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Irs Ez Form 2011

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Irs Ez Form 2011

Irs ez form 2011 6. Irs ez form 2011   Tuition and Fees Deduction Table of Contents IntroductionWhat is the tax benefit of the tuition and fees deduction. Irs ez form 2011 Can You Claim the DeductionWho Can Claim the Deduction Who Cannot Claim the Deduction What Expenses QualifyQualified Education Expenses No Double Benefit Allowed Expenses That Do Not Qualify Who Is an Eligible Student Who Can Claim a Dependent's Expenses Figuring the DeductionEffect of the Amount of Your Income on the Amount of Your Deduction Claiming the Deduction Illustrated Example Introduction You may be able to deduct qualified education expenses paid during the year for yourself, your spouse, or your dependent(s). Irs ez form 2011 You cannot claim this deduction if your filing status is married filing separately or if another person can claim an exemption for you as a dependent on his or her tax return. Irs ez form 2011 The qualified expenses must be for higher education, as explained later under Qualified Education Expenses . Irs ez form 2011 What is the tax benefit of the tuition and fees deduction. Irs ez form 2011   The tuition and fees deduction can reduce the amount of your income subject to tax by up to $4,000. Irs ez form 2011   This deduction is taken as an adjustment to income. Irs ez form 2011 This means you can claim this deduction even if you do not itemize deductions on Schedule A (Form 1040). Irs ez form 2011 This deduction may be beneficial to you if you do not qualify for the American opportunity or lifetime learning credits. Irs ez form 2011 You can choose the education benefit that will give you the lowest tax. Irs ez form 2011 You may want to compare the tuition and fees deduction to the education credits. Irs ez form 2011 See chapter 2, American Opportunity Credit and chapter 3, Lifetime Learning Credit for more information on the education credits. Irs ez form 2011 Table 6-1. Irs ez form 2011 Tuition and Fees Deduction at a Glance summarizes the features of the tuition and fees deduction. Irs ez form 2011 Can You Claim the Deduction The following rules will help you determine if you can claim the tuition and fees deduction. Irs ez form 2011 Who Can Claim the Deduction Generally, you can claim the tuition and fees deduction if all three of the following requirements are met. Irs ez form 2011 You pay qualified education expenses of higher education. Irs ez form 2011 You pay the education expenses for an eligible student. Irs ez form 2011 The eligible student is yourself, your spouse, or your dependent for whom you claim an exemption on your tax return. Irs ez form 2011 The term “qualified education expenses” is defined later under Qualified Education Expenses . Irs ez form 2011 “Eligible student” is defined later under Who Is an Eligible Student . Irs ez form 2011 For more information on claiming the deduction for a dependent, see Who Can Claim a Dependent's Expenses , later. Irs ez form 2011 Table 6-1. Irs ez form 2011 Tuition and Fees Deduction at a Glance Do not rely on this table alone. Irs ez form 2011 Refer to the text for complete details. Irs ez form 2011 Question Answer What is the maximum benefit? You can reduce your income subject to tax by up to $4,000. Irs ez form 2011 What is the limit on modified adjusted gross income (MAGI)? $160,000 if married filing a joint return; $80,000 if single, head of household, or qualifying widow(er). Irs ez form 2011 Where is the deduction taken? As an adjustment to income on  Form 1040 or Form 1040A. Irs ez form 2011 For whom must the expenses be paid? A student enrolled in an eligible educational institution who is either: •you,  •your spouse, or  •your dependent for whom you claim an exemption. Irs ez form 2011 What tuition and fees are deductible? Tuition and fees required for enrollment or attendance at an eligible postsecondary educational institution, but not including personal, living, or family expenses, such as room and board. Irs ez form 2011 Who Cannot Claim the Deduction You cannot claim the tuition and fees deduction if any of the following apply. Irs ez form 2011 Your filing status is married filing separately. Irs ez form 2011 Another person can claim an exemption for you as a dependent on his or her tax return. Irs ez form 2011 You cannot take the deduction even if the other person does not actually claim that exemption. Irs ez form 2011 Your modified adjusted gross income (MAGI) is more than $80,000 ($160,000 if filing a joint return). Irs ez form 2011 You (or your spouse) were a nonresident alien for any part of 2013 and the nonresident alien did not elect to be treated as a resident alien for tax purposes. Irs ez form 2011 More information on nonresident aliens can be found in Publication 519. Irs ez form 2011 What Expenses Qualify The tuition and fees deduction is based on qualified education expenses you pay for yourself, your spouse, or a dependent for whom you claim an exemption on your tax return. Irs ez form 2011 Generally, the deduction is allowed for qualified education expenses paid in 2013 in connection with enrollment at an institution of higher education during 2013 or for an academic period beginning in 2013 or in the first 3 months of 2014. Irs ez form 2011 For example, if you paid $1,500 in December 2013 for qualified tuition for the spring 2014 semester beginning in January 2014, you may be able to use that $1,500 in figuring your 2013 deduction. Irs ez form 2011 Academic period. Irs ez form 2011   An academic period includes a semester, trimester, quarter, or other period of study (such as a summer school session) as reasonably determined by an educational institution. Irs ez form 2011 In the case of an educational institution that uses credit hours or clock hours and does not have academic terms, each payment period can be treated as an academic period. Irs ez form 2011 Paid with borrowed funds. Irs ez form 2011   You can claim a tuition and fees deduction for qualified education expenses paid with the proceeds of a loan. Irs ez form 2011 Use the expenses to figure the deduction for the year in which the expenses are paid, not the year in which the loan is repaid. Irs ez form 2011 Treat loan disbursements sent directly to the educational institution as paid on the date the institution credits the student's account. Irs ez form 2011 Student withdraws from class(es). Irs ez form 2011   You can claim a tuition and fees deduction for qualified education expenses not refunded when a student withdraws. Irs ez form 2011 Qualified Education Expenses For purposes of the tuition and fees deduction, qualified education expenses are tuition and certain related expenses required for enrollment or attendance at an eligible educational institution. Irs ez form 2011 Eligible educational institution. Irs ez form 2011   An eligible educational institution is any college, university, vocational school, or other postsecondary educational institution eligible to participate in a student aid program administered by the U. Irs ez form 2011 S. Irs ez form 2011 Department of Education. Irs ez form 2011 It includes virtually all accredited public, nonprofit, and proprietary (privately owned profit-making) postsecondary institutions. Irs ez form 2011 The educational institution should be able to tell you if it is an eligible educational institution. Irs ez form 2011   Certain educational institutions located outside the United States also participate in the U. Irs ez form 2011 S. Irs ez form 2011 Department of Education's Federal Student Aid (FSA) programs. Irs ez form 2011 Related expenses. Irs ez form 2011   Student-activity fees and expenses for course-related books, supplies, and equipment are included in qualified education expenses only if the fees and expenses must be paid to the institution as a condition of enrollment or attendance. Irs ez form 2011 Prepaid expenses. Irs ez form 2011   Qualified education expenses paid in 2013 for an academic period that begins in the first three months of 2014 can be used in figuring an education credit for 2013 only. Irs ez form 2011 See Academic period , earlier. Irs ez form 2011 For example, you pay $2,000 in December 2013 for qualified tuition for the 2014 winter quarter that begins in January 2014, you can use that $2,000 in figuring an education credit for 2013 only (if you meet all the other requirements). Irs ez form 2011 You cannot use any amount you paid in 2012 or 2014 to figure the qualified education expenses you use to figure your 2013 education credit(s). Irs ez form 2011 In the following examples, assume that each student is an eligible student and each college or university an eligible educational institution. Irs ez form 2011 Example 1. Irs ez form 2011 Jackson is a sophomore in University V's degree program in dentistry. Irs ez form 2011 This year, in addition to tuition, he is required to pay a fee to the university for the rental of the dental equipment he will use in this program. Irs ez form 2011 Because the equipment rental fee must be paid to University V for enrollment and attendance, Jackson's equipment rental fee is a qualified education expense. Irs ez form 2011 Example 2. Irs ez form 2011 Donna and Charles, both first-year students at College W, are required to have certain books and other reading materials to use in their mandatory first-year classes. Irs ez form 2011 The college has no policy about how students should obtain these materials, but any student who purchases them from College W's bookstore will receive a bill directly from the college. Irs ez form 2011 Charles bought his books from a friend, so what he paid for them is not a qualified education expense. Irs ez form 2011 Donna bought hers at College W's bookstore. Irs ez form 2011 Although Donna paid College W directly for her first-year books and materials, her payment is not a qualified education expense because the books and materials are not required to be purchased from College W for enrollment or attendance at the institution. Irs ez form 2011 Example 3. Irs ez form 2011 When Marci enrolled at College X for her freshman year, she had to pay a separate student activity fee in addition to her tuition. Irs ez form 2011 This activity fee is required of all students, and is used solely to fund on-campus organizations and activities run by students, such as the student newspaper and the student government. Irs ez form 2011 No portion of the fee covers personal expenses. Irs ez form 2011 Although labeled as a student activity fee, the fee is required for Marci's enrollment and attendance at College X. Irs ez form 2011 Therefore, it is a qualified expense. Irs ez form 2011 No Double Benefit Allowed You cannot do any of the following. Irs ez form 2011 Deduct qualified education expenses you deduct under any other provision of the law, for example, as a business expense. Irs ez form 2011 Deduct qualified education expenses for a student on your income tax return if you or anyone else claims an American opportunity or lifetime learning credit for that same student in the same year. Irs ez form 2011 Deduct qualified education expenses that have been used to figure the tax-free portion of a distribution from a Coverdell education savings account (ESA) or a qualified tuition program (QTP). Irs ez form 2011 For a QTP, this applies only to the amount of tax-free earnings that were distributed, not to the recovery of contributions to the program. Irs ez form 2011 See Coordination With Tuition and Fees Deduction in chapter 8, Qualified Tuition Program, later. Irs ez form 2011 Deduct qualified education expenses that have been paid with tax-free interest on U. Irs ez form 2011 S. Irs ez form 2011 savings bonds (Form 8815). Irs ez form 2011 See Figuring the Tax-Free Amount in chapter 10, Education Savings Bond Program, later. Irs ez form 2011 Deduct qualified education expenses that have been paid with tax-free educational assistance, such as a scholarship, grant, or assistance provided by an employer. Irs ez form 2011 See the following section on Adjustments to Qualified Education Expenses. Irs ez form 2011 Adjustments to Qualified Education Expenses For each student, reduce the qualified education expenses paid by or on behalf of that student under the following rules. Irs ez form 2011 The result is the amount of adjusted qualified education expenses for each student. Irs ez form 2011 You must also reduce qualified education expenses by the other amounts referred to in No Double Benefit Allowed , earlier. Irs ez form 2011 Tax-free educational assistance. Irs ez form 2011   For tax-free educational assistance received in 2013, reduce the qualified educational expenses for each academic period by the amount of tax-free educational assistance allocable to that academic period. Irs ez form 2011 See Academic period , earlier. Irs ez form 2011   Some tax-free educational assistance received after 2013 may be treated as a refund of qualified education expenses paid in 2013. Irs ez form 2011 This tax-free educational assistance is any tax-free educational assistance received by you or anyone else after 2013 for qualified education expenses paid on behalf of a student in 2013 (or attributable to enrollment at an eligible educational institution during 2013). Irs ez form 2011   If this tax-free educational assistance is received after 2013 but before you file your 2013 income tax return, see Refunds received after 2013 but before your income tax return is filed , later. Irs ez form 2011 If this tax-free educational assistance is received after 2013 and after you file your 2013 income tax return, see Refunds received after 2013 and after your income tax return is filed , later. Irs ez form 2011   This tax-free education assistance includes: The tax-free part of scholarships and fellowships (see Tax-Free Scholarships and Fellowships in chapter 1, Scholarships, Fellowships, Grants, and Tuition Reductions), Pell grants (see Pell Grants and Other Title IV Need-Based Education Grants in chapter 1, Scholarships, Fellowships, Grants, and Tuition Reductions), Employer-provided educational assistance (see chapter 11, Employer-Provided Educational Assistance ), Veterans' educational assistance (see Veterans' Benefits in chapter 1, Scholarships, Fellowships, Grants, and Tuition Reductions), and Any other nontaxable (tax-free) payments (other than gifts or inheritances) received as educational assistance. Irs ez form 2011 Generally, any scholarship or fellowship is treated as tax free. Irs ez form 2011 However, a scholarship or fellowship is not treated as tax free to the extent the student includes it in gross income (if the student is required to file a tax return for the year the scholarship or fellowship is received) and either of the following is true. Irs ez form 2011 The scholarship or fellowship (or any part of it) must be applied (by its terms) to expenses (such as room and board) other than qualified education expenses as defined in Qualified education expenses in chapter 1, Scholarships, Fellowships, Grants, and Tuition Reductions. Irs ez form 2011 The scholarship or fellowship (or any part of it) may be applied (by its terms) to expenses (such as room and board) other than qualified education expenses as defined in Qualified education expenses in chapter 1, Scholarships, Fellowships, Grants, and Tuition Reductions. Irs ez form 2011 You may be able to increase the combined value of an education credit and certain educational assistance if the student includes some or all of the educational assistance in income in the year it is received. Irs ez form 2011 For details, see Adjustments to Qualified Education Expenses in chapters 2 and 3. Irs ez form 2011 Refunds. Irs ez form 2011   A refund of qualified education expenses may reduce adjusted qualified education expenses for the tax year or require repayment (recapture) of a credit claimed in an earlier year. Irs ez form 2011 Some tax-free educational assistance received after 2013 may be treated as a refund. Irs ez form 2011 See Tax-free educational assistance , earlier. Irs ez form 2011 Refunds received in 2013. Irs ez form 2011   For each student, figure the adjusted qualified education expenses for 2013 by adding all the qualified education expenses for 2013 and subtracting any refunds of those expenses received from the eligible educational institution during 2013. Irs ez form 2011 Refunds received after 2013 but before your income tax return is filed. Irs ez form 2011   If anyone receives a refund after 2013 of qualified education expenses paid on behalf of a student in 2013 and the refund is paid before you file an income tax return for 2013, the amount of qualified education expenses for 2013 is reduced by the amount of the refund. Irs ez form 2011 Refunds received after 2013 and after your income tax return is filed. Irs ez form 2011   If anyone receives a refund after 2013 of qualified education expenses paid on behalf of a student in 2013 and the refund is paid after you file an income tax return for 2013, you may need to repay some or all of the credit. Irs ez form 2011 See Credit recapture , later. Irs ez form 2011 Coordination with Coverdell education savings accounts and qualified tuition programs. Irs ez form 2011   Reduce your qualified education expenses by any qualified education expenses used to figure the exclusion from gross income of (a) interest received under an education savings bond program, or (b) any distribution from a Coverdell education savings account or qualified tuition program (QTP). Irs ez form 2011 For a QTP, this applies only to the amount of tax-free earnings that were distributed, not to the recovery of contributions to the program. Irs ez form 2011 Credit