File your Taxes for Free!
  • Get your maximum refund*
  • 100% accurate calculations guaranteed*

TurboTax Federal Free Edition - File Taxes Online

Don't let filing your taxes get you down! We'll help make it as easy as possible. With e-file and direct deposit, there's no faster way to get your refund!

Approved TurboTax Affiliate Site. TurboTax and TurboTax Online, among others, are registered trademarks and/or service marks of Intuit Inc. in the United States and other countries. Other parties' trademarks or service marks are the property of the respective owners.


© 2012 - 2018 All rights reserved.

This is an Approved TurboTax Affiliate site. TurboTax and TurboTax Online, among other are registered trademarks and/or service marks of Intuit, Inc. in the United States and other countries. Other parties' trademarks or service marks are the property of the respective owners.
When discussing "Free e-file", note that state e-file is an additional fee. E-file fees do not apply to New York state returns. Prices are subject to change without notice. E-file and get your refund faster
*If you pay an IRS or state penalty or interest because of a TurboTax calculations error, we'll pay you the penalty and interest.
*Maximum Refund Guarantee - or Your Money Back: If you get a larger refund or smaller tax due from another tax preparation method, we'll refund the applicable TurboTax federal and/or state purchase price paid. TurboTax Federal Free Edition customers are entitled to payment of $14.99 and a refund of your state purchase price paid. Claims must be submitted within sixty (60) days of your TurboTax filing date and no later than 6/15/14. E-file, Audit Defense, Professional Review, Refund Transfer and technical support fees are excluded. This guarantee cannot be combined with the TurboTax Satisfaction (Easy) Guarantee. *We're so confident your return will be done right, we guarantee it. Accurate calculations guaranteed. If you pay an IRS or state penalty or interest because of a TurboTax calculations error, we'll pay you the penalty and interest.
https://turbotax.intuit.com/corp/guarantees.jsp

Filling Out 1040x

Amended 1040 FormFile 1040x Free1040 Tax Form 2012Amend 2008 TaxesTax SlayerEfile 1040xTax Form 1040xAmended Tax Return 2012Earned Income Tax Credit CalculatorIncome Tax Deadline1040nr FormTaxslayer Com1040ez Form For 2013Free Tax FilingFederal And State Income Tax FormsH&r BlaockTaxes For 2010Filing A Tax AmmendmentTax Deadline1040ez Form For 2010How To Amend A Tax Return 20121040nr 2013State Tax Forms Online2012 Form 1040ezHow Do I Get 2012 Tax FormsFile For A Tax Extension FreeTax Amendment Forms2011 Tax Forms 1040ez1040ez Tax Forms 20142012 Tax SoftwareFree EfileI Need To Amend My 2009 Tax ReturnHow To Fill Out A 1040x Step By StepH & R BlockFree E-file State TaxesCopy 2011 TaxesFree 2007 Tax FilingFree Online Tax FilingEfile 1040xCan I File An Amended Tax Return Online

