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Irs Amended Tax Forms

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Irs Amended Tax Forms

Irs amended tax forms 11. Irs amended tax forms   Departing Aliens and the Sailing or Departure Permit Table of Contents Introduction Topics - This chapter discusses: Useful Items - You may want to see: Aliens Not Required To Obtain Sailing or Departure Permits Aliens Required To Obtain Sailing or Departure PermitsGetting a Sailing or Departure Permit Forms To File Paying Taxes and Obtaining Refunds Bond To Ensure Payment Filing Annual U. Irs amended tax forms S. Irs amended tax forms Income Tax Returns Introduction Before leaving the United States, all aliens (except those listed under Aliens Not Required To Obtain Sailing or Departure Permits must obtain a certificate of compliance. Irs amended tax forms This document, also popularly known as the sailing permit or departure permit, is part of the income tax form you must file before leaving. Irs amended tax forms You will receive a sailing or departure permit after filing a Form 1040-C or Form 2063. Irs amended tax forms These forms are discussed in this chapter. Irs amended tax forms To find out if you need a sailing or departure permit, first read Aliens Not Required To Obtain Sailing or Departure Permits . Irs amended tax forms If you do not fall into one of the categories in that discussion, you must obtain a sailing or departure permit. Irs amended tax forms Read Aliens Required To Obtain Sailing or Departure Permits . Irs amended tax forms Topics - This chapter discusses: Who needs a sailing permit, How to get a sailing permit, and Forms you file to get a sailing permit. Irs amended tax forms Useful Items - You may want to see: Form (and Instructions) 1040-C U. Irs amended tax forms S. Irs amended tax forms Departing Alien Income Tax Return 2063 U. Irs amended tax forms S. Irs amended tax forms Departing Alien Income Tax Statement See chapter 12 for information about getting these forms. Irs amended tax forms Aliens Not Required To Obtain Sailing or Departure Permits If you are included in one of the following categories, you do not have to get a sailing or departure permit before leaving the United States. Irs amended tax forms If you are in one of these categories and do not have to get a sailing or departure permit, you must be able to support your claim for exemption with proper identification or give the authority for the exemption. Irs amended tax forms Category 1. Irs amended tax forms   Representatives of foreign governments with diplomatic passports, whether accredited to the United States or other countries, members of their households, and servants accompanying them. Irs amended tax forms Servants who are leaving, but not with a person with a diplomatic passport, must get a sailing or departure permit. Irs amended tax forms However, they can get a sailing or departure permit on Form 2063 without examination of their income tax liability by presenting a letter from the chief of their diplomatic mission certifying that: Their name appears on the “White List” (a list of employees of diplomatic missions), and They do not owe to the United States any income tax, and will not owe any tax up to and including the intended date of departure. Irs amended tax forms   The statement must be presented to an IRS office. Irs amended tax forms Category 2. Irs amended tax forms    Employees of international organizations and foreign governments (other than diplomatic representatives exempt under category 1) and members of their households: Whose compensation for official services is exempt from U. Irs amended tax forms S. Irs amended tax forms tax under U. Irs amended tax forms S. Irs amended tax forms tax laws (described in chapter 10), and Who receive no other income from U. Irs amended tax forms S. Irs amended tax forms sources. Irs amended tax forms If you are an alien in category (1) or (2), above, who filed the waiver under section 247(b) of the Immigration and Nationality Act, you must get a sailing or departure permit. Irs amended tax forms This is true even if your income is exempt from U. Irs amended tax forms S. Irs amended tax forms tax because of an income tax treaty, consular agreement, or international agreement. Irs amended tax forms Category 3. Irs amended tax forms   Alien students, industrial trainees, and exchange visitors, including their spouses and children, who enter on an “F-1,” “F-2,” “H-3,” “H-4,” “J-1,” “J-2,” or “Q” visa only and who receive no income from U. Irs amended tax forms S. Irs amended tax forms sources while in the United States under those visas other than: Allowances to cover expenses incident to study or training in the United States, such as expenses for travel, maintenance, and tuition, The value of any services or food and lodging connected with this study or training, Income from employment authorized by the U. Irs amended tax forms S. Irs amended tax forms Citizenship and Immigration Services (USCIS), or Interest income on deposits that is not effectively connected with a U. Irs amended tax forms S. Irs amended tax forms trade or business. Irs amended tax forms (See Interest Income in chapter 3. Irs amended tax forms ) Category 4. Irs amended tax forms   Alien students, including their spouses and children, who enter on an “M-1” or “M-2” visa only and who receive no income from U. Irs amended tax forms S. Irs amended tax forms sources while in the United States under those visas, other than: Income from employment authorized by the U. Irs amended tax forms S. Irs amended tax forms Citizenship and Immigration Services (USCIS) or Interest income on deposits that is not effectively connected with a U. Irs amended tax forms S. Irs amended tax forms trade or business. Irs amended tax forms (See Interest Income in chapter 3. Irs amended tax forms ) Category 5. Irs amended tax forms   Certain other aliens temporarily in the United States who have received no taxable income during the tax year up to and including the date of departure or during the preceding tax year. Irs amended tax forms If the IRS has reason to believe that an alien has received income subject to tax and that the collection of income tax is