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Alabama 40 Tax Forms 2012

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Alabama 40 Tax Forms 2012

Alabama 40 tax forms 2012 2. Alabama 40 tax forms 2012   Simplified Employee Pensions (SEPs) Table of Contents Topics - This chapter discusses: Useful Items - You may want to see: Setting Up a SEPWhen not to use Form 5305-SEP. Alabama 40 tax forms 2012 How Much Can I Contribute?Contribution Limits Deducting ContributionsDeduction Limit for Contributions for Participants Deduction Limit for Self-Employed Individuals Carryover of Excess SEP Contributions When To Deduct Contributions Where To Deduct Contributions Salary Reduction Simplified Employee Pensions (SARSEPs)SARSEP ADP test. Alabama 40 tax forms 2012 Deferral percentage. Alabama 40 tax forms 2012 Employee compensation. Alabama 40 tax forms 2012 Compensation of self-employed individuals. Alabama 40 tax forms 2012 Choice not to treat deferrals as compensation. Alabama 40 tax forms 2012 Limit on Elective Deferrals Tax Treatment of Deferrals Distributions (Withdrawals) Additional TaxesEffects on employee. Alabama 40 tax forms 2012 Reporting and Disclosure Requirements Topics - This chapter discusses: Setting up a SEP How much can I contribute Deducting contributions Salary reduction simplified employee pensions (SARSEPs) Distributions (withdrawals) Additional taxes Reporting and disclosure requirements Useful Items - You may want to see: Publication 590 Individual Retirement Arrangements (IRAs) 3998 Choosing A Retirement Solution for Your Small Business 4285 SEP Checklist 4286 SARSEP Checklist 4333 SEP Retirement Plans for Small Businesses 4336 SARSEP for Small Businesses 4407 SARSEP—Key Issues and Assistance Forms (and Instructions) W-2 Wage and Tax Statement 1040 U. Alabama 40 tax forms 2012 S. Alabama 40 tax forms 2012 Individual Income Tax Return 5305-SEP Simplified Employee Pension—Individual Retirement Accounts Contribution Agreement 5305A-SEP Salary Reduction Simplified Employee Pension—Individual Retirement Accounts Contribution Agreement 8880 Credit for Qualified Retirement Savings Contributions 8881 Credit for Small Employer Pension Plan Startup Costs A SEP is a written plan that allows you to make contributions toward your own retirement and your employees' retirement without getting involved in a more complex qualified plan. Alabama 40 tax forms 2012 Under a SEP, you make contributions to a traditional individual retirement arrangement (called a SEP-IRA) set up by or for each eligible employee. Alabama 40 tax forms 2012 A SEP-IRA is owned and controlled by the employee, and you make contributions to the financial institution where the SEP-IRA is maintained. Alabama 40 tax forms 2012 SEP-IRAs are set up for, at a minimum, each eligible employee (defined below). Alabama 40 tax forms 2012 A SEP-IRA may have to be set up for a leased employee (defined in chapter 1), but does not need to be set up for excludable employees (defined later). Alabama 40 tax forms 2012 Eligible employee. Alabama 40 tax forms 2012   An eligible employee is an individual who meets all the following requirements. Alabama 40 tax forms 2012 Has reached age 21. Alabama 40 tax forms 2012 Has worked for you in at least 3 of the last 5 years. Alabama 40 tax forms 2012 Has received at least $550 in compensation from you in 2013. Alabama 40 tax forms 2012 This amount remains the same in 2014. Alabama 40 tax forms 2012    You can use less restrictive participation requirements than those listed, but not more restrictive ones. Alabama 40 tax forms 2012 Excludable employees. Alabama 40 tax forms 2012   The following employees can be excluded from coverage under a SEP. Alabama 40 tax forms 2012 Employees covered by a union agreement and whose retirement benefits were bargained for in good faith by the employees' union and you. Alabama 40 tax forms 2012 Nonresident alien employees who have received no U. Alabama 40 tax forms 2012 S. Alabama 40 tax forms 2012 source wages, salaries, or other personal services compensation from you. Alabama 40 tax forms 2012 For more information about nonresident aliens, see Publication 519, U. Alabama 40 tax forms 2012 S. Alabama 40 tax forms 2012 Tax Guide for Aliens. Alabama 40 tax forms 2012 Setting Up a SEP There are three basic steps in setting up a SEP. Alabama 40 tax forms 2012 You must execute a formal written agreement to provide benefits to all eligible employees. Alabama 40 tax forms 2012 You must give each eligible employee certain information about the SEP. Alabama 40 tax forms 2012 