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Irs Form 990 Ez 2010

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Irs Form 990 Ez 2010

Irs form 990 ez 2010 Publication 15 - Main Content Table of Contents 1. Irs form 990 ez 2010 Employer Identification Number (EIN) 2. Irs form 990 ez 2010 Who Are Employees?Relief provisions. Irs form 990 ez 2010 Business Owned and Operated by Spouses 3. Irs form 990 ez 2010 Family Employees 4. Irs form 990 ez 2010 Employee's Social Security Number (SSN)Registering for SSNVS. Irs form 990 ez 2010 5. Irs form 990 ez 2010 Wages and Other CompensationAccountable plan. Irs form 990 ez 2010 Nonaccountable plan. Irs form 990 ez 2010 Per diem or other fixed allowance. Irs form 990 ez 2010 50% test. Irs form 990 ez 2010 Health Savings Accounts and medical savings accounts. Irs form 990 ez 2010 Nontaxable fringe benefits. Irs form 990 ez 2010 When fringe benefits are treated as paid. Irs form 990 ez 2010 Valuation of fringe benefits. Irs form 990 ez 2010 Withholding on fringe benefits. Irs form 990 ez 2010 Depositing taxes on fringe benefits. Irs form 990 ez 2010 6. Irs form 990 ez 2010 TipsOrdering rule. Irs form 990 ez 2010 7. Irs form 990 ez 2010 Supplemental Wages 8. Irs form 990 ez 2010 Payroll Period 9. Irs form 990 ez 2010 Withholding From Employees' WagesIncome Tax Withholding Social Security and Medicare Taxes Part-Time Workers 10. Irs form 990 ez 2010 Required Notice to Employees About the Earned Income Credit (EIC) 11. Irs form 990 ez 2010 Depositing TaxesWhen To Deposit How To Deposit Deposit Penalties 12. Irs form 990 ez 2010 Filing Form 941 or Form 944 13. Irs form 990 ez 2010 Reporting Adjustments to Form 941 or Form 944Current Period Adjustments Prior Period Adjustments Wage Repayments 14. Irs form 990 ez 2010 Federal Unemployment (FUTA) TaxSuccessor employer. Irs form 990 ez 2010 Household employees. Irs form 990 ez 2010 When to deposit. Irs form 990 ez 2010 Household employees. Irs form 990 ez 2010 Electronic filing by reporting agents. Irs form 990 ez 2010 16. Irs form 990 ez 2010 How To Use the Income Tax Withholding TablesWage Bracket Method Percentage Method Alternative Methods of Income Tax Withholding How To Get Tax Help 1. Irs form 990 ez 2010 Employer Identification Number (EIN) If you are required to report employment taxes or give tax statements to employees or annuitants, you need an EIN. Irs form 990 ez 2010 The EIN is a nine-digit number the IRS issues. Irs form 990 ez 2010 The digits are arranged as follows: 00-0000000. Irs form 990 ez 2010 It is used to identify the tax accounts of employers and certain others who have no employees. Irs form 990 ez 2010 Use your EIN on all of the items you send to the IRS and SSA. Irs form 990 ez 2010 For more information, see Publication 1635, Employer Identification Number: Understanding Your EIN. Irs form 990 ez 2010 If you do not have an EIN, you may apply for one online. Irs form 990 ez 2010 Go to the IRS. Irs form 990 ez 2010 gov and click on the Apply for an EIN Online link under Tools. Irs form 990 ez 2010 You may also apply for an EIN by calling 1-800-829-4933, or you can fax or mail Form SS-4, Application for Employer Identification Number, to the IRS. Irs form 990 ez 2010 Do not use an SSN in place of an EIN. Irs form 990 ez 2010 You should have only one EIN. Irs form 990 ez 2010 If you have more than one and are not sure which one to use, call 1-800-829-4933 or 1-800-829-4059 (TDD/TTY for persons who are deaf, hard of hearing, or have a speech disability). Irs form 990 ez 2010 Give the numbers you have, the name and address to which each was assigned, and the address of your main place of business. Irs form 990 ez 2010 The IRS will tell you which number to use. Irs form 990 ez 2010 If you took over another employer's business (see Successor employer in section 9), do not use that employer's EIN. Irs form 990 ez 2010 If you have applied for an EIN but do not have your EIN by the time a return is due, file a paper return and write “Applied For” and the date you applied for it in the space shown for the number. Irs form 990 ez 2010 2. Irs form 990 ez 2010 Who Are Employees? Generally, employees are defined either under common law or under statutes for certain situations. Irs form 990 ez 2010 See Publication 15-A for details on statutory employees and nonemployees. Irs form 990 ez 2010 Employee status under common law. Irs form 990 ez 2010   Generally, a worker who performs services for you is your employee if you have the right to control what will be done and how it will be done. Irs form 990 ez 2010 This is so even when you give the employee freedom of action. Irs form 990 ez 2010 What matters is that you have the right to control the details of how the services are performed. Irs form 990 ez 2010 See Publication 15-A for more information on how to determine whether an individual providing services is an independent contractor or an employee. Irs form 990 ez 2010   Generally, people in business for themselves are not employees. Irs form 990 ez 2010 For example, doctors, lawyers, veterinarians, and others in an independent trade in which they offer their services to the public are usually not employees. Irs form 990 ez 2010 However, if the business is incorporated, corporate officers who work in the business are employees of the corporation. Irs form 990 ez 2010   If an employer-employee relationship exists, it does not matter what it is called. Irs form 990 ez 2010 The employee may be called an agent or independent contractor. Irs form 990 ez 2010 It also does not matter how payments are measured or paid, what they are called, or if the employee works full or part time. Irs form 990 ez 2010 Statutory employees. Irs form 990 ez 2010   If someone who works for you is not an employee under the common law rules discussed earlier, do not withhold federal income tax from his or her pay, unless backup withholding applies. Irs form 990 ez 2010 Although the following persons may not be common law employees, they are considered employees by statute for social security, Medicare, and FUTA tax purposes under certain conditions. Irs form 990 ez 2010 An agent (or commission) driver who delivers food, beverages (other than milk), laundry, or dry cleaning for someone else. Irs form 990 ez 2010 A full-time life insurance salesperson who sells primarily for one company. Irs form 990 ez 2010 A homeworker who works by guidelines of the person for whom the work is done, with materials furnished by and returned to that person or to someone that person designates. Irs form 990 ez 2010 A traveling or city salesperson (other than an agent-driver or commission-driver) who works full time (except for sideline sales activities) for one firm or person getting orders from customers. Irs form 990 ez 2010 The orders must be for merchandise for resale or supplies for use in the customer's business. Irs form 990 ez 2010 The customers must be retailers, wholesalers, contractors, or operators of hotels, restaurants, or other businesses dealing with food or lodging. Irs form 990 ez 2010    Statutory nonemployees. Irs form 990 ez 2010   Direct sellers, qualified real estate agents, and certain companion sitters are, by law, considered nonemployees. Irs form 990 ez 2010 They are generally treated as self-employed for all federal tax purposes, including income and employment taxes. Irs form 990 ez 2010 H-2A agricultural workers. Irs form 990 ez 