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Free 1040 Ez

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Free 1040 ez Publication 15 - Main Content Table of Contents 1. Free 1040 ez Employer Identification Number (EIN) 2. Free 1040 ez Who Are Employees?Relief provisions. Free 1040 ez Business Owned and Operated by Spouses 3. Free 1040 ez Family Employees 4. Free 1040 ez Employee's Social Security Number (SSN)Registering for SSNVS. Free 1040 ez 5. Free 1040 ez Wages and Other CompensationAccountable plan. Free 1040 ez Nonaccountable plan. Free 1040 ez Per diem or other fixed allowance. Free 1040 ez 50% test. Free 1040 ez Health Savings Accounts and medical savings accounts. Free 1040 ez Nontaxable fringe benefits. Free 1040 ez When fringe benefits are treated as paid. Free 1040 ez Valuation of fringe benefits. Free 1040 ez Withholding on fringe benefits. Free 1040 ez Depositing taxes on fringe benefits. Free 1040 ez 6. Free 1040 ez TipsOrdering rule. Free 1040 ez 7. Free 1040 ez Supplemental Wages 8. Free 1040 ez Payroll Period 9. Free 1040 ez Withholding From Employees' WagesIncome Tax Withholding Social Security and Medicare Taxes Part-Time Workers 10. Free 1040 ez Required Notice to Employees About the Earned Income Credit (EIC) 11. Free 1040 ez Depositing TaxesWhen To Deposit How To Deposit Deposit Penalties 12. Free 1040 ez Filing Form 941 or Form 944 13. Free 1040 ez Reporting Adjustments to Form 941 or Form 944Current Period Adjustments Prior Period Adjustments Wage Repayments 14. Free 1040 ez Federal Unemployment (FUTA) TaxSuccessor employer. Free 1040 ez Household employees. Free 1040 ez When to deposit. Free 1040 ez Household employees. Free 1040 ez Electronic filing by reporting agents. Free 1040 ez 16. Free 1040 ez How To Use the Income Tax Withholding TablesWage Bracket Method Percentage Method Alternative Methods of Income Tax Withholding How To Get Tax Help 1. Free 1040 ez Employer Identification Number (EIN) If you are required to report employment taxes or give tax statements to employees or annuitants, you need an EIN. Free 1040 ez The EIN is a nine-digit number the IRS issues. Free 1040 ez The digits are arranged as follows: 00-0000000. Free 1040 ez It is used to identify the tax accounts of employers and certain others who have no employees. Free 1040 ez Use your EIN on all of the items you send to the IRS and SSA. Free 1040 ez For more information, see Publication 1635, Employer Identification Number: Understanding Your EIN. Free 1040 ez If you do not have an EIN, you may apply for one online. Free 1040 ez Go to the IRS. Free 1040 ez gov and click on the Apply for an EIN Online link under Tools. Free 1040 ez You may also apply for an EIN by calling 1-800-829-4933, or you can fax or mail Form SS-4, Application for Employer Identification Number, to the IRS. Free 1040 ez Do not use an SSN in place of an EIN. Free 1040 ez You should have only one EIN. Free 1040 ez If you have more than one and are not sure which one to use, call 1-800-829-4933 or 1-800-829-4059 (TDD/TTY for persons who are deaf, hard of hearing, or have a speech disability). Free 1040 ez Give the numbers you have, the name and address to which each was assigned, and the address of your main place of business. Free 1040 ez The IRS will tell you which number to use. Free 1040 ez If you took over another employer's business (see Successor employer in section 9), do not use that employer's EIN. Free 1040 ez If you have applied for an EIN but do not have your EIN by the time a return is due, file a paper return and write “Applied For” and the date you applied for it in the space shown for the number. Free 1040 ez 2. Free 1040 ez Who Are Employees? Generally, employees are defined either under common law or under statutes for certain situations. Free 1040 ez See Publication 15-A for details on statutory employees and nonemployees. Free 1040 ez Employee status under common law. Free 1040 ez   Generally, a worker who performs services for you is your employee if you have the right to control what will be done and how it will be done. Free 1040 ez This is so even when you give the employee freedom of action. Free 1040 ez What matters is that you have the right to control the details of how the services are performed. Free 1040 ez See Publication 15-A for more information on how to determine whether an individual providing services is an independent contractor or an employee. Free 1040 ez   Generally, people in business for themselves are not employees. Free 1040 ez For example, doctors, lawyers, veterinarians, and others in an independent trade in which they offer their services to the public are usually not employees. Free 1040 ez However, if the business is incorporated, corporate officers who work in the business are employees of the corporation. Free 1040 ez   If an employer-employee relationship exists, it does not matter what it is called. Free 1040 ez The employee may be called an agent or independent contractor. Free 1040 ez It also does not matter how payments are measured or paid, what they are called, or if the employee works full or part time. Free 1040 ez Statutory employees. Free 1040 ez   If someone who works for you is not an employee under the common law rules discussed earlier, do not withhold federal income tax from his or her pay, unless backup withholding applies. Free 1040 ez Although the following persons may not be common law employees, they are considered employees by statute for social security, Medicare, and FUTA tax purposes under certain conditions. Free 1040 ez An agent (or commission) driver who delivers food, beverages (other than milk), laundry, or dry cleaning for someone else. Free 1040 ez A full-time life insurance salesperson who sells primarily for one company. Free 1040 ez A homeworker who works by guidelines of the person for whom the work is done, with materials furnished by and returned to that person or to someone that person designates. Free 1040 ez A traveling or city salesperson (other than an agent-driver or commission-driver) who works full time (except for sideline sales activities) for one firm or person getting orders from customers. Free 1040 ez The orders must be for merchandise for resale or supplies for use in the customer's business. Free 1040 ez The customers must be retailers, wholesalers, contractors, or operators of hotels, restaurants, or other businesses dealing with food or lodging. Free 1040 ez    Statutory nonemployees. Free 1040 ez   Direct sellers, qualified real estate agents, and certain companion sitters are, by law, considered nonemployees. Free 1040 ez They are generally treated as self-employed for all federal tax purposes, including income and employment taxes. Free 1040 ez H-2A agricultural workers. Free 1040 ez   On Form W-2, do not check box 13 (Statutory employee), as H-2A workers are not statutory employees. Free 1040 ez Treating employees as nonemployees. Free 1040 ez   You will generally be liable for social security and Medicare taxes and withheld income tax if you do not deduct and withhold these taxes because you treated an employee as a nonemployee. Free 1040 ez You may be able to calculate your liability using special section 3509 rates for the employee share of social security and Medicare taxes and the federal income tax withholding. Free 1040 ez The applicable rates depend on whether you filed required Forms 1099. Free 1040 ez You cannot recover the employee share of social security, or Medicare tax, or income tax withholding from the employee if the tax is paid under section 3509. Free 1040 ez You are liable for the income tax withholding regardless of whether the employee paid income tax on the wages. Free 1040 ez You continue to owe the full employer share of social security and Medicare taxes. Free 1040 ez The employee remains liable for the employee share of social security and Medicare taxes. Free 1040 ez See Internal Revenue Code section 3509 for details. Free 1040 ez Also see the Instructions for Form 941-X. Free 1040 ez   Section 3509 rates are not available if you intentionally disregard the requirement to withhold taxes from the employee or if you withheld income taxes but not social security or Medicare taxes. Free 1040 ez Section 3509 is not available for reclassifying statutory employees. Free 1040 ez See Statutory employees , earlier in this section. Free 1040 ez   If the employer issued required information returns, the section 3509 rates are: For social security taxes; employer rate of 6. Free 1040 ez 2% plus 20% of the employee rate (see the Instructions for Form 941-X). Free 1040 ez For Medicare taxes; employer rate of 1. Free 1040 ez 45% plus 20% of the employee rate of 1. Free 1040 ez 45%, for a total rate of 1. Free 1040 ez 74% of wages. Free 1040 ez For Additional Medicare Tax; 0. Free 1040 ez 18% (20% of the employee rate of 0. Free 1040 ez 9%) of wages subject to Additional Medicare Tax. Free 1040 ez For income tax withholding, the rate is 1. Free 1040 ez 5% of wages. Free 1040 ez   If the employer did not issue required information returns, the section 3509 rates are: For social security taxes; employer rate of 6. Free 1040 ez 2% plus 40% of the employee rate (see the Instructions for Form 941-X). Free 1040 ez For Medicare taxes; employer rate of 1. Free 1040 ez 45% plus 40% of the employee rate of 1. Free 1040 ez 45%, for a total rate of 2. Free 1040 ez 03% of wages. Free 1040 ez For Additional Medicare Tax; 0. Free 1040 ez 36% (40% of the employee rate of 0. Free 1040 ez 9%) of wages subject to Additional Medicare Tax. Free 1040 ez For income tax withholding, the rate is 3. Free 1040 ez 0% of wages. Free 1040 ez Relief provisions. Free 1040 ez   If you have a reasonable basis for not treating a worker as an employee, you may be relieved from having to pay employment taxes for that worker. Free 1040 ez To get this relief, you must file all required federal tax returns, including information returns, on a basis consistent with your treatment of the worker. Free 1040 ez You (or your predecessor) must not have treated any worker holding a substantially similar position as an employee for any periods beginning after 1977. Free 1040 ez See Publication 1976, Do You Qualify for Relief Under Section 530. Free 1040 ez IRS help. Free 1040 ez   If you want the IRS to determine whether a worker is an employee, file Form SS-8, Determination of Worker Status for Purposes of Federal Employment Taxes and Income Tax Withholding. Free 1040 ez Voluntary Classification Settlement Program (VCSP). Free 1040 ez   Employers who are currently treating their workers (or a class or group of workers) as independent contractors or other nonemployees and want to voluntarily reclassify their workers as employees for future tax periods may be eligible to participate in the VCSP if certain requirements are met. Free 1040 ez To apply, use Form 8952, Application for Voluntary Classification Settlement Program (VCSP). Free 1040 ez For more information visit IRS. Free 1040 ez gov and enter “VCSP” in the search box. Free 1040 ez Business Owned and Operated by Spouses If you and your spouse jointly own and operate a business and share in the profits and losses, you are partners in a partnership, whether or not you have a formal partnership agreement. Free 1040 ez See Publication 541, Partnerships, for more details. Free 1040 ez The partnership is considered the employer of any employees, and is liable for any employment taxes due on wages paid to its employees. Free 1040 ez Exception—Qualified joint venture. Free 1040 ez   For tax years beginning after December 31, 2006, the Small Business and Work Opportunity Tax Act of 2007 (Public Law 110-28) provides that a “qualified joint venture,” whose only members are spouses filing a joint income tax return, can elect not to be treated as a partnership for federal tax purposes. Free 1040 ez A qualified joint venture conducts a trade or business where: The only members of the joint venture are spouses who file a joint income tax return, Both spouses materially participate (see Material participation in the Instructions for Schedule C (Form 1040), line G) in the trade or business (mere joint ownership of property is not enough), Both spouses elect to not be treated as a partnership, and The business is co-owned by both spouses and is not held in the name of a state law entity such as a partnership or limited liability company (LLC). Free 1040 ez   To make the election, all items of income, gain, loss, deduction, and credit must be divided between the spouses, in accordance with each spouse's interest in the venture, and reported on separate Schedules C or F as sole proprietors. Free 1040 ez Each spouse must also file a separate Schedule SE to pay self-employment taxes, as applicable. Free 1040 ez   Spouses using the qualified joint venture rules are treated as sole proprietors for federal tax purposes and generally do not need an EIN. Free 1040 ez If employment taxes are owed by the qualified joint venture, either spouse may report and pay the employment taxes due on the wages paid to the employees using the EIN of that spouse's sole proprietorship. Free 1040 ez Generally, filing as a qualified joint venture will not increase the spouses' total tax owed on the joint income tax return. Free 1040 ez However, it gives each spouse credit for social security earnings on which retirement benefits are based and for Medicare coverage without filing a partnership return. Free 1040 ez    Note. Free 1040 ez If your spouse is your employee, not your partner, see One spouse employed by another in section 3. Free 1040 ez   For more information on qualified joint ventures, visit IRS. Free 1040 ez gov and enter “qualified joint venture” in the search box. Free 1040 ez Exception—Community income. Free 1040 ez   If you and your spouse wholly own an unincorporated business as community property under the community property laws of a state, foreign country, or U. Free 1040 ez S. Free 1040 ez possession, you can treat the business either as a sole proprietorship (of the spouse who carried on the business) or a partnership. Free 1040 ez You may still make an election to be taxed as a qualified joint venture instead of a partnership. Free 1040 ez See Exception—Qualified joint venture , earlier. Free 1040 ez 3. Free 1040 ez Family Employees Child employed by parents. Free 1040 ez   Payments for the services of a child under age 18 who works for his or her parent in a trade or business are not subject to social security and Medicare taxes if the trade or business is