Filling Out 1040x

Filling out 1040x Publication 907 - Main Content Table of Contents IncomeDependent Care Benefits Social Security and Railroad Retirement Benefits Disability Pensions Military and Government Disability Pensions Other Payments Itemized DeductionsMedical Expenses Impairment-Related Work Expenses Tax CreditsChild and Dependent Care Credit Credit for the Elderly or the Disabled Earned Income Credit Household Employers Business Tax Incentives How To Get Tax Help Income All income is taxable unless it is specifically excluded by law. Filling out 1040x The following discussions highlight some income items (both taxable and nontaxable) that are of particular interest to people with disabilities and those who care for people with disabilities. Filling out 1040x Dependent Care Benefits Dependent care benefits include: Amounts your employer paid directly to either you or your care provider for the care of your qualifying person(s) while you worked, The fair market value of care in a daycare facility provided or sponsored by your employer, and Pre-tax contributions you made under a dependent care flexible spending arrangement. Filling out 1040x Exclusion or deduction. Filling out 1040x   If your employer provides dependent care benefits under a qualified plan, you may be able to exclude these benefits from your income. Filling out 1040x Your employer can tell you whether your benefit plan qualifies. Filling out 1040x To claim the exclusion, you must complete Part III of Form 2441, Child and Dependent Care Expenses. Filling out 1040x You cannot use Form 1040EZ. Filling out 1040x   If you are self-employed and receive benefits from a qualified dependent care benefit plan, you are treated as both employer and employee. Filling out 1040x Therefore, you would not get an exclusion from wages. Filling out 1040x Instead, you would get a deduction on Form 1040, Schedule C, line 14; Schedule E, line 19 or 28; or Schedule F, line 15. Filling out 1040x To claim the deduction, you must use Form 2441. Filling out 1040x   The amount you can exclude or deduct is limited to the smallest of: The total amount of dependent care benefits you received during the year, The total amount of qualified expenses you incurred during the year, Your earned income, Your spouse's earned income, or $5,000 ($2,500 if married filing separately). Filling out 1040x Statement for employee. Filling out 1040x   Your employer must give you a Form W-2 (or similar statement), showing in box 10 the total amount of dependent care benefits provided to you during the year under a qualified plan. Filling out 1040x Your employer will also include any dependent care benefits over $5,000 in your wages shown on your Form W-2 in box 1. Filling out 1040x Qualifying person(s). Filling out 1040x   A qualifying person is: A qualifying child who is under age 13 whom you can claim as a dependent. Filling out 1040x If the child turned 13 during the year, the child is a qualifying person for the part of the year he or she was under age 13. Filling out 1040x Your disabled spouse who is not physically or mentally able to care for himself or herself. Filling out 1040x Any disabled person who was not physically or mentally able to care for himself or herself whom you can claim as a dependent (or could claim as a dependent except that the person had gross income of $3,900 or more or filed a joint return). Filling out 1040x Any disabled person who was not physically or mentally able to care for himself or herself whom you could claim as a dependent except that you (or your spouse if filing jointly) could be claimed as a dependent on another taxpayer's 2013 return. Filling out 1040x For information about excluding benefits on Form 1040, Form 1040NR, or Form 1040A, see Form 2441 and its instructions. Filling out 1040x Social Security and Railroad Retirement Benefits If you received social security or equivalent Tier 1 railroad retirement (RRTA) benefits during the year, part of the amount you received may be taxable. Filling out 1040x Are any of your benefits taxable?   If the only income you received during the year was your social security or equivalent Tier 1 railroad retirement (RRTA) benefits, your benefits generally are not taxable. Filling out 1040x   If you received income during the year in addition to social security or equivalent Tier 1 railroad retirement (RRTA) benefits, part of your benefits may be taxable if all of your other income, including tax-exempt interest, plus half of your benefits are more than: $25,000 if you are single, head of household, or qualifying widow(er), $25,000 if you are married filing separately and lived apart from your spouse for all of 2013, $32,000 if you are married filing jointly, or $-0- if you are married filing separately and lived with your spouse at any time during 2013. Filling out 1040x   For more information, see the instructions for Form 1040, lines 20a and 20b, or Form 1040A, lines 14a and 14b. Filling out 1040x Publication 915, Social Security and Equivalent Railroad Retirement Benefits, contains more detailed information. Filling out 1040x Supplemental security income (SSI) payments. Filling out 1040x   Social security benefits do not include SSI payments, which are not taxable. Filling out 1040x Do not include these payments in your income. Filling out 1040x Disability Pensions If you retired on disability, you must include in income any disability pension you receive under a plan that is paid for by your employer. Filling out 1040x You must report your taxable disability payments as wages on line 7 of Form 1040 or Form 1040A until you reach minimum retirement age. Filling out 1040x Minimum retirement age generally is the age at which you can first receive a pension or annuity if you are not disabled. Filling out 1040x You may be entitled to a tax credit if you were permanently and totally disabled when you retired. Filling out 1040x For information on this credit, see Publication 524, Credit for the Elderly or the Disabled. Filling out 1040x Beginning on the day after you reach minimum retirement age, payments you receive are taxable as a pension or annuity. Filling out 1040x Report the payments on lines 16a and 16b of Form 1040 or on lines 12a and 12b of Form 1040A. Filling out 1040x For more information on pensions and annuities, see Publication 575, Pension and Annuity Income. Filling out 1040x Retirement and profit-sharing plans. Filling out 1040x   If you receive payments from a retirement or profit-sharing plan that does not provide for disability retirement, do not treat the payments as a disability pension. Filling out 1040x The payments must be reported as a pension or annuity. Filling out 1040x Accrued leave payment. Filling out 1040x   If you retire on disability, any lump-sum payment you receive for accrued annual leave is a salary payment. Filling out 1040x The payment is not a disability payment. Filling out 1040x Include it in your income in the tax year you receive it. Filling out 1040x See Publication 525, Taxable and Nontaxable Income, for more information. Filling out 1040x Military and Government Disability Pensions Generally, you must report disability pensions as income, but do not include certain military and government disability pensions. Filling out 1040x For information about military and government disability pensions, see Publication 525. Filling out 1040x VA disability benefits. Filling out 1040x   Do not include disability benefits you receive from the Department of Veterans Affairs (VA) in your gross income. Filling out 1040x If you are a military retiree and do not receive your disability benefits from the VA, see Publication 525 for more information. Filling out 1040x   Do not include in your income any veterans' benefits paid under any law, regulation, or administrative practice administered by the VA. Filling out 1040x These include: Education, training, and subsistence allowances, Disability compensation and pension payments for disabilities paid either to veterans or their families, Grants for homes designed for wheelchair living, Grants for motor vehicles for veterans who lost their sight or the use of their limbs, Veterans' insurance proceeds and dividends paid either to veterans or their beneficiaries, including the proceeds of a veteran's endowment policy paid before death, Interest on insurance dividends left on deposit with the VA, Benefits under a dependent-care assistance program, The death gratuity paid to a survivor of a member of the Armed Forces who died after September 10, 2001, or Payments made under the VA's compensated work therapy program. Filling out 1040x Other Payments You may receive other payments that are related to your disability. Filling out 1040x The following payments are not taxable. Filling out 1040x Benefit payments from a public welfare fund, such as payments due to blindness. Filling out 1040x Workers' compensation for an occupational sickness or injury if paid under a workers' compensation act or similar law. Filling out 1040x Compensatory (but not punitive) damages for physical injury or physical sickness. Filling out 1040x Disability benefits under a “no-fault” car insurance policy for loss of income or earning capacity as a result of injuries. Filling out 1040x Compensation for permanent loss or loss of use of a part or function of your body, or for your permanent disfigurement. Filling out 1040x Long-Term Care Insurance Long-term care insurance contracts generally are treated as accident and health insurance contracts. Filling out 1040x Amounts you receive from them (other than policyholder dividends or premium refunds) generally are excludable from income as amounts received for personal injury or sickness. Filling out 1040x More detailed information can be found in Publication 525. Filling out 1040x Accelerated Death Benefits You can exclude from income accelerated death benefits you receive on the life of an insured individual if certain requirements are met. Filling out 1040x Accelerated death benefits are amounts received under a life insurance contract before the death of the insured. Filling out 1040x These benefits also include amounts received on the sale or assignment of the contract to a viatical settlement provider. Filling out 1040x This exclusion applies only if the insured was a terminally ill individual or a chronically ill individual. Filling out 1040x For more information, see Publication 525. Filling out 1040x Itemized Deductions If you file Form 1040, you generally can either claim the standard deduction or itemize your deductions. Filling out 1040x You must use Schedule A (Form 1040) to itemize your deductions. Filling out 1040x See your form instructions for information on the standard deduction and the deductions you can itemize. Filling out 1040x The following discussions highlight some itemized deductions that are of particular interest to persons with disabilities. Filling out 1040x Medical Expenses When figuring your deduction for medical expenses, you can generally include medical and dental expenses you pay for yourself, your spouse, and your dependents. Filling out 1040x Medical expenses are the cost of diagnosis, cure, mitigation, treatment, or prevention of disease and the costs for treatments affecting any part or function of the body. Filling out 1040x They include the costs of equipment, supplies, diagnostic devices, and transportation for needed medical care and payments for medical insurance. Filling out 1040x You can deduct only the amount of your medical and dental expenses that is more than 10% (7. Filling out 1040x 5% if either you or your spouse was born before January 2, 1949) of your adjusted gross income shown on Form 1040, line 38. Filling out 1040x The following list highlights some of the medical expenses you can include in figuring your medical expense deduction. Filling out 1040x For more detailed information, see Publication 502, Medical and Dental Expenses (Including the Health Coverage Tax Credit). Filling out 1040x Artificial limbs, contact lenses, eyeglasses, and hearing aids. Filling out 1040x The part of the cost of Braille books and magazines that is more than the price of regular printed editions. Filling out 1040x Cost and repair of special telephone equipment for hearing-impaired persons. Filling out 1040x Cost and maintenance of a wheelchair or a three-wheel motor vehicle commercially known as an “autoette. Filling out 1040x ” Cost and care of a guide dog or other animal aiding a person with a physical disability. Filling out 1040x Costs for a school that furnishes special education if a principal reason for using the school is its resources for relieving a mental or physical disability. Filling out 1040x This includes the cost of teaching Braille and lip reading and the cost of remedial language training to correct a condition caused by a birth defect. Filling out 1040x Premiums for qualified long-term care insurance, up to certain amounts. Filling out 1040x Improvements to a home that do not increase its value if the main purpose is medical care. Filling out 1040x An example is constructing entrance or exit ramps. Filling out 1040x Improvements that increase a home's value, if the main purpose is medical care, may be partly included as a medical expense. Filling out 1040x See Publication 502 for more information. Filling out 1040x Impairment-Related Work Expenses If you are disabled, you can take a business deduction for expenses that are necessary for you to be able to work. Filling out 1040x If you take a business deduction for these impairment-related work expenses, they are not subject to the 10% (7. Filling out 1040x 5% if you or your spouse is age 65 or older) limit that applies to medical expenses. Filling out 1040x You are disabled if you have: A physical or mental disability (for example, blindness or deafness) that functionally limits your being employed, or A physical or mental impairment (including, but not limited to, a sight or hearing impairment) that substantially limits one or more of your major life activities, such as performing manual tasks, walking, speaking, breathing, learning, or working. Filling out 1040x Impairment-related expenses defined. Filling out 1040x   Impairment-related expenses are those ordinary and necessary business expenses that are: Necessary for you to do your work satisfactorily, For goods and services not required or used, other than incidentally, in your personal activities, and Not specifically covered under other income tax laws. Filling out 1040x Publication 502 contains more detailed information. Filling out 1040x Tax Credits This discussion highlights three tax credits that may be of interest to people with disabilities and those who care for people with disabilities. Filling out 1040x Child and Dependent Care Credit If you pay someone to care for either your dependent under age 13 or your spouse or dependent who is not able to care for himself or herself, you may be able to get a credit of up to 35% of your expenses. Filling out 1040x To qualify, you must pay these expenses so you can work or look for work. Filling out 1040x The care must be provided for: Your qualifying child who is your dependent and who was under age 13 when the care was provided, Your spouse who was not physically or mentally able to care for himself or herself and lived with you for more than half the year, or A person who was not physically or mentally able to care for himself or herself, lived with you for more than half the year, and either: Was your dependent, or Would have been your dependent except that: He or she received gross income of $3,900 or more, He or she filed a joint return, or You, or your spouse if filing jointly, could be claimed as a dependent on someone else's 2013 return. Filling out 1040x You can claim the credit on Form 1040 or 1040A. Filling out 1040x You cannot claim the credit on Form 1040EZ or Form 1040NR-EZ. Filling out 1040x You figure the credit on Form 2441. Filling out 1040x For more information, see the instructions for Form 1040, line 48, or Form 1040A, line 29. Filling out 1040x Publication 503, Child and Dependent Care Expenses, contains more detailed information. Filling out 1040x Credit for the Elderly or the Disabled You may be able to claim this credit if you are a U. Filling out 1040x S. Filling out 1040x citizen or a resident alien and either of the following apply. Filling out 1040x You were 65 or older at the end of 2013, You were under 65 at the end of 2013, and retired on permanent or total disability. Filling out 1040x You can claim the credit on Form 1040 or 1040A. Filling out 1040x You figure the credit on Schedule R. Filling out 1040x For more information, see the instructions for Form 1040, line 53, or Form 1040A, line 30. Filling out 1040x Publication 524, Credit for the Elderly or the Disabled, contains more detailed information. Filling out 1040x Earned Income Credit This credit is based on the amount of your earned income. Filling out 1040x You can get the credit if your adjusted gross income for 2013 is less than: $14,340 ($19,680 for married filing jointly) if you do not have a qualifying child, $37,870 ($43,210 for married filing jointly) if you have one