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Free Tax Calculator 2011

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Free Tax Calculator 2011

Free tax calculator 2011 Publication 946 - Introductory Material Table of Contents What's New for 2013 What's New for 2014 Reminders IntroductionOrdering forms and publications. Free tax calculator 2011 Tax questions. Free tax calculator 2011 What's New for 2013 Increased section 179 deduction dollar limits. Free tax calculator 2011  The maximum amount you can elect to deduct for most section 179 property you placed in service in 2013 is $500,000 ($535,000 for qualified enterprise zone property). Free tax calculator 2011 This limit is reduced by the amount by which the cost of the property placed in service during the tax year exceeds $2,000,000. Free tax calculator 2011 See Dollar Limits under How Much Can You Deduct in chapter 2. Free tax calculator 2011 Depreciation limits on business vehicles. Free tax calculator 2011  The total section 179 deduction and depreciation you can deduct for a passenger automobile (that is not a truck or van) you use in your business and first placed in service in 2013 is $3,160, if the special depreciation allowance does not apply. Free tax calculator 2011 The maximum deduction you can take for a truck or van you use in your business and first placed in service in 2013 is $3,360, if the special depreciation allowance does not apply. Free tax calculator 2011 See Maximum Depreciation Deduction in chapter 5. Free tax calculator 2011 Special allowance for qualified second generation biofuel plant property. Free tax calculator 2011 . Free tax calculator 2011  For tax years ending after December 31, 2012, you may be able to take a 50% special depreciation allowance for qualified second generation biofuel plant property placed in service after January 2, 2013, and before January 1, 2014. Free tax calculator 2011 Election to accelerate minimum tax credits for round 3 extension property. Free tax calculator 2011 . Free tax calculator 2011  For tax years ending after December 31, 2012, a corporation can elect to claim pre-2006 unused minimum tax credits in lieu of the special depreciation allowance for round 3 extension property. Free tax calculator 2011 What's New for 2014 Expiration of the increased section 179 deduction limits and expanded definition of section 179 property. Free tax calculator 2011  For tax years beginning after 2013, the increased section 179 expense deduction limit and threshold amount before reduction in limitation will no longer apply. Free tax calculator 2011 Also, the definition of section 179 property will no longer include certain qualified real property. Free tax calculator 2011 Expiration of the 7-year recovery period for motor sports entertainment complexes. Free tax calculator 2011  Qualified motor sports entertainment complex property placed in service after December 31, 2013, will not be treated as 7-year property under MACRS. Free tax calculator 2011 Expiration of the 15-year recovery period for qualified leasehold improvement, restaurant, and retail improvement properties. Free tax calculator 2011  Qualified leasehold improvement property, qualified restaurant property, and qualified retail improvement property placed in service after December 31, 2013, will not be treated as 15-year property under MACRS. Free tax calculator 2011 Expiration of the accelerated depreciation for qualified Indian reservation property. Free tax calculator 2011  The accelerated depreciation of property on an Indian Reservation will not apply to property placed in service after December 31, 2013. Free tax calculator 2011 Expiration of the 3-year recovery period for certain race horses. Free tax calculator 2011  The 3-year recovery period for race horses two years old or younger will expire for such horses placed in service after December 31, 2013. Free tax calculator 2011 Reminders Photographs of missing children. Free tax calculator 2011  The Internal Revenue Service is a proud partner with the National Center for Missing and Exploited Children. Free tax calculator 2011 Photographs of missing children selected by the Center may appear in this publication on pages that would otherwise be blank. Free tax calculator 2011 You can help bring these children home by looking at the photographs and calling 1-800-THE-LOST (1-800-843-5678) if you recognize a child. Free tax calculator 2011 Introduction Future developments. Free tax calculator 2011   For the latest information about developments related to Publication 946 such as legislation enacted after this publication was published, go to www. Free tax calculator 2011 irs. Free tax calculator 2011 gov/pub946. Free tax calculator 2011 This publication explains how you can recover the cost of business or income-producing property through deductions for depreciation (for example, the special depreciation allowance and deductions under the Modified Accelerated Cost Recovery System (MACRS)). Free tax calculator 2011 It also explains how you can elect to take a section 179 deduction, instead of depreciation deductions, for certain property, and the additional rules for listed property. Free tax calculator 2011 The depreciation methods discussed in this publication generally do not apply to property placed in service before 1987. Free tax calculator 2011 For more information, see Publication 534, Depreciating Property Placed in Service Before 1987. Free tax calculator 2011 Definitions. Free tax calculator 2011   Many of the terms used in this publication are defined in the Glossary near the end of the publication. Free tax calculator 2011 Glossary terms used in each discussion under the major headings are listed before the beginning of each discussion throughout the publication. Free tax calculator 2011 Do you need a different publication?   The following table shows where you can get more detailed information when depreciating certain types of property. Free tax calculator 2011 For information on depreciating: See Publication: A car 463, Travel, Entertainment, Gift, and Car Expenses Residential rental property 527, Residential Rental Property (Including Rental of Vacation Home) Office space in your home 587, Business Use of Your Home (Including Use by Daycare Providers) Farm property 225, Farmer's Tax Guide Comments and suggestions. Free tax calculator 2011   We welcome your comments about this publication and your suggestions for future editions. Free tax calculator 2011   You can write to us at the following address: Internal Revenue Service Business, Exempt Organizations and International Forms and Publications Branch SE:W:CAR:MP:T:B 1111 Constitution Ave. Free tax calculator 2011 NW, IR-6526 Washington, DC 20224   We respond to many letters by telephone. Free tax calculator 2011 Therefore, it would be helpful if you would include your daytime phone number, including the area code, in your correspondence. Free tax calculator 2011   You can send us comments from www. Free tax calculator 2011 irs. Free tax calculator 2011 gov/formspubs/. Free tax calculator 2011 Select “Comment on Tax Forms and Publications” under “More Information. Free tax calculator 2011 ”   Although we cannot respond individually to each comment received, we do appreciate your feedback and will consider your comments as we revise our tax products. Free tax calculator 2011 Ordering forms and publications. Free tax calculator 2011   Visit www. Free tax calculator 2011 irs. Free tax calculator 2011 gov/formspubs/ to download forms and publications, call 1-800-TAX-FORM (1-800-829-3676), or write to the address below and receive a response within 10 days after your request is received. Free tax calculator 2011 Internal Revenue Service 1201 N. Free tax calculator 2011 Mitsubishi Motorway Bloomington, IL 61705-6613 Tax questions. Free tax calculator 2011   If you have a tax question, check the information available on IRS. Free tax calculator 2011 gov or call 1-800-829-1040. Free tax calculator 2011 We cannot answer tax questions sent to either of the above addresses. Free tax calculator 2011 Prev  Up  Next   Home   More Online Publications
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Foreign Visitors Driving in the U.S.

Quick facts for foreign visitors, students, and residents about driving in the United States of America.

Short-Term Visitors

If you plan to drive when you visit the United States, check the driving rules in the state(s) you'll be visiting to verify that you can use your non-U.S. driver's license. You should get an International Driving Permit (IDP), which translates the information contained on your official driver's license into 10 languages.

The United States does not issue International Driving Permits to foreign visitors, so you will need to obtain this document in your home country before you travel to the United States.

Students

If you are a foreign student coming to the United States to study, you should contact the university or college you'll be attending for information about driving.

Residents (Non-U.S. Citizens)

The residency requirement for obtaining a U.S. driver's license is different in each state. Check the department of motor vehicles in the state where you live to see the requirements.

If you are eligible to apply for a driver's license, you can only get a driver's license from the state where you live. Check with your state's department of motor vehicles to find out how to apply.

Once you receive your U.S. driver's license from a state motor vehicle department, you can drive in all U.S. states. Remember that the driving laws in each state differ and it is your responsibility to know and obey the laws of the state where you are driving.