recapture. Irs ez form 2011    If any tax-free educational assistance for the qualified education expenses paid in 2013 or any refund of your qualified education expenses paid in 2013 is received after you file your 2013 income tax return, you must recapture (repay) any excess credit. Irs ez form 2011 You do this by refiguring the amount of your adjusted qualified education expenses for 2013 by reducing that amount by the amount of the refund or tax-free educational assistance. Irs ez form 2011 You then refigure your education credit(s) for 2013 and figure the amount by which your 2013 tax liability would have increased if you had claimed the refigured credit(s). Irs ez form 2011 Include that amount as an additional tax for the year the refund or tax-free assistance was received. Irs ez form 2011 Example. Irs ez form 2011   You paid $3,500 of qualified education expenses in December 2013, and your child began college in January 2014. Irs ez form 2011 You claimed $3,500 as the tuition and fees deduction on your 2013 income tax return. Irs ez form 2011 The reduction reduced your taxable income by $3,500. Irs ez form 2011 Also, you claimed no tax credits in 2013. Irs ez form 2011 Your child withdrew from two classes and you received a refund of $2,000 in 2014 after you filed your 2013 tax return. Irs ez form 2011 Refigure your 2013 tuition and fees deduction using $1,500 of qualified education expense instead of the $3,500. Irs ez form 2011 The refigured tuition and fees deduction is $1,500. Irs ez form 2011 Do not file an amended 2013 tax return to account for this adjustment. Irs ez form 2011 Instead, include the difference of $2,000 (but only to the extent this difference would have increased your 2013 tax) on the “Other income” line of your 2014 Form 1040. Irs ez form 2011 You cannot file Form 1040A for 2014. Irs ez form 2011 Amounts that do not reduce qualified education expenses. Irs ez form 2011   Do not reduce qualified education expenses by amounts paid with funds the student receives as: Payment for services, such as wages, A loan, A gift, An inheritance, or A withdrawal from the student's personal savings. Irs ez form 2011   Do not reduce the qualified education expenses by any scholarship or fellowship reported as income on the student's tax return in the following situations. Irs ez form 2011 The use of the money is restricted, by the terms of the scholarship or fellowship, to costs of attendance (such as room and board) other than qualified education expenses as defined in Qualified education expenses in chapter 1, Scholarships, Fellowships, Grants, and Tuition Restrictions. Irs ez form 2011 The use of the money is not restricted. Irs ez form 2011 Example 1. Irs ez form 2011 In 2013, Jackie paid $3,000 for tuition and $5,000 for room and board at University X. Irs ez form 2011 The university did not require her to pay any fees in addition to her tuition in order to enroll in or attend classes. Irs ez form 2011 To help pay these costs, she was awarded a $2,000 scholarship and a $4,000 student loan. Irs ez form 2011 The terms of the scholarship state that it can be used to pay any of Jackie's college expenses. Irs ez form 2011 University X applies the $2,000 scholarship against Jackie's $8,000 total bill, and Jackie pays the $6,000 balance of her bill from University X with a combination of her student loan and her savings. Irs ez form 2011 Jackie does not report any portion of the scholarship as income on her tax return. Irs ez form 2011 In figuring the tuition and fees deduction, Jackie must reduce her qualified education expenses by the amount of the scholarship ($2,000) because she excluded the entire scholarship from her income. Irs ez form 2011 The student loan is not tax-free educational assistance, so she does not need to reduce her qualified expenses by any part of the loan proceeds. Irs ez form 2011 Jackie is treated as having paid $1,000 in qualified education expenses ($3,000 tuition – $2,000 scholarship) in 2013. Irs ez form 2011 Example 2. Irs ez form 2011 The facts are the same as in Example 1, except that Jackie reports her entire scholarship as income on her tax return. Irs ez form 2011 Because Jackie reported the entire $2,000 scholarship in her income, she does not need to reduce her qualified education expenses. Irs ez form 2011 Jackie is treated as having paid $3,000 in qualified education expenses. Irs ez form 2011 Expenses That Do Not Qualify Qualified education expenses do not include amounts paid for: Insurance, Medical expenses (including student health fees), Room and board, Transportation, or Similar personal, living, or family expenses. Irs ez form 2011 This is true even if the amount must be paid to the institution as a condition of enrollment or attendance. Irs ez form 2011 Sports, games, hobbies, and noncredit courses. Irs ez form 2011   Qualified education expenses generally do not include expenses that relate to any course of instruction or other education that involves sports, games or hobbies, or any noncredit course. Irs ez form 2011 However, if the course of instruction or other education is part of the student's degree program, these expenses can qualify. Irs ez form 2011 Comprehensive or bundled fees. Irs ez form 2011   Some eligible educational institutions combine all of their fees for an academic period into one amount. Irs ez form 2011 If you do not receive, or do not have access to, an allocation showing how much you paid for qualified education expenses and how much you paid for personal expenses, such as those listed above, contact the institution. Irs ez form 2011 The institution is required to make this allocation and provide you with the amount you paid (or were billed) for qualified education expenses on Form 1098-T. Irs ez form 2011 See Figuring the Deduction , later, for more information about Form 1098-T. Irs ez form 2011 Who Is an Eligible Student For purposes of the tuition and fees deduction, an eligible student is a student who is enrolled in one or more courses at an eligible educational institution (as defined under Qualified Education Expenses , earlier). Irs ez form 2011 Who Can Claim a Dependent's Expenses Generally, in order to claim the tuition and fees deduction for qualified education expenses for a dependent, you must: Have paid the expenses, and Claim an exemption for the student as a dependent. Irs ez form 2011 For you to be able to deduct qualified education expenses for your dependent, you must claim an exemption for that individual. Irs ez form 2011 You do this by listing your dependent's name and other required information on Form 1040 (or Form 1040A), line 6c. Irs ez form 2011 IF your dependent is an eligible student and you. Irs ez form 2011 . Irs ez form 2011 . Irs ez form 2011 AND. Irs ez form 2011 . Irs ez form 2011 . Irs ez form 2011 THEN. Irs ez form 2011 . Irs ez form 2011 . Irs ez form 2011 claim an exemption for your dependent you paid all qualified education expenses for your dependent only you can deduct the qualified education expenses that you paid. Irs ez form 2011 Your dependent cannot take a deduction. Irs ez form 2011 claim an exemption for your dependent your dependent paid all qualified education expenses no one is allowed to take a deduction. Irs ez form 2011 do not claim an exemption for your dependent you paid all qualified education expenses no one is allowed to take a deduction. Irs ez form 2011 do not claim an exemption for your dependent your dependent paid all qualified education expenses no one is allowed to take a deduction. Irs ez form 2011 Expenses paid by dependent. Irs ez form 2011   If your dependent pays qualified education expenses, no one can take a tuition and fees deduction for those expenses. Irs ez form 2011 Neither you nor your dependent can deduct the expenses. Irs ez form 2011 For purposes of the tuition and fees deduction, you are not treated as paying any expenses actually paid by a dependent for whom you or anyone other than the dependent can claim an exemption. Irs ez form 2011 This rule applies even if you do not claim an exemption for your dependent on your tax return. Irs ez form 2011 Expenses paid by you. Irs ez form 2011   If you claim an exemption for a dependent who is an eligible student, only you can include any expenses you paid when figuring your tuition and fees deduction. Irs ez form 2011 Expenses paid under divorce decree. Irs ez form 2011   Qualified education expenses paid directly to an eligible educational institution for a student under a court-approved divorce decree are treated as paid by the student. Irs ez form 2011 Only the student would be eligible to take a tuition and fees deduction for that payment, and then only if no one else could claim an exemption for the student. Irs ez form 2011 Expenses paid by others. Irs ez form 2011   Someone other than you, your spouse, or your dependent (such as a relative or former spouse) may make a payment directly to an eligible educational institution to pay for an eligible student's qualified education expenses. Irs ez form 2011 In this case, the student is treated as receiving the payment from the other person and, in turn, paying the institution. Irs ez form 2011 If you claim, or can claim, an exemption on your tax return for the student, you are not considered to have paid the expenses and you cannot deduct them. Irs ez form 2011 If the student is not a dependent, only the student can deduct payments made directly to the institution for his or her expenses. Irs ez form 2011 If the student is your dependent, no one can deduct the payments. Irs ez form 2011 Example. Irs ez form 2011 In 2013, Ms. Irs ez form 2011 Baker makes a payment directly to an eligible educational institution for her grandson Dan's qualified education expenses. Irs ez form 2011 For purposes of deducting tuition and fees, Dan is treated as receiving the money from his grandmother and, in turn, paying his own qualified education expenses. Irs ez form 2011 If an exemption cannot be claimed for Dan on anyone else's tax return, only Dan can claim a tuition and fees deduction for his grandmother's payment. Irs ez form 2011 If someone else can claim an exemption for Dan, no one will be allowed a deduction for Ms. Irs ez form 2011 Baker's payment. Irs ez form 2011 Tuition reduction. Irs ez form 2011   When an eligible educational institution provides a reduction in tuition to an employee of the institution (or spouse or dependent child of an employee), the amount of the reduction may or may not be taxable. Irs ez form 2011 If it is taxable, the employee is treated as receiving a payment of that amount and, in turn, paying it to the educational institution on behalf of the student. Irs ez form 2011 For more information on tuition reductions, see Qualified Tuition Reduction , in chapter 1, Scholarships, Fellowships, Grants, and Tuition Reductions. Irs ez form 2011 Figuring the Deduction The maximum tuition and fees deduction in 2013 is $4,000, $2,000, or $0, depending on the amount of your MAGI. Irs ez form 2011 See Effect of the Amount of Your Income on the Amount of Your Deduction , later. Irs ez form 2011 Form 1098-T. Irs ez form 2011   To help you figure your tuition and fees deduction, the student should receive Form 1098-T (see Appendix A for a completed example of Form 1098-T). Irs ez form 2011 Generally, an eligible educational institution (such as a college or university) must send Form 1098-T (or acceptable substitute) to each enrolled student by January 31, 2014. Irs ez form 2011 An institution may choose to report either payments received (box 1), or amounts billed (box 2), for qualified education expenses. Irs ez form 2011 However, the amount in boxes 1 and 2 of Form 1098-T might be different than what you paid. Irs ez form 2011 When figuring the deduction, use only the amounts you paid in 2013 for qualified education expenses. Irs ez form 2011   In addition, Form 1098-T should give other information for that institution, such as adjustments made for prior years, the amount of scholarships or grants, reimbursements or refunds, and whether the student was enrolled at least half-time or was a graduate student. Irs ez form 2011    The eligible educational institution may ask for a completed Form W-9S or similar statement to obtain the student's name, address, and taxpayer identification number. Irs ez form 2011 Effect of the Amount of Your Income on the Amount of Your Deduction If your MAGI is not more than $65,000 ($130,000 if you are married filing jointly), your maximum tuition and fees deduction is $4,000. Irs ez form 2011 If your MAGI is larger than $65,000 ($130,000 if you are married filing jointly), but is not more than $80,000 ($160,000 if you are married filing jointly), your maximum deduction is $2,000. Irs ez form 2011 No tuition and fees deduction is allowed if your MAGI is larger than $80,000 ($160,000 if you are married filing jointly). Irs ez form 2011 Modified adjusted gross income (MAGI). Irs ez form 2011   For most taxpayers, MAGI is adjusted gross income (AGI) as figured on their federal income tax return before subtracting any deduction for tuition and fees. Irs ez form 2011 However, as discussed below, there may be other modifications. Irs ez form 2011 MAGI when using Form 1040A. Irs ez form 2011   If you file Form 1040A, your MAGI is the AGI on line 22 of that form, figured without taking into account any amount on line 19 (tuition and fees deduction). Irs ez form 2011 MAGI when using Form 1040. Irs ez form 2011   If you file Form 1040, your MAGI is the AGI on line 38 of that form, figured without taking into account any amount on line 34 (tuition and fees deduction) or line 35 (domestic production activities deduction), and modified by adding back any: Foreign earned income exclusion, Foreign housing exclusion, Foreign housing deduction, Exclusion of income by bona fide residents of American Samoa, and Exclusion of income by bona fide residents of Puerto Rico. Irs ez form 2011   Table 6-2 shows how the amount of your MAGI can affect your tuition and fees deduction. Irs ez form 2011   You can use Worksheet 6-1. Irs ez form 2011 MAGI for the Tuition and Fees Deduction , later, to figure your MAGI. Irs ez form 2011 Table 6-2. Irs ez form 2011 Effect of MAGI on Maximum Tuition and Fees Deduction IF your filing status is. Irs ez form 2011 . Irs ez form 2011 . Irs ez form 2011 AND your MAGI is. Irs ez form 2011 . Irs ez form 2011 . Irs ez form 2011 THEN your maximum tuition and fees deduction is. Irs ez form 2011 . Irs ez form 2011 . Irs ez form 2011 single,  head of household, or qualifying widow(er) not more than $65,000 $4,000. Irs ez form 2011 more than $65,000  but not more than $80,000 $2,000. Irs ez form 2011 more than $80,000 $0. Irs ez form 2011 married filing joint return not more than $130,000 $4,000. Irs ez form 2011 more than $130,000 but not more than $160,000 $2,000. Irs ez form 2011 more than $160,000 $0. Irs ez form 2011 Claiming the Deduction You claim a tuition and fees deduction by completing Form 8917 and submitting it with your Form 1040 or Form 1040A. Irs ez form 2011 Enter the deduction on Form 1040, line 34, or Form 1040A, line 19. Irs ez form 2011 A filled-in Form 8917 is shown at the end of this chapter. Irs ez form 2011 Illustrated Example Tim Pfister, a single taxpayer, enrolled full-time at a local college to earn a degree in engineering. Irs ez form 2011 This is the first year of his postsecondary education. Irs ez form 2011 During 2013, he paid $3,600 for his qualified 2013 tuition expense. Irs ez form 2011 Both he and the college meet all of the requirements for the tuition and fees deduction. Irs ez form 2011 Tim's total income (Form 1040, line 22) and MAGI are $26,000. Irs ez form 2011 He figures his deduction of $3,600 as shown on Form 8917, later. Irs ez form 2011 Worksheet 6-1. Irs ez form 2011 MAGI for the Tuition and Fees Deduction Use this worksheet if you are filing Form 2555, 2555-EZ, or 4563, or you are excluding income from sources within Puerto Rico. Irs ez form 2011 Before using this worksheet, you must complete Form 1040, lines 7 through 33, and figure any amount to be entered on the dotted line next to line 36. Irs ez form 2011 1. Irs ez form 2011 Enter the amount from Form 1040, line 22   1. Irs ez form 2011         2. Irs ez form 2011 Enter the total from Form 1040, lines 23 through 33   2. Irs ez form 2011               3. Irs ez form 2011 Enter the total of any amounts entered on the dotted line next to Form 1040, line 36   3. Irs ez form 2011               4. Irs ez form 2011 Add lines 2 and 3   4. Irs ez form 2011         5. Irs ez form 2011 Subtract line 4 from line 1   5. Irs ez form 2011         6. Irs ez form 2011 Enter your foreign earned income exclusion and/or housing  exclusion (Form 2555, line 45, or Form 2555-EZ, line 18)   6. Irs ez form 2011         7. Irs ez form 2011 Enter your foreign housing deduction (Form 2555, line 50)   7. Irs ez form 2011         8. Irs ez form 2011 Enter the amount of income from Puerto Rico you are excluding   8. Irs ez form 2011         9. Irs ez form 2011 Enter the amount of income from American Samoa you are  excluding (Form 4563, line 15)   9. Irs ez form 2011         10. Irs ez form 2011 Add lines 5 through 9. Irs ez form 2011 This is your modified adjusted gross income   10. Irs ez form 2011     Note. Irs ez form 2011 If the amount on line 10 is more than $80,000 ($160,000 if married filing jointly),  you cannot take the deduction for tuition and fees. Irs ez form 2011       This image is too large to be displayed in the current screen. Irs ez form 2011 Please click the link to view the image. Irs ez form 2011 Form 8917 for Tim Pfister Prev  Up  Next   Home   More Online Publications
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Forms and Schedules for Form 1040

