of Contents Introduction Useful Items - You may want to see: Identification NumbersNew EIN. Www.myfreetax.com Employee. Www.myfreetax.com Other payee. Www.myfreetax.com Income TaxDo I Have To File an Income Tax Return? How Do I File? IRS e-file (Electronic Filing) When Is My Tax Return Due? How Do I Pay Income Tax? Self-Employment (SE) TaxHow to become insured under social security. Www.myfreetax.com Earning credits in 2013 and 2014. Www.myfreetax.com Employment Taxes Excise Taxes Information ReturnsWaiver of penalties. Www.myfreetax.com Penalties. Www.myfreetax.com Introduction This chapter explains the business taxes you may have to pay and the forms you may have to file. Www.myfreetax.com It also discusses taxpayer identification numbers. Www.myfreetax.com Table 1-1 lists the benefits of filing electronically. Www.myfreetax.com Table 1-2 lists the federal taxes you may have to pay, their due dates, and the forms you use to report them. Www.myfreetax.com Table 1-3 provides checklists that highlight the typical forms and schedules you may need to file if you ever go out of business. Www.myfreetax.com You may want to get Publication 509, Tax Calendars. Www.myfreetax.com It has tax calendars that tell you when to file returns and make tax payments. Www.myfreetax.com Useful Items - You may want to see: Publication 505 Tax Withholding and Estimated Tax Form (and Instructions) 1040 U. Www.myfreetax.com S. Www.myfreetax.com Individual Income Tax Return 1040-ES Estimated Tax for Individuals Sch C (Form 1040) Profit or Loss From Business Sch C-EZ (Form 1040) Net Profit From Business Sch SE (Form 1040) Self-Employment Tax See chapter 12 for information about getting publications and forms. Www.myfreetax.com Identification Numbers This section explains three types of taxpayer identification numbers, who needs them, when to use them, and how to get them. Www.myfreetax.com Social security number (SSN). Www.myfreetax.com   Generally, use your SSN as your taxpayer identification number. Www.myfreetax.com You must put this number on each of your individual income tax forms, such as Form 1040 and its schedules. Www.myfreetax.com   To apply for an SSN, use Form SS-5, Application for a Social Security Card. Www.myfreetax.com This form is available at Social Security Administration (SSA) offices or by calling 1-800-772-1213. Www.myfreetax.com It is also available from the SSA website at www. Www.myfreetax.com socialsecurity. Www.myfreetax.com gov. Www.myfreetax.com Individual taxpayer identification number (ITIN). Www.myfreetax.com   The IRS will issue an ITIN if you are a nonresident or resident alien and you do not have and are not eligible to get an SSN. Www.myfreetax.com In general, if you need to obtain an ITIN, you must attach Form W-7, Application for IRS Individual Taxpayer Identification Number, with your signed, original, completed tax return and any other required documentation and mail them to the following address. Www.myfreetax.com  Internal Revenue Service ITIN Operation P. Www.myfreetax.com O. Www.myfreetax.com Box 149342 Austin, TX 78714-9342 The exceptions are covered in detail in the instructions for Form W-7. Www.myfreetax.com If you must include another person's SSN on your return and that person does not have and cannot get an SSN, enter that person's ITIN. Www.myfreetax.com The application is also available in Spanish. Www.myfreetax.com The form is available at IRS. Www.myfreetax.com gov or you can call 1-800-829-3676 to order the form. Www.myfreetax.com    An ITIN is for tax use only. Www.myfreetax.com It does not entitle the holder to social security benefits or change the holder's employment or immigration status. Www.myfreetax.com Employer identification number (EIN). Www.myfreetax.com   You must also have an EIN to use as a taxpayer identification number if you do either of the following. Www.myfreetax.com Pay wages to one or more employees. Www.myfreetax.com File pension or excise tax returns. Www.myfreetax.com   If you must have an EIN, include it along with your SSN on your Schedule C or C-EZ. Www.myfreetax.com   You can apply for an EIN: Online by clicking on the Employer ID Numbers (EINs) link at www. Www.myfreetax.com irs. Www.myfreetax.com gov/businesses/small. Www.myfreetax.com The EIN is issued immediately once the application information is validated. Www.myfreetax.com By telephone at 1-800-829-4933. Www.myfreetax.com By mailing or faxing Form SS-4, Application for Employer Identification Number. Www.myfreetax.com New EIN. Www.myfreetax.com   