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Ez Form 2011

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Ez Form 2011

Ez form 2011 8. Ez form 2011   Paying Tax Through Withholding or Estimated Tax Table of Contents Introduction Topics - This chapter discusses: Useful Items - You may want to see: Notification of Alien Status Withholding From CompensationWithholding on Wages Withholding on Pensions Withholding on Tip Income Independent Contractors Withholding From Other IncomeTax Withheld on Partnership Income Withholding on Scholarships and Fellowship Grants Income Entitled to Tax Treaty BenefitsStudents, teachers, and researchers. Ez form 2011 Tax Withheld on Real Property Sales Social Security and Medicare TaxesStudents and Exchange Visitors Agricultural Workers Self-Employment Tax International Social Security Agreements Estimated Tax Form 1040-ES (NR)Fiscal year. Ez form 2011 Introduction This chapter discusses how to pay your U. Ez form 2011 S. Ez form 2011 income tax as you earn or receive income during the year. Ez form 2011 In general, the federal income tax is a pay as you go tax. Ez form 2011 There are two ways to pay as you go. Ez form 2011 Withholding. Ez form 2011 If you are an employee, your employer probably withholds income tax from your pay. Ez form 2011 Tax may also be withheld from certain other income—including pensions, bonuses, commissions, and gambling winnings. Ez form 2011 In each case, the amount withheld is paid to the U. Ez form 2011 S. Ez form 2011 Treasury in your name. Ez form 2011 Estimated tax. Ez form 2011 If you do not pay your tax through withholding, or do not pay enough tax that way, you might have to pay estimated tax. Ez form 2011 People who are in business for themselves generally will have to pay their tax this way. Ez form 2011 You may have to pay estimated tax if you receive income such as dividends, interest, rent, and royalties. Ez form 2011 Estimated tax is used to pay not only income tax, but self-employment tax and alternative minimum tax as well. Ez form 2011 Topics - This chapter discusses: How to notify your employer of your alien status, Income subject to withholding of income tax, Exemptions from withholding, Social security and Medicare taxes, and Estimated tax rules. Ez form 2011 Useful Items - You may want to see: Publication 515 Withholding of Tax on Nonresident Aliens and Foreign Entities 901 U. Ez form 2011 S. Ez form 2011 Tax Treaties Form (and Instructions) W-4 Employee's Withholding Allowance Certificate W-8BEN Certificate of Foreign Status of Beneficial Owner for United States Tax Withholding and Reporting (Individuals) W-8ECI Certificate of Foreign Person's Claim That Income Is Effectively Connected With the Conduct of a Trade or Business in the United States W-9 Request for Taxpayer Identification Number and Certification 1040-ES (NR) U. Ez form 2011 S. Ez form 2011 Estimated Tax for Nonresident Alien Individuals 8233 Exemption From Withholding on Compensation for Independent (and Certain Dependent) Personal Services of a Nonresident Alien Individual 8288-B Application for Withholding Certificate for Dispositions by Foreign Persons of U. Ez form 2011 S. Ez form 2011 Real Property Interests 13930 Application for Central Withholding Agreement See chapter 12 for information about getting these publications and forms. Ez form 2011 Notification of Alien Status You must let your employer know whether you are a resident or a nonresident alien so your employer can withhold the correct amount of tax from your wages. Ez form 2011 If you are a resident alien under the rules discussed in chapter 1, you must file Form W-9 or a similar statement with your employer. Ez form 2011 If you are a nonresident alien under those rules, you must furnish to your employer Form 8233 or Form W-8BEN, establishing that you are a foreign person, or Form W-4, establishing that your compensation is subject to graduated withholding at the same rates as resident aliens or U. Ez form 2011 S. Ez form 2011 citizens. Ez form 2011 If you are a resident alien and you receive income other than wages (such as dividends and royalties) from sources within the United States, file Form W-9 or similar statement with the withholding agent (generally, the payer of the income) so the agent will not withhold tax on the income at the 30% (or lower treaty) rate. Ez form 2011 If you receive this type of income as a nonresident alien, file Form W-8BEN with the withholding agent so that the agent will withhold tax at the 30% (or lower treaty) rate. Ez form 2011 However, if the income is effectively connected with a U. Ez form 2011 S. Ez form 2011 trade or business, file Form W-8ECI instead. Ez form 2011 Withholding From Compensation The following discussion generally applies only to nonresident aliens. Ez form 2011 Tax is withheld from resident aliens in the same manner as U. Ez form 2011 S. Ez form 2011 citizens. Ez form 2011 Wages and other compensation paid to a nonresident alien for services performed as an employee are usually subject to graduated withholding at the same rates as resident aliens and U. Ez form 2011 S. Ez form 2011 citizens. Ez form 2011 Therefore, your compensation, unless it is specifically excluded from the term “wages” by law, or is exempt from tax by treaty, is subject to graduated withholding. Ez form 2011 Withholding on Wages If you are an employee and you receive wages subject to graduated withholding, you will be required to fill out a Form W-4. Ez form 2011 Also fill out Form W-4 for a scholarship or fellowship grant to the extent it represents payment for past, present, or future services and for which you are not claiming a tax treaty withholding exemption on Form 8233 (discussed later under Income Entitled to Tax Treaty Benefits). Ez form 2011 These are services you are required to perform as an employee and as a condition of receiving the scholarship or fellowship (or tuition reduction). Ez form 2011 Nonresident aliens should fill out Form W-4 using the following instructions instead of the instructions on the Form W-4. Ez form 2011 This is because of the restrictions on a nonresident alien's filing status, the limited number of personal exemptions a nonresident alien is allowed, and because a nonresident alien cannot claim the standard deduction. Ez form 2011 Enter your social security number (SSN) on line 2. Ez form 2011 Do not enter an individual taxpayer identification number (ITIN). Ez form 2011 Check only “Single” marital status on line 3 (regardless of your actual marital status). Ez form 2011 Claim only one allowance on line 5, unless you are a resident of Canada, Mexico, or South Korea, or a U. Ez form 2011 S. Ez form 2011 national. Ez form 2011 Write “Nonresident Alien” or “NRA” on the dotted line on line 6. Ez form 2011 You can request additional withholding on line 6 at your option. Ez form 2011 Do not claim “Exempt” withholding status on line 7. Ez form 2011 A U. Ez form 2011 S. Ez form 2011 national is an individual who, although not a U. Ez form 2011 S. Ez form 2011 citizen, owes his or her allegiance to the United States. Ez form 2011 U. Ez form 2011 S. Ez form 2011 nationals include American Samoans, and Northern Mariana Islanders who chose to become U. Ez form 2011 S. Ez form 2011 nationals instead of U. Ez form 2011 S. Ez form 2011 citizens. Ez form 2011 See Withholding on Scholarships and Fellowship Grants later, for how to fill out Form W-4 if you receive a U. Ez form 2011 S. Ez form 2011 source scholarship or fellowship grant that is not a payment for services. Ez form 2011 Students and business apprentices from India. Ez form 2011   If you are eligible for the benefits of Article 21(2) of the United States-India Income Tax Treaty, you may claim an additional withholding allowance for the standard deduction. Ez form 2011 You can claim an additional withholding allowance for your spouse only if your spouse will have no gross income for 2013 and cannot be claimed as a dependent on another U. Ez form 2011 S. Ez form 2011 taxpayer's 2013 return. Ez form 2011 You may also claim an additional withholding allowance for each of your dependents not admitted to the United States on “F-2,” “J-2,” or “M-2” visas if they meet the same rules that apply to U. Ez form 2011 S. Ez form 2011 citizens. Ez form 2011 Household employees. Ez form 2011   If you work as a household employee, your employer does not have to withhold income tax. Ez form 2011 However, you may agree to voluntary income tax withholding by filing a Form W-4 with your employer. Ez form 2011 The agreement goes into effect when your employer accepts the agreement by beginning the withholding. Ez form 2011 You or your employer may end the agreement by letting the other know in writing. Ez form 2011 Agricultural workers. Ez form 2011   If you are an agricultural worker on an H-2A visa, your employer does not have to withhold income tax. Ez form 2011 However, your employer will withhold income tax only if you and your employer agree to withhold. Ez form 2011 In that case, you must provide your employer with a properly completed Form W-4. Ez form 2011 You can find more information about not having tax withheld at www. Ez form 2011 irs. Ez form 2011 gov/Individuals/International-Taxpayers/Foreign-Agricultural-Workers. Ez form 2011 Wages Exempt From Withholding Wages that are exempt from U. Ez form 2011 S. Ez form 2011 income tax under an income tax treaty are generally exempt from withholding. Ez form 2011 For information on how to claim this exemption from withholding, see Income Entitled to Tax Treaty Benefits , later. Ez form 2011 Wages paid to aliens who are residents of American Samoa, Canada, Mexico, Puerto Rico, or the U. Ez form 2011 S. Ez form 2011 Virgin Islands may be exempt from withholding. Ez form 2011 The following paragraphs explain these exemptions. Ez form 2011 Residents of Canada or Mexico engaged in transportation-related employment. Ez form 2011   Certain residents of Canada or Mexico who enter or leave the United States at frequent intervals are not subject to withholding on their wages. Ez form 2011 These persons either: Perform duties in transportation service between the United States and Canada or Mexico, or Perform duties connected to the construction, maintenance, or operation of a waterway, viaduct, dam, or bridge crossed by, or crossing, the boundary between the United States and Canada or the boundary between the United States and Mexico. Ez form 2011    This employment is subject to withholding of social security and Medicare taxes unless the services are performed for a railroad. Ez form 2011   To qualify for the exemption from withholding during a tax year, a Canadian or Mexican resident must give the employer a statement in duplicate with name, address, and identification number, certifying that the resident: Is not a U. Ez form 2011 S. Ez form 2011 citizen or resident, Is a resident of Canada or Mexico, whichever applies, and Expects to perform duties previously described during the tax year in question. Ez form 2011   The statement can be in any form, but it must be dated and signed by the employee and must include a written declaration that it is made under the penalties of perjury. Ez form 2011 Residents of American Samoa and Puerto Rico. Ez form 2011   If you are a nonresident alien employee who is a resident of American Samoa or Puerto Rico, wages for services performed in American Samoa or Puerto Rico are generally not subject to withholding unless you are an employee of the United States or any of its agencies in American Samoa or Puerto Rico. Ez form 2011 Residents of the U. Ez form 2011 S. Ez form 2011 Virgin Islands. Ez form 2011   Nonresident aliens who are bona fide residents of the U. Ez form 2011 S Virgin Islands are not subject to withholding of U. Ez form 2011 S. Ez form 2011 tax on income earned while temporarily employed in the United States. Ez form 2011 This is because those persons pay their income tax to the U. Ez form 2011 S. Ez form 2011 Virgin Islands. Ez form 2011 To avoid having tax withheld on income earned in the United States, bona fide residents of the U. Ez form 2011 S. Ez form 2011 Virgin Islands should write a letter, in duplicate, to their employers, stating that they are bona fide residents of the U. Ez form 2011 S. Ez form 2011 Virgin Islands and expect to pay tax on all income to the U. Ez form 2011 S. Ez form 2011 Virgin Islands. Ez form 2011 Withholding on Pensions If you receive a pension as a result of personal services performed in the United States, the pension income is subject to the 30% (or lower treaty) rate of withholding. Ez form 2011 You may, however, have tax withheld at graduated rates on the portion of the pension that arises from the performance of services in the United States after December 31, 1986. Ez form 2011 You must fill out Form W-8BEN and give it to the withholding agent or payer before the income is paid or credited to you. Ez form 2011 Withholding on Tip Income Tips you receive during the year for services performed in the United States are subject to U. Ez form 2011 S. Ez form 2011 income tax. Ez form 2011 Include them in taxable income. Ez form 2011 In addition, tips received while working for one employer, amounting to $20 or more in a month, are subject to graduated withholding. Ez form 2011 Independent Contractors If there is no employee-employer relationship between you and the person for whom you perform services, your compensation is subject to the 30% (or lower treaty) rate of withholding. Ez form 2011 However, if you are engaged in a trade or business in the United States during the tax year, your compensation for personal services as an independent contractor (independent personal services) may be entirely or partly exempt from withholding if you reach an agreement with the Internal Revenue Service on the amount of withholding required. Ez form 2011 An agreement that you reach with the IRS regarding withholding from your compensation for independent personal services is effective for payments covered by the agreement after it is agreed to by all parties. Ez form 2011 You must agree to timely file an income tax return for the current tax year. Ez form 2011 Central withholding agreements. Ez form 2011   If you are a nonresident alien entertainer or athlete performing or participating in athletic events in the United States, you may be able to enter into a withholding agreement with the IRS for reduced withholding provided certain requirements are met. Ez form 2011 Under no circumstances will such a withholding agreement reduce taxes withheld to less than the anticipated amount of income tax liability. Ez form 2011   File Form 13930 and the required attachments with the IRS to request a central withholding agreement. Ez form 2011 Either you or your authorized representative can file the form. Ez form 2011 It should be sent to the IRS at least 45 days before the tour begins or the event occurs. Ez form 2011 Exceptions will be considered on a case by case basis. Ez form 2011   For more information on the CWA program, go to www. Ez form 2011 irs. Ez form 2011 gov/Individuals/International-Taxpayers/Central-Withholding-Agreements. Ez form 2011 Final payment exemption. Ez form 2011   Your final payment of compensation during the tax year for independent personal services may be entirely or partly exempt from withholding. Ez form 2011 This exemption is available only once during your tax year and applies to a maximum of $5,000 of compensation. Ez form 2011 To obtain this exemption, you or your agent must give the following statements and information to the Commissioner or his delegate. Ez form 2011 A statement by each withholding agent from whom you have received gross income effectively connected with a trade or business in the United States during the tax year, showing the amount of income paid and the tax withheld. Ez form 2011 Each statement must be signed by the withholding agent and verified by a declaration that it is made under penalties of perjury. Ez form 2011 A statement by the withholding agent from whom you expect to receive the final payment of compensation, showing the amount of the payment and the amount of tax that would be withheld if a final payment exemption were not granted. Ez form 2011 This statement must also be signed by the withholding agent and verified by a declaration that it is made under penalties of perjury. Ez form 2011 A statement by you that you do not intend to receive any other income effectively connected with a trade or business in the United States during the current tax year. Ez form 2011 The amount of tax that has been withheld or paid under any other provision of the Internal Revenue Code or regulations for any income effectively connected with your trade or business in the United States during the current tax year. Ez form 2011 The amount of your outstanding tax liabilities, if any, including interest and penalties, from the current tax year or prior tax periods. Ez form 2011 Any provision of an income tax treaty under which a partial or complete exemption from withholding may be claimed, the country of your residence, and a statement of sufficient facts to justify an exemption under the treaty. Ez form 2011 A statement signed by you, and verified by a declaration that it is made under penalties of perjury, that all the information given is true and that to your knowledge no relevant information has been omitted. Ez form 2011   If satisfied with the information, the IRS will determine the amount of your tentative income tax for the tax year on gross income effectively connected with your trade or business in the United States. Ez form 2011 Ordinary and necessary business expenses can be taken into account if proven to the satisfaction of the Commissioner or his delegate. Ez form 2011   The Commissioner or his delegate will send you a