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1040 Online

1040 online Publication 15-B - Main Content Table of Contents 1. 1040 online Fringe Benefit OverviewAre Fringe Benefits Taxable? Cafeteria Plans Simple Cafeteria Plans 2. 1040 online Fringe Benefit Exclusion RulesAccident and Health Benefits Achievement Awards Adoption Assistance Athletic Facilities De Minimis (Minimal) Benefits Dependent Care Assistance Educational Assistance Employee Discounts Employee Stock Options Employer-Provided Cell Phones Group-Term Life Insurance Coverage Health Savings Accounts Lodging on Your Business Premises Meals Moving Expense Reimbursements No-Additional-Cost Services Retirement Planning Services Transportation (Commuting) Benefits Tuition Reduction Working Condition Benefits 3. 1040 online Fringe Benefit Valuation RulesGeneral Valuation Rule Cents-Per-Mile Rule Commuting Rule Lease Value Rule Unsafe Conditions Commuting Rule 4. 1040 online Rules for Withholding, Depositing, and ReportingTransfer of property. 1040 online Amount of deposit. 1040 online Limitation. 1040 online Conformity rules. 1040 online Election not to withhold income tax. 1040 online How To Get Tax Help 1. 1040 online Fringe Benefit Overview A fringe benefit is a form of pay for the performance of services. 1040 online For example, you provide an employee with a fringe benefit when you allow the employee to use a business vehicle to commute to and from work. 1040 online Performance of services. 1040 online   A person who performs services for you does not have to be your employee. 1040 online A person may perform services for you as an independent contractor, partner, or director. 1040 online Also, for fringe benefit purposes, treat a person who agrees not to perform services (such as under a covenant not to compete) as performing services. 1040 online Provider of benefit. 1040 online   You are the provider of a fringe benefit if it is provided for services performed for you. 1040 online You are considered the provider of a fringe benefit even if a third party, such as your client or customer, provides the benefit to your employee for services the employee performs for you. 1040 online For example, if, in exchange for goods or services, your customer provides day care services as a fringe benefit to your employees for services they provide for you as their employer, then you are the provider of this fringe benefit even though the customer is actually providing the day care. 1040 online Recipient of benefit. 1040 online   The person who performs services for you is considered the recipient of a fringe benefit provided for those services. 1040 online That person may be considered the recipient even if the benefit is provided to someone who did not perform services for you. 1040 online For example, your employee may be the recipient of a fringe benefit you provide to a member of the employee's family. 1040 online Are Fringe Benefits Taxable? Any fringe benefit you provide is taxable and must be included in the recipient's pay unless the law specifically excludes it. 1040 online Section 2 discusses the exclusions that apply to certain fringe benefits. 1040 online Any benefit not excluded under the rules discussed in section 2 is taxable. 1040 online Including taxable benefits in pay. 1040 online   You must include in a recipient's pay the amount by which the value of a fringe benefit is more than the sum of the following amounts. 1040 online Any amount the law excludes from pay. 1040 online Any amount the recipient paid for the benefit. 1040 online The rules used to determine the value of a fringe benefit are discussed in section 3. 1040 online   If the recipient of a taxable fringe benefit is your employee, the benefit is subject to employment taxes and must be reported on Form W-2, Wage and Tax Statement. 1040 online However, you can use special rules to withhold, deposit, and report the employment taxes. 1040 online These rules are discussed in section 4. 1040 online   If the recipient of a taxable fringe benefit is not your employee, the benefit is not subject to employment taxes. 1040 online However, you may have to report the benefit on one of the following information returns. 1040 online If the recipient receives the benefit as: Use: An independent contractor Form 1099-MISC, Miscellaneous Income A partner Schedule K-1 (Form 1065), Partner's Share of Income, Deductions, Credits, etc. 1040 online For more information, see the instructions for the forms listed above. 1040 online Cafeteria Plans A cafeteria plan, including a flexible spending arrangement, is a written plan that allows your employees to choose between receiving cash or taxable benefits instead of certain qualified benefits for which the law provides an exclusion from wages. 1040 online If an employee chooses to receive a qualified benefit under the plan, the fact that the employee could have received cash or a taxable benefit instead will not make the qualified benefit taxable. 1040 online Generally, a cafeteria plan does not include any plan that offers a benefit that defers pay. 1040 online However, a cafeteria plan can include a qualified 401(k) plan as a benefit. 1040 online Also, certain life insurance plans maintained by educational institutions can be offered as a benefit even though they defer pay. 1040 online Qualified benefits. 1040 online   A cafeteria plan can include the following benefits discussed in section 2. 1040 online Accident and health benefits (but not Archer medical savings accounts (Archer MSAs) or long-term care insurance). 1040 online Adoption assistance. 1040 online Dependent care assistance. 1040 online Group-term life insurance coverage (including costs that cannot be excluded from wages). 1040 online Health savings accounts (HSAs). 1040 online Distributions from an HSA may be used to pay eligible long-term care insurance premiums or qualified long-term care services. 1040 online Benefits not allowed. 1040 online   A cafeteria plan cannot include the following benefits discussed in section 2. 1040 online Archer MSAs. 1040 online See Accident and Health Benefits in section 2. 1040 online Athletic facilities. 1040 online De minimis (minimal) benefits. 1040 online Educational assistance. 1040 online Employee discounts. 1040 online Employer-provided cell phones. 1040 online Lodging on your business premises. 1040 online Meals. 1040 online Moving expense reimbursements. 1040 online No-additional-cost services. 1040 online Transportation (commuting) benefits. 1040 online Tuition reduction. 1040 online Working condition benefits. 1040 online It also cannot include scholarships or fellowships (discussed in Publication 970, Tax Benefits for Education). 1040 online $2,500 limit on a health flexible spending arrangement (FSA). 1040 online   For plan years beginning after December 31, 2012, a cafeteria plan may not allow an employee to request salary reduction contributions for a health FSA in excess of $2,500. 1040 online For plan years beginning after December 31, 2013, the limit is unchanged at $2,500. 1040 online   A cafeteria plan offering a health FSA must be amended to specify the $2,500 limit (or any lower limit set by the employer). 1040 online While cafeteria plans generally must be amended on a prospective basis, an amendment that is adopted on or before December 31, 2014, may be made effective retroactively, provided that in operation the cafeteria plan meets the limit for plan years beginning after December 31, 2012. 1040 online A cafeteria plan that does not limit health FSA contributions to the dollar limit is not a cafeteria plan and all benefits offered under the plan are includible in the employee's gross income. 1040 online   For more information, see Notice 2012-40, 2012-26 I. 1040 online R. 1040 online B. 1040 online 1046, available at www. 1040 online irs. 1040 online gov/irb/2012-26_IRB/ar09. 1040 online html. 1040 online Employee. 1040 online   For these plans, treat the following individuals as employees. 1040 online A current common-law employee. 1040 online See section 2 in Publication 15 (Circular E) for more information. 1040 online A full-time life insurance agent who is a current statutory employee. 1040 online A leased employee who has provided services to you on a substantially full-time basis for at least a year if the services are performed under your primary direction or control. 1040 online Exception for S corporation shareholders. 1040 online   Do not treat a 2% shareholder of an S corporation as an employee of the corporation for this purpose. 1040 online A 2% shareholder for this purpose is someone who directly or indirectly owns (at any time during the year) more than 2% of the corporation's stock or stock with more than 2% of the voting power. 1040 online Treat a 2% shareholder as you would a partner in a partnership for fringe benefit purposes, but do not treat the benefit as a reduction in distributions to the 2% shareholder. 1040 online Plans that favor highly compensated employees. 1040 online   If your plan favors highly compensated employees as to eligibility to participate, contributions, or benefits, you must include in their wages the value of taxable benefits they could have selected. 1040 online A plan you maintain under a collective bargaining agreement does not favor highly compensated employees. 1040 online   A highly compensated employee for this purpose is any of the following employees. 1040 online An officer. 1040 online A shareholder who owns more than 5% of the voting power or value of all classes of the employer's stock. 1040 online An employee who is highly compensated based on the facts and circumstances. 1040 online A spouse or dependent of a person described in (1), (2), or (3). 1040 online Plans that favor key employees. 1040 online   If your plan favors key employees, you must include in their wages the value of taxable benefits they could have selected. 1040 online A plan favors key employees if more than 25% of the total of the nontaxable benefits you provide for all employees under the plan go to key employees. 1040 online However, a plan you maintain under a collective bargaining agreement does not favor key employees. 1040 online   A key employee during 2014 is generally an employee who is either of the following. 1040 online An officer having annual pay of more than $170,000. 1040 online An employee who for 2014 is either of the following. 1040 online A 5% owner of your business. 1040 online A 1% owner of your business whose annual pay was more than $150,000. 1040 online Simple Cafeteria Plans Eligible employers meeting contribution requirements and eligibility and participation requirements can establish a simple cafeteria plan. 1040 online Simple cafeteria plans are treated as meeting the nondiscrimination requirements of a cafeteria plan and certain benefits under a cafeteria plan. 1040 online Eligible employer. 1040 online   You are an eligible employer if you employ an average of 100 or fewer employees during either of the 2 preceding years. 1040 online If your business was not in existence throughout the preceding year, you are eligible if you reasonably expect to employ an average of 100 or fewer employees in the current year. 1040 online If you establish a simple cafeteria plan in a year that you employ an average of 100 or fewer employees, you are considered an eligible employer for any subsequent year as long as you do not employ an average of 200 or more employees in a subsequent year. 1040 online Eligibility and participation requirements. 1040 online   These requirements are met if all employees who had at least 1,000 hours of service for the preceding plan year are eligible to participate and each employee eligible to participate in the plan may elect any benefit available under the plan. 1040 online You may elect to exclude from the plan employees who: Are under age 21 before the close of the plan year, Have less than 1 year of service with you as of any day during the plan year, Are covered under a collective bargaining agreement, or Are nonresident aliens working outside the United States whose income did not come from a U. 1040 online S. 1040 online source. 1040 online Contribution requirements. 1040 online   You must make a contribution to provide qualified benefits on behalf of each qualified employee in an amount equal to: A uniform percentage (not less than 2%) of the employee’s compensation for the plan year, or An amount which is at least 6% of the employee’s compensation for the plan year or twice the amount of the salary reduction contributions of each qualified employee, whichever is less. 1040 online If the contribution requirements are met using option (2), the rate of contribution to any salary reduction contribution of a highly compensated or key employee can not be greater than the rate of contribution to any other employee. 1040 online More information. 1040 online   For more information about cafeteria plans, see section 125 of the Internal Revenue Code and its regulations. 1040 online 2. 1040 online Fringe Benefit Exclusion Rules This section discusses the exclusion rules that apply to fringe benefits. 1040 online These rules exclude all or part of the value of certain benefits from the recipient's pay. 1040 online The excluded benefits are not subject to federal income tax withholding. 1040 online Also, in most cases, they are not subject to social security, Medicare, or federal unemployment (FUTA) tax and are not reported on Form W-2. 1040 online This section discusses the exclusion rules for the following fringe benefits. 1040 online Accident and health benefits. 1040 online Achievement awards. 1040 online Adoption assistance. 1040 online Athletic facilities. 1040 online De minimis (minimal) benefits. 1040 online Dependent care assistance. 1040 online Educational assistance. 1040 online Employee discounts. 1040 online Employee stock options. 1040 online Employer-provided cell phones. 1040 online Group-term life insurance coverage. 1040 online Health savings accounts (HSAs). 1040 online Lodging on your business premises. 1040 online Meals. 1040 online Moving expense reimbursements. 1040 online No-additional-cost services. 1040 online Retirement planning services. 1040 online Transportation (commuting) benefits. 1040 online Tuition reduction. 1040 online Working condition benefits. 1040 online See Table 2-1, later, for an overview of the employment tax treatment of these benefits. 1040 online Table 2-1. 1040 online Special Rules for Various Types of Fringe Benefits (For more information, see the full discussion in this section. 1040 online ) Treatment Under Employment Taxes Type of Fringe Benefit Income Tax Withholding Social Security and Medicare (including Additional Medicare Tax when wages are paid in excess of $200,000) Federal Unemployment (FUTA) Accident and health benefits Exempt1,2, except for long-term care benefits provided through a flexible spending or similar arrangement. 1040 online Exempt, except for certain payments to S corporation employees who are 2% shareholders. 1040 online Exempt Achievement awards Exempt1 up to $1,600 for qualified plan awards ($400 for nonqualified awards). 1040 online Adoption assistance Exempt1,3 Taxable Taxable Athletic facilities Exempt if substantially all use during the calendar year is by employees, their spouses, and their dependent children and the facility is operated by the employer on premises owned or leased by the employer. 1040 online De minimis (minimal) benefits Exempt Exempt Exempt Dependent care assistance Exempt3 up to certain limits, $5,000 ($2,500 for married employee filing separate return). 1040 online Educational assistance Exempt up to $5,250 of benefits each year. 1040 online (See Educational Assistance , later in this section. 1040 online ) Employee discounts Exempt3 up to certain limits. 1040 online (See Employee Discounts , later in this section. 1040 online ) Employee stock options See Employee Stock Options , later in this section. 1040 online Employer-provided cell phones Exempt if provided primarily for noncompensatory business purposes. 1040 online Group-term life insurance coverage Exempt Exempt1,4, 7 up to cost of $50,000 of coverage. 1040 online (Special rules apply to former employees. 1040 online ) Exempt Health savings accounts (HSAs) Exempt for qualified individuals up to the HSA contribution limits. 1040 online (See Health Savings Accounts , later in this section. 1040 online ) Lodging on your business premises Exempt1 if furnished for your convenience as a condition of employment. 1040 online Meals Exempt if furnished on your business premises for your convenience. 1040 online Exempt if de minimis. 1040 online Moving expense reimbursements Exempt1 if expenses would be deductible if the employee had paid them. 1040 online No-additional-cost services Exempt3 Exempt3 Exempt3 Retirement planning services Exempt5 Exempt5 Exempt5 Transportation (commuting) benefits Exempt1 up to certain limits if for rides in a commuter highway vehicle and/or transit passes ($130), qualified parking ($250), or qualified bicycle commuting reimbursement6 ($20). 1040 online (See Transportation (Commuting) Benefits , later in this section. 1040 online ) Exempt if de minimis. 1040 online Tuition reduction Exempt3 if for undergraduate education (or graduate education if the employee performs teaching or research activities). 1040 online Working condition benefits Exempt Exempt Exempt 1 Exemption does not apply to S corporation employees who are 2% shareholders. 1040 online 2 Exemption does not apply to certain highly compensated employees under a self-insured plan that favors those employees. 1040 online 3 Exemption does not apply to certain highly compensated employees under a program that favors those employees. 1040 online 4 Exemption does not apply to certain key employees under a plan that favors those employees. 