You may need to get a new EIN if either the form or the ownership of your business changes. Www.myfreetax.com For more information, see Publication 1635, Understanding Your EIN. Www.myfreetax.com When you need identification numbers of other persons. Www.myfreetax.com   In operating your business, you will probably make certain payments you must report on information returns. Www.myfreetax.com These payments are discussed under Information Returns, later in this chapter. Www.myfreetax.com You must give the recipient of these payments (the payee) a statement showing the total amount paid during the year. Www.myfreetax.com You must include the payee's identification number and your identification number on the returns and statements. Www.myfreetax.com Employee. Www.myfreetax.com   If you have employees, you must get an SSN from each of them. Www.myfreetax.com Record the name and SSN of each employee exactly as they are shown on the employee's social security card. Www.myfreetax.com If the employee's name is not correct as shown on the card, the employee should request a new card from the SSA. Www.myfreetax.com This may occur if the employee's name was changed due to marriage or divorce. Www.myfreetax.com   Form W-4, Employee's Withholding Allowance Certificate, is completed by each employee so the correct federal income tax can be withheld from their pay. Www.myfreetax.com   If your employee does not have an SSN, he or she should file Form SS-5 with the SSA. Www.myfreetax.com Other payee. Www.myfreetax.com   If you make payments to someone who is not your employee and you must report the payments on an information return, get that person's SSN. Www.myfreetax.com If you must report payments to an organization, such as a corporation or partnership, you must get its EIN. Www.myfreetax.com   To get the payee's SSN or EIN, use Form W-9, Request for Taxpayer Identification Number and Certification. Www.myfreetax.com   A payee who does not provide you with an identification number may be subject to backup withholding. Www.myfreetax.com For information on backup withholding, see the Form W-9 instructions and the General Instructions for Certain Information Returns. Www.myfreetax.com Income Tax This part explains whether you have to file an income tax return and when you file it. Www.myfreetax.com It also explains how you pay the tax. Www.myfreetax.com Do I Have To File an Income Tax Return? You have to file an income tax return for 2013 if your net earnings from self-employment were $400 or more. Www.myfreetax.com If your net earnings from self-employment were less than $400, you still have to file an income tax return if you meet any other filing requirement listed in the Form 1040 instructions. Www.myfreetax.com How Do I File? File your income tax return on Form 1040 and attach Schedule C or Schedule C-EZ. Www.myfreetax.com Enter the net profit or loss from Schedule C or Schedule C-EZ on page 1 of Form 1040. Www.myfreetax.com Use Schedule C to figure your net profit or loss from your business. Www.myfreetax.com If you operated more than one business as a sole proprietorship, you must attach a separate Schedule C for each business. Www.myfreetax.com You can use the simpler Schedule C-EZ if you operated only one business as a sole proprietorship, you did not have a net loss, and you meet the other requirements listed in Part I of the schedule. Www.myfreetax.com IRS e-file (Electronic Filing) Please click here for the text description of the image. Www.myfreetax.com E-file logo You may be able to file your tax returns electronically using an IRS e-file option. Www.myfreetax.com Table 1-1 lists the benefits of IRS e-file. Www.myfreetax.com IRS e-file uses automation to replace most of the manual steps needed to process paper returns. Www.myfreetax.com As a result, the processing of e-file returns is faster and more accurate than the processing of paper returns. Www.myfreetax.com As with a paper return, you are responsible for making sure your return contains accurate information and is filed on time. Www.myfreetax.com Using e-file does not affect your chances of an IRS examination of your return. Www.myfreetax.com You can file most commonly used business forms using IRS e-file. Www.myfreetax.com For more information, visit IRS. Www.myfreetax.com gov. Www.myfreetax.com Electronic signatures. Www.myfreetax.com   Paperless filing is easier than you think and it's available to most taxpayers who file electronically—including those first-time filers who were 16 or older