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H&r Block Tax Software

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H&r Block Tax Software

H&r block tax software 6. H&r block tax software   How To Get Tax Help Table of Contents Whether it's help with a tax issue, preparing your tax return or a need for a free publication or form, get the help you need the way you want it: online, use a smart phone, call or walk in to an IRS office or volunteer site near you. H&r block tax software Free help with your tax return. H&r block tax software   You can get free help preparing your return nationwide from IRS-certified volunteers. H&r block tax software The Volunteer Income Tax Assistance (VITA) program helps low-to-moderate income, elderly, people with disabilities, and limited English proficient taxpayers. H&r block tax software The Tax Counseling for the Elderly (TCE) program helps taxpayers age 60 and older with their tax returns. H&r block tax software Most VITA and TCE sites offer free electronic filing and all volunteers will let you know about credits and deductions you may be entitled to claim. H&r block tax software In addition, some VITA and TCE sites provide taxpayers the opportunity to prepare their own return with help from an IRS-certified volunteer. H&r block tax software To find the nearest VITA or TCE site, you can use the VITA Locator Tool on IRS. H&r block tax software gov, download the IRS2Go app, or call 1-800-906-9887. H&r block tax software   As part of the TCE program, AARP offers the Tax-Aide counseling program. H&r block tax software To find the nearest AARP Tax-Aide site, visit AARP's website at www. H&r block tax software aarp. H&r block tax software org/money/taxaide or call 1-888-227-7669. H&r block tax software For more information on these programs, go to IRS. H&r block tax software gov and enter “VITA” in the search box. H&r block tax software Internet. H&r block tax software    IRS. H&r block tax software gov and IRS2Go are ready when you are —24 hours a day, 7 days a week. H&r block tax software Download the free IRS2Go app from the iTunes app store or from Google Play. H&r block tax software Use it to check your refund status, order transcripts of your tax returns or tax account, watch the IRS YouTube channel, get IRS news as soon as it's released to the public, subscribe to filing season updates or daily tax tips, and follow the IRS Twitter news feed, @IRSnews, to get the latest federal tax news, including information about tax law changes and important IRS programs. H&r block tax software Check the status of your 2013 refund with the Where's My Refund? application on IRS. H&r block tax software gov or download the IRS2Go app and select the Refund Status option. H&r block tax software The IRS issues more than 9 out of 10 refunds in less than 21 days. H&r block tax software Using these applications, you can start checking on the status of your return within 24 hours after we receive your e-filed return or 4 weeks after you mail a paper return. H&r block tax software You will also be given a personalized refund date as soon as the IRS processes your tax return and approves your refund. H&r block tax software The IRS updates Where's My Refund? every 24 hours, usually overnight, so you only need to check once a day. H&r block tax software Use the Interactive Tax Assistant (ITA) to research your tax questions. H&r block tax software No need to wait on the phone or stand in line. H&r block tax software The ITA is available 24 hours a day, 7 days a week, and provides you with a variety of tax information related to general filing topics, deductions, credits, and income. H&r block tax software When you reach the response screen, you can print the entire interview and the final response for your records. H&r block tax software New subject areas are added on a regular basis. H&r block tax software  Answers not provided through ITA may be found in Tax Trails, one of the Tax Topics on IRS. H&r block tax software gov which contain general individual and business tax information or by searching the IRS Tax Map, which includes an international subject index. H&r block tax software You can use the IRS Tax Map, to search publications and instructions by topic or keyword. H&r block tax software The IRS Tax Map integrates forms and publications into one research tool and provides single-point access to tax law information by subject. H&r block tax software When the user searches the IRS Tax Map, they will be provided with links to related content in existing IRS