A SEP-IRA must be set up by or for each eligible employee. Alabama 40 tax forms 2012 Many financial institutions will help you set up a SEP. Alabama 40 tax forms 2012 Formal written agreement. Alabama 40 tax forms 2012   You must execute a formal written agreement to provide benefits to all eligible employees under a SEP. Alabama 40 tax forms 2012 You can satisfy the written agreement requirement by adopting an IRS model SEP using Form 5305-SEP. Alabama 40 tax forms 2012 However, see When not to use Form 5305-SEP, below. Alabama 40 tax forms 2012   If you adopt an IRS model SEP using Form 5305-SEP, no prior IRS approval or determination letter is required. Alabama 40 tax forms 2012 Keep the original form. Alabama 40 tax forms 2012 Do not file it with the IRS. Alabama 40 tax forms 2012 Also, using Form 5305-SEP will usually relieve you from filing annual retirement plan information returns with the IRS and the Department of Labor. Alabama 40 tax forms 2012 See the Form 5305-SEP instructions for details. Alabama 40 tax forms 2012 If you choose not to use Form 5305-SEP, you should seek professional advice in adopting a SEP. Alabama 40 tax forms 2012 When not to use Form 5305-SEP. Alabama 40 tax forms 2012   You cannot use Form 5305-SEP if any of the following apply. Alabama 40 tax forms 2012 You currently maintain any other qualified retirement plan other than another SEP. Alabama 40 tax forms 2012 You have any eligible employees for whom IRAs have not been set up. Alabama 40 tax forms 2012 You use the services of leased employees, who are not your common-law employees (as described in chapter 1). Alabama 40 tax forms 2012 You are a member of any of the following unless all eligible employees of all the members of these groups, trades, or businesses participate under the SEP. Alabama 40 tax forms 2012 An affiliated service group described in section 414(m). Alabama 40 tax forms 2012 A controlled group of corporations described in section 414(b). Alabama 40 tax forms 2012 Trades or businesses under common control described in section 414(c). Alabama 40 tax forms 2012 You do not pay the cost of the SEP contributions. Alabama 40 tax forms 2012 Information you must give to employees. Alabama 40 tax forms 2012   You must give each eligible employee a copy of Form 5305-SEP, its instructions, and the other information listed in the Form 5305-SEP instructions. Alabama 40 tax forms 2012 An IRS model SEP is not considered adopted until you give each employee this information. Alabama 40 tax forms 2012 Setting up the employee's SEP-IRA. Alabama 40 tax forms 2012   A SEP-IRA must be set up by or for each eligible employee. Alabama 40 tax forms 2012 SEP-IRAs can be set up with banks, insurance companies, or other qualified financial institutions. Alabama 40 tax forms 2012 You send SEP contributions to the financial institution where the SEP-IRA is maintained. Alabama 40 tax forms 2012 Deadline for setting up a SEP. Alabama 40 tax forms 2012   You can set up a SEP for any year as late as the due date (including extensions) of your income tax return for that year. Alabama 40 tax forms 2012 Credit for startup costs. Alabama 40 tax forms 2012   You may be able to claim a tax credit for part of the ordinary and necessary costs of starting a SEP that first became effective in 2013. Alabama 40 tax forms 2012 For more information, see Credit for startup costs under Reminders, earlier. Alabama 40 tax forms 2012 How Much Can I Contribute? The SEP rules permit you to contribute a limited amount of money each year to each employee's SEP-IRA. Alabama 40 tax forms 2012 If you are self-employed, you can contribute to your own SEP-IRA. Alabama 40 tax forms 2012 Contributions must be in the form of money (cash, check, or money order). Alabama 40 tax forms 2012 You cannot contribute property. Alabama 40 tax forms 2012 However, participants may be able to transfer or roll over certain property from one retirement plan to another. Alabama 40 tax forms 2012 See Publication 590 for more information about rollovers. Alabama 40 tax forms 2012 You do not have to make contributions every year. Alabama 40 tax forms 2012 But if you make contributions, they must be based on a written allocation formula and must not discriminate in favor of highly compensated employees (defined in chapter 1). Alabama 40 tax forms 2012 When you contribute, you must contribute to the SEP-IRAs of all participants who actually performed personal services during the year for which the contributions are made, including employees who die or terminate employment before the