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2011 Irs Form 1040ez

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2011 Irs Form 1040ez

2011 irs form 1040ez 8. 2011 irs form 1040ez   Qualified Tuition Program (QTP) Table of Contents Introduction What Is a Qualified Tuition ProgramDesignated beneficiary. 2011 irs form 1040ez Half-time student. 2011 irs form 1040ez How Much Can You Contribute Are Distributions TaxableFiguring the Taxable Portion of a Distribution Additional Tax on Taxable Distributions Rollovers and Other TransfersRollovers Changing the Designated Beneficiary Introduction Qualified tuition programs (QTPs) are also called “529 plans. 2011 irs form 1040ez ” States may establish and maintain programs that allow you to either prepay or contribute to an account for paying a student's qualified education expenses at a postsecondary institution. 2011 irs form 1040ez Eligible educational institutions may establish and maintain programs that allow you to prepay a student's qualified education expenses. 2011 irs form 1040ez If you prepay tuition, the student (designated beneficiary) will be entitled to a waiver or a payment of qualified education expenses. 2011 irs form 1040ez You cannot deduct either payments or contributions to a QTP. 2011 irs form 1040ez For information on a specific QTP, you will need to contact the state agency or eligible educational institution that established and maintains it. 2011 irs form 1040ez What is the tax benefit of a QTP. 2011 irs form 1040ez   No tax is due on a distribution from a QTP unless the amount distributed is greater than the beneficiary's adjusted qualified education expenses. 2011 irs form 1040ez See Are Distributions Taxable , later, for more information. 2011 irs form 1040ez    Even if a QTP is used to finance a student's education, the student or the student's parents still may be eligible to claim the American opportunity credit or the lifetime learning credit. 2011 irs form 1040ez See Coordination With American Opportunity and Lifetime Learning Credits, later. 2011 irs form 1040ez What Is a Qualified Tuition Program A qualified tuition program is a program set up to allow you to either prepay, or contribute to an account established for paying, a student's qualified education expenses at an eligible educational institution. 2011 irs form 1040ez QTPs can be established and maintained by states (or agencies or instrumentalities of a state) and eligible educational institutions. 2011 irs form 1040ez The program must meet certain requirements. 2011 irs form 1040ez Your state government or the eligible educational institution in which you are interested can tell you whether or not they participate in a QTP. 2011 irs form 1040ez Qualified education expenses. 2011 irs form 1040ez   These are expenses related to enrollment or attendance at an Eligible educational institution (defined later). 2011 irs form 1040ez As shown in the following list, to be qualified, some of the expenses must be required by the institution and some must be incurred by students who are enrolled at least half-time. 2011 irs form 1040ez See Half-time student , later. 2011 irs form 1040ez The following expenses must be required for enrollment or attendance of a Designated beneficiary (defined later) at an eligible educational institution. 2011 irs form 1040ez Tuition and fees. 2011 irs form 1040ez Books, supplies, and equipment. 2011 irs form 1040ez Expenses for special needs services needed by a special needs beneficiary must be incurred in connection with enrollment or attendance at an eligible educational institution. 2011 irs form 1040ez Expenses for room and board must be incurred by students who are enrolled at least half-time. 2011 irs form 1040ez The expense for room and board qualifies only to the extent that it is not more than the greater of the following two amounts. 2011 irs form 1040ez The allowance for room and board, as determined by the eligible educational institution, that was included in the cost of attendance (for federal financial aid purposes) for a particular academic period and living arrangement of the student. 2011 irs form 1040ez The actual amount charged if the student is residing in housing owned or operated by the eligible educational institution. 2011 irs form 1040ez You will need to contact the eligible educational institution for qualified room and board costs. 2011 irs form 1040ez    For tax years after 2010, the purchase of computer technology or equipment is only a qualified education expense if the computer technology or equipment is required for enrollment or attendance at an eligible institution. 2011 irs form 1040ez Designated beneficiary. 2011 irs form 1040ez   The designated beneficiary is generally the student (or future student) for whom the QTP is intended to provide benefits. 2011 irs form 1040ez The designated beneficiary can be changed after participation in the QTP begins. 2011 irs form 1040ez If a state or local government or certain tax-exempt organizations purchase an interest in a QTP as part of a scholarship program, the designated beneficiary is the person who receives the interest as a scholarship. 2011 irs form 1040ez Half-time student. 