publications, forms and instructions, questions and answers, and Tax Topics. H&r block tax software Coming this filing season, you can immediately view and print for free all 5 types of individual federal tax transcripts (tax returns, tax account, record of account, wage and income statement, and certification of non-filing) using Get Transcript. H&r block tax software You can also ask the IRS to mail a return or an account transcript to you. H&r block tax software Only the mail option is available by choosing the Tax Records option on the IRS2Go app by selecting Mail Transcript on IRS. H&r block tax software gov or by calling 1-800-908-9946. H&r block tax software Tax return and tax account transcripts are generally available for the current year and the past three years. H&r block tax software Determine if you are eligible for the EITC and estimate the amount of the credit with the Earned Income Tax Credit (EITC) Assistant. H&r block tax software Visit Understanding Your IRS Notice or Letter to get answers to questions about a notice or letter you received from the IRS. H&r block tax software If you received the First Time Homebuyer Credit, you can use the First Time Homebuyer Credit Account Look-up tool for information on your repayments and account balance. H&r block tax software Check the status of your amended return using Where's My Amended Return? Go to IRS. H&r block tax software gov and enter Where's My Amended Return? in the search box. H&r block tax software You can generally expect your amended return to be processed up to 12 weeks from the date we receive it. H&r block tax software It can take up to 3 weeks from the date you mailed it to show up in our system. H&r block tax software Make a payment using one of several safe and convenient electronic payment options available on IRS. H&r block tax software gov. H&r block tax software Select the Payment tab on the front page of IRS. H&r block tax software gov for more information. H&r block tax software Determine if you are eligible and apply for an online payment agreement, if you owe more tax than you can pay today. H&r block tax software Figure your income tax withholding with the IRS Withholding Calculator on IRS. H&r block tax software gov. H&r block tax software Use it if you've had too much or too little withheld, your personal situation has changed, you're starting a new job or you just want to see if you're having the right amount withheld. H&r block tax software Determine if you might be subject to the Alternative Minimum Tax by using the Alternative Minimum Tax Assistant on IRS. H&r block tax software gov. H&r block tax software Request an Electronic Filing PIN by going to IRS. H&r block tax software gov and entering Electronic Filing PIN in the search box. H&r block tax software Download forms, instructions and publications, including accessible versions for people with disabilities. H&r block tax software Locate the nearest Taxpayer Assistance Center (TAC) using the Office Locator tool on IRS. H&r block tax software gov, or choose the Contact Us option on the IRS2Go app and search Local Offices. H&r block tax software An employee can answer questions about your tax account or help you set up a payment plan. H&r block tax software Before you visit, check the Office Locator on IRS. H&r block tax software gov, or Local Offices under Contact Us on IRS2Go to confirm the address, phone number, days and hours of operation, and the services provided. H&r block tax software If you have a special need, such as a disability, you can request an appointment. H&r block tax software Call the local number listed in the Office Locator, or look in the phone book under United States Government, Internal Revenue Service. H&r block tax software Apply for an Employer Identification Number (EIN). H&r block tax software Go to IRS. H&r block tax software gov and enter Apply for an EIN in the search box. H&r block tax software Read the Internal Revenue Code, regulations, or other official guidance. H&r block tax software Read Internal Revenue Bulletins. H&r block tax software Sign up to receive local and national tax news and more by email. H&r block tax software Just click on “subscriptions” above the search box on IRS. H&r block tax software gov and choose from a variety of options. H&r block tax software Phone. H&r block tax software    You can call the IRS, or you can carry it in your pocket with the IRS2Go app on your smart phone or tablet. H&r block tax software Download the free IRS2Go app from the iTunes app store or from Google Play. H&r block