qualifying child, $43,038 ($48,378 for married filing jointly) if you have two qualifying children, or $46,227 ($51,567 for married filing jointly) if you have three or more qualifying children. Filling out 1040x To figure the credit, use the worksheet in the instructions for Form 1040, 1040A, or 1040EZ. Filling out 1040x If you have a qualifying child, also complete Schedule EIC, Earned Income Credit, and attach it to your Form 1040 or 1040A. Filling out 1040x You cannot use Form 1040EZ if you have a qualifying child. Filling out 1040x Qualifying child. Filling out 1040x   To be a qualifying child, your child must be younger than you (or your spouse if married filing jointly) and under age 19 or a full-time student under age 24 at the end of 2013, or permanently and totally disabled at any time during 2013, regardless of age. Filling out 1040x Earned income. Filling out 1040x   If you are retired on disability, benefits you receive under your employer's disability retirement plan are considered earned income until you reach minimum retirement age. Filling out 1040x However, payments you received from a disability insurance policy that you paid the premiums for are not earned income. Filling out 1040x More information. Filling out 1040x   For more information, including all the requirements to claim the earned income credit, see the instructions for Form 1040, line 64a; Form 1040A, line 38a; or Form 1040EZ, line 8a. Filling out 1040x Publication 596, Earned Income Credit (EIC), contains more detailed information. Filling out 1040x Household Employers If you pay someone to work in your home, such as a babysitter or housekeeper, you may be a household employer who has to pay employment taxes. Filling out 1040x A person you hire through an agency is not your employee if the agency controls what work is done and how it is done. Filling out 1040x This control could include setting the fee, requiring regular reports, and providing rules of conduct and appearance. Filling out 1040x In this case you do not have to pay employment taxes on the amount you pay. Filling out 1040x But if you control what work is done and how it is done, the worker is your employee. Filling out 1040x If you possess the right to discharge a worker, that worker is generally considered to be your employee. Filling out 1040x If a worker is your employee, it does not matter that you hired the worker through an agency or from a list provided by an agency. Filling out 1040x To find out if you have to pay employment taxes, see Publication 926, Household Employer's Tax Guide For Wages Paid in 2013. Filling out 1040x Business Tax Incentives If you own or operate a business, or you are looking for work, you should be aware of the following tax incentives for businesses to help persons with disabilities. Filling out 1040x Deduction for costs of removing barriers to the disabled and the elderly—This is a deduction a business can take for making a facility or public transportation vehicle more accessible to and usable by persons who are disabled or elderly. Filling out 1040x For more information, see chapter 7 of Publication 535, Business Expenses. Filling out 1040x Disabled access credit—This is a nonrefundable tax credit for an eligible small business that pays or incurs expenses to provide access to persons with disabilities. Filling out 1040x The expenses must be to enable the eligible small business to comply with the Americans With Disabilities Act of 1990. Filling out 1040x See Form 8826, Disabled Access Credit, for more information. Filling out 1040x Work opportunity credit—This credit provides businesses with an incentive to hire individuals from targeted groups that have a particularly high unemployment rate or other special employment needs. Filling out 1040x One targeted group consists of vocational rehabilitation referrals. Filling out 1040x These are individuals who have a physical or mental disability that results in a substantial handicap to employment. Filling out 1040x See Form 5884, Work Opportunity Credit. Filling out 1040x How To Get Tax Help Go online, use a smart phone, call or walk in to an office near you. Filling out 1040x Whether it's help with a tax issue, preparing your tax return or picking up a free publication or form, get the help you need the way you want it. Filling out 1040x Free help with your tax return. Filling out 1040x   Free help in preparing your return is available nationwide from IRS-certified volunteers. Filling out 1040x The Volunteer Income Tax Assistance (VITA) program is designed to help low-to-moderate income, elderly, persons with disabilities, and limited English proficient taxpayers. Filling out 1040x The Tax Counseling for the Elderly (TCE) program is designed to assist taxpayers age 60 and older with their tax returns. Filling out 1040x Most VITA and TCE sites offer free electronic filing and all volunteers will let you know about credits and deductions you may be entitled to claim. Filling out 1040x Some VITA and TCE sites provide taxpayers the opportunity to prepare their return with the assistance of an IRS-certified volunteer. Filling out 1040x To find the nearest VITA or TCE site, visit IRS. Filling out 1040x gov or call 1-800-906-9887. Filling out 1040x   As part of the TCE program, AARP offers the Tax-Aide counseling program. Filling out 1040x To find the nearest AARP Tax-Aide site, visit AARP's website at www. Filling out 1040x aarp. Filling out 1040x org/money/taxaide or call 1-888-227-7669. Filling out 1040x   For more information on these programs, go to IRS. Filling out 1040x gov and enter “VITA” in the search box. Filling out 1040x Internet. Filling out 1040x IRS. Filling out 1040x gov and IRS2Go are ready when you are — every day, every night, 24 hours a day, 7 days a week. Filling out 1040x Apply for an Employer Identification Number (EIN). Filling out 1040x Go to IRS. Filling out 1040x gov and enter Apply for an EIN in the search box. Filling out 1040x Request an Electronic Filing PIN by going to IRS. Filling out 1040x gov and entering Electronic Filing PIN in the search box. Filling out 1040x Check the status of your 2013 refund with Where's My Refund? Go to IRS. Filling out 1040x gov or the IRS2Go app, and click on Where's My Refund? You'll get a personalized refund date as soon as the IRS processes your tax return and approves your refund. Filling out 1040x If you e-file, your refund status is usually available within 24 hours after the IRS receives your tax return or 4 weeks after you've mailed a paper return. Filling out 1040x Check the status of your amended return. Filling out 1040x Go to IRS. Filling out 1040x gov and enter Where's My Amended Return in the search box. Filling out 1040x Download forms, instructions, and publications, including some accessible versions. Filling out 1040x Order free transcripts of your tax returns or tax account using the Order a Transcript tool on IRS. Filling out 1040x gov or IRS2Go. Filling out 1040x Tax return and tax account transcripts are generally available for the current year and past three years. Filling out 1040x Figure your income tax withholding with the IRS Withholding Calculator on IRS. Filling out 1040x gov. Filling out 1040x Use it if you've had too much or too little withheld, your personal situation has changed, you're starting a new job or you just want to see if you're having the right amount withheld. Filling out 1040x Determine if you might be subject to the Alternative Minimum Tax by using the Alternative Minimum Tax Assistant on IRS. Filling out 1040x gov. Filling out 1040x Locate the nearest Taxpayer Assistance Center using the Office Locator tool on IRS. Filling out 1040x gov or IRS2Go. Filling out 1040x Stop by most business days for face-to-face tax help, no appointment necessary — just walk in. Filling out 1040x An employee can explain IRS letters, request adjustments to your tax account or help you set up a payment plan. Filling out 1040x Before you visit, check the Office Locator for the address, phone number, hours of operation and the services provided. Filling out 1040x If you have an ongoing tax account problem or a special need, such as a disability, you can request an appointment. Filling out 1040x Call the local number listed in the Office Locator, or look in the phone book under United States Government, Internal Revenue Service. Filling out 1040x Locate the nearest volunteer help site with the VITA Locator Tool on IRS. Filling out 1040x gov. Filling out 1040x Low-to-moderate income, elderly, persons with disabilities, and limited English proficient taxpayers can get free help with their tax return from the nationwide Volunteer Income Tax Assistance (VITA) program. Filling out 1040x The Tax Counseling for the Elderly (TCE) program helps taxpayers 60 and older with their tax returns. Filling out 1040x Most VITA and TCE sites offer free electronic filing and some provide IRS-certified volunteers who can help prepare your tax return. Filling out 1040x AARP offers the Tax-Aide counseling program as part of the TCE program. Filling out 1040x Visit AARP's website to find the nearest Tax-Aide location. Filling out 1040x Research your tax questions. Filling out 1040x Search publications and instructions by topic or keyword. Filling out 1040x Read the Internal Revenue Code, regulations, or other official guidance. Filling out 1040x Read Internal Revenue Bulletins. Filling out 1040x Sign up to receive local and national tax news by email. Filling out 1040x Phone. Filling out 1040x You can call the IRS, or you can carry it in your pocket with the IRS2Go app on your smart phone or tablet. Filling out 1040x Download the free IRS2Go mobile app from the iTunes app store or from Google Play. Filling out 1040x Use it to watch the IRS YouTube channel, get IRS news as soon as it's released to the public, order transcripts of your tax returns or tax account, check your refund status, subscribe to filing season updates or daily tax tips, and follow the IRS Twitter news feed, @IRSnews, to get the latest federal tax news, including information about tax law changes and important IRS programs. Filling out 1040x Call to locate the nearest volunteer help site, 1-800-906-9887. Filling out 1040x Low-to-moderate income, elderly, persons with disabilities, and limited English proficient taxpayers can get free help with their tax return from the nationwide Volunteer Income Tax Assistance (VITA) program. Filling out 1040x The Tax Counseling for the Elderly (TCE) program helps taxpayers 60 and older with their tax returns. Filling out 1040x Most VITA and TCE sites offer free electronic filing. Filling out 1040x Some VITA and TCE sites provide IRS-certified volunteers who can help prepare your tax return. Filling out 1040x Through the TCE program, AARP offers the Tax-Aide counseling program; call 1-888-227-7669 to find the nearest Tax-Aide location. Filling out 1040x Call to check the status of your 2013 refund, 1-800-829-1954 or 1-800-829-4477. Filling out 1040x The automated Where's My Refund? information is available 24 hours a day, 7 days a week. Filling out 1040x If you e-file, your refund status is usually available within 24 hours after the IRS receives your tax return or 4 weeks after you've mailed a paper return. Filling out 1040x Before you call, have your 2013 tax return handy so you can provide your social security number, your filing status, and the exact whole dollar amount of your refund. Filling out 1040x Where's My Refund? can give you a personalized refund date as soon as the IRS processes your tax return and approves your refund. Filling out 1040x Where's My Refund? includes information for the most recent return filed in the current year and does not include information about amended returns. Filling out 1040x Call the Amended Return Hotline, 1-866-464-2050, to check the status of your amended return. Filling out 1040x Call to order forms, instructions and publications, 1-800-TAX-FORM (1-800-829-3676) to order current-year forms, instructions and publications, and prior-year forms and instructions (limited to 5 years). Filling out 1040x You should receive your order within 10 business days. Filling out 1040x Call to order transcripts of your tax returns or tax account, 1-800-908-9946. Filling out 1040x Follow the prompts to provide your Social Security Number or Individual Taxpayer Identification Number, date of birth, street address and ZIP code. Filling out 1040x Call for TeleTax topics, 1-800-829-4477, to listen to pre-recorded messages covering various tax topics. Filling out 1040x Call to ask tax questions, 1-800-829-1040. Filling out 1040x Call using TTY/TDD equipment, 1-800-829-4059 to ask tax questions or order forms and publications. Filling out 1040x The TTY/TDD telephone number is for people who are deaf, hard of hearing, or have a speech disability. Filling out 1040x These individuals can also contact the IRS through relay services such as the Federal Relay Service available at www. Filling out 1040x gsa. Filling out 1040x gov/fedrelay. Filling out 1040x Walk-in. Filling out 1040x You can find a selection of forms, publications and services — in-person, face-to-face. Filling out 1040x Products. Filling out 1040x You can walk in to some post offices, libraries, and IRS offices to pick up certain forms, instructions, and publications. Filling out 1040x Some IRS offices, libraries, and city and county government offices have a collection of products available to photocopy from reproducible proofs. Filling out 1040x Services. Filling out 1040x You can walk in to your local TAC most business days for personal, face-to-face tax help. Filling out 1040x An employee can explain IRS letters, request adjustments to your tax account, or help you set up a payment plan. Filling out 1040x If you need to resolve a tax problem, have questions about how the tax law applies to your individual tax return, or you are more comfortable talking with someone in person, visit your local TAC where you can talk with an IRS representative face-to-face. Filling out 1040x No appointment is necessary—just walk in. Filling out 1040x Before visiting, check www. Filling out 1040x irs. Filling out 1040x gov/localcontacts for hours of operation and services provided. Filling out 1040x Mail. Filling out 1040x You can send your order for forms, instructions, and publications to the address below. Filling out 1040x You should receive a response within 10 business days after your request is received. Filling out 1040x  Internal Revenue Service 1201 N. Filling out 1040x Mitsubishi Motorway Bloomington, IL 61705-6613 The Taxpayer Advocate Service Is Here to Help You. Filling out 1040x   The Taxpayer Advocate Service (TAS) is your voice at the IRS. Filling out 1040x Our job is to ensure that every taxpayer is treated fairly and that you know and understand your rights. Filling out 1040x What can TAS do for you?   We can offer you free help with IRS problems that you can't resolve on your own. Filling out 1040x We know this process can be confusing, but the worst thing you can do is nothing at all! TAS can help if you can't resolve your tax problem and: Your problem is causing financial difficulties for you, your family, or your business. Filling out 1040x You face (or your business is facing) an immediate threat of adverse action. Filling out 1040x You've tried repeatedly to contact the IRS but no one has responded, or the IRS hasn't responded by the date promised. Filling out 1040x   If you qualify for our help, you'll be assigned to one advocate who'll be with you at every turn and will do everything possible to resolve your problem. Filling out 1040x Here's why we can help: TAS is an independent organization within the IRS. Filling out 1040x Our advocates know how to work with the IRS. Filling out 1040x Our services are free and tailored to meet your needs. Filling out 1040x We have offices in every state, the District of Columbia, and Puerto Rico. Filling out 1040x How can you reach us?   If you think TAS can help you, call your local advocate, whose number is in your local directory and at www. Filling out 1040x irs. Filling out 1040x gov/advocate, or call us toll-free at 1-877-777-4778. Filling out 1040x How else does TAS help taxpayers?   TAS also works to resolve large-scale, systemic problems that affect many taxpayers. Filling out 1040x If you know of one of these broad issues, please report it to us through our Systemic Advocacy Management System at www. Filling out 1040x irs. Filling out 1040x gov/sams. Filling out 1040x Low Income Taxpayer Clinics. Filling out 1040x   Low Income Taxpayer Clinics (LITCs) serve individuals whose income is below a certain level and need to resolve tax problems such as audits, appeals, and tax collection disputes. Filling out 1040x Some clinics can provide information about taxpayer rights and responsibilities in different languages for individuals who speak English as a second language. Filling out 1040x Visit www. Filling out 1040x TaxpayerAdvocate. Filling out 1040x irs. Filling out 1040x gov or see IRS Publication 4134, Low Income Taxpayer Clinic List. Filling out 1040x Prev  Up  Next   Home   More Online Publications
Print - Click this link to Print this page