2011 irs form 1040ez   A student is enrolled “at least half-time” if he or she is enrolled for at least half the full-time academic workload for the course of study the student is pursuing, as determined under the standards of the school where the student is enrolled. 2011 irs form 1040ez Eligible educational institution. 2011 irs form 1040ez   For purposes of a QTP, this is any college, university, vocational school, or other postsecondary educational institution eligible to participate in a student aid program administered by the U. 2011 irs form 1040ez S. 2011 irs form 1040ez Department of Education. 2011 irs form 1040ez It includes virtually all accredited public, nonprofit, and proprietary (privately owned profit-making) postsecondary institutions. 2011 irs form 1040ez The educational institution should be able to tell you if it is an eligible educational institution. 2011 irs form 1040ez   Certain educational institutions located outside the United States also participate in the U. 2011 irs form 1040ez S. 2011 irs form 1040ez Department of Education's Federal Student Aid (FSA) programs. 2011 irs form 1040ez   How Much Can You Contribute Contributions to a QTP on behalf of any beneficiary cannot be more than the amount necessary to provide for the qualified education expenses of the beneficiary. 2011 irs form 1040ez There are no income restrictions on the individual contributors. 2011 irs form 1040ez You can contribute to both a QTP and a Coverdell ESA in the same year for the same designated beneficiary. 2011 irs form 1040ez   Are Distributions Taxable The part of a distribution representing the amount paid or contributed to a QTP does not have to be included in income. 2011 irs form 1040ez This is a return of the investment in the plan. 2011 irs form 1040ez The designated beneficiary generally does not have to include in income any earnings distributed from a QTP if the total distribution is less than or equal to adjusted qualified education expenses (defined under Figuring the Taxable Portion of a Distribution , later). 2011 irs form 1040ez Earnings and return of investment. 2011 irs form 1040ez    You will receive a Form 1099-Q, from each of the programs from which you received a QTP distribution in 2013. 2011 irs form 1040ez The amount of your gross distribution (box 1) shown on each form will be divided between your earnings (box 2) and your basis, or return of investment (box 3). 2011 irs form 1040ez Form 1099-Q should be sent to you by January 31, 2014. 2011 irs form 1040ez Figuring the Taxable Portion of a Distribution To determine if total distributions for the year are more or less than the amount of qualified education expenses, you must compare the total of all QTP distributions for the tax year to the adjusted qualified education expenses. 2011 irs form 1040ez Adjusted qualified education expenses. 2011 irs form 1040ez   This amount is the total qualified education expenses reduced by any tax-free educational assistance. 2011 irs form 1040ez Tax-free educational assistance includes: The tax-free part of scholarships and fellowships (see Tax-Free Scholarships and Fellowships in chapter 1, Scholarships, Fellowships, Grants, and Tuition Reductions), Veterans' educational assistance (see Veterans' Benefits in chapter 1, Scholarships, Fellowships, Grants, and Tuition Reductions), Pell grants (see Pell Grants and Other Title IV Need-Based Education Grants in chapter 1, Scholarships, Fellowships, Grants, and Tuition Reductions), Employer-provided educational assistance (see chapter 11, Employer-Provided Educational Assistance ), and Any other nontaxable (tax-free) payments (other than gifts or inheritances) received as educational assistance. 2011 irs form 1040ez Taxable earnings. 2011 irs form 1040ez   Use the following steps to figure the taxable part. 2011 irs form 1040ez Multiply the total distributed earnings shown in box 2 of Form 1099-Q by a fraction. 2011 irs form 1040ez The numerator is the adjusted qualified education expenses paid during the year and the denominator is the total amount distributed during the year. 2011 irs form 1040ez Subtract the amount figured in (1) from the total distributed earnings. 2011 irs form 1040ez The result is the amount the beneficiary must include in income. 2011 irs form 1040ez Report it on Form 1040 or Form 1040NR, line 21. 2011 irs form 1040ez Example 1. 2011 irs form 1040ez In 2007, Sara Clarke's parents opened a savings account for her with a QTP maintained by their state government. 2011 irs form 1040ez Over the years they contributed $18,000 to the account. 2011 irs form 1040ez The total balance in the account was $27,000 on the date the distribution was made. 2011 irs form 1040ez In the summer of 2013, Sara enrolled in college and had $8,300 of qualified education expenses for the rest of the year. 2011 irs form 1040ez She paid her college expenses from the following sources. 2011 irs form 1040ez   Gift from parents $1,600     Partial tuition scholarship (tax-free) 3,100     QTP distribution 5,300           Before Sara can determine the taxable part of her QTP distribution, she must reduce her total qualified education expenses by any tax-free educational assistance. 2011 irs form 1040ez   Total qualified education expenses $8,300     Minus: Tax-free educational assistance −3,100     Equals: Adjusted qualified  education expenses (AQEE) $5,200   Since the remaining expenses ($5,200) are less than the QTP distribution, part of the earnings will be taxable. 