tax software Call to locate the nearest volunteer help site, 1-800-906-9887 or you can use the VITA Locator Tool on IRS. H&r block tax software gov, or download the IRS2Go app. H&r block tax software Low-to-moderate income, elderly, people with disabilities, and limited English proficient taxpayers can get free help with their tax return from the nationwide Volunteer Income Tax Assistance (VITA) program. H&r block tax software The Tax Counseling for the Elderly (TCE) program helps taxpayers age 60 and older with their tax returns. H&r block tax software Most VITA and TCE sites offer free electronic filing. H&r block tax software Some VITA and TCE sites provide IRS-certified volunteers who can help prepare your tax return. H&r block tax software Through the TCE program, AARP offers the Tax-Aide counseling program; call 1-888-227-7669 to find the nearest Tax-Aide location. H&r block tax software Call the automated Where's My Refund? information hotline to check the status of your 2013 refund 24 hours a day, 7 days a week at 1-800-829-1954. H&r block tax software If you e-file, you can start checking on the status of your return within 24 hours after the IRS receives your tax return or 4 weeks after you've mailed a paper return. H&r block tax software The IRS issues more than 9 out of 10 refunds in less than 21 days. H&r block tax software Where's My Refund? will give you a personalized refund date as soon as the IRS processes your tax return and approves your refund. H&r block tax software Before you call this automated hotline, have your 2013 tax return handy so you can enter your social security number, your filing status, and the exact whole dollar amount of your refund. H&r block tax software The IRS updates Where's My Refund? every 24 hours, usually overnight, so you only need to check once a day. H&r block tax software Note, the above information is for our automated hotline. H&r block tax software Our live phone and walk-in assistors can research the status of your refund only if it's been 21 days or more since you filed electronically or more than 6 weeks since you mailed your paper return. H&r block tax software Call the Amended Return Hotline, 1-866-464-2050, to check the status of your amended return. H&r block tax software You can generally expect your amended return to be processed up to 12 weeks from the date we receive it. H&r block tax software It can take up to 3 weeks from the date you mailed it to show up in our system. H&r block tax software Call 1-800-TAX-FORM (1-800-829-3676) to order current-year forms, instructions, publications, and prior-year forms and instructions (limited to 5 years). H&r block tax software You should receive your order within 10 business days. H&r block tax software Call TeleTax, 1-800-829-4477, to listen to pre-recorded messages covering general and business tax information. H&r block tax software If, between January and April 15, you still have questions about the Form 1040, 1040A, or 1040EZ (like filing requirements, dependents, credits, Schedule D, pensions and IRAs or self-employment taxes), call 1-800-829-1040. H&r block tax software Call using TTY/TDD equipment, 1-800-829-4059 to ask tax questions or order forms and publications. H&r block tax software The TTY/TDD telephone number is for people who are deaf, hard of hearing, or have a speech disability. H&r block tax software These individuals can also contact the IRS through relay services such as the Federal Relay Service. H&r block tax software Walk-in. H&r block tax software   You can find a selection of forms, publications and services — in-person. H&r block tax software Products. H&r block tax software You can walk in to some post offices, libraries, and IRS offices to pick up certain forms, instructions, and publications. H&r block tax software Some IRS offices, libraries, and city and county government offices have a collection of products available to photocopy from reproducible proofs. H&r block tax software Services. H&r block tax software You can walk in to your local TAC for face-to-face tax help. H&r block tax software An employee can answer questions about your tax account or help you set up a payment plan. H&r block tax software Before visiting, use the Office Locator tool on IRS. H&r block tax software gov, or choose the Contact Us option on the IRS2Go app and search Local Offices for days and hours of operation, and services provided. H&r block tax software Mail. H&r block tax software   You can send your order for forms, instructions, and publications to the address below. H&r