a sole proprietorship or a partnership in which each partner is a parent of the child. Free 1040 ez If these payments are for work other than in a trade or business, such as domestic work in the parent's private home, they are not subject to social security and Medicare taxes until the child reaches age 21. Free 1040 ez However, see Covered services of a child or spouse , later in this section. Free 1040 ez Payments for the services of a child under age 21 who works for his or her parent, whether or not in a trade or business, are not subject to FUTA tax. Free 1040 ez Payments for the services of a child of any age who works for his or her parent are generally subject to income tax withholding unless the payments are for domestic work in the parent's home, or unless the payments are for work other than in a trade or business and are less than $50 in the quarter or the child is not regularly employed to do such work. Free 1040 ez One spouse employed by another. Free 1040 ez   The wages for the services of an individual who works for his or her spouse in a trade or business are subject to income tax withholding and social security and Medicare taxes, but not to FUTA tax. Free 1040 ez However, the payments for services of one spouse employed by another in other than a trade or business, such as domestic service in a private home, are not subject to social security, Medicare, and FUTA taxes. Free 1040 ez Covered services of a child or spouse. Free 1040 ez   The wages for the services of a child or spouse are subject to income tax withholding as well as social security, Medicare, and FUTA taxes if he or she works for: A corporation, even if it is controlled by the child's parent or the individual's spouse; A partnership, even if the child's parent is a partner, unless each partner is a parent of the child; A partnership, even if the individual's spouse is a partner; or An estate, even if it is the estate of a deceased parent. Free 1040 ez Parent employed by son or daughter. Free 1040 ez   When the employer is a son or daughter employing his or her parent the following rules apply. Free 1040 ez Payments for the services of a parent in the son’s or daughter’s (the employer’s) trade or business are subject to income tax withholding and social security and Medicare taxes. Free 1040 ez Payments for the services of a parent not in the son’s or daughter’s (the employer’s) trade or business are generally not subject to social security and Medicare taxes. Free 1040 ez    Social security and Medicare taxes do apply to payments made to a parent for domestic services if all of the following apply: The parent is employed by his or her son or daughter; The son or daughter (the employer) has a child or stepchild living in the home; The son or daughter (the employer) is a widow or widower, divorced, or living with a spouse who, because of a mental or physical condition, cannot care for the child or stepchild for at least 4 continuous weeks in a calendar quarter; and The child or stepchild is either under age 18 or requires the personal care of an adult for at least 4 continuous weeks in a calendar quarter due to a mental or physical condition. Free 1040 ez   Payments made to a parent employed by his or her child are not subject to FUTA tax, regardless of the type of services provided. Free 1040 ez 4. Free 1040 ez Employee's Social Security Number (SSN) You are required to get each employee's name and SSN and to enter them on Form W-2. Free 1040 ez This requirement also applies to resident and nonresident alien employees. Free 1040 ez You should ask your employee to show you his or her social security card. Free 1040 ez The employee may show the card if it is available. Free 1040 ez Do not accept a social security card that says “Not valid for employment. Free 1040 ez ” A social security number issued with this legend does not permit employment. Free 1040 ez You may, but are not required to, photocopy the social security card if the employee provides it. Free 1040 ez If you do not provide the correct employee name and SSN on Form W-2, you may owe a penalty unless you have reasonable cause. Free 1040 ez See Publication 1586, Reasonable Cause Regulations & Requirements for Missing and Incorrect Name/TINs, for information on the requirement to solicit the employee's SSN. Free 1040 ez Applying for a social security card. Free 1040 ez   Any employee who is legally eligible to work in the United States and does not have a social security card can get one by completing Form SS-5, Application for a Social Security Card, and submitting the necessary documentation. Free 1040 ez You can get Form SS-5 at SSA offices, by calling 1-800-772-1213, or from the SSA website at www. Free 1040 ez socialsecurity. Free 1040 ez gov/online/ss-5. Free 1040 ez html. Free 1040 ez The employee must complete and sign Form SS-5; it cannot be filed by the employer. Free 1040 ez You may be asked to supply a letter to accompany Form SS-5 if the employee has exceeded his or her yearly or lifetime limit for the number of replacement cards allowed. Free 1040 ez Applying for a social security number. Free 1040 ez   If you file Form W-2 on paper and your employee applied for an SSN but does not have one when you must file Form W-2, enter “Applied For” on the form. Free 1040 ez If you are filing electronically, enter all zeros (000-00-000) in the social security number field. Free 1040 ez When the employee receives the SSN, file Copy A of Form W-2c, Corrected Wage and Tax Statement, with the SSA to show the employee's SSN. Free 1040 ez Furnish copies B, C, and 2 of Form W-2c to the employee. Free 1040 ez Up to 25 Forms W-2c for each Form W-3c, Transmittal of Corrected Wage and Tax Statements, may now be filed per session over the Internet, with no limit on the number of sessions. Free 1040 ez For more information, visit the SSA's Employer W-2 Filing Instructions & Information webpage at www. Free 1040 ez socialsecurity. Free 1040 ez gov/employer. Free 1040 ez Advise your employee to correct the SSN on his or her original Form W-2. Free 1040 ez Correctly record the employee's name and SSN. Free 1040 ez   Record the name and number of each employee as they are shown on the employee's social security card. Free 1040 ez If the employee's name is not correct as shown on the card (for example, because of marriage or divorce), the employee should request a corrected card from the SSA. Free 1040 ez Continue to report the employee's wages under the old name until the employee shows you an updated social security card with the new name. Free 1040 ez If the SSA issues the employee a replacement card after a name change, or a new card with a different social security number after a change in alien work status, file a Form W-2c to correct the name/SSN reported for the most recently filed Form W-2. Free 1040 ez It is not necessary to correct other years if the previous name and number were used for years before the most recent Form W-2. Free 1040 ez IRS individual taxpayer identification numbers (ITINs) for aliens. Free 1040 ez   Do not accept an ITIN in place of an SSN for employee identification or for work. Free 1040 ez An ITIN is only available to resident and nonresident aliens who are not eligible for U. Free 1040 ez S. Free 1040 ez employment and need identification for other tax purposes. Free 1040 ez You can identify an ITIN because it is a nine-digit number, beginning with the number “9” with either a “7” or “8” as the fourth digit and is formatted like an SSN (for example, 9NN-7N-NNNN). Free 1040 ez    An individual with an ITIN who later becomes eligible to work in the United States must obtain an SSN. Free 1040 ez If the individual is currently eligible to work in the United States, instruct the individual to apply for an SSN and follow the instructions under Applying for a social security number, earlier. Free 1040 ez Do not use an ITIN in place of an SSN on Form W-2. Free 1040 ez Verification of social security numbers. Free 1040 ez   Employers and authorized reporting agents can use the Social Security Number Verification Service (SSNVS) to instantly verify up to 10 names and SSNs (per screen) at a time, or submit an electronic file of up to 250,000 names and SSNs and usually receive the results the next business day. Free 1040 ez Visit www. Free 1040 ez socialsecurity. Free 1040 ez gov/employer/ssnv. Free 1040 ez htm for more information. Free 1040 ez Registering for SSNVS. Free 1040 ez   You must register online and receive authorization from your employer to use SSNVS. Free 1040 ez To register, visit SSA's website at www. Free 1040 ez ssa. Free 1040 ez gov/employer and click on the Business Services Online link. Free 1040 ez Follow the registration instructions to obtain a user identification (ID) and password. Free 1040 ez You will need to provide the following information about yourself and your company. Free 1040 ez Name. Free 1040 ez SSN. Free 1040 ez Date of birth. Free 1040 ez Type of employer. Free 1040 ez EIN. Free 1040 ez Company name, address, and telephone number. Free 1040 ez Email address. Free 1040 ez   When you have completed the online registration process, SSA will mail a one-time activation code to your employer. Free 1040 ez You must enter the activation code online to use SSNVS. Free 1040 ez 5. Free 1040 ez Wages and Other Compensation Wages subject to federal employment taxes generally include all pay you give to an employee for services performed. Free 1040 ez The pay may be in cash or in other forms. Free 1040 ez It includes salaries, vacation allowances, bonuses, commissions, and fringe benefits. Free 1040 ez It does not matter how you measure or make the payments. Free 1040 ez Amounts an employer pays as a bonus for signing or ratifying a contract in connection with the establishment of an employer-employee relationship and an amount paid to an employee for cancellation of an employment contract and relinquishment of contract rights are wages subject to social security, Medicare, and FUTA taxes and income tax withholding. Free 1040 ez Also, compensation paid to a former employee for services performed while still employed is wages subject to employment taxes. Free 1040 ez More information. Free 1040 ez   See section 6 for a discussion of tips and section 7 for a discussion of supplemental wages. Free 1040 ez Also, see section 15 for exceptions to the general rules for wages. Free 1040 ez Publication 15-A provides additional information on wages, including nonqualified deferred compensation, and other compensation. Free 1040 ez Publication 15-B provides information on other forms of compensation, including: Accident and health benefits, Achievement awards, Adoption assistance, Athletic facilities, De minimis (minimal) benefits, Dependent care assistance, Educational assistance, Employee discounts, Employee stock options, Employer-provided cell phones, Group-term life insurance coverage, Health Savings Accounts, Lodging on your business premises, Meals, Moving expense reimbursements, No-additional-cost services, Retirement planning services, Transportation (commuting) benefits, Tuition reduction, and Working condition benefits. Free 1040 ez Employee business expense reimbursements. Free 1040 ez   A reimbursement or allowance arrangement is a system by which you pay the advances, reimbursements, and charges for your employees' business expenses. Free 1040 ez How you report a reimbursement or allowance amount depends on whether you have an accountable or a nonaccountable plan. Free 1040 ez If a single payment includes both wages and an expense reimbursement, you must specify the amount of the reimbursement. Free 1040 ez   These rules apply to all ordinary and necessary employee business expenses that would otherwise qualify for a deduction by the employee. Free 1040 ez Accountable plan. Free 1040 ez   To be an accountable plan, your reimbursement or allowance arrangement must require your employees to meet all three of the following rules. Free 1040 ez They must have paid or incurred deductible expenses while performing services as your employees. Free 1040 ez The reimbursement or advance must be paid for the expense and must not be an amount that would have otherwise been paid by the employee. Free 1040 ez They must substantiate these expenses to you within a reasonable period of time. Free 1040 ez They must return any amounts in excess of substantiated expenses within a reasonable period of time. Free 1040 ez   Amounts paid under an accountable plan are not wages and are not subject to income, social security, Medicare, and FUTA taxes. Free 1040 ez   If the expenses covered by this arrangement are not substantiated (or amounts in excess of substantiated expenses are not returned within a reasonable period of time), the amount paid under the arrangement in excess of the substantiated expenses is treated as paid under a nonaccountable plan. Free 1040 ez This amount is subject to income, social security, Medicare, and FUTA taxes for the first payroll period following the end of the reasonable period of time. Free 1040 ez   A reasonable period of time depends on the facts and circumstances. Free 1040 ez Generally, it is considered reasonable if your employees receive their advance within 30 days of the time they incur the expenses, adequately account for the expenses within 60 days after the expenses were paid or incurred, and return any amounts in excess of expenses within 120 days after the expenses were paid or incurred. Free 1040 ez Also, it is considered reasonable if you give your employees a periodic statement (at least quarterly) that asks them to either return or adequately account for outstanding amounts and they do so within 120 days. Free 1040 ez Nonaccountable plan. Free 1040 ez   Payments to your employee for travel and other necessary expenses of your business under a nonaccountable plan are wages and are treated as supplemental wages and subject to income, social security, Medicare, and FUTA taxes. Free 1040 ez Your payments are treated as paid under a nonaccountable plan if: Your employee is not required to or does not substantiate timely those expenses to you with receipts or other documentation, You advance an amount to your employee for business expenses and your employee is not required to or does not return timely any amount he or she does not use for business expenses, You advance or pay an amount to your employee regardless of whether you reasonably expect the employee to have business expenses related to your business, or You pay an amount as a reimbursement you