Schedule A (Form 1040), Itemized Deductions
Use Schedule A (Form 1040) to figure your itemized deductions. In most cases, your federal income tax will be less if you take the larger of your itemized deductions or your standard deduction.

Schedule B (Form 1040), Interest and Ordinary Dividends
Use Schedule B to report your taxable interest or ordinary dividends.

Schedule C (Form 1040), Profit or Loss From Business
Use this schedule to report income or loss from a business you operated or a profession you practiced as a sole proprietor. An activity qualifies as a business if your primary purpose for engaging in the activity is for income or profit and you are involved in the activity with continuity and regularity.

Schedule C-EZ (Form 1040), Net Profit From Business
You can use Schedule C-EZ instead of Schedule C if you operated a business or practiced a profession as a sole proprietorship or qualified joint venture, or you were a statutory employee and you have met all the requirements listed in Schedule C-EZ, Part I.

Schedule D (Form 1040), Capital Gains and Losses
Use Schedule D (Form 1040) to report the sale or exchange of capital assets, gains from involuntary conversions of capital assets, capital gain distributions and nonbusiness bad debts.

Schedule E (Form 1040), Supplemental Income and Loss
Use Schedule E (Form 1040) to report income or loss from rental real estate, royalties, partnerships, S corporations, estates, trusts, and residual interests in REMICs.

Schedule EIC (Form 1040A or 1040), Earned Income Credit
After you have figured your earned income credit (EIC), use this schedule to give the IRS information about your qualifying child(ren).

Schedule F (Form 1040), Profit or Loss From Farming
Use Schedule F (Form 1040) to report farm income and expenses.

Schedule H (Form 1040), Household Employment Taxes
Use this schedule to report household employment taxes if you paid any one household employee cash wages of $1,800 or more during the calendar year, withheld federal income tax during the calendar year for any household employee, or paid total cash wages of $1,000 or more in any calendar quarter of the year or previous year to all household employees.

Schedule J (Form 1040), Income Averaging for Farmers and Fishermen
Use Schedule J (Form 1040) to elect to figure your income tax by averaging, over the previous 3 years (base years), all or part of your taxable income from your trade or business of farming or fishing.

Schedule R (Form 1040A or 1040), Credit for the Elderly or the Disabled
Use this schedule to figure the credit for the elderly or the disabled.

Schedule SE (Form 1040), Self-Employment Tax
Use this schedule to figure the tax due on net earnings from self-employment.

Form 1040-V, Payment Voucher for Form 1040
This form is a statement you send with your check or money order for any balance due on the “Amount you owe” line of your Form 1040, Form 1040A, or Form 1040EZ.

Form 1040X, Amended U.S. Individual Income Tax Return
Used by individual taxpayers to amend prior year tax returns.

Form 2106, Employee Business Expenses
Use this form if you are an employee deducting ordinary and necessary expenses for your job.

Form 2210, Underpayment of Estimated Tax by Individuals, Estates, and Trusts
Use this form to see if you owe a penalty for underpaying your estimated tax and, if you do, to figure the amount of the penalty.

Form 2441, Child and Dependent Care Expenses
If you paid someone to care for your child (under age 13) or other qualifying person so you (and your spouse if filing jointly) could work or look for work, you may be able to take the credit for child and dependent care expenses.

Form 2848, Power of Attorney and Declaration of Representative
Use Form 2848 to authorize an individual to represent you before the IRS. The individual you authorize must be a person eligible to practice before the IRS.

Form 3903, Moving Expenses
Use Form 3903 to figure your moving expense deduction for a move related to the start of work at a new principal place of work (workplace). If the new workplace is outside the United States or its possessions, you must be a U.S. citizen or resident alien to deduct your expenses.

Form 4562, Depreciation and Amortization
Use Form 4562 to claim your deduction for depreciation and amortization, make the election under section 179 to expense certain property, and provide information on the business/investment use of automobiles and other listed property.

Form 4868, Application for Automatic Extension of Time To File U.S. Individual Income Tax Return
A U.S. citizen or resident files this form to request an automatic extension of time to file a U.S. individual income tax return.

Form 4952, Investment Interest Expense Deduction
Use this form to figure the amount of investment interest expense you can deduct for the current year and the amount you can carry forward to future years.

Form 5329, Additional Taxes on Qualified Plans (Including IRAs) and Other Tax-Favored Accounts
Use Form 5329 to report additional taxes on IRAs, other qualified retirement plans, modified endowment contracts, Coverdell ESAs, QTPs, Archer MSAs, or HSAs.

Form 6251, Alternative Minimum Tax - Individuals
Use this form to figure the amount, if any, of your alternative minimum tax (AMT).

Form 8283, Noncash Charitable Contributions
Individuals, partnerships, and corporations file this form to report information about noncash charitable contributions when the amount of their deduction for all noncash gifts is more than $500.

Form 8582, Passive Activity Loss Limitations
Noncorporate taxpayers use this form to figure the amount of any passive activity loss (PAL) for the current tax year.

Form 8606, Nondeductible IRAs
Use this form to report nondeductible contributions you made to traditional IRAs; distributions from traditional, SEP, or SIMPLE IRAs, if you have ever made nondeductible contributions to traditional IRAs; conversions from traditional, SEP, or SIMPLE IRAs to Roth IRAs; and distributions from Roth IRAs

Schedule 8812 (Form 1040A or 1040), Child Tax Credit
Use Part I of this schedule to document that any child for whom you entered an ITIN and for whom you also checked the "if qualifying child for child tax credit" box, is a resident of the United States because the child meets the substantial presence test and is not otherwise treated as a nonresident alien. Use Parts II–IV of Schedule 8812 to figure the additional child tax credit.

Form 8822, Change of Address
Use this form to notify the Internal Revenue Service of a change to your home mailing address.

Form 8829, Expenses for Business Use of Your Home
Use this form to figure the allowable expenses for business use of your home on Schedule C (Form 1040) and any carryover to next year of amounts not deductible this year.

Form 8863, Education Credits (American Opportunity and Lifetime Learning Credits)
Use this form to figure and claim your education credits, which are based on qualified education expenses paid to an eligible postsecondary educational institution.

Form 8949, Sales and Other Dispositions of Capital Assets
Use this form to reconcile amounts that were reported to you and the IRS on Form 1099-B or 1099-S (or substitute statement) with the amounts you report on your return.