letter, directed to the withholding agent, showing the amount of the final payment of compensation that is exempt from withholding and the amount that can be paid to you because of the exemption. Ez form 2011 You must give two copies of the letter to the withholding agent and must also attach a copy of the letter to your income tax return for the tax year for which the exemption is effective. Ez form 2011 Allowance for Personal Exemption Withholding on payments for independent personal services is generally based on the amount of your compensation payment minus the value of one exemption ($3,950 for 2014). Ez form 2011 To determine the income for independent personal services performed in the United States to which the 30% (or lower treaty) rate will apply, you are allowed one personal exemption if you are not a U. Ez form 2011 S. Ez form 2011 national and are not a resident of Canada, Mexico, or South Korea. Ez form 2011 For purposes of 30% withholding, the exemption is prorated at $10. Ez form 2011 82 a day in 2014 for the period that labor or personal services are performed in the United States. Ez form 2011 To claim an exemption from withholding on the personal exemption amount, fill out the applicable parts of Form 8233 and give it to the withholding agent. Ez form 2011 Example. Ez form 2011 Eric Johannsen, who is a resident of Country X worked under a contract with a U. Ez form 2011 S. Ez form 2011 firm (not as an employee) in the United States for 100 days during 2014 before returning to his country. Ez form 2011 He earned $6,000 for the services performed (not considered wages) in the United States. Ez form 2011 Eric is married and has three dependent children. Ez form 2011 His wife is not employed and has no income subject to U. Ez form 2011 S. Ez form 2011 tax. Ez form 2011 The amount of the personal exemption to be allowed against the income for his personal services performed within the United States in 2014 is $1,082 (100 days × $10. Ez form 2011 82), and withholding at 30% is applied against the balance. Ez form 2011 Thus, $1,475. Ez form 2011 40 in tax is withheld from Eric's earnings (30% of $4,918 ($6,000 − $1,082). Ez form 2011 U. Ez form 2011 S. Ez form 2011 nationals or residents of Canada, Mexico, or South Korea. Ez form 2011   If you are a nonresident alien who is a resident of Canada, Mexico, or South Korea, or who is a national of the United States, you are subject to the same 30% withholding on your compensation for independent personal services performed in the United States. Ez form 2011 However, if you are a U. Ez form 2011 S. Ez form 2011 national or a resident of Canada or Mexico, you are allowed the same personal exemptions as U. Ez form 2011 S. Ez form 2011 citizens. Ez form 2011 For the 30% (or lower treaty) rate withholding, you can take $10. Ez form 2011 82 per day for each allowable exemption in 2014. Ez form 2011 If you are a resident of South Korea, you are allowed personal exemptions for yourself and for your spouse and children who live with you in the United States at any time during the tax year. Ez form 2011 However, the additional exemptions for your spouse and children must be further prorated as explained in chapter 5 under Exemptions . Ez form 2011 Students and business apprentices from India. Ez form 2011   If you are eligible for the benefits of Article 21(2) of the United States-India Income Tax Treaty, you are allowed an exemption for your spouse only if your spouse will have no gross income for 2014 and cannot be claimed as a dependent on another U. Ez form 2011 S. Ez form 2011 taxpayer's 2014 return. Ez form 2011 You are also allowed an exemption for each dependent not admitted to the United States on “F-2,” “J-2,” or “M-2” visas if they meet the same rules that apply to U. Ez form 2011 S. Ez form 2011 citizens. Ez form 2011 For the 30% (or lower treaty rate) withholding on compensation for independent personal services performed in the United States, you are allowed $10. Ez form 2011 82 per day for each allowable exemption in 2014. Ez form 2011 Refund of Taxes Withheld in Error Multi-level marketing. Ez form 2011   If you are a distributor for a multi-level marketing company who had taxes withheld in error, file a U. Ez form 2011 S. Ez form 2011 income tax return (Form 1040NR, Form 1040NR-EZ, or Form 1120-F) or, if a tax return has already been filed, a claim for refund (Form 1040X or amended Form 1120-F) to recover the amount withheld in error. Ez form 2011 You must also attach to the U. Ez form 2011 S. Ez form 2011 income tax return or claim for refund supporting information that includes, but is not limited to, the following items. Ez form 2011 A copy of your Form W-2, Form 1042-S, or Form 1099 to prove the amount of taxes withheld. Ez form 2011 A statement explaining why income reported on your Form W-2, Form 1042-S, or Form 1099 is not subject to U. Ez form 2011 S. Ez form 2011 taxation. Ez form 2011 A statement listing all the dates you entered and left the United States during the taxable year. Ez form 2011 If the compensation is multi-year compensation, the statement must list all the dates you entered and left the United States during each of the taxable years to which the compensation is attributable. Ez form 2011 A copy of any documents or records that show the number of days you actually were present in the United States during the years listed. Ez form 2011 A statement providing: (a) the number of days (or unit of time less than a day, if appropriate) that personal services were performed in the United States in connection with recruiting, training, and supporting your lower-tier distributors; and (b) the total number of days (or unit of time less than a day, if appropriate) that personal services were performed globally in connection with recruiting, training, and supporting your lower-tier distributors. Ez form 2011 Any further relevant document or record supporting your claim that the taxes were withheld in error. Ez form 2011 Withholding From Other Income Other income subject to 30% withholding generally includes fixed or determinable income such as interest (other than portfolio interest), dividends, pensions and annuities, and gains from certain sales and exchanges, discussed in chapter 4. Ez form 2011 It also includes 85% of social security benefits paid to nonresident aliens. Ez form 2011 Refund of taxes withheld in error on social security benefits paid to resident aliens. Ez form 2011   Social security benefits paid to a lawful permanent resident (green card holder) are not subject to 30% withholding. Ez form 2011 For U. Ez form 2011 S. Ez form 2011 income tax purposes, green card holders continue to be resident aliens until their lawful permanent resident status under immigration laws is either taken away or is administratively or judicially determined to have been abandoned. Ez form 2011 See Green Card Test in chapter 1. Ez form 2011 If you are a green card holder and tax was withheld in error on your social security benefits because you have a foreign address, the withholding tax is refundable by the Social Security Administration (SSA) or the IRS. Ez form 2011 SSA will refund taxes erroneously withheld if the refund can be processed during the same calendar year in which the tax was withheld. Ez form 2011 If SSA cannot refund the taxes withheld, you must file a Form 1040 or 1040A with the Department of the Treasury, Internal Revenue Service Center, Austin, TX 73301 to determine if you are entitled to a refund. Ez form 2011 You must also attach the following to your Form 1040 or 1040A. Ez form 2011 A copy of Form SSA-1042S, Social Security Benefit Statement. Ez form 2011 A copy of the “green card. Ez form 2011 ” A signed declaration that includes the following statements: The SSA should not have withheld income tax from my social security benefits because I am a U. Ez form 2011 S. Ez form 2011 lawful permanent resident and my green card has been neither revoked nor administratively or judicially determined to have been abandoned. Ez form 2011 I am filing a U. Ez form 2011 S. Ez form 2011 income tax return for the tax year as a resident alien reporting all of my worldwide income. Ez form 2011 I have not claimed benefits for the tax year under an income tax treaty as the resident of a country other than the United States. Ez form 2011 Other income not subject to withholding of 30% (or lower treaty) rate. Ez form 2011   The following income is not subject to withholding at the 30% (or lower treaty) rate if you file Form W-8ECI with the payer of the income. Ez form 2011 Income (other than compensation) that is effectively connected with your U. Ez form 2011 S. Ez form 2011 trade or business. Ez form 2011 Income from real property that you choose to treat as effectively connected with a U. Ez form 2011 S. Ez form 2011 trade or business. Ez form 2011 See Income From Real Property in chapter 4 for details about this choice. Ez form 2011   Special rules for withholding on partnership income, scholarships, and fellowships are explained next. Ez form 2011 Tax Withheld on Partnership Income If you are a foreign partner in a U. Ez form 2011 S. Ez form 2011 or foreign partnership, the partnership will withhold tax on your share of effectively connected taxable income (ECTI) from the partnership. Ez form 2011 You may be able to reduce your ECTI subject to withholding by certain partner-level deductions. Ez form 2011 Generally, you must use Form 8804-C for this purpose. Ez form 2011 See the Instructions for Form 8804-C for more information. Ez form 2011 The withholding rate on your share of effectively connected income is generally the highest rate of tax specified under section 1 of the Code (39. Ez form 2011 6% for 2014). Ez form 2011 However, the partnership may withhold at the highest rate that applies to a particular type of income allocable to you if you gave the partnership the appropriate documentation. Ez form 2011 Long-term capital gain is an example of a particular type of income to which the highest tax rate applies. Ez form 2011 Claim the tax withheld as a credit on your 2014 Form 1040NR. Ez form 2011 The partnership will give you a statement on Form 8805, Foreign Partner's Information Statement of Section 1446 Withholding Tax, showing the tax withheld. Ez form 2011 A partnership that is publicly traded will withhold tax on your actual distributions of effectively connected income. Ez form 2011 In this case the partnership will give you a statement on Form 1042-S, Foreign Person's U. Ez form 2011 S. Ez form 2011 Source Income Subject to Withholding. Ez form 2011 Withholding on Scholarships and Fellowship Grants There is no withholding on a qualified scholarship received by a candidate for a degree. Ez form 2011 See chapter 3. Ez form 2011 If you are a nonresident alien student or grantee with an “F,” “J,” “M,” or “Q” visa and you receive a U. Ez form 2011 S. Ez form 2011 source grant or scholarship that is not fully exempt, the withholding agent (usually the payer of the scholarship) withholds tax at 14% (or lower treaty rate) of the taxable part of the grant or scholarship that is not a payment for services. Ez form 2011 However, if you are not a candidate for a degree and the grant does not meet certain requirements, tax will be withheld at the 30% (or lower treaty) rate. Ez form 2011 Any part of a scholarship or fellowship grant that is a payment for services is subject to graduated withholding as discussed earlier under Withholding on Wages. Ez form 2011 Alternate Withholding Procedure Your withholding agent may choose to use an alternate procedure by asking you to fill out Form W-4 and the Personal Allowances Worksheet (attached to Form W-4). Ez form 2011 Use the following instructions instead of the Form W-4 instructions to complete the worksheet. Ez form 2011 Line A. Ez form 2011   Enter the total of the following amounts on line A. Ez form 2011 Personal exemption. Ez form 2011   Include the prorated part of your allowable personal exemption. Ez form 2011 Figure the amount by multiplying the number of days you expect to be in the United States in 2014 by the daily exemption amount ($10. Ez form 2011 82). Ez form 2011 Expenses. Ez form 2011   Include expenses that will be deductible on your return. Ez form 2011 These include away-from-home expenses (meals, lodging, and transportation), certain state and local income taxes, charitable contributions, and casualty losses, discussed earlier under Itemized Deductions in chapter 5. Ez form 2011 They also include business expenses, moving expenses, and the IRA deduction discussed under Deductions in chapter 5. Ez form 2011 Nontaxable grant or scholarship. Ez form 2011   Include the part of your grant or scholarship that is not taxable under U. Ez form 2011 S. Ez form 2011 law or under a tax treaty. Ez form 2011 Line B. Ez form 2011   Enter -0- unless the following paragraph applies to you. Ez form 2011   If you are a student who qualifies under Article 21(2) of the United States-India Income Tax Treaty, and you are not claiming deductions for away-from-home expenses or other itemized deductions (discussed earlier), enter the standard deduction on line B. Ez form 2011 The standard deduction amount for 2013 is $6,100. Ez form 2011 Lines C and D. Ez form 2011   Enter -0- on both lines unless the following paragraphs apply to you. Ez form 2011   If you are a resident of Canada, Mexico, South Korea, or a U. Ez form 2011 S. Ez form 2011 national, an additional daily exemption amount may be allowed for your spouse and each of your dependents. Ez form 2011   If you are a resident of India who is eligible for the benefits of Article 21(2) of the United States-India Income Tax Treaty, you can claim an additional daily exemption amount for your spouse only if your spouse will have no gross income for 2014 and cannot be claimed as a dependent on another U. Ez form 2011 S. Ez form 2011 taxpayer's 2014 return. Ez form 2011 You can also claim an additional amount for each of your dependents not admitted to the United States on “F-2,” “J-2,” or “M-2” visas if they meet the same rules that apply to U. Ez form 2011 S. Ez form 2011 citizens. Ez form 2011   Enter any additional amount for your spouse on line C. Ez form 2011 Enter any additional amount for your dependents on line D. Ez form 2011 Lines E, F, and G. Ez form 2011   No entries should be made on lines E, F, and G. Ez form 2011 Line H. Ez form 2011   Add the amounts on lines A through D and enter the total on line H. Ez form 2011 Form W-4. Ez form 2011   Complete lines 1 through 4 of Form W-4. Ez form 2011 Sign and date the form and give it with the Personal Allowances Worksheet to your withholding agent. Ez form 2011   If you file a Form W-4 to reduce or eliminate the withholding on your scholarship or grant, you must file an annual U. Ez form 2011 S. Ez form 2011 income tax return to be allowed the exemptions and deductions you claimed on that form. Ez form 2011 If you are in the United States during more than one tax year, you must attach a statement to your yearly Form W-4 indicating that you have filed a U. Ez form 2011 S. Ez form 2011 income tax return for the previous year. Ez form 2011 If you have not been in the United States long enough to be required to file a return, you must attach a statement to your Form W-4 saying you will file a U. Ez form 2011 S. Ez form 2011 income tax return when required. Ez form 2011 After the withholding agent has accepted your Form W-4, tax will be withheld on your scholarship or grant at the graduated rates that apply to wages. Ez form 2011 The gross amount of the income is reduced by the amount on line H of the worksheet and the withholding tax is figured on the remainder. Ez form 2011 You will receive a Form 1042-S from the withholding agent (usually the payer of your grant) showing the gross amount of your taxable scholarship or fellowship grant less the withholding allowance amount, the tax rate, and the amount of tax withheld. Ez form 2011 Use this form to prepare your annual U. Ez form 2011 S. Ez form 2011 income tax return. Ez form 2011 Income Entitled to Tax Treaty Benefits If a tax treaty between the United States and your country provides an exemption from, or a reduced rate of, tax for certain items of income, you should notify the payor of the income (the withholding agent) of your foreign status to claim a tax treaty withholding exemption. Ez form 2011 Generally, you do this by filing either Form W-8BEN or Form 8233 with the withholding agent. Ez form 2011 File Form W-8BEN for income that is not personal services income. Ez form 2011 File Form 8233 for personal services income as discussed next. Ez form 2011 Employees and independent contractors. Ez form 2011   If you perform personal services as an employee or as an independent contractor and you can claim an exemption from withholding on that personal service income because of a tax treaty, give Form 8233 to each withholding agent from whom amounts will be received. Ez form 2011   Even if you submit Form 8233, the withholding agent may have to withhold tax from your income. Ez form 2011 This is because the factors on which the treaty exemption is based may not be determinable until after the close of the tax year. Ez form 2011 In this case, you must file Form 1040NR (or Form 1040NR-EZ if you qualify) to recover any overwithheld tax and to provide the IRS with proof that you are entitled to the treaty exemption. Ez form 2011 Students, teachers, and researchers. Ez form 2011   Students, teachers, and researchers must attach the appropriate statement shown in Appendix A (for students) or Appendix B (for teachers and researchers) at the end of this publication to the Form 8233 and give it to the withholding agent. Ez form 2011 For treaties not listed in the appendices, attach a statement in a format similar to those for other treaties. Ez