would have otherwise paid as wages. Free 1040 ez   See section 7 for more information on supplemental wages. Free 1040 ez Per diem or other fixed allowance. Free 1040 ez   You may reimburse your employees by travel days, miles, or some other fixed allowance under the applicable revenue procedure. Free 1040 ez In these cases, your employee is considered to have accounted to you if your reimbursement does not exceed rates established by the Federal Government. Free 1040 ez The 2013 standard mileage rate for auto expenses was 56. Free 1040 ez 5 cents per mile. Free 1040 ez The rate for 2014 is 56 cents per mile. Free 1040 ez   The government per diem rates for meals and lodging in the continental United States are listed in Publication 1542, Per Diem Rates. Free 1040 ez Other than the amount of these expenses, your employees' business expenses must be substantiated (for example, the business purpose of the travel or the number of business miles driven). Free 1040 ez   If the per diem or allowance paid exceeds the amounts substantiated, you must report the excess amount as wages. Free 1040 ez This excess amount is subject to income tax withholding and payment of social security, Medicare, and FUTA taxes. Free 1040 ez Show the amount equal to the substantiated amount (for example, the nontaxable portion) in box 12 of Form W-2 using code “L. Free 1040 ez ” Wages not paid in money. Free 1040 ez   If in the course of your trade or business you pay your employees in a medium that is neither cash nor a readily negotiable instrument, such as a check, you are said to pay them “in kind. Free 1040 ez ” Payments in kind may be in the form of goods, lodging, food, clothing, or services. Free 1040 ez Generally, the fair market value of such payments at the time they are provided is subject to federal income tax withholding and social security, Medicare, and FUTA taxes. Free 1040 ez   However, noncash payments for household work, agricultural labor, and service not in the employer's trade or business are exempt from social security, Medicare, and FUTA taxes. Free 1040 ez Withhold income tax on these payments only if you and the employee agree to do so. Free 1040 ez Nonetheless, noncash payments for agricultural labor, such as commodity wages, are treated as cash payments subject to employment taxes if the substance of the transaction is a cash payment. Free 1040 ez Moving expenses. Free 1040 ez   Reimbursed and employer-paid qualified moving expenses (those that would otherwise be deductible by the employee) paid under an accountable plan are not includible in an employee's income unless you have knowledge the employee deducted the expenses in a prior year. Free 1040 ez Reimbursed and employer-paid nonqualified moving expenses are includible in income and are subject to employment taxes and income tax withholding. Free 1040 ez For more information on moving expenses, see Publication 521, Moving Expenses. Free 1040 ez Meals and lodging. Free 1040 ez   The value of meals is not taxable income and is not subject to income tax withholding and social security, Medicare, and FUTA taxes if the meals are furnished for the employer's convenience and on the employer's premises. Free 1040 ez The value of lodging is not subject to income tax withholding and social security, Medicare, and FUTA taxes if the lodging is furnished for the employer's convenience, on the employer's premises, and as a condition of employment. Free 1040 ez    “For the convenience of the employer” means you have a substantial business reason for providing the meals and lodging other than to provide additional compensation to the employee. Free 1040 ez For example, meals you provide at the place of work so that an employee is available for emergencies during his or her lunch period are generally considered to be for your convenience. Free 1040 ez   However, whether meals or lodging are provided for the convenience of the employer depends on all of the facts and circumstances. Free 1040 ez A written statement that the meals or lodging are for your convenience is not sufficient. Free 1040 ez 50% test. Free 1040 ez   If over 50% of the employees who are provided meals on an employer's business premises receive these meals for the convenience of the employer, all meals provided on the premises are treated as furnished for the convenience of the employer. Free 1040 ez If this 50% test is met, the value of the meals is excludable from income for all employees and is not subject to federal income tax withholding or employment taxes. Free 1040 ez For more information, see Publication 15-B. Free 1040 ez Health insurance plans. Free 1040 ez   If you pay the cost of an accident or health insurance plan for your employees, including an employee's spouse and dependents, your payments are not wages and are not subject to social security, Medicare, and FUTA taxes, or federal income tax withholding. Free 1040 ez Generally, this exclusion also applies to qualified long-term care insurance contracts. Free 1040 ez However, for income tax withholding, the value of health insurance benefits must be included in the wages of S corporation employees who own more than 2% of the S corporation (2% shareholders). Free 1040 ez For social security, Medicare, and FUTA taxes, the health insurance benefits are excluded from the wages only for employees and their dependents or for a class or classes of employees and their dependents. Free 1040 ez See Announcement 92-16 for more information. Free 1040 ez You can find Announcement 92-16 on page 53 of Internal Revenue Bulletin 1992-5. Free 1040 ez Health Savings Accounts and medical savings accounts. Free 1040 ez   Your contributions to an employee's Health Savings Account (HSA) or Archer medical savings account (MSA) are not subject to social security, Medicare, or FUTA taxes, or federal income tax withholding if it is reasonable to believe at the time of payment of the contributions they will be excludable from the income of the employee. Free 1040 ez To the extent it is not reasonable to believe they will be excludable, your contributions are subject to these taxes. Free 1040 ez Employee contributions to their HSAs or MSAs through a payroll deduction plan must be included in wages and are subject to social security, Medicare, and FUTA taxes and income tax withholding. Free 1040 ez However, HSA contributions made under a salary reduction arrangement in a section 125 cafeteria plan are not wages and are not subject to employment taxes or withholding. Free 1040 ez For more information, see the Instructions for Form 8889, Health Savings Accounts (HSAs). Free 1040 ez Medical care reimbursements. Free 1040 ez   Generally, medical care reimbursements paid for an employee under an employer's self-insured medical reimbursement plan are not wages and are not subject to social security, Medicare, and FUTA taxes, or income tax withholding. Free 1040 ez See Publication 15-B for an exception for highly compensated employees. Free 1040 ez Differential wage payments. Free 1040 ez   Differential wage payments are any payments made by an employer to an individual for a period during which the individual is performing service in the uniformed services while on active duty for a period of more than 30 days and represent all or a portion of the wages the individual would have received from the employer if the individual were performing services for the employer. Free 1040 ez   Differential wage payments are wages for income tax withholding, but are not subject to social security, Medicare, or FUTA taxes. Free 1040 ez Employers should report differential wage payments in box 1 of Form W-2. Free 1040 ez For more information about the tax treatment of differential wage payments, visit IRS. Free 1040 ez gov and enter “employees in a combat zone” in the search box. Free 1040 ez Fringe benefits. Free 1040 ez   You generally must include fringe benefits in an employee's gross income (but see Nontaxable fringe benefits next). Free 1040 ez The benefits are subject to income tax withholding and employment taxes. Free 1040 ez Fringe benefits include cars you provide, flights on aircraft you provide, free or discounted commercial flights, vacations, discounts on property or services, memberships in country clubs or other social clubs, and tickets to entertainment or sporting events. Free 1040 ez In general, the amount you must include is the amount by which the fair market value of the benefits is more than the sum of what the employee paid for it plus any amount the law excludes. Free 1040 ez There are other special rules you and your employees may use to value certain fringe benefits. Free 1040 ez See Publication 15-B for more information. Free 1040 ez Nontaxable fringe benefits. Free 1040 ez   Some fringe benefits are not taxable (or are minimally taxable) if certain conditions are met. Free 1040 ez See Publication 15-B for details. Free 1040 ez The following are some examples of nontaxable fringe benefits. Free 1040 ez Services provided to your employees at no additional cost to you. Free 1040 ez Qualified employee discounts. Free 1040 ez Working condition fringes that are property or services the employee could deduct as a business expense if he or she had paid for it. Free 1040 ez Examples include a company car for business use and subscriptions to business magazines. Free 1040 ez Certain minimal value fringes (including an occasional cab ride when an employee must work overtime and meals you provide at eating places you run for your employees if the meals are not furnished at below cost). Free 1040 ez Qualified transportation fringes subject to specified conditions and dollar limitations (including transportation in a commuter highway vehicle, any transit pass, and qualified parking). Free 1040 ez Qualified moving expense reimbursement. Free 1040 ez See Moving expenses , earlier in this section, for details. Free 1040 ez The use of on-premises athletic facilities, if substantially all of the use is by employees, their spouses, and their dependent children. Free 1040 ez Qualified tuition reduction an educational organization provides to its employees for education. Free 1040 ez For more information, see Publication 970, Tax Benefits for Education. Free 1040 ez Employer-provided cell phones provided primarily for a noncompensatory business reason. Free 1040 ez   However, do not exclude the following fringe benefits from the income of highly compensated employees unless the benefit is available to other employees on a nondiscriminatory basis. Free 1040 ez No-additional-cost services. Free 1040 ez Qualified employee discounts. Free 1040 ez Meals provided at an employer operated eating facility. Free 1040 ez Reduced tuition for education. Free 1040 ez  For more information, including the definition of a highly compensated employee, see Publication 15-B. Free 1040 ez When fringe benefits are treated as paid. Free 1040 ez   You may choose to treat certain noncash fringe benefits as paid by the pay period, by the quarter, or on any other basis you choose as long as you treat the benefits as paid at least once a year. Free 1040 ez You do not have to make a formal choice of payment dates or notify the IRS of the dates you choose. Free 1040 ez You do not have to make this choice for all employees. Free 1040 ez You may change methods as often as you like, as long as you treat all benefits provided in a calendar year as paid by December 31 of the calendar year. Free 1040 ez See Publication 15-B for more information, including a discussion of the special accounting rule for fringe benefits provided during November and December. Free 1040 ez Valuation of fringe benefits. Free 1040 ez   Generally, you must determine the value of fringe benefits no later than January 31 of the next year. Free 1040 ez Before January 31, you may reasonably estimate the value of the fringe benefits for purposes of withholding and depositing on time. Free 1040 ez Withholding on fringe benefits. Free 1040 ez   You may add the value of fringe benefits to regular wages for a payroll period and figure withholding taxes on the total, or you may withhold federal income tax on the value of the fringe benefits at the optional flat 25% supplemental wage rate. Free 1040 ez However, see Withholding on supplemental wages when an employee receives more than $1 million of supplemental wages during the calendar year in section 7. Free 1040 ez   You may choose not to withhold income tax on the value of an employee's personal use of a vehicle you provide. Free 1040 ez You must, however, withhold social security and Medicare taxes on the use of the vehicle. Free 1040 ez See Publication 15-B for more information on this election. Free 1040 ez Depositing taxes on fringe benefits. Free 1040 ez   Once you choose when fringe benefits are paid, you must deposit taxes in the same deposit period you treat the fringe benefits as paid. Free 1040 ez To avoid a penalty, deposit the taxes following the general deposit rules for that deposit period. Free 1040 ez   If you determine by January 31 you overestimated the value of a fringe benefit at the time you withheld and deposited for it, you may claim a refund for the overpayment or have it applied to your next employment tax return. Free 1040 ez See Valuation of fringe benefits , earlier. Free 1040 ez If you underestimated the value and deposited too little, you may be subject to a failure-to-deposit penalty. Free 1040 ez See section 11 for information on deposit penalties. Free 1040 ez   If you deposited the required amount of taxes but withheld a lesser amount from the employee, you can recover from the employee the social security, Medicare, or income taxes you deposited on his or her behalf, and included in the employee's Form W-2. Free 1040 ez However, you must recover the income taxes before April 1 of the following year. Free 1040 ez Sick pay. Free 1040 ez   In general, sick pay is any amount you pay under a plan to an employee who is unable to work because of sickness or injury. Free 1040 ez These amounts are sometimes paid by a third party, such as an insurance company or an employees' trust. Free 1040 ez In either case, these payments are subject to social security, Medicare, and FUTA taxes. Free 1040 ez Sick pay becomes exempt from these taxes after the end of 6 calendar months after the calendar month the employee last worked for the employer. Free 1040 ez The payments are always subject to federal income tax. Free 1040 ez See Publication 15-A for more information. Free 1040 ez 6. Free 1040 ez Tips Tips your employee