jeopardized by departure, it may then require the alien to obtain a sailing or departure permit. Irs amended tax forms Aliens in this category are: Alien military trainees who enter the United States for training under the sponsorship of the Department of Defense and who leave the United States on official military travel orders, Alien visitors for business on a “B-1” visa, or on both a “B-1” visa and a “B-2” visa, who do not remain in the United States or a U. Irs amended tax forms S. Irs amended tax forms possession for more than 90 days during the tax year, Alien visitors for pleasure on a “B-2” visa, Aliens in transit through the United States or any of its possessions on a “C-1” visa, or under a contract, such as a bond agreement, between a transportation line and the Attorney General, and Aliens who enter the United States on a border-crossing identification card or for whom passports, visas, and border-crossing identification cards are not required, if they are: Visitors for pleasure, Visitors for business who do not remain in the United States or a U. Irs amended tax forms S. Irs amended tax forms possession for more than 90 days during the tax year, or In transit through the United States or any of its possessions. Irs amended tax forms Category 6. Irs amended tax forms   Alien residents of Canada or Mexico who frequently commute between that country and the United States for employment, and whose wages are subject to the withholding of U. Irs amended tax forms S. Irs amended tax forms tax. Irs amended tax forms Aliens Required To Obtain Sailing or Departure Permits If you do not fall into one of the categories listed under Aliens Not Required To Obtain Sailing or Departure Permits, you must obtain a sailing or departure permit. Irs amended tax forms To obtain a permit, file Form 1040-C or Form 2063 (whichever applies) with your local IRS office before you leave the United States. Irs amended tax forms See Forms To File , later. Irs amended tax forms You must also pay all the tax shown as due on Form 1040-C and any taxes due for past years. Irs amended tax forms See Paying Taxes and Obtaining Refunds , later. Irs amended tax forms Getting a Sailing or Departure Permit The following discussion covers when and where to get your sailing permit. Irs amended tax forms Where to get a sailing or departure permit. Irs amended tax forms   If you have been working in the United States, you should get the permit from an IRS office in the area of your employment, or you may obtain one from an IRS office in the area of your departure. Irs amended tax forms When to get a sailing or departure permit. Irs amended tax forms   You should get your sailing or departure permit at least 2 weeks before you plan to leave. Irs amended tax forms You cannot apply earlier than 30 days before your planned departure date. Irs amended tax forms Do not wait until the last minute in case there are unexpected problems. Irs amended tax forms Papers to submit. Irs amended tax forms   Getting your sailing or departure permit will go faster if you bring to the IRS office papers and documents related to your income and your stay in the United States. Irs amended tax forms Bring the following records with you if they apply. Irs amended tax forms Your passport and alien registration card or visa. Irs amended tax forms Copies of your U. Irs amended tax forms S. Irs amended tax forms income tax returns filed for the past 2 years. Irs amended tax forms If you were in the United States for less than 2 years, bring the income tax returns you filed for that period. Irs amended tax forms Receipts for income taxes paid on these returns. Irs amended tax forms Receipts, bank records, canceled checks, and other documents that prove your deductions, business expenses, and dependents claimed on your returns. Irs amended tax forms A statement from each employer showing wages paid and tax withheld from January 1 of the current year to the date of departure if you were an employee. Irs amended tax forms If you were self-employed, you must bring a statement of income and expenses up to the date you plan to leave. Irs amended tax forms Proof of estimated tax payments for the past year and this year. Irs amended tax forms Documents showing any gain or loss from the sale of personal property and/or real property, including capital assets and merchandise. Irs amended tax forms Documents relating to scholarship or fellowship grants including: Verification of the grantor, source, and purpose of the grant. Irs amended tax forms Copies of the application for, and approval of, the grant. Irs amended tax forms A statement of the amount paid, and your duties and obligations under the grant. Irs amended tax forms A list of any previous grants. Irs amended tax forms Documents indicating you qualify for any special tax treaty benefits claimed. Irs amended tax forms Document verifying your date of departure from the United States, such as an airline ticket. Irs amended tax forms Document verifying your U. Irs amended tax forms S. Irs amended tax forms taxpayer identification number, such as a social security card or an IRS issued Notice CP 565 showing your individual taxpayer identification number (ITIN). Irs amended tax forms Note. Irs amended tax forms   If you are married and reside in a community property state, also bring the above-listed documents for your spouse. Irs amended tax forms This applies whether or not your spouse requires a permit. Irs amended tax forms Forms To File If you must get a sailing or departure permit, you must file Form 2063 or Form 1040-C. Irs amended tax forms Employees in the IRS office can assist in filing these forms. Irs amended tax forms Both forms have a “certificate of compliance” section. Irs amended tax forms When the certificate of compliance is signed by an agent of the Field Assistance Area Director, it certifies that your U. Irs amended tax forms S. Irs amended tax forms tax obligations have been satisfied according to available information. Irs amended tax forms Your Form 1040-C copy of the signed certificate, or the one detached from Form 2063, is your sailing or departure permit. Irs amended tax forms Form 2063 This is a short form that asks for certain information