block tax software You should receive a response within 10 business days after your request is received. H&r block tax software Internal Revenue Service 1201 N. H&r block tax software Mitsubishi Motorway Bloomington, IL 61705-6613    The Taxpayer Advocate Service Is Here to Help You. H&r block tax software The Taxpayer Advocate Service (TAS) is your voice at the IRS. H&r block tax software Our job is to ensure that every taxpayer is treated fairly and that you know and understand your rights. H&r block tax software   What can TAS do for you? We can offer you free help with IRS problems that you can't resolve on your own. H&r block tax software We know this process can be confusing, but the worst thing you can do is nothing at all! TAS can help if you can't resolve your tax problem and: Your problem is causing financial difficulties for you, your family, or your business. H&r block tax software You face (or your business is facing) an immediate threat of adverse action. H&r block tax software You've tried repeatedly to contact the IRS but no one has responded, or the IRS hasn't responded by the date promised. H&r block tax software   If you qualify for our help, you'll be assigned to one advocate who'll be with you at every turn and will do everything possible to resolve your problem. H&r block tax software Here's why we can help: TAS is an independent organization within the IRS. H&r block tax software Our advocates know how to work with the IRS. H&r block tax software Our services are free and tailored to meet your needs. H&r block tax software We have offices in every state, the District of Columbia, and Puerto Rico. H&r block tax software   How can you reach us? If you think TAS can help you, call your local advocate, whose number is in your local directory and at Taxpayer Advocate, or call us toll-free at 1-877-777-4778. H&r block tax software   How else does TAS help taxpayers?  TAS also works to resolve large-scale, systemic problems that affect many taxpayers. H&r block tax software If you know of one of these broad issues, please report it to us through our Systemic Advocacy Management System. H&r block tax software Low Income Taxpayer Clinics (LITCs). H&r block tax software   Low Income Taxpayer Clinics (LITCs) serve individuals whose income is below a certain level and need to resolve tax problems such as audits, appeals, and tax collection disputes. H&r block tax software Some clinics can provide information about taxpayer rights and responsibilities in different languages for individuals who speak English as a second language. H&r block tax software Visit www. H&r block tax software TaxpayerAdvocate. H&r block tax software irs. H&r block tax software gov or see IRS Publication 4134, Low Income Taxpayer Clinic List. H&r block tax software Prev  Up  Next   Home   More Online Publications
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Brief History of IRS

Origin
The roots of IRS go back to the Civil War when President Lincoln and Congress, in 1862, created the position of commissioner of Internal Revenue and enacted an income tax to pay war expenses. The income tax was repealed 10 years later. Congress revived the income tax in 1894, but the Supreme Court ruled it unconstitutional the following year.

16th Amendment
In 1913, Wyoming ratified the 16th Amendment, providing the three-quarter majority of states necessary to amend the Constitution. The 16th Amendment gave Congress the authority to enact an income tax. That same year, the first Form 1040 appeared after Congress levied a 1 percent tax on net personal incomes above $3,000 with a 6 percent surtax on incomes of more than $500,000.

In 1918, during World War I, the top rate of the income tax rose to 77 percent to help finance the war effort. It dropped sharply in the post-war years, down to 24 percent in 1929, and rose again during the Depression. During World War II, Congress introduced payroll withholding and quarterly tax payments.

A New Name
In the 50s, the agency was reorganized to replace a patronage system with career, professional employees. The Bureau of Internal Revenue name was changed to the Internal Revenue Service. Only the IRS commissioner and chief counsel are selected by the president and confirmed by the Senate.

Today’s IRS Organization
The IRS Restructuring and Reform Act of 1998 prompted the most comprehensive reorganization and modernization of IRS in nearly half a century. The IRS reorganized itself to closely resemble the private sector model of organizing around customers with similar needs.