receives from customers are generally subject to withholding. Free 1040 ez Your employee must report cash tips to you by the 10th of the month after the month the tips are received. Free 1040 ez The report should include tips you paid over to the employee for charge customers, tips the employee received directly from customers, and tips received from other employees under any tip-sharing arrangement. Free 1040 ez Both directly and indirectly tipped employees must report tips to you. Free 1040 ez No report is required for months when tips are less than $20. Free 1040 ez Your employee reports the tips on Form 4070, Employee's Report of Tips to Employer, or on a similar statement. Free 1040 ez The statement must be signed by the employee and must include: The employee's name, address, and SSN, Your name and address, The month or period the report covers, and The total of tips received during the month or period. Free 1040 ez Both Forms 4070 and 4070-A, Employee's Daily Record of Tips, are included in Publication 1244, Employee's Daily Record of Tips and Report to Employer. Free 1040 ez You are permitted to establish a system for electronic tip reporting by employees. Free 1040 ez See Regulations section 31. Free 1040 ez 6053-1(d). Free 1040 ez Collecting taxes on tips. Free 1040 ez   You must collect income tax, employee social security tax, and employee Medicare tax on the employee's tips. Free 1040 ez The withholding rules for withholding an employee's share of Medicare tax on tips also apply to withholding the Additional Medicare Tax once wages and tips exceed $200,000 in the calendar year. Free 1040 ez If an employee reports to you in writing $20 or more of tips in a month, the tips are also subject to FUTA tax. Free 1040 ez   You can collect these taxes from the employee's wages or from other funds he or she makes available. Free 1040 ez See Tips treated as supplemental wages in section 7 for more information. Free 1040 ez Stop collecting the employee social security tax when his or her wages and tips for tax year 2014 reach $117,000; collect the income and employee Medicare taxes for the whole year on all wages and tips. Free 1040 ez You are responsible for the employer social security tax on wages and tips until the wages (including tips) reach the limit. Free 1040 ez You are responsible for the employer Medicare tax for the whole year on all wages and tips. Free 1040 ez File Form 941 or Form 944 to report withholding and employment taxes on tips. Free 1040 ez Ordering rule. Free 1040 ez   If, by the 10th of the month after the month for which you received an employee's report on tips, you do not have enough employee funds available to deduct the employee tax, you no longer have to collect it. Free 1040 ez If there are not enough funds available, withhold taxes in the following order. Free 1040 ez Withhold on regular wages and other compensation. Free 1040 ez Withhold social security and Medicare taxes on tips. Free 1040 ez Withhold income tax on tips. Free 1040 ez Reporting tips. Free 1040 ez   Report tips and any collected and uncollected social security and Medicare taxes on Form W-2 and on Form 941, lines 5b, 5c, and 5d (Form 944, lines 4b, 4c, and 4d). Free 1040 ez Report an adjustment on Form 941, line 9 (Form 944, line 6), for the uncollected social security and Medicare taxes. Free 1040 ez Enter the amount of uncollected social security tax and Medicare tax on Form W-2, box 12, with codes “A” and “B. Free 1040 ez ” Do not include any uncollected Additional Medicare Tax in box 12 of Form W-2. Free 1040 ez See section 13 and the General Instructions for Forms W-2 and W-3. Free 1040 ez   Revenue Ruling 2012-18 provides guidance for employers regarding social security and Medicare taxes imposed on tips, including information on the reporting of the employer share of social security and Medicare taxes under section 3121(q), the difference between tips and service charges, and the section 45B credit. Free 1040 ez See Revenue Ruling 2012-18, 2012-26 I. Free 1040 ez R. Free 1040 ez B. Free 1040 ez 1032, available at www. Free 1040 ez irs. Free 1040 ez gov/irb/2012-26_IRB/ar07. Free 1040 ez html. Free 1040 ez Allocated tips. Free 1040 ez   If you operate a large food or beverage establishment, you must report allocated tips under certain circumstances. Free 1040 ez However, do not withhold income, social security, or Medicare taxes on allocated tips. Free 1040 ez   A large food or beverage establishment is one that provides food or beverages for consumption on the premises, where tipping is customary, and where there were normally more than 10 employees on a typical business day during the preceding year. Free 1040 ez   The tips may be allocated by one of three methods—hours worked, gross receipts, or good faith agreement. Free 1040 ez For information about these allocation methods, including the requirement to file Forms 8027 electronically if 250 or more forms are filed, see the Instructions for Form 8027. Free 1040 ez For information on filing Form 8027 electronically with the IRS, see Publication 1239. Free 1040 ez Tip Rate Determination and Education Program. Free 1040 ez   Employers may participate in the Tip Rate Determination and Education Program. Free 1040 ez The program primarily consists of two voluntary agreements developed to improve tip income reporting by helping taxpayers to understand and meet their tip reporting responsibilities. Free 1040 ez The two agreements are the Tip Rate Determination Agreement (TRDA) and the Tip Reporting Alternative Commitment (TRAC). Free 1040 ez A tip agreement, the Gaming Industry Tip Compliance Agreement (GITCA), is available for the gaming (casino) industry. Free 1040 ez To get more information about TRDA and TRAC agreements, see Publication 3144, Tips on Tips. Free 1040 ez Additionally, visit IRS. Free 1040 ez gov and enter “MSU tips” in the search box to get more information about GITCA, TRDA, or TRAC agreements. Free 1040 ez 7. Free 1040 ez Supplemental Wages Supplemental wages are wage payments to an employee that are not regular wages. Free 1040 ez They include, but are not limited to, bonuses, commissions, overtime pay, payments for accumulated sick leave, severance pay, awards, prizes, back pay, retroactive pay increases, and payments for nondeductible moving expenses. Free 1040 ez Other payments subject to the supplemental wage rules include taxable fringe benefits and expense allowances paid under a nonaccountable plan. Free 1040 ez How you withhold on supplemental wages depends on whether the supplemental payment is identified as a separate payment from regular wages. Free 1040 ez See Regulations section 31. Free 1040 ez 3402(g)-1 for additional guidance for wages paid after January 1, 2007. Free 1040 ez Also see Revenue Ruling 2008-29, 2008-24 I. Free 1040 ez R. Free 1040 ez B. Free 1040 ez 1149, available at www. Free 1040 ez irs. Free 1040 ez gov/irb/2008-24_IRB/ar08. Free 1040 ez html. Free 1040 ez Withholding on supplemental wages when an employee receives more than $1 million of supplemental wages from you during the calendar year. Free 1040 ez   Special rules apply to the extent supplemental wages paid to any one employee during the calendar year exceed $1 million. Free 1040 ez If a supplemental wage payment, together with other supplemental wage payments made to the employee during the calendar year, exceeds $1 million, the excess is subject to withholding at 39. Free 1040 ez 6% (or the highest rate of income tax for the year). Free 1040 ez Withhold using the 39. Free 1040 ez 6% rate without regard to the employee's Form W-4. Free 1040 ez In determining supplemental wages paid to the employee during the year, include payments from all businesses under common control. Free 1040 ez For more information, see Treasury Decision 9276, 2006-37 I. Free 1040 ez R. Free 1040 ez B. Free 1040 ez 423, available at www. Free 1040 ez irs. Free 1040 ez gov/irb/2006-37_IRB/ar09. Free 1040 ez html. Free 1040 ez Withholding on supplemental wage payments to an employee who does not receive $1 million of supplemental wages during the calendar year. Free 1040 ez   If the supplemental wages paid to the employee during the calendar year are less than or equal to $1 million, the following rules apply in determining the amount of income tax to be withheld. Free 1040 ez Supplemental wages combined with regular wages. Free 1040 ez   If you pay supplemental wages with regular wages but do not specify the amount of each, withhold federal income tax as if the total were a single payment for a regular payroll period. Free 1040 ez Supplemental wages identified separately from regular wages. Free 1040 ez   If you pay supplemental wages separately (or combine them in a single payment and specify the amount of each), the federal income tax withholding method depends partly on whether you withhold income tax from your employee's regular wages. Free 1040 ez If you withheld income tax from an employee's regular wages in the current or immediately preceding calendar year, you can use one of the following methods for the supplemental wages. Free 1040 ez Withhold a flat 25% (no other percentage allowed). Free 1040 ez If the supplemental wages are paid concurrently with regular wages, add the supplemental wages to the concurrently paid regular wages. Free 1040 ez If there are no concurrently paid regular wages, add the supplemental wages to alternatively, either the regular wages paid or to be paid for the current payroll period or the regular wages paid for the preceding payroll period. Free 1040 ez Figure the income tax withholding as if the total of the regular wages and supplemental wages is a single payment. Free 1040 ez Subtract the tax withheld from the regular wages. Free 1040 ez Withhold the remaining tax from the supplemental wages. Free 1040 ez If there were other payments of supplemental wages paid during the payroll period made before the current payment of supplemental wages, aggregate all the payments of supplemental wages paid during the payroll period with the regular wages paid during the payroll period, calculate the tax on the total, subtract the tax already withheld from the regular wages and the previous supplemental wage payments, and withhold the remaining tax. Free 1040 ez If you did not withhold income tax from the employee's regular wages in the current or immediately preceding calendar year, use method 1-b. Free 1040 ez This would occur, for example, when the value of the employee's withholding allowances claimed on Form W-4 is more than the wages. Free 1040 ez Regardless of the method you use to withhold income tax on supplemental wages, they are subject to social security, Medicare, and FUTA taxes. Free 1040 ez Example 1. Free 1040 ez You pay John Peters a base salary on the 1st of each month. Free 1040 ez He is single and claims one withholding allowance. Free 1040 ez In January he is paid $1,000. Free 1040 ez Using the wage bracket tables, you withhold $50 from this amount. Free 1040 ez In February, he receives salary of $1,000 plus a commission of $2,000, which you combine with regular wages and do not separately identify. Free 1040 ez You figure the withholding based on the total of $3,000. Free 1040 ez The correct withholding from the tables is $338. Free 1040 ez Example 2. Free 1040 ez You pay Sharon Warren a base salary on the 1st of each month. Free 1040 ez She is single and claims one allowance. Free 1040 ez Her May 1 pay is $2,000. Free 1040 ez Using the wage bracket tables, you withhold $188. Free 1040 ez On May 14 she receives a bonus of $1,000. Free 1040 ez Electing to use supplemental wage withholding method 1-b, you: Add the bonus amount to the amount of wages from the most recent base salary pay date (May 1) ($2,000 + $1,000 = $3,000). Free 1040 ez Determine the amount of withholding on the combined $3,000 amount to be $338 using the wage bracket tables. Free 1040 ez Subtract the amount withheld from wages on the most recent base salary pay date (May 1) from the combined withholding amount ($338 – $188 = $150). Free 1040 ez Withhold $150 from the bonus payment. Free 1040 ez Example 3. Free 1040 ez The facts are the same as in Example 2, except you elect to use the flat rate method of withholding on the bonus. Free 1040 ez You withhold 25% of $1,000, or $250, from Sharon's bonus payment. Free 1040 ez Example 4. Free 1040 ez The facts are the same as in Example 2, except you elect to pay Sharon a second bonus of $2,000 on May 28. Free 1040 ez Using supplemental wage withholding method 1-b, you: Add the first and second bonus amounts to the amount of wages from the most recent base salary pay date (May 1) ($2,000 + $1,000 + $2,000 = $5,000). Free 1040 ez Determine the amount of withholding on the combined $5,000 amount to be $781 using the wage bracket tables. Free 1040 ez Subtract the amounts withheld from wages on the most recent base salary pay date (May 1) and the amounts withheld from the first bonus payment from the combined withholding amount ($781 – $188 – $150 = $443). Free 1040 ez Withhold $443 from the second bonus payment. Free 1040 ez Tips treated as supplemental wages. Free 1040 ez   Withhold income tax on tips from wages earned by the employee or from other funds the employee makes available. Free 1040 ez If an employee receives regular wages and reports tips, figure income tax withholding as if the tips were supplemental wages. Free 1040 ez If you have not withheld income tax from the regular wages, add the tips to the regular wages. Free 1040 ez Then withhold income tax on the total. Free 1040 ez If you withheld income tax from the regular wages, you can withhold on the tips by method 1-a or 1-b discussed earlier in this section under Supplemental wages identified separately from regular wages. Free 1040 ez Vacation pay. Free 1040 ez   Vacation pay is subject to withholding as if it were a regular wage payment. Free 1040 ez When vacation pay is in addition to regular wages for the vacation period, treat it as a supplemental wage payment. Free 1040 ez If the vacation pay is for a time longer than your usual payroll period, spread it over the pay periods for which you pay it. Free 1040 ez 8. Free 1040 ez Payroll Period Your payroll period is a period of service for which you usually pay wages. Free 1040 ez When you have a regular payroll period, withhold income tax for that time period even if your employee does not work the full period. Free 1040 ez No regular payroll period. Free 1040 ez   When you do not have a regular payroll period, withhold the tax as if you paid