at the end of 2013. Www.myfreetax.com If you file electronically using tax preparation software or a tax professional, you will participate in the Self-Select PIN (personal identification number) program. Www.myfreetax.com If you are married filing jointly, you and your spouse will each need to create a PIN and enter these PINs as your electronic signatures. Www.myfreetax.com    To create a PIN, you must know your adjusted gross income (AGI) from your originally filed 2012 income tax return (not from an amended return, Form 1040X, or any math error notice from the IRS). Www.myfreetax.com You will also need to provide your date of birth (DOB). Www.myfreetax.com Make sure your DOB is accurate and matches the information on record with the Social Security Administration before you e-file. Www.myfreetax.com To do this, check your annual Social Security Statement. Www.myfreetax.com   With a Self-Select PIN, there is nothing to sign and nothing to mail—not even your Forms W-2. Www.myfreetax.com For more details on the Self-Select PIN program, visit IRS. Www.myfreetax.com gov. Www.myfreetax.com State returns. Www.myfreetax.com   In most states, you can file an electronic state return simultaneously with your federal return. Www.myfreetax.com For more information, check with your local IRS office, state tax agency, tax professional, or IRS. Www.myfreetax.com gov. Www.myfreetax.com Refunds. Www.myfreetax.com   You can have your refund check mailed to you, or you can have your refund deposited directly to your checking or savings account. Www.myfreetax.com   With e-file, your refund will be issued in half the time as when filing on paper. Www.myfreetax.com Most refunds are issued within 3 weeks. Www.myfreetax.com If you choose Direct Deposit, you can receive your refund in as few as 10 days. Www.myfreetax.com Offset against debts. Www.myfreetax.com   As with a paper return, you may not get all of your refund if you owe certain past-due amounts, such as federal tax, state tax, a student loan, or child support. Www.myfreetax.com You will be notified if the refund you claimed has been offset against your debts. Www.myfreetax.com Refund inquiries. Www.myfreetax.com   You can check the status of your refund if it has been at least 24 hours (4 weeks if you mailed a paper return) from the date you filed your return. Www.myfreetax.com Be sure to have a copy of your tax return available because you will need to know the filing status, the first social security number shown on the return, and the exact whole-dollar amount of the refund. Www.myfreetax.com To check on your refund, do one of the following. Www.myfreetax.com Go to IRS. Www.myfreetax.com gov and click on Where's My Refund. Www.myfreetax.com Call 1-800-829-4477 for automated refund information, and follow the recorded instructions. Www.myfreetax.com Call 1-800-829-1954 during the hours shown in your form instructions. Www.myfreetax.com Balance due. Www.myfreetax.com   If you owe tax, you must pay it by April 15, 2014, to avoid late-payment penalties and interest. Www.myfreetax.com You can make your payment electronically by scheduling an electronic funds withdrawal from your checking or savings account or by credit card. Www.myfreetax.com Using an Authorized IRS e-file Provider Many tax professionals can electronically file paperless returns for their clients. Www.myfreetax.com You have two options. Www.myfreetax.com You can prepare your return, take it to an authorized IRS e-file provider, and have the provider transmit it electronically to the IRS. Www.myfreetax.com You can have an authorized IRS e-file provider prepare your return and transmit it for you electronically. Www.myfreetax.com You will be asked to complete Form 8879, IRS e-file Signature Authorization, to authorize the provider to enter your self-selected PIN on your return. Www.myfreetax.com Depending on the provider and the specific services requested, a fee may be charged. Www.myfreetax.com To find an authorized IRS e-file provider near you, go to IRS. Www.myfreetax.com gov or look for an “Authorized IRS e-file Provider” sign. Www.myfreetax.com Using Your Personal Computer A computer with Internet access is all you need to file your tax return using IRS e-file. Www.myfreetax.com When you use your personal computer, you can e-file your return from your home any time of the day or night. Www.myfreetax.com Sign your return electronically using a self-selected PIN to complete the process. Www.myfreetax.com There is no signature form to submit or Forms