2011 irs form 1040ez Sara's Form 1099-Q shows that $950 of the QTP distribution is earnings. 2011 irs form 1040ez Sara figures the taxable part of the distributed earnings as follows. 2011 irs form 1040ez   1. 2011 irs form 1040ez $950 (earnings) × $5,200 AQEE  $5,300 distribution           =$932 (tax-free earnings)     2. 2011 irs form 1040ez $950 (earnings)−$932 (tax-free earnings)     =$18 (taxable earnings)  Sara must include $18 in income (Form 1040, line 21) as distributed QTP earnings not used for adjusted qualified education expenses. 2011 irs form 1040ez Coordination With American Opportunity and Lifetime Learning Credits An American opportunity or lifetime learning credit (education credit) can be claimed in the same year the beneficiary takes a tax-free distribution from a QTP, as long as the same expenses are not used for both benefits. 2011 irs form 1040ez This means that after the beneficiary reduces qualified education expenses by tax-free educational assistance, he or she must further reduce them by the expenses taken into account in determining the credit. 2011 irs form 1040ez Example 2. 2011 irs form 1040ez Assume the same facts as in Example 1 , except that Sara's parents claimed an American opportunity credit of $2,500 (based on $4,000 expenses). 2011 irs form 1040ez   Total qualified education expenses $8,300     Minus: Tax-free educational assistance −3,100     Minus: Expenses taken into account  in figuring American opportunity credit −4,000     Equals: Adjusted qualified  education expenses (AQEE) $1,200           The taxable part of the distribution is figured as follows. 2011 irs form 1040ez   1. 2011 irs form 1040ez $950 (earnings) × $1,200 AQEE  $5,300 distribution           =$215 (tax-free earnings)     2. 2011 irs form 1040ez $950 (earnings)−$215 (tax-free earnings)     =$735 (taxable earnings)       Sara must include $735 in income (Form 1040, line 21). 2011 irs form 1040ez This represents distributed earnings not used for adjusted qualified education expenses. 2011 irs form 1040ez Coordination With Coverdell ESA Distributions If a designated beneficiary receives distributions from both a QTP and a Coverdell ESA in the same year, and the total of these distributions is more than the beneficiary's adjusted qualified higher education expenses, the expenses must be allocated between the distributions. 2011 irs form 1040ez For purposes of this allocation, disregard any qualified elementary and secondary education expenses. 2011 irs form 1040ez Example 3. 2011 irs form 1040ez Assume the same facts as in Example 2 , except that instead of receiving a $5,300 distribution from her QTP, Sara received $4,600 from that account and $700 from her Coverdell ESA. 2011 irs form 1040ez In this case, Sara must allocate her $1,200 of adjusted qualified higher education expenses (AQHEE) between the two distributions. 2011 irs form 1040ez   $1,200 AQHEE × $700 ESA distribution  $5,300 total distribution = $158 AQHEE (ESA)     $1,200 AQHEE × $4,600 QTP distribution  $5,300 total distribution = $1,042 AQHEE (QTP)   Sara then figures the taxable portion of her Coverdell ESA distribution based on qualified higher education expenses of $158, and the taxable portion of her QTP distribution based on the other $1,042. 2011 irs form 1040ez Note. 2011 irs form 1040ez If you are required to allocate your expenses between Coverdell ESA and QTP distributions, and you have adjusted qualified elementary and secondary education expenses, see the examples in chapter 7, Coverdell Education Savings Account under Coordination With Qualified Tuition Program (QTP) Distributions . 2011 irs form 1040ez Coordination With Tuition and Fees Deduction. 2011 irs form 1040ez   A tuition and fees deduction can be claimed in the same year the beneficiary takes a tax-free distribution from a QTP, as long as the same expenses are not used for both benefits. 2011 irs form 1040ez Losses on QTP Investments If you have a loss on your investment in a QTP account, you may be able to take the loss on your income tax return. 2011 irs form 1040ez You can take the loss only when all amounts from that account have been distributed and the total distributions are less than your unrecovered basis. 2011 irs form 1040ez Your basis is the total amount of contributions to that QTP account. 2011 irs form 1040ez You claim the loss as a miscellaneous itemized deduction on Schedule A (Form 1040), line 23 (Schedule A (Form 1040NR), line 9), subject to the 2%-of-adjusted-gross-income limit. 2011 irs form 1040ez If you have distributions from more than one QTP account during a year, you must combine the information (amount of distribution, basis, etc. 2011 irs form 1040ez ) from all such accounts in order to determine your taxable earnings for the year. 2011 irs form 1040ez By doing this, the loss from one QTP account reduces the distributed earnings (if any) from any other QTP accounts. 2011 irs form 1040ez Example 1. 2011 irs form 1040ez In 2013, Taylor received a final distribution of $1,000 from QTP #1. 2011 irs form 1040ez His unrecovered basis in that account before the distribution was $3,000. 2011 irs form 1040ez If Taylor itemizes his deductions, he can claim the $2,000 loss on Schedule A (Form 1040). 2011 irs form 1040ez Example 2. 