wages for a daily or miscellaneous payroll period. Free 1040 ez Figure the number of days (including Sundays and holidays) in the period covered by the wage payment. Free 1040 ez If the wages are unrelated to a specific length of time (for example, commissions paid on completion of a sale), count back the number of days from the payment period to the latest of: The last wage payment made during the same calendar year, The date employment began, if during the same calendar year, or January 1 of the same year. Free 1040 ez Employee paid for period less than 1 week. Free 1040 ez   When you pay an employee for a period of less than one week, and the employee signs a statement under penalties of perjury indicating he or she is not working for any other employer during the same week for wages subject to withholding, figure withholding based on a weekly payroll period. Free 1040 ez If the employee later begins to work for another employer for wages subject to withholding, the employee must notify you within 10 days. Free 1040 ez You then figure withholding based on the daily or miscellaneous period. Free 1040 ez 9. Free 1040 ez Withholding From Employees' Wages Income Tax Withholding Using Form W-4 to figure withholding. Free 1040 ez   To know how much federal income tax to withhold from employees' wages, you should have a Form W-4 on file for each employee. Free 1040 ez Encourage your employees to file an updated Form W-4 for 2014, especially if they owed taxes or received a large refund when filing their 2013 tax return. Free 1040 ez Advise your employees to use the IRS Withholding Calculator on the IRS website at www. Free 1040 ez irs. Free 1040 ez gov/individuals for help in determining how many withholding allowances to claim on their Forms W-4. Free 1040 ez   Ask all new employees to give you a signed Form W-4 when they start work. Free 1040 ez Make the form effective with the first wage payment. Free 1040 ez If a new employee does not give you a completed Form W-4, withhold income tax as if he or she is single, with no withholding allowances. Free 1040 ez Form in Spanish. Free 1040 ez   You can provide Formulario W-4(SP), Certificado de Exención de Retenciones del Empleado, in place of Form W-4, to your Spanish-speaking employees. Free 1040 ez For more information, see Publicación 17(SP), El Impuesto Federal sobre los Ingresos (Para Personas Físicas). Free 1040 ez The rules discussed in this section that apply to Form W-4 also apply to Formulario W-4(SP). Free 1040 ez Electronic system to receive Form W-4. Free 1040 ez   You may establish a system to electronically receive Forms W-4 from your employees. Free 1040 ez See Regulations section 31. Free 1040 ez 3402(f)(5)-1(c) for more information. Free 1040 ez Effective date of Form W-4. Free 1040 ez   A Form W-4 remains in effect until the employee gives you a new one. Free 1040 ez When you receive a new Form W-4 from an employee, do not adjust withholding for pay periods before the effective date of the new form. Free 1040 ez If an employee gives you a Form W-4 that replaces an existing Form W-4, begin withholding no later than the start of the first payroll period ending on or after the 30th day from the date when you received the replacement Form W-4. Free 1040 ez For exceptions, see Exemption from federal income tax withholding , IRS review of requested Forms W-4 , and Invalid Forms W-4 , later in this section. Free 1040 ez A Form W-4 that makes a change for the next calendar year will not take effect in the current calendar year. Free 1040 ez Successor employer. Free 1040 ez   If you are a successor employer (see Successor employer , later in this section), secure new Forms W-4 from the transferred employees unless the “Alternative Procedure” in section 5 of Revenue Procedure 2004-53 applies. Free 1040 ez See Revenue Procedure 2004-53, 2004-34 I. Free 1040 ez R. Free 1040 ez B. Free 1040 ez 320, available at www. Free 1040 ez irs. Free 1040 ez gov/irb/2004-34_IRB/ar13. Free 1040 ez html. Free 1040 ez Completing Form W-4. Free 1040 ez   The amount of any federal income tax withholding must be based on marital status and withholding allowances. Free 1040 ez Your employees may not base their withholding amounts on a fixed dollar amount or percentage. Free 1040 ez However, an employee may specify a dollar amount to be withheld in addition to the amount of withholding based on filing status and withholding allowances claimed on Form W-4. Free 1040 ez Employees may claim fewer withholding allowances than they are entitled to claim. Free 1040 ez They may wish to claim fewer allowances to ensure they have enough withholding or to offset the tax on other sources of taxable income not subject to withholding. Free 1040 ez See Publication 505, Tax Withholding and Estimated Tax, for more information about completing Form W-4. Free 1040 ez Along with Form W-4, you may wish to order Publication 505 for use by your employees. Free 1040 ez Do not accept any withholding or estimated tax payments from your employees in addition to withholding based on their Form W-4. Free 1040 ez If they require additional withholding, they should submit a new Form W-4 and, if necessary, pay estimated tax by filing Form 1040-ES, Estimated Tax for Individuals, or by using the Electronic Federal Tax Payment System (EFTPS) to make estimated tax payments. Free 1040 ez Exemption from federal income tax withholding. Free 1040 ez   Generally, an employee may claim exemption from federal income tax withholding because he or she had no income tax liability last year and expects none this year. Free 1040 ez See the Form W-4 instructions for more information. Free 1040 ez However, the wages are still subject to social security and Medicare taxes. Free 1040 ez See also Invalid Forms W-4 , later in this section. Free 1040 ez   A Form W-4 claiming exemption from withholding is effective when it is filed with the employer and only for that calendar year. Free 1040 ez To continue to be exempt from withholding in the next calendar year, an employee must give you a new Form W-4 by February 15. Free 1040 ez If the employee does not give you a new Form W-4 by February 15, begin withholding based on the last Form W-4 for the employee that did not claim an exemption from withholding or, if one was not filed, then withhold tax as if he or she is single with zero withholding allowances. Free 1040 ez If the employee provides a new Form W-4 claiming exemption from withholding on February 16 or later, you may apply it to future wages but do not refund any taxes already withheld. Free 1040 ez Withholding income taxes on the wages of nonresident alien employees. Free 1040 ez   In general, you must withhold federal income taxes on the wages of nonresident alien employees. Free 1040 ez However, see Publication 515, Withholding of Tax on Nonresident Aliens and Foreign Entities, for exceptions to this general rule. Free 1040 ez Also see section 3 of Publication 51 (Circular A), Agricultural Employer's Tax Guide, for guidance on H-2A visa workers. Free 1040 ez Withholding adjustment for nonresident alien employees. Free 1040 ez   For 2014, apply the procedure discussed next to figure the amount of income tax to withhold from the wages of nonresident alien employees performing services within the United States. Free 1040 ez Nonresident alien students from India and business apprentices from India are not subject to this procedure. Free 1040 ez Instructions. Free 1040 ez   To figure how much income tax to withhold from the wages paid to a nonresident alien employee performing services in the United States, use the following steps. Free 1040 ez Step 1. Free 1040 ez   Add to the wages paid to the nonresident alien employee for the payroll period the amount shown in the chart below for the applicable payroll period. Free 1040 ez    Amount to Add to Nonresident Alien Employee's Wages for Calculating Income Tax Withholding Only   Payroll Period Add Additional     Weekly $ 43. Free 1040 ez 30     Biweekly 86. Free 1040 ez 50     Semimonthly 93. Free 1040 ez 80     Monthly 187. Free 1040 ez 50     Quarterly 562. Free 1040 ez 50     Semiannually 1,125. Free 1040 ez 00     Annually 2,250. Free 1040 ez 00     Daily or Miscellaneous (each day of the payroll period) 8. Free 1040 ez 70   Step 2. Free 1040 ez   Use the amount figured in Step 1 and the number of withholding allowances claimed (generally limited to one allowance) to figure income tax withholding. Free 1040 ez Determine the value of withholding allowances by multiplying the number of withholding allowances claimed by the appropriate amount from Table 5. Free 1040 ez Percentage Method—2014 Amount for One Withholding Allowance shown on page 41. Free 1040 ez If you are using the Percentage Method Tables for Income Tax Withholding, provided on pages 43–44, reduce the amount figured in Step 1 by the value of withholding allowances and use that reduced amount to figure the income tax withholding. Free 1040 ez If you are using the Wage Bracket Method for Income Tax Withholding, provided on pages 45–64, use the amount figured in Step 1 and the number of withholding allowances to figure income tax withholding. Free 1040 ez The amounts from the chart above are added to wages solely for calculating income tax withholding on the wages of the nonresident alien employee. Free 1040 ez The amounts from the chart should not be included in any box on the employee's Form W-2 and do not increase the income tax liability of the employee. Free 1040 ez Also, the amounts from the chart do not increase the social security tax or Medicare tax liability of the employer or the employee, or the FUTA tax liability of the employer. Free 1040 ez This procedure only applies to nonresident alien employees who have wages subject to income tax withholding. Free 1040 ez Example. Free 1040 ez An employer using the percentage method of withholding pays wages of $500 for a biweekly payroll period to a married nonresident alien employee. Free 1040 ez The nonresident alien has properly completed Form W-4, entering marital status as “single” with one withholding allowance and indicating status as a nonresident alien on Form W-4, line 6 (see Nonresident alien employee's Form W-4 , later in this section). Free 1040 ez The employer determines the wages to be used in the withholding tables by adding to the $500 amount of wages paid the amount of $86. Free 1040 ez 50 from the chart under Step 1 ($586. Free 1040 ez 50 total). Free 1040 ez The employer then applies the applicable tables to determine the income tax withholding for nonresident aliens (see Step 2 ). Free 1040 ez Reminder: If you use the Percentage Method Tables for Income Tax Withholding, reduce the amount figured in Step 1 by the value of withholding allowances and use that reduced amount to figure income tax withholding. Free 1040 ez The $86. Free 1040 ez 50 added to wages for calculating income tax withholding is not reported on Form W-2, and does not increase the income tax liability of the employee. Free 1040 ez Also, the $86. Free 1040 ez 50 added to wages does not affect the social security tax or Medicare tax liability of the employer or the employee, or the FUTA tax liability of the employer. Free 1040 ez Supplemental wage payment. Free 1040 ez   This procedure for determining the amount of income tax withholding does not apply to a supplemental wage payment (see section 7) if the 39. Free 1040 ez 6% mandatory flat rate withholding applies or if the 25% optional flat rate withholding is being used to calculate income tax withholding on the supplemental wage payment. Free 1040 ez Nonresident alien employee's Form W-4. Free 1040 ez   When completing Forms W-4, nonresident aliens are required to: Not claim exemption from income tax withholding, Request withholding as if they are single, regardless of their actual marital status, Claim only one allowance (if the nonresident alien is a resident of Canada, Mexico, or South Korea, or a student or business apprentice from India, he or she may claim more than one allowance), and Write “Nonresident Alien” or “NRA” above the dotted line on line 6 of Form W-4. Free 1040 ez   If you maintain an electronic Form W-4 system, you should provide a field for nonresident aliens to enter nonresident alien status in lieu of writing “Nonresident Alien” or “NRA” above the dotted line on line 6. Free 1040 ez A nonresident alien employee may request additional withholding at his or her option for other purposes, although such additions should not be necessary for withholding to cover federal income tax liability related to employment. Free 1040 ez Form 8233. Free 1040 ez   If a nonresident alien employee claims a tax treaty exemption from withholding, the employee must submit Form 8233, Exemption From Withholding on Compensation for Independent (and Certain Dependent) Personal Services of a Nonresident Alien Individual, with respect to the income exempt under the treaty, instead of Form W-4. Free 1040 ez See Publication 515 for details. Free 1040 ez IRS review of requested Forms W-4. Free 1040 ez   When requested by the IRS, you must make original Forms W-4 available for inspection by an IRS employee. Free 1040 ez You may also be directed to send certain Forms W-4 to the IRS. Free 1040 ez You may receive a notice from the IRS requiring you to submit a copy of Form W-4 for one or more of your named employees. Free 1040 ez Send the requested copy or copies of Form W-4 to the IRS at the address provided and in the manner directed by the notice. Free 1040 ez The IRS may also require you to submit copies of Form W-4 to the IRS as directed by Treasury Decision 9337, 2007-35 I. Free 1040 ez R. Free 1040 ez B. Free 1040 ez 455, which is available at www. Free 1040 ez irs. Free 1040 ez gov/irb/2007-35_IRB/ar10. Free 1040 ez html. Free 1040 ez When we refer to Form W-4, the same rules apply to Formulario W-4(SP), its Spanish translation. Free 1040 ez After submitting a copy of a requested Form W-4 to the IRS, continue to withhold federal income tax based on that Form W-4 if it is valid (see Invalid Forms W-4 , later in this section). Free 1040 ez However, if the IRS later notifies you in writing the employee is not entitled to claim exemption from withholding or a claimed number of withholding allowances, withhold federal income tax based on the effective date, marital status, and maximum number of withholding allowances specified in the IRS notice (commonly referred to as a "lock-in letter
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Contact My Local Office in Kansas