Understanding Your CP102 Notice

We made changes to your return because we believe there’s a miscalculation. You owe money on your taxes as a result of these changes.


What you need to do

  • Read your notice carefully—it will explain why you owe.
  • Compare the figures on the notice with your tax return.
  • Pay the amount owed by the date on the notice’s payment coupon.
  • Make payment arrangements if you can’t pay the full amount you owe.
  • Contact us within 60 days of the date of your notice if you disagree with the change(s) we made.
  • If you agree with our change(s), correct the copy of your tax return that you kept for your records.

You may want to...


  • Answers to common questions

    How can I find out what caused my tax return to change?
    Please contact us at the number listed on your notice for specific information about your tax return.

    What should I do if I disagree with the changes you made?
    If you disagree, contact us at the toll free number listed on the top right corner of your notice. If you contact us in writing within 60 days of the date of this notice, we’ll reverse the change we made to your account. However, if you’re unable to provide us additional information that justifies the reversal and we believe the reversal is in error, we’ll forward your case for audit. This step gives you formal appeal rights, including the right to appeal our decision in court before you have to pay the additional tax. After we forward your case, the audit staff will contact you within five to six weeks to fully explain the audit process and your rights. If you don’t contact us within the 60-day period, you’ll lose your right to appeal our decision before payment of tax. If you don’t contact us within 60 days, the change won’t be reversed and you must pay the additional tax. You may then file a claim for refund. You must submit the claim within three years of the date you filed the tax return, or within two years of the date of your last payment for this tax.

    What happens if I can’t pay the full amount I owe?
    You can arrange to make a payment plan with us if you can’t pay the full amount you owe.

    Am I charged interest on the money I owe?
    Not if you pay the full amount you owe by the date on the payment coupon. However interest accrues on the unpaid balance after that date.

    Will I receive a penalty if I can’t pay the full amount?
    Yes, you will receive a late payment penalty. You can contact us at the number given on your notice if you’re unable to pay the full amount shown in your specific notice because of circumstances beyond your control. Contact us by the due date of your payment and, depending on your situation, we may be able to remove the penalty.


    Tips for next year

    Consider filing your taxes electronically. Filing online can help you to avoid mistakes and to find credits and deductions for which you may qualify. In many cases you can file electronically for free. Learn more about e-file.

Page Last Reviewed or Updated: 24-Mar-2014

How to get help

  • Call the 1-800 number listed on the top right corner of your notice.
  • Authorize someone (e.g., accountant) to contact the IRS on your behalf using Form 2848.
  • See if you qualify for help from a Low Income Taxpayer Clinic.
     