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The Free Tax Calculator 2011

Free tax calculator 2011 2. Free tax calculator 2011   Simplified Employee Pensions (SEPs) Table of Contents Topics - This chapter discusses: Useful Items - You may want to see: Setting Up a SEPWhen not to use Form 5305-SEP. Free tax calculator 2011 How Much Can I Contribute?Contribution Limits Deducting ContributionsDeduction Limit for Contributions for Participants Deduction Limit for Self-Employed Individuals Carryover of Excess SEP Contributions When To Deduct Contributions Where To Deduct Contributions Salary Reduction Simplified Employee Pensions (SARSEPs)SARSEP ADP test. Free tax calculator 2011 Deferral percentage. Free tax calculator 2011 Employee compensation. Free tax calculator 2011 Compensation of self-employed individuals. Free tax calculator 2011 Choice not to treat deferrals as compensation. Free tax calculator 2011 Limit on Elective Deferrals Tax Treatment of Deferrals Distributions (Withdrawals) Additional TaxesEffects on employee. Free tax calculator 2011 Reporting and Disclosure Requirements Topics - This chapter discusses: Setting up a SEP How much can I contribute Deducting contributions Salary reduction simplified employee pensions (SARSEPs) Distributions (withdrawals) Additional taxes Reporting and disclosure requirements Useful Items - You may want to see: Publication 590 Individual Retirement Arrangements (IRAs) 3998 Choosing A Retirement Solution for Your Small Business 4285 SEP Checklist 4286 SARSEP Checklist 4333 SEP Retirement Plans for Small Businesses 4336 SARSEP for Small Businesses 4407 SARSEP—Key Issues and Assistance Forms (and Instructions) W-2 Wage and Tax Statement 1040 U. Free tax calculator 2011 S. Free tax calculator 2011 Individual Income Tax Return 5305-SEP Simplified Employee Pension—Individual Retirement Accounts Contribution Agreement 5305A-SEP Salary Reduction Simplified Employee Pension—Individual Retirement Accounts Contribution Agreement 8880 Credit for Qualified Retirement Savings Contributions 8881 Credit for Small Employer Pension Plan Startup Costs A SEP is a written plan that allows you to make contributions toward your own retirement and your employees' retirement without getting involved in a more complex qualified plan. Free tax calculator 2011 Under a SEP, you make contributions to a traditional individual retirement arrangement (called a SEP-IRA) set up by or for each eligible employee. Free tax calculator 2011 A SEP-IRA is owned and controlled by the employee, and you make contributions to the financial institution where the SEP-IRA is maintained. Free tax calculator 2011 SEP-IRAs are set up for, at a minimum, each eligible employee (defined below). Free tax calculator 2011 A SEP-IRA may have to be set up for a leased employee (defined in chapter 1), but does not need to be set up for excludable employees (defined later). Free tax calculator 2011 Eligible employee. Free tax calculator 2011   An eligible employee is an individual who meets all the following requirements. Free tax calculator 2011 Has reached age 21. Free tax calculator 2011 Has worked for you in at least 3 of the last 5 years. Free tax calculator 2011 Has received at least $550 in compensation from you in 2013. Free tax calculator 2011 This amount remains the same in 2014. Free tax calculator 2011    You can use less restrictive participation requirements than those listed, but not more restrictive ones. Free tax calculator 2011 Excludable employees. Free tax calculator 2011   The following employees can be excluded from coverage under a SEP. Free tax calculator 2011 Employees covered by a union agreement and whose retirement benefits were bargained for in good faith by the employees' union and you. Free tax calculator 2011 Nonresident alien employees who have received no U. Free tax calculator 2011 S. Free tax calculator 2011 source wages, salaries, or other personal services compensation from you. Free tax calculator 2011 For more information about nonresident aliens, see Publication 519, U. Free tax calculator 2011 S. Free tax calculator 2011 Tax Guide for Aliens. Free tax calculator 2011 Setting Up a SEP There are three basic steps in setting up a SEP. Free tax calculator 2011 You must execute a formal written agreement to provide benefits to all eligible employees. Free tax calculator 2011 You must give each eligible employee certain information about the SEP. Free tax calculator 2011 A SEP-IRA must be set up by or for each eligible employee. Free tax calculator 2011 Many financial institutions will help you set up a SEP. Free tax calculator 2011 Formal written agreement. Free tax calculator 2011   You must execute a formal written agreement to provide benefits to all eligible employees under a SEP. Free tax calculator 2011 You can satisfy the written agreement requirement by adopting an IRS model SEP using Form 5305-SEP. Free tax calculator 2011 However, see When not to use Form 5305-SEP, below. Free tax calculator 2011   If you adopt an IRS model