Face-to-face Tax Help

IRS Taxpayer Assistance Centers (TACs) are your source for personal tax help when you believe your tax issue can only be handled face-to-face. No appointment is necessary.

Keep in mind, many questions can be resolved online without waiting in line. Through IRS.gov you can:
• Set up a payment plan.
• Get a transcript of your tax return.
• Make a payment.
• Check on your refund.
• Find answers to many of your tax questions.

We are now referring all requests for tax return preparation services to other available resources. You can take advantage of free tax preparation through Free File, Free File Fillable Forms or through a volunteer site in your community. To find the nearest volunteer site location or to get more information about Free File, go to the top of the page and enter “Free Tax Help” in the Search box.

If you have a tax account issues and feel that it requires talking with someone face-to-face, visit your local TAC.

Caution:  Many of our offices are located in Federal Office Buildings. These buildings may not allow visitors to bring in cell phones with camera capabilities.

Multilingual assistance is available in every office. Hours of operation are subject to change.

Before visiting your local office click on "Services Provided" in the chart below to see what services are available. Services are limited and not all services are available at every TAC office and may vary from site to site. You can get these services on a walk-in basis.

 City Street Address  Days/Hours of Service  Telephone* 
Overland Park  6717 Shawnee Mission Pkwy
Overland Park, KS 66202 

Monday-Friday - 8:30 a.m.- 4:30 p.m.

 

**This office will be open until 6:00 p.m. on 4/14 & 4/15**

 

Services Provided

(816) 966-2840 
Topeka  120 S.E. Sixth Ave.
Topeka, KS 66603 

Monday-Friday - 8:30 a.m.- 4:30 p.m.

 

Services Provided

(785) 235-3053 
Wichita  555 N. Woodlawn
Building 4
Wichita, KS 67208 

Monday-Friday - 8:30 a.m.- 4:30 p.m.

 

Services Provided

(316) 352-7401 

* Note: The phone numbers in the chart above are not toll-free for all locations. When you call, you will reach a recorded business message with information about office hours, locations and services provided in that office. If face-to-face assistance is not a priority for you, you may also get help with IRS letters or resolve tax account issues by phone, toll free at 1-800-829-1040 (individuals) or 1-800-829-4933 (businesses).

For information on where to file your tax return please see Where to File Addresses.

The Taxpayer Advocate Service: Call (316) 651-2100 in Wichita or 1-877-777-4778 elsewhere, or see  Publication 1546 , The Taxpayer Advocate Service of the IRS. For further information, see  Tax Topic 104.

Partnerships

IRS and organizations all over the country are partnering to assist taxpayers. Through these partnerships, organizations are also achieving their own goals. These mutually beneficial partnerships are strengthening outreach efforts and bringing education and assistance to millions.

For more information about these programs for individuals and families, contact the Stakeholder Partnerships, Education and Communication Office at:

Internal Revenue Service
271 W. 3rd St N.
Wichita, KS 67202

For more information about these programs for businesses, your local Stakeholder Liaison office establishes relationships with organizations representing small business and self-employed taxpayers. They provide information about the policies, practices and procedures the IRS uses to ensure compliance with the tax laws. To establish a relationship with us, use this list to find a contact in your state:

Stakeholder Liaison (SL) Phone Numbers for Organizations Representing Small Businesses and Self-employed Taxpayers.