The Filling Out 1040x

Filling out 1040x Publication 517 - Main Content Table of Contents Social Security CoverageCoverage of Members of the Clergy Coverage of Religious Workers (Church Employees) U. Filling out 1040x S. Filling out 1040x Citizens and Resident and Nonresident Aliens Ministerial ServicesMinisters Members of Religious Orders Christian Science Practitioners and Readers Exemption From Self-Employment (SE) TaxMembers of the Clergy Members of Recognized Religious Sects Self-Employment Tax: Figuring Net EarningsRegular Method Nonfarm Optional Method Income Tax: Income and ExpensesIncome Items Expense Items Income Tax Withholding and Estimated Tax Filing Your Return Retirement Savings ArrangementsDeducting contributions to tax-sheltered annuity plans. Filling out 1040x Full-time student. Filling out 1040x Adjusted gross income. Filling out 1040x More information. Filling out 1040x Earned Income Credit Comprehensive ExampleForm W-2 From Church Form W-2 From College Schedule C-EZ (Form 1040) Form 2106-EZ Schedule A (Form 1040) Schedule SE (Form 1040) Form 1040 Attachment 1 Attachment 2 How To Get Tax HelpLow Income Taxpayer Clinics Social Security Coverage This section gives information about which system (SECA or FICA) is used to collect social security and Medicare taxes from members of the clergy (ministers, members of a religious order, and Christian Science practitioners and readers) and religious workers (church employees). Filling out 1040x Coverage of Members of the Clergy The services you perform in the exercise of your ministry, of the duties required by your religious order, or of your profession as a Christian Science practitioner or reader are covered by social security and Medicare under SECA. Filling out 1040x Your earnings for these ministerial services (defined later) are subject to self-employment (SE) tax unless one of the following applies. Filling out 1040x You are a member of a religious order who has taken a vow of poverty. Filling out 1040x You ask the Internal Revenue Service (IRS) for an exemption from SE tax for your services and the IRS approves your request. Filling out 1040x See Exemption From Self-Employment (SE) Tax , later. Filling out 1040x You are subject only to the social security laws of a foreign country under the provisions of a social security agreement between the United States and that country. Filling out 1040x For more information, see Bilateral Social Security (Totalization) Agreements in Publication 54. Filling out 1040x Your earnings that are not from ministerial services may be subject to social security tax under FICA or SECA according to the rules that apply to taxpayers in general. Filling out 1040x See Ministerial Services , later. Filling out 1040x Ministers If you are a minister of a church, your earnings for the services you perform in your capacity as a minister are subject to SE tax, even if you perform these services as an employee of that church. Filling out 1040x However, you can request that the IRS grant you an exemption, as discussed under Exemption From Self-Employment (SE) Tax , later. Filling out 1040x For the specific services covered, see Ministerial Services , later. Filling out 1040x Ministers defined. Filling out 1040x   Ministers are individuals who are duly ordained, commissioned, or licensed by a religious body constituting a church or church denomination. Filling out 1040x Ministers have the authority to conduct religious worship, perform sacerdotal functions, and administer ordinances or sacraments according to the prescribed tenets and practices of that church or denomination. Filling out 1040x   If a church or denomination ordains some ministers and licenses or commissions others, anyone licensed or commissioned must be able to perform substantially all the religious functions of an ordained minister to be treated as a minister for social security purposes. Filling out 1040x Employment status for other tax purposes. Filling out 1040x   Even though all of your income from performing ministerial services is subject to self-employment tax for social security tax purposes, you may be an employee for income tax or retirement plan purposes in performing those same services. Filling out 1040x For income tax or retirement plan purposes, your income earned as an employee will be considered wages. Filling out 1040x Common-law employee. Filling out 1040x   Under common-law rules, you are considered either an employee or a self-employed person. Filling out 1040x Generally, you are an employee if you perform services for someone who has the legal right to control both what you do and how you do it, even if you have considerable discretion and freedom of action. Filling out 1040x For more information about the common-law rules, see Publication 15-A, Employer's Supplemental Tax Guide. Filling out 1040x   If a congregation employs you and pays you a salary, you are generally a common-law employee and income from the exercise of your ministry is wages for income tax purposes. Filling out 1040x However, amounts received directly from members of the congregation, such as fees for performing marriages, baptisms, or other personal services, are not wages; such amounts are self-employment income for both income tax purposes and social security tax purposes. Filling out 1040x Example. Filling out 1040x A church hires and pays you a salary to perform ministerial services subject to its control. Filling out 1040x Under the common-law rules, you are an employee of the church while performing those services. Filling out 1040x Form SS-8. Filling out 1040x   If you are not certain whether you are an employee or a self-employed person, you can get a determination from the IRS by filing Form SS-8. Filling out 1040x Members of Religious Orders If you are a member of a religious order who has not taken a vow of poverty, your earnings for ministerial services you perform as a member of the order are subject to SE tax. Filling out 1040x See Ministerial Services , later. Filling out 1040x However, you can request that the IRS grant you an exemption as discussed under Exemption From Self-Employment (SE) Tax , later. Filling out 1040x Vow of poverty. Filling out 1040x   If you are a member of a religious order and have taken a vow of poverty, you are already exempt from paying SE tax on your earnings for ministerial services you perform as an agent of your church or its agencies. Filling out 1040x You do not need to request a separate exemption. Filling out 1040x For income tax purposes, the earnings are tax free to you. Filling out 1040x Your earnings are considered the income of the religious order. Filling out 1040x Services covered under FICA at the election of the order. Filling out 1040x   However, even if you have taken a vow of poverty, the services you perform for your church or its agencies may be covered under social security. Filling out 1040x Your services are covered if your order, or an autonomous subdivision of the order, elects social security coverage for its current and future vow-of-poverty members. Filling out 1040x   The order or subdivision elects coverage by filing Form SS-16. Filling out 1040x The election may cover certain vow-of-poverty members for a retroactive period of up to 20 calendar quarters before the quarter in which it files the certificate. Filling out 1040x If the election is made, the order or subdivision pays both the employer's and employee's share of the tax. Filling out 1040x You do not pay any of the FICA tax. Filling out 1040x Services performed outside the order. Filling out 1040x   Even if you are a member of a religious order who has taken a vow of poverty and the order requires you to turn over amounts you earn, your earnings are subject to federal income tax and either SE tax or FICA tax (including estimated tax payments and/or withholding) if you: Are self-employed or an employee of an organization outside your religious community, and Perform work not required by, or done on behalf of, the order. Filling out 1040x   In these cases, your income from self-employment or as an employee of that outside organization is taxable to you directly. Filling out 1040x You may, however, be able to take a charitable deduction for the amount you turn over to the order. Filling out 1040x See Publication 526, Charitable Contributions. Filling out 1040x Rulings. Filling out 1040x   Organizations and individuals may request rulings from the IRS on whether they are religious orders, or members of a religious order, respectively, for FICA tax, SE tax, and federal income tax withholding purposes. Filling out 1040x To request a ruling, follow the procedures in Revenue Procedure 2014-1, 2014-1 I. Filling out 1040x R. Filling out 1040x B. Filling out 1040x 1, available at www. Filling out 1040x irs. Filling out 1040x gov/irb/2014-1_IRB/ar05. Filling out 1040x html. Filling out 1040x Christian Science Practitioners and Readers Generally, your earnings from services you perform in your profession as a Christian Science practitioner or reader are subject to SE tax. Filling out 1040x However, you can request an exemption as discussed under Exemption From Self-Employment (SE) Tax , later. Filling out 1040x Practitioners. Filling out 1040x   Christian Science practitioners are members in good standing of the Mother Church, The First Church of Christ, Scientist, in Boston, Massachusetts, who practice healing according to the teachings of Christian Science. Filling out 1040x State law specifically exempts Christian Science practitioners from licensing requirements. Filling out 1040x   Some Christian Science practitioners also are Christian Science teachers or lecturers. Filling out 1040x Income from teaching or lecturing is considered the same as income from their work as practitioners. Filling out 1040x Readers. Filling out 1040x   For tax purposes, Christian Science readers are considered the same as ordained, commissioned, or licensed ministers. Filling out 1040x Coverage of Religious Workers (Church Employees) If you are a religious worker (a church employee) and are not in one of the classes already discussed, your wages are generally subject to social security and Medicare tax under FICA, not SECA. Filling out 1040x Some exceptions are discussed next. Filling out 1040x Election by Church To Exclude Its Employees From FICA Coverage Churches and qualified church-controlled organizations (church organizations) that are opposed for religious reasons to the payment of social security and Medicare taxes can elect to exclude their employees from FICA coverage. Filling out 1040x If your employer makes this election, it does not pay the employer's portion of the FICA taxes or withhold from your pay your portion of the FICA taxes. Filling out 1040x Instead, your wages are subject to SECA and you must pay SE tax on your wages if they exceed $108. Filling out 1040x 28 during the tax year. Filling out 1040x However, you can request an exemption from SE tax if you are a member of a recognized religious sect, as discussed below. Filling out 1040x Churches and church organizations make this election by filing two copies of Form 8274. Filling out 1040x For more information about making this election, see Form 8274. Filling out 1040x Election by Certain Church Employees Who Are Opposed to Social Security and Medicare You may be able to choose to be exempt from social security and Medicare taxes, including the SE tax, if you are a member of a recognized religious sect or division and work for a church (or church-controlled nonprofit division) that does not pay the employer's part of the social security tax on wages. Filling out 1040x This exemption does not apply to your service, if any, as a minister of a church or as a member of a religious order. Filling out 1040x Make this choice by filing Form 4029. Filling out 1040x See Requesting Exemption—Form 4029 , later, under Members of Recognized Religious Sects. Filling out 1040x U. Filling out 1040x S. Filling out 1040x Citizens and Resident and Nonresident Aliens To be covered under the SE tax provisions (SECA), individuals generally must be citizens or resident aliens of the United States. Filling out 1040x Nonresident aliens are not covered under SECA unless a social security agreement in effect between the United States and the foreign country determines that you are covered under the U. Filling out 1040x S. Filling out 1040x social security system. Filling out 1040x To determine your alien status, see Publication 519, U. Filling out 1040x S. Filling out 1040x Tax Guide for Aliens. Filling out 1040x Residents of Puerto Rico, the U. Filling out 1040x S. Filling out 1040x Virgin Islands, Guam, the CNMI, and American Samoa. Filling out 1040x   If you are a resident of one of these U. Filling out 1040x S. Filling out 1040x possessions but not a U. Filling out 1040x S. Filling out 1040x citizen, for SE tax purposes you are treated the same as a citizen or resident alien of the United States. Filling out 1040x For information on figuring the tax, see Self-Employment Tax: Figuring Net Earnings , later. Filling out 1040x Ministerial Services Ministerial services, in general, are the services you perform in the exercise of your ministry, in the exercise of your duties as required by your religious order, or in the exercise of your profession as a Christian Science practitioner or reader. Filling out 1040x Income you receive for performing ministerial services is subject to SE tax unless you have an exemption as explained later. Filling out 1040x Even if you have an exemption, only the income you receive for performing ministerial services is exempt. Filling out 1040x The exemption does not apply to any other income. Filling out 1040x The following discussions provide more detailed information on ministerial services of ministers, members of a religious order, and Christian Science practitioners and readers. Filling out 1040x Ministers Most services you perform as a minister, priest, rabbi, etc. Filling out 1040x , are ministerial services. Filling out 1040x These services include: Performing sacerdotal functions, Conducting religious worship, and Controlling, conducting, and maintaining religious organizations (including the religious boards, societies, and other integral agencies of such organizations) that are under the authority of a religious body that is a church or denomination. Filling out 1040x You are considered to control, conduct, and maintain a religious organization if you direct, manage, or promote the organization's activities. Filling out 1040x A religious organization is under the authority of a religious body that is a church or denomination if it is organized for and dedicated to carrying out the principles of a faith according to the requirements governing the creation of institutions of the faith. Filling out 1040x Services for nonreligious organizations. Filling out 1040x   Your services for a nonreligious organization are ministerial services if the services are assigned or designated by your church. Filling out 1040x Assigned or designated services qualify even if they do not involve performing sacerdotal functions or conducting religious worship. Filling out 1040x   If your services are not assigned or designated by your church, they are ministerial services only if they involve performing sacerdotal functions or conducting religious worship. Filling out 1040x Services that are not part of your ministry. Filling out 1040x   Income from services you perform as an employee that are not ministerial services is subject to social security and Medicare tax withholding under FICA (not SECA) under the rules that apply to employees in general. Filling out 1040x The following are not ministerial services. Filling out 1040x Services you perform for nonreligious organizations other than the services stated above. Filling out 1040x Services you perform as a duly ordained, commissioned, or licensed minister of a church as an employee of the United States, the District of Columbia, a foreign government, or any of their political subdivisions. Filling out 1040x These services are not ministerial services even if you are performing sacerdotal functions or conducting religious worship. Filling out 1040x (For example, if you perform services as a chaplain in the Armed Forces of the United States, those services are not ministerial services. Filling out 1040x ) Services you perform in a government-owned and operated hospital. Filling out 1040x (These services are considered performed by a government employee, not by a minister as part of the ministry. Filling out 1040x ) However, services that you perform at a church-related hospital or health and welfare institution, or a private nonprofit hospital, are considered to be part of the ministry and are considered ministerial services. Filling out 1040x Books or articles. Filling out 1040x   Writing religious books or articles is considered to be in the exercise of your ministry and is considered a ministerial service. Filling out 1040x   This rule also applies to members of religious orders and to Christian Science practitioners and readers. Filling out 1040x Members of Religious Orders Services you perform as a member of a religious order in the exercise of duties required by the order are ministerial services. Filling out 1040x The services are considered ministerial because you perform them as an agent of the order. Filling out 1040x For example, if the order directs you to perform services for another agency of the supervising church or an associated institution, you are considered to perform the services as an agent of the order. Filling out 1040x However, if the order directs you to work outside the order, this employment will not be considered a duty required by the order unless: Your services are the kind that are ordinarily performed by members of the order, and Your services are part of the duties that must be exercised for, or on behalf of, the religious order as its agent. Filling out 1040x Effect of employee status. Filling out 1040x   Ordinarily, if your services are not considered directed or required of you by the order, you and the outside party for whom you work are considered employee and employer. Filling out 1040x In this case, your earnings from the services are taxed under the rules that apply to employees in general, not under the rules for services provided as agent for the order. Filling out 1040x This result is true even if you have taken a vow of poverty. Filling out 1040x Example. Filling out 1040x Pat Brown and Chris Green are members of a religious order and have taken vows of poverty. Filling out 1040x They renounce all claims to their earnings. Filling out 1040x The earnings belong to the order. Filling out 1040x Pat is a licensed attorney. Filling out 1040x The superiors of the order instructed her to get a