but does not include a tax computation. Irs amended tax forms The following departing aliens can get their sailing or departure permits by filing Form 2063. Irs amended tax forms Aliens, whether resident or nonresident, who have had no taxable income for the tax year up to and including the date of departure and for the preceding year, if the period for filing the income tax return for that year has not expired. Irs amended tax forms Resident aliens who have received taxable income during the tax year or preceding year and whose departure will not hinder the collection of any tax. Irs amended tax forms However, if the IRS has information indicating that the aliens are leaving to avoid paying their income tax, they must file a Form 1040-C. Irs amended tax forms Aliens in either of these categories who have not filed an income tax return or paid income tax for any tax year must file the return and pay the income tax before they can be issued a sailing or departure permit on Form 2063. Irs amended tax forms The sailing or departure permit detached from Form 2063 can be used for all departures during the current year. Irs amended tax forms However, the IRS may cancel the sailing or departure permit for any later departure if it believes the collection of income tax is jeopardized by that later departure. Irs amended tax forms Form 1040-C If you must get a sailing or departure permit and you do not qualify to file Form 2063, you must file Form 1040-C. Irs amended tax forms Ordinarily, all income received or reasonably expected to be received during the tax year up to and including the date of departure must be reported on Form 1040-C and the tax on it must be paid. Irs amended tax forms When you pay any tax shown as due on the Form 1040-C, and you file all returns and pay all tax due for previous years, you will receive a sailing or departure permit. Irs amended tax forms However, the IRS may permit you to furnish a bond guaranteeing payment instead of paying the taxes for certain years. Irs amended tax forms See Bond To Ensure Payment , discussed later. Irs amended tax forms The sailing or departure permit issued under the conditions in this paragraph is only for the specific departure for which it is issued. Irs amended tax forms Returning to the United States. Irs amended tax forms   If you furnish the IRS with information showing, to the satisfaction of the IRS, that you intend to return to the United States and that your departure does not jeopardize the collection of income tax, you can get a sailing or departure permit by filing Form 1040-C without having to pay the tax shown on it. Irs amended tax forms You must, however, file all income tax returns that have not yet been filed as required, and pay all income tax that is due on these returns. Irs amended tax forms   Your Form 1040-C must include all income received and reasonably expected to be received during the entire year of departure. Irs amended tax forms The sailing or departure permit issued with this Form 1040-C can be used for all departures during the current year. Irs amended tax forms However, the Service may cancel the sailing or departure permit for any later departure if the payment of income tax appears to be in jeopardy. Irs amended tax forms Joint return on Form 1040-C. Irs amended tax forms   Departing husbands and wives who are nonresident aliens cannot file joint returns. Irs amended tax forms However, if both spouses are resident aliens, they can file a joint return on Form 1040-C if: Both spouses can reasonably be expected to qualify to file a joint return at the normal close of their tax year, and The tax years of the spouses end at the same time. Irs amended tax forms Paying Taxes and Obtaining Refunds You must pay all tax shown as due on the Form 1040-C at the time of filing it, except when a bond is furnished, or the IRS is satisfied that your departure does not jeopardize the collection of income tax. Irs amended tax forms You must also pay any taxes due for past years. Irs amended tax forms If the tax computation on Form 1040-C results in an overpayment, there is no tax to pay at the time you file that return. Irs amended tax forms However, the IRS cannot provide a refund at the time of departure. Irs amended tax forms If you are due a refund, you must file either Form 1040NR or Form 1040NR-EZ at the end of the tax year. Irs amended tax forms Bond To Ensure Payment Usually, you must pay the tax shown as due on Form 1040-C when you file it. Irs amended tax forms However, if you pay all taxes due that you owe for prior years, you can furnish a bond guaranteeing payment instead of paying the income taxes shown as due on the Form 1040-C or the tax return for the preceding year if the period for filing that return has not expired. Irs amended tax forms The bond must equal the tax due plus interest to the date of payment as figured by the IRS. Irs amended tax forms Information about the form of bond and security on it can be obtained from your IRS office. Irs amended tax forms Filing Annual U. Irs amended tax forms S. Irs amended tax forms Income Tax Returns Form 1040-C is not an annual U. Irs amended tax forms S. Irs amended tax forms income tax return. Irs amended tax forms If an income tax return is required by law, that return must be filed even though a Form 1040-C has already been filed. Irs amended tax forms Chapters 5 and 7 discuss filing an annual U. Irs amended tax forms S. Irs amended tax forms income tax return. Irs amended tax forms The tax paid with Form 1040-C should be taken as a credit against the tax liability for the entire tax year on your annual U. Irs amended tax forms S. Irs amended tax forms income tax return. Irs amended tax forms Prev  Up  Next   Home   More Online Publications
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This federal law, which dates back to 1972, was intended to protect consumers in their homes during door-to-door sales pitches or at sales in temporary business locations. According to the FTC, the 3-Day Cooling Off Rule does NOT apply to the purchase of new automobiles or items sold online. It only applies when a company is selling something that costs $25 or more at a location other than its regular place of business.