W-2 to send in. Www.myfreetax.com Free Internet filing options. Www.myfreetax.com   More taxpayers can now prepare and e-file their individual income tax returns free using commercial tax preparation software accessible through IRS. Www.myfreetax.com gov or www. Www.myfreetax.com usa. Www.myfreetax.com gov. Www.myfreetax.com The IRS is partnering with the tax software industry to offer free preparation and filing services to a significant number of taxpayers. Www.myfreetax.com Security and privacy certificate programs will assure tax data is safe and secure. Www.myfreetax.com To see if you qualify for these services, visit the Return Preparation and Filing Options page at IRS. Www.myfreetax.com gov. Www.myfreetax.com   If you cannot use the free services, you can buy tax preparation software at various electronics stores or computer and office supply stores. Www.myfreetax.com You can also download software from the Internet or prepare and file your return completely online by using tax preparation software available on the Internet. Www.myfreetax.com Filing Through Employers and Financial Institutions Some businesses offer free e-file to their employees, members, or customers. Www.myfreetax.com Others offer it for a fee. Www.myfreetax.com Ask your employer or financial institution if they offer IRS e-file as an employee, member, or customer benefit. Www.myfreetax.com Free Help With Your Return Free help in preparing your return is available nationwide from IRS-trained volunteers. Www.myfreetax.com The Volunteer Income Tax Assistance (VITA) program is designed to help low-income taxpayers, and the Tax Counseling for the Elderly (TCE) program is designed to assist taxpayers age 60 or older with their tax returns. Www.myfreetax.com Some locations offer free electronic filing. Www.myfreetax.com Table 1-1. Www.myfreetax.com Benefits of IRS e-file Accuracy • Your chance of getting an error notice from the IRS is significantly reduced. Www.myfreetax.com Security • Your privacy and security are assured. Www.myfreetax.com Electronic signatures • Create your own personal identification number (PIN) and file a completely paperless return through your tax preparation software or tax professional. Www.myfreetax.com There is nothing to mail. Www.myfreetax.com Proof of acceptance • You receive an electronic acknowledgment within 48 hours that the IRS has accepted your return for processing. Www.myfreetax.com Fast refunds • You get your refund faster with Direct Deposit—in as few as 10 days. Www.myfreetax.com Free Internet filing options • Use IRS. Www.myfreetax.com gov to access commercial tax preparation and e-file services available at no cost to eligible taxpayers. Www.myfreetax.com Electronic payment options • Convenient, safe, and secure electronic payment options are available. Www.myfreetax.com E-file and pay your taxes in a single step. Www.myfreetax.com Schedule an electronic funds withdrawal from your checking or savings account (up to and including April 15, 2014) or pay by credit card. Www.myfreetax.com Federal/State filing • Prepare and file your federal and state tax returns together and double the benefits you get from e-file. Www.myfreetax.com When Is My Tax Return Due? Form 1040 for calendar year 2013 is due by April 15, 2014. Www.myfreetax.com If you use a fiscal year (explained in chapter 2), your return is due by the 15th day of the 4th month after the end of your fiscal year. Www.myfreetax.com If you file late, you may have to pay penalties and interest. Www.myfreetax.com If you cannot file your return on time, use Form 4868, Application for Automatic Extension of Time To File U. Www.myfreetax.com S. Www.myfreetax.com Individual Income Tax Return, to request an automatic 6-month extension. Www.myfreetax.com For calendar year taxpayers, this will extend the tax filing due date until October 15. Www.myfreetax.com Filing an extension does not extend the time to pay your taxes, only the time to file the tax return. Www.myfreetax.com How Do I Pay Income Tax? Federal income tax is a pay-as-you-go tax. Www.myfreetax.com You must pay it as you earn or receive income during the year. Www.myfreetax.com An employee usually has income tax withheld from his or her pay. Www.myfreetax.com If you do not pay your tax through withholding, or do not pay enough tax that way, you might have to pay estimated tax. Www.myfreetax.com You generally have to make estimated tax payments if you expect to owe taxes, including self-employment tax (discussed later), of $1,000 or more when you file your return. Www.myfreetax.com Use Form 1040-ES to figure and pay the tax. Www.myfreetax.com If you do not have to make estimated tax payments, you can pay any tax due when you file your return. Www.myfreetax.com For more information on estimated tax, see Publication 505, Tax Withholding and Estimated Tax. Www.myfreetax.com What are my payment options?   