form 2011   If you received a scholarship or fellowship and personal services income from the same withholding agent, use Form 8233 to claim an exemption from withholding based on a tax treaty for both types of income. Ez form 2011 Special events and promotions. Ez form 2011   Withholding at the full 30% rate is required for payments made to a nonresident alien or foreign corporation for gate receipts (or television or other receipts) from rock music festivals, boxing promotions, and other entertainment or sporting events, unless the withholding agent has been specifically advised otherwise by letter from the IRS. Ez form 2011 Form 13930 is used to request a reduction in withholding. Ez form 2011 Withholding may be required even if the income may be exempt from taxation by provisions of a tax treaty. Ez form 2011 One reason for this is that the partial or complete exemption is usually based on factors that cannot be determined until after the close of the tax year. Ez form 2011 You will be required to pay U. Ez form 2011 S. Ez form 2011 tax, at the time of your departure from the United States, on any income for which you incorrectly claimed a treaty exemption. Ez form 2011 For more details on treaty provisions that apply to compensation, see Publication 901. Ez form 2011 Tax Withheld on Real Property Sales If you are a nonresident alien and you dispose of a U. Ez form 2011 S. Ez form 2011 real property interest, the transferee (buyer) of the property generally must withhold a tax equal to 10% of the amount realized on the disposition. Ez form 2011 A distribution by a qualified investment entity to a nonresident alien shareholder that is treated as gain from the sale or exchange of a U. Ez form 2011 S. Ez form 2011 real property interest by the shareholder is subject to withholding at 35%. Ez form 2011 Withholding is also required on certain distributions and other transactions by domestic or foreign corporations, partnerships, trusts, and estates. Ez form 2011 These rules are covered in Publication 515. Ez form 2011 For information on the tax treatment of dispositions of U. Ez form 2011 S. Ez form 2011 real property interests, see Real Property Gain or Loss in chapter 4. Ez form 2011 If you are a partner in a domestic partnership, and the partnership disposes of a U. Ez form 2011 S. Ez form 2011 real property interest at a gain, the partnership will withhold tax on the amount of gain allocable to its foreign partners. Ez form 2011 Your share of the income and tax withheld will be reported to you on Form 8805, Foreign Partner's Information Statement of Section 1446 Withholding Tax, or Form 1042-S, Foreign Person's U. Ez form 2011 S. Ez form 2011 Source Income Subject to Withholding (in the case of a publicly traded partnership). Ez form 2011 Withholding is not required in the following situations. Ez form 2011 The property is acquired by the buyer for use as a residence and the amount realized (sales price) is not more than $300,000. Ez form 2011 The property disposed of is an interest in a domestic corporation if any class of stock of the corporation is regularly traded on an established securities market. Ez form 2011 However, this exception does not apply to certain dispositions of substantial amounts of non-publicly traded interests in publicly traded corporations. Ez form 2011 The property disposed of is an interest in a U. Ez form 2011 S. Ez form 2011 corporation that is not regularly traded on an established market and you (the seller) give the buyer a copy of a statement issued by the corporation certifying that the interest is not a U. Ez form 2011 S. Ez form 2011 real property interest. Ez form 2011 You (the seller) give the buyer a certification stating, under penalties of perjury, that you are not a foreign person, and containing your name, U. Ez form 2011 S. Ez form 2011 taxpayer identification number, and home address. Ez form 2011 You can give the certification to a qualified substitute. Ez form 2011 The qualified substitute gives the buyer a statement, under penalties of perjury, that the certification is in the possession of the qualified substitute. Ez form 2011 For this purpose, a qualified substitute is (a) the person (including any attorney or title company) responsible for closing the transaction, other than your agent, and (b) the buyer's agent. Ez form 2011 The buyer receives a withholding certificate from the Internal Revenue Service. Ez form 2011 You give the buyer written notice that you are not required to recognize any gain or loss on the transfer because of a nonrecognition provision in the Internal Revenue Code or a provision in a U. Ez form 2011 S. Ez form 2011 tax treaty. Ez form 2011 The buyer must file a copy of the notice with the Ogden Service Center, P. Ez form 2011 O. Ez form 2011 Box 409101, Ogden, UT 84409. Ez form 2011 You must verify the notice as true and sign it under penalties of perjury. Ez form 2011 The notice must contain the following information. Ez form 2011 A statement that the notice is a notice of nonrecognition under regulation section 1. Ez form 2011 1445-2(d)(2). Ez form 2011 Your name, taxpayer identification number, and home address. Ez form 2011 A statement that you are not required to recognize any gain or loss on the transfer. Ez form 2011 A brief description of the transfer. Ez form 2011 A brief summary of the law and facts supporting your claim that recognition of gain or loss is not required. Ez form 2011 You may not give the buyer a written notice for any of the following transfers: the sale of your main home on which you exclude gain, a like-kind exchange that does not qualify for nonrecognition treatment in its entirety, or a deferred like-kind exchange that has not been completed at the time the buyer must file Form 8288. Ez form 2011 Instead, a withholding certificate (described next) must be obtained. Ez form 2011 The amount you realize on the transfer of a U. Ez form 2011 S. Ez form 2011 real property interest is zero. Ez form 2011 The property is acquired by the United States, a U. Ez form 2011 S. Ez form 2011 state or possession, a political subdivision, or the District of Columbia. Ez form 2011 The distribution is from a domestically controlled qualified investment entity (QIE) and is treated as a distribution of a U. Ez form 2011 S. Ez form 2011 real property interest only because an interest in the entity was disposed of in an applicable wash sale transaction. Ez form 2011 For the definition of a QIE, see Qualified investment entities under Real Property Gain or Loss, earlier. Ez form 2011 See Wash sale under Real Property Gain or Loss in chapter 4. Ez form 2011 The certifications in (3) and (4) must be disregarded by the buyer if the buyer or qualified substitute has actual knowledge, or receives notice from a seller's or buyer's agent (or substitute), that they are false. Ez form 2011 This also applies to the qualified substitute's statement under (4). Ez form 2011 Withholding certificates. Ez form 2011   The tax required to be withheld on a disposition can be reduced or eliminated under a withholding certificate issued by the IRS. Ez form 2011 Either you or the buyer can request a withholding certificate. Ez form 2011   A withholding certificate can be issued due to any of the following. Ez form 2011 The IRS determines that reduced withholding is appropriate because either: The amount required to be withheld would be more than your maximum tax liability, or Withholding of the reduced amount would not jeopardize collection of the tax. Ez form 2011 All of your realized gain is exempt from U. Ez form 2011 S. Ez form 2011 tax. Ez form 2011 You or the buyer enters into an agreement for the payment of tax providing security for the tax liability. Ez form 2011   Get Publication 515 and Form 8288-B for information on procedures to request a withholding certificate. Ez form 2011 Credit for tax withheld. Ez form 2011   The buyer must report and pay over the withheld tax within 20 days after the transfer using Form 8288, U. Ez form 2011 S. Ez form 2011 Withholding Tax Return for Dispositions by Foreign Persons of U. Ez form 2011 S. Ez form 2011 Real Property Interests. Ez form 2011 This form is filed with the IRS with copies A and B of Form 8288-A, Statement of Withholding on Dispositions by Foreign Persons of U. Ez form 2011 S. Ez form 2011 Real Property Interests. Ez form 2011 Copy B of this statement will be stamped received by the IRS and returned to you (the seller) if the statement is complete and includes your taxpayer identification number (TIN). Ez form 2011 You must file Copy B with your tax return to take credit for the tax withheld. Ez form 2011   A stamped copy of Form 8288-A will not be provided to you if your TIN is not included on that form. Ez form 2011 The IRS will send you a letter requesting the TIN and providing instructions for how to get a TIN. Ez form 2011 When you provide the IRS with a TIN, the IRS will provide you with a stamped Copy B of Form 8288-A. Ez form 2011 Social Security and Medicare Taxes If you work as an employee in the United States, you must pay social security and Medicare taxes in most cases. Ez form 2011 Your payments of these taxes contribute to your coverage under the U. Ez form 2011 S. Ez form 2011 social security system. Ez form 2011 Social security coverage provides retirement benefits, survivors and disability benefits, and medical insurance (Medicare) benefits to individuals who meet certain eligibility requirements. Ez form 2011 In most cases, the first $113,700 of taxable wages received in 2013 for services performed in the United States is subject to social security tax. Ez form 2011 All taxable wages are subject to Medicare tax. Ez form 2011 Your employer deducts these taxes from each wage payment. Ez form 2011 Your employer must deduct these taxes even if you do not expect to qualify for social security or Medicare benefits. Ez form 2011 You can claim a credit for excess social security tax on your income tax return if you have more than one employer and the amount deducted from your combined wages for 2013 is more than $7,049. Ez form 2011 40. Ez form 2011 Use the appropriate worksheet in chapter 3 of Publication 505, Tax Withholding and Estimated Tax, to figure your credit. Ez form 2011 If any one employer deducted more than $7,049. Ez form 2011 40, you cannot claim a credit for that amount. Ez form 2011 Ask your employer to refund the excess. Ez form 2011 If your employer does not refund the excess, you can file a claim for refund using Form 843. Ez form 2011 In general, U. Ez form 2011 S. Ez form 2011 social security and Medicare taxes apply to payments of wages for services performed as an employee in the United States, regardless of the citizenship or residence of either the employee or the employer. Ez form 2011 In limited situations, these taxes apply to wages for services performed outside the United States. Ez form 2011 Your employer should be able to tell you if social security and Medicare taxes apply to your wages. Ez form 2011 You cannot make voluntary payments if no taxes are due. Ez form 2011 Additional Medicare Tax. Ez form 2011   Beginning in 2013, in addition to the Medicare tax, a 0. Ez form 2011 9% Additional Medicare Tax applies to Medicare wages, Railroad Retirement Tax Act (RRTA) compensation, and self-employment income that are more than: $250,000 if married filing jointly, $125,000 if married filing separately, or $200,000 for any other filing status. Ez form 2011   There are no special rules for nonresident aliens for purposes of Additional Medicare Tax. Ez form 2011 Wages, RRTA compensation, and self-employment income that are subject to Medicare tax will also be subject to Additional Medicare Tax if in excess of the applicable threshold. Ez form 2011   Your employer is responsible for withholding the 0. Ez form 2011 9% Additional Medicare Tax on Medicare wages or RRTA compensation it pays to you in excess of $200,000 in the calendar year. Ez form 2011 If you intend to file a joint return and you anticipate that you and your spouse's individual wages are not going to be more than $200,000 but your combined wages and self-employment income are going to be more than $250,000, you may want to request additional withholding on Form W-4 and/or make estimated tax payments. Ez form 2011   If you file Form 1040NR, you must pay Additional Medicare Tax if the total of your wages and your self-employment income was more than $125,000 if married (Box 3, 4, or 5 on page 1 of Form 1040NR), or $200,000 if single or qualifying widow(er) (Box 1, 2, or 6 on page 1 of Form 1040NR). Ez form 2011    See Form 8959, Additional Medicare Tax, and the Instructions for Form 8959 to determine whether you are required to pay Additional Medicare Tax. Ez form 2011 For more information on Additional Medicare Tax, go to IRS. Ez form 2011 gov and enter “Additional Medicare Tax” in the search box. Ez form 2011   Self-employed individuals may also be required to pay Additional Medicare Tax. Ez form 2011 See Self-Employment Tax , later. Ez form 2011 Students and Exchange Visitors Generally, services performed by you as a nonresident alien temporarily in the United States as a nonimmigrant under subparagraph (F), (J), (M), or (Q) of section 101(a)(15) of the Immigration and Nationality Act are not covered under the social security program if the services are performed to carry out the purpose for which you were admitted to the United States. Ez form 2011 This means that there will be no withholding of social security or Medicare taxes from the pay you receive for these services. Ez form 2011 These types of services are very limited, and generally include only on-campus work, practical training, and economic hardship employment. Ez form 2011 Social security and Medicare taxes will be withheld from your pay for these services if you are considered a resident alien as discussed in chapter 1, even though your nonimmigrant classification (“F,” “J,” “M,” or “Q”) remains the same. Ez form 2011 Services performed by a spouse or minor child of nonimmigrant aliens with the classification of “F-2,” “J-2,” “M-2,” and “Q-3” are covered under social security. Ez form 2011 Nonresident Alien Students If you are a nonresident alien temporarily admitted to the United States as a student, you generally are not permitted to work for a wage or salary or to engage in business while you are in the United States. Ez form 2011 In some cases, a student admitted to the United States in “F-1,” “M-1,” or “J-1” status is granted permission to work. Ez form 2011 Social security and Medicare taxes are not withheld from pay for the work unless the student is considered a resident alien. Ez form 2011 Any student who is enrolled and regularly attending classes at a school may be exempt from social security and Medicare taxes on pay for services performed for that school. Ez form 2011 The U. Ez form 2011 S. Ez form 2011 Citizenship and Immigration Services (USCIS) permits on-campus work for students in “F-1” status if it does not displace a U. Ez form 2011 S. Ez form 2011 resident. Ez form 2011 On-campus work means work performed on the school's premises. Ez form 2011 On-campus work includes work performed at an off-campus location that is educationally affiliated with the school. Ez form 2011 On-campus work under the terms of a scholarship, fellowship, or assistantship is considered part of the academic program of a student taking a full course of study and is permitted by the USCIS. Ez form 2011 Social security and Medicare taxes are not withheld from pay for this work unless the student is considered a resident alien. Ez form 2011 If services performed by a nonresident alien student are not considered as performed to carry out the purpose for which the student was admitted to the United States, social security and Medicare taxes will be withheld from pay for the services unless the pay is exempt under the Internal Revenue Code. Ez form 2011 Exchange Visitors Exchange visitors are temporarily admitted to the United States under section 101(a)(15)(J) of the Immigration and Nationality Act. Ez form 2011 Social security and Medicare taxes are not withheld on pay for services of an exchange visitor who has been given permission to work and who possesses or obtains a letter of authorization from the sponsor unless the exchange visitor is considered a resident alien. Ez form 2011 If services performed by an exchange visitor are not considered as performed to carry out the purpose for which the visitor was admitted to the United States, social security and Medicare taxes are withheld from pay for the services unless the pay is exempt under the Internal Revenue Code. Ez form 2011 Nonresident aliens temporarily admitted to the United States as participants in international cultural exchange programs under section 101(a)(15)(Q) of the Immigration and Nationality Act may be exempt from social security and Medicare taxes. Ez form 2011 The employer must be the petitioner through whom the alien obtained the “Q” visa. Ez form 2011 Social security and Medicare taxes are not withheld from pay for this work unless the alien is considered a resident alien. Ez form 2011 Refund of Taxes Withheld in Error If social security or Medicare taxes were withheld in error from pay that is not subject to these taxes, contact the employer who withheld the taxes for a refund. Ez form 2011 If you are unable to get a full refund of the amount from your employer, file a claim for refund with the Internal Revenue Service on Form 843, Claim for Refund and Request for Abatement. Ez form 2011 Attach the following items to Form 843. Ez form 2011 A copy of your Form W-2 to prove the amount of social security and Medicare taxes withheld. Ez form 2011 A copy of your visa. Ez form 2011 Form I-94 (or other documentation showing your dates of arrival or departure). Ez form 