SEP using Form 5305-SEP, no prior IRS approval or determination letter is required. Free tax calculator 2011 Keep the original form. Free tax calculator 2011 Do not file it with the IRS. Free tax calculator 2011 Also, using Form 5305-SEP will usually relieve you from filing annual retirement plan information returns with the IRS and the Department of Labor. Free tax calculator 2011 See the Form 5305-SEP instructions for details. Free tax calculator 2011 If you choose not to use Form 5305-SEP, you should seek professional advice in adopting a SEP. Free tax calculator 2011 When not to use Form 5305-SEP. Free tax calculator 2011   You cannot use Form 5305-SEP if any of the following apply. Free tax calculator 2011 You currently maintain any other qualified retirement plan other than another SEP. Free tax calculator 2011 You have any eligible employees for whom IRAs have not been set up. Free tax calculator 2011 You use the services of leased employees, who are not your common-law employees (as described in chapter 1). Free tax calculator 2011 You are a member of any of the following unless all eligible employees of all the members of these groups, trades, or businesses participate under the SEP. Free tax calculator 2011 An affiliated service group described in section 414(m). Free tax calculator 2011 A controlled group of corporations described in section 414(b). Free tax calculator 2011 Trades or businesses under common control described in section 414(c). Free tax calculator 2011 You do not pay the cost of the SEP contributions. Free tax calculator 2011 Information you must give to employees. Free tax calculator 2011   You must give each eligible employee a copy of Form 5305-SEP, its instructions, and the other information listed in the Form 5305-SEP instructions. Free tax calculator 2011 An IRS model SEP is not considered adopted until you give each employee this information. Free tax calculator 2011 Setting up the employee's SEP-IRA. Free tax calculator 2011   A SEP-IRA must be set up by or for each eligible employee. Free tax calculator 2011 SEP-IRAs can be set up with banks, insurance companies, or other qualified financial institutions. Free tax calculator 2011 You send SEP contributions to the financial institution where the SEP-IRA is maintained. Free tax calculator 2011 Deadline for setting up a SEP. Free tax calculator 2011   You can set up a SEP for any year as late as the due date (including extensions) of your income tax return for that year. Free tax calculator 2011 Credit for startup costs. Free tax calculator 2011   You may be able to claim a tax credit for part of the ordinary and necessary costs of starting a SEP that first became effective in 2013. Free tax calculator 2011 For more information, see Credit for startup costs under Reminders, earlier. Free tax calculator 2011 How Much Can I Contribute? The SEP rules permit you to contribute a limited amount of money each year to each employee's SEP-IRA. Free tax calculator 2011 If you are self-employed, you can contribute to your own SEP-IRA. Free tax calculator 2011 Contributions must be in the form of money (cash, check, or money order). Free tax calculator 2011 You cannot contribute property. Free tax calculator 2011 However, participants may be able to transfer or roll over certain property from one retirement plan to another. Free tax calculator 2011 See Publication 590 for more information about rollovers. Free tax calculator 2011 You do not have to make contributions every year. Free tax calculator 2011 But if you make contributions, they must be based on a written allocation formula and must not discriminate in favor of highly compensated employees (defined in chapter 1). Free tax calculator 2011 When you contribute, you must contribute to the SEP-IRAs of all participants who actually performed personal services during the year for which the contributions are made, including employees who die or terminate employment before the contributions are made. Free tax calculator 2011 Contributions are deductible within limits, as discussed later, and generally are not taxable to the plan participants. Free tax calculator 2011 A SEP-IRA cannot be a Roth IRA. Free tax calculator 2011 Employer contributions to a SEP-IRA will not affect the amount an individual can contribute to a Roth or traditional IRA. Free tax calculator 2011 Unlike regular contributions to a traditional IRA, contributions under a SEP can be made to participants over age 70½. Free tax calculator 2011 If you are self-employed, you can also make contributions under the SEP for yourself even if you are over 70½. Free tax calculator 2011 Participants age 70½ or over must take required minimum distributions. Free tax calculator 2011 Time limit for making contributions. Free tax calculator 2011   To deduct contributions for a year, you must make the contributions by the due date (including extensions) of your tax return for the year. Free tax calculator 2011 Contribution Limits Contributions you make for 2013 to a common-law employee's