You can pay your estimated tax electronically using various options. Www.myfreetax.com If you pay electronically, there is no need to mail in Form 1040-ES payment vouchers. Www.myfreetax.com These options include: Paying electronically through the Electronic Federal Tax Payment System (EFTPS). Www.myfreetax.com Paying by authorizing an electronic funds withdrawal when you file Form 1040 electronically. Www.myfreetax.com Paying by credit or debit card over the phone or by Internet. Www.myfreetax.com Other options include crediting an overpayment from your 2013 return to your 2014 estimated tax, or mailing a check or money order with a Form 1040-ES payment voucher. Www.myfreetax.com EFTPS    To enroll in EFTPS, go to www. Www.myfreetax.com eftps. Www.myfreetax.com gov or call 1-800-555-4477. Www.myfreetax.com When you request a new EIN and you will have a tax obligation, you are automatically enrolled in EFTPS. Www.myfreetax.com Benefits of EFTPS: The chance of an error in making your payments is reduced. Www.myfreetax.com You receive immediate confirmation of every transaction. Www.myfreetax.com Penalty for underpayment of tax. Www.myfreetax.com   If you did not pay enough income tax and self-employment tax for 2013 by withholding or by making estimated tax payments, you may have to pay a penalty on the amount not paid. Www.myfreetax.com The IRS will figure the penalty for you and send you a bill. Www.myfreetax.com Or you can use Form 2210, Underpayment of Estimated Tax by Individuals, Estates, and Trusts, to see if you have to pay a penalty and to figure the penalty amount. Www.myfreetax.com For more information, see Publication 505. Www.myfreetax.com Self-Employment (SE) Tax Self-employment tax (SE tax) is a social security and Medicare tax primarily for individuals who work for themselves. Www.myfreetax.com It is similar to the social security and Medicare taxes withheld from the pay of most wage earners. Www.myfreetax.com If you earned income as a statutory employee, you do not pay SE tax on that income. Www.myfreetax.com Social security coverage. Www.myfreetax.com   Social security benefits are available to self-employed persons just as they are to wage earners. Www.myfreetax.com Your payments of SE tax contribute to your coverage under the social security system. Www.myfreetax.com Social security coverage provides you with retirement benefits, disability benefits, survivor benefits, and hospital insurance (Medicare) benefits. Www.myfreetax.com By not reporting all of your self-employment income, you could cause your social security benefits to be lower when you retire. Www.myfreetax.com How to become insured under social security. Www.myfreetax.com   You must be insured under the social security system before you begin receiving social security benefits. Www.myfreetax.com You are insured if you have the required number of credits (also called quarters of coverage), discussed next. Www.myfreetax.com Earning credits in 2013 and 2014. Www.myfreetax.com   For 2013, you received one credit, up to a maximum of four credits, for each $1,160 ($1,200 for 2014) of income subject to social security taxes. Www.myfreetax.com Therefore, for 2013, if you had income (self-employment and wages) of $4,640 that was subject to social security taxes, you receive four credits ($4,640 ÷ $1,160). Www.myfreetax.com   For an explanation of the number of credits you must have to be insured and the benefits available to you and your family under the social security program, consult your nearest Social Security Administration (SSA) office. Www.myfreetax.com    Making false statements to get or to increase social security benefits may subject you to penalties. Www.myfreetax.com The Social Security Administration (SSA) time limit for posting self-employment income. Www.myfreetax.com   Generally, the SSA will give you credit only for self-employment income reported on a tax return filed within 3 years, 3 months, and 15 days after the tax year you earned the income. Www.myfreetax.com If you file your tax return or report a change in your self-employment income after this time limit, the SSA may change its records, but only