2011 irs form 1040ez Assume the same facts as in Example 1 , except that Taylor also had a distribution of $9,000 from QTP #2, giving him total distributions for 2013 of $10,000. 2011 irs form 1040ez His total basis in these distributions was $4,500 ($3,000 for QTP #1 and $1,500 for QTP #2). 2011 irs form 1040ez Taylor's adjusted qualified education expenses for 2013 totaled $6,000. 2011 irs form 1040ez In order to figure his taxable earnings, Taylor combines the two accounts and determines his taxable earnings as follows. 2011 irs form 1040ez   1. 2011 irs form 1040ez $10,000 (total distribution)−$4,500 (basis portion of distribution)     = $5,500 (earnings included in distribution)   2. 2011 irs form 1040ez $5,500 (earnings) x $6,000 AQEE  $10,000 distribution           =$3,300 (tax-free earnings)     3. 2011 irs form 1040ez $5,500 (earnings)−$3,300 (tax-free earnings)     =$2,200 (taxable earnings)                 Taylor must include $2,200 in income on Form 1040, line 21. 2011 irs form 1040ez Because Taylor's accounts must be combined, he cannot deduct his $2,000 loss (QTP #1) on Schedule A (Form 1040). 2011 irs form 1040ez Instead, the $2,000 loss reduces the total earnings that were distributed, thereby reducing his taxable earnings. 2011 irs form 1040ez Additional Tax on Taxable Distributions Generally, if you receive a taxable distribution, you also must pay a 10% additional tax on the amount included in income. 2011 irs form 1040ez Exceptions. 2011 irs form 1040ez   The 10% additional tax does not apply to distributions: Paid to a beneficiary (or to the estate of the designated beneficiary) on or after the death of the designated beneficiary. 2011 irs form 1040ez Made because the designated beneficiary is disabled. 2011 irs form 1040ez A person is considered to be disabled if he or she shows proof that he or she cannot do any substantial gainful activity because of his or her physical or mental condition. 2011 irs form 1040ez A physician must determine that his or her condition can be expected to result in death or to be of long-continued and indefinite duration. 2011 irs form 1040ez Included in income because the designated beneficiary received: A tax-free scholarship or fellowship (see Tax-Free Scholarships and Fellowships in chapter 1, Scholarships, Fellowships, Grants, and Tuition Reductions), Veterans' educational assistance (see Veterans' Benefits in chapter 1, Scholarships, Fellowships, Grants, and Tuition Reductions), Employer-provided educational assistance (see chapter 11, Employer-Provided Educational Assistance ), or Any other nontaxable (tax-free) payments (other than gifts or inheritances) received as educational assistance. 2011 irs form 1040ez Made on account of the attendance of the designated beneficiary at a U. 2011 irs form 1040ez S. 2011 irs form 1040ez military academy (such as the USNA at Annapolis). 2011 irs form 1040ez This exception applies only to the extent that the amount of the distribution does not exceed the costs of advanced education (as defined in section 2005(d)(3) of title 10 of the U. 2011 irs form 1040ez S. 2011 irs form 1040ez Code) attributable to such attendance. 2011 irs form 1040ez Included in income only because the qualified education expenses were taken into account in determining the American opportunity or lifetime learning credit (see Coordination With American Opportunity and Lifetime Learning Credits , earlier. 2011 irs form 1040ez ) Exception (3) applies only to the extent the distribution is not more than the scholarship, allowance, or payment. 2011 irs form 1040ez Figuring the additional tax. 2011 irs form 1040ez    Use Part II of Form 5329, to figure any additional tax. 2011 irs form 1040ez Report the amount on Form 1040, line 58, or Form 1040NR, line 56. 2011 irs form 1040ez Rollovers and Other Transfers Assets can be rolled over or transferred from one QTP to another. 2011 irs form 1040ez In addition, the designated beneficiary can be changed without transferring accounts. 2011 irs form 1040ez Rollovers Any amount distributed from a QTP is not taxable if it is rolled over to another QTP for the benefit of the same beneficiary or for the benefit of a member of the beneficiary's family (including the beneficiary's spouse). 2011 irs form 1040ez An amount is rolled over if it is paid to another QTP within 60 days after the date of the distribution. 2011 irs form 1040ez Do not report qualifying rollovers (those that meet the above criteria) anywhere on Form 1040 or 1040NR. 2011 irs form 1040ez These are not taxable distributions. 2011 irs form 1040ez Members of the beneficiary's family. 2011 irs form 1040ez   For these purposes, the beneficiary's family includes the beneficiary's spouse and the following other relatives of the beneficiary. 2011 irs form 1040ez Son, daughter, stepchild, foster child, adopted child, or a descendant of any of them. 2011 irs form 1040ez Brother, sister, stepbrother, or stepsister. 2011 irs form 1040ez Father or mother or ancestor of either. 2011 irs form 1040ez Stepfather or stepmother. 2011 irs form 1040ez Son or daughter of a brother or sister. 2011 irs form 1040ez Brother or sister of father or mother. 2011 irs form 1040ez Son-in-law, daughter-in-law, father-in-law, mother-in-law, brother-in-law, or sister-in-law. 2011 irs form 1040ez The spouse of any individual listed above. 