contributions are made. Alabama 40 tax forms 2012 Contributions are deductible within limits, as discussed later, and generally are not taxable to the plan participants. Alabama 40 tax forms 2012 A SEP-IRA cannot be a Roth IRA. Alabama 40 tax forms 2012 Employer contributions to a SEP-IRA will not affect the amount an individual can contribute to a Roth or traditional IRA. Alabama 40 tax forms 2012 Unlike regular contributions to a traditional IRA, contributions under a SEP can be made to participants over age 70½. Alabama 40 tax forms 2012 If you are self-employed, you can also make contributions under the SEP for yourself even if you are over 70½. Alabama 40 tax forms 2012 Participants age 70½ or over must take required minimum distributions. Alabama 40 tax forms 2012 Time limit for making contributions. Alabama 40 tax forms 2012   To deduct contributions for a year, you must make the contributions by the due date (including extensions) of your tax return for the year. Alabama 40 tax forms 2012 Contribution Limits Contributions you make for 2013 to a common-law employee's SEP-IRA cannot exceed the lesser of 25% of the employee's compensation or $51,000. Alabama 40 tax forms 2012 Compensation generally does not include your contributions to the SEP. Alabama 40 tax forms 2012 The SEP plan document will specify how the employer contribution is determined and how it will be allocated to participants. Alabama 40 tax forms 2012 Example. Alabama 40 tax forms 2012 Your employee, Mary Plant, earned $21,000 for 2013. Alabama 40 tax forms 2012 The maximum contribution you can make to her SEP-IRA is $5,250 (25% x $21,000). Alabama 40 tax forms 2012 Contributions for yourself. Alabama 40 tax forms 2012   The annual limits on your contributions to a common-law employee's SEP-IRA also apply to contributions you make to your own SEP-IRA. Alabama 40 tax forms 2012 However, special rules apply when figuring your maximum deductible contribution. Alabama 40 tax forms 2012 See Deduction Limit for Self-Employed Individuals , later. Alabama 40 tax forms 2012 Annual compensation limit. Alabama 40 tax forms 2012   You cannot consider the part of an employee's compensation over $255,000 when figuring your contribution limit for that employee. Alabama 40 tax forms 2012 However, $51,000 is the maximum contribution for an eligible employee. Alabama 40 tax forms 2012 These limits are $260,000 and $52,000, respectively, in 2014. Alabama 40 tax forms 2012 Example. Alabama 40 tax forms 2012 Your employee, Susan Green, earned $210,000 for 2013. Alabama 40 tax forms 2012 Because of the maximum contribution limit for 2013, you can only contribute $51,000 to her SEP-IRA. Alabama 40 tax forms 2012 More than one plan. Alabama 40 tax forms 2012   If you contribute to a defined contribution plan (defined in chapter 4), annual additions to an account are limited to the lesser of $51,000 or 100% of the participant's compensation. Alabama 40 tax forms 2012 When you figure this limit, you must add your contributions to all defined contribution plans maintained by you. Alabama 40 tax forms 2012 Because a SEP is considered a defined contribution plan for this limit, your contributions to a SEP must be added to your contributions to other defined contribution plans you maintain. Alabama 40 tax forms 2012 Tax treatment of excess contributions. Alabama 40 tax forms 2012   Excess contributions are your contributions to an employee's SEP-IRA (or to your own SEP-IRA) for 2013 that exceed the lesser of the following amounts. Alabama 40 tax forms 2012 25% of the employee's compensation (or, for you, 20% of your net earnings from self-employment). Alabama 40 tax forms 2012 $51,000. Alabama 40 tax forms 2012 Excess contributions are included in the employee's income for the year and are treated as contributions by the employee to his or her SEP-IRA. Alabama 40 tax forms 2012 For more information on employee tax treatment of excess contributions, see chapter 1 in Publication 590. Alabama 40 tax forms 2012 Reporting on Form W-2. Alabama 40 tax forms 2012   Do not include SEP contributions on your employee's Form W-2 unless contributions were made under a salary reduction arrangement (discussed later). Alabama 40 tax forms 2012 Deducting Contributions Generally, you can deduct the contributions you make each year to each employee's SEP-IRA. Alabama 40 tax forms 2012 If you are self-employed, you can deduct the contributions you make each year to your own SEP-IRA. Alabama 40 tax forms 2012 Deduction Limit for Contributions for Participants The most you can deduct