2010   On Form W-2, do not check box 13 (Statutory employee), as H-2A workers are not statutory employees. Irs form 990 ez 2010 Treating employees as nonemployees. Irs form 990 ez 2010   You will generally be liable for social security and Medicare taxes and withheld income tax if you do not deduct and withhold these taxes because you treated an employee as a nonemployee. Irs form 990 ez 2010 You may be able to calculate your liability using special section 3509 rates for the employee share of social security and Medicare taxes and the federal income tax withholding. Irs form 990 ez 2010 The applicable rates depend on whether you filed required Forms 1099. Irs form 990 ez 2010 You cannot recover the employee share of social security, or Medicare tax, or income tax withholding from the employee if the tax is paid under section 3509. Irs form 990 ez 2010 You are liable for the income tax withholding regardless of whether the employee paid income tax on the wages. Irs form 990 ez 2010 You continue to owe the full employer share of social security and Medicare taxes. Irs form 990 ez 2010 The employee remains liable for the employee share of social security and Medicare taxes. Irs form 990 ez 2010 See Internal Revenue Code section 3509 for details. Irs form 990 ez 2010 Also see the Instructions for Form 941-X. Irs form 990 ez 2010   Section 3509 rates are not available if you intentionally disregard the requirement to withhold taxes from the employee or if you withheld income taxes but not social security or Medicare taxes. Irs form 990 ez 2010 Section 3509 is not available for reclassifying statutory employees. Irs form 990 ez 2010 See Statutory employees , earlier in this section. Irs form 990 ez 2010   If the employer issued required information returns, the section 3509 rates are: For social security taxes; employer rate of 6. Irs form 990 ez 2010 2% plus 20% of the employee rate (see the Instructions for Form 941-X). Irs form 990 ez 2010 For Medicare taxes; employer rate of 1. Irs form 990 ez 2010 45% plus 20% of the employee rate of 1. Irs form 990 ez 2010 45%, for a total rate of 1. Irs form 990 ez 2010 74% of wages. Irs form 990 ez 2010 For Additional Medicare Tax; 0. Irs form 990 ez 2010 18% (20% of the employee rate of 0. Irs form 990 ez 2010 9%) of wages subject to Additional Medicare Tax. Irs form 990 ez 2010 For income tax withholding, the rate is 1. Irs form 990 ez 2010 5% of wages. Irs form 990 ez 2010   If the employer did not issue required information returns, the section 3509 rates are: For social security taxes; employer rate of 6. Irs form 990 ez 2010 2% plus 40% of the employee rate (see the Instructions for Form 941-X). Irs form 990 ez 2010 For Medicare taxes; employer rate of 1. Irs form 990 ez 2010 45% plus 40% of the employee rate of 1. Irs form 990 ez 2010 45%, for a total rate of 2. Irs form 990 ez 2010 03% of wages. Irs form 990 ez 2010 For Additional Medicare Tax; 0. Irs form 990 ez 2010 36% (40% of the employee rate of 0. Irs form 990 ez 2010 9%) of wages subject to Additional Medicare Tax. Irs form 990 ez 2010 For income tax withholding, the rate is 3. Irs form 990 ez 2010 0% of wages. Irs form 990 ez 2010 Relief provisions. Irs form 990 ez 2010   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 form 990 ez 2010 To get this relief, you must file all required federal tax returns, including information returns, on a basis consistent with your treatment of the worker. Irs form 990 ez 2010 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 form 990 ez 2010 See Publication 1976, Do You Qualify for Relief Under Section 530. Irs form 990 ez 2010 IRS help. Irs form 990 ez 2010   If you want the IRS to determine whether a worker is an employee, file Form SS-8, Determination of Worker Status for Purposes of Federal Employment Taxes and Income Tax Withholding. Irs form 990 ez 2010 Voluntary Classification Settlement Program (VCSP). Irs form 990 ez 2010   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 form 990 ez 2010 To apply, use Form 8952, Application for Voluntary Classification Settlement Program (VCSP). Irs form 990 ez 2010 For more information visit IRS. Irs form 990 ez 2010 gov and enter “VCSP” in the search box. Irs form 990 ez 2010 Business Owned and Operated by Spouses If you and your spouse jointly own and operate a business and share in the profits and losses, you are partners in a partnership, whether or not you have a formal partnership agreement. Irs form 990 ez 2010 See Publication 541, Partnerships, for more details. Irs form 990 ez 2010 The partnership is considered the employer of any employees, and is liable for any employment taxes due on wages paid to its employees. Irs form 990 ez 2010 Exception—Qualified joint venture. Irs form 990 ez 2010   For tax years beginning after December 31, 2006, the Small Business and Work Opportunity Tax Act of 2007 (Public Law 110-28) provides that a “qualified joint venture,” whose only members are spouses filing a joint income tax return, can elect not to be treated as a partnership for federal tax purposes. Irs form 990 ez 2010 A qualified joint venture conducts a trade or business where: The only members of the joint venture are spouses who file a joint income tax return, Both spouses materially participate (see Material participation in the Instructions for Schedule C (Form 1040), line G) in the trade or business (mere joint ownership of property is not enough), Both spouses elect to not be treated as a partnership, and The business is co-owned by both spouses and is not held in the name of a state law entity such as a partnership or limited liability company (LLC). Irs form 990 ez 2010   To make the election, all items of income, gain, loss, deduction, and credit must be divided between the spouses, in accordance with each spouse's interest in the venture, and reported on separate Schedules C or F as sole proprietors. Irs form 990 ez 2010 Each spouse must also file a separate Schedule SE to pay self-employment taxes, as applicable. Irs form 990 ez 2010   Spouses using the qualified joint venture rules are treated as sole proprietors for federal tax purposes and generally do not need an EIN. Irs form 990 ez 2010 If employment taxes are owed by the qualified joint venture, either spouse may report and pay the employment taxes due on the wages paid to the employees using the EIN of that spouse's sole proprietorship. Irs form 990 ez 2010 Generally, filing as a qualified joint venture will not increase the spouses' total tax owed on the joint income tax return. Irs form 990 ez 2010 However, it gives each spouse credit for social security earnings on which retirement benefits are based and for Medicare coverage without filing a partnership return. Irs form 990 ez 2010    Note. Irs form 990 ez 2010 If your spouse is your employee, not your partner, see One spouse employed by another in section 3. Irs form 990 ez 2010   For more information on qualified joint ventures, visit IRS. Irs form 990 ez 2010 gov and enter “qualified joint venture” in the search box. Irs form 990 ez 2010 Exception—Community income. Irs form 990 ez 2010   If you and your spouse wholly own an unincorporated business as community property under the community property laws of a state, foreign country, or U. Irs form 990 ez 2010 S. Irs form 990 ez 2010 possession, you can treat the business either as a sole proprietorship (of the spouse who carried on the business) or