To comply with the 3-Day Cooling Off Rule, a seller must inform a buyer of his/her right to cancel the sale and receive a full refund within three business days.

Be aware that there are situations in which the Cooling-Off Rule does not apply:

  • You made the purchase entirely by mail or telephone.
  • The sale was the result of prior contact you had at the seller's permanent business location.
  • You signed a document waiving your right to cancel.
  • Your purchase is not primarily for personal, family or household use. .
  • You were buying real estate, insurance, securities, or a motor vehicle.
  • You can't return the item in a condition similar to how it was when you got it.
  • You bought arts or crafts at a fair, shopping mall, civic center, or school.

Remember, if you paid by credit card and are having difficulty getting your refund, you may also be able to dispute the charge with your credit card company under the Fair Credit Billing Act.

The Irs Amended Tax Forms

Irs amended tax forms 3. Irs amended tax forms   SIMPLE Plans Table of Contents Topics - This chapter discusses: Useful Items - You may want to see: SIMPLE IRA PlanWho Can Set Up a SIMPLE IRA Plan? Who Can Participate in a SIMPLE IRA Plan? How To Set Up a SIMPLE IRA Plan Notification Requirement Contribution Limits When To Deduct Contributions Where To Deduct Contributions Tax Treatment of Contributions Distributions (Withdrawals) More Information on SIMPLE IRA Plans SIMPLE 401(k) Plan Topics - This chapter discusses: SIMPLE IRA plan SIMPLE 401(k) plan Useful Items - You may want to see: Publications 590 Individual Retirement Arrangements (IRAs) 3998 Choosing A Retirement Solution for Your Small Business 4284 SIMPLE IRA Plan Checklist 4334 SIMPLE IRA Plans for Small Businesses Forms (and Instructions) W-2 Wage and Tax Statement 5304-SIMPLE Savings Incentive Match Plan for Employees of Small Employers (SIMPLE)–Not for Use With a Designated Financial Institution 5305-SIMPLE Savings Incentive Match Plan for Employees of Small Employers (SIMPLE)–for Use With a Designated Financial Institution 8880 Credit for Qualified Retirement Savings Contributions 8881 Credit for Small Employer Pension Plan Startup Costs A savings incentive match plan for employees (SIMPLE plan) is a written arrangement that provides you and your employees with a simplified way to make contributions to provide retirement income. Irs amended tax forms Under a SIMPLE plan, employees can choose to make salary reduction contributions to the plan rather than receiving these amounts as part of their regular pay. Irs amended tax forms In addition, you will contribute matching or nonelective contributions. Irs amended tax forms SIMPLE plans can only be maintained on a calendar-year basis. Irs amended tax forms A SIMPLE plan can be set up in either of the following ways. Irs amended tax forms Using SIMPLE IRAs (SIMPLE IRA plan). Irs amended tax forms As part of a 401(k) plan (SIMPLE 401(k) plan). Irs amended tax forms Many financial institutions will help you set up a SIMPLE plan. Irs amended tax forms SIMPLE IRA Plan A SIMPLE IRA plan is a retirement plan that uses SIMPLE IRAs for each eligible employee. Irs amended tax forms Under a SIMPLE IRA plan, a SIMPLE IRA must be set up for each eligible employee. Irs amended tax forms For the definition of an eligible employee, see Who Can Participate in a SIMPLE IRA Plan , later. Irs amended tax forms Who Can Set Up a SIMPLE IRA Plan? You can set up a SIMPLE IRA plan if you meet both the following requirements. Irs amended tax forms You meet the employee limit. Irs amended tax forms You do not maintain another qualified plan unless the other plan is for collective bargaining employees. Irs amended tax forms Employee limit. Irs amended tax forms   You can set up a SIMPLE IRA plan only if you had 100 or fewer employees who received $5,000 or more in compensation from you for the preceding year. Irs amended tax forms Under this rule, you must take into account all employees employed at any time during the calendar year regardless of whether they are eligible to participate. Irs amended tax forms Employees include self-employed individuals who received earned income and leased employees (defined in chapter 1). Irs amended tax forms   Once you set up a SIMPLE IRA plan, you must continue to meet the 100-employee limit each year you maintain the plan. Irs amended tax forms Grace period for employers who cease to meet the 100-employee limit. Irs amended tax forms   If you maintain the SIMPLE IRA plan for at least 1 year and you cease to meet the 100-employee limit in a later year, you will be treated as meeting it for the 2 calendar years immediately following the calendar year for which you last met it. Irs amended tax forms   A different rule applies if you do not meet the 100-employee limit because of an acquisition, disposition, or similar transaction. Irs amended tax forms Under this rule, the SIMPLE IRA plan will be treated as meeting the 100-employee limit for the year of the transaction and the 2 following years if both the following conditions are satisfied. Irs amended tax forms Coverage under the plan has not significantly changed during the grace period. Irs amended tax forms The SIMPLE IRA plan would have continued to qualify after the transaction if you had remained a separate employer. Irs amended tax forms    The grace period for acquisitions, dispositions, and similar transactions also applies if, because