2011 If you have an F-1 visa, documentation showing permission to work in the U. Ez form 2011 S. Ez form 2011 If you have a J-1 visa, documentation showing permission to work in the U. Ez form 2011 S. Ez form 2011 If you are engaged in optional practical training or employment due to severe economic necessity, documentation showing permission to work in the U. Ez form 2011 S. Ez form 2011 A statement from your employer indicating the amount of the reimbursement your employer provided and the amount of the credit or refund your employer claimed or you authorized your employer to claim. Ez form 2011 If you cannot obtain this statement from your employer, you must provide this information on your own statement and explain why you are not attaching a statement from your employer or on Form 8316 claiming your employer will not issue the refund. Ez form 2011 If you were exempt from social security and Medicare tax for only part of the year, pay statements showing the tax paid during the period you were exempt. Ez form 2011 File Form 843 (with attachments) with the Department of the Treasury, Internal Revenue Service Center, Ogden, UT 84201-0038. Ez form 2011 Do not use Form 843 to request a refund of Additional Medicare Tax. Ez form 2011 If Additional Medicare Tax was withheld from your pay in error, you can claim a credit for any withheld Additional Medicare Tax against the total tax liability shown on your tax return by filing Form 8959 with Form 1040 or 1040NR. Ez form 2011 If Additional Medicare Tax was withheld in error in a prior year for which you already filed Form 1040 or 1040NR, you must file Form 1040X, Amended U. Ez form 2011 S. Ez form 2011 Individual Income Tax Return, for the prior year in which the wages or compensation were originally received to recover the Additional Medicare Tax withheld in error. Ez form 2011 See the Instructions for Form 1040X. Ez form 2011 Agricultural Workers Agricultural workers temporarily admitted into the United States on H-2A visas are exempt from social security and Medicare taxes on compensation paid to them for services performed in connection with the H-2A visa. Ez form 2011 You can find more information about not having tax withheld at www. Ez form 2011 irs. Ez form 2011 gov/Individuals/International-Taxpayers/Foreign-Agricultural-Workers. Ez form 2011 Self-Employment Tax Self-employment tax is the social security and Medicare taxes for individuals who are self-employed. Ez form 2011 Nonresident aliens are not subject to self-employment tax unless an international social security agreement in effect determines that they are covered under the U. Ez form 2011 S. Ez form 2011 social security system. Ez form 2011 Residents of the U. Ez form 2011 S. Ez form 2011 Virgin Islands, Puerto Rico, Guam, the Commonwealth of the Northern Mariana Islands, or American Samoa are considered U. Ez form 2011 S. Ez form 2011 residents for this purpose and are subject to the self-employment tax. Ez form 2011 Resident aliens must pay self-employment tax under the same rules that apply to U. Ez form 2011 S. Ez form 2011 citizens. Ez form 2011 However, a resident alien employed by an international organization, a foreign government, or a wholly-owned instrumentality of a foreign government is not subject to the self-employment tax on income earned in the United States. Ez form 2011 Self-employment income you receive while you are a resident alien is subject to self-employment tax even if it was paid for services you performed as a nonresident alien. Ez form 2011 Example. Ez form 2011 Bill Jones is an author engaged in the business of writing books. Ez form 2011 Bill had several books published in a foreign country while he was a citizen and resident of that country. Ez form 2011 During 2013, Bill entered the United States as a resident alien. Ez form 2011 After becoming a U. Ez form 2011 S. Ez form 2011 resident, he continued to receive royalties from his foreign publisher. Ez form 2011 Bill reports his income and expenses on the cash basis (he reports income on his tax return when received and deducts expenses when paid). Ez form 2011 Bill's 2013 self-employment income includes the royalties received after he became a U. Ez form 2011 S. Ez form 2011 resident even though the books were published while he was a nonresident alien. Ez form 2011 This royalty income is subject to self-employment tax. Ez form 2011 Reporting self-employment tax. Ez form 2011   Use Schedule SE (Form 1040) to report and figure your self-employment tax. Ez form 2011 Then enter the tax on Form 1040, line 56, or Form 1040NR, line 54. Ez form 2011 Attach Schedule SE to Form 1040 or Form 1040NR. Ez form 2011 Additional Medicare Tax. Ez form 2011   Self-employed individuals must pay a 0. Ez form 2011 9% Additional Medicare Tax on self-employment income that exceeds one of the following threshold amounts (based on your filing status): Married filing jointly — $250,000; Married filing separately — $125,000; Single, Head of household, or Qualifying widow(er) — $200,000. Ez form 2011   If you have both wages and self-employment income, the threshold amount for applying the Additional Medicare Tax on the self-employment income is reduced (but not below zero) by the amount of wages subject to Additional Medicare Tax. Ez form 2011 A self-employment loss should not be considered for purposes of this tax   If you file Form 1040NR, you must pay Additional Medicare Tax if the total of your wages and your self-employment income was more than $125,000 if married (Box 3, 4, or 5 on page 1 of Form 1040NR), or $200,000 if single or qualifying widow(er) (Box 1, 2, or 6 on page 1 of Form 1040NR). Ez form 2011   See Form 8959, Additional Medicare Tax, and the Instructions for Form 8959 to determine whether you are required to pay Additional Medicare Tax. Ez form 2011 For more information on Additional Medicare Tax, go to IRS. Ez form 2011 gov and enter “Additional Medicare Tax” in the search box. Ez form 2011 Deduction for employer-equivalent portion of self-employment tax. Ez form 2011   If you must pay self-employment tax, you can deduct a portion of the self-employment tax paid in figuring your adjusted gross income. Ez form 2011 This deduction is figured on Schedule SE (Form 1040). Ez form 2011 Note. Ez form 2011 No portion of the Additional Medicare Tax is deductible for self-employment tax. Ez form 2011 More information. Ez form 2011   Get Publication 334, Tax Guide for Small Business, for more information about self-employment tax. Ez form 2011 International Social Security Agreements The United States has entered into social security agreements with foreign countries to coordinate social security coverage and taxation of workers employed for part or all of their working careers in one of the countries. Ez form 2011 These agreements are commonly referred to as totalization agreements. Ez form 2011 Under these agreements, dual coverage and dual contributions (taxes) for the same work are eliminated. Ez form 2011 The agreements generally make sure that social security taxes (including self-employment tax) are paid only to one country. Ez form 2011 Agreements are in effect with the following countries. Ez form 2011 Australia. Ez form 2011 Austria. Ez form 2011 Belgium. Ez form 2011 Canada. Ez form 2011 Chile. Ez form 2011 Czech Republic. Ez form 2011 Denmark. Ez form 2011 Finland. Ez form 2011 France. Ez form 2011 Germany. Ez form 2011 Greece. Ez form 2011 Ireland. Ez form 2011 Italy. Ez form 2011 Japan. Ez form 2011 Korea, South. Ez form 2011 Luxembourg. Ez form 2011 The Netherlands. Ez form 2011 Norway. Ez form 2011 Poland. Ez form 2011 Portugal. Ez form 2011 Spain. Ez form 2011 Sweden. Ez form 2011 Switzerland. Ez form 2011 The United Kingdom. Ez form 2011 Agreements with other countries are expected to enter into force in the future. Ez form 2011 Employees. Ez form 2011   Generally, under these agreements, you are subject to social security taxes only in the country where you are working. Ez form 2011 However, if you are temporarily sent to work for the same employer in the United States and your pay would normally be subject to social security taxes in both countries, most agreements provide that you remain covered only by the social security system of the country from which you were sent. Ez form 2011 You can get more information on any agreement by contacting the U. Ez form 2011 S. Ez form 2011 Social Security Administration at the address given later. Ez form 2011 If you have access to the Internet, you can get more information at www. Ez form 2011 socialsecurity. Ez form 2011 gov/international. Ez form 2011   To establish that your pay is subject only to foreign social security taxes and is exempt from U. Ez form 2011 S. Ez form 2011 social security taxes (including the Medicare tax) under an agreement, you or your employer should request a certificate of coverage from the appropriate agency of the foreign country. Ez form 2011 This will usually be the same agency to which you or your employer pays your foreign social security taxes. Ez form 2011 The foreign agency will be able to tell you what information is needed for them to issue the certificate. Ez form 2011 Your employer should keep a copy of the certificate because it may be needed to show why you are exempt from U. Ez form 2011 S. Ez form 2011 social security taxes. Ez form 2011 Only wages paid on or after the effective date of the agreement can be exempt from U. Ez form 2011 S. Ez form 2011 social security taxes. Ez form 2011    Some of the countries with which the United States has agreements will not issue certificates of coverage. Ez form 2011 In this case, either you or your employer should request a statement that your wages are not covered by the U. Ez form 2011 S. Ez form 2011 social security system. Ez form 2011 Request the statement from the following address. Ez form 2011 U. Ez form 2011 S. Ez form 2011 Social Security Administration Office of International Programs P. Ez form 2011 O. Ez form 2011 Box 17741 Baltimore, MD 21235-7741 Self-employed individuals. Ez form 2011   Under most agreements, self-employed individuals are covered by the social security system of the country where they reside. Ez form 2011 However, under some agreements, you may be exempt from U. Ez form 2011 S. Ez form 2011 self-employment tax if you temporarily transfer your business activity to or from the United States. Ez form 2011   If you believe that your self-employment income is subject only to U. Ez form 2011 S. Ez form 2011 self-employment tax and is exempt from foreign social security taxes, request a certificate of coverage from the U. Ez form 2011 S. Ez form 2011 Social Security Administration at the address given earlier. Ez form 2011 This certificate will establish your exemption from foreign social security taxes. Ez form 2011   To establish that your self-employment income is subject only to foreign social security taxes and is exempt from U. Ez form 2011 S. Ez form 2011 self-employment tax, request a certificate of coverage from the appropriate agency of the foreign country. Ez form 2011 If the foreign country will not issue the certificate, you should request a statement that your income is not covered by the U. Ez form 2011 S. Ez form 2011 social security system. Ez form 2011 Request it from the U. Ez form 2011 S. Ez form 2011 Social Security Administration at the address given earlier. Ez form 2011 Attach a photocopy of either statement to Form 1040 each year you are exempt. Ez form 2011 Also print “Exempt, see attached statement” on the line for self-employment tax. Ez form 2011 Estimated Tax Form 1040-ES (NR) You may have income from which no U. Ez form 2011 S. Ez form 2011 income tax is withheld. Ez form 2011 Or the amount of tax withheld may be less than the income tax you estimate you will owe at the end of the year. Ez form 2011 If so, you may have to pay estimated tax. Ez form 2011 Generally, you must make estimated tax payments for 2014 if you expect to owe at least $1,000 in tax and you expect your withholding and certain refundable credits to be less than the smaller of: 90% of the tax to be shown on your 2014 income tax return, or 100% of the tax shown on your 2013 income tax return (if your 2013 return covered all 12 months of the year). Ez form 2011 If your adjusted gross income for 2013 was more than $150,000 ($75,000 if your filing status for 2014 is married filing separately), substitute 110% for 100% in (2) above if you are not a farmer or fisherman. Ez form 2011 Item (2) does not apply if you did not file a 2013 return. Ez form 2011 A nonresident alien should use Form 1040-ES (NR) to figure and pay estimated tax. Ez form 2011 If you pay by check, make it payable to the "United States Treasury. Ez form 2011 " How to estimate your tax for 2014. Ez form 2011   If you filed a 2013 return on Form 1040NR or Form 1040NR-EZ and expect your income, number of exemptions, and total deductions for 2014 to be nearly the same, you should use your 2013 return as a guide to complete the Estimated Tax Worksheet in the Form 1040-ES (NR) instructions. Ez form 2011 If you did not file a return for 2013, or if your income, exemptions, deductions, or credits will be different for 2014, you must estimate these amounts. Ez form 2011 Figure your estimated tax liability using the Tax Rate Schedule in the 2014 Form 1040-ES (NR) instructions for your filing status. Ez form 2011 Note. Ez form 2011 If you expect to be a resident of Puerto Rico during the entire year, use Form 1040-ES or Formulario 1040-ES (PR). Ez form 2011 When to pay estimated tax. Ez form 2011   Make your first estimated tax payment by the due date for filing the previous year's Form 1040NR or Form 1040NR-EZ. Ez form 2011 If you have wages subject to the same withholding rules that apply to U. Ez form 2011 S. Ez form 2011 citizens, you must file Form 1040NR or Form 1040NR-EZ and make your first estimated tax payment by April 15, 2014. Ez form 2011 If you do not have wages subject to withholding, file your income tax return and make your first estimated tax payment by June 16, 2014. Ez form 2011   If your first estimated tax payment is due April 15, 2014, you can pay your estimated tax in full at that time or in four equal installments by the dates shown next. Ez form 2011 1st installment April 15, 2014 2nd installment June 16, 2014 3rd installment Sept. Ez form 2011 15, 2014 4th installment Jan. Ez form 2011 15, 2015 If your first payment is not due until June 16, 2014, you can pay your estimated tax in full at that time or: ½ of your estimated tax by June 16, 2014, 1/4 of the tax by September 15, 2014, and 1/4 by January 15, 2015. Ez form 2011    You do not have to make the payment due January 15, 2015, if you file your 2014 Form 1040NR or 1040NR-EZ by February 2, 2015, and pay the entire balance due with your return. Ez form 2011 Fiscal year. Ez form 2011   If your return is not on a calendar year basis, your due dates are the 15th day of the 4th, 6th, and 9th months of your fiscal year, and the 1st month of the following fiscal year. Ez form 2011 If any date falls on a Saturday, Sunday, or legal holiday, use the next day that is not a Saturday, Sunday, or legal holiday. Ez form 2011 Changes in income, deductions, or exemptions. Ez form 2011   Even if you are not required to make an estimated tax payment in April or June, your circumstances may change so that you will have to make estimated tax payments later. Ez form 2011 This can happen if you receive additional income or if any of your deductions are reduced or eliminated. Ez form 2011 If so, see the instructions for Form 1040-ES (NR) and Publication 505 for information on figuring your estimated tax. Ez form 2011 Amended estimated tax. Ez form 2011   If, after you have made estimated tax payments, you find your estimated tax is substantially increased or decreased because of a change in your income or exemptions, you should adjust your remaining estimated tax payments. Ez form 2011 To do this, see the instructions for Form 1040-ES (NR) and Publication 505. Ez form 2011 Penalty for failure to pay estimated income tax. Ez form 2011   You will be subject to a penalty for underpayment of installments of estimated tax except in certain situations. Ez form 2011 These situations are explained on Form 2210, Underpayment of Estimated Tax by Individuals, Estates, and Trusts. Ez form 2011 Prev  Up  Next   Home   More Online Publications