1040 online 5 Exemption does not apply to services for tax preparation, accounting, legal, or brokerage services. 1040 online 6 If the employee receives a qualified bicycle commuting reimbursement in a qualified bicycle commuting month, the employee cannot receive commuter highway vehicle, transit pass, or qualified parking benefits in that same month. 1040 online 7 You must include in your employee's wages the cost of group-term life insurance beyond $50,000 worth of coverage, reduced by the amount the employee paid toward the insurance. 1040 online Report it as wages in boxes 1, 3, and 5 of the employee's Form W-2. 1040 online Also, show it in box 12 with code “C. 1040 online ” The amount is subject to social security and Medicare taxes, and you may, at your option, withhold federal income tax. 1040 online Accident and Health Benefits This exclusion applies to contributions you make to an accident or health plan for an employee, including the following. 1040 online Contributions to the cost of accident or health insurance including qualified long-term care insurance. 1040 online Contributions to a separate trust or fund that directly or through insurance provides accident or health benefits. 1040 online Contributions to Archer MSAs or health savings accounts (discussed in Publication 969, Health Savings Accounts and Other Tax-Favored Health Plans). 1040 online This exclusion also applies to payments you directly or indirectly make to an employee under an accident or health plan for employees that are either of the following. 1040 online Payments or reimbursements of medical expenses. 1040 online Payments for specific injuries or illnesses (such as the loss of the use of an arm or leg). 1040 online The payments must be figured without regard to any period of absence from work. 1040 online Accident or health plan. 1040 online   This is an arrangement that provides benefits for your employees, their spouses, their dependents, and their children (under age 27) in the event of personal injury or sickness. 1040 online The plan may be insured or noninsured and does not need to be in writing. 1040 online Employee. 1040 online   For this exclusion, treat the following individuals as employees. 1040 online A current common-law employee. 1040 online A full-time life insurance agent who is a current statutory employee. 1040 online A retired employee. 1040 online A former employee you maintain coverage for based on the employment relationship. 1040 online A widow or widower of an individual who died while an employee. 1040 online A widow or widower of a retired employee. 1040 online For the exclusion of contributions to an accident or health plan, a leased employee who has provided services to you on a substantially full-time basis for at least a year if the services are performed under your primary direction or control. 1040 online Special rule for certain government plans. 1040 online   For certain government accident and health plans, payments to a deceased plan participant's beneficiary may qualify for the exclusion from gross income if the other requirements for exclusion are met. 1040 online See section 105(j) for details. 1040 online Exception for S corporation shareholders. 1040 online   Do not treat a 2% shareholder of an S corporation as an employee of the corporation for this purpose. 1040 online A 2% shareholder is someone who directly or indirectly owns (at any time during the year) more than 2% of the corporation's stock or stock with more than 2% of the voting power. 1040 online Treat a 2% shareholder as you would a partner in a partnership for fringe benefit purposes, but do not treat the benefit as a reduction in distributions to the 2% shareholder. 1040 online Exclusion from wages. 1040 online   You can generally exclude the value of accident or health benefits you provide to an employee from the employee's wages. 1040 online Exception for certain long-term care benefits. 1040 online   You cannot exclude contributions to the cost of long-term care insurance from an employee's wages subject to federal income tax withholding if the coverage is provided through a flexible spending or similar arrangement. 1040 online This is a benefit program that reimburses specified expenses up to a maximum amount that is reasonably available to the employee and is less than five times the total cost of the insurance. 1040 online However, you can exclude these contributions from the employee's wages subject to social security, Medicare, and federal unemployment (FUTA) taxes. 1040 online S corporation shareholders. 1040 online   Because you cannot treat a 2% shareholder of an S corporation as an employee for this exclusion, you must include the value of accident or health benefits you provide to the employee in the employee's wages subject to federal income tax withholding. 1040 online However, you can exclude the value of these benefits (other than payments for specific injuries or illnesses) from the employee's wages subject to social security, Medicare, and FUTA taxes. 1040 online Exception for highly compensated employees. 1040 online   If your plan is a self-insured medical reimbursement plan that favors highly compensated employees, you must include all or part of the amounts you pay to these employees in their wages subject to federal income tax withholding. 1040 online However, you can exclude these amounts (other than payments for specific injuries or illnesses) from the employee's wages subject to social security, Medicare, and FUTA taxes. 1040 online   A self-insured plan is a plan that reimburses your employees for medical expenses not covered by an accident or health insurance policy. 1040 online   A highly compensated employee for this exception is any of the following individuals. 1040 online One of the five highest paid officers. 1040 online An employee who owns (directly or indirectly) more than 10% in value of the employer's stock. 1040 online An employee who is among the highest paid 25% of all employees (other than those who can be excluded from the plan). 1040 online   For more information on this exception, see section 105(h) of the Internal Revenue Code and its regulations. 1040 online COBRA premiums. 1040 online   The exclusion for accident and health benefits applies to amounts you pay to maintain medical coverage for a current or former employee under the Combined Omnibus Budget Reconciliation Act of 1986 (COBRA). 1040 online The exclusion applies regardless of the length of employment, whether you directly pay the premiums or reimburse the former employee for premiums paid, and whether the employee's separation is permanent or temporary. 1040 online Achievement Awards This exclusion applies to the value of any tangible personal property you give to an employee as an award for either length of service or safety achievement. 1040 online The exclusion does not apply to awards of cash, cash equivalents, gift certificates, or other intangible property such as vacations, meals, lodging, tickets to theater or sporting events, stocks, bonds, and other securities. 1040 online The award must meet the requirements for employee achievement awards discussed in chapter 2 of Publication 535, Business Expenses. 1040 online Employee. 1040 online   For this exclusion, treat the following individuals as employees. 1040 online A current employee. 1040 online A former common-law employee you maintain coverage for in consideration of or based on an agreement relating to prior service as an employee. 1040 online A leased employee who has provided services to you on a substantially full-time basis for at least a year if the services are performed under your primary direction or control. 1040 online Exception for S corporation shareholders. 1040 online   Do not treat a 2% shareholder of an S corporation as an employee of the corporation for this purpose. 1040 online A 2% shareholder is someone who directly or indirectly owns (at any time during the year) more than 2% of the corporation's stock or stock with more than 2% of the voting power. 1040 online Treat a 2% shareholder as you would a partner in a partnership for fringe benefit purposes, but do not treat the benefit as a reduction in distributions to the 2% shareholder. 1040 online Exclusion from wages. 1040 online   You can generally exclude the value of achievement awards you give to an employee from the employee's wages if their cost is not more than the amount you can deduct as a business expense for the year. 1040 online The excludable annual amount is $1,600 ($400 for awards that are not “qualified plan awards”). 1040 online See chapter 2 of Publication 535 for more information about the limit on deductions for employee achievement awards. 1040 online    To determine for 2014 whether an achievement award is a “qualified plan award” under the deduction rules described in Publication 535, treat any employee who received more than $115,000 in pay for 2013 as a highly compensated employee. 1040 online   If the cost of awards given to an employee is more than your allowable deduction, include in the employee's wages the larger of the following amounts. 1040 online The part of the cost that is more than your allowable deduction (up to the value of the awards). 1040 online The amount by which the value of the awards exceeds your allowable deduction. 1040 online Exclude the remaining value of the awards from the employee's wages. 1040 online Adoption Assistance An adoption assistance program is a separate written plan of an employer that meets all of the following requirements. 1040 online It benefits employees who qualify under rules set up by you, which do not favor highly compensated employees or their dependents. 1040 online To determine whether your plan meets this test, do not consider employees excluded from your plan who are covered by a collective bargaining agreement, if there is evidence that adoption assistance was a subject of good-faith bargaining. 1040 online It does not pay more than 5% of its payments during the year for shareholders or owners (or their spouses or dependents). 1040 online A shareholder or owner is someone who owns (on any day of the year) more than 5% of the stock or of the capital or profits interest of your business. 1040 online You give reasonable notice of the plan to eligible employees. 1040 online Employees provide reasonable substantiation that payments or reimbursements are for qualifying expenses. 1040 online For this exclusion, a highly compensated employee for 2014 is an employee who meets either of the following tests. 1040 online The employee was a 5% owner at any time during the year or the preceding year. 1040 online The employee received more than $115,000 in pay for the preceding year. 1040 online You can choose to ignore test (2) if the employee was not also in the top 20% of employees when ranked by pay for the preceding year. 1040 online You must exclude all payments or reimbursements you make under an adoption assistance program for an employee's qualified adoption expenses from the employee's wages subject to federal income tax withholding. 1040 online However, you cannot exclude these payments from wages subject to social security, Medicare, and federal unemployment (FUTA) taxes. 1040 online For more information, see the Instructions for Form 8839, Qualified Adoption Expenses. 1040 online You must report all qualifying adoption expenses you paid or reimbursed under your adoption assistance program for each employee for the year in box 12 of the employee's Form W-2. 1040 online Use code “T” to identify this amount. 1040 online Exception for S corporation shareholders. 1040 online   For this exclusion, do not treat a 2% shareholder of an S corporation as an employee of the corporation. 1040 online A 2% shareholder is someone who directly or indirectly owns (at any time during the year) more than 2% of the corporation's stock or stock with more than 2% of the voting power. 1040 online Treat a 2% shareholder as you would a partner in a partnership for fringe benefit purposes, including using the benefit as a reduction in distributions to the 2% shareholder. 1040 online Athletic Facilities You can exclude the value of an employee's use of an on-premises gym or other athletic facility you operate from an employee's wages if substantially all use of the facility during the calendar year is by your employees, their spouses, and their dependent children. 1040 online For this purpose, an employee's dependent child is a child or stepchild who is the employee's dependent or who, if both parents are deceased, has not attained the age of 25. 1040 online On-premises facility. 1040 online   The athletic facility must be located on premises you own or lease. 1040 online It does not have to be located on your business premises. 1040 online However, the exclusion does not apply to an athletic facility for residential use, such as athletic facilities that are part of a resort. 1040 online Employee. 1040 online   For this exclusion, treat the following individuals as employees. 1040 online A current employee. 1040 online A former employee who retired or left on disability. 1040 online A widow or widower of an individual who died while an employee. 1040 online A widow or widower of a former employee who retired or left on disability. 1040 online A leased employee who has provided services to you on a substantially full-time basis for at least a year if the services are performed under your primary direction or control. 1040 online A partner who performs services for a partnership. 1040 online De Minimis (Minimal) Benefits You can exclude the value of a de minimis benefit you provide to an employee from the employee's wages. 1040 online A de minimis benefit is any property or service you provide to an employee that has so little value (taking into account how frequently you provide similar benefits to your employees) that accounting for it would be unreasonable or administratively impracticable. 1040 online Cash and cash equivalent fringe benefits (for example, use of gift card, charge card, or credit card), no matter how little, are never excludable as a de minimis benefit, except for occasional meal money or transportation fare. 1040 online Examples of de minimis benefits include the following. 1040 online Personal use of an employer-provided cell phone provided primarily for noncompensatory business purposes. 1040 online See Employer-Provided Cell Phones , later in this section, for details. 1040 online Occasional personal use of a company copying machine if you sufficiently control its use so that at least 85% of its use is for business purposes. 1040 online Holiday gifts, other than cash, with a low fair market value. 1040 online Group-term life insurance payable on the death of an employee's spouse or dependent if the face amount is not more than $2,000. 1040 online Meals. 1040 online See Meals , later in this section, for details. 1040 online Occasional parties or picnics for employees and their guests. 1040 online Occasional tickets for theater or sporting events. 1040 online Transportation fare. 1040 online See Transportation (Commuting) Benefits , later in this section, for details. 1040 online Employee. 1040 online   For this exclusion, treat any recipient of a de minimis benefit as an employee. 1040 online Dependent Care Assistance This exclusion applies to household and dependent care services you directly or indirectly pay for or provide to an employee under a dependent care assistance program that covers only your employees. 1040 online The services must be for a qualifying person's care and must be provided to allow the employee to work. 1040 online These requirements are basically the same as the tests the employee would have to meet to claim the dependent care credit if the employee paid for the services. 1040 online For more information, see Qualifying Person Test and Work-Related Expense Test in Publication 503, Child and Dependent Care Expenses. 1040 online Employee. 1040 online   For this exclusion, treat the following individuals as employees. 1040 online A current employee. 1040 online A leased employee who has provided services to you on a substantially full-time basis for at least a year if the services are performed under your primary direction or control. 1040 online Yourself (if you are a sole proprietor). 1040 online A partner who performs services for a partnership. 1040 online Exclusion from wages. 1040 online   You can exclude the value of benefits you provide to an employee under a dependent care assistance program from the employee's wages if you reasonably believe that the employee can exclude the benefits from gross income. 1040 online   An employee can generally exclude from gross income up to $5,000 of benefits received under a dependent care assistance program each year. 1040 online This limit is reduced to $2,500 for married employees filing separate returns. 1040 online   However, the exclusion cannot be more than the smaller of the earned income of either the employee or employee's spouse. 1040 online Special rules apply to determine the earned income of a spouse who is either a student or not able to care for himself or herself. 1040 online For more information on the earned income limit, see Publication 503. 1040 online Exception for highly compensated employees. 1040 online   You cannot exclude dependent care assistance from the wages of a highly compensated employee unless the benefits provided under the program do not favor highly compensated employees and the program meets the requirements described in section 129(d) of the Internal Revenue Code. 1040 online   For this exclusion, a highly compensated employee for 2014 is an employee who meets either of the following tests. 