for your contributions to you or your employee's SEP-IRA is the lesser of the following amounts. Alabama 40 tax forms 2012 Your contributions (including any excess contributions carryover). Alabama 40 tax forms 2012 25% of the compensation (limited to $255,000 per participant) paid to the participants during 2013 from the business that has the plan, not to exceed $51,000 per participant. Alabama 40 tax forms 2012 In 2014, the amounts in (2) above are $260,000 and $52,000, respectively. Alabama 40 tax forms 2012 Deduction Limit for Self-Employed Individuals If you contribute to your own SEP-IRA, you must make a special computation to figure your maximum deduction for these contributions. Alabama 40 tax forms 2012 When figuring the deduction for contributions made to your own SEP-IRA, compensation is your net earnings from self-employment (defined in chapter 1), which takes into account both the following deductions. Alabama 40 tax forms 2012 The deduction for the deductible part of your self-employment tax. Alabama 40 tax forms 2012 The deduction for contributions to your own SEP-IRA. Alabama 40 tax forms 2012 The deduction for contributions to your own SEP-IRA and your net earnings depend on each other. Alabama 40 tax forms 2012 For this reason, you determine the deduction for contributions to your own SEP-IRA indirectly by reducing the contribution rate called for in your plan. Alabama 40 tax forms 2012 To do this, use the Rate Table for Self-Employed or the Rate Worksheet for Self-Employed, whichever is appropriate for your plan's contribution rate, in chapter 5. Alabama 40 tax forms 2012 Then figure your maximum deduction by using the Deduction Worksheet for Self-Employed in chapter 5. Alabama 40 tax forms 2012 Carryover of Excess SEP Contributions If you made SEP contributions that are more than the deduction limit (nondeductible contributions), you can carry over and deduct the difference in later years. Alabama 40 tax forms 2012 However, the carryover, when combined with the contribution for the later year, is subject to the deduction limit for that year. Alabama 40 tax forms 2012 If you also contributed to a defined benefit plan or defined contribution plan, see Carryover of Excess Contributions under Employer Deduction in chapter 4 for the carryover limit. Alabama 40 tax forms 2012 Excise tax. Alabama 40 tax forms 2012   If you made nondeductible (excess) contributions to a SEP, you may be subject to a 10% excise tax. Alabama 40 tax forms 2012 For information about the excise tax, see Excise Tax for Nondeductible (Excess) Contributions under Employer Deduction in chapter 4. Alabama 40 tax forms 2012 When To Deduct Contributions When you can deduct contributions made for a year depends on the tax year on which the SEP is maintained. Alabama 40 tax forms 2012 If the SEP is maintained on a calendar year basis, you deduct the yearly contributions on your tax return for the year within which the calendar year ends. Alabama 40 tax forms 2012 If you file your tax return and maintain the SEP using a fiscal year or short tax year, you deduct contributions made for a year on your tax return for that year. Alabama 40 tax forms 2012 Example. Alabama 40 tax forms 2012 You are a fiscal year taxpayer whose tax year ends June 30. Alabama 40 tax forms 2012 You maintain a SEP on a calendar year basis. Alabama 40 tax forms 2012 You deduct SEP contributions made for calendar year 2013 on your tax return for your tax year ending June 30, 2014. Alabama 40 tax forms 2012 Where To Deduct Contributions Deduct the contributions you make for your common-law employees on your tax return. Alabama 40 tax forms 2012 For example, sole proprietors deduct them on Schedule C (Form 1040) or Schedule F (Form 1040), Profit or Loss From Farming; partnerships deduct them on Form 1065, U. Alabama 40 tax forms 2012 S. Alabama 40 tax forms 2012 Return of Partnership Income; and corporations deduct them on Form 1120, U. Alabama 40 tax forms 2012 S. Alabama 40 tax forms 2012 Corporation Income Tax Return, or Form 1120S, U. Alabama 40 tax forms 2012 S. Alabama 40 tax forms 2012 Income Tax Return for an S Corporation. Alabama 40 tax forms 2012 Sole proprietors and partners deduct contributions for themselves on line 28 of Form 1040. Alabama 40 tax forms 2012 (If you are a partner, contributions for yourself are shown on the Schedule K-1 (Form 1065), Partner's Share of Income, Deductions, Credits, etc. Alabama 40 tax forms 2012 , you receive from the partnership. Alabama 40 tax forms 2012 ) Remember that sole proprietors and partners can't deduct