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Ez form 2011 4. Ez form 2011   Qualified Plans Table of Contents Topics - This chapter discusses: Useful Items - You may want to see: Kinds of PlansDefined Contribution Plan Defined Benefit Plan Qualification RulesEarly retirement. Ez form 2011 Loan secured by benefits. Ez form 2011 Waiver of survivor benefits. Ez form 2011 Waiver of 30-day waiting period before annuity starting date. Ez form 2011 Involuntary cash-out of benefits not more than dollar limit. Ez form 2011 Exception for certain loans. Ez form 2011 Exception for QDRO. Ez form 2011 SIMPLE and safe harbor 401(k) plan exception. Ez form 2011 Setting Up a Qualified PlanAdopting a Written Plan Investing Plan Assets Minimum Funding RequirementDue dates. Ez form 2011 Installment percentage. Ez form 2011 Extended period for making contributions. Ez form 2011 ContributionsEmployer Contributions Employee Contributions When Contributions Are Considered Made Employer DeductionDeduction Limits Deduction Limit for Self-Employed Individuals Where To Deduct Contributions Carryover of Excess Contributions Excise Tax for Nondeductible (Excess) Contributions Elective Deferrals (401(k) Plans)Limit on Elective Deferrals Automatic Enrollment Treatment of Excess Deferrals Qualified Roth Contribution ProgramElective Deferrals Qualified Distributions Reporting Requirements DistributionsRequired Distributions Distributions From 401(k) Plans Tax Treatment of Distributions Tax on Early Distributions Tax on Excess Benefits Excise Tax on Reversion of Plan Assets Notification of Significant Benefit Accrual Reduction Prohibited TransactionsTax on Prohibited Transactions Reporting RequirementsOne-participant plan. Ez form 2011 Caution: Form 5500-EZ not required. Ez form 2011 Form 5500. Ez form 2011 Electronic filing of Forms 5500 and 5500-SF. Ez form 2011 Topics - This chapter discusses: Kinds of plans Qualification rules Setting up a qualified plan Minimum funding requirement Contributions Employer deduction Elective deferrals (401(k) plans) Qualified Roth contribution program Distributions Prohibited transactions Reporting requirements Useful Items - You may want to see: Publications 575 Pension and Annuity Income 590 Individual Retirement Arrangements (IRAs) 3066 Have you had your Check-up this year? for Retirement Plans 3998 Choosing A Retirement Solution for Your Small Business 4222 401(k) Plans for Small Businesses 4530 Designated Roth Accounts under a 401(k), 403(b), or governmental 457(b) plans 4531 401(k) Plan Checklist 4674 Automatic Enrollment 401(k) Plans for Small Businesses 4806 Profit Sharing Plans for Small Businesses Forms (and Instructions) www. Ez form 2011 dol. Ez form 2011 gov/ebsa/pdf/2013-5500. Ez form 2011 pdf www. Ez form 2011 dol. Ez form 2011 gov/ebsa/pdf/2013-5500-SF. Ez form 2011 pdf W-2 Wage and Tax Statement Schedule K-1 (Form 1065) Partner's Share of Income, Deductions, Credits, etc. Ez form 2011 1099-R Distributions From Pensions, Annuities, Retirement or Profit-Sharing Plans, IRAs, Insurance Contracts, etc. Ez form 2011 1040 U. Ez form 2011 S. Ez form 2011 Individual Income Tax Return Schedule C (Form 1040) Profit or Loss From Business Schedule F (Form 1040) Profit or Loss From Farming 5300 Application for Determination for Employee Benefit Plan 5310 Application for Determination for Terminating Plan 5329 Additional Taxes on Qualified Plans (Including IRAs) and Other Tax-Favored Accounts 5330 Return of Excise Taxes Related to Employee Benefit Plans 5500 Annual Return/Report of Employee Benefit Plan. Ez form 2011 For copies of this form, go to: 5500-EZ Annual Return of One-Participant (Owners and Their Spouses) Retirement Plan 5500-SF Short Form Annual Return/Report of Small Employee Benefit Plan. Ez form 2011 For copies of this form, go to: 8717 User Fee for Employee Plan Determination Letter Request 8880 Credit for Qualified Retirement Savings Contributions 8881 Credit for Small Employer Pension Plan Startup Costs 8955-SSA Annual Registration Statement Identifying Separated Participants With Deferred Vested Benefits These qualified retirement plans set up by self-employed individuals are sometimes called Keogh or H. Ez form 2011 R. Ez form 2011 10 plans. Ez form 2011 A sole proprietor or a partnership can set up one of these plans. Ez form 2011 A common-law employee or a partner cannot set up one of these plans. Ez form 2011 The plans described here can also be set up and maintained by employers that are corporations. Ez form 2011 All the rules discussed here apply to corporations except where specifically limited to the self-employed. Ez form 2011 The plan must be for the exclusive benefit of employees or their beneficiaries. Ez form 2011 These qualified plans can include coverage for a self-employed individual. Ez form 2011 As an employer, you can usually deduct, subject to limits, contributions you make to a qualified plan, including those made for your own retirement. Ez form 2011 The contributions (and earnings and gains on them) are generally tax free until distributed by the plan. Ez form 2011 Kinds of Plans There are two basic kinds of qualified plans—defined contribution plans and defined benefit plans—and different rules apply to each. Ez form 2011 You can have more than one qualified plan, but your contributions to all the plans must not total more than the overall limits discussed under Contributions and Employer Deduction, later. Ez form 2011 Defined Contribution Plan A defined contribution plan provides an individual account for each participant in the plan. Ez form 2011 It provides benefits to a participant largely based on the amount contributed to that participant's account. Ez form 2011 Benefits are also affected by any income, expenses, gains, losses, and forfeitures of other accounts that may be allocated to an account. Ez form 2011 A defined contribution plan can be either a profit-sharing plan or a money purchase pension plan. Ez form 2011 Profit-sharing plan. Ez form 2011   Although it is called a “profit-sharing plan,” you do not actually have to make a business profit for the year in order to make a contribution (except for yourself if you are self-employed as discussed under Self-employed Individual, later). Ez form 2011 A profit-sharing plan can be set up to allow for discretionary employer contributions, meaning the amount contributed each year to the plan is not fixed. Ez form 2011 An employer may even make no contribution to the plan for a given year. Ez form 2011   The plan must provide a definite formula for allocating the contribution among the participants and for distributing the accumulated funds to the employees after they reach a certain age, after a fixed number of years, or upon certain other occurrences. Ez form 2011   In general, you can be more flexible in making contributions to a profit-sharing plan than to a money purchase pension plan (discussed next) or a defined benefit plan (discussed later). Ez form 2011 Money purchase pension plan. Ez form 2011   Contributions to a money purchase pension plan are fixed and are not based on your business profits. Ez form 2011 For example, if the plan requires that contributions be 10% of the participants' compensation without regard to whether you have profits (or the self-employed person has earned income), the plan is a money purchase pension plan. Ez form 2011 This applies even though the compensation of a self-employed individual as a participant is based on earned income derived from business profits. Ez form 2011 Defined Benefit Plan A defined benefit plan is any plan that is not a defined contribution plan. Ez form 2011 Contributions to a defined benefit plan are based on what is needed to provide definitely determinable benefits to plan participants. Ez form 2011 Actuarial assumptions and computations are required to figure these contributions. Ez form 2011 Generally, you will need continuing professional help to have a defined benefit plan. Ez form 2011 Qualification Rules To qualify for the tax benefits available to qualified plans, a plan must meet certain requirements (qualification rules) of the tax law. Ez form 2011 Generally, unless you write your own plan, the financial institution that provided your plan will take the continuing responsibility for meeting qualification rules that are later changed. Ez form 2011 The following is a brief overview of important qualification rules that generally have not yet been discussed. Ez form 2011 It is not intended to be all-inclusive. Ez form 2011 See Setting Up a Qualified Plan , later. Ez form 2011 Generally, the following qualification rules also apply to a SIMPLE 401(k) retirement plan. Ez form 2011 A SIMPLE 401(k) plan is, however, not subject to the top-heavy plan rules and nondiscrimination rules if the plan satisfies the provisions discussed in chapter 3 under SIMPLE 401(k) Plan. Ez form 2011 Plan assets must not be diverted. Ez form 2011   Your plan must make it impossible for its assets to be used for, or diverted to, purposes other than the benefit of employees and their beneficiaries. Ez form 2011 As a general rule, the assets cannot be diverted to the employer. Ez form 2011 Minimum coverage requirement must be met. Ez form 2011   To be a qualified plan, a defined benefit plan must benefit at least the lesser of the following. Ez form 2011 50 employees, or The greater of: 40% of all employees, or Two employees. Ez form 2011 If there is only one employee, the plan must benefit that employee. Ez form 2011 Contributions or benefits must not discriminate. Ez form 2011   Under the plan, contributions or benefits to be provided must not discriminate in favor of highly compensated employees. Ez form 2011 Contributions and benefits must not be more than certain limits. Ez form 2011   Your plan must not provide for contributions or benefits that are more than certain limits. Ez form 2011 The limits apply to the annual contributions and other additions to the account of a participant in a defined contribution plan and to the annual benefit payable to a participant in a defined benefit plan. Ez form 2011 These limits are discussed later in this chapter under Contributions. Ez form 2011 Minimum vesting standard must be met. Ez form 2011   Your plan must satisfy certain requirements regarding when benefits vest. Ez form 2011 A benefit is vested (you have a fixed right to it) when it becomes nonforfeitable. Ez form 2011 A benefit is nonforfeitable if it cannot be lost upon the happening, or failure to happen, of any event. Ez form 2011 Special rules apply to forfeited benefit amounts. Ez form 2011 In defined contribution plans, forfeitures can be allocated to the accounts of remaining participants in a nondiscriminatory way, or they can be used to reduce your contributions. Ez form 2011   Forfeitures under a defined benefit plan cannot be used to increase the benefits any employee would otherwise receive under the plan. Ez form 2011 Forfeitures must be used instead to reduce employer contributions. Ez form 2011 Participation. Ez form 2011   In general, an employee must be allowed to participate in your plan if he or she meets both the following requirements. Ez form 2011 Has reached age 21. Ez form 2011 Has at least 1 year of service (2 years if the plan is not a 401(k) plan and provides that after not more than 2 years of service the employee has a nonforfeitable right to all his or her accrued benefit). Ez form 2011 A plan cannot exclude an employee because he or she has reached a specified age. Ez form 2011 Leased employee. Ez form 2011   A leased employee, defined in chapter 1, who performs services for you (recipient of the services) is treated as your employee for certain plan qualification rules. Ez form 2011 These rules include those in all the following areas. Ez form 2011 Nondiscrimination in coverage, contributions, and benefits. Ez form 2011 Minimum age and service requirements. Ez form 2011 Vesting. Ez form 2011 Limits on contributions and benefits. Ez form 2011 Top-heavy plan requirements. Ez form 2011 Contributions or benefits provided by the leasing organization for services performed for you are treated as provided by you. Ez form 2011 Benefit payment must begin when required. Ez form 2011   Your plan must provide that, unless the participant chooses otherwise, the payment of benefits to the participant must begin within 60 days after the close of the latest of the following periods. Ez form 2011 The plan year in which the participant reaches the earlier of age 65 or the normal retirement age specified in the plan. Ez form 2011 The plan year in which the 10th anniversary of the year in which the participant began participating in the plan occurs. Ez form 2011 The plan year in which the participant separates from service. Ez form 2011 Early retirement. Ez form 2011   Your plan can provide for payment of retirement benefits before the normal retirement age. Ez form 2011 If your plan offers an early retirement benefit, a participant who separates from service before satisfying the early retirement age requirement is entitled to that benefit if he or she meets both the following requirements. Ez form 2011 Satisfies the service requirement for the early retirement benefit. Ez form 2011 Separates from service with a nonforfeitable right to an accrued benefit. Ez form 2011 The benefit, which may be actuarially reduced, is payable when the early retirement age requirement is met. Ez form 2011 Required minimum distributions. Ez form 2011   Special rules require minimum annual distributions from qualified plans, generally beginning after age  70½. Ez form 2011 See Required Distributions , under Distributions, later. Ez form 2011 Survivor benefits. Ez form 2011   Defined benefit and money purchase pension plans must provide automatic survivor benefits in both the following forms. Ez form 2011 A qualified joint and survivor annuity for a vested participant who does not die before the annuity starting date. Ez form 2011 A qualified pre-retirement survivor annuity for a vested participant who dies before the annuity starting date and who has a surviving spouse. Ez form 2011   The automatic survivor benefit also applies to any participant under a profit-sharing plan unless all the following conditions are met. Ez form 2011 The participant does not choose benefits in the form of a life annuity. Ez form 2011 The plan pays the full vested account balance to the participant's surviving spouse (or other beneficiary if the surviving spouse consents or if there is no surviving spouse) if the participant dies. Ez form 2011 The plan is not a direct or indirect transferee of a plan that must provide automatic survivor benefits. Ez form 2011 Loan secured by benefits. Ez form 2011   If automatic survivor benefits are required for a spouse under a plan, he or she must consent to a loan that uses as security the accrued benefits in the plan. Ez form 2011 Waiver of survivor benefits. Ez form 2011   Each plan participant may be permitted to waive the joint and survivor annuity or the pre-retirement survivor annuity (or both), but only if the participant has the written consent of the spouse. Ez form 2011 The plan also must allow the participant to withdraw the waiver. Ez form 2011 The spouse's consent must be witnessed by a plan representative or notary public. Ez form 2011 Waiver of 30-day waiting period before annuity starting date. Ez form 2011    A plan may permit a participant to waive (with spousal consent) the 30-day minimum waiting period after a written explanation of the terms and conditions of a joint and survivor annuity is provided to each participant. Ez form 2011   The waiver is allowed only if the distribution begins more than 7 days after the written explanation is provided. Ez form 2011 Involuntary cash-out of benefits not more than dollar limit. Ez form 2011   A plan may provide for the immediate distribution of the participant's benefit under the plan if the present value of the benefit is not greater than $5,000. Ez form 2011   However, the distribution cannot be made after the annuity starting date unless the participant and the spouse or surviving spouse of a participant who died (if automatic survivor benefits are required for a spouse under the plan) consents in writing to the distribution. Ez form 2011 If the present value is greater than $5,000, the plan must have the written consent of the participant and the spouse or surviving spouse (if automatic survivor benefits are required for a spouse under the plan) for any immediate distribution of the benefit. Ez form 2011   Benefits attributable to rollover contributions and earnings on them can be ignored in determining the present value of these benefits. Ez form 2011   A plan must provide for the automatic rollover of any cash-out distribution of more than $1,000 to an individual retirement account or annuity, unless the participant chooses otherwise. Ez form 2011 A section 402(f) notice must be sent prior to an involuntary cash-out of an eligible rollover distribution. Ez form 2011 See Section 402(f) Notice under Distributions, later, for more details. Ez form 2011 Consolidation, merger, or transfer of assets or liabilities. Ez form 2011   Your plan must provide that, in the case of any merger or consolidation with, or transfer of assets or liabilities to, any other plan, each participant would (if the plan then terminated) receive a benefit equal to or more than the benefit he or she would have been entitled to just before the merger, etc. Ez form 2011 (if the plan had then terminated). Ez form 2011 Benefits must not be assigned or alienated. Ez form 2011   Your plan must provide that a participant's or beneficiary's benefits under the plan cannot be taken away by any legal or equitable proceeding except as provided below or pursuant to certain judgements or settlements against the participant for violations of plan rules. Ez form 2011 Exception for certain loans. Ez form 2011   A loan from the plan (not from a third party) to a participant or beneficiary is not treated as an assignment or alienation if the loan is secured by the participant's accrued nonforfeitable benefit and is exempt from the tax on prohibited transactions under section 4975(d)(1) or would be exempt if the participant were a disqualified person. Ez form 2011 A disqualified person is defined later in this chapter under Prohibited Transactions. Ez form 2011 Exception for QDRO. Ez form 2011   Compliance with a QDRO (qualified domestic relations order) does not result in a prohibited assignment or alienation of benefits. Ez form 2011   Payments to an alternate payee under a QDRO before the participant attains age 59½ are not subject to the 10% additional tax that would otherwise apply under certain circumstances. Ez form 2011 Benefits distributed to an alternate payee under a QDRO can be rolled over tax free to an individual retirement account or to an individual retirement annuity. Ez form 2011 No benefit reduction for social security increases. Ez form 2011   Your plan must not permit a benefit reduction for a post-separation increase in the social security benefit level or wage base for any participant or beneficiary who is receiving benefits under your plan, or who is separated from service and has nonforfeitable rights to benefits. Ez form 2011 