Form 9465, Installment Agreement Request
Use form to request a monthly installment plan if you cannot pay the full amount you owe shown on your tax return (or on a notice we sent you).

Page Last Reviewed or Updated: 20-Feb-2014

The Irs Ez Form 2011

Irs ez form 2011 Publication 15-A - Main Content Table of Contents 1. Irs ez form 2011 Who Are Employees?Independent Contractors Common-Law Employees Statutory Employees Statutory Nonemployees Misclassification of Employees 2. Irs ez form 2011 Employee or Independent Contractor?Common-Law Rules Industry Examples 3. Irs ez form 2011 Employees of Exempt OrganizationsSocial security and Medicare taxes. Irs ez form 2011 FUTA tax. Irs ez form 2011 4. Irs ez form 2011 Religious Exemptions and Special Rules for MinistersForm W-2. Irs ez form 2011 Self-employed. Irs ez form 2011 Employees. Irs ez form 2011 5. Irs ez form 2011 Wages and Other CompensationRelocating for Temporary Work Assignments Employee Achievement Awards Scholarship and Fellowship Payments Outplacement Services Withholding for Idle Time Back Pay Supplemental Unemployment Benefits Golden Parachute Payments Interest-Free and Below-Market-Interest-Rate Loans Leave Sharing Plans Nonqualified Deferred Compensation Plans Tax-Sheltered Annuities Contributions to a Simplified Employee Pension (SEP) SIMPLE Retirement Plans 6. Irs ez form 2011 Sick Pay ReportingSick Pay Payments That Are Not Sick Pay Sick Pay Plan Third-Party Payers of Sick Pay Social Security, Medicare, and FUTA Taxes on Sick Pay Income Tax Withholding on Sick Pay Depositing and Reporting Example of Figuring and Reporting Sick Pay 7. Irs ez form 2011 Special Rules for Paying TaxesCommon Paymaster Agents Reporting Agents Employee's Portion of Taxes Paid by Employer International Social Security Agreements 8. Irs ez form 2011 Pensions and AnnuitiesFederal Income Tax Withholding 9. Irs ez form 2011 Alternative Methods for Figuring WithholdingTerm of continuous employment. Irs ez form 2011 Formula Tables for Percentage Method Withholding (for Automated Payroll Systems) Wage Bracket Percentage Method Tables (for Automated Payroll Systems) Combined Federal Income Tax, Employee Social Security Tax, and Employee Medicare Tax Withholding Tables 10. Irs ez form 2011 Tables for Withholding on Distributions of Indian Gaming Profits to Tribal MembersWithholding Tables How To Get Tax Help 1. Irs ez form 2011 Who Are Employees? Before you can know how to treat payments that you make to workers for services, you must first know the business relationship that exists between you and the person performing the services. Irs ez form 2011 The person performing the services may be: An independent contractor, A common-law employee, A statutory employee, or A statutory nonemployee. Irs ez form 2011 This discussion explains these four categories. Irs ez form 2011 A later discussion, Employee or Independent Contractor in section 2, points out the differences between an independent contractor and an employee and gives examples from various types of occupations. Irs ez form 2011 If an individual who works for you is not an employee under the common-law rules (see section 2), you generally do not have to withhold federal income tax from that individual's pay. Irs ez form 2011 However, in some cases you may be required to withhold under the backup withholding requirements on these payments. Irs ez form 2011 See Publication 15 (Circular E) for information on backup withholding. Irs ez form 2011 Independent Contractors People such as doctors, veterinarians, and auctioneers who follow an independent trade, business, or profession in which they offer their services to the public, are generally not employees. Irs ez form 2011 However, whether such people are employees or independent contractors depends on the facts in each case. Irs ez form 2011 The general rule is that an individual is an independent contractor if you, the person for whom the services are performed, have the right to control or direct only the result of the work and not the means and methods of accomplishing the result. Irs ez form 2011 Common-Law Employees Under common-law rules, anyone who performs services for you is generally your employee if you have the right to control what will be done and how it will be done. Irs ez form 2011 This is so even when you give the employee freedom of action. Irs ez form 2011 What matters is that you have the right to control the details of how the services are performed. Irs ez form 2011 For a discussion of facts that indicate whether an individual providing services is an independent contractor or employee, see section 2. Irs ez form 2011 If you have an employer-employee relationship, it makes no difference how it is labeled. Irs ez form 2011 The substance of the relationship, not the label, governs the worker's status. Irs ez form 2011 It does not matter whether the individual is employed full time or part time. Irs ez form 2011 For employment tax purposes, no distinction is made between classes of employees. Irs ez form 2011 Superintendents, managers, and other supervisory personnel are all employees. Irs ez form 2011 An officer of a corporation is generally an employee; however, an officer who performs no services or only minor services, and neither receives nor is entitled to receive any pay, is not considered an employee. Irs ez form 2011 A director of a corporation is not an employee with respect to services performed as a director. Irs ez form 2011 You generally have to withhold and pay income, social security, and Medicare taxes on wages that you pay to common-law employees. Irs ez form 2011 However, the wages of certain employees may be exempt from one or more of these taxes. Irs ez form 2011 See Employees of Exempt Organizations (section 3) and Religious Exemptions and Special Rules for Ministers (section 4). Irs ez form 2011 Leased employees. Irs ez form 2011   Under certain circumstances, a firm that furnishes workers to other firms is the employer of those workers for employment tax purposes. Irs ez form 2011 For example, a temporary staffing service may provide the services of secretaries, nurses, and other similarly trained workers to its clients on a temporary basis. Irs ez form 2011   The staffing service enters into contracts with the clients under which the clients specify the services to be provided and a fee is paid to the staffing service for each individual furnished. Irs ez form 2011 The staffing service has the right to control and direct the worker's services for the client, including the right to discharge or reassign the worker. Irs ez form 2011 The staffing service hires the workers, controls the payment of their wages, provides them with unemployment insurance and other benefits, and is the employer for employment tax purposes. Irs ez form 2011 For information on employee leasing as it relates to pension plan qualification requirements, see Leased employee in Publication 560, Retirement Plans for Small Business. Irs ez form 2011 Additional information. Irs ez form 2011   For more information about the treatment of special types of employment, the treatment of special types of payments, and similar subjects, see Publication 15 (Circular E) or Publication 51 (Circular A), Agricultural Employer's Tax Guide. Irs ez form 2011 Statutory Employees If workers are independent contractors under the common law rules, such workers may nevertheless be treated as employees by statute, (also known as “statutory employees”) for certain employment tax purposes. Irs ez form 2011 This would happen if they fall within any one of the following four categories and meet the three conditions described next under Social security and Medicare taxes . Irs ez form 2011 A driver who distributes beverages (other than milk) or meat, vegetable, fruit, or bakery products; or who picks up and delivers laundry or dry cleaning, if the driver is your agent or is paid on commission. Irs ez form 2011 A full-time life insurance sales agent whose principal business activity is selling life insurance or annuity contracts, or both, primarily for one life insurance company. Irs ez form 2011 An individual who works at home on materials or goods that you supply and that must be returned to you or to a person you name, if you also furnish specifications for the work to be done. Irs ez form 2011 A full-time traveling or city salesperson who works on your behalf and turns in orders to you from wholesalers, retailers, contractors, or operators of hotels, restaurants, or other similar establishments. Irs ez form 2011 The goods sold must be merchandise for resale or supplies for use in the buyer's business operation. Irs ez form 2011 The work performed for you must be the salesperson's principal business activity. Irs ez form 2011 See Salesperson in section 2. Irs ez form 2011 Social security and Medicare taxes. Irs ez form 2011   You must withhold social security and Medicare taxes from the wages of statutory employees if all three of the following conditions apply. Irs ez form 2011 The service contract states or implies that substantially all the services are to be performed personally by them. Irs ez form 2011 They do not have a substantial investment in the equipment and property used to perform the services (other than an investment in facilities for transportation, such as a car or truck). Irs ez form 2011 The services are performed on a continuing basis for the same payer. Irs ez form 2011 Federal unemployment (FUTA) tax. Irs ez form 2011   For FUTA tax (the unemployment tax paid under the Federal Unemployment Tax Act), the term “employee” means the same as it does for social security and Medicare taxes, except that it does not include statutory employees defined above in categories 2 and 3. Irs ez form 2011 Any individual who is a statutory employee described above under category 1 or 4 is also an employee for FUTA tax purposes and subject to FUTA tax. Irs ez form 2011 Income tax. Irs ez form 2011   Do not withhold federal income tax from the wages of statutory employees. Irs ez form 2011 Reporting payments to statutory employees. Irs ez form 2011   Furnish Form W-2 to a statutory employee, and check “Statutory employee” in box 13. Irs ez form 2011 Show your payments to the employee as “other compensation” in box 1. Irs ez form 2011 Also, show social security wages in box 3, social security tax withheld in box 4, Medicare wages in box 5, and Medicare tax withheld in box 6. Irs ez form 2011 The statutory employee can deduct his or her trade or business expenses from the payments shown on Form W-2. Irs ez form 2011 He or she reports earnings as a statutory employee on line 1 of Schedule C (Form 1040), Profit or Loss From Business, or Schedule C-EZ (Form 1040), Net Profit From Business. Irs ez form 2011 A statutory employee's business expenses are deductible on Schedule C (Form 1040) or C-EZ (Form 1040) and are not subject to the reduction by 2% of his or her adjusted gross income that applies to common-law employees. Irs ez form 2011 H-2A agricultural workers. Irs ez form 2011   On Form W-2, do not check box 13 (Statutory employee), as H-2A workers are not statutory employees. Irs ez form 2011 Statutory Nonemployees There are three categories of statutory nonemployees: direct sellers, licensed real estate agents, and certain companion sitters. Irs ez form 2011 Direct sellers and licensed real estate agents are treated as self-employed for all federal tax purposes, including income and employment taxes, if: Substantially all payments for their services as direct sellers or real estate agents are directly related to sales or other output, rather than to the number of hours worked, and Their services are performed under a written contract providing that they will not be treated as employees for federal tax purposes. Irs ez form 2011 Direct sellers. Irs ez form 2011   Direct sellers include persons falling within any of the following three groups. Irs ez form 2011 Persons engaged in selling (or soliciting the sale of) consumer products in the home or place of business other than in a permanent retail establishment. Irs ez form 2011 Persons engaged in selling (or soliciting the sale of) consumer products to any buyer on a buy-sell basis, a deposit-commission basis, or any similar basis prescribed by regulations, for resale in the home or at a place of business other than in a permanent retail establishment. Irs ez form 2011 Persons engaged in the trade or business of delivering or distributing newspapers or shopping news (including any services directly related to such delivery or distribution). Irs ez form 2011   Direct selling includes activities of individuals who attempt to increase direct sales activities of their direct sellers and who earn income based on the productivity of their direct sellers. Irs ez form 2011 Such activities include providing motivation and encouragement; imparting skills, knowledge, or experience; and recruiting. Irs ez form 2011 Licensed real estate agents. Irs ez form 2011   This category includes individuals engaged in appraisal activities for real estate sales if they earn income based on sales or other output. Irs ez form 2011 Companion sitters. Irs ez form 2011   Companion sitters are individuals who furnish personal attendance, companionship, or household care services to children or to individuals who are elderly or disabled. Irs ez form 2011 A person engaged in the trade or business of putting the sitters in touch with individuals who wish to employ them (that is, a companion sitting placement service) will not be treated as the employer of the sitters if that person does not receive or pay the salary or wages of the sitters and is compensated by the sitters or the persons who employ them on a fee basis. Irs ez form 2011 Companion sitters who are not employees of a companion sitting placement service are generally treated as self-employed for all federal tax purposes. Irs ez form 2011 Misclassification of Employees Consequences of treating an employee as an independent contractor. Irs ez form 2011   If you classify an employee as an independent contractor and you have no reasonable basis for doing so, you are liable for employment taxes for that worker and the relief provision, discussed next, will not apply. Irs ez form 2011 See section 2 in Publication 15 (Circular E) for more information. Irs ez form 2011 Relief provision. Irs ez form 2011   If you have a reasonable basis for not treating a worker as an employee, you may be relieved from having to pay employment taxes for that worker. Irs ez form 2011 To get this relief, you must file all required federal information returns on a basis consistent with your treatment of the worker. Irs ez form 2011 You (or your predecessor) must not have treated any worker holding a substantially similar position as an employee for any periods beginning after 1977. Irs ez form 2011 Technical service specialists. Irs ez form 2011   This