of these types of transactions, you do not meet the rules explained under Other qualified plan or Who Can Participate in a SIMPLE IRA Plan, below. Irs amended tax forms Other qualified plan. Irs amended tax forms   The SIMPLE IRA plan generally must be the only retirement plan to which you make contributions, or to which benefits accrue, for service in any year beginning with the year the SIMPLE IRA plan becomes effective. Irs amended tax forms Exception. Irs amended tax forms   If you maintain a qualified plan for collective bargaining employees, you are permitted to maintain a SIMPLE IRA plan for other employees. Irs amended tax forms Who Can Participate in a SIMPLE IRA Plan? Eligible employee. Irs amended tax forms   Any employee who received at least $5,000 in compensation during any 2 years preceding the current calendar year and is reasonably expected to receive at least $5,000 during the current calendar year is eligible to participate. Irs amended tax forms The term “employee” includes a self-employed individual who received earned income. Irs amended tax forms   You can use less restrictive eligibility requirements (but not more restrictive ones) by eliminating or reducing the prior year compensation requirements, the current year compensation requirements, or both. Irs amended tax forms For example, you can allow participation for employees who received at least $3,000 in compensation during any preceding calendar year. Irs amended tax forms However, you cannot impose any other conditions for participating in a SIMPLE IRA plan. Irs amended tax forms Excludable employees. Irs amended tax forms   The following employees do not need to be covered under a SIMPLE IRA plan. Irs amended tax forms Employees who are covered by a union agreement and whose retirement benefits were bargained for in good faith by the employees' union and you. Irs amended tax forms Nonresident alien employees who have received no U. Irs amended tax forms S. Irs amended tax forms source wages, salaries, or other personal services compensation from you. Irs amended tax forms Compensation. Irs amended tax forms   Compensation for employees is the total wages, tips, and other compensation from the employer subject to federal income tax withholding and the amounts paid for domestic service in a private home, local college club, or local chapter of a college fraternity or sorority. Irs amended tax forms Compensation also includes the employee's salary reduction contributions made under this plan and, if applicable, elective deferrals under a section 401(k) plan, a SARSEP, or a section 403(b) annuity contract and compensation deferred under a section 457 plan required to be reported by the employer on Form W-2. Irs amended tax forms If you are self-employed, compensation is your net earnings from self-employment (line 4 of Short Schedule SE or line 6 of Long Schedule SE (Form 1040)) before subtracting any contributions made to the SIMPLE IRA plan for yourself. Irs amended tax forms How To Set Up a SIMPLE IRA Plan You can use Form 5304-SIMPLE or Form 5305-SIMPLE to set up a SIMPLE IRA plan. Irs amended tax forms Each form is a model savings incentive match plan for employees (SIMPLE) plan document. Irs amended tax forms Which form you use depends on whether you select a financial institution or your employees select the institution that will receive the contributions. Irs amended tax forms Use Form 5304-SIMPLE if you allow each plan participant to select the financial institution for receiving his or her SIMPLE IRA plan contributions. Irs amended tax forms Use Form 5305-SIMPLE if you require that all contributions under the SIMPLE IRA plan be deposited initially at a designated financial institution. Irs amended tax forms The SIMPLE IRA plan is adopted when you have completed all appropriate boxes and blanks on the form and you (and the designated financial institution, if any) have signed it. Irs amended tax forms Keep the original form. Irs amended tax forms Do not file it with the IRS. Irs amended tax forms Other uses of the forms. Irs amended tax forms   If you set up a SIMPLE IRA plan using Form 5304-SIMPLE or Form 5305-SIMPLE, you can use the form to satisfy other requirements, including the following. Irs amended tax forms Meeting employer notification requirements for the SIMPLE IRA plan. Irs amended tax forms Form 5304-SIMPLE and Form 5305-SIMPLE contain a Model Notification to Eligible Employees that provides the necessary information to the employee. Irs amended tax forms Maintaining the SIMPLE IRA plan records and proving you set up a SIMPLE IRA plan for employees. Irs amended tax forms Deadline for setting up a SIMPLE IRA plan. Irs amended tax forms   You can set up a SIMPLE IRA plan effective on any date from January 1 through October 1 of a year, provided you did not previously maintain a SIMPLE IRA plan. Irs amended tax forms This requirement does not apply if you are a new employer that comes into existence after October 1 of the year the SIMPLE IRA plan is set up and you set up a SIMPLE IRA plan as soon as administratively feasible after your business comes into existence. Irs amended tax forms If you previously maintained a SIMPLE IRA plan, you can set up a SIMPLE IRA plan effective only on January 1 of a year. Irs amended tax forms A SIMPLE IRA plan cannot have an effective date that is before the date you actually adopt the plan. Irs amended tax forms Setting up a SIMPLE IRA. Irs amended