Page Last Reviewed or Updated: 03-Dec-2013

The H&r Block Tax Software

H&r block tax software 2. H&r block tax software   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. H&r block tax software 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. H&r block tax software Deferral percentage. H&r block tax software Employee compensation. H&r block tax software Compensation of self-employed individuals. H&r block tax software Choice not to treat deferrals as compensation. H&r block tax software Limit on Elective Deferrals Tax Treatment of Deferrals Distributions (Withdrawals) Additional TaxesEffects on employee. H&r block tax software 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. H&r block tax software S. H&r block tax software 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. H&r block tax software Under a SEP, you make contributions to a traditional individual retirement arrangement (called a SEP-IRA) set up by or for each eligible employee. H&r block tax software A SEP-IRA is owned and controlled by the employee, and you make contributions to the financial institution where the SEP-IRA is maintained. H&r block tax software SEP-IRAs are set up for, at a minimum, each eligible employee (defined below). H&r block tax software 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). H&r block tax software Eligible employee. H&r block tax software   An eligible employee is an individual who meets all the following requirements. H&r block tax software Has reached age 21. H&r block tax software Has worked for you in at least 3 of the last 5 years. H&r block tax software Has received at least $550 in compensation from you in 2013. H&r block tax software This amount remains the same in 2014. H&r block tax software    You can use less restrictive participation requirements than those listed, but not more restrictive ones. H&r block tax software Excludable employees. H&r block tax software   The following employees can be excluded from coverage under a SEP. H&r block tax software Employees covered by a union agreement and whose retirement benefits were bargained for in good faith by the employees' union and you. H&r block tax software Nonresident alien employees who have received no U. H&r block tax software S. H&r block tax software source wages, salaries, or other personal services compensation from you. H&r block tax software For more information about nonresident aliens, see Publication 519, U. H&r block tax software S. H&r block tax software Tax Guide for Aliens. H&r block tax software Setting Up a SEP There are three basic steps in setting up a SEP. H&r block tax software You must execute a formal written agreement to provide benefits to all eligible employees. H&r block tax software You must give each eligible employee certain information about the SEP. H&r block tax software A SEP-IRA must be set up by or for each eligible employee. H&r block tax software Many financial institutions will help you set up a SEP. H&r block tax software Formal written agreement. H&r block tax software   You must execute a formal written agreement to provide benefits to all eligible employees under a SEP. H&r block tax software You can satisfy the written agreement requirement by adopting an IRS model SEP using Form 5305-SEP. H&r block tax software However, see When not to use Form 5305-SEP, below. H&r block tax software   If you adopt an IRS model SEP using Form 5305-SEP, no prior IRS approval or determination letter is required. H&r block tax software Keep the original form. H&r block tax software Do not file it with the IRS. H&r block tax software Also, using Form 5305-SEP will usually relieve you from filing annual retirement plan information returns with the IRS and the Department of Labor. H&r block tax software See the Form 5305-SEP instructions for details. H&r block tax software If you choose not to use Form 5305-SEP, you should seek professional advice in adopting a SEP. H&r block tax software When not to use Form 5305-SEP. H&r block tax software   You cannot use Form 5305-SEP if any of the following apply. H&r block tax software You currently maintain any other qualified retirement plan other than another SEP. H&r block tax software You have any eligible employees for whom IRAs have not been set up. H&r block tax software You use the services of leased employees, who are not your common-law employees (as described in chapter 1). H&r block tax software 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. H&r block tax software An affiliated service group described in section 414(m). H&r block tax software A controlled group of corporations described in section 414(b). H&r block tax software Trades or businesses under common control described in section 414(c). H&r block tax software You do not pay the cost of the SEP contributions. H&r block tax software Information you must give to employees. H&r block tax software   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. H&r block tax software An IRS model SEP is not considered adopted until you give each employee this information. H&r block tax software Setting up the employee's SEP-IRA. H&r block tax software   A SEP-IRA must be set up by or for each eligible employee. H&r block tax software SEP-IRAs can be set up with banks, insurance companies, or other qualified financial institutions. H&r block tax software You send SEP contributions to the financial institution where the SEP-IRA is maintained. H&r block tax software Deadline for setting up a SEP. H&r block tax software   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. H&r block tax software