a partnership. Irs form 990 ez 2010 You may still make an election to be taxed as a qualified joint venture instead of a partnership. Irs form 990 ez 2010 See Exception—Qualified joint venture , earlier. Irs form 990 ez 2010 3. Irs form 990 ez 2010 Family Employees Child employed by parents. Irs form 990 ez 2010   Payments for the services of a child under age 18 who works for his or her parent in a trade or business are not subject to social security and Medicare taxes if the trade or business is a sole proprietorship or a partnership in which each partner is a parent of the child. Irs form 990 ez 2010 If these payments are for work other than in a trade or business, such as domestic work in the parent's private home, they are not subject to social security and Medicare taxes until the child reaches age 21. Irs form 990 ez 2010 However, see Covered services of a child or spouse , later in this section. Irs form 990 ez 2010 Payments for the services of a child under age 21 who works for his or her parent, whether or not in a trade or business, are not subject to FUTA tax. Irs form 990 ez 2010 Payments for the services of a child of any age who works for his or her parent are generally subject to income tax withholding unless the payments are for domestic work in the parent's home, or unless the payments are for work other than in a trade or business and are less than $50 in the quarter or the child is not regularly employed to do such work. Irs form 990 ez 2010 One spouse employed by another. Irs form 990 ez 2010   The wages for the services of an individual who works for his or her spouse in a trade or business are subject to income tax withholding and social security and Medicare taxes, but not to FUTA tax. Irs form 990 ez 2010 However, the payments for services of one spouse employed by another in other than a trade or business, such as domestic service in a private home, are not subject to social security, Medicare, and FUTA taxes. Irs form 990 ez 2010 Covered services of a child or spouse. Irs form 990 ez 2010   The wages for the services of a child or spouse are subject to income tax withholding as well as social security, Medicare, and FUTA taxes if he or she works for: A corporation, even if it is controlled by the child's parent or the individual's spouse; A partnership, even if the child's parent is a partner, unless each partner is a parent of the child; A partnership, even if the individual's spouse is a partner; or An estate, even if it is the estate of a deceased parent. Irs form 990 ez 2010 Parent employed by son or daughter. Irs form 990 ez 2010   When the employer is a son or daughter employing his or her parent the following rules apply. Irs form 990 ez 2010 Payments for the services of a parent in the son’s or daughter’s (the employer’s) trade or business are subject to income tax withholding and social security and Medicare taxes. Irs form 990 ez 2010 Payments for the services of a parent not in the son’s or daughter’s (the employer’s) trade or business are generally not subject to social security and Medicare taxes. Irs form 990 ez 2010    Social security and Medicare taxes do apply to payments made to a parent for domestic services if all of the following apply: The parent is employed by his or her son or daughter; The son or daughter (the employer) has a child or stepchild living in the home; The son or daughter (the employer) is a widow or widower, divorced, or living with a spouse who, because of a mental or physical condition, cannot care for the child or stepchild for at least 4 continuous weeks in a calendar quarter; and The child or stepchild is either under age 18 or requires the personal care of an adult for at least 4 continuous weeks in a calendar quarter due to a mental or physical condition. Irs form 990 ez 2010   Payments made to a parent employed by his or her child are not subject to FUTA tax, regardless of the type of services provided. Irs form 990 ez 2010 4. Irs form 990 ez 2010 Employee's Social Security Number (SSN) You are required to get each employee's name and SSN and to enter them on Form W-2. Irs form 990 ez 2010 This requirement also applies to resident and nonresident alien employees. Irs form 990 ez 2010 You should ask your employee to show you his or her social security card. Irs form 990 ez 2010 The employee may show the card if it is available. Irs form 990 ez 2010 Do not accept a social security card that says “Not valid for employment. Irs form 990 ez 2010 ” A social security number issued with this legend does not permit employment. Irs form 990 ez 2010 You may, but are not required to, photocopy the social security card if the employee provides it. Irs form 990 ez 2010 If you do not provide the correct employee name and SSN on Form W-2, you may owe a penalty unless you have reasonable cause. Irs form 990 ez 2010 See Publication 1586, Reasonable Cause Regulations & Requirements for Missing and Incorrect Name/TINs, for information on the requirement to solicit the employee's SSN. Irs form 990 ez 2010 Applying for a social security card. Irs form 990 ez 2010   Any employee who is legally eligible to work in the United States and does not have a social security card can get one by completing Form SS-5, Application for a Social Security Card, and submitting the necessary documentation. Irs form 990 ez 2010 You can get Form SS-5 at SSA offices, by calling 1-800-772-1213, or from the SSA website at www. Irs form 990 ez 2010 socialsecurity. Irs form 990 ez 2010 gov/online/ss-5. Irs form 990 ez 2010 html. Irs form 990 ez 2010 The employee must complete and sign Form SS-5; it cannot be filed by the employer. Irs form 990 ez 2010 You may be asked to supply a letter to accompany Form SS-5 if the employee has exceeded his or her yearly or lifetime limit for the number of replacement cards allowed. Irs form 990 ez 2010 Applying for a social security number. Irs form 990 ez 2010   If you file Form W-2 on paper and your employee applied for an SSN but does not have one when you must file Form W-2, enter “Applied For” on the form. Irs form 990 ez 2010 If you are filing electronically, enter all zeros (000-00-000) in the social security number field. Irs form 990 ez 2010 When the employee receives the SSN, file Copy A of Form W-2c, Corrected Wage and Tax Statement, with the SSA to show the employee's SSN. Irs form 990 ez 2010 Furnish copies B, C, and 2 of Form W-2c to the employee. Irs form 990 ez 2010 Up to 25 Forms W-2c for each Form W-3c, Transmittal of Corrected Wage and Tax Statements, may now be filed per session over the Internet, with no limit on the number of sessions. Irs form 990 ez 2010 For more information, visit the SSA's Employer W-2 Filing Instructions & Information webpage at www. Irs form 990 ez 2010 socialsecurity. Irs form 990 ez 2010 gov/employer. Irs form 990 ez 2010 Advise your employee to correct the SSN on his or her original Form W-2. Irs form 990 ez 2010 Correctly record the employee's name and SSN. Irs form 990 ez 2010   Record the name and number of each employee as they are shown on the employee's social security card. Irs form 990 ez 2010 If the employee's name is not correct as shown on the card (for example, because of marriage or divorce), the employee should request a corrected card from the SSA. Irs form 990 ez 2010 Continue to report the employee's wages under the old name until the employee shows you an updated social security card with the