1040 online The employee was a 5% owner at any time during the year or the preceding year. 1040 online The employee received more than $115,000 in pay for the preceding year. 1040 online You can choose to ignore test (2) if the employee was not also in the top 20% of employees when ranked by pay for the preceding year. 1040 online Form W-2. 1040 online   Report the value of all dependent care assistance you provide to an employee under a dependent care assistance program in box 10 of the employee's Form W-2. 1040 online Include any amounts you cannot exclude from the employee's wages in boxes 1, 3, and 5. 1040 online Report both the nontaxable portion of assistance (up to $5,000) and any assistance above the amount that is non-taxable to the employee. 1040 online Example. 1040 online   Company A provides a dependent care assistance flexible spending arrangement to its employees through a cafeteria plan. 1040 online In addition, it provides occasional on-site dependent care to its employees at no cost. 1040 online Emily, an employee of company A, had $4,500 deducted from her pay for the dependent care flexible spending arrangement. 1040 online In addition, Emily used the on-site dependent care several times. 1040 online The fair market value of the on-site care was $700. 1040 online Emily's Form W-2 should report $5,200 of dependent care assistance in box 10 ($4,500 flexible spending arrangement plus $700 on-site dependent care). 1040 online Boxes 1, 3, and 5 should include $200 (the amount in excess of the nontaxable assistance), and applicable taxes should be withheld on that amount. 1040 online Educational Assistance This exclusion applies to educational assistance you provide to employees under an educational assistance program. 1040 online The exclusion also applies to graduate level courses. 1040 online Educational assistance means amounts you pay or incur for your employees' education expenses. 1040 online These expenses generally include the cost of books, equipment, fees, supplies, and tuition. 1040 online However, these expenses do not include the cost of a course or other education involving sports, games, or hobbies, unless the education: Has a reasonable relationship to your business, or Is required as part of a degree program. 1040 online Education expenses do not include the cost of tools or supplies (other than textbooks) your employee is allowed to keep at the end of the course. 1040 online Nor do they include the cost of lodging, meals, or transportation. 1040 online Educational assistance program. 1040 online   An educational assistance program is a separate written plan that provides educational assistance only to your employees. 1040 online The program qualifies only if all of the following tests are met. 1040 online The program benefits employees who qualify under rules set up by you that do not favor highly compensated employees. 1040 online To determine whether your program meets this test, do not consider employees excluded from your program who are covered by a collective bargaining agreement if there is evidence that educational assistance was a subject of good-faith bargaining. 1040 online The program does not provide more than 5% of its benefits during the year for shareholders or owners. 1040 online A shareholder or owner is someone who owns (on any day of the year) more than 5% of the stock or of the capital or profits interest of your business. 1040 online The program does not allow employees to choose to receive cash or other benefits that must be included in gross income instead of educational assistance. 1040 online You give reasonable notice of the program to eligible employees. 1040 online Your program can cover former employees if their employment is the reason for the coverage. 1040 online   For this exclusion, a highly compensated employee for 2014 is an employee who meets either of the following tests. 1040 online The employee was a 5% owner at any time during the year or the preceding year. 1040 online The employee received more than $115,000 in pay for the preceding year. 1040 online You can choose to ignore test (2) if the employee was not also in the top 20% of employees when ranked by pay for the preceding year. 1040 online Employee. 1040 online   For this exclusion, treat the following individuals as employees. 1040 online A current employee. 1040 online A former employee who retired, left on disability, or was laid off. 1040 online A leased employee who has provided services to you on a substantially full-time basis for at least a year if the services are performed under your primary direction or control. 1040 online Yourself (if you are a sole proprietor). 1040 online A partner who performs services for a partnership. 1040 online Exclusion from wages. 1040 online   You can exclude up to $5,250 of educational assistance you provide to an employee under an educational assistance program from the employee's wages each year. 1040 online Assistance over $5,250. 1040 online   If you do not have an educational assistance plan, or you provide an employee with assistance exceeding $5,250, you must include the value of these benefits as wages, unless the benefits are working condition benefits. 1040 online Working condition benefits may be excluded from wages. 1040 online Property or a service provided is a working condition benefit to the extent that if the employee paid for it, the amount paid would have been deductible as a business or depreciation expense. 1040 online See Working Condition Benefits , later, in this section. 1040 online Employee Discounts This exclusion applies to a price reduction you give an employee on property or services you offer to customers in the ordinary course of the line of business in which the employee performs substantial services. 1040 online However, it does not apply to discounts on real property or discounts on personal property of a kind commonly held for investment (such as stocks or bonds). 1040 online Employee. 1040 online   For this exclusion, treat the following individuals as employees. 1040 online A current employee. 1040 online A former employee who retired or left on disability. 1040 online A widow or widower of an individual who died while an employee. 1040 online A widow or widower of an employee who retired or left on disability. 1040 online A leased employee who has provided services to you on a substantially full-time basis for at least a year if the services are performed under your primary direction or control. 1040 online A partner who performs services for a partnership. 1040 online Exclusion from wages. 1040 online   You can generally exclude the value of an employee discount you provide an employee from the employee's wages, up to the following limits. 1040 online For a discount on services, 20% of the price you charge nonemployee customers for the service. 1040 online For a discount on merchandise or other property, your gross profit percentage times the price you charge nonemployee customers for the property. 1040 online   Determine your gross profit percentage in the line of business based on all property you offer to customers (including employee customers) and your experience during the tax year immediately before the tax year in which the discount is available. 1040 online To figure your gross profit percentage, subtract the total cost of the property from the total sales price of the property and divide the result by the total sales price of the property. 1040 online Exception for highly compensated employees. 1040 online   You cannot exclude from the wages of a highly compensated employee any part of the value of a discount that is not available on the same terms to one of the following groups. 1040 online All of your employees. 1040 online A group of employees defined under a reasonable classification you set up that does not favor highly compensated employees. 1040 online   For this exclusion, a highly compensated employee for 2014 is an employee who meets either of the following tests. 1040 online The employee was a 5% owner at any time during the year or the preceding year. 1040 online The employee received more than $115,000 in pay for the preceding year. 1040 online You can choose to ignore test (2) if the employee was not also in the top 20% of employees when ranked by pay for the preceding year. 1040 online Employee Stock Options There are three kinds of stock options—incentive stock options, employee stock purchase plan options, and nonstatutory (nonqualified) stock options. 1040 online Wages for social security, Medicare, and federal unemployment (FUTA) taxes do not include remuneration resulting from the exercise, after October 22, 2004, of an incentive stock option or under an employee stock purchase plan option, or from any disposition of stock acquired by exercising such an option. 1040 online The IRS will not apply these taxes to an exercise before October 23, 2004, of an incentive stock option or an employee stock purchase plan option or to a disposition of stock acquired by such exercise. 1040 online Additionally, federal income tax withholding is not required on the income resulting from a disqualifying disposition of stock acquired by the exercise after October 22, 2004, of an incentive stock option or under an employee stock purchase plan option, or on income equal to the discount portion of stock acquired by the exercise, after October 22, 2004, of an employee stock purchase plan option resulting from any disposition of the stock. 1040 online The IRS will not apply federal income tax withholding upon the disposition of stock acquired by the exercise, before October 23, 2004, of an incentive stock option or an employee stock purchase plan option. 1040 online However, the employer must report as income in box 1 of Form W-2, (a) the discount portion of stock acquired by the exercise of an employee stock purchase plan option upon disposition of the stock, and (b) the spread (between the exercise price and the fair market value of the stock at the time of exercise) upon a disqualifying disposition of stock acquired by the exercise of an incentive stock option or an employee stock purchase plan option. 1040 online An employer must report the excess of the fair market value of stock received upon exercise of a nonstatutory stock option over the amount paid for the stock option on Form W-2 in boxes 1, 3 (up to the social security wage base), 5, and in box 12 using the code “V. 1040 online ” See Regulations section 1. 1040 online 83-7. 1040 online An employee who transfers his or her interest in nonstatutory stock options to the employee's former spouse incident to a divorce is not required to include an amount in gross income upon the transfer. 1040 online The former spouse, rather than the employee, is required to include an amount in gross income when the former spouse exercises the stock options. 1040 online See Revenue Ruling 2002-22 and Revenue Ruling 2004-60 for details. 1040 online You can find Revenue Ruling 2002-22 on page 849 of Internal Revenue Bulletin 2002-19 at www. 1040 online irs. 1040 online gov/pub/irs-irbs/irb02-19. 1040 online pdf. 1040 online See Revenue Ruling 2004-60, 2004-24 I. 1040 online R. 1040 online B. 1040 online 1051, available at www. 1040 online irs. 1040 online gov/irb/2004-24_IRB/ar13. 1040 online html. 1040 online For more information about employee stock options, see sections 421, 422, and 423 of the Internal Revenue Code and their related regulations. 1040 online Employer-Provided Cell Phones The value of an employer-provided cell phone, provided primarily for noncompensatory business reasons, is excludable from an employee's income as a working condition fringe benefit. 1040 online Personal use of an employer-provided cell phone, provided primarily for noncompensatory business reasons, is excludable from an employee's income as a de minimis fringe benefit. 1040 online For the rules relating to these types of benefits, see De Minimis (Minimal) Benefits , earlier in this section, and Working Condition Benefits , later in this section. 1040 online Noncompensatory business purposes. 1040 online   You provide a cell phone primarily for noncompensatory business purposes if there are substantial business reasons for providing the cell phone. 1040 online Examples of substantial business reasons include the employer's: Need to contact the employee at all times for work-related emergencies, Requirement that the employee be available to speak with clients at times when the employee is away from the office, and Need to speak with clients located in other time zones at times outside the employee's normal workday. 1040 online Cell phones provided to promote goodwill, boost morale, or attract prospective employees. 1040 online   You cannot exclude from an employee's wages the value of a cell phone provided to promote goodwill of an employee, to attract a prospective employee, or as a means of providing additional compensation to an employee. 1040 online Additional information. 1040 online   For additional information on the tax treatment of employer-provided cell phones, see Notice 2011-72, 2011-38 I. 1040 online R. 1040 online B. 1040 online 407, available at  www. 1040 online irs. 1040 online gov/irb/2011-38_IRB/ar07. 1040 online html. 1040 online Group-Term Life Insurance Coverage This exclusion applies to life insurance coverage that meets all the following conditions. 1040 online It provides a general death benefit that is not included in income. 1040 online You provide it to a group of employees. 1040 online See The 10-employee rule , later. 1040 online It provides an amount of insurance to each employee based on a formula that prevents individual selection. 1040 online This formula must use factors such as the employee's age, years of service, pay, or position. 1040 online You provide it under a policy you directly or indirectly carry. 1040 online Even if you do not pay any of the policy's cost, you are considered to carry it if you arrange for payment of its cost by your employees and charge at least one employee less than, and at least one other employee more than, the cost of his or her insurance. 1040 online Determine the cost of the insurance, for this purpose, as explained under Coverage over the limit , later. 1040 online Group-term life insurance does not include the following insurance. 1040 online Insurance that does not provide general death benefits, such as travel insurance or a policy providing only accidental death benefits. 1040 online Life insurance on the life of your employee's spouse or dependent. 1040 online However, you may be able to exclude the cost of this insurance from the employee's wages as a de minimis benefit. 1040 online See De Minimis (Minimal) Benefits , earlier in this section. 1040 online Insurance provided under a policy that provides a permanent benefit (an economic value that extends beyond 1 policy year, such as paid-up or cash surrender value), unless certain requirements are met. 1040 online See Regulations section 1. 1040 online 79-1 for details. 1040 online Employee. 1040 online   For this exclusion, treat the following individuals as employees. 1040 online A current common-law employee. 1040 online A full-time life insurance agent who is a current statutory employee. 1040 online An individual who was formerly your employee under (1) or (2). 1040 online A leased employee who has provided services to you on a substantially full-time basis for at least a year if the services are performed under your primary direction and control. 1040 online Exception for S corporation shareholders. 1040 online   Do not treat a 2% shareholder of an S corporation as an employee of the corporation for this purpose. 1040 online A 2% shareholder is someone who directly or indirectly owns (at any time during the year) more than 2% of the corporation's stock or stock with more than 2% of the voting power. 1040 online Treat a 2% shareholder as you would a partner in a partnership for fringe benefit purposes, but do not treat the benefit as a reduction in distributions to the 2% shareholder. 1040 online The 10-employee rule. 1040 online   Generally, life insurance is not group-term life insurance unless you provide it to at least 10 full-time employees at some time during the year. 1040 online   For this rule, count employees who choose not to receive the insurance unless, to receive it, they must contribute to the cost of benefits other than the group-term life insurance. 1040 online For example, count an employee who could receive insurance by paying part of the cost, even if that employee chooses not to receive it. 1040 online However, do not count an employee who must pay part or all of the cost of permanent benefits to get insurance, unless that employee chooses to receive it. 1040 online A permanent benefit is an economic value extending beyond one policy year (for example, a paid-up or cash-surrender value) that is provided under a life insurance policy. 1040 online Exceptions. 1040 online   Even if you do not meet the 10-employee rule, two exceptions allow you to treat insurance as group-term life insurance. 1040 online   Under the first exception, you do not have to meet the 10-employee rule if all the following conditions are met. 1040 online If evidence that the employee is insurable is required, it is limited to a medical questionnaire (completed by the employee) that does not require a physical. 1040 online You provide the insurance to all your full-time employees or, if the insurer requires the evidence mentioned in (1), to all full-time employees who provide evidence the insurer accepts. 1040 online You figure the coverage based on either a uniform percentage of pay or the insurer's coverage brackets that meet certain requirements. 1040 online See Regulations section 1. 1040 online 79-1 for details. 