2011 irs form 1040ez First cousin. 2011 irs form 1040ez Example. 2011 irs form 1040ez When Aaron graduated from college last year he had $5,000 left in his QTP. 2011 irs form 1040ez He wanted to give this money to his younger brother, who was in junior high school. 2011 irs form 1040ez In order to avoid paying tax on the distribution of the amount remaining in his account, Aaron contributed the same amount to his brother's QTP within 60 days of the distribution. 2011 irs form 1040ez If the rollover is to another QTP for the same beneficiary, only one rollover is allowed within 12 months of a previous transfer to any QTP for that designated beneficiary. 2011 irs form 1040ez Changing the Designated Beneficiary There are no income tax consequences if the designated beneficiary of an account is changed to a member of the beneficiary's family. 2011 irs form 1040ez See Members of the beneficiary's family , earlier. 2011 irs form 1040ez Example. 2011 irs form 1040ez Assume the same situation as in the last example. 2011 irs form 1040ez Instead of closing his QTP and paying the distribution into his brother's QTP, Aaron could have instructed the trustee of his account to simply change the name of the beneficiary on his account to that of his brother. 2011 irs form 1040ez Prev  Up  Next   Home   More Online Publications
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The 2011 Irs Form 1040ez

2011 irs form 1040ez 6. 2011 irs form 1040ez   Tip Income Table of Contents Introduction Useful Items - You may want to see: Keeping a Daily Tip RecordElectronic tip record. 2011 irs form 1040ez Reporting Tips to Your EmployerElectronic tip statement. 2011 irs form 1040ez Final report. 2011 irs form 1040ez Reporting Tips on Your Tax Return Allocated Tips Introduction This chapter is for employees who receive tips. 2011 irs form 1040ez All tips you receive are income and are subject to federal income tax. 2011 irs form 1040ez You must include in gross income all tips you receive directly, charged tips paid to you by your employer, and your share of any tips you receive under a tip-splitting or tip-pooling arrangement. 2011 irs form 1040ez The value of noncash tips, such as tickets, passes, or other items of value, is also income and subject to tax. 2011 irs form 1040ez Reporting your tip income correctly is not difficult. 2011 irs form 1040ez You must do three things. 2011 irs form 1040ez Keep a daily tip record. 2011 irs form 1040ez Report tips to your employer. 2011 irs form 1040ez Report all your tips on your income tax return. 2011 irs form 1040ez  This chapter will explain these three things and show you what to do on your tax return if you have not done the first two. 2011 irs form 1040ez This chapter will also show you how to treat allocated tips. 2011 irs form 1040ez For information on special tip programs and agreements, see Publication 531. 2011 irs form 1040ez Useful Items - You may want to see: Publication 531 Reporting Tip Income 1244 Employee's Daily Record of Tips and Report to Employer Form (and Instructions) 4137 Social Security and Medicare Tax on Unreported Tip Income 4070 Employee's Report of Tips to Employer Keeping a Daily Tip Record Why keep a daily tip record. 2011 irs form 1040ez   You must keep a daily tip record so you can: Report your tips accurately to your employer, Report your tips accurately on your tax return, and Prove your tip income if your return is ever questioned. 2011 irs form 1040ez How to keep a daily tip record. 2011 irs form 1040ez   There are two ways to keep a daily tip record. 2011 irs form 1040ez You can either: Write information about your tips in a tip diary, or Keep copies of documents that show your tips, such as restaurant bills and credit or debit card charge slips. 2011 irs form 1040ez You should keep your daily tip record with your tax or other personal records. 2011 irs form 1040ez You must keep your records for as long as they are important for administration of the federal tax law. 2011 irs form 1040ez For information on how long to keep records, see How long to keep records in chapter 1. 2011 irs form 1040ez    If you keep a tip diary, you can use Form 4070A, Employee's Daily Record of Tips. 2011 irs form 1040ez To get Form 4070A, ask the Internal Revenue Service (IRS) or your employer for Publication 1244. 2011 irs form 1040ez Also, Publication 1244 is available online at www. 2011 irs form 1040ez irs. 2011 irs form 1040ez gov/pub/irs-pdf/p1244. 2011 irs form 1040ez pdf. 2011 irs form 1040ez Publication 1244 includes a 1-year supply of Form 4070A. 2011 irs form 1040ez Each day, write in the information asked for on the form. 2011 irs form 1040ez   In addition to the information asked for on Form 4070A, you also need to keep a record of the date and value of any noncash tips you get, such as tickets, passes, or other items of value. 2011 irs form 1040ez Although you do not report these tips to your employer, you must report them on your tax return. 2011 irs form 1040ez   If you do not use Form 4070A, start your records by writing your name, your employer's name, and the name of the business (if it is different from your employer's name). 2011 irs form 1040ez Then, each workday, write the date and the following information. 2011 irs form 1040ez Cash tips you get directly from customers or from other employees. 