Credit for startup costs. H&r block tax software   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. H&r block tax software For more information, see Credit for startup costs under Reminders, earlier. H&r block tax software 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. H&r block tax software If you are self-employed, you can contribute to your own SEP-IRA. H&r block tax software Contributions must be in the form of money (cash, check, or money order). H&r block tax software You cannot contribute property. H&r block tax software However, participants may be able to transfer or roll over certain property from one retirement plan to another. H&r block tax software See Publication 590 for more information about rollovers. H&r block tax software You do not have to make contributions every year. H&r block tax software 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). H&r block tax software 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. H&r block tax software Contributions are deductible within limits, as discussed later, and generally are not taxable to the plan participants. H&r block tax software A SEP-IRA cannot be a Roth IRA. H&r block tax software Employer contributions to a SEP-IRA will not affect the amount an individual can contribute to a Roth or traditional IRA. H&r block tax software Unlike regular contributions to a traditional IRA, contributions under a SEP can be made to participants over age 70½. H&r block tax software If you are self-employed, you can also make contributions under the SEP for yourself even if you are over 70½. H&r block tax software Participants age 70½ or over must take required minimum distributions. H&r block tax software Time limit for making contributions. H&r block tax software   To deduct contributions for a year, you must make the contributions by the due date (including extensions) of your tax return for the year. H&r block tax software 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. H&r block tax software Compensation generally does not include your contributions to the SEP. H&r block tax software The SEP plan document will specify how the employer contribution is determined and how it will be allocated to participants. H&r block tax software Example. H&r block tax software Your employee, Mary Plant, earned $21,000 for 2013. H&r block tax software The maximum contribution you can make to her SEP-IRA is $5,250 (25% x $21,000). H&r block tax software Contributions for yourself. H&r block tax software   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. H&r block tax software However, special rules apply when figuring your maximum deductible contribution. H&r block tax software See Deduction Limit for Self-Employed Individuals , later. H&r block tax software Annual compensation limit. H&r block tax software   You cannot consider the part of an employee's compensation over $255,000 when figuring your contribution limit for that employee. H&r block tax software However, $51,000 is the maximum contribution for an eligible employee. H&r block tax software These limits are $260,000 and $52,000, respectively, in 2014. H&r block tax software Example. H&r block tax software Your employee, Susan Green, earned $210,000 for 2013. H&r block tax software Because of the maximum contribution limit for 2013, you can only contribute $51,000 to her SEP-IRA. H&r block tax software More than one plan. H&r block tax software   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. H&r block tax software When you figure this limit, you must add your contributions to all defined contribution plans maintained by you. H&r block tax software 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. H&r block tax software Tax treatment of excess contributions. H&r block tax software   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. H&r block tax software 25% of the employee's compensation (or, for you, 20% of your net earnings from self-employment). H&r block tax software $51,000. H&r block tax software 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. H&r block tax software For more information on employee tax treatment of excess contributions, see chapter 1 in Publication 590. H&r block tax software Reporting on Form W-2. H&r block tax software   Do not include SEP contributions on your employee's Form W-2 unless contributions were made under a salary reduction arrangement (discussed later). H&r block tax software Deducting Contributions Generally, you can deduct the contributions you make each year to each employee's SEP-IRA. H&r block tax software If you are self-employed, you can deduct the contributions you make each year to your own SEP-IRA. H&r block tax software 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. H&r block tax software Your contributions (including any excess contributions carryover). H&r block tax software 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. H&r block tax software In 2014, the amounts in (2) above are $260,000 and $52,000, respectively. H&r block tax software 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. H&r block tax software 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. H&r block tax software The deduction for the deductible part of your self-employment tax. H&r block tax software The deduction for contributions to your own SEP-IRA. H&r block tax software The deduction for contributions to your own SEP-IRA and your net earnings depend on each other. H&r block tax software 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. H&r block tax software 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. H&r