new name. Irs form 990 ez 2010 If the SSA issues the employee a replacement card after a name change, or a new card with a different social security number after a change in alien work status, file a Form W-2c to correct the name/SSN reported for the most recently filed Form W-2. Irs form 990 ez 2010 It is not necessary to correct other years if the previous name and number were used for years before the most recent Form W-2. Irs form 990 ez 2010 IRS individual taxpayer identification numbers (ITINs) for aliens. Irs form 990 ez 2010   Do not accept an ITIN in place of an SSN for employee identification or for work. Irs form 990 ez 2010 An ITIN is only available to resident and nonresident aliens who are not eligible for U. Irs form 990 ez 2010 S. Irs form 990 ez 2010 employment and need identification for other tax purposes. Irs form 990 ez 2010 You can identify an ITIN because it is a nine-digit number, beginning with the number “9” with either a “7” or “8” as the fourth digit and is formatted like an SSN (for example, 9NN-7N-NNNN). Irs form 990 ez 2010    An individual with an ITIN who later becomes eligible to work in the United States must obtain an SSN. Irs form 990 ez 2010 If the individual is currently eligible to work in the United States, instruct the individual to apply for an SSN and follow the instructions under Applying for a social security number, earlier. Irs form 990 ez 2010 Do not use an ITIN in place of an SSN on Form W-2. Irs form 990 ez 2010 Verification of social security numbers. Irs form 990 ez 2010   Employers and authorized reporting agents can use the Social Security Number Verification Service (SSNVS) to instantly verify up to 10 names and SSNs (per screen) at a time, or submit an electronic file of up to 250,000 names and SSNs and usually receive the results the next business day. Irs form 990 ez 2010 Visit www. Irs form 990 ez 2010 socialsecurity. Irs form 990 ez 2010 gov/employer/ssnv. Irs form 990 ez 2010 htm for more information. Irs form 990 ez 2010 Registering for SSNVS. Irs form 990 ez 2010   You must register online and receive authorization from your employer to use SSNVS. Irs form 990 ez 2010 To register, visit SSA's website at www. Irs form 990 ez 2010 ssa. Irs form 990 ez 2010 gov/employer and click on the Business Services Online link. Irs form 990 ez 2010 Follow the registration instructions to obtain a user identification (ID) and password. Irs form 990 ez 2010 You will need to provide the following information about yourself and your company. Irs form 990 ez 2010 Name. Irs form 990 ez 2010 SSN. Irs form 990 ez 2010 Date of birth. Irs form 990 ez 2010 Type of employer. Irs form 990 ez 2010 EIN. Irs form 990 ez 2010 Company name, address, and telephone number. Irs form 990 ez 2010 Email address. Irs form 990 ez 2010   When you have completed the online registration process, SSA will mail a one-time activation code to your employer. Irs form 990 ez 2010 You must enter the activation code online to use SSNVS. Irs form 990 ez 2010 5. Irs form 990 ez 2010 Wages and Other Compensation Wages subject to federal employment taxes generally include all pay you give to an employee for services performed. Irs form 990 ez 2010 The pay may be in cash or in other forms. Irs form 990 ez 2010 It includes salaries, vacation allowances, bonuses, commissions, and fringe benefits. Irs form 990 ez 2010 It does not matter how you measure or make the payments. Irs form 990 ez 2010 Amounts an employer pays as a bonus for signing or ratifying a contract in connection with the establishment of an employer-employee relationship and an amount paid to an employee for cancellation of an employment contract and relinquishment of contract rights are wages subject to social security, Medicare, and FUTA taxes and income tax withholding. Irs form 990 ez 2010 Also, compensation paid to a former employee for services performed while still employed is wages subject to employment taxes. Irs form 990 ez 2010 More information. Irs form 990 ez 2010   See section 6 for a discussion of tips and section 7 for a discussion of supplemental wages. Irs form 990 ez 2010 Also, see section 15 for exceptions to the general rules for wages. Irs form 990 ez 2010 Publication 15-A provides additional information on wages, including nonqualified deferred compensation, and other compensation. Irs form 990 ez 2010 Publication 15-B provides information on other forms of compensation, including: Accident and health benefits, Achievement awards, Adoption assistance, Athletic facilities, De minimis (minimal) benefits, Dependent care assistance, Educational assistance, Employee discounts, Employee stock options, Employer-provided cell phones, Group-term life insurance coverage, Health Savings Accounts, Lodging on your business premises, Meals, Moving expense reimbursements, No-additional-cost services, Retirement planning services, Transportation (commuting) benefits, Tuition reduction, and Working condition benefits. Irs form 990 ez 2010 Employee business expense reimbursements. Irs form 990 ez 2010   A reimbursement or allowance arrangement is a system by which you pay the advances, reimbursements, and charges for your employees' business expenses. Irs form 990 ez 2010 How you report a reimbursement or allowance amount depends on whether you have an accountable or a nonaccountable plan. Irs form 990 ez 2010 If a single payment includes both wages and an expense reimbursement, you must specify the amount of the reimbursement. Irs form 990 ez 2010   These rules apply to all ordinary and necessary employee business expenses that would otherwise qualify for a deduction by the employee. Irs form 990 ez 2010 Accountable plan. Irs form 990 ez 2010   To be an accountable plan, your reimbursement or allowance arrangement must require your employees to meet all three of the following rules. Irs form 990 ez 2010 They must have paid or incurred deductible expenses while performing services as your employees. Irs form 990 ez 2010 The reimbursement or advance must be paid for the expense and must not be an amount that would have otherwise been paid by the employee. Irs form 990 ez 2010 They must substantiate these expenses to you within a reasonable period of time. Irs form 990 ez 2010 They must return any amounts in excess of substantiated expenses within a reasonable period of time. Irs form 990 ez 2010   Amounts paid under an accountable plan are not wages and are not subject to income, social security, Medicare, and FUTA taxes. Irs form 990 ez 2010   If the expenses covered by this arrangement are not substantiated (or amounts in excess of substantiated expenses are not returned within a reasonable period of time), the amount paid under the arrangement in excess of the substantiated expenses is treated as paid under a nonaccountable plan. Irs form 990 ez 2010 This amount is subject to income, social security, Medicare, and FUTA taxes for the first payroll period following the end of the reasonable period of time. Irs form 990 ez 2010   A reasonable period of time depends on the facts and circumstances. Irs form 990 ez 2010 Generally, it is considered reasonable if your employees receive their advance within 30 days of the time they incur the expenses, adequately account for the expenses within 60 days after the expenses were paid or incurred, and return any amounts in excess of expenses within 120 days after the expenses were paid or incurred. Irs