SEP-IRA cannot exceed the lesser of 25% of the employee's compensation or $51,000. Free tax calculator 2011 Compensation generally does not include your contributions to the SEP. Free tax calculator 2011 The SEP plan document will specify how the employer contribution is determined and how it will be allocated to participants. Free tax calculator 2011 Example. Free tax calculator 2011 Your employee, Mary Plant, earned $21,000 for 2013. Free tax calculator 2011 The maximum contribution you can make to her SEP-IRA is $5,250 (25% x $21,000). Free tax calculator 2011 Contributions for yourself. Free tax calculator 2011   The annual limits on your contributions to a common-law employee's SEP-IRA also apply to contributions you make to your own SEP-IRA. Free tax calculator 2011 However, special rules apply when figuring your maximum deductible contribution. Free tax calculator 2011 See Deduction Limit for Self-Employed Individuals , later. Free tax calculator 2011 Annual compensation limit. Free tax calculator 2011   You cannot consider the part of an employee's compensation over $255,000 when figuring your contribution limit for that employee. Free tax calculator 2011 However, $51,000 is the maximum contribution for an eligible employee. Free tax calculator 2011 These limits are $260,000 and $52,000, respectively, in 2014. Free tax calculator 2011 Example. Free tax calculator 2011 Your employee, Susan Green, earned $210,000 for 2013. Free tax calculator 2011 Because of the maximum contribution limit for 2013, you can only contribute $51,000 to her SEP-IRA. Free tax calculator 2011 More than one plan. Free tax calculator 2011   If you contribute to a defined contribution plan (defined in chapter 4), annual additions to an account are limited to the lesser of $51,000 or 100% of the participant's compensation. Free tax calculator 2011 When you figure this limit, you must add your contributions to all defined contribution plans maintained by you. Free tax calculator 2011 Because a SEP is considered a defined contribution plan for this limit, your contributions to a SEP must be added to your contributions to other defined contribution plans you maintain. Free tax calculator 2011 Tax treatment of excess contributions. Free tax calculator 2011   Excess contributions are your contributions to an employee's SEP-IRA (or to your own SEP-IRA) for 2013 that exceed the lesser of the following amounts. Free tax calculator 2011 25% of the employee's compensation (or, for you, 20% of your net earnings from self-employment). Free tax calculator 2011 $51,000. Free tax calculator 2011 Excess contributions are included in the employee's income for the year and are treated as contributions by the employee to his or her SEP-IRA. Free tax calculator 2011 For more information on employee tax treatment of excess contributions, see chapter 1 in Publication 590. Free tax calculator 2011 Reporting on Form W-2. Free tax calculator 2011   Do not include SEP contributions on your employee's Form W-2 unless contributions were made under a salary reduction arrangement (discussed later). Free tax calculator 2011 Deducting Contributions Generally, you can deduct the contributions you make each year to each employee's SEP-IRA. Free tax calculator 2011 If you are self-employed, you can deduct the contributions you make each year to your own SEP-IRA. Free tax calculator 2011 Deduction Limit for Contributions for Participants The most you can deduct for your contributions to you or your employee's SEP-IRA is the lesser of the following amounts. Free tax calculator 2011 Your contributions (including any excess contributions carryover). Free tax calculator 2011 25% of the compensation (limited to $255,000 per participant) paid to the participants during 2013 from the business that has the plan, not to exceed $51,000 per participant. Free tax calculator 2011 In 2014, the amounts in (2) above are $260,000 and $52,000, respectively. Free tax calculator 2011 Deduction Limit for Self-Employed Individuals If you contribute to your own SEP-IRA, you must make a special computation to figure your maximum deduction for these contributions. Free tax calculator 2011 When figuring the deduction for contributions made to your own SEP-IRA, compensation is your net earnings from self-employment (defined in chapter 1), which takes into account both the following deductions. Free tax calculator 2011 The deduction for the deductible part of your self-employment tax. Free tax calculator 2011 The deduction for contributions to your own SEP-IRA. Free tax calculator 2011 The deduction for contributions to your own SEP-IRA and your net earnings depend on each other. Free tax calculator 2011 For this reason, you determine the deduction for contributions to your own SEP-IRA indirectly by reducing the contribution rate called for in your plan. Free tax calculator 2011 To do this, use the Rate Table for Self-Employed or the Rate Worksheet for Self-Employed, whichever is appropriate for your plan's contribution rate, in chapter 5. Free