job with a law firm. Filling out 1040x Pat joined a law firm as an employee and, as she requested, the firm made the salary payments directly to the order. Filling out 1040x Chris is a secretary. Filling out 1040x The superiors of the order instructed him to accept a job with the business office of the church that supervises the order. Filling out 1040x Chris took the job and gave all his earnings to the order. Filling out 1040x Pat's services are not duties required by the order. Filling out 1040x Her earnings are subject to social security and Medicare tax under FICA and to federal income tax. Filling out 1040x Chris' services are duties required by the order. Filling out 1040x He is acting as an agent of the order and not as an employee of a third party. Filling out 1040x He does not include the earnings in gross income, and they are not subject to income tax withholding or to social security and Medicare tax under FICA or SECA. Filling out 1040x Christian Science Practitioners and Readers Services you perform as a Christian Science practitioner or reader in the exercise of your profession are ministerial services. Filling out 1040x Amounts you receive for performing these services are generally subject to SE tax. Filling out 1040x You may request an exemption from SE tax, discussed next, which applies only to those services. Filling out 1040x Exemption From Self-Employment (SE) Tax You can request an exemption from SE tax if you are a member of the clergy (minister, member of a religious order, or Christian Science practitioner or reader) or a member of a recognized religious sect. Filling out 1040x Generally, members of religious orders who have taken a vow of poverty are already exempt from paying SE tax, as discussed earlier under Members of Religious Orders under Social Security Coverage. Filling out 1040x They do not have to request the exemption. Filling out 1040x Who cannot be exempt. Filling out 1040x   You cannot be exempt from SE tax if you made one of the following elections to be covered under social security. Filling out 1040x These elections are irrevocable. Filling out 1040x You elected to be covered under social security by filing Form 2031, Revocation of Exemption From Self-Employment Tax for Use by Ministers, Members of Religious Orders, and Christian Science Practitioners, for your 1986, 1987, 2000, or 2001 tax year. Filling out 1040x You elected before 1968 to be covered under social security for your ministerial services. Filling out 1040x Requesting exemption. Filling out 1040x    Table 2, earlier, briefly summarizes the procedure for requesting exemption from the SE tax. Filling out 1040x More detailed explanations follow. Filling out 1040x If you are a minister, member of a religious order, or Christian Science practitioner, an approved exemption only applies to earnings you receive for ministerial services, discussed earlier. Filling out 1040x It does not apply to any other self-employment income. Filling out 1040x Table 2. Filling out 1040x The Self-Employment Tax Exemption Application and Approval Process   Who Can Apply Members of the Clergy Members of Recognized  Religious Sects How File Form 4361 File Form 4029 When File by the due date (including extensions) of your income tax return for the second tax year in which you had at least $400 of net earnings from self-employment (at least part from ministerial services) File anytime Approval If approved, you will receive an approved copy of Form 4361 If approved, you will receive an approved copy of Form 4029 Effective Date For all tax years after 1967 in which you have at least $400 of net earnings from self-employment For all tax years beginning with the first year you meet the eligibility requirements discussed later Members of the Clergy To claim the exemption from SE tax, you must meet all of the following conditions. Filling out 1040x You file Form 4361, described below under Requesting Exemption—Form 4361 . Filling out 1040x You are conscientiously opposed to public insurance because of your individual religious considerations (not because of your general conscience), or you are opposed because of the principles of your religious denomination. Filling out 1040x You file for other than economic reasons. Filling out 1040x You inform the ordaining, commissioning, or licensing body of your church or order that you are opposed to public insurance if you are a minister or a member of a religious order (other than a vow-of-poverty member). Filling out 1040x This requirement does not apply to Christian Science practitioners or readers. Filling out 1040x You establish that the organization that ordained, commissioned, or licensed you, or your religious order, is a tax-exempt religious organization. Filling out 1040x You establish that the organization is a church or a convention or association of churches. Filling out 1040x You did not make an election discussed earlier under Who cannot be exempt . Filling out 1040x You sign and return the statement the IRS mails to you to certify that you are requesting an exemption based on the grounds listed on the statement. Filling out 1040x Requesting Exemption—Form 4361 To request exemption from SE tax, file Form 4361 in triplicate (original and two copies) with the IRS. Filling out 1040x The IRS will return to you a copy of the Form 4361 that you filed indicating whether it has approved your exemption. Filling out 1040x If it is approved, keep the approved copy of Form 4361 in your permanent records. Filling out 1040x When to file. Filling out 1040x   File Form 4361 by the date your income tax return is due, including extensions, for the second tax year in which both of the following are true. Filling out 1040x You have net earnings from self-employment of at least $400. Filling out 1040x Any part of those net earnings was from ministerial services you performed as a: Minister, Member of a religious order, or Christian Science practitioner or reader. Filling out 1040x The 2 years do not have to be consecutive tax years. Filling out 1040x    The approval process can take some time, so you should file Form 4361 as soon as possible. Filling out 1040x Example 1. Filling out 1040x Rev. Filling out 1040x Lawrence Jaeger, a clergyman ordained in 2013, has net self-employment earnings as a minister of $450 in 2013 and $500 in 2014. Filling out 1040x He must file his application for exemption by the due date, including extensions, for his 2014 income tax return. Filling out 1040x However, if Rev. Filling out 1040x Jaeger does not receive IRS approval for an exemption by April 15, 2015, his SE tax for 2014 is due by that date. Filling out 1040x Example 2. Filling out 1040x Rev. Filling out 1040x Louise Wolfe has only $300 in net self-employment earnings as a minister in 2013, but earned more than $400 in 2012 and expects to earn more than $400 in 2014. Filling out 1040x She must file her application for exemption by the due date, including extensions, for her 2014 income tax return. Filling out 1040x However, if she does not receive IRS approval for an exemption by April 15, 2015, her SE tax for 2014 is due by that date. Filling out 1040x Example 3. Filling out 1040x In 2011, Rev. Filling out 1040x David Moss was ordained a minister and had $700 in net self-employment earnings as a minister. Filling out 1040x In 2012, he received $1,000 as a minister, but his related expenses were over $1,000. Filling out 1040x Therefore, he had no net self-employment earnings as a minister in 2012. Filling out 1040x Also in 2012, he opened a book store and had $8,000 in net self-employment earnings from the store. Filling out 1040x In 2013, he had net self-employment earnings of $1,500 as a minister and $10,000 net self-employment earnings from the store. Filling out 1040x Rev. Filling out 1040x Moss had net earnings from self-employment in 2011 and 2013 that were $400 or more each year, and part of the self-employment earnings in each of those years was for his services as a minister. Filling out 1040x Thus, he must file his application for exemption by the due date, including extensions, for his 2013 income tax return. Filling out 1040x Death of individual. Filling out 1040x   The right to file an application for exemption ends with an individual's death. Filling out 1040x A surviving spouse, executor, or administrator cannot file an exemption application for a deceased clergy member. Filling out 1040x Effective date of exemption. Filling out 1040x   An approved exemption is effective for all tax years after 1967 in which you have $400 or more of net earnings from self-employment and any part of those earnings is for services as a member of the clergy. Filling out 1040x Once the exemption is approved, it is irrevocable. Filling out 1040x Example. Filling out 1040x Rev. Filling out 1040x Trudy Austin, ordained in 2010, had $400 or more in net self-employment earnings as a minister in both 2010 and 2013. Filling out 1040x She files an application for exemption on February 20, 2014. Filling out 1040x If an exemption is granted, it is effective for 2010 and the following years. Filling out 1040x Refunds of SE tax. Filling out 1040x   If, after receiving an approved Form 4361, you find that you overpaid SE tax, you can file a claim for refund on Form 1040X. Filling out 1040x Generally, for a refund, you must file Form 1040X within 3 years from the date you filed the return or within 2 years from the date you paid the tax, whichever is later. Filling out 1040x A return you filed, or tax you paid, before the due date is considered to have been filed or paid on the due date. Filling out 1040x   If you file a claim after the 3-year period but within 2 years from the time you paid the tax, the credit or refund will not be more than the tax you paid within the 2 years immediately before you file the claim. Filling out 1040x Members of Recognized Religious Sects If you are a member of a recognized religious sect, or a division of a recognized religious sect, you can apply for an exemption from payment of social security and Medicare taxes on both your self-employment income and the wages you earn from an employer who also has an exemption. Filling out 1040x Exception. Filling out 1040x   If you received social security benefits or payments, or anyone else received these benefits or payments based on your wages or self-employment income, you cannot apply. Filling out 1040x However, if you pay your benefits back, you may be considered for exemption. Filling out 1040x Contact your local Social Security Administration office to find out the amount you must pay back. Filling out 1040x Eligibility requirements. Filling out 1040x   To claim this exemption from SE tax, all the following requirements must be met. Filling out 1040x You must file Form 4029, discussed later under Requesting Exemption—Form 4029 . Filling out 1040x As a follower of the established teachings of the sect or division, you must be conscientiously opposed to accepting benefits of any private or public insurance that makes payments for death, disability, old age, retirement, or medical care, or provides services for medical care. Filling out 1040x You must waive all rights to receive any social security payment or benefit and agree that no benefits or payments will be made to anyone else based on your wages and self-employment income. Filling out 1040x The Commissioner of Social Security must determine that: Your sect or division has the established teachings as described in (2) above, It is the practice, and has been for a substantial period of time, for members of the sect or division to provide for their dependent members in a manner that is reasonable in view of the members' general level of living, and The sect or division has existed at all times since December 31, 1950. Filling out 1040x Requesting Exemption—Form 4029 To request the exemption, file Form 4029 in triplicate (original and two copies) with the Social Security Administration at the address shown on the form. Filling out 1040x The sect or division must complete part of the form. Filling out 1040x The IRS will return to you a copy of the Form 4029 that you filed indicating whether it has approved your exemption. Filling out 1040x If it is approved, keep the approved copy of Form 4029 in your permanent records. Filling out 1040x When to file. Filling out 1040x   You can file Form 4029 at any time. Filling out 1040x   If you have an approved exemption from SE tax and for some reason that approved exemption ended, you must file a new Form 4029 if you subsequently meet the eligibility requirements, discussed earlier. Filling out 1040x See Effective date of exemption next for information on when the newly approved exemption would become effective. Filling out 1040x    If you have a previously approved exemption from SE tax and you change membership to another recognized religious sect, without any change to your eligibility requirements, then you do not need to file a new Form 4029. Filling out 1040x Effective date of exemption. Filling out 1040x   An approved exemption from SE tax generally is effective for all tax years beginning with the first year you meet the eligibility requirements discussed earlier. Filling out 1040x (For example, if you meet the eligibility requirements in 2011, you file Form 4029 in 2012, and the IRS approves your exemption in 2013, your exemption is effective for tax year 2011 and all later years. Filling out 1040x )   The exemption will end if you fail to meet the eligibility requirements or if the Commissioner of Social Security determines that the sect or division fails to meet them. Filling out 1040x You must notify the IRS within 60 days if you are no longer a member of the religious group, or if you no longer follow the established teachings of this group. Filling out 1040x The exemption will end for the tax year where you or your sect/division first fails to meet the eligibility requirements. Filling out 1040x Refunds of SE tax paid. Filling out 1040x    To get a refund of any SE tax you paid while the exemption was in effect, file Form 1040X. Filling out 1040x For information on filing this form, see Refunds of SE tax under Requesting Exemption—Form 4361, earlier. Filling out 1040x Exemption From FICA Taxes Generally, under FICA, the employer and the employee each pay half of the social security and Medicare tax. Filling out 1040x Both the employee and the employer, if they meet the eligibility requirements discussed earlier, can apply to be exempt from their share of FICA taxes on wages paid by the employer to the employee. Filling out 1040x A partnership in which each partner holds a religious exemption from social security and Medicare is an employer for this purpose. Filling out 1040x If the employer's application is approved, the exemption will apply only to FICA taxes on wages paid to employees who also received an approval of identical applications. Filling out 1040x Information for employers. Filling out 1040x   If you have an approved Form 4029 and you have an employee who has an approved Form 4029, do not report wages you paid to the employee as social security and Medicare wages. Filling out 1040x   If you have an employee who does not have an approved Form 4029, you must withhold the employee's share of social security and Medicare taxes and pay the employer's share. Filling out 1040x Form W-2. Filling out 1040x   When preparing a Form W-2 for an employee with an approved Form 4029, enter “Form 4029” in box 14, “Other. Filling out 1040x ” Do not make any entries in boxes 3, 4, 5, or 6. Filling out 1040x Forms 941, 943, and 944. Filling out 1040x   If both you and your employee have received approved Forms 4029, do not include these exempt wages on the following forms. Filling out 1040x Instead, follow the instructions given below. Filling out 1040x Form 941, Employer's QUARTERLY Federal Tax Return: check the box on line 4 and enter “Form 4029” in the empty space below the check box. Filling out 1040x Form 943, Employer's Annual Federal Tax Return for Agricultural Employees: enter “Form 4029” on the dotted line next to the lines 2 and 4 entry spaces. Filling out 1040x Form 944, Employer's ANNUAL Federal Tax Return: check the box on line 3 and enter “Form 4029” in the empty space below the check box. Filling out 1040x Effective date. Filling out 1040x   An approved exemption from FICA becomes effective on the first day of the first calendar quarter after the quarter in which you file Form 4029. Filling out 1040x The exemption will end on the last day of the calendar quarter before the quarter in which the employer, employee, sect, or division fails to meet the requirements. Filling out 1040x Self-Employment Tax: Figuring Net Earnings There are two methods for figuring your net earnings from self-employment as a member of the clergy or a religious worker. Filling out 1040x Regular method. Filling out 1040x Nonfarm optional method. Filling out 1040x You may find Worksheets 1 through 4 helpful in figuring your net earnings from self-employment. Filling out 1040x Blank worksheets are in the back of this publication, after the Comprehensive Example. Filling out 1040x Regular Method Most people use the regular method. Filling out 1040x Under this method, figure your net earnings from self-employment by totaling your gross income for services you performed as a minister, a member of a religious order who has not taken a vow of poverty, or a Christian Science practitioner or reader. Filling out 1040x Then, subtract your allowable business deductions and multiply the difference by 92. Filling out 1040x 35% (. Filling out 1040x 9235). Filling out 1040x Use Schedule SE (Form 1040) to figure your net earnings and SE tax. Filling out 1040x If you are an employee of a church that elected to exclude you from FICA coverage, figure net earnings by multiplying your church wages shown on Form W-2 by 92. Filling out 1040x 35% (. Filling out 1040x 9235). Filling out 1040x Do not reduce your wages by any business deductions when making this computation. Filling out 1040x Use Schedule SE (Form 1040), Section B, to figure your net earnings and SE tax. Filling out 1040x If you have an approved exemption, or you are automatically exempt, do not include the income or deductions from ministerial services in figuring your net earnings from self-employment. Filling out 1040x Amounts included in gross income. Filling out 1040x   To figure your net earnings from self-employment (on Schedule SE (Form 1040)), include in gross income: Salaries and fees for your ministerial services (discussed earlier), Offerings you receive for marriages, baptisms, funerals, masses, etc. Filling out 1040x , The value of meals and lodging provided to you, your spouse, and your dependents for your employer's convenience, The fair rental value of a parsonage provided to you (including the