block tax software Then figure your maximum deduction by using the Deduction Worksheet for Self-Employed in chapter 5. H&r block tax software 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. H&r block tax software However, the carryover, when combined with the contribution for the later year, is subject to the deduction limit for that year. H&r block tax software 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. H&r block tax software Excise tax. H&r block tax software   If you made nondeductible (excess) contributions to a SEP, you may be subject to a 10% excise tax. H&r block tax software For information about the excise tax, see Excise Tax for Nondeductible (Excess) Contributions under Employer Deduction in chapter 4. H&r block tax software When To Deduct Contributions When you can deduct contributions made for a year depends on the tax year on which the SEP is maintained. H&r block tax software 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. H&r block tax software 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. H&r block tax software Example. H&r block tax software You are a fiscal year taxpayer whose tax year ends June 30. H&r block tax software You maintain a SEP on a calendar year basis. H&r block tax software You deduct SEP contributions made for calendar year 2013 on your tax return for your tax year ending June 30, 2014. H&r block tax software Where To Deduct Contributions Deduct the contributions you make for your common-law employees on your tax return. H&r block tax software 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. H&r block tax software S. H&r block tax software Return of Partnership Income; and corporations deduct them on Form 1120, U. H&r block tax software S. H&r block tax software Corporation Income Tax Return, or Form 1120S, U. H&r block tax software S. H&r block tax software Income Tax Return for an S Corporation. H&r block tax software Sole proprietors and partners deduct contributions for themselves on line 28 of Form 1040. H&r block tax software (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. H&r block tax software , you receive from the partnership. H&r block tax software ) 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. H&r block tax software Salary Reduction Simplified Employee Pensions (SARSEPs) A SARSEP is a SEP set up before 1997 that includes a salary reduction arrangement. H&r block tax software (See the Caution, next. H&r block tax software ) 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. H&r block tax software 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. H&r block tax software You are not allowed to set up a SARSEP after 1996. H&r block tax software 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. H&r block tax software If you are interested in setting up a retirement plan that includes a salary reduction arrangement, see chapter 3. H&r block tax software 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. H&r block tax software At least 50% of your employees eligible to participate choose to make elective deferrals. H&r block tax software You have 25 or fewer employees who were eligible to participate in the SEP at any time during the preceding year. H&r block tax software The elective deferrals of your highly compensated employees meet the SARSEP ADP test. H&r block tax software SARSEP ADP test. H&r block tax software   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. H&r block tax software A highly compensated employee is defined in chapter 1. H&r block tax software Deferral percentage. H&r block tax software   The deferral percentage for an employee for a year is figured as follows. H&r block tax software   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. H&r block tax software Employee compensation. H&r block tax software   For figuring the deferral percentage, compensation is generally the amount you pay to the employee for the year. H&r block tax software Compensation includes the elective deferral and other amounts deferred in certain employee benefit plans. H&r block tax software See Compensation in chapter 1. H&r block tax software 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. H&r block tax software Compensation of self-employed individuals. H&r block tax software   If you are self-employed, compensation is your net earnings from self-employment as defined in chapter 1. H&r block tax software   Compensation does not include tax-free items (or deductions related to them) other than foreign earned income and housing cost amounts. H&r block tax software Choice not to treat deferrals as compensation. H&r block tax software   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. H&r block tax software Limit on Elective Deferrals The most a participant can choose to defer for calendar year 2013 is the lesser of the following amounts. H&r block tax software 25% of the participant's compensation (limited to $255,000 of the participant's compensation). H&r block tax software $17,500. H&r block tax software The $17,500 limit applies to the total elective deferrals the employee makes for the year to a SEP and any of the following. H&r block tax software Cash or deferred arrangement (section 401(k) plan). H&r block tax software Salary reduction arrangement under a tax-sheltered annuity plan (section 403(b) plan). H&r block tax software SIMPLE IRA plan. H&r block tax software In 2014, the $255,000 limit increases to $260,000 and the $17,500 limit remains at $17,500. H&r block tax software Catch-up contributions. H&r block tax software   A SARSEP can permit