Page Last Reviewed or Updated: 28-Mar-2014

The Free 1040 Ez

Free 1040 ez 27. Free 1040 ez   Tax Benefits for Work-Related Education Table of Contents What's New Introduction Useful Items - You may want to see: Qualifying Work-Related EducationEducation Required by Employer or by Law Education To Maintain or Improve Skills Education To Meet Minimum Requirements Education That Qualifies You for a New Trade or Business What Expenses Can Be DeductedUnclaimed reimbursement. Free 1040 ez Transportation Expenses Travel Expenses No Double Benefit Allowed Reimbursements Deducting Business ExpensesSelf-Employed Persons Employees Performing Artists and Fee-Basis Officials Impairment-Related Work Expenses Recordkeeping What's New Standard mileage rate. Free 1040 ez  Generally, if you claim a business deduction for work-related education and you drive your car to and from school, the amount you can deduct for miles driven from January 1, 2013, through December 31, 2013, is 56½ cents per mile. Free 1040 ez For more information, see Transportation Expenses under What Expenses Can Be Deducted. Free 1040 ez Introduction This chapter discusses work-related education expenses that you may be able to deduct as business expenses. Free 1040 ez To claim such a deduction, you must: Itemize your deductions on Schedule A (Form 1040) if you are an employee, File Schedule C (Form 1040), Schedule C-EZ (Form 1040), or Schedule F (Form 1040) if you are self-employed, and Have expenses for education that meet the requirements discussed under Qualifying Work-Related Education . Free 1040 ez If you are an employee and can itemize your deductions, you may be able to claim a deduction for the expenses you pay for your work-related education. Free 1040 ez Your deduction will be the amount by which your qualifying work-related education expenses plus other job and certain miscellaneous expenses (except for impairment-related work expenses of disabled individuals) is greater than 2% of your adjusted gross income. Free 1040 ez See chapter 28. Free 1040 ez If you are self-employed, you deduct your expenses for qualifying work-related education directly from your self-employment income. Free 1040 ez Your work-related education expenses may also qualify you for other tax benefits, such as the American opportunity and lifetime learning credits (see chapter 35). Free 1040 ez You may qualify for these other benefits even if you do not meet the requirements listed earlier. Free 1040 ez Also, keep in mind that your work-related education expenses may qualify you to claim more than one tax benefit. Free 1040 ez Generally, you may claim any number of benefits as long as you use different expenses to figure each one. Free 1040 ez When you figure your taxes, you may want to compare these tax benefits so you can choose the method(s) that give you the lowest tax liability. Free 1040 ez Useful Items - You may want to see: Publication 463 Travel, Entertainment, Gift, and Car Expenses 970 Tax Benefits for Education Form (and Instructions) 2106 Employee Business Expenses 2106-EZ Unreimbursed Employee Business Expenses Schedule A (Form 1040) Itemized Deductions Qualifying Work-Related Education You can deduct the costs of qualifying work-related education as business expenses. Free 1040 ez This is education that meets at least one of the following two tests. Free 1040 ez The education is required by your employer or the law to keep your present salary, status, or job. Free 1040 ez The required education must serve a bona fide business purpose of your employer. Free 1040 ez The education maintains or improves skills needed in your present work. Free 1040 ez However, even if the education meets one or both of the above tests, it is not qualifying work-related education if it: Is needed to meet the minimum educational requirements of your present trade or business, or Is part of a program of study that will qualify you for a new trade or business. Free 1040 ez You can deduct the costs of qualifying work-related education as a business expense even if the education could lead to a degree. Free 1040 ez Use Figure 27-A, later, as a quick check to see if your education qualifies. Free 1040 ez Education Required by Employer or by Law Once you have met the minimum educational requirements for your job, your employer or the law may require you to get more education. Free 1040 ez This additional education is qualifying work-related education if all three of the following requirements are met. Free 1040 ez It is required for you to keep your present salary, status, or job, The requirement serves a bona fide business purpose of your employer, and The education is not part of a program that will qualify you for a new trade or business. Free 1040 ez When you get more education than your employer or the law requires, the additional education can be qualifying work-related education only if it maintains or improves skills required in your present work. Free 1040 ez See Education To Maintain or Improve Skills , later. Free 1040 ez Example. Free 1040 ez You are a teacher who has satisfied the minimum requirements for teaching. Free 1040 ez Your employer requires you to take an additional college course each year to keep your teaching job. Free 1040 ez If the courses will not qualify you for a new trade or business, they are qualifying work-related education even if you eventually receive a master's degree and an increase in salary because of this extra education. Free 1040 ez Education To Maintain or Improve Skills If your education is not required by your employer or the law, it can be qualifying work-related education only if it maintains or improves skills needed in your present work. Free 1040 ez This could include refresher courses, courses on current developments, and academic or vocational courses. Free 1040 ez Example. Free 1040 ez You repair televisions, radios, and stereo systems for XYZ Store. Free 1040 ez To keep up with the latest changes, you take special courses in radio and stereo service. Free 1040 ez These courses maintain and improve skills required in your work. Free 1040 ez Maintaining skills vs. Free 1040 ez qualifying for new job. Free 1040 ez   Education to maintain or improve skills needed in your present work is not qualifying education if it will also qualify you for a new trade or business. Free 1040 ez Education during temporary absence. Free 1040 ez   If you stop working for a year or less in order to get education to maintain or improve skills needed in your present work and then return to the same general type of work, your absence is considered temporary. Free 1040 ez Education that you get during a temporary absence is qualifying work-related education if it maintains or improves skills needed in your present work. Free 1040 ez Example. Free 1040 ez You quit your biology research job to become a full-time biology graduate student for one year. Free 1040 ez If you return to work in biology research after completing the courses, the education is related to your present work even if you do not go back to work with the same employer. Free 1040 ez Education during indefinite absence. Free 1040 ez   If you stop work for more than a year, your absence from your job is considered indefinite. Free 1040 ez Education during an indefinite absence, even if it maintains or improves skills needed in the work from which you are absent, is considered to qualify you for a new trade or business. Free 1040 ez Therefore, it is not qualifying work-related education. Free 1040 ez Education To Meet Minimum Requirements Education you need to meet the minimum educational requirements for your present trade or business is not qualifying work-related education. Free 1040 ez The minimum educational requirements are determined by: Laws and regulations, Standards of your profession, trade, or business, and Your employer. Free 1040 ez Once you have met the minimum educational requirements that were in effect when you were hired, you do not have to meet any new minimum educational requirements. Free 1040 ez This means that if the minimum requirements change after you were hired, any education you need to meet the new requirements can be qualifying education. Free 1040 ez You have not necessarily met the minimum educational requirements of your trade or business simply because you are already doing the work. Free 1040 ez Example 1. Free 1040 ez You are a full-time engineering student. Free 1040 ez Although you have not received your degree or certification, you work part-time as an engineer for a firm that will employ you as a full-time engineer after you finish college. Free 1040 ez Although your college engineering courses improve your skills in your present job, they are also needed to meet the minimum job requirements for a full-time engineer. Free 1040 ez The education is not qualifying work-related education. Free 1040 ez Example 2. Free 1040 ez You are an accountant and you have met the minimum educational requirements of your employer. Free 1040 ez Your employer later changes the minimum educational requirements and requires you to take college courses to keep your job. Free 1040 ez These additional courses can be qualifying work-related education because you have already satisfied the minimum requirements that were in effect when you were hired. Free 1040 ez Requirements for Teachers States or school districts usually set the minimum educational requirements for teachers. Free 1040 ez The requirement is the college degree or the minimum number of college hours usually required of a person hired for that position. Free 1040 ez If there are no requirements, you will have met the minimum educational requirements when you become a faculty member. Free 1040 ez The determination of whether you are a faculty member of an educational institution must be made on the basis of the particular practices of the institution. Free 1040 ez You generally will be considered a faculty member when one or more of the following occurs. Free 1040 ez You have tenure. Free 1040 ez Your years of service count toward obtaining tenure. Free 1040 ez You have a vote in faculty decisions. Free 1040 ez Your school makes contributions for you to a retirement plan other than social security or a similar program. Free 1040 ez Example 1. Free 1040 ez The law in your state requires beginning secondary school teachers to have a bachelor's degree, including 10 professional education courses. Free 1040 ez In addition, to keep the job a teacher must complete a fifth year of training within 10 years from the date of hire. Free 1040 ez If the employing school certifies to the state Department of Education that qualified teachers cannot be found, the school can hire persons with only 3 years of college. Free 1040 ez However, to keep their jobs, these teachers must get a bachelor's degree and the required professional education courses within 3 years. Free 1040 ez Under these facts, the bachelor's degree, whether or not it includes the 10 professional education courses, is considered the minimum educational requirement for qualification as a teacher in your state. Free 1040 ez If you have all the required education except the fifth year, you have met the minimum educational requirements. Free 1040 ez The fifth year of training is qualifying work-related education unless it is part of a program of study that will qualify you for a new trade or business. Free 1040 ez Figure 27-A Does Your Work-Related Education Qualify? Please click here for the text description of the image. Free 1040 ez Figure 27-A. Free 1040 ez Does Your Work-Related Education Qualify?" Example 2. Free 1040 ez Assume the same facts as in Example 1 except that you have a bachelor's degree and only six professional education courses. Free 1040 ez The additional four education courses can be qualifying work-related education. Free 1040 ez Although you do not have all the required courses, you have already met the minimum educational requirements. Free 1040 ez Example 3. Free 1040 ez Assume the same facts as in Example 1 except that you are hired with only 3 years of college. Free 1040 ez The courses you take that lead to a bachelor's degree (including those in education) are not qualifying work-related education. Free 1040 ez They are needed to meet the minimum educational requirements for employment as a teacher. Free 1040 ez Example 4. Free 1040 ez You have a bachelor's degree and you work as a temporary instructor at a university. Free 1040 ez At the same time, you take graduate courses toward an advanced degree. Free 1040 ez The rules of the university state that you can become a faculty member only if you get a graduate degree. Free 1040 ez Also, you can keep your job as an instructor only as long as you show satisfactory progress toward getting this degree. Free 1040 ez You have not met the minimum educational requirements to qualify you as a faculty member. Free 1040 ez The graduate courses are not qualifying work-related education. Free 1040 ez Certification in a new state. Free 1040 ez   Once you have met the minimum educational requirements for teachers for your state, you are considered to have met the minimum educational requirements in all states. Free 1040 ez This is true even if you must get additional education to be certified in another state. Free 1040 ez Any additional education you need is qualifying work-related education. Free 1040 ez You have already met the minimum requirements for teaching. Free 1040 ez Teaching in another state is not a new trade or business. Free 1040 ez Example. Free 1040 ez You hold a permanent teaching certificate in State A and are employed as a teacher in that state for several years. Free 1040 ez You move to State B and are promptly hired as a teacher. Free 1040 ez You are required, however, to complete certain prescribed courses to get a permanent teaching certificate in State B. Free 1040 ez These additional courses are qualifying work-related education because the teaching position in State B involves the same general kind of work for which you were qualified in State A. Free 1040 ez Education That Qualifies You for a New Trade or Business Education that is part of a program of study that will qualify you for a new trade or business is not qualifying work-related education. Free 1040 ez This is true even if you do not plan to enter that trade or business. Free 1040 ez If you are an employee, a change of duties that involves the same general kind of work is not a new trade or business. Free 1040 ez Example 1. Free 1040 ez You are an accountant. Free 1040 ez Your employer requires you to get a law degree at your own expense. Free 1040 ez You register at a law school for the regular curriculum that leads to a law degree. Free 1040 ez Even if you do not intend to become a lawyer, the education is not qualifying because the law degree will qualify you for a new trade or business. Free 1040 ez Example 2. Free 1040 ez You are a general practitioner of medicine. Free 1040 ez You take a 2-week course to review developments in several specialized fields of medicine. Free 1040 ez The course does not qualify you for a new profession. Free 1040 ez It is qualifying work-related education because it maintains or improves skills required in your present profession. Free 1040 ez Example 3. Free 1040 ez While working in the private practice of psychiatry, you enter a program to study and train at an accredited psychoanalytic institute. Free 1040 ez The program will lead to qualifying you to practice psychoanalysis. Free 1040 ez The psychoanalytic training does not qualify you for a new profession. Free 1040 ez It is qualifying work-related education because it maintains or improves skills required in your present profession. Free 1040 ez Bar or CPA Review Course Review courses to prepare for the bar examination or the certified public accountant (CPA) examination are not qualifying work-related education. Free 1040 ez They are part of a program of study that can qualify you for a new profession. Free 1040 ez Teaching and Related Duties All teaching and related duties are considered the same general kind of work. Free 1040 ez A change in duties in any of the following ways is not considered a change to a new business. Free 1040 ez Elementary school teacher to secondary school teacher. Free 1040 ez Teacher of one subject, such as biology, to teacher of another subject, such as art. Free 1040 ez Classroom teacher to guidance counselor. Free 1040 ez Classroom teacher to school administrator. Free 1040 ez What Expenses Can Be Deducted If your education meets the requirements described earlier under Qualifying Work-Related Education , you can generally deduct your education expenses as business expenses. Free 1040 ez If you are not self-employed, you can deduct business expenses only if you itemize your deductions. Free 1040 ez You cannot deduct expenses related to tax-exempt and excluded income. Free 1040 ez Deductible expenses. Free 1040 ez   The following education expenses can be deducted. Free 1040 ez Tuition, books, supplies, lab fees, and similar items. Free 1040 ez Certain transportation and travel costs. Free 1040 ez Other education expenses, such as costs of research and typing when writing a paper as part of an educational program. Free 1040 ez Nondeductible expenses. Free 1040 ez   You cannot deduct personal or capital expenses. Free 1040 ez For example, you cannot deduct the dollar value