relief provision does not apply for a technical services specialist you provide to another business under an arrangement between you and the other business. Irs ez form 2011 A technical service specialist is an engineer, designer, drafter, computer programmer, systems analyst, or other similarly skilled worker engaged in a similar line of work. Irs ez form 2011   This limit on the application of the rule does not affect the determination of whether such workers are employees under the common-law rules. Irs ez form 2011 The common-law rules control whether the specialist is treated as an employee or an independent contractor. Irs ez form 2011 However, if you directly contract with a technical service specialist to provide services for your business and not for another business, you may still be entitled to the relief provision. Irs ez form 2011 Test proctors and room supervisors. Irs ez form 2011   The consistent treatment requirement does not apply to services performed after December 31, 2006, by an individual as a test proctor or room supervisor assisting in the administration of college entrance or placement examinations if the individual: Is performing the services for a section 501(c) organization exempt from tax under section 501(a) of the code, and Is not otherwise treated as an employee of the organization for employment taxes. Irs ez form 2011 Voluntary Classification Settlement Program (VCSP). Irs ez form 2011   Employers who are currently treating their workers (or a class or group of workers) as independent contractors or other nonemployees and want to voluntarily reclassify their workers as employees for future tax periods may be eligible to participate in the VCSP if certain requirements are met. Irs ez form 2011 To apply, use Form 8952, Application for Voluntary Classification Settlement Program (VCSP). Irs ez form 2011 For more information, visit IRS. Irs ez form 2011 gov and enter “VCSP” in the search box. Irs ez form 2011 2. Irs ez form 2011 Employee or Independent Contractor? An employer must generally withhold federal income taxes, withhold and pay over social security and Medicare taxes, and pay unemployment tax on wages paid to an employee. Irs ez form 2011 An employer does not generally have to withhold or pay over any federal taxes on payments to independent contractors. Irs ez form 2011 Common-Law Rules To determine whether an individual is an employee or an independent contractor under the common law, the relationship of the worker and the business must be examined. Irs ez form 2011 In any employee-independent contractor determination, all information that provides evidence of the degree of control and the degree of independence must be considered. Irs ez form 2011 Facts that provide evidence of the degree of control and independence fall into three categories: behavioral control, financial control, and the type of relationship of the parties. Irs ez form 2011 These facts are discussed next. Irs ez form 2011 Behavioral control. Irs ez form 2011   Facts that show whether the business has a right to direct and control how the worker does the task for which the worker is hired include the type and degree of: Instructions that the business gives to the worker. Irs ez form 2011   An employee is generally subject to the business' instructions about when, where, and how to work. Irs ez form 2011 All of the following are examples of types of instructions about how to do work. Irs ez form 2011 When and where to do the work. Irs ez form 2011 What tools or equipment to use. Irs ez form 2011 What workers to hire or to assist with the work. Irs ez form 2011 Where to purchase supplies and services. Irs ez form 2011 What work must be performed by a specified  individual. Irs ez form 2011 What order or sequence to follow. Irs ez form 2011   The amount of instruction needed varies among different jobs. Irs ez form 2011 Even if no instructions are given, sufficient behavioral control may exist if the employer has the right to control how the work results are achieved. Irs ez form 2011 A business may lack the knowledge to instruct some highly specialized professionals; in other cases, the task may require little or no instruction. Irs ez form 2011 The key consideration is whether the business has retained the right to control the details of a worker's performance or instead has given up that right. Irs ez form 2011 Training that the business gives to the worker. Irs ez form 2011   An employee may be trained to perform services in a particular manner. Irs ez form 2011 Independent contractors ordinarily use their own methods. Irs ez form 2011 Financial control. Irs ez form 2011   Facts that show whether the business has a right to control the business aspects of the worker's job include: The extent to which the worker has unreimbursed business expenses. Irs ez form 2011   Independent contractors are more likely to have unreimbursed expenses than are employees. Irs ez form 2011 Fixed ongoing costs that are incurred regardless of whether work is currently being performed are especially important. Irs ez form 2011 However, employees may also incur unreimbursed expenses in connection with the services that they perform for their employer. Irs ez form 2011 The extent of the worker's investment. Irs ez form 2011   An independent contractor often has a significant investment in the facilities or tools he or she uses in performing services for someone else. Irs ez form 2011 However, a significant investment is not necessary for independent contractor status. Irs ez form 2011 The extent to which the worker makes his or her services available to the relevant market. Irs ez form 2011   An independent contractor is generally free to seek out business opportunities. Irs ez form 2011 Independent contractors often advertise, maintain a visible business location, and are available to work in the relevant market. Irs ez form 2011 How the business pays the worker. Irs ez form 2011   An employee is generally guaranteed a regular wage amount for an hourly, weekly, or other period of time. Irs ez form 2011 This usually indicates that a worker is an employee, even when the wage or salary is supplemented by a commission. Irs ez form 2011 An independent contractor is often paid a flat fee or on a time and materials basis for the job. Irs ez form 2011 However, it is common in some professions, such as law, to pay independent contractors hourly. Irs ez form 2011 The extent to which the worker can realize a profit or loss. Irs ez form 2011   An independent contractor can make a profit or loss. Irs ez form 2011 Type of relationship. Irs ez form 2011   Facts that show the parties' type of relationship include: Written contracts describing the relationship the parties intended to create. Irs ez form 2011 Whether or not the business provides the worker with employee-type benefits, such as insurance, a pension plan, vacation pay, or sick pay. Irs ez form 2011 The permanency of the relationship. Irs ez form 2011 If you engage a worker with the expectation that the relationship will continue indefinitely, rather than for a specific project or period, this is generally considered evidence that your intent was to create an employer-employee relationship. Irs ez form 2011 The extent to which services performed by the worker are a key aspect of the regular business of the company. Irs ez form 2011 If a worker provides services that are a key aspect of your regular business activity, it is more likely that you will have the right to direct and control his or her activities. Irs ez form 2011 For example, if a law firm hires an attorney, it is likely that it will present the attorney's work as its own and would have the right to control or direct that work. Irs ez form 2011 This would indicate an employer-employee relationship. Irs ez form 2011 IRS help. Irs ez form 2011   If you want the IRS to determine whether or not a worker is an employee, file Form SS-8, Determination of Worker Status for Purposes of Federal Employment Taxes and Income Tax Withholding, with the IRS. Irs ez form 2011 Industry Examples The following examples may help you properly classify your workers. Irs ez form 2011 Building and Construction Industry Example 1. Irs ez form 2011 Jerry Jones has an agreement with Wilma White to supervise the remodeling of her house. Irs ez form 2011 She did not advance funds to help him carry on the work. Irs ez form 2011 She makes direct payments to the suppliers for all necessary materials. Irs ez form 2011 She carries liability and workers' compensation insurance covering Jerry and others that he engaged to assist him. Irs ez form 2011 She pays them an hourly rate and exercises almost constant supervision over the work. Irs ez form 2011 Jerry is not free to transfer his assistants to other jobs. Irs ez form 2011 He may not work on other jobs while working for Wilma. Irs ez form 2011 He assumes no responsibility to complete the work and will incur no contractual liability if he fails to do so. Irs ez form 2011 He and his assistants perform personal services for hourly wages. Irs ez form 2011 Jerry Jones and his assistants are employees of Wilma White. Irs ez form 2011 Example 2. Irs ez form 2011 Milton Manning, an experienced tile setter, orally agreed with a corporation to perform full-time services at construction sites. Irs ez form 2011 He uses his own tools and performs services in the order designated by the corporation and according to its specifications. Irs ez form 2011 The corporation supplies all materials, makes frequent inspections of his work, pays him on a piecework basis, and carries workers' compensation insurance on him. Irs ez form 2011 He does not have a place of business or hold himself out to perform similar services for others. Irs ez form 2011 Either party can end the services at any time. Irs ez form 2011 Milton Manning is an employee of the corporation. Irs ez form 2011 Example 3. Irs ez form 2011 Wallace Black agreed with the Sawdust Co. Irs ez form 2011 to supply the construction labor for a group of houses. Irs ez form 2011 The company agreed to pay all construction costs. Irs ez form 2011 However, he supplies all the tools and equipment. Irs ez form 2011 He performs personal services as a carpenter and mechanic for an hourly wage. Irs ez form 2011 He also acts as superintendent and foreman and engages other individuals to assist him. Irs ez form 2011 The company has the right to select, approve, or discharge any helper. Irs ez form 2011 A company representative makes frequent inspections of the construction site. Irs ez form 2011 When a house is finished, Wallace is paid a certain percentage of its costs. Irs ez form 2011 He is not responsible for faults, defects of construction, or wasteful operation. Irs ez form 2011 At the end of each week, he presents the company with a statement of the amount that he has spent, including the payroll. Irs ez form 2011 The company gives him a check for that amount from which he pays the assistants, although he is not personally liable for their wages. Irs ez form 2011 Wallace Black and his assistants are employees of the Sawdust Co. Irs ez form 2011 Example 4. Irs ez form 2011 Bill Plum contracted with Elm Corporation to complete the roofing on a housing complex. Irs ez form 2011 A signed contract established a flat amount for the services rendered by Bill Plum. Irs ez form 2011 Bill is a licensed roofer and carries workers' compensation and liability insurance under the business name, Plum Roofing. Irs ez form 2011 He hires his own roofers who are treated as employees for federal employment tax purposes. Irs ez form 2011 If there is a problem with the roofing work, Plum Roofing is responsible for paying for any repairs. Irs ez form 2011 Bill Plum, doing business as Plum Roofing, is an independent contractor. Irs ez form 2011 Example 5. Irs ez form 2011 Vera Elm, an electrician, submitted a job estimate to a housing complex for electrical work at $16 per hour for 400 hours. Irs ez form 2011 She is to receive $1,280 every 2 weeks for the next 10 weeks. Irs ez form 2011 This is not considered payment by the hour. Irs ez form 2011 Even if she works more or less than 400 hours to complete the work, Vera Elm will receive $6,400. Irs ez form 2011 She also performs additional electrical installations under contracts with other companies, that she obtained through advertisements. Irs ez form 2011 Vera is an independent contractor. Irs ez form 2011 Trucking Industry Example. Irs ez form 2011 Rose Trucking contracts to deliver material for Forest, Inc. Irs ez form 2011 , at $140 per ton. Irs ez form 2011 Rose Trucking is not paid for any articles that are not delivered. Irs ez form 2011 At times, Jan Rose, who operates as Rose Trucking, may also lease another truck and engage a driver to complete the contract. Irs ez form 2011 All operating expenses, including insurance coverage, are paid by Jan Rose. Irs ez form 2011 All equipment is owned or rented by Jan and she is responsible for all maintenance. Irs ez form 2011 None of the drivers are provided by Forest, Inc. Irs ez form 2011 Jan Rose, operating as Rose Trucking, is an independent contractor. Irs ez form 2011 Computer Industry Example. Irs ez form 2011 Steve Smith, a computer programmer, is laid off when Megabyte, Inc. Irs ez form 2011 , downsizes. Irs ez form 2011 Megabyte agrees to pay Steve a flat amount to complete a one-time project to create a certain product. Irs ez form 2011 It is not clear how long that it will take to complete the project, and Steve is not guaranteed any minimum payment for the hours spent on the program. Irs ez form 2011 Megabyte provides Steve with no instructions beyond the specifications for the product itself. Irs ez form 2011 Steve and Megabyte have a written contract, which provides that Steve is considered to be an independent contractor, is required to pay federal and state taxes, and receives no benefits from Megabyte. Irs ez form 2011 Megabyte will file Form 1099-MISC, Miscellaneous Income, to report the amount paid to Steve. Irs ez form 2011 Steve works at home and is not expected or allowed to attend meetings of the software development group. Irs ez form 2011 Steve is an independent contractor. Irs ez form 2011 Automobile Industry Example 1. Irs ez form 2011 Donna Lee is a salesperson employed on a full-time basis by Bob Blue, an auto dealer. Irs ez form 2011 She works six days a week and is on duty in Bob's showroom on certain assigned days and times. Irs ez form 2011 She appraises trade-ins, but her appraisals are subject to the sales manager's approval. Irs ez form 2011 Lists of prospective customers belong to the dealer. Irs ez form 2011 She is required to develop leads and report results to the sales manager. Irs ez form 2011 Because of her experience, she requires only minimal assistance in closing and financing sales and in other phases of her work. Irs ez form 2011 She is paid a commission and