1040 online   Under the second exception, you do not have to meet the 10-employee rule if all the following conditions are met. 1040 online You provide the insurance under a common plan covering your employees and the employees of at least one other employer who is not related to you. 1040 online The insurance is restricted to, but mandatory for, all your employees who belong to, or are represented by, an organization (such as a union) that carries on substantial activities besides obtaining insurance. 1040 online Evidence of whether an employee is insurable does not affect an employee's eligibility for insurance or the amount of insurance that employee gets. 1040 online   To apply either exception, do not consider employees who were denied insurance for any of the following reasons. 1040 online They were 65 or older. 1040 online They customarily work 20 hours or less a week or 5 months or less in a calendar year. 1040 online They have not been employed for the waiting period given in the policy. 1040 online This waiting period cannot be more than 6 months. 1040 online Exclusion from wages. 1040 online   You can generally exclude the cost of up to $50,000 of group-term life insurance from the wages of an insured employee. 1040 online You can exclude the same amount from the employee's wages when figuring social security and Medicare taxes. 1040 online In addition, you do not have to withhold federal income tax or pay FUTA tax on any group-term life insurance you provide to an employee. 1040 online Coverage over the limit. 1040 online   You must include in your employee's wages the cost of group-term life insurance beyond $50,000 worth of coverage, reduced by the amount the employee paid toward the insurance. 1040 online Report it as wages in boxes 1, 3, and 5 of the employee's Form W-2. 1040 online Also, show it in box 12 with code “C. 1040 online ” The amount is subject to social security and Medicare taxes, and you may, at your option, withhold federal income tax. 1040 online   Figure the monthly cost of the insurance to include in the employee's wages by multiplying the number of thousands of dollars of all insurance coverage over $50,000 (figured to the nearest $100) by the cost shown in Table 2-2. 1040 online For all coverage provided within the calendar year, use the employee's age on the last day of the employee's tax year. 1040 online You must prorate the cost from the table if less than a full month of coverage is involved. 1040 online Table 2-2. 1040 online Cost Per $1,000 of Protection For 1 Month Age Cost Under 25 $ . 1040 online 05 25 through 29 . 1040 online 06 30 through 34 . 1040 online 08 35 through 39 . 1040 online 09 40 through 44 . 1040 online 10 45 through 49 . 1040 online 15 50 through 54 . 1040 online 23 55 through 59 . 1040 online 43 60 through 64 . 1040 online 66 65 through 69 1. 1040 online 27 70 and older 2. 1040 online 06 You figure the total cost to include in the employee's wages by multiplying the monthly cost by the number of full months' coverage at that cost. 1040 online Example. 1040 online Tom's employer provides him with group-term life insurance coverage of $200,000. 1040 online Tom is 45 years old, is not a key employee, and pays $100 per year toward the cost of the insurance. 1040 online Tom's employer must include $170 in his wages. 1040 online The $200,000 of insurance coverage is reduced by $50,000. 1040 online The yearly cost of $150,000 of coverage is $270 ($. 1040 online 15 x 150 x 12), and is reduced by the $100 Tom pays for the insurance. 1040 online The employer includes $170 in boxes 1, 3, and 5 of Tom's Form W-2. 1040 online The employer also enters $170 in box 12 with code “C. 1040 online ” Coverage for dependents. 1040 online   Group-term life insurance coverage paid by the employer for the spouse or dependents of an employee may be excludable from income as a de minimis fringe benefit if the face amount is not more than $2,000. 1040 online If the face amount is greater than $2,000, the entire cost of the dependent coverage must be included in income unless the amount over $2,000 is purchased with employee contributions on an after-tax basis. 1040 online The cost of the insurance is determined by using Table 2-2. 1040 online Former employees. 1040 online   When group-term life insurance over $50,000 is provided to an employee (including retirees) after his or her termination, the employee share of social security and Medicare taxes on that period of coverage is paid by the former employee with his or her tax return and is not collected by the employer. 1040 online You are not required to collect those taxes. 1040 online Use the table above to determine the amount of social security and Medicare taxes owed by the former employee for coverage provided after separation from service. 1040 online Report those uncollected amounts separately in box 12 of Form W-2 using codes “M” and “N. 1040 online ” See the General Instructions for Forms W-2 and W-3 and the Instructions for Form 941. 1040 online Exception for key employees. 1040 online   Generally, if your group-term life insurance plan favors key employees as to participation or benefits, you must include the entire cost of the insurance in your key employees' wages. 1040 online This exception generally does not apply to church plans. 1040 online When figuring social security and Medicare taxes, you must also include the entire cost in the employees' wages. 1040 online Include the cost in boxes 1, 3, and 5 of Form W-2. 1040 online However, you do not have to withhold federal income tax or pay FUTA tax on the cost of any group-term life insurance you provide to an employee. 1040 online   For this purpose, the cost of the insurance is the greater of the following amounts. 1040 online The premiums you pay for the employee's insurance. 1040 online See Regulations section 1. 1040 online 79-4T(Q&A 6) for more information. 1040 online The cost you figure using Table 2-2. 1040 online   For this exclusion, a key employee during 2014 is an employee or former employee who is one of the following individuals. 1040 online See section 416(i) of the Internal Revenue Code for more information. 1040 online An officer having annual pay of more than $170,000. 1040 online An individual who for 2014 was either of the following. 1040 online A 5% owner of your business. 1040 online A 1% owner of your business whose annual pay was more than $150,000. 1040 online   A former employee who was a key employee upon retirement or separation from service is also a key employee. 1040 online   Your plan does not favor key employees as to participation if at least one of the following is true. 1040 online It benefits at least 70% of your employees. 1040 online At least 85% of the participating employees are not key employees. 1040 online It benefits employees who qualify under a set of rules you set up that do not favor key employees. 1040 online   Your plan meets this participation test if it is part of a cafeteria plan (discussed in section 1) and it meets the participation test for those plans. 1040 online   When applying this test, do not consider employees who: Have not completed 3 years of service, Are part-time or seasonal, Are nonresident aliens who receive no U. 1040 online S. 1040 online source earned income from you, or Are not included in the plan but are in a unit of employees covered by a collective bargaining agreement, if the benefits provided under the plan were the subject of good-faith bargaining between you and employee representatives. 1040 online   Your plan does not favor key employees as to benefits if all benefits available to participating key employees are also available to all other participating employees. 1040 online Your plan does not favor key employees just because the amount of insurance you provide to your employees is uniformly related to their pay. 1040 online S corporation shareholders. 1040 online   Because you cannot treat a 2% shareholder of an S corporation as an employee for this exclusion, you must include the cost of all group-term life insurance coverage you provide the 2% shareholder in his or her wages. 1040 online When figuring social security and Medicare taxes, you must also include the cost of this coverage in the 2% shareholder's wages. 1040 online Include the cost in boxes 1, 3, and 5 of Form W-2. 1040 online However, you do not have to withhold federal income tax or pay federal unemployment tax on the cost of any group-term life insurance coverage you provide to the 2% shareholder. 1040 online Health Savings Accounts A Health Savings Account (HSA) is an account owned by a qualified individual who is generally your employee or former employee. 1040 online Any contributions that you make to an HSA become the employee's property and cannot be withdrawn by you. 1040 online Contributions to the account are used to pay current or future medical expenses of the account owner, his or her spouse, and any qualified dependent. 1040 online The medical expenses must not be reimbursable by insurance or other sources and their payment from HSA funds (distribution) will not give rise to a medical expense deduction on the individual's federal income tax return. 1040 online For more information about HSAs, visit the Department of Treasury's website at www. 1040 online treasury. 1040 online gov and enter “HSA” in the search box. 1040 online Eligibility. 1040 online   A qualified individual must be covered by a High Deductible Health Plan (HDHP) and not be covered by other health insurance except for permitted insurance listed under section 223(c)(3) or insurance for accidents, disability, dental care, vision care, or long-term care. 1040 online For calendar year 2014, a qualifying HDHP must have a deductible of at least $1,250 for self-only coverage or $2,500 for family coverage and must limit annual out-of-pocket expenses of the beneficiary to $6,350 for self-only coverage and $12,700 for family coverage. 1040 online   There are no income limits that restrict an individual's eligibility to contribute to an HSA nor is there a requirement that the account owner have earned income to make a contribution. 1040 online Exceptions. 1040 online   An individual is not a qualified individual if he or she can be claimed as a dependent on another person's tax return. 1040 online Also, an employee's participation in a health flexible spending arrangement (FSA) or health reimbursement arrangement (HRA) generally disqualifies the individual (and employer) from making contributions to his or her HSA. 1040 online However, an individual may qualify to participate in an HSA if he or she is participating in only a limited-purpose FSA or HRA or a post-deductible FSA. 1040 online For more information, see Other employee health plans in Publication 969. 1040 online Employer contributions. 1040 online   Up to specified dollar limits, cash contributions to the HSA of a qualified individual (determined monthly) are exempt from federal income tax withholding, social security tax, Medicare tax, and FUTA tax. 1040 online For 2014, you can contribute up to $3,300 for self-only coverage or $6,550 for family coverage to a qualified individual's HSA. 1040 online   The contribution amounts listed above are increased by $1,000 for a qualified individual who is age 55 or older at any time during the year. 1040 online For two qualified individuals who are married to each other and who each are age 55 or older at any time during the year, each spouse's contribution limit is increased by $1,000 provided each spouse has a separate HSA. 1040 online No contributions can be made to an individual's HSA after he or she becomes enrolled in Medicare Part A or Part B. 1040 online Nondiscrimination rules. 1040 online    Your contribution amount to an employee's HSA must be comparable for all employees who have comparable coverage during the same period. 1040 online Otherwise, there will be an excise tax equal to 35% of the amount you contributed to all employees' HSAs. 1040 online   For guidance on employer comparable contributions to HSAs under section 4980G in instances where an employee has not established an HSA by December 31 and in instances where an employer accelerates contributions for the calendar year for employees who have incurred qualified medical expenses, see Regulations section 54. 1040 online 4980G-4. 1040 online Exception. 1040 online   The Tax Relief and Health Care Act of 2006 allows employers to make larger HSA contributions for a nonhighly compensated employee than for a highly compensated employee. 1040 online A highly compensated employee for 2014 is an employee who meets either of the following tests. 1040 online The employee was a 5% owner at any time during the year or the preceding year. 1040 online The employee received more than $115,000 in pay for the preceding year. 1040 online You can choose to ignore test (2) if the employee was not also in the top 20% of employees when ranked by pay for the preceding year. 1040 online Partnerships and S corporations. 1040 online   Partners and 2% shareholders of an S corporation are not eligible for salary reduction (pre-tax) contributions to an HSA. 1040 online Employer contributions to the HSA of a bona fide partner or 2% shareholder are treated as distributions or guaranteed payments as determined by the facts and circumstances. 1040 online Cafeteria plans. 1040 online   You may contribute to an employee's HSA using a cafeteria plan and your contributions are not subject to the statutory comparability rules. 1040 online However, cafeteria plan nondiscrimination rules still apply. 1040 online For example, contributions under a cafeteria plan to employee HSAs cannot be greater for higher-paid employees than they are for lower-paid employees. 1040 online Contributions that favor lower-paid employees are not prohibited. 1040 online Reporting requirements. 1040 online   You must report your contributions to an employee's HSA in box 12 of Form W-2 using code “W. 1040 online ” The trustee or custodian of the HSA, generally a bank or insurance company, reports distributions from the HSA using Form 1099-SA, Distributions From an HSA, Archer MSA, or Medicare Advantage MSA. 1040 online Lodging on Your Business Premises You can exclude the value of lodging you furnish to an employee from the employee's wages if it meets the following tests. 1040 online It is furnished on your business premises. 1040 online It is furnished for your convenience. 1040 online The employee must accept it as a condition of employment. 1040 online Different tests may apply to lodging furnished by educational institutions. 1040 online See section 119(d) of the Internal Revenue Code for details. 1040 online The exclusion does not apply if you allow your employee to choose to receive additional pay instead of lodging. 1040 online On your business premises. 1040 online   For this exclusion, your business premises is generally your employee's place of work. 1040 online For special rules that apply to lodging furnished in a camp located in a foreign country, see section 119(c) of the Internal Revenue Code and its regulations. 1040 online For your convenience. 1040 online   Whether or not you furnish lodging for your convenience as an employer depends on all the facts and circumstances. 1040 online You furnish the lodging to your employee for your convenience if you do this for a substantial business reason other than to provide the employee with additional pay. 1040 online This is true even if a law or an employment contract provides that the lodging is furnished as pay. 1040 online However, a written statement that the lodging is furnished for your convenience is not sufficient. 1040 online Condition of employment. 1040 online   Lodging meets this test if you require your employees to accept the lodging because they need to live on your business premises to be able to properly perform their duties. 1040 online Examples include employees who must be available at all times and employees who could not perform their required duties without being furnished the lodging. 1040 online   It does not matter whether you must furnish the lodging as pay under the terms of an employment contract or a law fixing the terms of employment. 1040 online Example. 1040 online A hospital gives Joan, an employee of the hospital, the choice of living at the hospital free of charge or living elsewhere and receiving a cash allowance in addition to her regular salary. 1040 online If Joan chooses to live at the hospital, the hospital cannot exclude the value of the lodging from her wages because she is not required to live at the hospital to properly perform the duties of her employment. 1040 online S corporation shareholders. 1040 online   For this exclusion, do not treat a 2% shareholder of an S corporation as an employee of the corporation. 1040 online A 2% shareholder is someone who directly or indirectly owns (at any time during the year) more than 2% of the corporation's stock or stock with more than 2% of the voting power. 1040 online Treat a 2% shareholder as you would a partner in a partnership for fringe benefit purposes, but do not treat the benefit as a reduction in distributions to the 2% shareholder. 1040 online Meals This section discusses the exclusion rules that apply to de minimis meals and meals on your business premises. 1040 online De Minimis Meals You can exclude any occasional meal or meal money you provide to an employee if it has so little value (taking into account how frequently you provide meals to your employees) that accounting for it would be unreasonable or administratively impracticable. 1040 online The exclusion applies, for example, to the following items. 1040 online Coffee, doughnuts, or soft drinks. 1040 online Occasional meals or meal money provided to enable an employee to work overtime. 1040 online However, the exclusion does not apply to meal money figured on the basis of hours worked. 1040 online Occasional parties or picnics for employees and their guests. 1040 online This exclusion also applies to meals you provide at an employer-operated eating facility for employees if the annual revenue from the facility equals or exceeds the direct costs of the facility. 1040 online For this purpose, your revenue from providing a meal is considered equal to the facility's direct operating costs to provide that meal if its value can be excluded from an employee's wages as explained under Meals on Your Business Premises , later. 1040 online If food or beverages you furnish to employees qualify as a de minimis benefit, you can deduct their full cost. 1040 online The 50% limit on deductions for the cost of meals does not apply. 1040 online The deduction limit on meals is discussed in chapter 2 of Publication 535. 1040 online Employee. 1040 online   For this exclusion, treat any recipient of a de minimis meal as