of vacation time or annual leave you take to attend classes. Free 1040 ez This amount is a personal expense. Free 1040 ez Unclaimed reimbursement. Free 1040 ez   If you do not claim reimbursement that you are entitled to receive from your employer, you cannot deduct the expenses that apply to that unclaimed reimbursement. Free 1040 ez Example. Free 1040 ez Your employer agrees to pay your education expenses if you file a voucher showing your expenses. Free 1040 ez You do not file a voucher, and you do not get reimbursed. Free 1040 ez Because you did not file a voucher, you cannot deduct the expenses on your tax return. Free 1040 ez Transportation Expenses If your education qualifies, you can deduct local transportation costs of going directly from work to school. Free 1040 ez If you are regularly employed and go to school on a temporary basis, you can also deduct the costs of returning from school to home. Free 1040 ez Temporary basis. Free 1040 ez   You go to school on a temporary basis if either of the following situations applies to you. Free 1040 ez Your attendance at school is realistically expected to last 1 year or less and does indeed last for 1 year or less. Free 1040 ez Initially, your attendance at school is realistically expected to last 1 year or less, but at a later date your attendance is reasonably expected to last more than 1 year. Free 1040 ez Your attendance is temporary up to the date you determine it will last more than 1 year. Free 1040 ez Note. Free 1040 ez If you are in either situation (1) or (2), your attendance is not temporary if facts and circumstances indicate otherwise. Free 1040 ez Attendance not on a temporary basis. Free 1040 ez   You do not go to school on a temporary basis if either of the following situations apply to you. Free 1040 ez Your attendance at school is realistically expected to last more than 1 year. Free 1040 ez It does not matter how long you actually attend. Free 1040 ez Initially, your attendance at school is realistically expected to last 1 year or less, but at a later date your attendance is reasonably expected to last more than 1 year. Free 1040 ez Your attendance is not temporary after the date you determine it will last more than 1 year. Free 1040 ez Deductible Transportation Expenses If you are regularly employed and go directly from home to school on a temporary basis, you can deduct the round-trip costs of transportation between your home and school. Free 1040 ez This is true regardless of the location of the school, the distance traveled, or whether you attend school on nonwork days. Free 1040 ez Transportation expenses include the actual costs of bus, subway, cab, or other fares, as well as the costs of using your car. Free 1040 ez Transportation expenses do not include amounts spent for travel, meals, or lodging while you are away from home overnight. Free 1040 ez Example 1. Free 1040 ez You regularly work in a nearby town, and go directly from work to home. Free 1040 ez You also attend school every work night for 3 months to take a course that improves your job skills. Free 1040 ez Since you are attending school on a temporary basis, you can deduct your daily round-trip transportation expenses in going between home and school. Free 1040 ez This is true regardless of the distance traveled. Free 1040 ez Example 2. Free 1040 ez Assume the same facts as in Example 1 except that on certain nights you go directly from work to school and then home. Free 1040 ez You can deduct your transportation expenses from your regular work site to school and then home. Free 1040 ez Example 3. Free 1040 ez Assume the same facts as in Example 1 except that you attend the school for 9 months on Saturdays, nonwork days. Free 1040 ez Since you are attending school on a temporary basis, you can deduct your round-trip transportation expenses in going between home and school. Free 1040 ez Example 4. Free 1040 ez Assume the same facts as in Example 1 except that you attend classes twice a week for 15 months. Free 1040 ez Since your attendance in school is not considered temporary, you cannot deduct your transportation expenses in going between home and school. Free 1040 ez If you go directly from work to school, you can deduct the one-way transportation expenses of going from work to school. Free 1040 ez If you go from work to home to school and return home, your transportation expenses cannot be more than if you had gone directly from work to school. Free 1040 ez Using your car. Free 1040 ez   If you use your car (whether you own or lease it) for transportation to school, you can deduct your actual expenses or use the standard mileage rate to figure the amount you can deduct. Free 1040 ez The standard mileage rate for miles driven from January 1, 2013, through December 31, 2013 is 56½ cents per mile. Free 1040 ez Whichever method you use, you can also deduct parking fees and tolls. Free 1040 ez See chapter 26 for information on deducting your actual expenses of using a car. Free 1040 ez Travel Expenses You can deduct expenses for travel, meals (see 50% limit on meals , later), and lodging if you travel overnight mainly to obtain qualifying work-related education. Free 1040 ez Travel expenses for qualifying work-related education are treated the same as travel expenses for other employee business purposes. Free 1040 ez For more information, see chapter 26. Free 1040 ez You cannot deduct expenses for personal activities, such as sightseeing, visiting, or entertaining. Free 1040 ez Mainly personal travel. Free 1040 ez   If your travel away from home is mainly personal, you cannot deduct all of your expenses for travel, meals, and lodging. Free 1040 ez You can deduct only your expenses for lodging and 50% of your expenses for meals during the time you attend the qualified educational activities. Free 1040 ez   Whether a trip's purpose is mainly personal or educational depends upon the facts and circumstances. Free 1040 ez An important factor is the comparison of time spent on personal activities with time spent on educational activities. Free 1040 ez If you spend more time on personal activities, the trip is considered mainly educational only if you can show a substantial nonpersonal reason for traveling to a particular location. Free 1040 ez Example 1. Free 1040 ez John works in Newark, New Jersey. Free 1040 ez He traveled to Chicago to take a deductible 1-week course at the request of his employer. Free 1040 ez His main reason for going to Chicago was to take the course. Free 1040 ez While there, he took a sight-seeing trip, entertained some friends, and took a side trip to Pleasantville for a day. Free 1040 ez Since the trip was mainly for business, John can deduct his round-trip airfare to Chicago. Free 1040 ez He cannot deduct his transportation expenses of going to Pleasantville. Free 1040 ez He can deduct only the meals (subject to the 50% limit) and lodging connected with his educational activities. Free 1040 ez Example 2. Free 1040 ez Sue works in Boston. Free 1040 ez She went to a university in Michigan to take a course for work. Free 1040 ez The course is qualifying work-related education. Free 1040 ez She took one course, which is one-fourth of a full course load of study. Free 1040 ez She spent the rest of the time on personal activities. Free 1040 ez Her reasons for taking the course in Michigan were all personal. Free 1040 ez Sue's trip is mainly personal because three-fourths of her time is considered personal time. Free 1040 ez She cannot deduct the cost of her round-trip train ticket to Michigan. Free 1040 ez She can deduct one-fourth of the meals (subject to the 50% limit) and lodging costs for the time she attended the university. Free 1040 ez Example 3. Free 1040 ez Dave works in Nashville and recently traveled to California to take a 2-week seminar. Free 1040 ez The seminar is qualifying work-related education. Free 1040 ez While there, he spent an extra 8 weeks on personal activities. Free 1040 ez The facts, including the extra 8-week stay, show that his main purpose was to take a vacation. Free 1040 ez Dave cannot deduct his round-trip airfare or his meals and lodging for the 8 weeks. Free 1040 ez He can deduct only his expenses for meals (subject to the 50% limit) and lodging for the 2 weeks he attended the seminar. Free 1040 ez Cruises and conventions. Free 1040 ez   Certain cruises and conventions offer seminars or courses as part of their itinerary. Free 1040 ez Even if the seminars or courses are work-related, your deduction for travel may be limited. Free 1040 ez This applies to: Travel by ocean liner, cruise ship, or other form of luxury water transportation, and Conventions outside the North American area. Free 1040 ez   For a discussion of the limits on travel expense deductions that apply to cruises and conventions, see Luxury Water Travel and Conventions in chapter 1 of Publication 463. Free 1040 ez 50% limit on meals. Free 1040 ez   You can deduct only 50% of the cost of your meals while traveling away from home to obtain qualifying work-related education. Free 1040 ez You cannot have been reimbursed for the meals. Free 1040 ez   Employees must use Form 2106 or Form 2106-EZ to apply the 50% limit. Free 1040 ez Travel as Education You cannot deduct the cost of travel as a form of education even if it is directly related to your duties in your work or business. Free 1040 ez Example. Free 1040 ez You are a French language teacher. Free 1040 ez While on sabbatical leave granted for travel, you traveled through France to improve your knowledge of the French language. Free 1040 ez You chose your itinerary and most of your activities to improve your French language skills. Free 1040 ez You cannot deduct your travel expenses as education expenses. Free 1040 ez This is true even if you spent most of your time learning French by visiting French schools and families, attending movies or plays, and engaging in similar activities. Free 1040 ez No Double Benefit Allowed You cannot do either of the following. Free 1040 ez Deduct work-related education expenses as business expenses if you benefit from these expenses under any other provision of the law, for example, the tuition and fees deduction (see chapter 35). Free 1040 ez Deduct work-related education expenses paid with tax-free scholarship, grant, or employer-provided educational assistance. Free 1040 ez See Adjustments to Qualifying Work-Related Education Expenses , next. Free 1040 ez Adjustments to Qualifying Work-Related Education Expenses If you pay qualifying work-related education expenses with certain tax-free funds, you cannot claim a deduction for those amounts. Free 1040 ez You must reduce the qualifying expenses by the amount of such expenses allocable to the tax-free educational assistance. Free 1040 ez For more information, see chapter 12 of Publication 970. Free 1040 ez Tax-free educational assistance includes: The tax-free part of scholarships and fellowships (see chapter 1 of Publication 970), The tax-free part of Pell grants (see chapter 1 of Publication 970), The tax-free part of employer-provided educational assistance (see chapter 11 of Publication 970), Veterans' educational assistance (see chapter 1 of Publication 970), and Any other nontaxable (tax-free) payments (other than gifts or inheritances) received for education assistance. Free 1040 ez Amounts that do not reduce qualifying work-related education expenses. Free 1040 ez   Do not reduce the qualifying work-related education expenses by amounts paid with funds the student receives as: Payment for services, such as wages, A loan, A gift, An inheritance, or A withdrawal from the student's personal savings. Free 1040 ez   Also, do not reduce the qualifying work-related education expenses by any scholarship or fellowship reported as income on the student's return or any scholarship which, by its terms, cannot be applied to qualifying work-related education expenses. Free 1040 ez Reimbursements How you treat reimbursements depends on the arrangement you have with your employer. Free 1040 ez There are two basic types of reimbursement arrangements—accountable plans and nonaccountable plans. Free 1040 ez You can tell the type of plan you are reimbursed under by the way the reimbursement is reported on your Form W-2. Free 1040 ez For information on how to treat reimbursements under both accountable and nonaccountable plans, see Reimbursements in chapter 26. Free 1040 ez Deducting Business Expenses Self-employed persons and employees report business expenses differently. Free 1040 ez The following information explains what forms you must use to deduct the cost of your qualifying work-related education as a business expense. Free 1040 ez Self-Employed Persons If you are self-employed, report the cost of your qualifying work-related education on the appropriate form used to report your business income and expenses (generally Schedule C, C-EZ, or F). Free 1040 ez If your educational expenses include expenses for a car or truck, travel, or meals, report those expenses the same way you report other business expenses for those items. Free 1040 ez See the instructions for the form you file for information on how to complete it. Free 1040 ez Employees If you are an employee, you can deduct the cost of qualifying work-related education only if you: Did not receive (and were not entitled to receive) any reimbursement from your employer, Were reimbursed under a nonaccountable plan (amount is included in box 1 of Form W-2), or Received reimbursement under an accountable plan, but the amount received was less than your expenses for which you claimed reimbursement. Free 1040 ez If either (1) or (2) applies, you can deduct the total qualifying cost. Free 1040 ez If (3) applies, you can deduct only the qualifying costs that were more than your reimbursement. Free 1040 ez In order to deduct the cost of your qualifying work-related education as a business expense, include the amount with your deduction for any other employee business expenses on Schedule A (Form 1040), line 21. Free 1040 ez (Special rules for expenses of certain performing artists and fee-basis officials and for impairment-related work expenses are explained later. Free 1040 ez ) This deduction (except for impairment-related work expenses of disabled individuals) is subject to the 2%-of-adjusted-gross-income limit that applies to most miscellaneous itemized deductions. Free 1040 ez See chapter 28. Free 1040 ez Form 2106 or 2106-EZ. Free 1040 ez   To figure your deduction for employee business expenses, including qualifying work-related education, you generally must complete Form 2106 or Form 2106-EZ. Free 1040 ez Form not required. Free 1040 ez   Do not complete either Form 2106 or Form 2106-EZ if: If amounts included in box 1 of your Form W-2, are not considered reimbursements, and You are not claiming travel, transportation, meal, or entertainment expenses. Free 1040 ez   If you meet both of these requirements, enter the expenses directly on Schedule A (Form 1040), line 21. Free 1040 ez (Special rules for expenses of certain performing artists and fee-basis officials and for impairment-related work expenses are explained later. Free 1040 ez ) Using Form 2106-EZ. Free 1040 ez   This form is shorter and easier to use than Form 2106. Free 1040 ez Generally, you can use this form if: All reimbursements, if any, are included in box 1 of your Form W-2, and You are using the standard mileage rate if you are claiming vehicle expenses. Free 1040 ez   If you do not meet both of these requirements, use Form 2106. Free 1040 ez Performing Artists and Fee-Basis Officials If you are a qualified performing artist, or a state (or local) government official who is paid in whole or in part on a fee basis, you can deduct the cost of your qualifying work-related education as an adjustment to gross income rather than as an itemized deduction. Free 1040 ez Include the cost of your qualifying work-related education with any other employee business expenses on Form 1040, line 24. Free 1040 ez You do not have to itemize your deductions on Schedule A (Form 1040), and, therefore, the deduction is not subject to the 2%-of-adjusted-gross-income limit. Free 1040 ez You must complete Form 2106 or 2106-EZ to figure your deduction, even if you meet the requirements described earlier under Form not required . Free 1040 ez For more information on qualified performing artists, see chapter 6 of Publication 463. Free 1040 ez Impairment-Related Work Expenses If you are disabled and have impairment-related work expenses that are necessary for you to be able to get qualifying work-related education, you can deduct these expenses on Schedule A (Form 1040), line 28. Free 1040 ez They are not subject to the 2%-of-adjusted-gross-income limit. Free 1040 ez To deduct these expenses, you must complete Form 2106 or 2106-EZ even if you meet the requirements described earlier under Form not required . Free 1040 ez For more information on impairment-related work expenses, see chapter 6 of Publication 463. Free 1040 ez Recordkeeping You must keep records as proof of any deduction claimed on your tax return. Free 1040 ez Generally, you should keep your records for 3 years from the date of filing the tax return and claiming the deduction. Free 1040 ez For specific information about keeping records of business expenses, see Recordkeeping in chapter 26. Free 1040 ez Prev  Up  Next   Home   More Online Publications