tax forms   SIMPLE IRAs are the individual retirement accounts or annuities into which the contributions are deposited. Irs amended tax forms A SIMPLE IRA must be set up for each eligible employee. Irs amended tax forms Forms 5305-S, SIMPLE Individual Retirement Trust Account, and 5305-SA, SIMPLE Individual Retirement Custodial Account, are model trust and custodial account documents the participant and the trustee (or custodian) can use for this purpose. Irs amended tax forms   A SIMPLE IRA cannot be a Roth IRA. Irs amended tax forms Contributions to a SIMPLE IRA will not affect the amount an individual can contribute to a Roth or traditional IRA. Irs amended tax forms Deadline for setting up a SIMPLE IRA. Irs amended tax forms   A SIMPLE IRA must be set up for an employee before the first date by which a contribution is required to be deposited into the employee's IRA. Irs amended tax forms See Time limits for contributing funds , later, under Contribution Limits. Irs amended tax forms Credit for startup costs. Irs amended tax forms   You may be able to claim a tax credit for part of the ordinary and necessary costs of starting a SIMPLE IRA plan that first became effective in 2013. Irs amended tax forms For more information, see Credit for startup costs under Reminders, earlier. Irs amended tax forms Notification Requirement If you adopt a SIMPLE IRA plan, you must notify each employee of the following information before the beginning of the election period. Irs amended tax forms The employee's opportunity to make or change a salary reduction choice under a SIMPLE IRA plan. Irs amended tax forms Your decision to make either matching contributions or nonelective contributions (discussed later). Irs amended tax forms A summary description provided by the financial institution. Irs amended tax forms Written notice that his or her balance can be transferred without cost or penalty if they use a designated financial institution. Irs amended tax forms Election period. Irs amended tax forms   The election period is generally the 60-day period immediately preceding January 1 of a calendar year (November 2 to December 31 of the preceding calendar year). Irs amended tax forms However, the dates of this period are modified if you set up a SIMPLE IRA plan in mid-year (for example, on July 1) or if the 60-day period falls before the first day an employee becomes eligible to participate in the SIMPLE IRA plan. Irs amended tax forms   A SIMPLE IRA plan can provide longer periods for permitting employees to enter into salary reduction agreements or to modify prior agreements. Irs amended tax forms For example, a SIMPLE IRA plan can provide a 90-day election period instead of the 60-day period. Irs amended tax forms Similarly, in addition to the 60-day period, a SIMPLE IRA plan can provide quarterly election periods during the 30 days before each calendar quarter, other than the first quarter of each year. Irs amended tax forms Contribution Limits Contributions are made up of salary reduction contributions and employer contributions. Irs amended tax forms You, as the employer, must make either matching contributions or nonelective contributions, defined later. Irs amended tax forms No other contributions can be made to the SIMPLE IRA plan. Irs amended tax forms These contributions, which you can deduct, must be made timely. Irs amended tax forms See Time limits for contributing funds , later. Irs amended tax forms Salary reduction contributions. Irs amended tax forms   The amount the employee chooses to have you contribute to a SIMPLE IRA on his or her behalf cannot be more than $12,000 for 2013 and 2014. Irs amended tax forms These contributions must be expressed as a percentage of the employee's compensation unless you permit the employee to express them as a specific dollar amount. Irs amended tax forms You cannot place restrictions on the contribution amount (such as limiting the contribution percentage), except to comply with the $12,000 limit. Irs amended tax forms   If you or an employee participates in any other qualified plan during the year and you or your employee have salary reduction contributions (elective deferrals) under those plans, the salary reduction contributions under a SIMPLE IRA plan also count toward the overall annual limit ($17,500 for 2013 and 2014) on exclusion of salary reduction contributions and other elective deferrals. Irs amended tax forms Catch-up contributions. Irs amended tax forms   A SIMPLE IRA plan can permit participants who are age 50 or over at the end of the calendar year to also make catch-up contributions. Irs amended tax forms The catch-up contribution limit for 2013 and 2014 for SIMPLE IRA plans is $2,500. Irs amended tax forms Salary reduction contributions are not treated as catch-up contributions for 2013 or 2014 until they exceed $12,000. Irs amended tax forms However, the catch-up contribution a participant can make for a year cannot exceed the lesser of the following amounts. Irs amended tax forms The catch-up contribution limit. Irs amended tax forms The excess of the participant's compensation over the salary reduction contributions that are not catch-up contributions. Irs amended tax forms Employer matching contributions. Irs amended tax forms   You are generally required to match each employee's salary reduction contributions on a dollar-for-dollar basis up to 3% of the employee's compensation. Irs amended tax forms This requirement does not apply