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1040 online Publication 926 - Main Content Table of Contents Do You Have a Household Employee? Can Your Employee Legally Work in the United States? Do You Need To Pay Employment Taxes?Social Security and Medicare Taxes Federal Unemployment (FUTA) Tax Do You Need To Withhold Federal Income Tax? What Do You Need To Know About the Earned Income Credit? How Do You Make Tax Payments? What Forms Must You File?Employee who leaves during the year. 1040 online Filing options when no return is required. 1040 online What Records Must You Keep? Can You Claim a Credit for Child and Dependent Care Expenses? How Can You Correct Schedule H?Adjust the overpayment. 1040 online Claim for refund process. 1040 online How To Get Tax HelpLow Income Taxpayer Clinics Do You Have a Household Employee? You have a household employee if you hired someone to do household work and that worker is your employee. 1040 online The worker is your employee if you can control not only what work is done, but how it is done. 1040 online If the worker is your employee, it does not matter whether the work is full time or part time or that you hired the worker through an agency or from a list provided by an agency or association. 1040 online It also does not matter whether you pay the worker on an hourly, daily, or weekly basis, or by the job. 1040 online Example. 1040 online You pay Betty Shore to babysit your child and do light housework 4 days a week in your home. 1040 online Betty follows your specific instructions about household and child care duties. 1040 online You provide the household equipment and supplies that Betty needs to do her work. 1040 online Betty is your household employee. 1040 online Household work. 1040 online   Household work is work done in or around your home. 1040 online Some examples of workers who do household work are: Babysitters, Caretakers, House cleaning workers, Domestic workers, Drivers, Health aides, Housekeepers, Maids, Nannies, Private nurses, and Yard workers. 1040 online Workers who are not your employees. 1040 online   If only the worker can control how the work is done, the worker is not your employee but is self-employed. 1040 online A self-employed worker usually provides his or her own tools and offers services to the general public in an independent business. 1040 online   A worker who performs child care services for you in his or her home generally is not your employee. 1040 online   If an agency provides the worker and controls what work is done and how it is done, the worker is not your employee. 1040 online Example. 1040 online You made an agreement with John Peters to care for your lawn. 1040 online John runs a lawn care business and offers his services to the general public. 1040 online He provides his own tools and supplies, and he hires and pays any helpers he needs. 1040 online Neither John nor his helpers are your household employees. 1040 online More information. 1040 online   More information about who is an employee is in Publication 15-A, Employer's Supplemental Tax Guide. 1040 online Can Your Employee Legally Work in the United States? It is unlawful for you knowingly to hire or continue to employ an alien who cannot legally work in the United States. 1040 online When you hire a household employee to work for you on a regular basis, you and the employee must complete the U. 1040 online S. 1040 online Citizenship and Immigration Services (USCIS) Form I-9, Employment Eligibility Verification. 1040 online No later than the first day of work, the employee must complete the employee section of the form by providing certain required information and attesting to his or her current work eligibility status in the United States. 1040 online You must complete the employer section by examining documents presented by the employee as evidence of his or her identity and employment eligibility. 1040 online Acceptable documents to establish identity and employment eligibility are listed on Form I-9. 1040 online You should keep the completed Form I-9 in your own records. 1040 online Do not submit it to the IRS, the USCIS, or any other government or other entity. 1040 online The form must be kept available for review upon notice by an authorized U. 1040 online S. 1040 online Government official. 1040 online Two copies of Form I-9 are contained in the Handbook for Employers (Form M-274) published by the USCIS. 1040 online Call the USCIS at 1-800-870-3676 to order the Handbook for Employers; or you may download the handbook at www. 1040 online uscis. 1040 online gov. 1040 online If you have questions about the employment eligibility verification process or other immigration-related employment matters, contact the USCIS Office of Business Liaison at 1-800-357-2099. 1040 online You also can visit the USCIS website at www. 1040 online uscis. 1040 online gov to get Form I-9. 1040 online For more information, see Employee's Social Security Number (SSN) in Publication 15 (Circular E), Employer's Tax Guide. 1040 online Do You Need To Pay Employment Taxes? If you have a household employee, you may need to withhold and pay social security and Medicare taxes, pay federal unemployment tax, or both. 1040 online To find out, read Table 1. 1040 online You do not need to withhold federal income tax from your household employee's wages. 1040 online But if your employee asks you to withhold it, you can. 1040 online See Do You Need To Withhold Federal Income Tax, later. 1040 online If you need to pay social security, Medicare, or federal unemployment tax or choose to withhold federal income tax, read Table 2 for an overview of what you may need to do. 1040 online If you do not need to pay social security, Medicare, or federal unemployment tax and do not choose to withhold federal income tax, read State employment taxes, next. 1040 online The rest of this publication does not apply to you. 1040 online State employment taxes. 1040 online   You should contact your state unemployment tax agency to find out whether you need to pay state unemployment tax for your household employee. 1040 online For a list of state unemployment tax agencies, visit the U. 1040 online S. 1040 online Department of Labor's website at www. 1040 online workforcesecurity. 1040 online doleta. 1040 online gov/unemploy/agencies. 1040 online asp. 1040 online You should also determine if you need to pay or collect other state employment taxes or carry workers' compensation insurance. 1040 online    Table 1. 1040 online Do You Need To Pay Employment Taxes? IF you . 1040 online . 1040 online . 1040 online THEN you need to . 1040 online . 1040 online . 1040 online A– Pay cash wages of $1,900 or more in 2014 to any one household employee. 1040 online Withhold and pay social security and Medicare taxes. 1040 online The taxes are 15. 1040 online 3%1 of cash wages. 1040 online Your employee's share is 7. 1040 online 65%1. 1040 online   (You can choose to pay it yourself and not withhold it. 1040 online ) Your share is 7. 1040 online 65%. 1040 online   Do not count wages you pay to— Your spouse, Your child under the age of 21, Your parent (see Wages not counted, later, for an exception), or Any employee under the age of 18 at any time in 2014 (see Wages not counted, later, for an exception). 1040 online B– Pay total cash wages of $1,000 or more in any calendar quarter of 2013 or 2014 to household employees. 1040 online Pay federal unemployment tax. 1040 online The tax is 6% of cash wages. 1040 online Wages over $7,000 a year per employee are not taxed. 1040 online You also may owe state unemployment tax. 1040 online   Do not count wages you pay to— Your spouse, Your child under the age of 21, or Your parent. 1040 online 1In addition to withholding Medicare tax at 1. 1040 online 45%, you must withhold a 0. 1040 online 9% Additional Medicare Tax from wages you pay to an employee in excess of $200,000 in a calendar year. 1040 online 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. 1040 online Additional Medicare Tax is only imposed on the employee. 1040 online There is no employer share of Additional Medicare Tax. 1040 online All wages that are subject to Medicare tax are subject to Additional Medicare Tax withholding if paid in excess of the $200,000 withholding threshold. 1040 online Note. 1040 online If neither A nor B above applies, you do not need to pay any federal employment taxes. 1040 online But you may still need to pay state employment taxes. 1040 online Table 2. 1040 online Household Employer's Checklist You may need to do the following things when you have a household employee. 1040 online   When you hire a household employee: □ Find out if the person can legally work in the United States. 1040 online  □ Find out if you need to pay state taxes. 1040 online When you pay your household employee: □ Withhold social security and Medicare taxes. 1040 online  □ Withhold federal income tax. 1040 online  □ Decide how you will make tax payments. 1040 online  □ Keep records. 1040 online By February 2, 2015: □ Get an employer identification number (EIN). 1040 online  □ Give your employee Copies B, C, and 2 of Form W-2, Wage and Tax Statement. 1040 online By March 2, 2015 (March 31, 2015, if you file Form W-2 electronically): □ Send Copy A of Form W-2 to the Social Security Administration (SSA). 1040 online By April 15, 2015: □ File Schedule H (Form 1040), Household Employment Taxes, with your 2014 federal income tax return (Form 1040, 1040NR, 1040-SS, or Form 1041). 1040 online  If you do not have to file a return, file Schedule H by itself. 1040 online Social Security and Medicare Taxes The social security tax pays for old-age, survivors, and disability benefits for workers and their families. 1040 online The Medicare tax pays for hospital insurance. 1040 online Both you and your household employee may owe social security and Medicare taxes. 1040 online Your share is 7. 1040 online 65% (6. 1040 online 2% for social security tax and 1. 1040 online 45% for Medicare tax) of the employee's social security and Medicare wages. 1040 online Your employee's share is also 7. 1040 online 65% (6. 1040 online 2% for social security tax and 1. 1040 online 45% for Medicare tax). 1040 online In addition to withholding Medicare tax at 1. 1040 online 45%, you must withhold a 0. 1040 online 9% Additional Medicare Tax from wages you pay to an employee in excess of $200,000 in a calendar year. 1040 online 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. 1040 online Additional Medicare Tax is only imposed on the employee. 1040 online There is no employer share of Additional Medicare Tax. 1040 online All wages that are subject to Medicare tax are subject to Additional Medicare Tax withholding if paid in excess of the $200,000 withholding threshold. 1040 online For more information on Additional Medicare Tax, visit IRS. 1040 online gov and enter “Additional Medicare Tax” in the search box. 1040 online Generally, you can use Table 3 to figure the amount of social security and Medicare taxes to withhold from each wage payment. 1040 online You are responsible for payment of your employee's share of the taxes as well as your own. 1040 online You can either withhold your employee's share from the employee's wages or pay it from your own funds. 1040 online If you decide to pay the employee's share from your own funds, see Not withholding the employee's share, later. 1040 online Pay the taxes as discussed under How Do You Make Tax Payments, later. 1040 online Also, see What Forms Must You File, later. 1040 online Social security and Medicare wages. 1040 online   You figure social security and Medicare taxes on the social security and Medicare wages you pay your employee. 1040 online   If you pay your household employee cash wages of $1,900 or more in 2014, all cash wages you pay to that employee in 2014 (regardless of when the wages were earned) up to $117,000 are social security wages and all cash wages are Medicare wages. 1040 online However, any noncash wages you pay do not count as social security and Medicare wages. 1040 online   If you pay the employee less than $1,900 in cash wages in 2014, none of the wages you pay the employee are social security or Medicare wages and neither you nor your employee will owe social security or Medicare tax on those wages. 1040 online Cash wages. 1040 online   Cash wages include wages you pay by check, money order, etc. 1040 online Cash wages do not include the value of food, lodging, clothing, and other noncash items you give your household employee. 1040 online However, cash you give your employee in place of these items is included in cash wages. 1040 online State disability payments treated as wages. 1040 online   Certain state disability plan payments that your household employee may receive are treated as social security and Medicare wages. 1040 online For more information about these payments, see the Instructions for Schedule H (Form 1040) and the notice issued by the state. 1040 online Wages not counted. 1040 online   Do not count wages you pay to any of the following individuals as social security or Medicare wages, even if these wages are $1,900 or more during the year. 1040 online Your spouse. 1040 online Your child who is under the age of 21. 1040 online Your parent. 1040 online Exception: Count these wages if both the following conditions apply. 1040 online Your parent cares for your child who is either of the following. 1040 online Under the age of 18, or Has a physical or mental condition that requires the personal care of an adult for at least 4 continuous weeks in the calendar quarter services were performed. 1040 online Your marital status is one of the following. 1040 online You are divorced and have not remarried, You are a widow or widower, or You are living with a spouse whose physical or mental condition prevents him or her from caring for your child for at least 4 continuous weeks in the calendar quarter services were performed. 1040 online An employee who is under the age of 18 at any time during the year. 1040 online Exception: Count these wages if providing household services is the employee's principal occupation. 1040 online If the employee is a student, providing household services is not considered to be his or her principal occupation. 1040 online Also, if your employee's cash wages reach $117,000 (maximum wages subject to social security tax) in 2014, do not count any wages you pay that employee during the rest of the year as social security wages to figure social security tax. 1040 online Continue to count the employee's cash wages as Medicare wages to figure Medicare tax. 1040 online If you provide your employee transit passes to commute to your home, do not count the value of the transit passes (up to $130 per month for 2014) as wages. 1040 online A transit pass includes any pass, token, fare card, voucher, or similar item entitling a person to ride on mass transit, such as a bus or train. 1040 online If you provide your employee parking at or near your home or at or near a location from which your employee commutes to your home, do not count the value of parking (up to $250 per month for 2014) as wages. 1040 online If you reimburse your employee for transit passes or parking, you may be able to exclude the reimbursement amounts. 1040 online See Publication 15-B, Employer's Tax Guide to Fringe Benefits, for special requirements for this exclusion. 1040 online Withholding the employee's share. 1040 online   You should withhold the employee's share of social security and Medicare taxes if you expect to pay your household employee cash wages of $1,900 or more in 2014. 1040 online However, if you prefer to pay the employee's share yourself, see Not withholding the employee's share, later. 1040 online   You can withhold the employee's share of the taxes even if you are not sure your employee's cash wages will be $1,900 or more in 2014. 1040 online If you withhold the taxes but then actually pay the employee less than $1,900 in cash wages for the year, you should repay the employee. 1040 online   Withhold 7. 1040 online 65% (6. 1040 online 2% for social security tax and 1. 1040 online 45% for Medicare tax) from each payment of social security and Medicare wages. 1040 online Generally, you can use Table 3 to figure the proper amount to withhold. 1040 online You will pay the amount withheld to the IRS with your share of the taxes. 1040 online Do not withhold any social security tax after your employee's social security wages for the year reach $117,000. 1040 online Table 3. 1040 online Employee Social Security (6. 1040 online 2%) and Medicare (1. 1040 online 45%1) Tax Withholding Table (See Publication 15 (Circular E) for income tax withholding tables. 1040 online ) Use this table to figure the amount of social security and Medicare taxes to withhold from each wage payment. 1040 online For example, on a wage payment of $180, the employee social security tax is $11. 1040 online 16 ($6. 1040 online 20 tax on $100 plus $4. 1040 online 96 on $80 wages). 