as a business expense contributions made to a SEP for themselves, only those made for their common-law employees. Alabama 40 tax forms 2012 Salary Reduction Simplified Employee Pensions (SARSEPs) A SARSEP is a SEP set up before 1997 that includes a salary reduction arrangement. Alabama 40 tax forms 2012 (See the Caution, next. Alabama 40 tax forms 2012 ) Under a SARSEP, your employees can choose to have you contribute part of their pay to their SEP-IRAs rather than receive it in cash. Alabama 40 tax forms 2012 This contribution is called an “elective deferral” because employees choose (elect) to set aside the money, and they defer the tax on the money until it is distributed to them. Alabama 40 tax forms 2012 You are not allowed to set up a SARSEP after 1996. Alabama 40 tax forms 2012 However, participants (including employees hired after 1996) in a SARSEP set up before 1997 can continue to have you contribute part of their pay to the plan. Alabama 40 tax forms 2012 If you are interested in setting up a retirement plan that includes a salary reduction arrangement, see chapter 3. Alabama 40 tax forms 2012 Who can have a SARSEP?   A SARSEP set up before 1997 is available to you and your eligible employees only if all the following requirements are met. Alabama 40 tax forms 2012 At least 50% of your employees eligible to participate choose to make elective deferrals. Alabama 40 tax forms 2012 You have 25 or fewer employees who were eligible to participate in the SEP at any time during the preceding year. Alabama 40 tax forms 2012 The elective deferrals of your highly compensated employees meet the SARSEP ADP test. Alabama 40 tax forms 2012 SARSEP ADP test. Alabama 40 tax forms 2012   Under the SARSEP ADP test, the amount deferred each year by each eligible highly compensated employee as a percentage of pay (the deferral percentage) cannot be more than 125% of the average deferral percentage (ADP) of all non-highly compensated employees eligible to participate. Alabama 40 tax forms 2012 A highly compensated employee is defined in chapter 1. Alabama 40 tax forms 2012 Deferral percentage. Alabama 40 tax forms 2012   The deferral percentage for an employee for a year is figured as follows. Alabama 40 tax forms 2012   The elective employer contributions (excluding certain catch-up contributions)  paid to the SEP for the employee for the year     The employee's compensation (limited to $255,000 in 2013)   The instructions for Form 5305A-SEP have a worksheet you can use to determine whether the elective deferrals of your highly compensated employees meet the SARSEP ADP test. Alabama 40 tax forms 2012 Employee compensation. Alabama 40 tax forms 2012   For figuring the deferral percentage, compensation is generally the amount you pay to the employee for the year. Alabama 40 tax forms 2012 Compensation includes the elective deferral and other amounts deferred in certain employee benefit plans. Alabama 40 tax forms 2012 See Compensation in chapter 1. Alabama 40 tax forms 2012 Elective deferrals under the SARSEP are included in figuring your employees' deferral percentage even though they are not included in the income of your employees for income tax purposes. Alabama 40 tax forms 2012 Compensation of self-employed individuals. Alabama 40 tax forms 2012   If you are self-employed, compensation is your net earnings from self-employment as defined in chapter 1. Alabama 40 tax forms 2012   Compensation does not include tax-free items (or deductions related to them) other than foreign earned income and housing cost amounts. Alabama 40 tax forms 2012 Choice not to treat deferrals as compensation. Alabama 40 tax forms 2012   You can choose not to treat elective deferrals (and other amounts deferred in certain employee benefit plans) for a year as compensation under your SARSEP. Alabama 40 tax forms 2012 Limit on Elective Deferrals The most a participant can choose to defer for calendar year 2013 is the lesser of the following amounts. Alabama 40 tax forms 2012 25% of the participant's compensation (limited to $255,000 of the participant's compensation). Alabama 40 tax forms 2012 $17,500. Alabama 40 tax forms 2012 The $17,500 limit applies to the total elective deferrals the employee makes for the year to a SEP and any of the following. Alabama 40 tax forms 2012 Cash or deferred arrangement (section 401(k) plan). Alabama 40 tax forms 2012 Salary reduction arrangement under a tax-sheltered annuity plan (section 403(b) plan). Alabama 40 tax forms 2012 SIMPLE IRA plan. Alabama 40 tax forms 2012 In 2014, the $255,000 limit increases