form 990 ez 2010 Also, it is considered reasonable if you give your employees a periodic statement (at least quarterly) that asks them to either return or adequately account for outstanding amounts and they do so within 120 days. Irs form 990 ez 2010 Nonaccountable plan. Irs form 990 ez 2010   Payments to your employee for travel and other necessary expenses of your business under a nonaccountable plan are wages and are treated as supplemental wages and subject to income, social security, Medicare, and FUTA taxes. Irs form 990 ez 2010 Your payments are treated as paid under a nonaccountable plan if: Your employee is not required to or does not substantiate timely those expenses to you with receipts or other documentation, You advance an amount to your employee for business expenses and your employee is not required to or does not return timely any amount he or she does not use for business expenses, You advance or pay an amount to your employee regardless of whether you reasonably expect the employee to have business expenses related to your business, or You pay an amount as a reimbursement you would have otherwise paid as wages. Irs form 990 ez 2010   See section 7 for more information on supplemental wages. Irs form 990 ez 2010 Per diem or other fixed allowance. Irs form 990 ez 2010   You may reimburse your employees by travel days, miles, or some other fixed allowance under the applicable revenue procedure. Irs form 990 ez 2010 In these cases, your employee is considered to have accounted to you if your reimbursement does not exceed rates established by the Federal Government. Irs form 990 ez 2010 The 2013 standard mileage rate for auto expenses was 56. Irs form 990 ez 2010 5 cents per mile. Irs form 990 ez 2010 The rate for 2014 is 56 cents per mile. Irs form 990 ez 2010   The government per diem rates for meals and lodging in the continental United States are listed in Publication 1542, Per Diem Rates. Irs form 990 ez 2010 Other than the amount of these expenses, your employees' business expenses must be substantiated (for example, the business purpose of the travel or the number of business miles driven). Irs form 990 ez 2010   If the per diem or allowance paid exceeds the amounts substantiated, you must report the excess amount as wages. Irs form 990 ez 2010 This excess amount is subject to income tax withholding and payment of social security, Medicare, and FUTA taxes. Irs form 990 ez 2010 Show the amount equal to the substantiated amount (for example, the nontaxable portion) in box 12 of Form W-2 using code “L. Irs form 990 ez 2010 ” Wages not paid in money. Irs form 990 ez 2010   If in the course of your trade or business you pay your employees in a medium that is neither cash nor a readily negotiable instrument, such as a check, you are said to pay them “in kind. Irs form 990 ez 2010 ” Payments in kind may be in the form of goods, lodging, food, clothing, or services. Irs form 990 ez 2010 Generally, the fair market value of such payments at the time they are provided is subject to federal income tax withholding and social security, Medicare, and FUTA taxes. Irs form 990 ez 2010   However, noncash payments for household work, agricultural labor, and service not in the employer's trade or business are exempt from social security, Medicare, and FUTA taxes. Irs form 990 ez 2010 Withhold income tax on these payments only if you and the employee agree to do so. Irs form 990 ez 2010 Nonetheless, noncash payments for agricultural labor, such as commodity wages, are treated as cash payments subject to employment taxes if the substance of the transaction is a cash payment. Irs form 990 ez 2010 Moving expenses. Irs form 990 ez 2010   Reimbursed and employer-paid qualified moving expenses (those that would otherwise be deductible by the employee) paid under an accountable plan are not includible in an employee's income unless you have knowledge the employee deducted the expenses in a prior year. Irs form 990 ez 2010 Reimbursed and employer-paid nonqualified moving expenses are includible in income and are subject to employment taxes and income tax withholding. Irs form 990 ez 2010 For more information on moving expenses, see Publication 521, Moving Expenses. Irs form 990 ez 2010 Meals and lodging. Irs form 990 ez 2010   The value of meals is not taxable income and is not subject to income tax withholding and social security, Medicare, and FUTA taxes if the meals are furnished for the employer's convenience and on the employer's premises. Irs form 990 ez 2010 The value of lodging is not subject to income tax withholding and social security, Medicare, and FUTA taxes if the lodging is furnished for the employer's convenience, on the employer's premises, and as a condition of employment. Irs form 990 ez 2010    “For the convenience of the employer” means you have a substantial business reason for providing the meals and lodging other than to provide additional compensation to the employee. Irs form 990 ez 2010 For example, meals you provide at the place of work so that an employee is available for emergencies during his or her lunch period are generally considered to be for your convenience. Irs form 990 ez 2010   However, whether meals or lodging are provided for the convenience of the employer depends on all of the facts and circumstances. Irs form 990 ez 2010 A written statement that the meals or lodging are for your convenience is not sufficient. Irs form 990 ez 2010 50% test. Irs form 990 ez 2010   If over 50% of the employees who are provided meals on an employer's business premises receive these meals for the convenience of the employer, all meals provided on the premises are treated as furnished for the convenience of the employer. Irs form 990 ez 2010 If this 50% test is met, the value of the meals is excludable from income for all employees and is not subject to federal income tax withholding or employment taxes. Irs form 990 ez 2010 For more information, see Publication 15-B. Irs form 990 ez 2010 Health insurance plans. Irs form 990 ez 2010   If you pay the cost of an accident or health insurance plan for your employees, including an employee's spouse and dependents, your payments are not wages and are not subject to social security, Medicare, and FUTA taxes, or federal income tax withholding. Irs form 990 ez 2010 Generally, this exclusion also applies to qualified long-term care insurance contracts. Irs form 990 ez 2010 However, for income tax withholding, the value of health insurance benefits must be included in the wages of S corporation employees who own more than 2% of the S corporation (2% shareholders). Irs form 990 ez 2010 For social security, Medicare, and FUTA taxes, the health insurance benefits are excluded from the wages only for employees and their dependents or for a class or classes of employees and their dependents. Irs form 990 ez 2010 See Announcement 92-16 for more information. Irs form 990 ez 2010 You can find Announcement 92-16 on page 53 of Internal Revenue Bulletin 1992-5. Irs form 990 ez 2010 Health Savings Accounts and medical savings accounts. Irs form 990 ez 2010   Your contributions to an employee's Health Savings Account (HSA) or Archer medical savings account (MSA) are not subject to social security, Medicare, or FUTA taxes, or federal income tax withholding if it is reasonable to believe at the time of payment of the contributions they will be excludable from the income of the