1040 online The employee Medicare tax is $2. 1040 online 61 ($1. 1040 online 45 tax on $100 plus $1. 1040 online 16 on $80 wages). 1040 online If wage payment is: The social security tax to be withheld is: The Medicare tax to be withheld is: If wage payment is: The social security tax to be withheld is: The Medicare tax to be withheld is: $ 1. 1040 online 00 . 1040 online $ . 1040 online 06 $ . 1040 online 01 $ 51. 1040 online 00 . 1040 online $ 3. 1040 online 16 $ . 1040 online 74 2. 1040 online 00 . 1040 online . 1040 online 12 . 1040 online 03 52. 1040 online 00 . 1040 online 3. 1040 online 22 . 1040 online 75 3. 1040 online 00 . 1040 online . 1040 online 19 . 1040 online 04 53. 1040 online 00 . 1040 online 3. 1040 online 29 . 1040 online 77 4. 1040 online 00 . 1040 online . 1040 online 25 . 1040 online 06 54. 1040 online 00 . 1040 online 3. 1040 online 35 . 1040 online 78 5. 1040 online 00 . 1040 online . 1040 online 31 . 1040 online 07 55. 1040 online 00 . 1040 online 3. 1040 online 41 . 1040 online 80 6. 1040 online 00 . 1040 online . 1040 online 37 . 1040 online 09 56. 1040 online 00 . 1040 online 3. 1040 online 47 . 1040 online 81 7. 1040 online 00 . 1040 online . 1040 online 43 . 1040 online 10 57. 1040 online 00 . 1040 online 3. 1040 online 53 . 1040 online 83 8. 1040 online 00 . 1040 online . 1040 online 50 . 1040 online 12 58. 1040 online 00 . 1040 online 3. 1040 online 60 . 1040 online 84 9. 1040 online 00 . 1040 online . 1040 online 56 . 1040 online 13 59. 1040 online 00 . 1040 online 3. 1040 online 66 . 1040 online 86 10. 1040 online 00 . 1040 online . 1040 online 62 . 1040 online 15 60. 1040 online 00 . 1040 online 3. 1040 online 72 . 1040 online 87 11. 1040 online 00 . 1040 online . 1040 online 68 . 1040 online 16 61. 1040 online 00 . 1040 online 3. 1040 online 78 . 1040 online 88 12. 1040 online 00 . 1040 online . 1040 online 74 . 1040 online 17 62. 1040 online 00 . 1040 online 3. 1040 online 84 . 1040 online 90 13. 1040 online 00 . 1040 online . 1040 online 81 . 1040 online 19 63. 1040 online 00 . 1040 online 3. 1040 online 91 . 1040 online 91 14. 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online 4. 1040 online 84 1. 1040 online 13 29. 1040 online 00 . 1040 online 1. 1040 online 80 . 1040 online 42 79. 1040 online 00 . 1040 online 4. 1040 online 90 1. 1040 online 15 30. 1040 online 00 . 1040 online 1. 1040 online 86 . 1040 online 44 80. 1040 online 00 . 1040 online 4. 1040 online 96 1. 1040 online 16 31. 1040 online 00 . 1040 online 1. 1040 online 92 . 1040 online 45 81. 1040 online 00 . 1040 online 5. 1040 online 02 1. 1040 online 17 32. 1040 online 00 . 1040 online 1. 1040 online 98 . 1040 online 46 82. 1040 online 00 . 1040 online 5. 1040 online 08 1. 1040 online 19 33. 1040 online 00 . 1040 online 2. 1040 online 05 . 1040 online 48 83. 1040 online 00 . 1040 online 5. 1040 online 15 1. 1040 online 20 34. 1040 online 00 . 1040 online 2. 1040 online 11 . 1040 online 49 84. 1040 online 00 . 1040 online 5. 1040 online 21 1. 1040 online 22 35. 1040 online 00 . 1040 online 2. 1040 online 17 . 1040 online 51 85. 1040 online 00 . 1040 online 5. 1040 online 27 1. 1040 online 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1040 online 67 . 1040 online 62 93. 1040 online 00 . 1040 online 5. 1040 online 77 1. 1040 online 35 44. 1040 online 00 . 1040 online 2. 1040 online 73 . 1040 online 64 94. 1040 online 00 . 1040 online 5. 1040 online 83 1. 1040 online 36 45. 1040 online 00 . 1040 online 2. 1040 online 79 . 1040 online 65 95. 1040 online 00 . 1040 online 5. 1040 online 89 1. 1040 online 38 46. 1040 online 00 . 1040 online 2. 1040 online 85 . 1040 online 67 96. 1040 online 00 . 1040 online 5. 1040 online 95 1. 1040 online 39 47. 1040 online 00 . 1040 online 2. 1040 online 91 . 1040 online 68 97. 1040 online 00 . 1040 online 6. 1040 online 01 1. 1040 online 41 48. 1040 online 00 . 1040 online 2. 1040 online 98 . 1040 online 70 98. 1040 online 00 . 1040 online 6. 1040 online 08 1. 1040 online 42 49. 1040 online 00 . 1040 online 3. 1040 online 04 . 1040 online 71 99. 1040 online 00 . 1040 online 6. 1040 online 14 1. 1040 online 44 50. 1040 online 00 . 1040 online 3. 1040 online 10 . 1040 online 73 100. 1040 online 00 . 1040 online 6. 1040 online 20 1. 1040 online 45 1In addition to withholding Medicare tax at 1. 1040 online 45%, you must withhold a 0. 1040 online 9% Additional Medicare Tax from wages you pay to an employee in excess of $200,000 in a calendar year. 1040 online 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. 1040 online Additional Medicare Tax is only imposed on the employee. 1040 online There is no employer share of Additional Medicare Tax. 1040 online All wages that are subject to Medicare tax are subject to Additional Medicare Tax withholding if paid in excess of the $200,000 withholding threshold. 1040 online   If you make an error by withholding too little, you should withhold additional taxes from a later payment. 1040 online If you withhold too much, you should repay the employee. 1040 online    In addition to withholding Medicare tax at 1. 1040 online 45%, you must withhold a 0. 1040 online 9% Additional Medicare Tax from wages you pay to an employee in excess of $200,000 in a calendar year. 1040 online 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. 1040 online Additional Medicare Tax is only imposed on the employee. 1040 online There is no employer share of Additional Medicare Tax. 1040 online All wages that are subject to Medicare tax are subject to Additional Medicare Tax withholding if paid in excess of the $200,000 withholding threshold. 1040 online For more information on Additional Medicare Tax, visit IRS. 1040 online gov and enter “Additional Medicare Tax” in the search box. 1040 online Example. 1040 online On February 13, 2014, Mary Brown hired Jane R. 1040 online Oak (who is an unrelated individual over age 18) to care for her child and agreed to pay cash wages of $50 every Friday. 1040 online Jane worked for the remainder of the year (a total of 46 weeks). 1040 online Mary did not give Jane a Form W-4 to request federal or state tax withholding. 1040 online The following is the information Mary will need to complete Schedule H, Form W-2, and Form W-3. 1040 online See the completed examples of Form W-2 and Form W-3 for 2014 at the end of this publication. 1040 online Total cash wages paid to Jane $2,300. 1040 online 00 ($50 x 46 weeks)       Jane's share of:     Social security tax $142. 1040 online 60 ($2,300 x 6. 1040 online 2% (. 1040 online 062))         Medicare tax $33. 1040 online 35       ($2,300 x 1. 1040 online 45% (. 1040 online 0145)) Mary's share of:     Social security tax $142. 1040 online 60  ($2,300 x 6. 1040 online 2% (. 1040 online 062))           Medicare tax $33. 1040 online 35  ($2,300 x 1. 1040 online 45% (. 1040 online 0145)) Amount reported on Form W-2 and Form W-3:   Box 1:Wages, tips $2,300. 1040 online 00   Box 4: Social security tax withheld 142. 1040 online 60   Box 6: Medicare tax withheld 33. 1040 online 35 For information on withholding and reporting federal income taxes, see Publication 15 (Circular E). 1040 online Not withholding the employee's share. 1040 online   If you prefer to pay your employee's social security and Medicare taxes from your own funds, do not withhold them from your employee's wages. 1040 online The social security and Medicare taxes you pay to cover your employee's share must be included in the employee's wages for income tax purposes. 1040 online However, they are not counted as social security and Medicare wages or as federal unemployment (FUTA) wages. 1040 online Example. 1040 online In 2014 you hire a household employee (who is an unrelated individual over age 18) to care for your child and agree to pay cash wages of $100 every Friday. 1040 online You expect to pay your employee $1,900 or more for the year. 1040 online You decide to pay your employee's share of social security and Medicare taxes from your own funds. 1040 online You pay your employee $100 every Friday without withholding any social security or Medicare taxes. 1040 online For social security and Medicare tax purposes, your employee's wages each payday are $100. 1040 online For each wage payment, you will pay $15. 1040 online 30 when you pay the taxes. 1040 online This is $7. 1040 online 65 ($6. 1040 online 20 for social security tax + $1. 1040 online 45 for Medicare tax) to cover your employee's share plus $7. 1040 online 65 ($6. 1040 online 20 for social security tax + $1. 1040 online 45 for Medicare tax) for your share. 1040 online For income tax purposes, your employee's wages each payday are $107. 1040 online 65 ($100 + the $7. 1040 online 65 you will pay to cover your employee's share of social security and Medicare taxes). 1040 online Federal Unemployment (FUTA) Tax The federal unemployment tax is part of the federal and state program under the Federal Unemployment Tax Act (FUTA) that pays unemployment compensation to workers who lose their jobs. 1040 online Like most employers, you may owe both the federal unemployment tax (the FUTA tax) and a state unemployment tax. 1040 online Or, you may owe only the FUTA tax or only the state unemployment tax. 1040 online To find out whether you will owe state unemployment tax, contact your state's unemployment tax agency. 1040 online For a list of state unemployment tax agencies, visit the U. 1040 online S. 1040 online Department of Labor's website at www. 1040 online workforcesecurity. 1040 online doleta. 1040 online gov/unemploy/agencies. 1040 online asp. 1040 online You should also find out if you need to pay or collect other state employment taxes or carry workers' compensation insurance. 1040 online The FUTA tax is 6. 1040 online 0% of your employee's FUTA wages. 1040 online However, you may be able to take a credit of up to 5. 1040 online 4% against the FUTA tax, resulting in a net tax rate of 0. 1040 online 6%. 1040 online Your credit for 2014 is limited unless you pay all the required contributions for 2014 to your state unemployment fund by April 15, 2015. 1040 online The credit you can take for any contributions for 2014 that you pay after April 15, 2015, is limited to 90% of the credit that would have been allowable if the contributions were paid by April 15, 2015. 1040 online (If you did not pay all the required contributions for 2013 by April 15, 2014, see Credit for 2013, later. 1040 online ) Note. 1040 online   If a due date falls on a Saturday, Sunday, or legal holiday, payments are considered timely if made by the next business day. 1040 online The term “legal holiday” means any legal holiday in the District of Columbia. 1040 online Pay the tax as discussed under How Do You Make Tax Payments, later. 1040 online Also, see What Forms Must You File, later. 1040 online Note. 1040 online   The 5. 1040 online 4% credit is reduced for wages paid in a credit reduction state. 1040 online See the Instructions for Schedule H (Form 1040). 1040 online Do not withhold the FUTA tax from your employee's wages. 1040 online You must pay it from your own funds. 1040 online FUTA wages. 1040 online   Figure the FUTA tax on the FUTA wages you pay. 1040 online If you pay cash wages to all of your household employees totaling $1,000 or more in any calendar quarter of 2013 or 2014, the first $7,000 of cash wages you pay to each household employee in 2014 is FUTA wages. 1040 online (A calendar quarter is January through March, April through June, July through September, or October through December. 1040 online ) If your employee's cash wages reach $7,000 during the year, do not figure the FUTA tax on any wages you pay that employee during the rest of the year. 1040 online For an explanation of cash wages, see the discussion on Social security and Medicare wages under Social Security and Medicare Taxes, earlier. 1040 online Wages not counted. 1040 online   Do not count wages you pay to any of the following individuals as FUTA wages. 1040 online Your spouse. 1040 online Your child who is under the age of 21. 1040 online Your parent. 1040 online Credit for 2013. 1040 online   The credit you can take for any state unemployment fund contributions for 2013 that you pay after April 15, 2014, is limited to 90% of the credit that would have been allowable if the contributions were paid on or before April 15, 2014. 1040 online Use Worksheet A to figure the credit for late contributions if you paid any state contributions after the due date for filing  Form 1040. 1040 online Worksheet A. 1040 online Worksheet for Credit for Late Contributions 1. 1040 online Enter the amount from Schedule H, line 22   2. 1040 online Enter the amount from Schedule H, line 19   3. 1040 online Subtract line 2 from line 1. 1040 online If zero or less, enter -0-   4. 1040 online Enter total contributions paid to the state(s) after the Form 1040 due date   5. 1040 online Enter the smaller of line 3 or line 4   6. 1040 online Multiply line 5 by . 1040 online 90 (90%)   7. 1040 online Add lines 2 and 6   8. 1040 online Enter the smaller of the amount on line 1 or line 7 here and on Schedule H, line 23   Do You Need To Withhold Federal Income Tax? You are not required to withhold federal income tax from wages you pay a household employee. 1040 online You should withhold federal income tax only if your household employee asks you to withhold it and you agree. 1040 online The employee must give you a completed Form W-4, Employee's Withholding Allowance Certificate. 1040 online If you and your employee have agreed to withholding, either of you may end the agreement by letting the other know in writing. 1040 online If you agree to withhold federal income tax, you are responsible for paying it to the IRS. 1040 online Pay the tax as discussed under How Do You Make Tax Payments, later. 1040 online Also, see What Forms Must You File, later. 1040 online Use the income tax withholding tables in Publication 15 (Circular E) to find out how much to withhold. 1040 online Figure federal income tax withholding on wages before you deduct any amounts for other withheld taxes. 1040 online Withhold federal income tax from each payment of wages based on the filing status and exemptions shown on your employee's Form W-4. 1040 online Publication 15 (Circular E) contains detailed instructions. 1040 online Wages. 1040 online   Figure federal income tax withholding on both cash and noncash wages you pay. 1040 online Measure wages you pay in any form other than cash by the fair market value of the noncash item. 1040 online   Do not count as wages any of the following items. 1040 online Meals provided to your employee at your home for your convenience. 1040 online Lodging provided to your employee at your home for your convenience and as a condition of employment. 1040 online Up to $130 per month for 2014 for transit passes you give your employee (or for any cash reimbursement you make for the amount your employee pays for transit passes used to commute to your home if you qualify for this exclusion). 1040 online A transit pass includes any pass, token, fare card, voucher, or similar item entitling a person to ride on mass transit, such as a bus or train. 1040 online See Publication 15-B for special requirements for this exclusion. 1040 online Up to $250 per month for 2014 for the value of parking you provide your employee or for any cash reimbursement you make for the amount your employee pays and substantiates for parking at or near your home or at or near a location from which your employee commutes to your home. 1040 online   See Publication 15 (Circular E) for more information on cash and noncash wages. 1040 online Paying tax without withholding. 1040 online   Any income tax you pay for your employee without withholding it from the employee's wages must be included in the employee's wages for federal income tax purposes. 1040 online It also must be included in social security and Medicare wages and in federal unemployment (FUTA) wages. 1040 online What Do You Need To Know About the Earned Income Credit? Certain workers can take the earned income credit (EIC) on their federal income tax return. 1040 online This credit reduces their tax or allows them to receive a payment from the IRS. 1040 online You also may have to give your employee a notice about the EIC. 1040 online Notice about the EIC. 1040 online   Copy B of the 2014 Form W-2 has a statement about the EIC on the back. 1040 online If you give your employee that copy by February 2, 2015 (as discussed under Form W-2 under What Forms Must You File, later), you do not have to give the employee any other notice about the EIC. 1040 online   If you do not give your employee Copy B of the Form W-2, your notice about the EIC can be any of the following items. 1040 online A substitute Form W-2 with the same EIC information on the back of the employee's copy that is on Copy B of the Form W-2. 1040 online Notice 797, Possible Federal Tax Refund Due to the Earned Income Credit (EIC). 1040 online Your own written statement with the same wording as in Notice 797. 1040 online If a substitute Form W-2 is given on time but does not have the required EIC information, you must notify the employee within one week of the date the substitute Form W-2 is given. 1040 online If Form W-2 is required but is not given on time, you must give the employee Notice 797 or your written statement about the 2014 EIC by February 2, 2015. 1040 online If Form W-2 is not required, you must notify the employee by February 7, 2015. 1040 online   You must give your household employee a notice about the EIC if you agree to withhold federal income tax from the employee's wages (as discussed earlier under Do You Need To Withhold Federal Income Tax?) and the income tax withholding tables show that no tax should be withheld. 1040 online Even if not required, you are encouraged to give the employee a notice about the EIC if his or her 2014 wages are less than $46,997 ($52,427 if married filing jointly). 