is eligible for prizes and bonuses offered by Bob. Irs ez form 2011 Bob also pays the cost of health insurance and group-term life insurance for Donna. Irs ez form 2011 Donna is an employee of Bob Blue. Irs ez form 2011 Example 2. Irs ez form 2011 Sam Sparks performs auto repair services in the repair department of an auto sales company. Irs ez form 2011 He works regular hours and is paid on a percentage basis. Irs ez form 2011 He has no investment in the repair department. Irs ez form 2011 The sales company supplies all facilities, repair parts, and supplies; issues instructions on the amounts to be charged, parts to be used, and the time for completion of each job; and checks all estimates and repair orders. Irs ez form 2011 Sam is an employee of the sales company. Irs ez form 2011 Example 3. Irs ez form 2011 An auto sales agency furnishes space for Helen Bach to perform auto repair services. Irs ez form 2011 She provides her own tools, equipment, and supplies. Irs ez form 2011 She seeks out business from insurance adjusters and other individuals and does all of the body and paint work that comes to the agency. Irs ez form 2011 She hires and discharges her own helpers, determines her own and her helpers' working hours, quotes prices for repair work, makes all necessary adjustments, assumes all losses from uncollectible accounts, and receives, as compensation for her services, a large percentage of the gross collections from the auto repair shop. Irs ez form 2011 Helen is an independent contractor and the helpers are her employees. Irs ez form 2011 Attorney Example. Irs ez form 2011 Donna Yuma is a sole practitioner who rents office space and pays for the following items: telephone, computer, on-line legal research linkup, fax machine, and photocopier. Irs ez form 2011 Donna buys office supplies and pays bar dues and membership dues for three other professional organizations. Irs ez form 2011 Donna has a part-time receptionist who also does the bookkeeping. Irs ez form 2011 She pays the receptionist, withholds and pays federal and state employment taxes, and files a Form W-2 each year. Irs ez form 2011 For the past 2 years, Donna has had only three clients, corporations with which there have been long-standing relationships. Irs ez form 2011 Donna charges the corporations an hourly rate for her services, sending monthly bills detailing the work performed for the prior month. Irs ez form 2011 The bills include charges for long distance calls, on-line research time, fax charges, photocopies, postage, and travel, costs for which the corporations have agreed to reimburse her. Irs ez form 2011 Donna is an independent contractor. Irs ez form 2011 Taxicab Driver Example. Irs ez form 2011 Tom Spruce rents a cab from Taft Cab Co. Irs ez form 2011 for $150 per day. Irs ez form 2011 He pays the costs of maintaining and operating the cab. Irs ez form 2011 Tom Spruce keeps all fares that he receives from customers. Irs ez form 2011 Although he receives the benefit of Taft's two-way radio communication equipment, dispatcher, and advertising, these items benefit both Taft and Tom Spruce. Irs ez form 2011 Tom Spruce is an independent contractor. Irs ez form 2011 Salesperson To determine whether salespersons are employees under the usual common-law rules, you must evaluate each individual case. Irs ez form 2011 If a salesperson who works for you does not meet the tests for a common-law employee, discussed earlier in this section, you do not have to withhold federal income tax from his or her pay (see Statutory Employees in section 1). Irs ez form 2011 However, even if a salesperson is not an employee under the usual common-law rules for income tax withholding, his or her pay may still be subject to social security, Medicare, and FUTA taxes as a statutory employee. Irs ez form 2011 To determine whether a salesperson is an employee for social security, Medicare, and FUTA tax purposes, the salesperson must meet all eight elements of the statutory employee test. Irs ez form 2011 A salesperson is a statutory employee for social security, Medicare, and FUTA tax purposes if he or she: Works full time for one person or company except, possibly, for sideline sales activities on behalf of some other person, Sells on behalf of, and turns his or her orders over to, the person or company for which he or she works, Sells to wholesalers, retailers, contractors, or operators of hotels, restaurants, or similar establishments, Sells merchandise for resale, or supplies for use in the customer's business, Agrees to do substantially all of this work personally, Has no substantial investment in the facilities used to do the work, other than in facilities for transportation, Maintains a continuing relationship with the person or company for which he or she works, and Is not an employee under common-law rules. Irs ez form 2011 3. Irs ez form 2011 Employees of Exempt Organizations Many nonprofit organizations are exempt from federal income tax. Irs ez form 2011 Although they do not have to pay federal income tax themselves, they must still withhold federal income tax from the pay of their employees. Irs ez form 2011 However, there are special social security, Medicare, and FUTA tax rules that apply to the wages that they pay their employees. Irs ez form 2011 Section 501(c)(3) organizations. Irs ez form 2011   Nonprofit organizations that are exempt from federal income tax under section 501(c)(3) of the Internal Revenue Code include any community chest, fund, or foundation organized and operated exclusively for religious, charitable, scientific, testing for public safety, literary or educational purposes, fostering national or international amateur sports competition, or for the prevention of cruelty to children or animals. Irs ez form 2011 These organizations are usually corporations and are exempt from federal income tax under section 501(a). Irs ez form 2011 Social security and Medicare taxes. Irs ez form 2011   Wages paid to employees of section 501(c)(3) organizations are subject to social security and Medicare taxes unless one of the following situations applies. Irs ez form 2011 The organization pays an employee less than $100 in a calendar year. Irs ez form 2011 The organization is a church or church-controlled organization opposed for religious reasons to the payment of social security and Medicare taxes and has filed Form 8274, Certification by Churches and Qualified Church-Controlled Organizations Electing Exemption From Employer Social Security and Medicare Taxes, to elect exemption from social security and Medicare taxes. Irs ez form 2011 The organization must have filed for exemption before the first date on which a quarterly employment tax return (Form 941) or annual employment tax return (Form 944) would otherwise be due. Irs ez form 2011   An employee of a church or church-controlled organization that is exempt from social security and Medicare taxes must pay self-employment tax if the employee is paid $108. Irs ez form 2011 28 or more in a year. Irs ez form 2011 However, an employee who is a member of a qualified religious sect can apply for an exemption from the self-employment tax by filing Form 4029, Application for Exemption From Social Security and Medicare Taxes and Waiver of Benefits. Irs ez form 2011 See Members of recognized religious sects opposed to insurance in section 4. Irs ez form 2011 FUTA tax. Irs ez form 2011   An organization that is exempt from federal income tax under section 501(c)(3) of the Internal Revenue Code is also exempt from FUTA tax. Irs ez form 2011 This exemption cannot be waived. Irs ez form 2011 Do not file Form 940 to report wages paid by these organizations or pay the tax. Irs ez form 2011 Note. Irs ez form 2011 An organization wholly owned by a state or its political subdivision should contact the appropriate state official for information about reporting and getting social security and Medicare coverage for its employees. Irs ez form 2011 Other than section 501(c)(3) organizations. Irs ez form 2011   Nonprofit organizations that are not section 501(c)(3) organizations may also be exempt from federal income tax under section 501(a) or section 521. Irs ez form 2011 However, these organizations are not exempt from withholding federal income, social security, or Medicare tax from their employees' pay, or from paying FUTA tax. Irs ez form 2011 Two special rules for social security, Medicare, and FUTA taxes apply. Irs ez form 2011 If an employee is paid less than $100 during a calendar year, his or her wages are not subject to social security and Medicare taxes. Irs ez form 2011 If an employee is paid less than $50 in a calendar quarter, his or her wages are not subject to FUTA tax for the quarter. Irs ez form 2011 The above rules do not apply to employees who work for pension plans and other similar organizations described in section 401(a). Irs ez form 2011 4. Irs ez form 2011 Religious Exemptions and Special Rules for Ministers Special rules apply to the treatment of ministers for social security and Medicare tax purposes. Irs ez form 2011 An exemption from social security and Medicare taxes is available for ministers and certain other religious workers and members of certain recognized religious sects. Irs ez form 2011 For more information on getting an exemption, see Publication 517, Social Security and Other Information for Members of the Clergy and Religious Workers. Irs ez form 2011 Ministers. Irs ez form 2011   Ministers are individuals who are duly ordained, commissioned, or licensed by a religious body constituting a church or church denomination. Irs ez form 2011 They are given the authority to conduct religious worship, perform sacerdotal functions, and administer ordinances and sacraments according to the prescribed tenets and practices of that religious organization. Irs ez form 2011   Ministers are employees if they perform services in the exercise of ministry and are subject to your will and control. Irs ez form 2011 The common-law rules discussed in section 1 and section 2 should be applied to determine whether a minister is your employee or is self-employed. Irs ez form 2011 Whether the minister is an employee or self-employed, the earnings of a minister are not subject to federal income, social security, and Medicare tax withholding. Irs ez form 2011 However, even if the minister is a common law employee, the earnings as reported on the minister's Form 1040 are subject to self-employment tax and federal income tax. Irs ez form 2011 You do not withhold these taxes from wages earned by a minister, but if the minister is your employee, you may agree with the minister to voluntarily withhold tax to cover the minister's liability for self-employment tax and federal income tax. Irs ez form 2011 For more information, see Publication 517. Irs ez form 2011 Form W-2. Irs ez form 2011   If your minister is an employee, report all taxable compensation as wages in box 1 on Form W-2. Irs ez form 2011 Include in this amount expense allowances or reimbursements paid under a nonaccountable plan, discussed in section 5 of Publication 15 (Circular E). Irs ez form 2011 Do not include a parsonage allowance (excludable housing allowance) in this amount. Irs ez form 2011 You may report a designated parsonage or rental allowance (housing allowance) and a utilities allowance, or the rental value of housing provided in a separate statement or in box 14 on Form W-2. Irs ez form 2011 Do not show on Form W-2, Form 941, or Form 944 any amount as social security or Medicare wages, or any withholding for social security or Medicare taxes. Irs ez form 2011 If you withheld federal income tax from the minister under a voluntary agreement, this amount should be shown in box 2 on Form W-2 as federal income tax withheld. Irs ez form 2011 For more information on ministers, see Publication 517. Irs ez form 2011 Exemptions for ministers and others. Irs ez form 2011   Certain ordained ministers, Christian Science practitioners, and members of religious orders who have not taken a vow of poverty may apply to exempt their earnings from self-employment tax on religious grounds. Irs ez form 2011 The application must be based on conscientious opposition because of personal considerations to public insurance that makes payments in the event of death, disability, old age, or retirement, or that makes payments toward the cost of, or provides services for, medical care, including social security and Medicare benefits. Irs ez form 2011 The exemption applies only to qualified services performed for the religious organization. Irs ez form 2011 See Revenue Procedure 91-20, 1991-1 C. Irs ez form 2011 B. Irs ez form 2011 524, for guidelines to determine whether an organization is a religious order or whether an individual is a member of a religious order. Irs ez form 2011   To apply for the exemption, the employee should file Form 4361, Application for Exemption From Self-Employment Tax for Use by Ministers, Members of Religious Orders and Christian Science Practitioners. Irs ez form 2011 See Publication 517 for more information about claiming an exemption from self-employment tax using Form 4361. Irs ez form 2011 Members of recognized religious sects opposed to insurance. Irs ez form 2011   If you belong to a recognized religious sect or to a division of such sect that is opposed to insurance, you may qualify for an exemption from the self-employment tax. Irs ez form 2011 To qualify, you must be conscientiously opposed to accepting the benefits of any public or private insurance that makes payments because of death, disability, old age, or retirement, or makes payments toward the cost of, or provides services for, medical care (including social security and Medicare benefits). Irs ez form 2011 If you buy a retirement annuity from an insurance company, you will not be eligible for this exemption. Irs ez form 2011 Religious opposition based on the teachings of the sect is the only legal basis for the exemption. Irs ez form 2011 In addition, your religious sect (or division) must have existed since December 31, 1950. Irs ez form 2011 Self-employed. Irs ez form 2011   If you are self-employed and a member of a recognized religious sect opposed to insurance, you can apply for exemption by filing Form 4029 to waive all social security and Medicare benefits. Irs ez form 2011 Employees. Irs ez form 2011   The social security and Medicare tax exemption available to the self-employed who are members of a recognized religious sect opposed to insurance is also available to their employees who are members of such a sect. Irs ez form 2011 This applies to partnerships only if each partner is a member of the sect. Irs ez form 2011 This exemption for employees applies only if both the employee and the employer are members of such a sect, and the employer has an exemption. Irs ez form 2011 To get the exemption, the employee must file Form 4029. Irs ez form 2011   An