to remove or reduce the amount. Www.myfreetax.com The SSA will not change its records to increase your self-employment income. Www.myfreetax.com Who must pay self-employment tax. Www.myfreetax.com   You must pay SE tax and file Schedule SE (Form 1040) if either of the following applies. Www.myfreetax.com Your net earnings from self-employment (excluding church employee income) were $400 or more. Www.myfreetax.com You had church employee income of $108. Www.myfreetax.com 28 or more. Www.myfreetax.com The SE tax rules apply no matter how old you are and even if you are already receiving social security or Medicare benefits. Www.myfreetax.com SE tax rate. Www.myfreetax.com   For 2013, the SE tax rate on net earnings is 15. Www.myfreetax.com 3% (12. Www.myfreetax.com 4% social security tax plus 2. Www.myfreetax.com 9% Medicare tax). Www.myfreetax.com Maximum earnings subject to SE tax. Www.myfreetax.com   Only the first $113,700 of your combined wages, tips, and net earnings in 2013 is subject to any combination of the 12. Www.myfreetax.com 4% social security part of SE tax, social security tax, or railroad retirement (tier 1) tax. Www.myfreetax.com   All your combined wages, tips, and net earnings in 2013 are subject to any combination of the 2. Www.myfreetax.com 9% Medicare part of SE tax, social security tax, or railroad retirement (tier 1) tax. Www.myfreetax.com   If wages and tips you receive as an employee are subject to either social security or railroad retirement (tier 1) tax, or both, and total at least $113,700, do not pay the 12. Www.myfreetax.com 4% social security part of the SE tax on any of your net earnings. Www.myfreetax.com However, you must pay the 2. Www.myfreetax.com 9% Medicare part of the SE tax on all your net earnings. Www.myfreetax.com Deduct one-half of your SE tax as an adjustment to income on line 27 of Form 1040. Www.myfreetax.com   More information. Www.myfreetax.com   For information on methods of calculating SE tax, see Chapter 10, Self-Employment Tax. Www.myfreetax.com Table 1-2. Www.myfreetax.com Which Forms Must I File? IF you are liable for: THEN use Form: DUE by:1 Income tax 1040 and Schedule C or C-EZ2 15th day of 4th month after end of  tax year. Www.myfreetax.com Self-employment tax Schedule SE File with Form 1040. Www.myfreetax.com Estimated tax 1040-ES 15th day of 4th, 6th, and 9th months of tax year, and 15th day of 1st month after the end of tax year. Www.myfreetax.com Social security and Medicare taxes and income tax withholding 941 or 944 April 30, July 31, October 31, and January 313. Www.myfreetax.com     See Publication 15. Www.myfreetax.com Providing information on social security and Medicare taxes and income tax withholding W-2 (to employee)  W-2 and W-3 (to the Social Security Administration) January 313. Www.myfreetax.com   Last day of February (March 31 if filing electronically)3. Www.myfreetax.com Federal unemployment (FUTA) tax 940 January 313. Www.myfreetax.com     April 30, July 31, October 31, and January 31, but only if the liability for unpaid tax is more than $500. Www.myfreetax.com Filing information returns for payments to nonemployees and transactions with other persons See Information Returns Forms 1099 – to the recipient by January 31 and to the IRS by February 28 (March 31 if filing electronically). Www.myfreetax.com     Other forms – see the General Instructions for Certain Information Returns. Www.myfreetax.com Excise tax See Excise Taxes See the instructions to the forms. Www.myfreetax.com 1 If a due date falls on a Saturday, Sunday, or legal holiday, file by the next day that is not a Saturday, Sunday, or legal holiday. Www.myfreetax.com For more information, see Publication 509, Tax Calendars. Www.myfreetax.com 2 File a separate schedule for each business. Www.myfreetax.com 3 See the form instructions if you go out of business, change the form of your business, or stop paying wages. Www.myfreetax.com     Employment Taxes If you have employees, you will need to file forms to report employment taxes. Www.myfreetax.com Employment taxes include the following items. Www.myfreetax.com Social security and Medicare taxes. Www.myfreetax.com Federal income tax withholding. Www.myfreetax.com Federal unemployment (FUTA) tax. Www.myfreetax.com For more information, see Publication 15 (Circular E), Employer's Tax Guide. Www.myfreetax.com That publication explains your tax responsibilities as an employer. Www.myfreetax.com To help you determine whether the people working for you are your employees, see