employee. Irs form 990 ez 2010 To the extent it is not reasonable to believe they will be excludable, your contributions are subject to these taxes. Irs form 990 ez 2010 Employee contributions to their HSAs or MSAs through a payroll deduction plan must be included in wages and are subject to social security, Medicare, and FUTA taxes and income tax withholding. Irs form 990 ez 2010 However, HSA contributions made under a salary reduction arrangement in a section 125 cafeteria plan are not wages and are not subject to employment taxes or withholding. Irs form 990 ez 2010 For more information, see the Instructions for Form 8889, Health Savings Accounts (HSAs). Irs form 990 ez 2010 Medical care reimbursements. Irs form 990 ez 2010   Generally, medical care reimbursements paid for an employee under an employer's self-insured medical reimbursement plan are not wages and are not subject to social security, Medicare, and FUTA taxes, or income tax withholding. Irs form 990 ez 2010 See Publication 15-B for an exception for highly compensated employees. Irs form 990 ez 2010 Differential wage payments. Irs form 990 ez 2010   Differential wage payments are any payments made by an employer to an individual for a period during which the individual is performing service in the uniformed services while on active duty for a period of more than 30 days and represent all or a portion of the wages the individual would have received from the employer if the individual were performing services for the employer. Irs form 990 ez 2010   Differential wage payments are wages for income tax withholding, but are not subject to social security, Medicare, or FUTA taxes. Irs form 990 ez 2010 Employers should report differential wage payments in box 1 of Form W-2. Irs form 990 ez 2010 For more information about the tax treatment of differential wage payments, visit IRS. Irs form 990 ez 2010 gov and enter “employees in a combat zone” in the search box. Irs form 990 ez 2010 Fringe benefits. Irs form 990 ez 2010   You generally must include fringe benefits in an employee's gross income (but see Nontaxable fringe benefits next). Irs form 990 ez 2010 The benefits are subject to income tax withholding and employment taxes. Irs form 990 ez 2010 Fringe benefits include cars you provide, flights on aircraft you provide, free or discounted commercial flights, vacations, discounts on property or services, memberships in country clubs or other social clubs, and tickets to entertainment or sporting events. Irs form 990 ez 2010 In general, the amount you must include is the amount by which the fair market value of the benefits is more than the sum of what the employee paid for it plus any amount the law excludes. Irs form 990 ez 2010 There are other special rules you and your employees may use to value certain fringe benefits. Irs form 990 ez 2010 See Publication 15-B for more information. Irs form 990 ez 2010 Nontaxable fringe benefits. Irs form 990 ez 2010   Some fringe benefits are not taxable (or are minimally taxable) if certain conditions are met. Irs form 990 ez 2010 See Publication 15-B for details. Irs form 990 ez 2010 The following are some examples of nontaxable fringe benefits. Irs form 990 ez 2010 Services provided to your employees at no additional cost to you. Irs form 990 ez 2010 Qualified employee discounts. Irs form 990 ez 2010 Working condition fringes that are property or services the employee could deduct as a business expense if he or she had paid for it. Irs form 990 ez 2010 Examples include a company car for business use and subscriptions to business magazines. Irs form 990 ez 2010 Certain minimal value fringes (including an occasional cab ride when an employee must work overtime and meals you provide at eating places you run for your employees if the meals are not furnished at below cost). Irs form 990 ez 2010 Qualified transportation fringes subject to specified conditions and dollar limitations (including transportation in a commuter highway vehicle, any transit pass, and qualified parking). Irs form 990 ez 2010 Qualified moving expense reimbursement. Irs form 990 ez 2010 See Moving expenses , earlier in this section, for details. Irs form 990 ez 2010 The use of on-premises athletic facilities, if substantially all of the use is by employees, their spouses, and their dependent children. Irs form 990 ez 2010 Qualified tuition reduction an educational organization provides to its employees for education. Irs form 990 ez 2010 For more information, see Publication 970, Tax Benefits for Education. Irs form 990 ez 2010 Employer-provided cell phones provided primarily for a noncompensatory business reason. Irs form 990 ez 2010   However, do not exclude the following fringe benefits from the income of highly compensated employees unless the benefit is available to other employees on a nondiscriminatory basis. Irs form 990 ez 2010 No-additional-cost services. Irs form 990 ez 2010 Qualified employee discounts. Irs form 990 ez 2010 Meals provided at an employer operated eating facility. Irs form 990 ez 2010 Reduced tuition for education. Irs form 990 ez 2010  For more information, including the definition of a highly compensated employee, see Publication 15-B. Irs form 990 ez 2010 When fringe benefits are treated as paid. Irs form 990 ez 2010   You may choose to treat certain noncash fringe benefits as paid by the pay period, by the quarter, or on any other basis you choose as long as you treat the benefits as paid at least once a year. Irs form 990 ez 2010 You do not have to make a formal choice of payment dates or notify the IRS of the dates you choose. Irs form 990 ez 2010 You do not have to make this choice for all employees. Irs form 990 ez 2010 You may change methods as often as you like, as long as you treat all benefits provided in a calendar year as paid by December 31 of the calendar year. Irs form 990 ez 2010 See Publication 15-B for more information, including a discussion of the special accounting rule for fringe benefits provided during November and December. Irs form 990 ez 2010 Valuation of fringe benefits. Irs form 990 ez 2010   Generally, you must determine the value of fringe benefits no later than January 31 of the next year. Irs form 990 ez 2010 Before January 31, you may reasonably estimate the value of the fringe benefits for purposes of withholding and depositing on time. Irs form 990 ez 2010 Withholding on fringe benefits. Irs form 990 ez 2010   You may add the value of fringe benefits to regular wages for a payroll period and figure withholding taxes on the total, or you may withhold federal income tax on the value of the fringe benefits at the optional flat 25% supplemental wage rate. Irs form 990 ez 2010 However, see Withholding on supplemental wages when an employee receives more than $1 million of supplemental wages during the calendar year in section 7. Irs form 990 ez 2010   You may choose not to withhold income tax on the value of an employee's personal use of a vehicle you provide. Irs form 990 ez 2010 You must, however, withhold social security and Medicare taxes on the use of the vehicle. Irs form 990 ez 2010 See Publication 15-B for more information on this election. Irs form 990 ez 2010 Depositing taxes on fringe benefits. Irs form 990 ez 2010   Once you choose when fringe benefits are paid, you must deposit taxes in the same deposit period you treat the fringe benefits as paid. Irs form 990 ez 2010 To avoid a