employee of a church or church-controlled organization that is exempt from social security and Medicare taxes can also apply for an exemption on Form 4029. Irs ez form 2011 5. Irs ez form 2011 Wages and Other Compensation Publication 15 (Circular E) provides a general discussion of taxable wages. Irs ez form 2011 Publication 15-B discusses fringe benefits. Irs ez form 2011 The following topics supplement those discussions. Irs ez form 2011 Relocating for Temporary Work Assignments If an employee is given a temporary work assignment away from his or her regular place of work, certain travel expenses reimbursed or paid directly by the employer in accordance with an accountable plan (see section 5 in Publication 15 (Circular E)) may be excludable from the employee's wages. Irs ez form 2011 Generally, a temporary work assignment in a single location is one that is realistically expected to last (and does in fact last) for 1 year or less. Irs ez form 2011 If the employee's new work assignment is indefinite, any living expenses reimbursed or paid by the employer (other than qualified moving expenses) must be included in the employee's wages as compensation. Irs ez form 2011 For the travel expenses to be excludable: The new work location must be outside of the city or general area of the employee's regular work place or post of duty, The travel expenses must otherwise qualify as deductible by the employee, and The expenses must be for the period during which the employee is at the temporary work location. Irs ez form 2011 If you reimburse or pay any personal expenses of an employee during his or her temporary work assignment, such as expenses for home leave for family members or for vacations, these amounts must be included in the employee's wages. Irs ez form 2011 See chapter 1 of Publication 463, Travel, Entertainment, Gift, and Car Expenses, and section 5 of Publication 15 (Circular E), for more information. Irs ez form 2011 These rules generally apply to temporary work assignments both inside and outside the U. Irs ez form 2011 S. Irs ez form 2011 Employee Achievement Awards Do not withhold federal income, social security, or Medicare taxes on the fair market value of an employee achievement award if it is excludable from your employee's gross income. Irs ez form 2011 To be excludable from your employee's gross income, the award must be tangible personal property (not cash, gift certificates, or securities) given to an employee for length of service or safety achievement, awarded as part of a meaningful presentation, and awarded under circumstances that do not indicate that the payment is disguised compensation. Irs ez form 2011 Excludable employee achievement awards also are not subject to FUTA tax. Irs ez form 2011 Limits. Irs ez form 2011   The most that you can exclude for the cost of all employee achievement awards to the same employee for the year is $400. Irs ez form 2011 A higher limit of $1,600 applies to qualified plan awards. Irs ez form 2011 Qualified plan awards are employee achievement awards under a written plan that does not discriminate in favor of highly compensated employees. Irs ez form 2011 An award cannot be treated as a qualified plan award if the average cost per recipient of all awards under all of your qualified plans is more than $400. Irs ez form 2011   If during the year an employee receives awards not made under a qualified plan and also receives awards under a qualified plan, the exclusion for the total cost of all awards to that employee cannot be more than $1,600. Irs ez form 2011 The $400 and $1,600 limits cannot be added together to exclude more than $1,600 for the cost of awards to any one employee during the year. Irs ez form 2011 Scholarship and Fellowship Payments Only amounts that you pay as a qualified scholarship to a candidate for a degree may be excluded from the recipient's gross income. Irs ez form 2011 A qualified scholarship is any amount granted as a scholarship or fellowship that is used for: Tuition and fees required to enroll in, or to attend, an educational institution, or Fees, books, supplies, and equipment that are required for courses at the educational institution. Irs ez form 2011 The exclusion from income does not apply to the portion of any amount received that represents payment for teaching, research, or other services required as a condition of receiving the scholarship or tuition reduction. Irs ez form 2011 These amounts are reportable on Form W-2. Irs ez form 2011 However, the exclusion will still apply for any amount received under two specific programs—the National Health Service Corps Scholarship Program and the Armed Forces Health Professions Scholarship and Financial Assistance Program—despite any service condition attached to those amounts. Irs ez form 2011 Any amounts that you pay for room and board are not excludable from the recipient's gross income. Irs ez form 2011 A qualified scholarship is not subject to social security, Medicare, and FUTA taxes, or federal income tax withholding. Irs ez form 2011 For more information, see Publication 970, Tax Benefits for Education. Irs ez form 2011 Outplacement Services If you provide outplacement services to your employees to help them find new employment (such as career counseling, resume assistance, or skills assessment), the value of these benefits may be income to them and subject to all withholding taxes. Irs ez form 2011 However, the value of these services will not be subject to any employment taxes if: You derive a substantial business benefit from providing the services (such as improved employee morale or business image) separate from the benefit that you would receive from the mere payment of additional compensation, and The employee would be able to deduct the cost of the services as employee business expenses if he or she had paid for them. Irs ez form 2011 However, if you receive no additional benefit from providing the services, or if the services are not provided on the basis of employee need, then the value of the services is treated as wages and is subject to federal income tax withholding and social security and Medicare taxes. Irs ez form 2011 Similarly, if an employee receives the outplacement services in exchange for reduced severance pay (or other taxable compensation), then the amount the severance pay is reduced is treated as wages for employment tax purposes. Irs ez form 2011 Withholding for Idle Time Payments made under a voluntary guarantee to employees for idle time (any time during which an employee performs no services) are wages for the purposes of social security, Medicare, and FUTA taxes, and federal income tax withholding. Irs ez form 2011 Back Pay Treat back pay as wages in the year paid and withhold and pay employment taxes as required. Irs ez form 2011 If back pay was awarded by a court or government agency to enforce a federal or state statute protecting an employee's right to employment or wages, special rules apply for reporting those wages to the Social Security Administration. Irs ez form 2011 These rules also apply to litigation actions and settlement agreements or agency directives that are resolved out of court and not under a court decree or order. Irs ez form 2011 Examples of pertinent statutes include, but are not limited to, the National Labor Relations Act, Fair Labor Standards Act, Equal Pay Act, and Age Discrimination in Employment Act. Irs ez form 2011 See Publication 957, Reporting Back Pay and Special Wage Payments to the Social Security Administration, and Form SSA-131, Employer Report of Special Wage Payments, for details. Irs ez form 2011 Supplemental Unemployment Benefits If you pay, under a plan, supplemental unemployment benefits to a former employee, all or part of the payments may be taxable and subject to federal income tax withholding, depending on how the plan is funded. Irs ez form 2011 Amounts that represent a return to the employee of amounts previously subject to tax are not taxable and are not subject to withholding. Irs ez form 2011 You should withhold federal income tax on the taxable part of the payments made, under a plan, to an employee who is involuntarily separated because of a reduction in force, discontinuance of a plant or operation, or other similar condition. Irs ez form 2011 It does not matter whether the separation is temporary or permanent. Irs ez form 2011 There are special rules that apply in determining whether benefits qualify as supplemental unemployment benefits that are excluded from wages for social security, Medicare, and FUTA tax purposes. Irs ez form 2011 To qualify as supplemental unemployment benefits for these purposes, the benefits must meet the following requirements. Irs ez form 2011 Benefits are paid only to unemployed former employees who are laid off by the employer. Irs ez form 2011 Eligibility for benefits depends on meeting prescribed conditions after termination. Irs ez form 2011 The amount of weekly benefits payable is based upon state unemployment benefits, other compensation allowable under state law, and the amount of regular weekly pay. Irs ez form 2011 The right to benefits does not accrue until a prescribed period after termination. Irs ez form 2011 Benefits are not attributable to the performance of particular services. Irs ez form 2011 No employee has any right to the benefits until qualified and eligible to receive benefits. Irs ez form 2011 Benefits may not be paid in a lump sum. Irs ez form 2011 Withholding on taxable supplemental unemployment benefits must be based on the withholding certificate (Form W-4) that the employee gave to you. Irs ez form 2011 Golden Parachute Payments A golden parachute payment, in general, is a payment made under a contract entered into by a corporation and key personnel. Irs ez form 2011 Under the agreement, the corporation agrees to pay certain amounts to its key personnel in the event of a change in ownership or control of the corporation. Irs ez form 2011 Payments to employees under golden parachute contracts are subject to social security, Medicare, and FUTA taxes, and federal income tax withholding. Irs ez form 2011 See Regulations section 1. Irs ez form 2011 280G-1 for more information. Irs ez form 2011 No deduction is allowed to the corporation for any excess parachute payment. Irs ez form 2011 To determine the amount of the excess parachute payment, you must first determine if there is a parachute payment for purposes of section 280G. Irs ez form 2011 A parachute payment for purposes of section 280G is any payment that meets all of the following. Irs ez form 2011 The payment is in the nature of compensation. Irs ez form 2011 The payment is to, or for the benefit of, a disqualified individual. Irs ez form 2011 A disqualified individual is anyone who at any time during the 12-month period prior to and ending on the date of the change in ownership or control of the corporation (the disqualified individual determination period) was an employee or independent contractor and was, in regard to that corporation, a shareholder, an officer, or highly compensated individual. Irs ez form 2011 The payment is contingent on a change in ownership of the corporation, the effective control of the corporation, or the ownership of a substantial portion of the assets of the corporation. Irs ez form 2011 The payment has an aggregate present value of at least three times the individual's base amount. Irs ez form 2011 The base amount is the average annual compensation for service includible in the individual's gross income over the most recent 5 taxable years. Irs ez form 2011 An excess parachute payment amount is the excess of any parachute payment over the base amount. Irs ez form 2011 For more information, see Regulations section 1. Irs ez form 2011 280G-1. Irs ez form 2011 The recipient of an excess parachute payment is subject to a 20% nondeductible excise tax. Irs ez form 2011 If the recipient is an employee, the 20% excise tax is to be withheld by the corporation. Irs ez form 2011 Example. Irs ez form 2011 An officer of a corporation receives a golden parachute payment of $400,000. Irs ez form 2011 This is more than three times greater than his or her average compensation of $100,000 over the previous 5-year period. Irs ez form 2011 The excess parachute payment is $300,000 ($400,000 minus $100,000). Irs ez form 2011 The corporation cannot deduct the $300,000 and must withhold the excise tax of $60,000 (20% of $300,000). Irs ez form 2011 Reporting golden parachute payments. Irs ez form 2011   Golden parachute payments to employees must be reported on Form W-2. Irs ez form 2011 See the General Instructions for Forms W-2 and W-3 for details. Irs ez form 2011 For nonemployee reporting of these payments, see Box 7. Irs ez form 2011 Nonemployee Compensation in the Instructions for Form 1099-MISC. Irs ez form 2011 Exempt payments. Irs ez form 2011   Payments by most small business corporations and payments under certain qualified plans are exempt from the golden parachute rules. Irs ez form 2011 See section 280G(b)(5) and (6) for more information. Irs ez form 2011 Interest-Free and Below-Market-Interest-Rate Loans In general, if an employer lends an employee more than $10,000 at an interest rate less than the current applicable federal rate (AFR), the difference between the interest paid and the interest that would be paid under the AFR is considered additional compensation to the employee. Irs ez form 2011 This rule applies to a loan of $10,000 or less if one of its principal purposes is the avoidance of federal tax. Irs ez form 2011 This additional compensation to the employee is subject to social security, Medicare, and FUTA taxes, but not to federal income tax withholding. Irs ez form 2011 Include it in compensation on Form W-2 (or Form 1099-MISC for an independent contractor). Irs ez form 2011 The AFR is established monthly and published by the IRS each month in the Internal Revenue Bulletin. Irs ez form 2011 You can get these rates by calling 1-800-829-4933 or by visiting IRS. Irs ez form 2011 gov. Irs ez form 2011 For more information, see section 7872 and its related regulations. Irs ez form 2011 Leave Sharing Plans If you establish a leave sharing plan for your employees that allows them to transfer leave to other employees for medical emergencies, the amounts paid to the recipients of the leave are considered wages. Irs ez form 2011 These amounts are includible in the gross income of the recipients and are subject to social security, Medicare, and FUTA taxes, and federal income tax withholding. Irs ez form 2011 Do not include these amounts in the income of the transferors. Irs ez form 2011 These rules apply only to leave sharing plans that permit employees to transfer leave to other employees for medical emergencies. Irs ez form 2011 Nonqualified Deferred Compensation Plans Income Tax and Reporting Section 409A provides that all amounts deferred under a nonqualified