if you make nonelective contributions as discussed later. Irs amended tax forms Example. Irs amended tax forms In 2013, your employee, John Rose, earned $25,000 and chose to defer 5% of his salary. Irs amended tax forms Your net earnings from self-employment are $40,000, and you choose to contribute 10% of your earnings to your SIMPLE IRA. Irs amended tax forms You make 3% matching contributions. Irs amended tax forms The total contribution you make for John is $2,000, figured as follows. Irs amended tax forms Salary reduction contributions ($25,000 × . Irs amended tax forms 05) $1,250 Employer matching contribution ($25,000 × . Irs amended tax forms 03) 750 Total contributions $2,000     The total contribution you make for yourself is $5,200, figured as follows. Irs amended tax forms Salary reduction contributions ($40,000 × . Irs amended tax forms 10) $4,000 Employer matching contribution ($40,000 × . Irs amended tax forms 03) 1,200 Total contributions $5,200 Lower percentage. Irs amended tax forms   If you choose a matching contribution less than 3%, the percentage must be at least 1%. Irs amended tax forms You must notify the employees of the lower match within a reasonable period of time before the 60-day election period (discussed earlier) for the calendar year. Irs amended tax forms You cannot choose a percentage less than 3% for more than 2 years during the 5-year period that ends with (and includes) the year for which the choice is effective. Irs amended tax forms Nonelective contributions. Irs amended tax forms   Instead of matching contributions, you can choose to make nonelective contributions of 2% of compensation on behalf of each eligible employee who has at least $5,000 (or some lower amount you select) of compensation from you for the year. Irs amended tax forms If you make this choice, you must make nonelective contributions whether or not the employee chooses to make salary reduction contributions. Irs amended tax forms Only $255,000 of the employee's compensation can be taken into account to figure the contribution limit in 2013 ($260,000 in 2014). Irs amended tax forms   If you choose this 2% contribution formula, you must notify the employees within a reasonable period of time before the 60-day election period (discussed earlier) for the calendar year. Irs amended tax forms Example 1. Irs amended tax forms In 2013, your employee, Jane Wood, earned $36,000 and chose to have you contribute 10% of her salary. Irs amended tax forms Your net earnings from self-employment are $50,000, and you choose to contribute 10% of your earnings to your SIMPLE IRA. Irs amended tax forms You make a 2% nonelective contribution. Irs amended tax forms Both of you are under age 50. Irs amended tax forms The total contribution you make for Jane is $4,320, figured as follows. Irs amended tax forms Salary reduction contributions ($36,000 × . Irs amended tax forms 10) $3,600 2% nonelective contributions ($36,000 × . Irs amended tax forms 02) 720 Total contributions $4,320     The total contribution you make for yourself is $6,000, figured as follows. Irs amended tax forms Salary reduction contributions ($50,000 × . Irs amended tax forms 10) $5,000 2% nonelective contributions ($50,000 × . Irs amended tax forms 02) 1,000 Total contributions $6,000 Example 2. Irs amended tax forms Using the same facts as in Example 1, above, the maximum contribution you make for Jane or for yourself if you each earned $75,000 is $13,500, figured as follows. Irs amended tax forms Salary reduction contributions (maximum amount allowed) $12,000 2% nonelective contributions ($75,000 × . Irs amended tax forms 02) 1,500 Total contributions $13,500 Time limits for contributing funds. Irs amended tax forms   You must make the salary reduction contributions to the SIMPLE IRA within 30 days after the end of the month in which the amounts would otherwise have been payable to the employee in cash. Irs amended tax forms You must make matching contributions or nonelective contributions by the due date (including extensions) for filing your federal income tax return for the year. Irs amended tax forms Certain plans subject to Department of Labor rules may have an earlier due date for salary reduction contributions. Irs amended tax forms When To Deduct Contributions You can deduct SIMPLE IRA contributions in the tax year within which the calendar year for which contributions were made ends. Irs amended tax forms You can deduct contributions for a particular tax year if they are made for that tax year and are made by the due date (including extensions) of your federal income tax return for that year. Irs amended tax forms Example 1. Irs amended tax forms Your tax year is the fiscal year ending June 30. Irs amended tax forms Contributions under a SIMPLE IRA plan for the calendar year 2013 (including contributions made in 2013 before July 1, 2013) are deductible in the tax year ending June 30, 2014. Irs amended tax forms Example 2. Irs amended tax forms You are a sole proprietor whose tax year is the calendar year. Irs amended tax forms Contributions under a SIMPLE IRA plan for the calendar year 2013 (including contributions made in 2014 by April 15, 2014) are deductible in the 2013 tax year. Irs amended tax forms Where To Deduct Contributions Deduct the contributions you make for your common-law employees on your tax return. Irs amended tax forms For example, sole proprietors deduct them on Schedule C (Form 1040) or Schedule