2011 irs form 1040ez Tips from credit and debit card charge customers that your employer pays you. 2011 irs form 1040ez The value of any noncash tips you get, such as tickets, passes, or other items of value. 2011 irs form 1040ez The amount of tips you paid out to other employees through tip pools or tip splitting, or other arrangements, and the names of the employees to whom you paid the tips. 2011 irs form 1040ez Electronic tip record. 2011 irs form 1040ez   You can use an electronic system provided by your employer to record your daily tips. 2011 irs form 1040ez If you do, you must receive and keep a paper copy of this record. 2011 irs form 1040ez Service charges. 2011 irs form 1040ez    Do not write in your tip diary the amount of any service charge that your employer adds to a customer's bill and then pays to you and treats as wages. 2011 irs form 1040ez This is part of your wages, not a tip. 2011 irs form 1040ez See examples below. 2011 irs form 1040ez Example 1. 2011 irs form 1040ez Good Food Restaurant adds an 18% charge to the bill for parties of 6 or more customers. 2011 irs form 1040ez Jane’s bill for food and beverages for her party of 8 includes an amount on the tip line equal to 18% of the charges for food and beverages, and the total includes this amount. 2011 irs form 1040ez Because Jane did not have an unrestricted right to determine the amount on the “tip line,” the 18% charge is considered a service charge. 2011 irs form 1040ez Do not include the 18% charge in your tip diary. 2011 irs form 1040ez Service charges that are paid to you are considered wages, not tips. 2011 irs form 1040ez Example 2. 2011 irs form 1040ez Good Food Restaurant also includes sample calculations of tip amounts at the bottom of its bills for food and beverages provided to customers. 2011 irs form 1040ez David’s bill includes a blank “tip line,” with sample tip calculations of 15%, 18%, and 20% of his charges for food and beverages at the bottom of the bill beneath the signature line. 2011 irs form 1040ez Because David is free to enter any amount on the “tip line” or leave it blank, any amount he includes is considered a tip. 2011 irs form 1040ez Be sure to include this amount in your tip diary. 2011 irs form 1040ez Reporting Tips to Your Employer Why report tips to your employer. 2011 irs form 1040ez   You must report tips to your employer so that: Your employer can withhold federal income tax and social security, Medicare, Additional Medicare, or railroad retirement taxes, Your employer can report the correct amount of your earnings to the Social Security Administration or Railroad Retirement Board (which affects your benefits when you retire or if you become disabled, or your family's benefits if you die), and You can avoid the penalty for not reporting tips to your employer (explained later). 2011 irs form 1040ez What tips to report. 2011 irs form 1040ez   Report to your employer only cash, check, and debit and credit card tips you receive. 2011 irs form 1040ez   If your total tips for any 1 month from any one job are less than $20, do not report the tips for that month to that employer. 2011 irs form 1040ez   If you participate in a tip-splitting or tip-pooling arrangement, report only the tips you receive and retain. 2011 irs form 1040ez Do not report to your employer any portion of the tips you receive that you pass on to other employees. 2011 irs form 1040ez However, you must report tips you receive from other employees. 2011 irs form 1040ez    Do not report the value of any noncash tips, such as tickets or passes, to your employer. 2011 irs form 1040ez You do not pay social security, Medicare, Additional Medicare or railroad retirement taxes on these tips. 2011 irs form 1040ez How to report. 2011 irs form 1040ez    If your employer does not give you any other way to report tips, you can use Form 4070. 2011 irs form 1040ez Fill in the information asked for on the form, sign and date the form, and give it to your employer. 2011 irs form 1040ez To get a 1-year supply of the form, ask the IRS or your employer for Publication 1244. 2011 irs form 1040ez   If you do not use Form 4070, give your employer a statement with the following information. 2011 irs form 1040ez Your name, address, and social security number. 2011 irs form 1040ez Your employer's name, address, and business name (if it is different from your employer's name). 2011 irs form 1040ez The month (or the dates of any shorter period) in which you received tips. 2011 irs form 1040ez The total tips required to be reported for that period. 2011 irs form 1040ez You must sign and date the statement. 2011 irs form 1040ez Be sure to keep a copy with your tax or other personal records. 2011 irs form 1040ez   Your employer may require you to report your tips more than once a month. 2011 irs form 1040ez However, the statement cannot cover a period of more than 1 calendar month. 2011 irs form 1040ez Electronic tip statement. 2011 irs form 1040ez   Your employer can have you furnish your tip statements electronically. 2011 irs form 1040ez When to report. 2011 irs form 1040ez   Give your report for each month to your employer by the 10th of the next month. 2011 irs form 1040ez If the 10th falls on a Saturday, Sunday, or legal holiday, give your employer the report by the next day that is not a Saturday, Sunday, or legal holiday. 