1040 online How Do You Make Tax Payments? When you file your 2014 federal income tax return in 2015, attach Schedule H (Form 1040) to your Form 1040, 1040NR, 1040-SS, or 1041. 1040 online Use Schedule H to figure your total household employment taxes (social security, Medicare, FUTA, and withheld federal income taxes). 1040 online Add these household employment taxes to your income tax. 1040 online Pay the amount due by April 15, 2015. 1040 online For more information about using Schedule H, see Schedule H under What Forms Must You File, later. 1040 online You can avoid owing tax with your return if you pay enough tax during the year to cover your household employment taxes, as well as your income tax. 1040 online You can pay the additional tax in any of the following ways. 1040 online Ask your employer to withhold more federal income tax from your wages in 2014. 1040 online Ask the payer of your pension or annuity to withhold more federal income tax from your benefits. 1040 online Make estimated tax payments for 2014 to the IRS. 1040 online Increase your payments if you already make estimated tax payments. 1040 online You may be subject to the estimated tax underpayment penalty if you did not pay enough income and household employment taxes during the year. 1040 online (See Publication 505, Tax Withholding and Estimated Tax, for information about the underpayment penalty. 1040 online ) However, you will not be subject to the penalty if both of the following situations apply to you. 1040 online You will not have federal income tax withheld from wages, pensions, or any other payments you receive. 1040 online Your income taxes, excluding your household employment taxes, would not be enough to require payment of estimated taxes. 1040 online Asking for more federal income tax withholding. 1040 online   If you are employed and want more federal income tax withheld from your wages to cover your household employment taxes, give your employer a new Form W-4. 1040 online Complete it as before, but show the additional amount you want withheld from each paycheck on line 6. 1040 online   If you receive a pension or annuity and want more federal income tax withheld to cover household employment taxes, give the payer a new Form W-4P, Withholding Certificate for Pension or Annuity Payments (or a similar form provided by the payer). 1040 online Complete it as before, but show the additional amount you want withheld from each benefit payment on line 3. 1040 online   See Publication 505 to make sure you will have the right amount withheld. 1040 online It will help you compare your total expected withholding for 2014 with the combined income tax and employment taxes that you can expect to figure on your 2014 tax return. 1040 online Paying estimated tax. 1040 online   If you want to make estimated tax payments to cover household employment taxes, get Form 1040-ES, Estimated Tax for Individuals. 1040 online You can use its payment vouchers to make your payments by check or money order. 1040 online You may be able to pay by Electronic Funds Withdrawal (EFW) or credit card. 1040 online For details, see the form instructions and visit IRS. 1040 online gov. 1040 online    You can pay all the employment taxes at once or you can pay them in installments. 1040 online If you have already made estimated tax payments for 2014, you can increase your remaining payments to cover the employment taxes. 1040 online Estimated tax payments for 2014 are due April 15, June 16, and September 15, 2014, and January 15, 2015. 1040 online Payment option for business employers. 1040 online   If you own a business as a sole proprietor or your home is on a farm operated for profit, you can choose either of two ways to pay your 2014 household employment taxes. 1040 online You can pay them with your federal income tax as previously described, or you can include them with your federal employment tax deposits or other payments for your business or farm employees. 1040 online For information on depositing employment taxes, see Publication 15 (Circular E). 1040 online   If you pay your household employment taxes with your business or farm employment taxes, you must report your household employment taxes with those other employment taxes on Form 941, Employer's QUARTERLY Federal Tax Return, Form 944, Employer's ANNUAL Federal Tax Return, or Form 943, Employer's Annual Federal Tax Return for Agricultural Employees, and on Form 940, Employer's Annual Federal Unemployment (FUTA) Tax Return. 1040 online See Business employment tax returns, later. 1040 online    The deduction that can be taken on Schedules C and F (Form 1040) for wages and employment taxes applies only to wages and taxes paid for business and farm employees. 1040 online You cannot deduct the wages and employment taxes paid for your household employees on your Schedule C or F. 1040 online More information. 1040 online   For more information about paying taxes through federal income tax withholding and estimated tax payments, and figuring the estimated tax penalty, see Publication 505. 1040 online What Forms Must You File? You must file certain forms to report your household employee's wages and the federal employment taxes for the employee if you pay any of the following wages to the employee. 1040 online Social security and Medicare wages. 1040 online FUTA wages. 1040 online Wages from which you withhold federal income tax. 1040 online For information on ordering employment tax forms, see How To Get Tax Help, later. 1040 online Employer identification number (EIN). 1040 online   You must include your employer identification number (EIN) on the forms you file for your household employee. 1040 online An EIN is a nine-digit number issued by the IRS. 1040 online It is not the same as a social security number. 1040 online    You ordinarily will have an EIN if you previously paid taxes for employees, either as a household employer or as a sole proprietor of a business you own. 1040 online If you already have an EIN, use that number. 1040 online   If you do not have an EIN, you may apply for one online. 1040 online Go to IRS. 1040 online gov and click on the Apply for an EIN Online link under Tools. 1040 online You may also apply for an EIN by calling 1-800-829-4933, or you can fax or mail Form SS-4, Application for Employer Identification Number, to the IRS. 1040 online Form W-2. 1040 online   File a separate 2014 Form W-2, for each household employee to whom you pay either of the following wages during the year. 1040 online Social security and Medicare wages of $1,900 or more. 1040 online Wages from which you withhold federal income tax. 1040 online You must complete Form W-2 and give Copies B, C, and 2 to your employee by February 2, 2015. 1040 online You must send Copy A of Form W-2 with Form W-3, Transmittal of Wage and Tax Statements, to the SSA by March 2, 2015 (March 31, 2015, if you file your Form W-2 electronically). 1040 online Electronic filing is available to all employers and is free, fast, secure, and offers a later filing deadline. 1040 online Visit the SSA's Employer W-2 Filing Instructions & Information website at www. 1040 online socialsecurity. 1040 online gov/employer for guidelines on filing electronically. 1040 online Employee who leaves during the year. 1040 online   If an employee stops working for you before the end of 2014, you can file Form W-2 and provide copies to your employee immediately after you make your final payment of wages. 1040 online You do not need to wait until 2015. 1040 online If the employee asks you for Form W-2, give it to him or her within 30 days after the request or the last wage payment, whichever is later. 1040 online Schedule H. 1040 online   Use Schedule H to report household employment taxes if you pay any of the following wages to the employee. 1040 online Social security and Medicare wages of $1,900 or more. 1040 online FUTA wages. 1040 online Wages from which you withhold federal income tax. 1040 online File Schedule H with your 2014 federal income tax return by April 15, 2015. 1040 online If you get an extension to file your return, the extension also will apply to your Schedule H. 1040 online Filing options when no return is required. 1040 online   If you are not required to file a 2014 tax return, you have the following two options. 1040 online You can file Schedule H by itself. 1040 online See the Schedule H instructions for details. 1040 online If, besides your household employee, you have other employees for whom you report employment taxes on Form 941, Form 944, or Form 943 and on Form 940, you can include your taxes for your household employee on those forms. 1040 online See Business employment tax returns, next. 1040 online   Employers having the options listed above include certain tax-exempt organizations that do not have to file a tax return, such as churches that pay a household worker to take care of a minister's home. 1040 online Business employment tax returns. 1040 online   Do not use Schedule H if you choose to pay the employment taxes for your household employee with business or farm employment taxes. 1040 online (See Payment option for business employers, earlier. 1040 online ) Instead, include the social security, Medicare, and withheld federal income taxes for the employee on the Form 941 or Form 944 you file for your business or on the Form 943 you file for your farm. 1040 online Include the FUTA tax for the employee on your Form 940. 1040 online   If you report the employment taxes for your household employee on Form 941, Form 944, or Form 943, file Form W-2 for that employee with the Forms W-2 and Form W-3 for your business or farm employees. 1040 online   For information on filing Form 941 or Form 944, see Publication 15 (Circular E). 1040 online For information on filing Form 943, see Publication 51 (Circular A), Agricultural Employer's Tax Guide. 1040 online Both of these publications also provide information about filing Form 940. 1040 online What Records Must You Keep? Keep your copies of Schedule H or other employment tax forms you file and related Forms W-2, W-3, and W-4. 1040 online You must also keep records to support the information you enter on the forms you file. 1040 online If you must file Form W-2, you will need to keep a record of your employee's name, address, and social security number. 1040 online Wage and tax records. 1040 online   On each payday, you should record the date and amounts of all the following items. 1040 online Your employee's cash and noncash wages. 1040 online Any employee social security tax you withhold or agree to pay for your employee. 1040 online Any employee Medicare tax you withhold or agree to pay for your employee. 1040 online Any federal income tax you withhold. 1040 online Any state employment taxes you withhold. 1040 online Employee's social security number. 1040 online   You must keep a record of your employee's name and social security number exactly as they appear on his or her social security card if you pay the employee either of the following. 1040 online Social security and Medicare wages of $1,900 or more. 1040 online Wages from which you withhold federal income tax. 1040 online You must ask for your employee's social security number no later than the first day on which you pay the wages. 1040 online You may wish to ask for it when you hire your employee. 1040 online You should ask your employee to show you his or her social security card. 1040 online The employee may show the card if it is available. 1040 online You may, but are not required to, photocopy the card if the employee provides it. 1040 online   An employee who does not have a social security number must apply for one on Form SS-5, Application for a Social Security Card. 1040 online An employee who has lost his or her social security card or whose name is not correctly shown on the card may apply for a replacement card. 1040 online    Employees can get Form SS-5 from any Social Security Administration office or by calling 1-800-772-1213. 1040 online    You also can download Form SS-5 from the Social Security Administration website at  www. 1040 online socialsecurity. 1040 online gov/online/ss-5. 1040 online pdf. 1040 online How long to keep records. 1040 online   Keep your employment tax records for at least 4 years after the due date of the return on which you report the taxes or the date the taxes were paid, whichever is later. 1040 online Can You Claim a Credit for Child and Dependent Care Expenses? If your household employee cares for your dependent who is under age 13 or for your spouse or dependent who is not capable of self-care, you may be able to take an income tax credit against some of your expenses. 1040 online To qualify, you must pay these expenses so you can work or look for work. 1040 online If you can take the credit, you can include in your qualifying expenses your share of the federal and state employment taxes you pay, as well as the employee's wages. 1040 online For information about the credit, see Publication 503, Child and Dependent Care Expenses. 1040 online How Can You Correct Schedule H? If you discover that you made an error on a Schedule H (or Anexo H-PR), the forms used to correct the error depend on whether the Schedule H was attached to another form or whether it was filed by itself. 1040 online Schedule H attached to another form. 1040 online    If you discover an error on a Schedule H that you previously filed with Form 1040, Form 1040NR, or Form 1040-SS, file Form 1040X, Amended U. 1040 online S. 1040 online Individual Income Tax Return, and attach a corrected Schedule H. 1040 online If you filed Formulario 1040-PR, file a Form 1040X and attach a corrected Anexo H-PR. 1040 online If you discover an error on a Schedule H that you previously filed with Form 1041, U. 1040 online S. 1040 online Income Tax Return for Estates and Trusts, file an “amended” Form 1041 and attach a corrected Schedule H. 1040 online You discovered (that is, ascertained) the error when you had enough information to be able to correct the error. 1040 online Write “CORRECTED” (or “CORREGIDO”) and the date you discovered the error in the top margin of your corrected Schedule H (or Anexo H-PR), in dark, bold letters. 1040 online In addition, explain the reason for your correction and the date the error was discovered in Part III of Form 1040X or in a statement attached to the amended Form 1041. 1040 online Schedule H filed by itself. 1040 online   If you discover an error on a Schedule H (or Anexo H-PR) that you filed as a stand-alone return, file another stand-alone Schedule H with the corrected information. 1040 online You discovered (that is, ascertained) the error when you had enough information to be able to correct the error. 1040 online Write “CORRECTED” (or “CORREGIDO”) and the date you discovered the error in the top margin of your corrected Schedule H (or Anexo H-PR), in dark, bold letters. 1040 online In addition, explain the reason for your correction and the date the error was discovered in a statement attached to the corrected Schedule H. 1040 online If you have an overpayment, also write “ADJUSTED” (or “CORREGIDO”) or “REFUND” (or “REEMBOLSO”) in the top margin, depending on whether you want to adjust your overpayment or claim a refund. 1040 online (See Overpayment of tax, later. 1040 online ) When to file. 1040 online   File a corrected Schedule H when you discover an error on a previously filed Schedule H. 1040 online If you are correcting an underpayment, file a corrected Schedule H no later than the due date of your next tax return (generally, April 15 of the following calendar year) after you discover the error. 1040 online If you are correcting an overpayment, file a corrected Schedule H within the refund period of limitations (generally 3 years from the date your original form was filed or within 2 years from the date you paid the tax, whichever is later). 1040 online Underpayment of tax. 1040 online   You must pay any underpayment of social security and Medicare taxes by the time you file the corrected Schedule H. 1040 online Generally, by filing on time and paying by the time you file the return, you will not be charged interest (and will not be subject to failure-to-pay or estimated tax penalties) on the balance due. 1040 online However, underreported FUTA taxes will be subject to interest. 1040 online Overpayment of tax. 1040 online    You may either adjust or claim a refund of an overpayment of social security and Medicare taxes on a previously filed Schedule H. 1040 online However, if you are correcting an overpayment and are filing the corrected Schedule H within 90 days of the expiration of the period of limitations, you can only claim a refund of the overpayment. 1040 online Adjust the overpayment. 1040 online   If the corrected Schedule H is filed with a Form 1040X or an amended Form 1041, adjust your return by indicating on line 22 of the Form 1040X or on line 29a of the Form 1041 that you would like the overpayment applied to your estimated taxes on Form 1040, Form 1040NR, Form 1040-PR, Form 1040-SS, or Form 1041 for the year in which you are filing the corrected Schedule H. 1040 online If the corrected Schedule H is filed as a stand-alone return, adjust your return by writing “ADJUSTED” (or “CORREGIDO”) in the top margin (in dark, bold letters). 1040 online If you adjust your return, you will not receive interest on your overpayment. 1040 online If the corrected Schedule H will be filed within 90 days of the expiration of the refund period of limitations, you may not adjust the return and must claim a refund for the overpayment. 1040 online You may not adjust your return to correct overpayments of FUTA tax. 1040 online Claim for refund process. 