Publication 15-A, Employer's Supplemental Tax Guide. Www.myfreetax.com That publication has information to help you determine whether an individual is an independent contractor or an employee. Www.myfreetax.com If you incorrectly classify an employee as an independent contractor, you may be held liable for employment taxes for that worker plus a penalty. Www.myfreetax.com An independent contractor is someone who is self-employed. Www.myfreetax.com You do not generally have to withhold or pay any taxes on payments made to an independent contractor. Www.myfreetax.com Excise Taxes This section identifies some of the excise taxes you may have to pay and the forms you have to file if you do any of the following. Www.myfreetax.com Manufacture or sell certain products. Www.myfreetax.com Operate certain kinds of businesses. Www.myfreetax.com Use various kinds of equipment, facilities, or products. Www.myfreetax.com Receive payment for certain services. Www.myfreetax.com For more information on excise taxes, see Publication 510, Excise Taxes. Www.myfreetax.com Form 720. Www.myfreetax.com   The federal excise taxes reported on Form 720, Quarterly Federal Excise Tax Return, consist of several broad categories of taxes, including the following. Www.myfreetax.com Environmental taxes on the sale or use of ozone-depleting chemicals and imported products containing or manufactured with these chemicals. Www.myfreetax.com Communications and air transportation taxes. Www.myfreetax.com Fuel taxes. Www.myfreetax.com Tax on the first retail sale of heavy trucks, trailers, and tractors. Www.myfreetax.com Manufacturers taxes on the sale or use of a variety of different articles. Www.myfreetax.com Tax on indoor tanning services. Www.myfreetax.com Form 2290. Www.myfreetax.com   There is a federal excise tax on the use of certain trucks, truck tractors, and buses on public highways. Www.myfreetax.com The tax applies to vehicles having a taxable gross weight of 55,000 pounds or more. Www.myfreetax.com Report the tax on Form 2290, Heavy Highway Vehicle Use Tax Return. Www.myfreetax.com For more information, see the Instructions for Form 2290. Www.myfreetax.com Depositing excise taxes. Www.myfreetax.com   If you have to file a quarterly excise tax return on Form 720, you may have to deposit your excise taxes before the return is due. Www.myfreetax.com For details on depositing excise taxes, see the Instructions for Form 720. Www.myfreetax.com Information Returns If you make or receive payments in your business, you may have to report them to the IRS on information returns. Www.myfreetax.com The IRS compares the payments shown on the information returns with each person's income tax return to see if the payments were included in income. Www.myfreetax.com You must give a copy of each information return you are required to file to the recipient or payer. Www.myfreetax.com In addition to the forms described below, you may have to use other returns to report certain kinds of payments or transactions. Www.myfreetax.com For more details on information returns and when you have to file them, see the General Instructions for Certain Information Returns. Www.myfreetax.com Form 1099-MISC. Www.myfreetax.com   Use Form 1099-MISC, Miscellaneous Income, to report certain payments you make in your business. Www.myfreetax.com These payments include the following items. Www.myfreetax.com Payments of $600 or more for services performed for your business by people not treated as your employees, such as fees to subcontractors, attorneys, accountants, or directors. Www.myfreetax.com Rent payments of $600 or more, other than rents paid to real estate agents. Www.myfreetax.com Prizes and awards of $600 or more that are not for services, such as winnings on TV or radio shows. Www.myfreetax.com Royalty payments of $10 or more. Www.myfreetax.com Payments to certain crew members by operators of fishing boats. Www.myfreetax.com You also use Form 1099-MISC to report your sales of $5,000 or more of consumer goods to a person for resale anywhere other than in a permanent retail establishment. Www.myfreetax.com Form W-2. Www.myfreetax.com   You must file Form W-2, Wage and Tax Statement, to report payments to your employees, such as wages, tips, and other compensation, withheld income, social security, and Medicare taxes. Www.myfreetax.com You can file Form W-2 online. Www.myfreetax.com For more information about Form W-2, see the General Instructions for Forms W-2 and W-3. Www.myfreetax.com Penalties. Www.myfreetax.com   