2011 irs form 1040ez Example. 2011 irs form 1040ez You must report your tips received in September 2014 by October 10, 2014. 2011 irs form 1040ez Final report. 2011 irs form 1040ez   If your employment ends during the month, you can report your tips when your employment ends. 2011 irs form 1040ez Penalty for not reporting tips. 2011 irs form 1040ez   If you do not report tips to your employer as required, you may be subject to a penalty equal to 50% of the social security, Medicare, and Additional Medicare taxes or railroad retirement tax you owe on the unreported tips. 2011 irs form 1040ez (For information about these taxes, see Reporting social security, Medicare, Additional Medicare, or railroad retirement taxes on tips not reported to your employer under Reporting Tips on Your Tax Return, later. 2011 irs form 1040ez ) The penalty amount is in addition to the taxes you owe. 2011 irs form 1040ez   You can avoid this penalty if you can show reasonable cause for not reporting the tips to your employer. 2011 irs form 1040ez To do so, attach a statement to your return explaining why you did not report them. 2011 irs form 1040ez Giving your employer money for taxes. 2011 irs form 1040ez   Your regular pay may not be enough for your employer to withhold all the taxes you owe on your regular pay plus your reported tips. 2011 irs form 1040ez If this happens, you can give your employer money until the close of the calendar year to pay the rest of the taxes. 2011 irs form 1040ez   If you do not give your employer enough money, your employer will apply your regular pay and any money you give in the following order. 2011 irs form 1040ez All taxes on your regular pay. 2011 irs form 1040ez Social security, Medicare, and Additional Medicare taxes or railroad retirement taxes on your reported tips. 2011 irs form 1040ez Federal, state, and local income taxes on your reported tips. 2011 irs form 1040ez    Any taxes that remain unpaid can be collected by your employer from your next paycheck. 2011 irs form 1040ez If withholding taxes remain uncollected at the end of the year, you may be subject to a penalty for underpayment of estimated taxes. 2011 irs form 1040ez See Publication 505, Tax Withholding and Estimated Tax, for more information. 2011 irs form 1040ez    Uncollected taxes. 2011 irs form 1040ez You must report on your tax return any social security and Medicare taxes or railroad retirement tax that remained uncollected at the end of 2013. 2011 irs form 1040ez These uncollected taxes will be shown on your 2013 Form W-2. 2011 irs form 1040ez See Reporting uncollected social security, Medicare, or railroad retirement taxes on tips reported to your employer under Reporting Tips on Your Tax Return, later. 2011 irs form 1040ez Reporting Tips on Your Tax Return How to report tips. 2011 irs form 1040ez    Report your tips with your wages on Form 1040, line 7; Form 1040A, line 7; or Form 1040EZ, line 1. 2011 irs form 1040ez What tips to report. 2011 irs form 1040ez   You must report all tips you received in 2013 on your tax return, including both cash tips and noncash tips. 2011 irs form 1040ez Any tips you reported to your employer for 2013 are included in the wages shown in box 1 of your Form W-2. 2011 irs form 1040ez Add to the amount in box 1 only the tips you did not report to your employer. 2011 irs form 1040ez    If you received $20 or more in cash and charge tips in a month and did not report all of those tips to your employer, see Reporting social security, Medicare, Additional Medicare, or railroad retirement taxes on tips not reported to your employer, later. 2011 irs form 1040ez    If you did not keep a daily tip record as required and an amount is shown in box 8 of your Form W-2, see Allocated Tips, later. 2011 irs form 1040ez   If you kept a daily tip record and reported tips to your employer as required under the rules explained earlier, add the following tips to the amount in box 1 of your Form W-2. 2011 irs form 1040ez Cash and charge tips you received that totaled less than $20 for any month. 2011 irs form 1040ez The value of noncash tips, such as tickets, passes, or other items of value. 2011 irs form 1040ez Example. 2011 irs form 1040ez Ben Smith began working at the Blue Ocean Restaurant (his only employer in 2013) on June 30 and received $10,000 in wages during the year. 2011 irs form 1040ez Ben kept a daily tip record showing that his tips for June were $18 and his tips for the rest of the year totaled $7,000. 2011 irs form 1040ez He was not required to report his June tips to his employer, but he reported all of the rest of his tips to his employer as required. 2011 irs form 1040ez Ben's Form W-2 from Blue Ocean Restaurant shows $17,000 ($10,000 wages plus $7,000 reported tips) in box 1. 2011 irs form 1040ez He adds the $18 unreported tips to that amount and reports $17,018 as wages on his tax return. 2011 irs form 1040ez Reporting social security, Medicare, Additional Medicare, or railroad retirement taxes on tips not reported to your employer. 2011 irs form 1040ez    If you received $20 or more in cash and charge tips in a month from any one job and did not report all of those tips to your employer, you must report the social security, Medicare, and Additional Medicare taxes on the unreported tips as additional tax on your return. 