F (Form 1040); partnerships deduct them on Form 1065; and corporations deduct them on Form 1120 or Form 1120S. Irs amended tax forms Sole proprietors and partners deduct contributions for themselves on line 28 of Form 1040. Irs amended tax forms (If you are a partner, contributions for yourself are shown on the Schedule K-1 (Form 1065) you receive from the partnership. Irs amended tax forms ) Tax Treatment of Contributions You can deduct your contributions and your employees can exclude these contributions from their gross income. Irs amended tax forms SIMPLE IRA plan contributions are not subject to federal income tax withholding. Irs amended tax forms However, salary reduction contributions are subject to social security, Medicare, and federal unemployment (FUTA) taxes. Irs amended tax forms Matching and nonelective contributions are not subject to these taxes. Irs amended tax forms Reporting on Form W-2. Irs amended tax forms   Do not include SIMPLE IRA plan contributions in the “Wages, tips, other compensation” box of Form W-2. Irs amended tax forms You must, however, include them in the “Social security wages” and “Medicare wages and tips” boxes. Irs amended tax forms You must also include them in box 12. Irs amended tax forms Mark the “Retirement plan” checkbox in box 13. Irs amended tax forms For more information, see the Form W-2 instructions. Irs amended tax forms Distributions (Withdrawals) Distributions from a SIMPLE IRA are subject to IRA rules and generally are includible in income for the year received. Irs amended tax forms Tax-free rollovers can be made from one SIMPLE IRA into another SIMPLE IRA. Irs amended tax forms However, a rollover from a SIMPLE IRA to a non-SIMPLE IRA can be made tax free only after a 2-year participation in the SIMPLE IRA plan. Irs amended tax forms Generally, you or your employee must begin to receive distributions from a SIMPLE IRA by April 1 of the first year after the calendar year in which you or your employee reaches age 70½. Irs amended tax forms Early withdrawals generally are subject to a 10% additional tax. Irs amended tax forms However, the additional tax is increased to 25% if funds are withdrawn within 2 years of beginning participation. Irs amended tax forms More information. Irs amended tax forms   See Publication 590 for information about IRA rules, including those on the tax treatment of distributions, rollovers, required distributions, and income tax withholding. Irs amended tax forms More Information on SIMPLE IRA Plans If you need help to set up or maintain a SIMPLE IRA plan, go to the IRS website and search SIMPLE IRA Plan. Irs amended tax forms SIMPLE 401(k) Plan You can adopt a SIMPLE plan as part of a 401(k) plan if you meet the 100-employee limit as discussed earlier under SIMPLE IRA Plan. Irs amended tax forms A SIMPLE 401(k) plan is a qualified retirement plan and generally must satisfy the rules discussed under Qualification Rules in chapter 4, including the required distribution rules. Irs amended tax forms However, a SIMPLE 401(k) plan is not subject to the nondiscrimination and top-heavy rules discussed in chapter 4 if the plan meets the conditions listed below. Irs amended tax forms Under the plan, an employee can choose to have you make salary reduction contributions for the year to a trust in an amount expressed as a percentage of the employee's compensation, but not more than $12,000 for 2013 and 2014. Irs amended tax forms If permitted under the plan, an employee who is age 50 or over can also make a catch-up contribution of up to $2,500 for 2013 and 2014. Irs amended tax forms See Catch-up contributions , earlier under Contribution Limits. Irs amended tax forms You must make either: Matching contributions up to 3% of compensation for the year, or Nonelective contributions of 2% of compensation on behalf of each eligible employee who has at least $5,000 of compensation from you for the year. Irs amended tax forms No other contributions can be made to the trust. Irs amended tax forms No contributions are made, and no benefits accrue, for services during the year under any other qualified retirement plan sponsored by you on behalf of any employee eligible to participate in the SIMPLE 401(k) plan. Irs amended tax forms The employee's rights to any contributions are nonforfeitable. Irs amended tax forms No more than $255,000 of the employee's compensation can be taken into account in figuring matching contributions and nonelective contributions in 2013 ($260,000 in 2014). Irs amended tax forms Compensation is defined earlier in this chapter. Irs amended tax forms Employee notification. Irs amended tax forms   The notification requirement that applies to SIMPLE IRA plans also applies to SIMPLE 401(k) plans. Irs amended tax forms See Notification Requirement in this chapter. Irs amended tax forms Credit for startup costs. Irs amended tax forms   You may be able to claim a tax credit for part of the ordinary and necessary costs of starting a SIMPLE 401(k) plan that first became effective in 2013. Irs amended tax forms For more information, see Credit for startup costs under Reminders, earlier. Irs amended tax forms Note on Forms. Irs amended tax forms   Please note that Forms 5304-SIMPLE and 5305-SIMPLE can not be used to establish a SIMPLE 401(k) plan. Irs amended tax forms To set up a SIMPLE 401(k) plan, see Adopting a Written Plan in chapter 4. Irs amended tax forms Prev  Up  Next   Home   More Online Publications