penalty, deposit the taxes following the general deposit rules for that deposit period. Irs form 990 ez 2010   If you determine by January 31 you overestimated the value of a fringe benefit at the time you withheld and deposited for it, you may claim a refund for the overpayment or have it applied to your next employment tax return. Irs form 990 ez 2010 See Valuation of fringe benefits , earlier. Irs form 990 ez 2010 If you underestimated the value and deposited too little, you may be subject to a failure-to-deposit penalty. Irs form 990 ez 2010 See section 11 for information on deposit penalties. Irs form 990 ez 2010   If you deposited the required amount of taxes but withheld a lesser amount from the employee, you can recover from the employee the social security, Medicare, or income taxes you deposited on his or her behalf, and included in the employee's Form W-2. Irs form 990 ez 2010 However, you must recover the income taxes before April 1 of the following year. Irs form 990 ez 2010 Sick pay. Irs form 990 ez 2010   In general, sick pay is any amount you pay under a plan to an employee who is unable to work because of sickness or injury. Irs form 990 ez 2010 These amounts are sometimes paid by a third party, such as an insurance company or an employees' trust. Irs form 990 ez 2010 In either case, these payments are subject to social security, Medicare, and FUTA taxes. Irs form 990 ez 2010 Sick pay becomes exempt from these taxes after the end of 6 calendar months after the calendar month the employee last worked for the employer. Irs form 990 ez 2010 The payments are always subject to federal income tax. Irs form 990 ez 2010 See Publication 15-A for more information. Irs form 990 ez 2010 6. Irs form 990 ez 2010 Tips Tips your employee receives from customers are generally subject to withholding. Irs form 990 ez 2010 Your employee must report cash tips to you by the 10th of the month after the month the tips are received. Irs form 990 ez 2010 The report should include tips you paid over to the employee for charge customers, tips the employee received directly from customers, and tips received from other employees under any tip-sharing arrangement. Irs form 990 ez 2010 Both directly and indirectly tipped employees must report tips to you. Irs form 990 ez 2010 No report is required for months when tips are less than $20. Irs form 990 ez 2010 Your employee reports the tips on Form 4070, Employee's Report of Tips to Employer, or on a similar statement. Irs form 990 ez 2010 The statement must be signed by the employee and must include: The employee's name, address, and SSN, Your name and address, The month or period the report covers, and The total of tips received during the month or period. Irs form 990 ez 2010 Both Forms 4070 and 4070-A, Employee's Daily Record of Tips, are included in Publication 1244, Employee's Daily Record of Tips and Report to Employer. Irs form 990 ez 2010 You are permitted to establish a system for electronic tip reporting by employees. Irs form 990 ez 2010 See Regulations section 31. Irs form 990 ez 2010 6053-1(d). Irs form 990 ez 2010 Collecting taxes on tips. Irs form 990 ez 2010   You must collect income tax, employee social security tax, and employee Medicare tax on the employee's tips. Irs form 990 ez 2010 The withholding rules for withholding an employee's share of Medicare tax on tips also apply to withholding the Additional Medicare Tax once wages and tips exceed $200,000 in the calendar year. Irs form 990 ez 2010 If an employee reports to you in writing $20 or more of tips in a month, the tips are also subject to FUTA tax. Irs form 990 ez 2010   You can collect these taxes from the employee's wages or from other funds he or she makes available. Irs form 990 ez 2010 See Tips treated as supplemental wages in section 7 for more information. Irs form 990 ez 2010 Stop collecting the employee social security tax when his or her wages and tips for tax year 2014 reach $117,000; collect the income and employee Medicare taxes for the whole year on all wages and tips. Irs form 990 ez 2010 You are responsible for the employer social security tax on wages and tips until the wages (including tips) reach the limit. Irs form 990 ez 2010 You are responsible for the employer Medicare tax for the whole year on all wages and tips. Irs form 990 ez 2010 File Form 941 or Form 944 to report withholding and employment taxes on tips. Irs form 990 ez 2010 Ordering rule. Irs form 990 ez 2010   If, by the 10th of the month after the month for which you received an employee's report on tips, you do not have enough employee funds available to deduct the employee tax, you no longer have to collect it. Irs form 990 ez 2010 If there are not enough funds available, withhold taxes in the following order. Irs form 990 ez 2010 Withhold on regular wages and other compensation. Irs form 990 ez 2010 Withhold social security and Medicare taxes on tips. Irs form 990 ez 2010 Withhold income tax on tips. Irs form 990 ez 2010 Reporting tips. Irs form 990 ez 2010   Report tips and any collected and uncollected social security and Medicare taxes on Form W-2 and on Form 941, lines 5b, 5c, and 5d (Form 944, lines 4b, 4c, and 4d). Irs form 990 ez 2010 Report an adjustment on Form 941, line 9 (Form 944, line 6), for the uncollected social security and Medicare taxes. Irs form 990 ez 2010 Enter the amount of uncollected social security tax and Medicare tax on Form W-2, box 12, with codes “A” and “B. Irs form 990 ez 2010 ” Do not include any uncollected Additional Medicare Tax in box 12 of Form W-2. Irs form 990 ez 2010 See section 13 and the General Instructions for Forms W-2 and W-3. Irs form 990 ez 2010   Revenue Ruling 2012-18 provides guidance for employers regarding social security and Medicare taxes imposed on tips, including information on the reporting of the employer share of social security and Medicare taxes under section 3121(q), the difference between tips and service charges, and the section 45B credit. Irs form 990 ez 2010 See Revenue Ruling 2012-18, 2012-26 I. Irs form 990 ez 2010 R. Irs form 990 ez 2010 B. Irs form 990 ez 2010 1032, available at www. Irs form 990 ez 2010 irs. Irs form 990 ez 2010 gov/irb/2012-26_IRB/ar07. Irs form 990 ez 2010 html. Irs form 990 ez 2010 Allocated tips. Irs form 990 ez 2010   If you operate a large food or beverage establishment, you must report allocated tips under certain circumstances. Irs form 990 ez 2010 However, do not withhold income, social security, or Medicare taxes on allocated tips. Irs form 990 ez 2010   A large food or beverage establishment is one that provides food or beverages for consumption on the premises, where tipping is customary, and where there were normally more than 10 employees on a typical business day during the preceding year. Irs form 990 ez 2010   The tips may be allocated by one of three methods—hours worked, gross receipts, or good faith agreement. Irs form 990 ez 2010 For information about these allocation methods, including the requirement to file Forms 8027 electronically if 250 or more forms are filed, see the Instructions for Form 8027. Irs form 990 ez 2010 For information on filing Form 8027 electronically with the IRS, see Publication 1239. Irs form 990 ez 2010 Tip Rate Determination and Education Program. Irs form 990 ez 2010   Employers may participate in the Tip Rate Determination and Education Program. Irs form 990 ez 2010 The program primarily consists