tax calculator 2011 Then figure your maximum deduction by using the Deduction Worksheet for Self-Employed in chapter 5. Free tax calculator 2011 Carryover of Excess SEP Contributions If you made SEP contributions that are more than the deduction limit (nondeductible contributions), you can carry over and deduct the difference in later years. Free tax calculator 2011 However, the carryover, when combined with the contribution for the later year, is subject to the deduction limit for that year. Free tax calculator 2011 If you also contributed to a defined benefit plan or defined contribution plan, see Carryover of Excess Contributions under Employer Deduction in chapter 4 for the carryover limit. Free tax calculator 2011 Excise tax. Free tax calculator 2011   If you made nondeductible (excess) contributions to a SEP, you may be subject to a 10% excise tax. Free tax calculator 2011 For information about the excise tax, see Excise Tax for Nondeductible (Excess) Contributions under Employer Deduction in chapter 4. Free tax calculator 2011 When To Deduct Contributions When you can deduct contributions made for a year depends on the tax year on which the SEP is maintained. Free tax calculator 2011 If the SEP is maintained on a calendar year basis, you deduct the yearly contributions on your tax return for the year within which the calendar year ends. Free tax calculator 2011 If you file your tax return and maintain the SEP using a fiscal year or short tax year, you deduct contributions made for a year on your tax return for that year. Free tax calculator 2011 Example. Free tax calculator 2011 You are a fiscal year taxpayer whose tax year ends June 30. Free tax calculator 2011 You maintain a SEP on a calendar year basis. Free tax calculator 2011 You deduct SEP contributions made for calendar year 2013 on your tax return for your tax year ending June 30, 2014. Free tax calculator 2011 Where To Deduct Contributions Deduct the contributions you make for your common-law employees on your tax return. Free tax calculator 2011 For example, sole proprietors deduct them on Schedule C (Form 1040) or Schedule F (Form 1040), Profit or Loss From Farming; partnerships deduct them on Form 1065, U. Free tax calculator 2011 S. Free tax calculator 2011 Return of Partnership Income; and corporations deduct them on Form 1120, U. Free tax calculator 2011 S. Free tax calculator 2011 Corporation Income Tax Return, or Form 1120S, U. Free tax calculator 2011 S. Free tax calculator 2011 Income Tax Return for an S Corporation. Free tax calculator 2011 Sole proprietors and partners deduct contributions for themselves on line 28 of Form 1040. Free tax calculator 2011 (If you are a partner, contributions for yourself are shown on the Schedule K-1 (Form 1065), Partner's Share of Income, Deductions, Credits, etc. Free tax calculator 2011 , you receive from the partnership. Free tax calculator 2011 ) Remember that sole proprietors and partners can't deduct as a business expense contributions made to a SEP for themselves, only those made for their common-law employees. Free tax calculator 2011 Salary Reduction Simplified Employee Pensions (SARSEPs) A SARSEP is a SEP set up before 1997 that includes a salary reduction arrangement. Free tax calculator 2011 (See the Caution, next. Free tax calculator 2011 ) Under a SARSEP, your employees can choose to have you contribute part of their pay to their SEP-IRAs rather than receive it in cash. Free tax calculator 2011 This contribution is called an “elective deferral” because employees choose (elect) to set aside the money, and they defer the tax on the money until it is distributed to them. Free tax calculator 2011 You are not allowed to set up a SARSEP after 1996. Free tax calculator 2011 However, participants (including employees hired after 1996) in a SARSEP set up before 1997 can continue to have you contribute part of their pay to the plan. Free tax calculator 2011 If you are interested in setting up a retirement plan that includes a salary reduction arrangement, see chapter 3. Free tax calculator 2011 Who can have a SARSEP?   A SARSEP set up before 1997 is available to you and your eligible employees only if all the following requirements are met. Free tax calculator 2011 At least 50% of your employees eligible to participate choose to make elective deferrals. Free tax calculator 2011 You have 25 or fewer employees who were eligible to participate in the SEP at any time during the preceding year. Free tax calculator 2011 The elective deferrals of your highly compensated employees meet the SARSEP ADP test. Free tax calculator 2011 SARSEP ADP test. Free tax calculator 2011   Under the SARSEP ADP test, the amount deferred each year by each eligible highly compensated employee as a percentage of pay (the deferral percentage) cannot be more than 125% of the average deferral percentage (ADP) of all non-highly compensated employees eligible to participate. Free tax calculator 2011 A highly compensated employee is defined in chapter 1. Free tax calculator 2011 