This rule also applies to plans supplementing the benefits provided by other federal or state laws. Ez form 2011 Elective deferrals must be limited. Ez form 2011   If your plan provides for elective deferrals, it must limit those deferrals to the amount in effect for that particular year. Ez form 2011 See Limit on Elective Deferrals later in this chapter. Ez form 2011 Top-heavy plan requirements. Ez form 2011   A top-heavy plan is one that mainly favors partners, sole proprietors, and other key employees. Ez form 2011   A plan is top-heavy for a plan year if, for the preceding plan year, the total value of accrued benefits or account balances of key employees is more than 60% of the total value of accrued benefits or account balances of all employees. Ez form 2011 Additional requirements apply to a top-heavy plan primarily to provide minimum benefits or contributions for non-key employees covered by the plan. Ez form 2011   Most qualified plans, whether or not top-heavy, must contain provisions that meet the top-heavy requirements and will take effect in plan years in which the plans are top-heavy. Ez form 2011 These qualification requirements for top-heavy plans are explained in section 416 and its regulations. Ez form 2011 SIMPLE and safe harbor 401(k) plan exception. Ez form 2011   The top-heavy plan requirements do not apply to SIMPLE 401(k) plans, discussed earlier in chapter 3, or to safe harbor 401(k) plans that consist solely of safe harbor contributions, discussed later in this chapter. Ez form 2011 QACAs (discussed later) also are not subject to top-heavy requirements. Ez form 2011 Setting Up a Qualified Plan There are two basic steps in setting up a qualified plan. Ez form 2011 First you adopt a written plan. Ez form 2011 Then you invest the plan assets. Ez form 2011 You, the employer, are responsible for setting up and maintaining the plan. Ez form 2011 If you are self-employed, it is not necessary to have employees besides yourself to sponsor and set up a qualified plan. Ez form 2011 If you have employees, see Participation, under Qualification Rules, earlier. Ez form 2011 Set-up deadline. Ez form 2011   To take a deduction for contributions for a tax year, your plan must be set up (adopted) by the last day of that year (December 31 for calendar-year employers). Ez form 2011 Credit for startup costs. Ez form 2011   You may be able to claim a tax credit for part of the ordinary and necessary costs of starting a qualified plan that first became effective in 2013. Ez form 2011 For more information, see Credit for startup costs under Reminders, earlier. Ez form 2011 Adopting a Written Plan You must adopt a written plan. Ez form 2011 The plan can be an IRS-approved master or prototype plan offered by a sponsoring organization. Ez form 2011 Or it can be an individually designed plan. Ez form 2011 Written plan requirement. Ez form 2011   To qualify, the plan you set up must be in writing and must be communicated to your employees. Ez form 2011 The plan's provisions must be stated in the plan. Ez form 2011 It is not sufficient for the plan to merely refer to a requirement of the Internal Revenue Code. Ez form 2011 Master or prototype plans. Ez form 2011   Most qualified plans follow a standard form of plan (a master or prototype plan) approved by the IRS. Ez form 2011 Master and prototype plans are plans made available by plan providers for adoption by employers (including self-employed individuals). Ez form 2011 Under a master plan, a single trust or custodial account is established, as part of the plan, for the joint use of all adopting employers. Ez form 2011 Under a prototype plan, a separate trust or custodial account is established for each employer. Ez form 2011 Plan providers. Ez form 2011   The following organizations generally can provide IRS-approved master or prototype plans. Ez form 2011 Banks (including some savings and loan associations and federally insured credit unions). Ez form 2011 Trade or professional organizations. Ez form 2011 Insurance companies. Ez form 2011 Mutual funds. Ez form 2011 Individually designed plan. Ez form 2011   If you prefer, you can set up an individually designed plan to meet specific needs. Ez form 2011 Although advance IRS approval is not required, you can apply for approval by paying a fee and requesting a determination letter. Ez form 2011 You may need professional help for this. Ez form 2011 See Rev. Ez form 2011 Proc. Ez form 2011 2014-6, 2014-1 I. Ez form 2011 R. Ez form 2011 B. Ez form 2011 198, available at www. Ez form 2011 irs. Ez form 2011 gov/irb/2014-1_IRB/ar10. Ez form 2011 html, as annually updated, that may help you decide whether to apply for approval. Ez form 2011 Internal Revenue Bulletins are available on the IRS website at IRS. Ez form 2011 gov They are also available at most IRS offices and at certain libraries. Ez form 2011 User fee. Ez form 2011   The fee mentioned earlier for requesting a determination letter does not apply to employers who have 100 or fewer employees who received at least $5,000 of compensation from the employer for the preceding year. Ez form 2011 At least one of them must be a non-highly compensated employee participating in the plan. Ez form 2011 The fee does not apply to requests made by the later of the following dates. Ez form 2011 The end of the 5th plan year the plan is in effect. Ez form 2011 The end of any remedial amendment period for the plan that begins within the first 5 plan years. Ez form 2011 The request cannot be made by the sponsor of a prototype or similar plan the sponsor intends to market to participating employers. Ez form 2011   For more information about whether the user fee applies, see Rev. Ez form 2011 Proc. Ez form 2011 2014-8, 2014-1 I. Ez form 2011 R. Ez form 2011 B. Ez form 2011 242, available at www. Ez form 2011 irs. Ez form 2011 gov/irb/2014-1_IRB/ar12. Ez form 2011 html, as may be annually updated; Notice 2003-49, 2003-32 I. Ez form 2011 R. Ez form 2011 B. Ez form 2011 294, available at www. Ez form 2011 irs. Ez form 2011 gov/irb/2003-32_IRB/ar13. Ez form 2011 html; and Notice 2011-86, 2011-45 I. Ez form 2011 R. Ez form 2011 B. Ez form 2011 698, available at www. Ez form 2011 irs. Ez form 2011 gov/irb/2011-45_IRB/ar11. Ez form 2011 html. Ez form 2011 Investing Plan Assets In setting up a qualified plan, you arrange how the plan's funds will be used to build its assets. Ez form 2011 You can establish a trust or custodial account to invest the funds. Ez form 2011 You, the trust, or the custodial account can buy an annuity contract from an insurance company. Ez form 2011 Life insurance can be included only if it is incidental to the retirement benefits. Ez form 2011 You set up a trust by a legal instrument (written document). Ez form 2011 You may need professional help to do this. Ez form 2011 You can set up a custodial account with a bank, savings and loan association, credit union, or other person who can act as the plan trustee. Ez form 2011 You do not need a trust or custodial account, although you can have one, to invest the plan's funds in annuity contracts or face-amount certificates. Ez form 2011 If anyone other than a trustee holds them, however, the contracts or certificates must state they are not transferable. Ez form 2011 Other plan requirements. Ez form 2011   For information on other important plan requirements, see Qualification Rules , earlier in this chapter. Ez form 2011 Minimum Funding Requirement In general, if your plan is a money purchase pension plan or a defined benefit plan, you must actually pay enough into the plan to satisfy the minimum funding standard for each year. Ez form 2011 Determining the amount needed to satisfy the minimum funding standard for a defined benefit plan is complicated, and you should seek professional help in order to meet these contribution requirements. Ez form 2011 For information on this funding requirement, see section 412 and its regulations. Ez form 2011 Quarterly installments of required contributions. Ez form 2011   If your plan is a defined benefit plan subject to the minimum funding requirements, you generally must make quarterly installment payments of the required contributions. Ez form 2011 If you do not pay the full installments timely, you may have to pay interest on any underpayment for the period of the underpayment. Ez form 2011 Due dates. Ez form 2011   The due dates for the installments are 15 days after the end of each quarter. Ez form 2011 For a calendar-year plan, the installments are due April 15, July 15, October 15, and January 15 (of the following year). Ez form 2011 Installment percentage. Ez form 2011   Each quarterly installment must be 25% of the required annual payment. Ez form 2011 Extended period for making contributions. Ez form 2011   Additional contributions required to satisfy the minimum funding requirement for a plan year will be considered timely if made by 8½ months after the end of that year. Ez form 2011 Contributions A qualified plan is generally funded by your contributions. Ez form 2011 However, employees participating in the plan may be permitted to make contributions, and you may be permitted to make contributions on your own behalf. Ez form 2011 See Employee Contributions and Elective Deferrals later. Ez form 2011 Contributions deadline. Ez form 2011   You can make deductible contributions for a tax year up to the due date of your return (plus extensions) for that year. Ez form 2011 Self-employed individual. Ez form 2011   You can make contributions on behalf of yourself only if you have net earnings (compensation) from self-employment in the trade or business for which the plan was set up. Ez form 2011 Your net earnings must be from your personal services, not from your investments. Ez form 2011 If you have a net loss from self-employment, you cannot make contributions for yourself for the year, even if you can contribute for common-law employees based on their compensation. Ez form 2011 Employer Contributions There are certain limits on the contributions and other annual additions you can make each year for plan participants. Ez form 2011 There are also limits on the amount you can deduct. Ez form 2011 See Deduction Limits , later. Ez form 2011 Limits on Contributions and Benefits Your plan must provide that contributions or benefits cannot exceed certain limits. Ez form 2011 The limits differ depending on whether your plan is a defined contribution plan or a defined benefit plan. Ez form 2011 Defined benefit plan. Ez form 2011   For 2013, the annual benefit for a participant under a defined benefit plan cannot exceed the lesser of the following amounts. Ez form 2011 100% of the participant's average compensation for his or her highest 3 consecutive calendar years. Ez form 2011 $205,000 ($210,000 for 2014). Ez form 2011 Defined contribution plan. Ez form 2011   For 2013, a defined contribution plan's annual contributions and other additions (excluding earnings) to the account of a participant cannot exceed the lesser of the following amounts. Ez form 2011 100% of the participant's compensation. Ez form 2011 $51,000 ($52,000 for 2014). Ez form 2011   Catch-up contributions (discussed later under Limit on Elective Deferrals) are not subject to the above limit. Ez form 2011 Employee Contributions Participants may be permitted to make nondeductible contributions to a plan in addition to your contributions. Ez form 2011 Even though these employee contributions are not deductible, the earnings on them are tax free until distributed in later years. Ez form 2011 Also, these contributions must satisfy the actual contribution percentage (ACP) test of section 401(m)(2), a nondiscrimination test that applies to employee contributions and matching contributions. Ez form 2011 See Regulations sections 1. Ez form 2011 401(k)-2 and 1. Ez form 2011 401(m)-2 for further guidance relating to the nondiscrimination rules under sections 401(k) and 401(m). Ez form 2011 When Contributions Are Considered Made You generally apply your plan contributions to the year in which you make them. Ez form 2011 But you can apply them to the previous year if all the following requirements are met. Ez form 2011 You make them by the due date of your tax return for the previous year (plus extensions). Ez form 2011 The plan was established by the end of the previous year. Ez form 2011 The plan treats the contributions as though it had received them on the last day of the previous year. Ez form 2011 You do either of the following. Ez form 2011 You specify in writing to the plan administrator or trustee that the contributions apply to the previous year. Ez form 2011 You deduct the contributions on your tax return for the previous year. Ez form 2011 A partnership shows contributions for partners on Form 1065. Ez form 2011 Employer's promissory note. Ez form 2011   Your promissory note made out to the plan is not a payment that qualifies for the deduction. Ez form 2011 Also, issuing this note is a prohibited transaction subject to tax. Ez form 2011 See Prohibited Transactions , later. Ez form 2011 Employer Deduction You can usually deduct, subject to limits, contributions you make to a qualified plan, including those made for your own retirement. Ez form 2011 The contributions (and earnings and gains on them) are generally tax free until distributed by the plan. Ez form 2011 Deduction Limits The deduction limit for your contributions to a qualified plan depends on the kind of plan you have. Ez form 2011 Defined contribution plans. Ez form 2011   The deduction for contributions to a defined contribution plan (profit-sharing plan or money purchase pension plan) cannot be more than 25% of the compensation paid (or accrued) during the year to your eligible employees participating in the plan. Ez form 2011 If you are self-employed, you must reduce this limit in figuring the deduction for contributions you make for your own account. Ez form 2011 See Deduction Limit for Self-Employed Individuals , later. Ez form 2011   When figuring the deduction limit, the following rules apply. Ez form 2011 Elective deferrals (discussed later) are not subject to the limit. Ez form 2011 Compensation includes elective deferrals. Ez form 2011 The maximum compensation that can be taken into account for each employee in 2013 is $255,000 ($260,000 for 2014). Ez form 2011 Defined benefit plans. Ez form 2011   The deduction for contributions to a defined benefit plan is based on actuarial assumptions and computations. Ez form 2011 Consequently, an actuary must figure your deduction limit. Ez form 2011    In figuring the deduction for contributions, you cannot take into account any contributions or benefits that are more than the limits discussed earlier under Limits on Contributions and Benefits, earlier. Ez form 2011 Table 4–1. Ez form 2011 Carryover of Excess Contributions Illustrated—Profit-Sharing Plan (000's omitted) Year Participants' compensation Participants' share of required contribution (10% of annual profit) Deductible  limit for current year (25% of compensation) Contribution Excess contribution carryover used1 Total  deduction including carryovers Excess contribution carryover available at end of year 2010 $1,000 $100 $250 $100 $ 0 $100 $ 0 2011 400 165 100 165 0 100 65 2012 500 100 125 100 25 125 40 2013 600 100 150 100 40 140 0  1There were no carryovers from years before 2010. Ez form 2011 Deduction Limit for Self-Employed Individuals If you make contributions for yourself, you need to make a special computation to figure your maximum deduction for these contributions. Ez form 2011 Compensation is your net earnings from self-employment, defined in chapter 1. Ez form 2011 This definition takes into account both the following items. Ez form 2011 The deduction for the deductible part of your self-employment tax. Ez form 2011 The deduction for contributions on your behalf to the plan. Ez form 2011 The deduction for your own contributions and your net earnings depend on each other. Ez form 2011 For this reason, you determine the deduction for your own contributions indirectly by reducing the contribution rate called for in your plan. Ez form 2011 To do this, use either the Rate Table for Self-Employed or the Rate Worksheet for Self-Employed in chapter 5. Ez form 2011 Then figure your maximum deduction by using the Deduction Worksheet for Self-Employed in chapter 5. Ez form 2011 Where To Deduct Contributions Deduct the contributions you make for your common-law employees on your tax return. Ez form 2011 For example, sole proprietors deduct them on Schedule C (Form 1040) or Schedule F (Form 1040); partnerships deduct them on Form 1065; and corporations deduct them on Form 1120, or Form 1120S. Ez form 2011 Sole proprietors and partners deduct contributions for themselves on line 28 of Form 1040. Ez form 2011 (If you are a partner, contributions for yourself are shown on the Schedule K-1 (Form 1065) you get from the partnership. Ez form 2011 ) Carryover of Excess Contributions If you contribute more to the plans than you can deduct for the year, you can carry over and deduct the difference in later years, combined with your contributions for those years. Ez form 2011 Your combined deduction in a later year is limited to 25% of the participating employees' compensation for that year. Ez form 2011 For purposes of this limit, a SEP is treated as a profit-sharing (defined contribution) plan. Ez form 2011 However, this percentage limit must be reduced to figure your maximum deduction for contributions you make for yourself. Ez form 2011 See Deduction Limit for Self-Employed Individuals, earlier. Ez form 2011 The amount you carry over and deduct may be subject to the excise tax discussed next. Ez form 2011 Table 4-1, earlier, illustrates the carryover of excess contributions to a profit-sharing plan. Ez form 2011 Excise Tax for Nondeductible (Excess) Contributions If you contribute more than your deduction limit to a retirement plan, you have made nondeductible contributions and you may be liable for an excise tax. Ez form 2011 In general, a 10% excise tax applies to nondeductible contributions made to qualified pension and profit-sharing plans and to SEPs. Ez form 2011 Special rule for self-employed individuals. Ez form 2011   The 10% excise tax does not apply to any contribution made to meet the minimum funding requirements in a money purchase pension plan or a defined benefit plan. Ez form 2011 Even if that contribution is more than your earned income from the trade or business for which the plan is set up, the difference is not subject to this excise tax. Ez form 2011 See Minimum Funding Requirement , earlier. Ez form 2011 Reporting the tax. Ez form 2011   You must report the tax on your nondeductible contributions on Form 5330. Ez form 2011 Form 5330 includes a computation of the tax. Ez form 2011 See the separate instructions for completing the form. Ez form 2011 Elective Deferrals (401(k) Plans) Your qualified plan can include a cash or deferred arrangement under which participants can choose to have you contribute part of their before-tax compensation to the plan rather than receive the compensation in cash. Ez form 2011 A plan with this type of arrangement is popularly known as a “401(k) plan. Ez form 2011 ” (As a self-employed individual participating in the plan, you can contribute part of your before-tax net earnings from the business. Ez form 2011 ) This contribution is called an “elective deferral” because participants choose (elect) to defer receipt of the money. Ez form 2011 In general, a qualified plan can include a cash or deferred arrangement only if the qualified plan is one of the following plans. Ez form 2011 A profit-sharing plan. Ez form 2011 A money purchase pension plan in existence on June 27, 1974, that included a salary reduction arrangement on that date. Ez form 2011 Partnership. Ez form 2011   A partnership can have a 401(k) plan. Ez form 2011 Restriction on conditions of participation. Ez form 2011   The plan cannot require, as a condition of participation, that an employee complete more than 1 year of service. Ez form 2011 Matching contributions. Ez form 2011   If your plan permits, you can make matching contributions for an employee who makes an elective deferral to your 401(k) plan. Ez form 2011 For example, the plan might provide that you will contribute 50 cents for each dollar your participating employees choose to defer under your 401(k) plan. Ez form 2011 Matching contributions are generally subject to the ACP test discussed earlier under Employee Contributions. Ez form 2011 Nonelective contributions. Ez form 2011   You can also make contributions (other than matching contributions) for your participating employees without giving them the choice to take cash instead. Ez form 2011 These are called nonelective contributions. Ez form 2011 Employee compensation limit. Ez form 2011   No more than $255,000 of the employee's compensation can be taken into account when figuring contributions other than elective deferrals in 2013. Ez form 2011 This limit is $260,000 in 2014. Ez form 2011 SIMPLE 401(k) plan. Ez form 2011   If you had 100 or fewer employees who earned $5,000 or more in compensation during the preceding year, you may be able to set up a SIMPLE 401(k) plan. Ez form 2011 A SIMPLE 401(k) plan is not subject to the nondiscrimination and top-heavy plan requirements discussed earlier under Qualification Rules. Ez form 2011 For details about SIMPLE 401(k) plans, see SIMPLE 401(k) Plan in chapter 3. Ez form 2011 Distributions. Ez form 2011   Certain rules apply to distributions from 401(k) plans. Ez form 2011 See Distributions From 401(k) Plans , later. Ez form 2011 Limit on Elective Deferrals There is a limit on the amount an employee can defer each year under these plans. Ez form 2011 This limit applies without regard to community property laws. Ez form 2011 Your plan must provide that your employees cannot defer more than the limit that applies for a particular year. Ez form 2011 For 2013 and 2014, the basic limit on elective deferrals is $17,500. Ez form 2011 This limit applies to all salary reduction contributions and elective deferrals. Ez form 2011 If, in conjunction with other plans, the deferral limit is exceeded, the difference is included in the employee's gross income. Ez form 2011 Catch-up contributions. Ez form 2011   A 401(k) plan can permit participants who are age 50 or over at the end of the calendar year to also make catch-up contributions. Ez form 2011 The catch-up contribution limit for 2013 and 2014 is $5,500. Ez form 2011 Elective deferrals are not treated as catch-up contributions for 2013 until they exceed the $17,500 limit, the actual deferral percentage (ADP) test limit of section 401(k)(3), or the plan limit (if any). Ez form 2011 However, the catch-up contribution a participant can make for a year cannot exceed the lesser of the following amounts. Ez form 2011 The catch-up contribution limit. Ez form 2011 The excess of the participant's compensation over the elective deferrals that are not catch-up contributions. Ez form 2011 Treatment of contributions. Ez form 2011   Your contributions to your own 401(k) plan are generally deductible by you for the year they are contributed to the plan. Ez form 2011 Matching or nonelective contributions made to the plan are also deductible by you in the year of contribution. Ez form 2011 Your employees' elective deferrals other than designated Roth contributions are tax free until distributed from the plan. Ez form 2011 Elective deferrals are included in wages for social security, Medicare, and federal unemployment (FUTA) tax. Ez form 2011 Forfeiture. Ez form 2011   Employees have a nonforfeitable right at all times to their accrued benefit attributable to elective deferrals. Ez form 2011 Reporting on Form W-2. Ez form 2011   Do not include elective deferrals in the “Wages, tips, other compensation” box of Form W-2. Ez form 2011 You must, however, include them in the “Social security wages” and “Medicare wages and tips” boxes. Ez form 2011 You must also include them in box 12. Ez form 2011 Mark the “Retirement plan” checkbox in box 13. Ez form 2011 For more information, see the Form W-2 instructions. Ez form 2011 Automatic Enrollment Your 401(k) plan can have an automatic enrollment feature. Ez form 2011 Under this feature, you can automatically reduce an employee's pay by a fixed percentage and contribute that amount to the 401(k) plan on his or her behalf unless the employee affirmatively chooses not to have his or her pay reduced or chooses to have it reduced by a different percentage. Ez form 2011 These contributions are elective deferrals. Ez form 2011 An automatic enrollment feature will encourage employees' saving for retirement and will help your plan pass nondiscrimination testing (if applicable). Ez form 2011 For more information, see Publication 4674, Automatic Enrollment 401(k) Plans for Small Businesses. Ez form 2011 Eligible automatic contribution arrangement. Ez form 2011   Under an eligible automatic contribution arrangement (EACA), a participant is treated as having elected to have the employer make contributions in an amount equal to a uniform percentage of compensation. Ez form 2011 This automatic election will remain in place until the participant specifically elects not to have such deferral percentage made (or elects a different percentage). Ez form 2011 There is no required deferral percentage. Ez form 2011 Withdrawals. Ez form 2011   Under an EACA, you may allow participants to withdraw their automatic contributions to the plan if certain conditions are met. Ez form 2011 The participant must elect the withdrawal no later than 90 days after the date of the first elective contributions under the EACA. Ez form 2011 The participant must withdraw the entire amount of EACA default contributions, including any earnings thereon. Ez form 2011   If the plan allows withdrawals under the EACA, the amount of the withdrawal other than the amount of any designated Roth contributions must be included in the employee's gross income for the tax year in which the distribution is made. Ez form 2011 The additional 10% tax on early distributions will not apply to the distribution. Ez form 2011 Notice requirement. Ez form 2011   Under an EACA, employees must be given written notice of the terms of the EACA within a reasonable period of time before each plan year. Ez form 2011 The notice must be written in a manner calculated to be understood by the average employee and be sufficiently accurate and comprehensive in order to apprise the employee of his or her rights and obligations under the EACA. Ez form 2011 The notice must include an explanation of the employee's right to elect not to have elective contributions made on his or her behalf, or to elect a different percentage, and the employee must be given a reasonable period of time after receipt of the notice before the first elective contribution is made. Ez form 2011 The notice also must explain how contributions will be invested in the absence of an investment election by the employee. Ez form 2011 Qualified automatic contribution arrangement. Ez form 2011    A qualified automatic contribution arrangement (QACA) is a type of safe harbor plan. Ez form 2011 It contains an automatic enrollment feature, and mandatory employer contributions are required. Ez form 2011 If your plan includes a QACA, it will not be subject to the ADP test (discussed later) nor the top-heavy requirements (discussed earlier). Ez form 2011 Additionally, your plan will not be subject to the actual contribution percentage (ACP) test if certain additional requirements are met. Ez form 2011 Under a QACA, each employee who is eligible to participate in the plan will be treated as having elected to make elective deferral contributions equal to a certain default percentage of compensation. Ez form 2011 In order to not have default elective deferrals made, an employee must make an affirmative election specifying a deferral percentage (including zero, if desired). Ez form 2011 If an employee does not make an affirmative election, the default deferral percentage must meet the following conditions. Ez form 2011 It must be applied uniformly. Ez form 2011 It must not exceed 10%. Ez form 2011 It must be at least 3% in the first plan year it applies to an employee and through the end of the following year. Ez form 2011 It must increase to at least 4% in the following plan year. Ez form 2011 It must increase to at least 5% in the following plan year. Ez form 2011 It must increase to at least 6% in subsequent plan years. Ez form 2011 Matching or nonelective contributions. Ez form 2011   Under the terms of the QACA, you must make either matching or nonelective contributions according to the following terms. Ez form 2011 Matching contributions. Ez form 2011 You must make matching contributions on behalf of each non-highly compensated employee in the following amounts. Ez form 2011 An amount equal to 100% of elective deferrals, up to 1% of compensation. Ez form 2011 An amount equal to 50% of elective deferrals, from 1% up to 6% of compensation. Ez form 2011 Other formulas may be used as long as they are at least as favorable to non-highly compensated employees. Ez form 2011 The rate of matching contributions for highly compensated employees, including yourself, must not exceed the rates for non-highly compensated employees. Ez form 2011 Nonelective contributions. Ez form 2011 You must make nonelective contributions on behalf of every non-highly compensated employee eligible to participate in the plan, regardless of whether they elected to participate, in an amount equal to at least 3% of their compensation. Ez form 2011 Vesting requirements. Ez form 2011   All accrued benefits attributed to matching or nonelective contributions under the QACA must be 100% vested for all employees who complete 2 years of service. Ez form 2011 These contributions are subject to special withdrawal restrictions, discussed later. Ez form 2011 Notice requirements. Ez form 2011   Each employee eligible to participate in the QACA must receive written notice of their rights and obligations under the QACA, within a reasonable period before each plan year. Ez form 2011 The notice must be written in a manner calculated to be understood by the average employee, and it must be accurate and comprehensive. Ez form 2011 The notice must explain their right to elect not to have elective contributions made on their behalf, or to have contributions made at a different percentage than the default percentage. Ez form 2011 Additionally, the notice must explain how contributions will be invested in the absence of any investment election by the employee. Ez form 2011 The employee must have a reasonable period of time after receiving the notice to make such contribution and investment elections prior to the first contributions under the QACA. Ez form 2011 Treatment of Excess Deferrals If the total of an employee's deferrals is more than the limit for 2013, the employee can have the difference (called an excess deferral) paid out of any of the plans that permit these distributions. Ez form 2011 He or she must notify the plan by April 15, 2014 (or an earlier date specified in the plan), of the amount to be paid from each plan. Ez form 2011 The plan must then pay the employee that amount, plus earnings on the amount through the end of 2013, by April 15, 2014. Ez form 2011 Excess withdrawn by April 15. Ez form 2011   If the employee takes out the excess deferral by April 15, 2014, it is not reported again by including it in the employee's gross income for 2014. Ez form 2011 However, any income earned in 2013 on the excess deferral taken out is taxable in the tax year in which it is taken out. Ez form 2011 The distribution is not subject to the additional 10% tax on early distributions. Ez form 2011   If the employee takes out part of the excess deferral and the income on it, the distribution is treated as made proportionately from the excess deferral and the income. Ez form 2011   Even if the employee takes out the excess deferral by April 15, the amount will be considered for purposes of nondiscrimination testing requirements of the plan, unless the distributed amount is for a non-highly compensated employee who participates in only one employer's 401(k) plan or plans. Ez form 2011 Excess not withdrawn by April 15. Ez form 2011   If the employee does not take out the excess deferral by April 15, 2014, the excess, though taxable in 2013, is not included in the employee's cost basis in figuring the taxable amount of any eventual distributions under the plan. Ez form 2011 In effect, an excess deferral left in the plan is taxed twice, once when contributed and again when distributed. Ez form 2011 Also, if the employee's excess deferral is allowed to stay in the plan and the employee participates in no other employer's plan, the plan can be disqualified. Ez form 2011 Reporting corrective distributions on Form 1099-R. Ez form 2011   Report corrective distributions of excess deferrals (including any earnings) on Form 1099-R. Ez form 2011 For specific information about reporting corrective distributions, see the Instructions for Forms 1099-R and 5498. Ez form 2011 Tax on excess contributions of highly compensated employees. Ez form 2011   The law provides tests to detect discrimination in a plan. Ez form 2011 If tests, such as the actual deferral percentage test (ADP test) (see section 401(k)(3)) and the actual contribution percentage test (ACP test) (see section 401(m)(2)), show that contributions for highly compensated employees are more than the test limits for these contributions, the employer may have to pay a 10% excise tax. Ez form 2011 Report the tax on Form 5330. Ez form 2011 The ADP test does not apply to a safe harbor 401(k) plan (discussed next) nor to a QACA. Ez form 2011 Also, the ACP test does not apply to these plans if certain additional requirements are met. Ez form 2011   The tax for the year is 10% of the excess contributions for the plan year ending in your tax year. Ez form 2011 Excess contributions are elective deferrals, employee contributions, or employer matching or nonelective contributions that are more than the amount permitted under the ADP test or the ACP test. Ez form 2011   See Regulations sections 1. Ez form 2011 401(k)-2 and 1. Ez form 2011 401(m)-2 for further guidance relating to the nondiscrimination rules under sections 401(k) and 401(m). Ez form 2011    If the plan fails the ADP or ACP testing, and the failure is not corrected by the end of the next plan year, the plan can be disqualified. Ez form 2011 Safe harbor 401(k) plan. Ez form 2011 If you meet the requirements for a safe harbor 401(k) plan, you do not have to satisfy the ADP test, nor the ACP test, if certain additional requirements are met. Ez form 2011 For your plan to be a safe harbor plan, you must meet the following conditions. Ez form 2011 Matching or nonelective contributions. Ez form 2011 You must make matching or nonelective contributions according to one of the following formulas. Ez form 2011 Matching contributions. Ez form 2011 You must make matching contributions according to the following rules. Ez form 2011 You must contribute an amount equal to 100% of each non-highly compensated employee's elective deferrals, up to 3% of compensation. Ez form 2011 You must contribute an amount equal to 50% of each non-highly compensated employee's elective deferrals, from 3% up to 5% of compensation. Ez form 2011 The rate of matching contributions for highly compensated employees, including yourself, must not exceed the rates for non-highly compensated employees. Ez form 2011 Nonelective contributions. Ez