2011 irs form 1040ez To report these taxes, you must file a return even if you would not otherwise have to file. 2011 irs form 1040ez You must use Form 1040. 2011 irs form 1040ez (You cannot file Form 1040EZ or Form 1040A. 2011 irs form 1040ez )    Use Form 4137 to figure social security and Medicare taxes. 2011 irs form 1040ez Enter the tax on your return as instructed, and attach the completed Form 4137 to your return. 2011 irs form 1040ez Use Form 8959 to figure Additional Medicare Tax. 2011 irs form 1040ez    If you are subject to the Railroad Retirement Tax Act, you cannot use Form 4137 to pay railroad retirement tax on unreported tips. 2011 irs form 1040ez To get railroad retirement credit, you must report tips to your employer. 2011 irs form 1040ez Reporting uncollected social security, Medicare, or railroad retirement taxes on tips reported to your employer. 2011 irs form 1040ez   You may have uncollected taxes if your regular pay was not enough for your employer to withhold all the taxes you owe and you did not give your employer enough money to pay the rest of the taxes. 2011 irs form 1040ez For more information, see Giving your employer money for taxes , under Reporting Tips to Your Employer, earlier. 2011 irs form 1040ez   If your employer could not collect all the social security and Medicare taxes or railroad retirement tax you owe on tips reported for 2013, the uncollected taxes will be shown in box 12 of your Form W-2 (codes A and B). 2011 irs form 1040ez You must report these amounts as additional tax on your return. 2011 irs form 1040ez Unlike the uncollected portion of the regular (1. 2011 irs form 1040ez 45%) Medicare tax, the uncollected Additional Medicare Tax is not reported in box 12 of Form W-2 with code B. 2011 irs form 1040ez    To report these uncollected taxes, you must file a return even if you would not otherwise have to file. 2011 irs form 1040ez You must report these taxes on Form 1040, line 60. 2011 irs form 1040ez See the instructions for Form 1040, line 60. 2011 irs form 1040ez (You cannot file Form 1040EZ or Form 1040A. 2011 irs form 1040ez ) Allocated Tips If your employer allocated tips to you, they are shown separately in box 8 of your Form W-2. 2011 irs form 1040ez They are not included in box 1 with your wages and reported tips. 2011 irs form 1040ez If box 8 is blank, this discussion does not apply to you. 2011 irs form 1040ez What are allocated tips. 2011 irs form 1040ez   These are tips that your employer assigned to you in addition to the tips you reported to your employer for the year. 2011 irs form 1040ez Your employer will have done this only if: You worked in an establishment (restaurant, cocktail lounge, or similar business) that must allocate tips to employees, and The tips you reported to your employer were less than your share of 8% of food and drink sales. 2011 irs form 1040ez No income, social security, Medicare, Additional Medicare or railroad retirement taxes are withheld on allocated tips. 2011 irs form 1040ez How were your allocated tips figured. 2011 irs form 1040ez   The tips allocated to you are your share of an amount figured by subtracting the reported tips of all employees from 8% (or an approved lower rate) of food and drink sales (other than carryout sales and sales with a service charge of 10% or more). 2011 irs form 1040ez Your share of that amount was figured using either a method provided by an employer-employee agreement or a method provided by IRS regulations based on employees' sales or hours worked. 2011 irs form 1040ez For information about the exact allocation method used, ask your employer. 2011 irs form 1040ez Must you report your allocated tips on your tax return. 2011 irs form 1040ez   You must report all tips you received in 2013 on your tax return, including both cash tips and noncash tips. 2011 irs form 1040ez Any tips you reported to your employer for 2013 are included in the wages shown in box 1 of your Form W-2. 2011 irs form 1040ez Add to the amount in box 1 only the tips you did not report to your employer. 2011 irs form 1040ez This should include any allocated tips shown in box 8 on your Form(s) W-2, unless you have adequate records to show that you received less tips in the year than the allocated figures. 2011 irs form 1040ez   See What tips to report under Reporting Tips on Your Tax Return, and Keeping a Daily Tip Record , earlier. 2011 irs form 1040ez How to report allocated tips. 2011 irs form 1040ez   Report the amount in box 1 and the allocated tips in box 8 of your Form(s) W-2 as wages on Form 1040, line 7; Form 1040NR, line 8; or Form 1040NR-EZ, line 3. 2011 irs form 1040ez (You cannot file Form 1040A or Form 1040EZ when you have allocated tips. 2011 irs form 1040ez )    Because social security, Medicare, and Additional Medicare taxes were not withheld from the allocated tips, you must report those taxes as additional tax on your return. 2011 irs form 1040ez Complete Form 4137, and include the allocated tips on line 1 of the form. 2011 irs form 1040ez See Reporting social security, Medicare, Additional Medicare, or railroad retirement taxes on tips not reported to your employer under Reporting Tips on Your Tax Return, earlier. 2011 irs form 1040ez Prev  Up  Next   Home   More Online Publications