deferred compensation (NQDC) plan for all tax years are currently includible in gross income (to the extent not subject to a substantial risk of forfeiture and not previously included in gross income) and subject to additional taxes, unless certain requirements are met pertaining to, among other things, elections to defer compensation and distributions under a NQDC plan. Irs ez form 2011 Section 409A also includes rules that apply to certain trusts or similar arrangements associated with NQDC plans if the trusts or arrangements are located outside of the United States, are restricted to the provision of benefits in connection with a decline in the financial health of the plan sponsor, or contributions are made to the trust during certain periods such as when a qualified plan of the service recipient is underfunded. Irs ez form 2011 Employers must withhold federal income tax (but not the additional Section 409A taxes) on any amount includible in gross income under section 409A. Irs ez form 2011 Other changes to the Internal Revenue Code provide that the deferrals under a NQDC plan must be reported separately on Form W-2 or Form 1099-MISC, whichever applies. Irs ez form 2011 Specific rules for reporting are provided in the instructions to the forms. Irs ez form 2011 The provisions do not affect the application or reporting of social security, Medicare, or FUTA taxes. Irs ez form 2011 The provisions do not prevent the inclusion of amounts in income or wages under other provisions of the Internal Revenue Code or common law principles, such as when amounts are actually or constructively received or irrevocably contributed to a separate fund. Irs ez form 2011 For more information about nonqualified deferred compensation plans, see Regulations sections 1. Irs ez form 2011 409A-1 through 1. Irs ez form 2011 409A-6. Irs ez form 2011 Notice 2008-113 provides guidance on the correction of certain operation failures of a NQDC plan. Irs ez form 2011 Notice 2008-113, 2008-51 I. Irs ez form 2011 R. Irs ez form 2011 B. Irs ez form 2011 1305, is available at www. Irs ez form 2011 irs. Irs ez form 2011 gov/irb/2008-51_IRB/ar12. Irs ez form 2011 html. Irs ez form 2011 Also see Notice 2010-6, 2010-3 I. Irs ez form 2011 R. Irs ez form 2011 B. Irs ez form 2011 275, available at www. Irs ez form 2011 irs. Irs ez form 2011 gov/irb/2010-03_IRB/ar08. Irs ez form 2011 html and Notice 2010-80, 2010-51 I. Irs ez form 2011 R. Irs ez form 2011 B. Irs ez form 2011 853, available at www. Irs ez form 2011 irs. Irs ez form 2011 gov/irb/2010-51_IRB/ar08. Irs ez form 2011 html. Irs ez form 2011 Social security, Medicare, and FUTA taxes. Irs ez form 2011   Employer contributions to nonqualified deferred compensation (NQDC) plans, as defined in the applicable regulations, are treated as wages subject to social security, Medicare, and FUTA taxes when the services are performed or the employee no longer has a substantial risk of forfeiting the right to the deferred compensation, whichever is later. Irs ez form 2011   Amounts deferred are subject to social security, Medicare, and FUTA taxes at that time unless the amount that is deferred cannot be reasonably ascertained; for example, if benefits are based on final pay. Irs ez form 2011 If the value of the future benefit is based on any factors that are not yet reasonably ascertainable, you may choose to estimate the value of the future benefit and withhold and pay social security, Medicare, and FUTA taxes on that amount. Irs ez form 2011 You will have to determine later, when the amount is reasonably ascertainable, whether any additional taxes are required. Irs ez form 2011 If taxes are not paid before the amounts become reasonably ascertainable, when the amounts become reasonably ascertainable they are subject to social security, Medicare, and FUTA taxes on the amounts deferred plus the income attributable to those amounts deferred. Irs ez form 2011 For more information, see Regulations sections 31. Irs ez form 2011 3121(v)(2)-1 and 31. Irs ez form 2011 3306(r)(2)-1. Irs ez form 2011 Tax-Sheltered Annuities Employer payments made by a public educational institution or a tax-exempt organization to purchase a tax-sheltered annuity for an employee (annual deferrals) are included in the employee's social security and Medicare wages, if the payments are made because of a salary reduction agreement. Irs ez form 2011 However, they are not included in box 1 on Form W-2 in the year the deferrals are made and are not subject to federal income tax withholding. Irs ez form 2011 See Regulations section 31. Irs ez form 2011 3121(a)(5)-2 for the definition of a salary reduction agreement. Irs ez form 2011 Contributions to a Simplified Employee Pension (SEP) An employer's SEP contributions to an employee's individual retirement arrangement (IRA) are excluded from the employee's gross income. Irs ez form 2011 These excluded amounts are not subject to social security, Medicare, or FUTA taxes, or federal income tax withholding. Irs ez form 2011 However, any SEP contributions paid under a salary reduction agreement (SARSEP) are included in wages for purposes of social security, Medicare, and FUTA taxes. Irs ez form 2011 See Publication 560 for more information about SEPs. Irs ez form 2011 Salary reduction simplified employee pensions (SARSEP) repealed. Irs ez form 2011   You may not establish a SARSEP after 1996. Irs ez form 2011 However, SARSEPs established before January 1, 1997, may continue to receive contributions. Irs ez form 2011 SIMPLE Retirement Plans Employer and employee contributions to a savings incentive match plan for employees (SIMPLE) retirement account (subject to limitations) are excludable from the employee's income and are exempt from federal income tax withholding. Irs ez form 2011 An employer's nonelective (2%) or matching contributions are exempt from social security, Medicare, and FUTA taxes. Irs ez form 2011 However, an employee's salary reduction contributions to a SIMPLE are subject to social security, Medicare, and FUTA taxes. Irs ez form 2011 For more information about SIMPLE retirement plans, see Publication 560. Irs ez form 2011 6. Irs ez form 2011 Sick Pay Reporting The IRS expects to change the third-party sick pay recap reporting and filing requirements for wages paid in 2014. Irs ez form 2011 Information about this change will be included in the revision of Publication 15-A that is expected to post to IRS. Irs ez form 2011 gov in December 2014. Irs ez form 2011 Special rules apply to the reporting of sick pay payments to employees. Irs ez form 2011 How these payments are reported depends on whether the payments are made by the employer or a third party, such as an insurance company. Irs ez form 2011 Sick pay is usually subject to social security, Medicare, and FUTA taxes. Irs ez form 2011 For exceptions, see Social Security, Medicare, and FUTA Taxes on Sick Pay , later in this section. Irs ez form 2011 Sick pay may also be subject to either mandatory or voluntary federal income tax withholding, depending on who pays it. Irs ez form 2011 Sick Pay Sick pay generally means any amount paid under a plan because of an employee's temporary absence from work due to injury, sickness, or disability. Irs ez form 2011 It may be paid by either the employer or a third party, such as an insurance company. Irs ez form 2011 Sick pay includes both short- and long-term benefits. Irs ez form 2011 It is often expressed as a percentage of the employee's regular wages. Irs ez form 2011 Payments That Are Not Sick Pay Sick pay does not include the following payments. Irs ez form 2011 Disability retirement payments. Irs ez form 2011 Disability retirement payments are not sick pay and are not discussed in this section. Irs ez form 2011 Those payments are subject to the rules for federal income tax withholding from pensions and annuities. Irs ez form 2011 See section 8. Irs ez form 2011 Workers' compensation. Irs ez form 2011 Payments because of a work-related injury or sickness that are made under a workers' compensation law are not sick pay and are not subject to employment taxes. Irs ez form 2011 But see Payments in the nature of workers' compensation—public employees next. Irs ez form 2011 Payments in the nature of workers' compensation—public employees. Irs ez form 2011 State and local government employees, such as police officers and firefighters, sometimes receive payments due to an injury in the line of duty under a statute that is not the general workers' compensation law of a state. Irs ez form 2011 If the statute limits benefits to work-related injuries or sickness and does not base payments on the employee's age, length of service, or prior contributions, the statute is “in the nature of” a workers' compensation law. Irs ez form 2011 Payments under a statute in the nature of a workers' compensation law are not sick pay and are not subject to employment taxes. Irs ez form 2011 For more information, see Regulations section 31. Irs ez form 2011 3121(a)(2)-1. Irs ez form 2011 Medical expense payments. Irs ez form 2011 Payments under a definite plan or system for medical and hospitalization expenses, or for insurance covering these expenses, are not sick pay and are not subject to employment taxes. Irs ez form 2011 Payments unrelated to absence from work. Irs ez form 2011 Accident or health insurance payments unrelated to absence from work are not sick pay and are not subject to employment taxes. Irs ez form 2011 These include payments for: Permanent loss of a member or function of the body, Permanent loss of the use of a member or function of the body, or Permanent disfigurement of the body. Irs ez form 2011 Example. Irs ez form 2011 Donald was injured in a car accident and lost an eye. Irs ez form 2011 Under a policy paid for by Donald's employer, Delta Insurance Co. Irs ez form 2011 paid Donald $20,000 as compensation for the loss of his eye. Irs ez form 2011 Because the payment was determined by the type of injury and was unrelated to Donald's absence from work, it is not sick pay and is not subject to federal employment taxes. Irs ez form 2011 Sick Pay Plan A sick pay plan is a plan or system established by an employer under which sick pay is available to employees generally or to a class or classes of employees. Irs ez form 2011 This does not include a situation in which benefits are provided on a discretionary or occasional basis with merely an intention to aid particular employees in time of need. Irs ez form 2011 You have a sick pay plan or system if the plan is in writing or is otherwise made known to employees, such as by a bulletin board notice or your long and established practice. Irs ez form 2011 Some indications that you have a sick pay plan or system include references to the plan or system in the contract of employment, employer contributions to a plan, or segregated accounts for the payment of benefits. Irs ez form 2011 Definition of employer. Irs ez form 2011   The employer for whom the employee normally works, a term used in the following discussion, is either the employer for whom the employee was working at the time that the employee became sick or disabled or the last employer for whom the employee worked before becoming sick or disabled, if that employer made contributions to the sick pay plan on behalf of the sick or disabled employee. Irs ez form 2011 Note. Irs ez form 2011 Contributions to a sick pay plan through a cafeteria plan (by direct employer contributions or salary reduction) are employer contributions unless they are after-tax employee contributions (that is, included in taxable wages). Irs ez form 2011 Third-Party Payers of Sick Pay Employer's agent. Irs ez form 2011   An employer's agent is a third party that bears no insurance risk and is reimbursed on a cost-plus-fee basis for payment of sick pay and similar amounts. Irs ez form 2011 A third party may be your agent even if the third party is responsible for determining which employees are eligible to receive payments. Irs ez form 2011 For example, if a third party provides administrative services only, the third party is your agent. Irs ez form 2011 If the third party is paid an insurance premium and is not reimbursed on a cost-plus-fee basis, the third party is not your agent. Irs ez form 2011 Whether an insurance company or other third party is your agent depends on the terms of their agreement with you. Irs ez form 2011   A third party that makes payments of sick pay as your agent is not considered the employer and generally has no responsibility for employment taxes. Irs ez form 2011 This responsibility remains with you. Irs ez form 2011 However, under an exception to this rule, the parties may enter into an agreement that makes the third-party agent responsible for employment taxes. Irs ez form 2011 In this situation, the third-party agent should use its own name and EIN (rather than your name and EIN) for the responsibilities that it has assumed. Irs ez form 2011 Third party not employer's agent. Irs ez form 2011   A third party that makes payments of sick pay other than as an agent of the employer is liable for federal income tax withholding (if requested by the employee) and the employee part of the social security and Medicare taxes. Irs ez form 2011   The third party is also liable for the employer part of the social security and Medicare taxes, and the FUTA tax, unless the third party transfers this liability to the employer for whom the employee normally works. Irs ez form 2011 This liability is transferred if the third party takes the following steps. Irs ez form 2011 Withholds the employee social security and Medicare taxes from the sick pay payments. Irs ez form 2011 Makes timely deposits of the employee social security and Medicare taxes. Irs ez form 2011 Notifies the employer for whom the employee normally works of the payments on which employee taxes were withheld and deposited. Irs ez form 2011 The third party must notify the employer within the time required for the third party's deposit of the employee part of the social security and Medicare taxes. Irs ez form 2011 For instance, if the third party is a monthly schedule depositor, it must notify the employer by the 15th day of the month following the month in which the sick pay payment is made because that is the day by which the deposit is required to be made. Irs ez form 2011 The third party should notify the employer as soon as information on payments is available so that an employer required to make electronic deposits can make them timely. Irs ez form 2011 For multi-employer plans, see the special rule discussed next. Irs ez form 2011 Multi-employer plan timing rule. Irs ez form 2011   A special rule applies to sick pay payments made to employees by a third-party insurer under an insurance contract with a multi-employer plan established under a collectively bargained agreement. Irs ez form 2011 If the third-party insurer making the payments complies wi