cost of utilities that are furnished) and the rental allowance (including an amount for payment of utilities) paid to you, and Any amount a church pays toward your income tax or SE tax, other than withholding the amount from your salary. Filling out 1040x This amount is also subject to income tax. Filling out 1040x   For the income tax treatment of items (2) and (4), see Income Tax: Income and Expenses , later. Filling out 1040x Example. Filling out 1040x Pastor Roger Adams receives an annual salary of $39,000 as a full-time minister. Filling out 1040x The $39,000 includes $5,000 that is designated as a rental allowance to pay utilities. Filling out 1040x His church owns a parsonage that has a fair rental value of $12,000 per year. Filling out 1040x The church gives Pastor Adams the use of the parsonage. Filling out 1040x He is not exempt from SE tax. Filling out 1040x He must include $51,000 ($39,000 plus $12,000) when figuring his net earnings for SE tax purposes. Filling out 1040x The results would be the same if, instead of the use of the parsonage and receipt of the rental allowance for utilities, Pastor Adams had received an annual salary of $51,000 of which $17,000 ($5,000 plus $12,000) per year was designated as a rental allowance. Filling out 1040x Overseas duty. Filling out 1040x   Your net earnings from self-employment are determined without any foreign earned income exclusion or the foreign housing exclusion or deduction if you are a U. Filling out 1040x S. Filling out 1040x citizen or resident alien serving abroad and living in a foreign country. Filling out 1040x   For information on excluding foreign earned income or the foreign housing amount, see Publication 54. Filling out 1040x Example. Filling out 1040x Diane Jones was the minister of a U. Filling out 1040x S. Filling out 1040x church in Mexico. Filling out 1040x She earned $35,000 in that position and was able to exclude it all for income tax purposes under the foreign earned income exclusion. Filling out 1040x The United States does not have a social security agreement with Mexico, so Mrs. Filling out 1040x Jones is subject to U. Filling out 1040x S. Filling out 1040x SE tax and must include $35,000 when figuring net earnings from self-employment. Filling out 1040x Specified U. Filling out 1040x S. Filling out 1040x possessions. Filling out 1040x    The exclusion from gross income for amounts derived from American Samoa or Puerto Rico does not apply in computing net earnings from self-employment. Filling out 1040x Also see Residents of Puerto Rico, the U. Filling out 1040x S. Filling out 1040x Virgin Islands, Guam, the CNMI, and American Samoa , earlier, under U. Filling out 1040x S. Filling out 1040x Citizens and Resident and Nonresident Aliens. Filling out 1040x Amounts not included in gross income. Filling out 1040x   Do not include the following amounts in gross income when figuring your net earnings from self-employment. Filling out 1040x Offerings that others made to the church. Filling out 1040x Contributions by your church to a tax-sheltered annuity plan set up for you, including any salary reduction contributions (elective deferrals) that are not included in your gross income. Filling out 1040x Pension payments or retirement allowances you receive for your past ministerial services. Filling out 1040x The rental value of a parsonage or a parsonage allowance provided to you after you retire. Filling out 1040x Allowable deductions. Filling out 1040x   When figuring your net earnings from self-employment, deduct all your expenses related to your ministerial services performed as a self-employed person. Filling out 1040x These are ministerial expenses you incurred while working other than as a common-law employee of the church. Filling out 1040x They include expenses incurred in performing marriages and baptisms, and in delivering speeches. Filling out 1040x Deduct these expenses on Schedule C or C-EZ (Form 1040), and carry the net amount to line 2 of Schedule SE (Form 1040), Section A or B. Filling out 1040x   Wages earned as a common-law employee (explained earlier) of a church are generally subject to self-employment tax unless an exemption is requested, as discussed earlier under Exemption From Self-Employment (SE) Tax . Filling out 1040x Subtract any allowable expenses (including unreimbursed employee business expenses) from those wages, include the net amount on line 2 of Schedule SE (Form 1040), Section A or B, and attach an explanation. Filling out 1040x Do not complete Schedule C or C-EZ (Form 1040). Filling out 1040x However, for income tax purposes, the expenses are allowed only as an itemized deduction on Schedule A (Form 1040) to the extent they exceed 2% of adjusted gross income. Filling out 1040x Employee reimbursement arrangements. Filling out 1040x   If you received an advance, allowance, or reimbursement for your employee expenses, how you report this amount and your employee expenses depends on whether your employer reimbursed you under an accountable plan or a nonaccountable plan. Filling out 1040x Ask your employer if you are not sure if it reimburses you using an accountable or a nonaccountable plan. Filling out 1040x Accountable plans. Filling out 1040x   To be an accountable plan, your employer's reimbursement arrangement must include all three of the following rules. Filling out 1040x Your expenses must have a business connection—that is, you must have paid or incurred deductible expenses while performing services as an employee of your employer. Filling out 1040x You must adequately account to your employer for these expenses within a reasonable period of time. Filling out 1040x You must return any excess reimbursement or allowance within a reasonable period of time. Filling out 1040x   The reimbursement is not reported on your Form W-2. Filling out 1040x Generally, if your expenses equal your reimbursement, you have no deduction. Filling out 1040x If your expenses are more than your reimbursement, you can deduct your excess expenses for SE tax and income tax purposes. Filling out 1040x Nonaccountable plan. Filling out 1040x   A nonaccountable plan is a reimbursement arrangement that does not meet all three of the rules listed under Accountable plans above. Filling out 1040x In addition, even if your employer has an accountable plan, the following payments will be treated as being paid under a nonaccountable plan. Filling out 1040x Excess reimbursements you fail to return to your employer. Filling out 1040x Reimbursement of nondeductible expenses related to your employer's business. Filling out 1040x   Your employer will combine any reimbursement paid to you under a nonaccountable plan with your wages, salary, or other compensation and report the combined total in box 1 of your Form W-2. Filling out 1040x Since reimbursements under a nonaccountable plan are included in your gross income, you can deduct your related expenses (for SE tax and income tax purposes) regardless of whether they are more than, less than, or equal to your reimbursement. Filling out 1040x   For more information on accountable and nonaccountable plans, see Publication 463, Travel, Entertainment, Gift, and Car Expenses. Filling out 1040x Married Couple Missionary Team If both spouses are duly ordained, commissioned, or licensed ministers of a church and have an agreement that each will perform specific services for which they are paid jointly or separately, they must divide the self-employment income according to the agreement. Filling out 1040x If the agreement is with one spouse only and the other spouse is not paid for any specific duties, amounts received for their services are included only in the self-employment income of the spouse having the agreement. Filling out 1040x Earnings Subject to SE Tax For 2013, the maximum net earnings from self-employment subject to social security (old age, survivors, and disability insurance) tax is $113,700 minus any wages and tips you earned that were subject to social security tax. Filling out 1040x The tax rate for the social security part is 12. Filling out 1040x 4%. Filling out 1040x In addition, all of your net earnings are subject to the Medicare (hospital insurance) part of the SE tax. Filling out 1040x This tax rate is 2. Filling out 1040x 9%. Filling out 1040x The combined self-employment tax rate is 15. Filling out 1040x 3%. Filling out 1040x Additional Medicare Tax. Filling out 1040x   Beginning in 2013, a 0. Filling out 1040x 9% Additional Medicare Tax applies to Medicare wages, railroad retirement (RRTA) compensation, and self-employment income that are more than: $125,000 if married filing separately, $250,000 if married filing jointly, or $200,000 for any other filing status. Filling out 1040x Medicare wages and self-employment income are combined to determine if income exceeds the threshold. Filling out 1040x A self-employment loss is not considered for purposes of this tax. Filling out 1040x RRTA compensation is separately compared to the threshold. Filling out 1040x For more information, see Form 8959, Additional Medicare Tax, and its separate instructions. Filling out 1040x Nonfarm Optional Method You may be able to use the nonfarm optional method for figuring your net earnings from self-employment. Filling out 1040x In general, the nonfarm optional method is intended to permit continued coverage for social security and Medicare purposes when your income for the tax year is low. Filling out 1040x You may use the nonfarm optional method if you meet all the following tests. Filling out 1040x You are self-employed on a regular basis. Filling out 1040x You meet this test if your actual net earnings from self-employment were $400 or more in at least 2 of the 3 tax years before the one for which you use this method. Filling out 1040x The net earnings can be from either farm or nonfarm earnings or both. Filling out 1040x You have used this method less than 5 prior years. Filling out 1040x (There is a 5-year lifetime limit. Filling out 1040x ) The years do not have to be consecutive. Filling out 1040x Your net nonfarm profits were: Less than $5,024, and Less than 72. Filling out 1040x 189% of your gross nonfarm income. Filling out 1040x If you meet all three tests, use Table 3 to figure your net earnings from self-employment under the nonfarm optional method. Filling out 1040x Table 3. Filling out 1040x Figuring Nonfarm Net Earnings IF your gross nonfarm income is . Filling out 1040x . Filling out 1040x . Filling out 1040x THEN your net earnings are equal to . Filling out 1040x . Filling out 1040x . Filling out 1040x $6,960 or less Two-thirds of your gross nonfarm income. Filling out 1040x More than $6,960 $4,640. Filling out 1040x Actual net earnings. Filling out 1040x   Multiply your total earnings subject to SE tax by 92. Filling out 1040x 35% (. Filling out 1040x 9235) to get actual net earnings. Filling out 1040x Actual net earnings are equivalent to net earnings under the “Regular Method. Filling out 1040x ” More information. Filling out 1040x   For more information on the nonfarm optional method, see Publication 334, Tax Guide for Small Business, and the Schedule SE (Form 1040) instructions. Filling out 1040x Income Tax: Income and Expenses Some income and expense items are treated the same for both income tax and SE tax purposes and some are treated differently. Filling out 1040x Note. Filling out 1040x For purposes of this section, references to members of the clergy are only to ministers or members of a religious order. Filling out 1040x Income Items The tax treatment of offerings and fees, outside earnings, rental allowances, rental value of a parsonage, earnings of members of religious orders, and foreign earned income is discussed here. Filling out 1040x Offerings and Fees If you are a member of the clergy, you must include in your income offerings and fees you receive for marriages, baptisms, funerals, masses, etc. Filling out 1040x , in addition to your salary. Filling out 1040x If the offering is made to the religious institution, it is not taxable to you. Filling out 1040x Outside Earnings If you are a member of a religious organization and you give your outside earnings to the organization, you still must include the earnings in your income. Filling out 1040x However, you may be entitled to a charitable contribution deduction for the amount paid to the organization. Filling out 1040x For more information, see Publication 526. Filling out 1040x Exclusion of Rental Allowance and Fair Rental Value of a Parsonage Ordained, commissioned, or licensed ministers of the gospel may be able to exclude from income tax the rental allowance or fair rental value of a parsonage that is provided to them as pay for their services. Filling out 1040x Services include: Ministerial services, discussed earlier, Administrative duties and teaching at theological seminaries, and The ordinary duties of a minister performed as an employee of the United States (other than as a chaplain in the Armed Forces), a state, possession, political subdivision, or the District of Columbia. Filling out 1040x This exclusion applies only for income tax purposes. Filling out 1040x It does not apply for SE tax purposes, as discussed earlier under Amounts included in gross income under Self-Employment Tax: Figuring Net Earnings. Filling out 1040x Designation requirement. Filling out 1040x   The church or organization that employs you must officially designate the payment as a housing allowance before it makes the payment. Filling out 1040x It must designate a definite amount. Filling out 1040x It cannot determine the amount of the housing allowance at a later date. Filling out 1040x If the church or organization does not officially designate a definite amount as a housing allowance, you must include your total salary in your income. Filling out 1040x   If you are employed and paid by a local congregation, a resolution by a national church agency of your denomination does not effectively designate a housing allowance for you. Filling out 1040x The local congregation must officially designate the part of your salary that is a housing allowance. Filling out 1040x However, a resolution of a national church agency can designate your housing allowance if you are directly employed by the national agency. Filling out 1040x Rental allowances. Filling out 1040x   If you receive in your salary an amount officially designated as a rental allowance (including an amount to pay utility costs), you can exclude the allowance from your gross income if: You use the amount to provide or rent a home, and The amount is not more than reasonable pay for your services. Filling out 1040x   The amount you exclude cannot be more than the fair rental value of the home, including furnishings, plus the cost of utilities. Filling out 1040x Fair rental value of parsonage. Filling out 1040x   You can exclude from gross income the fair rental value of a house or parsonage, including utilities, furnished to you as part of your earnings. Filling out 1040x However, the exclusion cannot be more than the reasonable pay for your services. Filling out 1040x If you pay for the utilities, you can exclude any allowance designated for utility costs, up to your actual cost. Filling out 1040x Example. Filling out 1040x Rev. Filling out 1040x Joanna Baker is a full-time minister. Filling out 1040x The church allows her to use a parsonage that has an annual fair rental value of $24,000. Filling out 1040x The church pays her an annual salary of $67,000, of which $7,500 is designated for utility costs. Filling out 1040x Her actual utility costs during the year were $7,000. Filling out 1040x For income tax purposes, Rev. Filling out 1040x Baker excludes $31,000 from gross income ($24,000 fair rental value of the parsonage plus $7,000 from the allowance for utility costs). Filling out 1040x She will report $60,000 ($59,500 salary plus $500 of unused utility allowance). Filling out 1040x Her income for SE tax purposes, however, is $91,000 ($67,000 salary + $24,000 fair rental value of the parsonage). Filling out 1040x Home ownership. Filling out 1040x   If you own your home and you receive as part of your salary a housing or rental allowance, you may exclude from gross income the smallest of: The amount actually used to provide a home, The amount officially designated as a rental allowance, or The fair rental value of the home, including furnishings, utilities, garage, etc. Filling out 1040x Excess rental allowance. Filling out 1040x   You must include in gross income the amount of any rental allowance that is more than the smallest of: Your reasonable salary, The fair rental value of the home plus utilities, or The amount actually used to provide a home. Filling out 1040x   Include in the total on Form 1040, line 7. Filling out 1040x On the dotted line next to line 7, enter “Excess allowance” and the amount. Filling out 1040x You may deduct the home mortgage interest and real estate taxes paid on your home even though you pay all or part of those expenses with funds you get through a tax-free rental or parsonage allowance. Filling out 1040x However, you can only deduct these expenses as itemized deductions on Schedule A (Form 1040). Filling out 1040x Retired ministers. Filling out 1040x   If you are a retired minister, you can exclude from your gross income the rental value of a home (plus utilities) furnished to you by your church as a part of your pay for past services, or the part of your pension that was designated as a rental allowance. Filling out 1040x However, a minister's surviving spouse cannot exclude the rental value unless the rental value is for ministerial services he or she performs or performed. Filling out 1040x Teachers or administrators. Filling out 1040x   If you are a minister employed as a teacher or administrator by a church school, college, or university, you are performing ministerial services for purposes of the housing exclusion. Filling out 1040x However, if you perform services as a teacher or administrator on the faculty of a nonchurch college, you cannot exclude from your income a housing allowance or the value of a home that the college provides to you. Filling out 1040x    If you live in faculty lodging as an employee of an educational institution or academic health center, all or part of the value of that lodging may be nontaxable under a different rule. Filling out 1040x In Publication 525, see Faculty lodging in the discussion on meals and lodging under Fringe Benefits. Filling out 1040x   If you serve as a minister of music or minister of education, or serve in an administrative or other function of your religious organization, but are not authorized to perform substantially all of the religious duties of an ordained minister in your church (even if you are commissioned as a minister of the gospel), the housing