The law provides for the following penalties if you do not file Form 1099-MISC or Form W-2 or do not correctly report the information. Www.myfreetax.com For more information, see the General Instructions for Certain Information Returns. Www.myfreetax.com Failure to file information returns. Www.myfreetax.com This penalty applies if you do not file information returns by the due date, do not include all required information, or report incorrect information. Www.myfreetax.com Failure to furnish correct payee statements. Www.myfreetax.com This penalty applies if you do not furnish a required statement to a payee by the required date, do not include all required information, or report incorrect information. Www.myfreetax.com Waiver of penalties. Www.myfreetax.com   These penalties will not apply if you can show that the failure was due to reasonable cause and not willful neglect. Www.myfreetax.com   In addition, there is no penalty for failure to include all required information, or for including incorrect information, on a de minimis (small) number of information returns if you correct the errors by August 1 of the year the returns are due. Www.myfreetax.com (A de minimis number of returns is the greater of 10 or ½ of 1% of the total number of returns you are required to file for the year. Www.myfreetax.com ) Form 8300. Www.myfreetax.com   You must file Form 8300, Report of Cash Payments Over $10,000 Received in a Trade or Business, if you receive more than $10,000 in cash in one transaction, or two or more related business transactions. Www.myfreetax.com Cash includes U. Www.myfreetax.com S. Www.myfreetax.com and foreign coin and currency. Www.myfreetax.com It also includes certain monetary instruments such as cashier's and traveler's checks and money orders. Www.myfreetax.com Cash does not include a check drawn on an individual's personal account (personal check). Www.myfreetax.com For more information, see Publication 1544, Reporting Cash Payments of Over $10,000 (Received in a Trade or Business). Www.myfreetax.com Penalties. Www.myfreetax.com   There are civil and criminal penalties, including up to 5 years in prison, for not filing Form 8300, filing (or causing the filing of) a false or fraudulent Form 8300, or structuring a transaction to evade reporting requirements. Www.myfreetax.com Table 1-3. Www.myfreetax.com Going Out of Business Checklists (Note. Www.myfreetax.com The following checklists highlight the typical final forms and schedules you may need to file if you ever go out of business. Www.myfreetax.com For more information, see the instructions for the listed forms. Www.myfreetax.com ) IF you are liable for:   THEN you may need to: Income tax □ File Schedule C or C-EZ with your Form 1040 for the year in which you go out of business. Www.myfreetax.com   □ File Form 4797 with your Form 1040 for each year in which you sell or exchange property used in your business or in which the business use of certain section 179 or listed property drops to 50% or less. Www.myfreetax.com   □ File Form 8594 with your Form 1040 if you sold your business. Www.myfreetax.com Self-employment tax □ File Schedule SE with your Form 1040 for the year in which you go out of business. Www.myfreetax.com Employment taxes □ File Form 941 (or Form 944) for the calendar quarter in which you make final wage payments. Www.myfreetax.com Note. Www.myfreetax.com Do not forget to check the box and enter the date final wages were paid on line 15 of Form 941 or line 14 of Form 944. Www.myfreetax.com   □ File Form 940 for the calendar year in which final wages were paid. Www.myfreetax.com Note. Www.myfreetax.com Do not forget to check box d, Final: Business closed or stopped paying wages, under Type of Return. Www.myfreetax.com Information returns □ Provide Forms W-2 to your employees for the calendar year in which you make final wage payments. Www.myfreetax.com Note. Www.myfreetax.com These forms are generally due by the due date of your final Form 941 or Form 944. Www.myfreetax.com   □ File Form W-3 to file Forms W-2. Www.myfreetax.com Note. Www.myfreetax.com These forms are generally due within 1 month after the due date of your final Form 941 or Form 944. Www.myfreetax.com   □ Provide Forms 1099-MISC to each person to whom you have paid at least $600 for services (including parts and materials) during the calendar year in which you go out of business. Www.myfreetax.com   □ File Form 1096 to file Forms 1099-MISC. Www.myfreetax.com Prev  Up  Next   Home   More Online Publications