participants who are age 50 or over at the end of the calendar year to also make catch-up contributions. H&r block tax software The catch-up contribution limit for 2013 is $5,500 and remains at $5,500 for 2014. H&r block tax software 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). H&r block tax software However, the catch-up contribution a participant can make for a year cannot exceed the lesser of the following amounts. H&r block tax software The catch-up contribution limit. H&r block tax software The excess of the participant's compensation over the elective deferrals that are not catch-up contributions. H&r block tax software   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). H&r block tax software Overall limit on SEP contributions. H&r block tax software   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). H&r block tax software The same rule applies to contributions you make to your own SEP-IRA. H&r block tax software See Contribution Limits , earlier. H&r block tax software Figuring the elective deferral. H&r block tax software   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. H&r block tax software 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. H&r block tax software However, these deferrals are included in wages for social security, Medicare, and federal unemployment (FUTA) tax. H&r block tax software Excess deferrals. H&r block tax software   For 2013, excess deferrals are the elective deferrals for the year that are more than the $17,500 limit discussed earlier. H&r block tax software For a participant who is eligible to make catch-up contributions, excess deferrals are the elective deferrals that are more than $23,000. H&r block tax software The treatment of excess deferrals made under a SARSEP is similar to the treatment of excess deferrals made under a qualified plan. H&r block tax software See Treatment of Excess Deferrals under Elective Deferrals (401(k) Plans) in chapter 4. H&r block tax software Excess SEP contributions. H&r block tax software   Excess SEP contributions are elective deferrals of highly compensated employees that are more than the amount permitted under the SARSEP ADP test. H&r block tax software You must notify your highly compensated employees within 2½ months after the end of the plan year of their excess SEP contributions. H&r block tax software If you do not notify them within this time period, you must pay a 10% tax on the excess. H&r block tax software For an explanation of the notification requirements, see Rev. H&r block tax software Proc. H&r block tax software 91-44, 1991-2 C. H&r block tax software B. H&r block tax software 733. H&r block tax software If you adopted a SARSEP using Form 5305A-SEP, the notification requirements are explained in the instructions for that form. H&r block tax software Reporting on Form W-2. H&r block tax software   Do not include elective deferrals in the “Wages, tips, other compensation” box of Form W-2. H&r block tax software You must, however, include them in the “Social security wages” and “Medicare wages and tips” boxes. H&r block tax software You must also include them in box 12. H&r block tax software Mark the “Retirement plan” checkbox in box 13. H&r block tax software For more information, see the Form W-2 instructions. H&r block tax software Distributions (Withdrawals) As an employer, you cannot prohibit distributions from a SEP-IRA. H&r block tax software 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. H&r block tax software Distributions are subject to IRA rules. H&r block tax software 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. H&r block tax software For more information about IRA rules, including the tax treatment of distributions, rollovers, required distributions, and income tax withholding, see Publication 590. H&r block tax software 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. H&r block tax software Making excess contributions. H&r block tax software Making early withdrawals. H&r block tax software Not making required withdrawals. H&r block tax software For information about these taxes, see chapter 1 in Publication 590. H&r block tax software Also, a SEP-IRA may be disqualified, or an excise tax may apply, if the account is involved in a prohibited transaction, discussed next. H&r block tax software Prohibited transaction. H&r block tax software   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. H&r block tax software In that case, the SEP-IRA will no longer qualify as an IRA. H&r block tax software For a list of prohibited transactions, see Prohibited Transactions in chapter 4. H&r block tax software Effects on employee. H&r block tax software   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. H&r block tax software 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. H&r block tax software Also, the employee may have to pay the additional tax for making early withdrawals. H&r block tax software 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. H&r block tax software See Setting Up a SEP , earlier. H&r block tax software Also, you must give your eligible employees a statement each year showing any contributions to their SEP-IRAs. H&r block tax software You must also give them notice of any excess contributions. H&r block tax software 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). H&r block tax software 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. H&r block tax software For more information, see the instructions for either Form 5305-SEP or Form 5305A-SEP. H&r block tax software Prev  Up  Next   Home   More Online Publications