1040 online   If the corrected Schedule H is filed with a Form 1040X or an amended Form 1041, claim a refund by indicating that you would like the overpayment refunded to you on line 21 of the Form 1040X or line 29b of the Form 1041. 1040 online If the corrected Schedule H is filed as a stand-alone return, claim a refund by writing “REFUND” (or “REEMBOLSO”) in the top margin (in dark, bold letters). 1040 online You will receive interest on any overpayment refunded, unless the overpayment is for FUTA tax because you were entitled to increased credits for state contributions. 1040 online Required repayment or consent. 1040 online   If you previously overreported social security and Medicare taxes, you may adjust your overpayment only after you have repaid or reimbursed your employees in the amount of the overcollection of employee tax. 1040 online You reimburse your employees by applying the overwithheld amount against taxes to be withheld on future wages. 1040 online You may claim a refund for the overpayment only after you have repaid or reimbursed your employees in the amount of the overcollection or you have obtained consents from your employees to file the claim for refund for the employee tax. 1040 online Include a statement that you repaid or reimbursed your employees, or obtained their written consents in the case of a claim for refund, in Part III of Form 1040X or in a statement attached to the amended Form 1041 or the stand-alone corrected Schedule H. 1040 online Filing required Forms W-2 or Forms W-2c. 1040 online   Whether you previously underreported tax or overreported tax, you will generally be required to file Form W-2, or their territorial equivalents (if none was previously filed), or Form W-2c, Corrected Wage and Tax Statement, to reflect the changes reported on your corrected Schedule H. 1040 online Additional Medicare Tax. 1040 online   Generally, you may not correct an error in Additional Medicare Tax withholding for wages paid to employees in a prior year unless it is an administrative error. 1040 online An administrative error occurs if the amount you entered on Schedule H is not the amount you actually withheld. 1040 online For example, if the Additional Medicare Tax actually withheld was incorrectly reported on Schedule H due to a mathematical or transposition error, this would be an administrative error. 1040 online   Any underwithheld Additional Medicare Tax must be recovered from employees on or before the last day of the calendar year in which the underwithholding occurred. 1040 online Any excess Additional Medicare Tax withholding must be repaid or reimbursed to employees before the end of the calendar year in which it was withheld. 1040 online Additional information. 1040 online   For more information about correcting errors on a previously filed Schedule H, see page 4 of Form 944-X, Form 944-X: Which process should you use? (substitute “Schedule H” for “Form 944-X”) and the Instructions for Form 944-X (or Formulario 944-X (PR)). 1040 online Also, visit IRS. 1040 online gov. 1040 online How To Get Tax Help Whether it's help with a tax issue, preparing your tax return or a need for a free publication or form, get the help you need the way you want it: online, use a smart phone, call or walk in to an IRS office or volunteer site near you. 1040 online Free help with your tax return. 1040 online   You can get free help preparing your return nationwide from IRS-certified volunteers. 1040 online The Volunteer Income Tax Assistance (VITA) program helps low-to-moderate income, elderly, people with disabilities, and limited English proficient taxpayers. 1040 online The Tax Counseling for the Elderly (TCE) program helps taxpayers age 60 and older with their tax returns. 1040 online Most VITA and TCE sites offer free electronic filing and all volunteers will let you know about credits and deductions you may be entitled to claim. 1040 online In addition, some VITA and TCE sites provide taxpayers the opportunity to prepare their own return with help from an IRS-certified volunteer. 1040 online To find the nearest VITA or TCE site, you can use the VITA Locator Tool on IRS. 1040 online gov, download the IRS2Go app, or call 1-800-906-9887. 1040 online   As part of the TCE program, AARP offers the Tax-Aide counseling program. 1040 online To find the nearest AARP Tax-Aide site, visit AARP's website at www. 1040 online aarp. 1040 online org/money/taxaide or call 1-888-227-7669. 1040 online For more information on these programs, go to IRS. 1040 online gov and enter “VITA” in the search box. 1040 online Internet. 1040 online    IRS. 1040 online gov and IRS2Go are ready when you are —24 hours a day, 7 days a week. 1040 online Download the free IRS2Go app from the iTunes app store or from Google Play. 1040 online Use it to check your refund status, order transcripts of your tax returns or tax account, watch the IRS YouTube channel, get IRS news as soon as it's released to the public, subscribe to filing season updates or daily tax tips, and follow the IRS Twitter news feed, @IRSnews, to get the latest federal tax news, including information about tax law changes and important IRS programs. 1040 online Check the status of your 2013 refund with the Where's My Refund? application on IRS. 1040 online gov or download the IRS2Go app and select the Refund Status option. 1040 online The IRS issues more than 9 out of 10 refunds in less than 21 days. 1040 online Using these applications, you can start checking on the status of your return within 24 hours after we receive your e-filed return or 4 weeks after you mail a paper return. 1040 online You will also be given a personalized refund date as soon as the IRS processes your tax return and approves your refund. 1040 online The IRS updates Where's My Refund? every 24 hours, usually overnight, so you only need to check once a day. 1040 online Use the Interactive Tax Assistant (ITA) to research your tax questions. 1040 online No need to wait on the phone or stand in line. 1040 online The ITA is available 24 hours a day, 7 days a week, and provides you with a variety of tax information related to general filing topics, deductions, credits, and income. 1040 online When you reach the response screen, you can print the entire interview and the final response for your records. 1040 online New subject areas are added on a regular basis. 1040 online  Answers not provided through ITA may be found in Tax Trails, one of the Tax Topics on IRS. 1040 online gov which contain general individual and business tax information or by searching the IRS Tax Map, which includes an international subject index. 1040 online You can use the IRS Tax Map, to search publications and instructions by topic or keyword. 1040 online The IRS Tax Map integrates forms and publications into one research tool and provides single-point access to tax law information by subject. 1040 online When the user searches the IRS Tax Map, they will be provided with links to related content in existing IRS publications, forms and instructions, questions and answers, and Tax Topics. 1040 online Coming this filing season, you can immediately view and print for free all 5 types of individual federal tax transcripts (tax returns, tax account, record of account, wage and income statement, and certification of non-filing) using Get Transcript. 1040 online You can also ask the IRS to mail a return or an account transcript to you. 1040 online Only the mail option is available by choosing the Tax Records option on the IRS2Go app by selecting Mail Transcript on IRS. 1040 online gov or by calling 1-800-908-9946. 1040 online Tax return and tax account transcripts are generally available for the current year and the past three years. 1040 online Determine if you are eligible for the EITC and estimate the amount of the credit with the Earned Income Tax Credit (EITC) Assistant. 1040 online Visit Understanding Your IRS Notice or Letter to get answers to questions about a notice or letter you received from the IRS. 1040 online If you received the First Time Homebuyer Credit, you can use the First Time Homebuyer Credit Account Look-up tool for information on your repayments and account balance. 1040 online Check the status of your amended return using Where's My Amended Return? Go to IRS. 1040 online gov and enter Where's My Amended Return? in the search box. 1040 online You can generally expect your amended return to be processed up to 12 weeks from the date we receive it. 1040 online It can take up to 3 weeks from the date you mailed it to show up in our system. 1040 online Make a payment using one of several safe and convenient electronic payment options available on IRS. 1040 online gov. 1040 online Select the Payment tab on the front page of IRS. 1040 online gov for more information. 1040 online Determine if you are eligible and apply for an online payment agreement, if you owe more tax than you can pay today. 1040 online Figure your income tax withholding with the IRS Withholding Calculator on IRS. 1040 online gov. 1040 online Use it if you've had too much or too little withheld, your personal situation has changed, you're starting a new job or you just want to see if you're having the right amount withheld. 1040 online Determine if you might be subject to the Alternative Minimum Tax by using the Alternative Minimum Tax Assistant on IRS. 1040 online gov. 1040 online Request an Electronic Filing PIN by going to IRS. 1040 online gov and entering Electronic Filing PIN in the search box. 1040 online Download forms, instructions and publications, including accessible versions for people with disabilities. 1040 online Locate the nearest Taxpayer Assistance Center (TAC) using the Office Locator tool on IRS. 1040 online gov, or choose the Contact Us option on the IRS2Go app and search Local Offices. 1040 online An employee can answer questions about your tax account or help you set up a payment plan. 1040 online Before you visit, check the Office Locator on IRS. 1040 online gov, or Local Offices under Contact Us on IRS2Go to confirm the address, phone number, days and hours of operation, and the services provided. 1040 online If you have a special need, such as a disability, you can request an appointment. 1040 online Call the local number listed in the Office Locator, or look in the phone book under United States Government, Internal Revenue Service. 1040 online Apply for an Employer Identification Number (EIN). 1040 online Go to IRS. 1040 online gov and enter Apply for an EIN in the search box. 1040 online Read the Internal Revenue Code, regulations, or other official guidance. 1040 online Read Internal Revenue Bulletins. 1040 online Sign up to receive local and national tax news and more by email. 1040 online Just click on “subscriptions” above the search box on IRS. 1040 online gov and choose from a variety of options. 1040 online Phone. 1040 online    You can call the IRS, or you can carry it in your pocket with the IRS2Go app on your smart phone or tablet. 1040 online Download the free IRS2Go app from the iTunes app store or from Google Play. 1040 online Call to locate the nearest volunteer help site, 1-800-906-9887 or you can use the VITA Locator Tool on IRS. 1040 online gov, or download the IRS2Go app. 1040 online Low-to-moderate income, elderly, people with disabilities, and limited English proficient taxpayers can get free help with their tax return from the nationwide Volunteer Income Tax Assistance (VITA) program. 1040 online The Tax Counseling for the Elderly (TCE) program helps taxpayers age 60 and older with their tax returns. 1040 online Most VITA and TCE sites offer free electronic filing. 1040 online Some VITA and TCE sites provide IRS-certified volunteers who can help prepare your tax return. 1040 online Through the TCE program, AARP offers the Tax-Aide counseling program; call 1-888-227-7669 to find the nearest Tax-Aide location. 1040 online Call the automated Where's My Refund? information hotline to check the status of your 2013 refund 24 hours a day, 7 days a week at 1-800-829-1954. 1040 online If you e-file, you can start checking on the status of your return within 24 hours after the IRS receives your tax return or 4 weeks after you've mailed a paper return. 1040 online The IRS issues more than 9 out of 10 refunds in less than 21 days. 1040 online Where's My Refund? will give you a personalized refund date as soon as the IRS processes your tax return and approves your refund. 1040 online Before you call this automated hotline, have your 2013 tax return handy so you can enter your social security number, your filing status, and the exact whole dollar amount of your refund. 1040 online The IRS updates Where's My Refund? every 24 hours, usually overnight, so you only need to check once a day. 1040 online Note, the above information is for our automated hotline. 1040 online Our live phone and walk-in assistors can research the status of your refund only if it's been 21 days or more since you filed electronically or more than 6 weeks since you mailed your paper return. 1040 online Call the Amended Return Hotline, 1-866-464-2050, to check the status of your amended return. 1040 online You can generally expect your amended return to be processed up to 12 weeks from the date we receive it. 1040 online It can take up to 3 weeks from the date you mailed it to show up in our system. 1040 online Call 1-800-TAX-FORM (1-800-829-3676) to order current-year forms, instructions, publications, and prior-year forms and instructions (limited to 5 years). 1040 online You should receive your order within 10 business days. 1040 online Call TeleTax, 1-800-829-4477, to listen to pre-recorded messages covering general and business tax information. 1040 online If, between January and April 15, you still have questions about the Form 1040, 1040A, or 1040EZ (like filing requirements, dependents, credits, Schedule D, pensions and IRAs or self-employment taxes), call 1-800-829-1040. 1040 online Call using TTY/TDD equipment, 1-800-829-4059 to ask tax questions or order forms and publications. 1040 online The TTY/TDD telephone number is for people who are deaf, hard of hearing, or have a speech disability. 1040 online These individuals can also contact the IRS through relay services such as the Federal Relay Service. 1040 online Walk-in. 1040 online   You can find a selection of forms, publications and services — in-person. 1040 online Products. 1040 online You can walk in to some post offices, libraries, and IRS offices to pick up certain forms, instructions, and publications. 1040 online Some IRS offices, libraries, and city and county government offices have a collection of products available to photocopy from reproducible proofs. 1040 online Services. 1040 online You can walk in to your local TAC for face-to-face tax help. 1040 online An employee can answer questions about your tax account or help you set up a payment plan. 1040 online Before visiting, use the Office Locator tool on IRS. 1040 online gov, or choose the Contact Us option on the IRS2Go app and search Local Offices for days and hours of operation, and services provided. 1040 online Mail. 1040 online   You can send your order for forms, instructions, and publications to the address below. 1040 online You should receive a response within 10 business days after your request is received. 1040 online Internal Revenue Service 1201 N. 1040 online Mitsubishi Motorway Bloomington, IL 61705-6613    The Taxpayer Advocate Service Is Here to Help You. 1040 online The Taxpayer Advocate Service (TAS) is your voice at the IRS. 1040 online Our job is to ensure that every taxpayer is treated fairly and that you know and understand your rights. 1040 online   What can TAS do for you? We can offer you free help with IRS problems that you can't resolve on your own. 1040 online We know this process can be confusing, but the worst thing you can do is nothing at all! TAS can help if you can't resolve your tax problem and: Your problem is causing financial difficulties for you, your family, or your business. 1040 online You face (or your business is facing) an immediate threat of adverse action. 1040 online You've tried repeatedly to contact the IRS but no one has responded, or the IRS hasn't responded by the date promised. 1040 online   If you qualify for our help, you'll be assigned to one advocate who'll be with you at every turn and will do everything possible to resolve your problem. 1040 online Here's why we can help: TAS is an independent organization within the IRS. 1040 online Our advocates know how to work with the IRS. 1040 online Our services are free and tailored to meet your needs. 1040 online We have offices in every state, the District of Columbia, and Puerto Rico. 1040 online   How can you reach us? If you think TAS can help you, call your local advocate, whose number is in your local directory and at Taxpayer Advocate, or call us toll-free at 1-877-777-4778. 1040 online   How else does TAS help taxpayers?  TAS also works to resolve large-scale, systemic problems that affect many taxpayers. 1040 online If you know of one of these broad issues, please report it to us through our Systemic Advocacy Management System. 1040 online Low Income Taxpayer Clinics Low Income Taxpayer Clinics (LITCs) serve individuals whose income is below a certain level and need to resolve tax problems such as audits, appeals and tax collection disputes. 1040 online Some clinics can provide information about taxpayer rights and responsibilities in different languages for individuals who speak English as a second language. 1040 online Visit Taxpayer Advocate or see IRS Publication 4134, Low Income Taxpayer Clinic List. 1040 online Sample W-2 Form This image is too large to be displayed in the current screen. 1040 online Please click the link to view the image. 1040 online Webtitle: Form W-2 Wage and Tax Statement and Form W-3 Transmitttal of Wage and Tax Statemtents Prev  Up  Next   Home   More Online Publications