Deferral percentage. Free tax calculator 2011   The deferral percentage for an employee for a year is figured as follows. Free tax calculator 2011   The elective employer contributions (excluding certain catch-up contributions)  paid to the SEP for the employee for the year     The employee's compensation (limited to $255,000 in 2013)   The instructions for Form 5305A-SEP have a worksheet you can use to determine whether the elective deferrals of your highly compensated employees meet the SARSEP ADP test. Free tax calculator 2011 Employee compensation. Free tax calculator 2011   For figuring the deferral percentage, compensation is generally the amount you pay to the employee for the year. Free tax calculator 2011 Compensation includes the elective deferral and other amounts deferred in certain employee benefit plans. Free tax calculator 2011 See Compensation in chapter 1. Free tax calculator 2011 Elective deferrals under the SARSEP are included in figuring your employees' deferral percentage even though they are not included in the income of your employees for income tax purposes. Free tax calculator 2011 Compensation of self-employed individuals. Free tax calculator 2011   If you are self-employed, compensation is your net earnings from self-employment as defined in chapter 1. Free tax calculator 2011   Compensation does not include tax-free items (or deductions related to them) other than foreign earned income and housing cost amounts. Free tax calculator 2011 Choice not to treat deferrals as compensation. Free tax calculator 2011   You can choose not to treat elective deferrals (and other amounts deferred in certain employee benefit plans) for a year as compensation under your SARSEP. Free tax calculator 2011 Limit on Elective Deferrals The most a participant can choose to defer for calendar year 2013 is the lesser of the following amounts. Free tax calculator 2011 25% of the participant's compensation (limited to $255,000 of the participant's compensation). Free tax calculator 2011 $17,500. Free tax calculator 2011 The $17,500 limit applies to the total elective deferrals the employee makes for the year to a SEP and any of the following. Free tax calculator 2011 Cash or deferred arrangement (section 401(k) plan). Free tax calculator 2011 Salary reduction arrangement under a tax-sheltered annuity plan (section 403(b) plan). Free tax calculator 2011 SIMPLE IRA plan. Free tax calculator 2011 In 2014, the $255,000 limit increases to $260,000 and the $17,500 limit remains at $17,500. Free tax calculator 2011 Catch-up contributions. Free tax calculator 2011   A SARSEP can permit participants who are age 50 or over at the end of the calendar year to also make catch-up contributions. Free tax calculator 2011 The catch-up contribution limit for 2013 is $5,500 and remains at $5,500 for 2014. Free tax calculator 2011 Elective deferrals are not treated as catch-up contributions for 2013 until they exceed the elective deferral limit (the lesser of 25% of compensation or $17,500), the SARSEP ADP test limit discussed earlier, or the plan limit (if any). Free tax calculator 2011 However, the catch-up contribution a participant can make for a year cannot exceed the lesser of the following amounts. Free tax calculator 2011 The catch-up contribution limit. Free tax calculator 2011 The excess of the participant's compensation over the elective deferrals that are not catch-up contributions. Free tax calculator 2011   Catch-up contributions are not subject to the elective deferral limit (the lesser of 25% of compensation or $17,500 in 2013 and in 2014). Free tax calculator 2011 Overall limit on SEP contributions. Free tax calculator 2011   If you also make nonelective contributions to a SEP-IRA, the total of the nonelective and elective contributions to that SEP-IRA cannot exceed the lesser of 25% of the employee's compensation or $51,000 for 2013 ($52,000 for 2014). Free tax calculator 2011 The same rule applies to contributions you make to your own SEP-IRA. Free tax calculator 2011 See Contribution Limits , earlier. Free tax calculator 2011 Figuring the elective deferral. Free tax calculator 2011   For figuring the 25% limit on elective deferrals, compensation does not include SEP contributions, including elective deferrals or other amounts deferred in certain employee benefit plans. Free tax calculator 2011 Tax Treatment of Deferrals Elective deferrals that are not more than the limits discussed earlier under Limit on Elective Deferrals are excluded from your employees' wages subject to federal income tax in the year of deferral. Free tax calculator 2011 However, these deferrals are included in wages for social security, Medicare, and federal unemployment (FUTA) tax. Free tax calculator 2011 Excess deferrals. Free tax calculator 2011   For 2013, excess deferrals are the elective deferrals for the year that are more than the $17,500 limit discussed earlier. Free tax calculator 2011 For a participant who is eligible to make catch-up contributions, excess deferrals are the elective