form 2011 You must make nonelective contributions, without regard to whether the employee made elective deferrals, on behalf of all non-highly compensated employees eligible to participate in the plan, equal to at least 3% of the employee's compensation. Ez form 2011 These mandatory matching and nonelective contributions must be immediately 100% vested and are subject to special withdrawal restrictions. Ez form 2011 Notice requirement. Ez form 2011 You must give eligible employees written notice of their rights and obligations with regard to contributions under the plan, within a reasonable period before the plan year. Ez form 2011 The other requirements for a 401(k) plan, including withdrawal and vesting rules, must also be met for your plan to qualify as a safe harbor 401(k) plan. Ez form 2011 Qualified Roth Contribution Program Under this program an eligible employee can designate all or a portion of his or her elective deferrals as after-tax Roth contributions. Ez form 2011 Elective deferrals designated as Roth contributions must be maintained in a separate Roth account. Ez form 2011 However, unlike other elective deferrals, designated Roth contributions are not excluded from employees' gross income, but qualified distributions from a Roth account are excluded from employees' gross income. Ez form 2011 Elective Deferrals Under a qualified Roth contribution program, the amount of elective deferrals that an employee may designate as a Roth contribution is limited to the maximum amount of elective deferrals excludable from gross income for the year (for 2013 and 2014, $17,500 if under age 50 and $23,000 if age 50 or over) less the total amount of the employee's elective deferrals not designated as Roth contributions. Ez form 2011 Designated Roth deferrals are treated the same as pre-tax elective deferrals for most purposes, including: The annual individual elective deferral limit (total of all designated Roth contributions and traditional, pre-tax elective deferrals) of $17,500 for 2013 and 2014, with an additional $5,500 if age 50 or over for 2013 and 2014, Determining the maximum employee and employer annual contributions of the lesser of 100% of compensation or $51,000 for 2013 ($52,000 for 2014), Nondiscrimination testing, Required distributions, and Elective deferrals not taken into account for purposes of deduction limits. Ez form 2011 Qualified Distributions A qualified distribution is a distribution that is made after the employee's nonexclusion period and: On or after the employee attains age   59½, On account of the employee's being disabled, or On or after the employee's death. Ez form 2011 An employee's nonexclusion period for a plan is the 5-tax-year period beginning with the earlier of the following tax years. Ez form 2011 The first tax year in which the employee made a contribution to his or her Roth account in the plan, or If a rollover contribution was made to the employee's designated Roth account from a designated Roth account previously established for the employee under another plan, then the first tax year the employee made a designated Roth contribution to the previously established account. Ez form 2011 Rollover. Ez form 2011   Beginning September 28, 2010, a rollover from another account can be made to a designated Roth account in the same plan. Ez form 2011 For additional information on these in-plan Roth rollovers, see Notice 2010-84, 2010-51 I. Ez form 2011 R. Ez form 2011 B. Ez form 2011 872, available at www. Ez form 2011 irs. Ez form 2011 gov/irb/2010-51_IRB/ar11. Ez form 2011 html, and Notice 2013-74. Ez form 2011 A distribution from a designated Roth account can only be rolled over to another designated Roth account or a Roth IRA. Ez form 2011 Rollover amounts do not apply toward the annual deferral limit. Ez form 2011 Reporting Requirements You must report a contribution to a Roth account on Form W-2 and a distribution from a Roth account on Form 1099-R. Ez form 2011 See the Form W-2 and 1099-R instructions for detailed information. Ez form 2011 Distributions Amounts paid to plan participants from a qualified plan are called distributions. Ez form 2011 Distributions may be nonperiodic, such as lump-sum distributions, or periodic, such as annuity payments. Ez form 2011 Also, certain loans may be treated as distributions. Ez form 2011 See Loans Treated as Distributions in Publication 575. Ez form 2011 Required Distributions A qualified plan must provide that each participant will either: Receive his or her entire interest (benefits) in the plan by the required beginning date (defined later), or Begin receiving regular periodic distributions by the required beginning date in annual amounts calculated to distribute the participant's entire interest (benefits) over his or her life expectancy or over the joint life expectancy of the participant and the designated beneficiary (or over a shorter period). Ez form 2011 These distribution rules apply individually to each qualified plan. Ez form 2011 You cannot satisfy the requirement for one plan by taking a distribution from another. Ez form 2011 The plan must provide that these rules override any inconsistent distribution options previously offered. Ez form 2011 Minimum distribution. Ez form 2011   If the account balance of a qualified plan participant is to be distributed (other than as an annuity), the plan administrator must figure the minimum amount required to be distributed each distribution calendar year. Ez form 2011 This minimum is figured by dividing the account balance by the applicable life expectancy. Ez form 2011 The plan administrator can use the life expectancy tables in Appendix C of Publication 590 for this purpose. Ez form 2011 For more information on figuring the minimum distribution, see Tax on Excess Accumulation in Publication 575. Ez form 2011 Required beginning date. Ez form 2011   Generally, each participant must receive his or her entire benefits in the plan or begin to receive periodic distributions of benefits from the plan by the required beginning date. Ez form 2011   A participant must begin to receive distributions from his or her qualified retirement plan by April 1 of the first year after the later of the following years. Ez form 2011 Calendar year in which he or she reaches age 70½. Ez form 2011 Calendar year in which he or she retires from employment with the employer maintaining the plan. Ez form 2011 However, the plan may require the participant to begin receiving distributions by April 1 of the year after the participant reaches age 70½ even if the participant has not retired. Ez form 2011   If the participant is a 5% owner of the employer maintaining the plan, the participant must begin receiving distributions by April 1 of the first year after the calendar year in which the participant reached age 70½. Ez form 2011 For more information, see Tax on Excess Accumulation in Publication 575. Ez form 2011 Distributions after the starting year. Ez form 2011   The distribution required to be made by April 1 is treated as a distribution for the starting year. Ez form 2011 (The starting year is the year in which the participant meets (1) or (2) above, whichever applies. Ez form 2011 ) After the starting year, the participant must receive the required distribution for each year by December 31 of that year. Ez form 2011 If no distribution is made in the starting year, required distributions for 2 years must be made in the next year (one by April 1 and one by December 31). Ez form 2011 Distributions after participant's death. Ez form 2011   See Publication 575 for the special rules covering distributions made after the death of a participant. Ez form 2011 Distributions From 401(k) Plans Generally, distributions cannot be made until one of the following occurs. Ez form 2011 The employee retires, dies, becomes disabled, or otherwise severs employment. Ez form 2011 The plan ends and no other defined contribution plan is established or continued. Ez form 2011 In the case of a 401(k) plan that is part of a profit-sharing plan, the employee reaches age 59½ or suffers financial hardship. Ez form 2011 For the rules on hardship distributions, including the limits on them, see Regulations section 1. Ez form 2011 401(k)-1(d). Ez form 2011 The employee becomes eligible for a qualified reservist distribution (defined next). Ez form 2011 Certain distributions listed above may be subject to the tax on early distributions discussed later. Ez form 2011 Qualified reservist distributions. Ez form 2011   A qualified reservist distribution is a distribution from an IRA or an elective deferral account made after September 11, 2001, to a military reservist or a member of the National Guard who has been called to active duty for at least 180 days or for an indefinite period. Ez form 2011 All or part of a qualified reservist distribution can be recontributed to an IRA. Ez form 2011 The additional 10% tax on early distributions does not apply to a qualified reservist distribution. Ez form 2011 Tax Treatment of Distributions Distributions from a qualified plan minus a prorated part of any cost basis are subject to income tax in the year they are distributed. Ez form 2011 Since most recipients have no cost basis, a distribution is generally fully taxable. Ez form 2011 An exception is a distribution that is properly rolled over as discussed under Rollover, next. Ez form 2011 The tax treatment of distributions depends on whether they are made periodically over several years or life (periodic distributions) or are nonperiodic distributions. Ez form 2011 See Taxation of Periodic Payments and Taxation of Nonperiodic Payments in Publication 575 for a detailed description of how distributions are taxed, including the 10-year tax option or capital gain treatment of a lump-sum distribution. Ez form 2011 Note. Ez form 2011 A recipient of a distribution from a designated Roth account will have a cost basis since designated Roth contributions are made on an after-tax basis. Ez form 2011 Also, a distribution from a designated Roth account is entirely tax-free if certain conditions are met. Ez form 2011 See Qualified distributions under Qualified Roth Contribution Program, earlier. Ez form 2011 Rollover. Ez form 2011   The recipient of an eligible rollover distribution from a qualified plan can defer the tax on it by rolling it over into a traditional IRA or another eligible retirement plan. Ez form 2011 However, it may be subject to withholding as discussed under Withholding requirement, later. Ez form 2011 A rollover can also be made to a Roth IRA, in which case, any previously untaxed amounts are includible in gross income unless the rollover is from a designated Roth account. Ez form 2011 Eligible rollover distribution. Ez form 2011   This is a distribution of all or any part of an employee's balance in a qualified retirement plan that is not any of the following. Ez form 2011 A required minimum distribution. Ez form 2011 See Required Distributions , earlier. Ez form 2011 Any of a series of substantially equal payments made at least once a year over any of the following periods. Ez form 2011 The employee's life or life expectancy. Ez form 2011 The joint lives or life expectancies of the employee and beneficiary. Ez form 2011 A period of 10 years or longer. Ez form 2011 A hardship distribution. Ez form 2011 The portion of a distribution that represents the return of an employee's nondeductible contributions to the plan. Ez form 2011 See Employee Contributions , earlier, and Rollover of nontaxable amounts, next. Ez form 2011 Loans treated as distributions. Ez form 2011 Dividends on employer securities. Ez form 2011 The cost of any life insurance coverage provided under a qualified retirement plan. Ez form 2011 Similar items designated by the IRS in published guidance. Ez form 2011 See, for example, the Instructions for Forms 1099-R and 5498. Ez form 2011 Rollover of nontaxable amounts. Ez form 2011   You may be able to roll over the nontaxable part of a distribution to another qualified retirement plan or a section 403(b) plan, or to an IRA. Ez form 2011 If the rollover is to a qualified retirement plan or a section 403(b) plan that separately accounts for the taxable and nontaxable parts of the rollover, the transfer must be made through a direct (trustee-to-trustee) rollover. Ez form 2011 If the rollover is to an IRA, the transfer can be made by any rollover method. Ez form 2011 Note. Ez form 2011 A distribution from a designated Roth account can be rolled over to another designated Roth account or to a Roth IRA. Ez form 2011 If the rollover is to a Roth IRA, it can be rolled over by any rollover method, but if the rollover is to another designated Roth account, it must be rolled over directly (trustee-to-trustee). Ez form 2011 More information. Ez form 2011   For more information about rollovers, see Rollovers in Pubs. Ez form 2011 575 and 590. Ez form 2011 Withholding requirement. Ez form 2011   If, during a year, a qualified plan pays to a participant one or more eligible rollover distributions (defined earlier) that are reasonably expected to total $200 or more, the payor must withhold 20% of the taxable portion of each distribution for federal income tax. Ez form 2011 Exceptions. Ez form 2011   If, instead of having the distribution paid to him or her, the participant chooses to have the plan pay it directly to an IRA or another eligible retirement plan (a direct rollover), no withholding is required. Ez form 2011   If the distribution is not an eligible rollover distribution, defined earlier, the 20% withholding requirement does not apply. Ez form 2011 Other withholding rules apply to distributions that are not eligible rollover distributions, such as long-term periodic distributions and required distributions (periodic or nonperiodic). Ez form 2011 However, the participant can choose not to have tax withheld from these distributions. Ez form 2011 If the participant does not make this choice, the following withholding rules apply. Ez form 2011 For periodic distributions, withholding is based on their treatment as wages. Ez form 2011 For nonperiodic distributions, 10% of the taxable part is withheld. Ez form 2011 Estimated tax payments. Ez form 2011   If no income tax is withheld or not enough tax is withheld, the recipient of a distribution may have to make estimated tax payments. Ez form 2011 For more information, see Withholding Tax and Estimated Tax in Publication 575. Ez form 2011 Section 402(f) Notice. Ez form 2011   If a distribution is an eligible rollover distribution, as defined earlier, you must provide a written notice to the recipient that explains the following rules regarding such distributions. Ez form 2011 That the distribution may be directly transferred to an eligible retirement plan and information about which distributions are eligible for this direct transfer. Ez form 2011 That tax will be withheld from the distribution if it is not directly transferred to an eligible retirement plan. Ez form 2011 That the distribution will not be subject to tax if transferred to an eligible retirement plan within 60 days after the date the recipient receives the distribution. Ez form 2011 Certain other rules that may be applicable. Ez form 2011   Notice 2009-68, 2009-39 I. Ez form 2011 R. Ez form 2011 B. Ez form 2011 423, available at www. Ez form 2011 irs. Ez form 2011 gov/irb/2009-39_IRB/ar14. Ez form 2011 html, contains two updated safe harbor section 402(f) notices that plan administrators may provide recipients of eligible rollover distributions. Ez form 2011 If the plan allows in-plan Roth rollovers, the 402(f) notice must be amended to reflect this. Ez form 2011 Notice 2010-84 contains guidance on how to modify a 402(f) notice for in-plan Roth rollovers. Ez form 2011 Timing of notice. Ez form 2011   The notice generally must be provided no less than 30 days and no more than 180 days before the date of a distribution. Ez form 2011 Method of notice. Ez form 2011   The written notice must be provided individually to each distributee of an eligible rollover distribution. Ez form 2011 Posting of the notice is not sufficient. Ez form 2011 However, the written requirement may be satisfied through the use of electronic media if certain additional conditions are met. Ez form 2011 See Regulations section 1. Ez form 2011 401(a)-21. Ez form 2011 Tax on failure to give notice. Ez form 2011   Failure to give a 402(f) notice will result in a tax of $100 for each failure, with a total not exceeding $50,000 per calendar year. Ez form 2011 The tax will not be imposed if it is shown that such failure is due to reasonable cause and not to willful neglect. Ez form 2011 Tax on Early Distributions If a distribution is made to an employee under the plan before he or she reaches age 59½, the employee may have to pay a 10% additional tax on the distribution. Ez form 2011 This tax applies to the amount received that the employee must include in income. Ez form 2011 Exceptions. Ez form 2011   The 10% tax will not apply if distributions before age 59½ are made in any of the following circumstances. Ez form 2011 Made to a beneficiary (or to the estate of the employee) on or after the death of the employee. Ez form 2011 Made due to the employee having a qualifying disability. Ez form 2011 Made as part of a series of substantially equal periodic payments beginning after separation from service and made at least annually for the life or life expectancy of the employee or the joint lives or life expectancies of the employee and his or her designated beneficiary. Ez form 2011 (The payments under this exception, except in the case of death or disability, must continue for at least 5 years or until the employee reaches age 59½, whichever is the longer period. Ez form 2011 ) Made to an employee after separation from service if the separation occurred during o