exclusion does not apply to you. Filling out 1040x Theological students. Filling out 1040x   If you are a theological student serving a required internship as a part-time or assistant pastor, you cannot exclude a parsonage or rental allowance from your income unless you are ordained, commissioned, or licensed as a minister. Filling out 1040x Traveling evangelists. Filling out 1040x   You can exclude a designated rental allowance from out-of-town churches if you meet all of the following requirements. Filling out 1040x You are an ordained minister. Filling out 1040x You perform ministerial services at churches located away from your community. Filling out 1040x You actually use the rental allowance to maintain your permanent home. Filling out 1040x Cantors. Filling out 1040x   If you have a bona fide commission and your congregation employs you on a full-time basis to perform substantially all the religious functions of the Jewish faith, you can exclude a rental allowance from your gross income. Filling out 1040x Earnings—Members of Religious Orders Your earnings may be exempt from both income tax and SE tax if you are a member of a religious order who: Has taken a vow of poverty, Receives earnings for services performed as an agent of the order and in the exercise of duties required by the order, and Renounces the earnings and gives them to the order. Filling out 1040x See Members of Religious Orders , earlier, under Social Security Coverage. Filling out 1040x Foreign Earned Income Certain income may be exempt from income tax if you work in a foreign country or in a specified U. Filling out 1040x S. Filling out 1040x possession. Filling out 1040x Publication 54 discusses the foreign earned income exclusion. Filling out 1040x Publication 570, Tax Guide for Individuals With Income From U. Filling out 1040x S. Filling out 1040x Possessions, covers the rules for taxpayers with income from U. Filling out 1040x S. Filling out 1040x possessions. Filling out 1040x You can get these free publications from the Internal Revenue Service at IRS. Filling out 1040x gov or from most U. Filling out 1040x S. Filling out 1040x Embassies or consulates. Filling out 1040x Expense Items The tax treatment of ministerial trade or business expenses, expenses allocable to tax-free income, and health insurance costs is discussed here. Filling out 1040x Ministerial Trade or Business Expenses as an Employee When you figure your income tax, you must itemize your deductions on Schedule A (Form 1040) to claim allowable deductions for ministerial trade or business expenses incurred while working as an employee. Filling out 1040x You also may have to file Form 2106, Employee Business Expenses (or Form 2106-EZ, Unreimbursed Employee Business Expenses). Filling out 1040x You claim these expenses as miscellaneous itemized deductions that are subject to the 2%-of-adjusted-gross-income (AGI) limit. Filling out 1040x See Publication 529 for more information on this limit. Filling out 1040x However, you cannot deduct any of your employee business expenses that are allocable to tax-free income (discussed next). Filling out 1040x Expenses Allocable to Tax-Free Income If you receive a rental or parsonage allowance that is exempt from income tax (tax free), you must allocate a portion of the expenses of operating your ministry to that tax-free income. Filling out 1040x You cannot deduct the portion of your expenses that you allocate to your tax-free rental or parsonage allowance. Filling out 1040x Exception. Filling out 1040x   This rule does not apply to your deductions for home mortgage interest or real estate taxes on your home. Filling out 1040x Figuring the allocation. Filling out 1040x   Figure the portion of your otherwise deductible expenses that you cannot deduct (because you must allocate that portion to tax-free income) by multiplying the expenses by the following fraction:      Tax-free rental or parsonage allowance     All income (taxable and tax free) earned from your ministry           When figuring the allocation, include the income and expenses related to the ministerial duties you perform both as an employee and as a self-employed person. Filling out 1040x    Reduce your otherwise deductible expenses only in figuring your income tax, not your SE tax. Filling out 1040x Example. Filling out 1040x Rev. Filling out 1040x Charles Ashford received $40,000 in earnings for ministerial services consisting of a $28,000 salary for ministerial services performed as an employee, $2,000 for weddings and baptisms performed as a self-employed person, and a $10,000 tax-free parsonage allowance. Filling out 1040x He incurred $4,000 of unreimbursed expenses connected with his earnings for ministerial services. Filling out 1040x $3,500 of the $4,000 is for employee expenses related to his ministerial salary, and $500 is related to the weddings and baptisms he performed as a self-employed person. Filling out 1040x Rev. Filling out 1040x Ashford figures the nondeductible (tax-free) portion of expenses related to his ministerial salary as follows: ($10,000 ÷ $40,000) x $3,500 = $875   Rev. Filling out 1040x Ashford figures the nondeductible (tax-free) portion of expenses related to his wedding and baptism income as follows: ($10,000 ÷ $40,000) x $500 = $125 Required statement. Filling out 1040x   If you receive a tax-free rental or parsonage allowance and have ministerial expenses, attach a statement to your tax return. Filling out 1040x The statement must contain all of the following information. Filling out 1040x A list of each item of taxable ministerial income by source (such as wages, salary, weddings, baptisms, etc. Filling out 1040x ) plus the amount. Filling out 1040x A list of each item of tax-free ministerial income by source (parsonage allowance) plus the amount. Filling out 1040x A list of each item of otherwise deductible ministerial expenses plus the amount. Filling out 1040x How you figured the nondeductible part of your otherwise deductible expenses. Filling out 1040x A statement that the other deductions claimed on your tax return are not allocable to your tax-free income. Filling out 1040x   See the attachments prepared for the Comprehensive Example , later. Filling out 1040x Following the example, you will find blank worksheets for your own use. Filling out 1040x Health Insurance Costs of Self-Employed Ministers If you are self-employed, you may be able to deduct the amount you paid in 2013 for medical and dental insurance and qualified long-term care insurance for you, your spouse, and your dependents. Filling out 1040x If you qualify, you can take this deduction as an adjustment to income on Form 1040, line 29. Filling out 1040x See the Instructions for Form 1040 to figure your deduction. Filling out 1040x The following special rules apply to the self-employed health insurance deduction. Filling out 1040x You cannot take a medical expense deduction on Schedule A (Form 1040) for any expenses you claim for purposes of the self-employed health insurance deduction. Filling out 1040x You cannot take the deduction for any month you are eligible to participate in a subsidized plan of your (or your spouse's) employer. Filling out 1040x The deduction cannot exceed your net earnings from the business under which the insurance plan is established. Filling out 1040x Your net earnings under this rule do not include the income you earned as a common-law employee (discussed earlier) of a church. Filling out 1040x More information. Filling out 1040x   For more information about the self-employed health insurance deduction, see chapter 6 in Publication 535. Filling out 1040x Deduction for SE Tax You can deduct one-half of your SE tax in figuring adjusted gross income. Filling out 1040x This is an income tax deduction only, on Form 1040, line 27. Filling out 1040x Do not claim this deduction in figuring net earnings from self-employment subject to SE tax. Filling out 1040x Income Tax Withholding and Estimated Tax The federal income tax is a pay-as-you-go tax. Filling out 1040x You must pay the tax as you earn or receive income during the year. Filling out 1040x An employee usually has income tax withheld from his or her wages or salary. Filling out 1040x However, your salary is not subject to federal income tax withholding if both of the following conditions apply. Filling out 1040x You are a duly ordained, commissioned, or licensed minister, a member of a religious order (who has not taken a vow of poverty), or a Christian Science practitioner or reader. Filling out 1040x Your salary is for ministerial services (see Ministerial Services , earlier). Filling out 1040x If your salary is not subject to withholding, or if you do not pay enough tax through withholding, you may need to make estimated tax payments to avoid penalties for not paying enough tax as you earn your income. Filling out 1040x You generally must make estimated tax payments if you expect to owe taxes, including SE tax, of $1,000 or more, when you file your return. Filling out 1040x Determine your estimated tax by using the worksheets in Publication 505, Tax Withholding and Estimated Tax. Filling out 1040x Pay the entire estimated tax for 2014 or the first installment by April 15, 2014. Filling out 1040x See Form 1040-ES for the different payment methods. Filling out 1040x The April 15 date applies whether or not your tax home and your abode are outside the United States and Puerto Rico. Filling out 1040x For more information, see chapter 2 of Publication 505. Filling out 1040x If you perform your services as a common-law employee of the church and your salary is not subject to income tax withholding, you can enter into a voluntary withholding agreement with the church to cover any income and SE tax that may be due. Filling out 1040x Filing Your Return You must file an income tax return for 2013 if your gross income was at least the amount shown in the third column of Table 4 above. Filling out 1040x Table 4. Filling out 1040x 2013 Filing Requirements for Most Taxpayers IF your filing status is . Filling out 1040x . Filling out 1040x . Filling out 1040x AND at the end of 2013 you were* . Filling out 1040x . Filling out 1040x . Filling out 1040x THEN file a return if your gross income** was at least . Filling out 1040x . Filling out 1040x . Filling out 1040x single under age 65 65 or older   $10,000 $11,500   married filing jointly*** under 65 (both spouses) 65 or older (one spouse) 65 or older (both spouses)   $20,000  $21,200  $22,400   married filing separately any age   $3,900   head of household under 65 65 or older   $12,850 $14,350   qualifying widow(er) with dependent child under 65 65 or older   $16,100  $17,300   * If you were born on January 1, 1949, you are considered to be age 65 at the end of 2013. Filling out 1040x ** Gross income means all income you received in the form of money, goods, property, and services that is not exempt from tax, including any income from sources outside the United States or from the sale of your main home (even if you can exclude part or all of it). Filling out 1040x Do not include any social security benefits unless (a) you are married filing a separate return and you lived with your spouse at any time in 2013, or (b) one-half of your social security benefits plus your other gross income and any tax-exempt interest is more than $25,000 ($32,000 if married filing jointly). Filling out 1040x If (a) or (b) applies, see the instructions for Form 1040, lines 20a and 20b, to figure the taxable part of social security benefits you must include in gross income. Filling out 1040x Gross income includes gains, but not losses, reported on Form 8949 or Schedule D (Form 1040). Filling out 1040x Gross income from a business means, for example, the amount on Schedule C (Form 1040), line 7, or Schedule F (Form 1040), line 9. Filling out 1040x But, in figuring gross income, do not reduce your income by any losses, including any loss on Schedule C (Form 1040), line 7, or Schedule F (Form 1040), line 9. Filling out 1040x *** If you did not live with your spouse at the end of 2013 (or on the date your spouse died) and your gross income was at least $3,900, you must file a return regardless of your age. Filling out 1040x Additional requirements. Filling out 1040x   Even if your income was less than the amount shown in Table 4, you must file an income tax return on Form 1040, and attach a completed Schedule SE (Form 1040), if:    You are not exempt from SE tax, and you have net earnings from self-employment (discussed earlier under Self-Employment Tax: Figuring Net Earnings ) of $400 or more in the tax year, You are exempt from SE tax on earnings from ministerial services and you have $400 or more of other net earnings subject to SE tax, or You had wages of $108. Filling out 1040x 28 or more from an electing church or church-controlled organization (see Coverage of Religious Workers (Church Employees) , earlier, under Social Security Coverage). Filling out 1040x Self-employment tax. Filling out 1040x   If you are liable for SE tax, you must file Schedule SE (Form 1040) with your return. Filling out 1040x   If you filed Form 4361 and did not receive approval from the IRS, you must pay SE tax on your ministerial earnings, as explained earlier. Filling out 1040x You should report ministerial earnings and expenses from nonemployee ministerial services on Schedule C or C-EZ (Form 1040). Filling out 1040x You should then carry the net amount over to line 2 of Schedule SE (Form 1040), Section A or B. Filling out 1040x However, if you were a duly ordained minister who was an employee of a church and you must pay SE tax on the wages you earned for those services, do not report those wages on Schedule C or C-EZ (Form 1040). Filling out 1040x Instead, report those wages less any allowable expenses (including any unreimbursed employee business expenses), on line 2 of Schedule SE (Form 1040), Section A or B, and attach an explanation. Filling out 1040x Note. Filling out 1040x For income tax purposes, the unreimbursed employee business expenses that you incurred as an employee of the church and subtracted from your wages on line 2 of Schedule SE (Form 1040) are allowed only as an itemized deduction on Schedule A (Form 1040) if they exceed 2% of your adjusted gross income. Filling out 1040x You cannot deduct these expenses on Schedule C or C-EZ (Form 1040) as a trade or business expense. Filling out 1040x Exemption from SE tax. Filling out 1040x   If you filed Form 4361 and received IRS approval not to be taxed on your ministerial earnings, and you do not have any other income subject to SE tax, do not file Schedule SE (Form 1040). Filling out 1040x Instead, enter “Exempt—Form 4361” on the dotted line next to Form 1040, line 56. Filling out 1040x However, if you had net earnings from another trade or business of $400 or more subject to SE tax, see line A at the top of Schedule SE (Form 1040), Section B. Filling out 1040x    If you filed Form 4029 and received IRS approval not to be taxed on those earnings, and you do not have any other income subject to SE tax, do not file Schedule SE (Form 1040). Filling out 1040x Instead, enter “Exempt—Form 4029” on the dotted line next to Form 1040, line 56. Filling out 1040x More information. Filling out 1040x   For more information on filing your return, including when and where to file it, see the Instructions for Form 1040. Filling out 1040x Retirement Savings Arrangements Retirement savings arrangements are plans that offer you a tax-favored way to save for your retirement. Filling out 1040x You generally can deduct your contributions to the plan. Filling out 1040x Your contributions and the earnings on them are not taxed until they are distributed. Filling out 1040x Retirement plans for the self-employed. Filling out 1040x   To set up one of the following plans you must be self-employed. Filling out 1040x SEP (simplified employee pension) plan. Filling out 1040x SIMPLE (savings incentive match plan for employees) plan. Filling out 1040x Qualified retirement plan (also called a Keogh or H. Filling out 1040x R. Filling out 1040x 10 plan). Filling out 1040x   The common-law rules determine whether you are an employee or a self-employed person for purposes of setting up a retirement plan. Filling out 1040x See Employment status for other tax purposes under Coverage of Members of the Clergy, earlier. Filling out 1040x This result is true even if your compensation for ministerial services (defined earlier) is subject to SE tax. Filling out 1040x   For example, if a congregation pays you a salary for performing ministerial services and you are subject to the congregation's control, you generally are a common-law employee. Filling out 1040x You are not a self-employed person for purposes of setting up a retirement plan. Filling out 1040x This result is true even if your salary is subject to SE tax. Filling out 1040x   On the other hand, amounts received directly from members of the congregation, such as fees for performing marriages, baptisms, or other personal services that you report on Schedule C or C-EZ (Form 1040), are earnings from self-employment for all tax purposes. Filling out 1040x   For more information on establishing a SEP, SIMPLE, or qualified retirement plan, see Publication 560, Retirement Plans for Small Business (SEP, SIMPLE, and Qualified Plans). Filling out 1040x Individual retirement arrangements (IRAs). Filling out 1040x   The traditional IRA and the Roth IRA are two individual retirement arrangements you can use to save money for your retirement. Filling out 1040x Generally, your maximum contribution for 2013 to either of these plans (or to a combination of the two) is the smaller of your taxable compensation or $5,500 ($6,500 if you are age 50 or older). Filling out 1040x   However, your maximum contribution to a Roth IRA will be further reduced or eliminated if your adjusted gross income is above a certain amount. Filling out 1040x You cannot deduct Roth IRA contributions, but if you satisfy certain requirements, all earnings in the Roth IRA are tax free and neither your nondeductible contributions nor any earnings on them are taxable when distributed. Filling out 1040x   If you contribute to a traditional IRA, your contribution may be deductible. Filling out 1040x However, your deduction may be reduced or eliminated if you or your spouse is covered by an employer retirement plan (including, but not limited to, a SEP, SIMPLE, or qualified retirement plan). Filling out 1040x   For more information on IRAs, see Publication 590. Filling out 1040x Tax-sheltered annuity plans. Filling out 1040x   Church employees, members of religious orders, and duly ordained, commissioned, or licensed ministers working as ministers or chaplains can participate in tax-sheltered annuity (403(b)) plans. Filling out 1040x For more