to $260,000 and the $17,500 limit remains at $17,500. Alabama 40 tax forms 2012 Catch-up contributions. Alabama 40 tax forms 2012   A SARSEP can permit participants who are age 50 or over at the end of the calendar year to also make catch-up contributions. Alabama 40 tax forms 2012 The catch-up contribution limit for 2013 is $5,500 and remains at $5,500 for 2014. Alabama 40 tax forms 2012 Elective deferrals are not treated as catch-up contributions for 2013 until they exceed the elective deferral limit (the lesser of 25% of compensation or $17,500), the SARSEP ADP test limit discussed earlier, or the plan limit (if any). Alabama 40 tax forms 2012 However, the catch-up contribution a participant can make for a year cannot exceed the lesser of the following amounts. Alabama 40 tax forms 2012 The catch-up contribution limit. Alabama 40 tax forms 2012 The excess of the participant's compensation over the elective deferrals that are not catch-up contributions. Alabama 40 tax forms 2012   Catch-up contributions are not subject to the elective deferral limit (the lesser of 25% of compensation or $17,500 in 2013 and in 2014). Alabama 40 tax forms 2012 Overall limit on SEP contributions. Alabama 40 tax forms 2012   If you also make nonelective contributions to a SEP-IRA, the total of the nonelective and elective contributions to that SEP-IRA cannot exceed the lesser of 25% of the employee's compensation or $51,000 for 2013 ($52,000 for 2014). Alabama 40 tax forms 2012 The same rule applies to contributions you make to your own SEP-IRA. Alabama 40 tax forms 2012 See Contribution Limits , earlier. Alabama 40 tax forms 2012 Figuring the elective deferral. Alabama 40 tax forms 2012   For figuring the 25% limit on elective deferrals, compensation does not include SEP contributions, including elective deferrals or other amounts deferred in certain employee benefit plans. Alabama 40 tax forms 2012 Tax Treatment of Deferrals Elective deferrals that are not more than the limits discussed earlier under Limit on Elective Deferrals are excluded from your employees' wages subject to federal income tax in the year of deferral. Alabama 40 tax forms 2012 However, these deferrals are included in wages for social security, Medicare, and federal unemployment (FUTA) tax. Alabama 40 tax forms 2012 Excess deferrals. Alabama 40 tax forms 2012   For 2013, excess deferrals are the elective deferrals for the year that are more than the $17,500 limit discussed earlier. Alabama 40 tax forms 2012 For a participant who is eligible to make catch-up contributions, excess deferrals are the elective deferrals that are more than $23,000. Alabama 40 tax forms 2012 The treatment of excess deferrals made under a SARSEP is similar to the treatment of excess deferrals made under a qualified plan. Alabama 40 tax forms 2012 See Treatment of Excess Deferrals under Elective Deferrals (401(k) Plans) in chapter 4. Alabama 40 tax forms 2012 Excess SEP contributions. Alabama 40 tax forms 2012   Excess SEP contributions are elective deferrals of highly compensated employees that are more than the amount permitted under the SARSEP ADP test. Alabama 40 tax forms 2012 You must notify your highly compensated employees within 2½ months after the end of the plan year of their excess SEP contributions. Alabama 40 tax forms 2012 If you do not notify them within this time period, you must pay a 10% tax on the excess. Alabama 40 tax forms 2012 For an explanation of the notification requirements, see Rev. Alabama 40 tax forms 2012 Proc. Alabama 40 tax forms 2012 91-44, 1991-2 C. Alabama 40 tax forms 2012 B. Alabama 40 tax forms 2012 733. Alabama 40 tax forms 2012 If you adopted a SARSEP using Form 5305A-SEP, the notification requirements are explained in the instructions for that form. Alabama 40 tax forms 2012 Reporting on Form W-2. Alabama 40 tax forms 2012   Do not include elective deferrals in the “Wages, tips, other compensation” box of Form W-2. Alabama 40 tax forms 2012 You must, however, include them in the “Social security wages” and “Medicare wages and tips” boxes. Alabama 40 tax forms 2012 You must also include them in box 12. Alabama 40 tax forms 2012 Mark the “Retirement plan” checkbox in box 13. Alabama 40 tax forms 2012 For more information, see the Form W-2 instructions. Alabama 40 tax forms 2012 Distributions (Withdrawals) As an employer, you cannot prohibit distributions from a SEP-IRA. Alabama 40 tax forms 2012 Also, you cannot make your contributions on the condition that any part of them must be kept in the account after you have made your contributions