deferrals that are more than $23,000. Free tax calculator 2011 The treatment of excess deferrals made under a SARSEP is similar to the treatment of excess deferrals made under a qualified plan. Free tax calculator 2011 See Treatment of Excess Deferrals under Elective Deferrals (401(k) Plans) in chapter 4. Free tax calculator 2011 Excess SEP contributions. Free tax calculator 2011   Excess SEP contributions are elective deferrals of highly compensated employees that are more than the amount permitted under the SARSEP ADP test. Free tax calculator 2011 You must notify your highly compensated employees within 2½ months after the end of the plan year of their excess SEP contributions. Free tax calculator 2011 If you do not notify them within this time period, you must pay a 10% tax on the excess. Free tax calculator 2011 For an explanation of the notification requirements, see Rev. Free tax calculator 2011 Proc. Free tax calculator 2011 91-44, 1991-2 C. Free tax calculator 2011 B. Free tax calculator 2011 733. Free tax calculator 2011 If you adopted a SARSEP using Form 5305A-SEP, the notification requirements are explained in the instructions for that form. Free tax calculator 2011 Reporting on Form W-2. Free tax calculator 2011   Do not include elective deferrals in the “Wages, tips, other compensation” box of Form W-2. Free tax calculator 2011 You must, however, include them in the “Social security wages” and “Medicare wages and tips” boxes. Free tax calculator 2011 You must also include them in box 12. Free tax calculator 2011 Mark the “Retirement plan” checkbox in box 13. Free tax calculator 2011 For more information, see the Form W-2 instructions. Free tax calculator 2011 Distributions (Withdrawals) As an employer, you cannot prohibit distributions from a SEP-IRA. Free tax calculator 2011 Also, you cannot make your contributions on the condition that any part of them must be kept in the account after you have made your contributions to the employee's accounts. Free tax calculator 2011 Distributions are subject to IRA rules. Free tax calculator 2011 Generally, you or your employee must begin to receive distributions from a SEP-IRA by April 1 of the first year after the calendar year in which you or your employee reaches age 70½. Free tax calculator 2011 For more information about IRA rules, including the tax treatment of distributions, rollovers, required distributions, and income tax withholding, see Publication 590. Free tax calculator 2011 Additional Taxes The tax advantages of using SEP-IRAs for retirement savings can be offset by additional taxes that may be imposed for all the following actions. Free tax calculator 2011 Making excess contributions. Free tax calculator 2011 Making early withdrawals. Free tax calculator 2011 Not making required withdrawals. Free tax calculator 2011 For information about these taxes, see chapter 1 in Publication 590. Free tax calculator 2011 Also, a SEP-IRA may be disqualified, or an excise tax may apply, if the account is involved in a prohibited transaction, discussed next. Free tax calculator 2011 Prohibited transaction. Free tax calculator 2011   If an employee improperly uses his or her SEP-IRA, such as by borrowing money from it, the employee has engaged in a prohibited transaction. Free tax calculator 2011 In that case, the SEP-IRA will no longer qualify as an IRA. Free tax calculator 2011 For a list of prohibited transactions, see Prohibited Transactions in chapter 4. Free tax calculator 2011 Effects on employee. Free tax calculator 2011   If a SEP-IRA is disqualified because of a prohibited transaction, the assets in the account will be treated as having been distributed to the employee on the first day of the year in which the transaction occurred. Free tax calculator 2011 The employee must include in income the fair market value of the assets (on the first day of the year) that is more than any cost basis in the account. Free tax calculator 2011 Also, the employee may have to pay the additional tax for making early withdrawals. Free tax calculator 2011 Reporting and Disclosure Requirements If you set up a SEP using Form 5305-SEP, you must give your eligible employees certain information about the SEP when you set it up. Free tax calculator 2011 See Setting Up a SEP , earlier. Free tax calculator 2011 Also, you must give your eligible employees a statement each year showing any contributions to their SEP-IRAs. Free tax calculator 2011 You must also give them notice of any excess contributions. Free tax calculator 2011 For details about other information you must give them, see the instructions for Form 5305-SEP or Form 5305A-SEP (for a salary reduction SEP). Free tax calculator 2011 Even if you did not use Form 5305-SEP or Form 5305A-SEP to set up your SEP, you must give your employees information similar to that described above. Free tax calculator 2011 For more information, see the instructions for either Form 5305-SEP or Form 5305A-SEP. Free tax calculator 2011 Prev  Up  Next   Home   More Online Publications