to the employee's accounts. Alabama 40 tax forms 2012 Distributions are subject to IRA rules. Alabama 40 tax forms 2012 Generally, you or your employee must begin to receive distributions from a SEP-IRA by April 1 of the first year after the calendar year in which you or your employee reaches age 70½. Alabama 40 tax forms 2012 For more information about IRA rules, including the tax treatment of distributions, rollovers, required distributions, and income tax withholding, see Publication 590. Alabama 40 tax forms 2012 Additional Taxes The tax advantages of using SEP-IRAs for retirement savings can be offset by additional taxes that may be imposed for all the following actions. Alabama 40 tax forms 2012 Making excess contributions. Alabama 40 tax forms 2012 Making early withdrawals. Alabama 40 tax forms 2012 Not making required withdrawals. Alabama 40 tax forms 2012 For information about these taxes, see chapter 1 in Publication 590. Alabama 40 tax forms 2012 Also, a SEP-IRA may be disqualified, or an excise tax may apply, if the account is involved in a prohibited transaction, discussed next. Alabama 40 tax forms 2012 Prohibited transaction. Alabama 40 tax forms 2012   If an employee improperly uses his or her SEP-IRA, such as by borrowing money from it, the employee has engaged in a prohibited transaction. Alabama 40 tax forms 2012 In that case, the SEP-IRA will no longer qualify as an IRA. Alabama 40 tax forms 2012 For a list of prohibited transactions, see Prohibited Transactions in chapter 4. Alabama 40 tax forms 2012 Effects on employee. Alabama 40 tax forms 2012   If a SEP-IRA is disqualified because of a prohibited transaction, the assets in the account will be treated as having been distributed to the employee on the first day of the year in which the transaction occurred. Alabama 40 tax forms 2012 The employee must include in income the fair market value of the assets (on the first day of the year) that is more than any cost basis in the account. Alabama 40 tax forms 2012 Also, the employee may have to pay the additional tax for making early withdrawals. Alabama 40 tax forms 2012 Reporting and Disclosure Requirements If you set up a SEP using Form 5305-SEP, you must give your eligible employees certain information about the SEP when you set it up. Alabama 40 tax forms 2012 See Setting Up a SEP , earlier. Alabama 40 tax forms 2012 Also, you must give your eligible employees a statement each year showing any contributions to their SEP-IRAs. Alabama 40 tax forms 2012 You must also give them notice of any excess contributions. Alabama 40 tax forms 2012 For details about other information you must give them, see the instructions for Form 5305-SEP or Form 5305A-SEP (for a salary reduction SEP). Alabama 40 tax forms 2012 Even if you did not use Form 5305-SEP or Form 5305A-SEP to set up your SEP, you must give your employees information similar to that described above. Alabama 40 tax forms 2012 For more information, see the instructions for either Form 5305-SEP or Form 5305A-SEP. 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The Alabama 40 Tax Forms 2012

Alabama 40 tax forms 2012 Index A Administrative adjustment requests, Amended Returns and Administrative Adjustment Requests (AARs) Allocations Built-in gain or loss, Allocations to account for built-in gain or loss. Alabama 40 tax forms 2012 Installment sale, Installment reporting for sale of partnership interest. Alabama 40 tax forms 2012 Amended returns, Amended Returns and Administrative Adjustment Requests (AARs) Assistance (see Tax help) B Built-in gain or loss, Allocations to account for built-in gain or loss. Alabama 40 tax forms 2012 C C corporation, TEFRA, Small Partnerships and the Small Partnership Exception Capital interest, Capital interest. Alabama 40 tax forms 2012 , Capital interest. Alabama 40 tax forms 2012 Comments on publication, Comments and suggestions. Alabama 40 tax forms 2012 Contribution Basis of property, Basis of contributed property. Alabama 40 tax forms 2012 Built-in gain or loss, Allocations to account for built-in gain or loss. Alabama 40 tax forms 2012 Distribution of property, Distribution of contributed property to another partner. Alabama 40 tax forms 2012 Net precontribution gain, Net precontribution gain. Alabama 40 tax forms 2012 Property, Contribution of Property Services, Contribution of Services D Definition, partnership, Forming a Partnership Determining ownership, More than 50% ownership. Alabama 40 tax forms 2012 Distributions Gain or loss, Partner's Gain or Loss Partner's debt, Distribution of partner's debt. Alabama 40 tax forms 2012 Partnership, Partnership Distributions Distributive share Adjusted basis, Adjusted Basis Guaranteed payments, Guaranteed Payments E e-file, IRS e-file (Electronic Filing) Electronic filing, IRS e-file (Electronic Filing) F Family partnership, Family Partnership Form 8275, Form 8275 required. Alabama 40 tax forms 2012 8308, Information return required of partnership. Alabama 40 tax forms 2012 8832, Organizations formed after 1996. Alabama 40 tax forms 2012 8865, Contribution to foreign partnership. Alabama 40 tax forms 2012 G Guaranteed payments, Guaranteed Payments I Insurance, self-employed health, Self-employed health insurance premiums. Alabama 40 tax forms 2012 Inventory items, substantially appreciated, Substantially appreciated inventory items. Alabama 40 tax forms 2012 L Liability Assumption of, Assumption of liability. Alabama 40 tax forms 2012 Partner's assumed by partnership, Partner's liabilities assumed by partnership. Alabama 40 tax forms 2012 Partnership's, Effect of Partnership Liabilities Limited liability company, Limited liability company. Alabama 40 tax forms 2012 Liquidation Constructive, Constructive liquidation. Alabama 40 tax forms 2012 Partner's interest, Complete liquidation of partner's interest. Alabama 40 tax forms 2012 Partner's retirement or death, Liquidation at Partner's Retirement or Death Losses Sales or exchanges, Losses. Alabama 40 tax forms 2012 M Marketable securities, Marketable securities treated as money. Alabama 40 tax forms 2012 N Notice group, TEFRA, Notice group. Alabama 40 tax forms 2012 Notice partner, TEFRA, Notice partner. Alabama 40 tax forms 2012 P Partner's Basis Distributed property, Partner's Basis for Distributed Property Partnership interest, Basis of Partner's Interest Interest Acquired by gift, Interest acquired by gift, etc. Alabama 40 tax forms 2012 Alternative rule, adjusted basis, Alternative rule for figuring adjusted basis. Alabama 40 tax forms 2012 Basis, Basis of Partner's Interest Basis adjustments, Adjusted Basis Book value, Book value of partner's interest. Alabama 40 tax forms 2012 Liquidation of, Complete liquidation of partner's interest. Alabama 40 tax forms 2012 , Liquidation at Partner's Retirement or Death Mandatory basis adjustment, Mandatory adjustment. Alabama 40 tax forms 2012 Sale, exchange, transfer, Sale, Exchange, or Other Transfer Special basis adjustment, Special adjustment to basis. Alabama 40 tax forms 2012 Transactions with partnership, Transactions Between Partnership and Partners Partnership Abandoned or worthless interest, Abandoned or worthless partnership interest. Alabama 40 tax forms 2012 Agreement, Partnership Agreement Basis, contributed property, Basis of contributed property. Alabama 40 tax forms 2012 Capital interest, Capital interest. Alabama 40 tax forms 2012 Defined, Forming a Partnership Exclusion from rules, Exclusion From Partnership Rules Family, Family Partnership Forming, Forming a Partnership Liabilities, Effect of Partnership Liabilities Terminating, Terminating a Partnership Transactions with partner, Transactions Between Partnership and Partners Partnership item, TEFRA, Partnership Item. Alabama 40 tax forms 2012 Precontribution gain, Net precontribution gain. Alabama 40 tax forms 2012 Profits interest, Profits interest. Alabama 40 tax forms 2012 Publications (see Tax help) R Related person, Related person. Alabama 40 tax forms 2012 S Self-employed health insurance, Self-employed health insurance premiums. Alabama 40 tax forms 2012 Short period return, Short period return. Alabama 40 tax forms 2012 Small partnership exception to TEFRA, Small Partnerships and the Small Partnership Exception, Small Partnership TEFRA Election Statute of Limitations and TEFRA, Statute of Limitations and TEFRA Substantially appreciated inventory items, Substantially appreciated inventory items. Alabama 40 tax forms 2012 Suggestions for publication, Comments and suggestions. Alabama 40 tax forms 2012 T Tax help, How To Get Tax Help Tax matters partner, Role of Tax Matters Partner (TMP) in TEFRA Proceedings Tax withholding, foreign person or firm, Withholding on foreign partner or firm. Alabama 40 tax forms 2012 TEFRA, Tax Equity and Fiscal Responsibility Act of 1982 (TEFRA) Terminating a partnership, Terminating a Partnership TTY/TDD information, How To Get Tax Help U Uniform Limited Partnership ACT (ULPA), Role of Tax Matters Partner (TMP) in TEFRA Proceedings Unrealized receivables, Unrealized receivables. Alabama 40 tax forms 2012 Prev  Up     Home   More Online Publications