of two voluntary agreements developed to improve tip income reporting by helping taxpayers to understand and meet their tip reporting responsibilities. Irs form 990 ez 2010 The two agreements are the Tip Rate Determination Agreement (TRDA) and the Tip Reporting Alternative Commitment (TRAC). Irs form 990 ez 2010 A tip agreement, the Gaming Industry Tip Compliance Agreement (GITCA), is available for the gaming (casino) industry. Irs form 990 ez 2010 To get more information about TRDA and TRAC agreements, see Publication 3144, Tips on Tips. Irs form 990 ez 2010 Additionally, visit IRS. Irs form 990 ez 2010 gov and enter “MSU tips” in the search box to get more information about GITCA, TRDA, or TRAC agreements. Irs form 990 ez 2010 7. Irs form 990 ez 2010 Supplemental Wages Supplemental wages are wage payments to an employee that are not regular wages. Irs form 990 ez 2010 They include, but are not limited to, bonuses, commissions, overtime pay, payments for accumulated sick leave, severance pay, awards, prizes, back pay, retroactive pay increases, and payments for nondeductible moving expenses. Irs form 990 ez 2010 Other payments subject to the supplemental wage rules include taxable fringe benefits and expense allowances paid under a nonaccountable plan. Irs form 990 ez 2010 How you withhold on supplemental wages depends on whether the supplemental payment is identified as a separate payment from regular wages. Irs form 990 ez 2010 See Regulations section 31. Irs form 990 ez 2010 3402(g)-1 for additional guidance for wages paid after January 1, 2007. Irs form 990 ez 2010 Also see Revenue Ruling 2008-29, 2008-24 I. Irs form 990 ez 2010 R. Irs form 990 ez 2010 B. Irs form 990 ez 2010 1149, available at www. Irs form 990 ez 2010 irs. Irs form 990 ez 2010 gov/irb/2008-24_IRB/ar08. Irs form 990 ez 2010 html. Irs form 990 ez 2010 Withholding on supplemental wages when an employee receives more than $1 million of supplemental wages from you during the calendar year. Irs form 990 ez 2010   Special rules apply to the extent supplemental wages paid to any one employee during the calendar year exceed $1 million. Irs form 990 ez 2010 If a supplemental wage payment, together with other supplemental wage payments made to the employee during the calendar year, exceeds $1 million, the excess is subject to withholding at 39. Irs form 990 ez 2010 6% (or the highest rate of income tax for the year). Irs form 990 ez 2010 Withhold using the 39. Irs form 990 ez 2010 6% rate without regard to the employee's Form W-4. Irs form 990 ez 2010 In determining supplemental wages paid to the employee during the year, include payments from all businesses under common control. Irs form 990 ez 2010 For more information, see Treasury Decision 9276, 2006-37 I. Irs form 990 ez 2010 R. Irs form 990 ez 2010 B. Irs form 990 ez 2010 423, available at www. Irs form 990 ez 2010 irs. Irs form 990 ez 2010 gov/irb/2006-37_IRB/ar09. Irs form 990 ez 2010 html. Irs form 990 ez 2010 Withholding on supplemental wage payments to an employee who does not receive $1 million of supplemental wages during the calendar year. Irs form 990 ez 2010   If the supplemental wages paid to the employee during the calendar year are less than or equal to $1 million, the following rules apply in determining the amount of income tax to be withheld. Irs form 990 ez 2010 Supplemental wages combined with regular wages. Irs form 990 ez 2010   If you pay supplemental wages with regular wages but do not specify the amount of each, withhold federal income tax as if the total were a single payment for a regular payroll period. Irs form 990 ez 2010 Supplemental wages identified separately from regular wages. Irs form 990 ez 2010   If you pay supplemental wages separately (or combine them in a single payment and specify the amount of each), the federal income tax withholding method depends partly on whether you withhold income tax from your employee's regular wages. Irs form 990 ez 2010 If you withheld income tax from an employee's regular wages in the current or immediately preceding calendar year, you can use one of the following methods for the supplemental wages. Irs form 990 ez 2010 Withhold a flat 25% (no other percentage allowed). Irs form 990 ez 2010 If the supplemental wages are paid concurrently with regular wages, add the supplemental wages to the concurrently paid regular wages. Irs form 990 ez 2010 If there are no concurrently paid regular wages, add the supplemental wages to alternatively, either the regular wages paid or to be paid for the current payroll period or the regular wages paid for the preceding payroll period. Irs form 990 ez 2010 Figure the income tax withholding as if the total of the regular wages and supplemental wages is a single payment. Irs form 990 ez 2010 Subtract the tax withheld from the regular wages. Irs form 990 ez 2010 Withhold the remaining tax from the supplemental wages. Irs form 990 ez 2010 If there were other payments of supplemental wages paid during the payroll period made before the current payment of supplemental wages, aggregate all the payments of supplemental wages paid during the payroll period with the regular wages paid during the payroll period, calculate the tax on the total, subtract the tax already withheld from the regular wages and the previous supplemental wage payments, and withhold the remaining tax. Irs form 990 ez 2010 If you did not withhold income tax from the employee's regular wages in the current or immediately preceding calendar year, use method 1-b. Irs form 990 ez 2010 This would occur, for example, when the value of the employee's withholding allowances claimed on Form W-4 is more than the wages. Irs form 990 ez 2010 Regardless of the method you use to withhold income tax on supplemental wages, they are subject to social security, Medicare, and FUTA taxes. Irs form 990 ez 2010 Example 1. Irs form 990 ez 2010 You pay John Peters a base salary on the 1st of each month. Irs form 990 ez 2010 He is single and claims one withholding allowance. Irs form 990 ez 2010 In January he is paid $1,000. Irs form 990 ez 2010 Using the wage bracket tables, you withhold $50 from this amount. Irs form 990 ez 2010 In February, he receives salary of $1,000 plus a commission of $2,000, which you combine with regular wages and do not separately identify. Irs form 990 ez 2010 You figure the withholding based on the total of $3,000. Irs form 990 ez 2010 The correct withholding from the tables is $338. Irs form 990 ez 2010 Example 2. Irs form 990 ez 2010 You pay Sharon Warren a base salary on the 1st of each month. Irs form 990 ez 2010 She is single and claims one allowance. Irs form 990 ez 2010 Her May 1 pay is $2,000. Irs form 990 ez 2010 Using the wage bracket tables, you withhold $188. Irs form 990 ez 2010 On May 14 she receives a bonus of $1,000. Irs form 990 ez 2010 Electing to use supplemental wage withholding method 1-b, you: Add the bonus amount to the amount of wages from the most recent base salary pay date (May 1) ($2,000 + $1,000 = $3,000). Irs form 990 ez 2010 Determine the amount of withholding on the combined $3,000 amount to be $338 using the wage bracket tables. Irs form 990 ez 2010 Subtract the amount withheld from wages on the most recent base salary pay date (May 1) from the combined withholding amount ($338 – $188 = $150). Irs form 990 ez 2010 Withhold $150 from the bonus payment. Irs form 990 ez 2010 Example 3. Irs form 990 ez 2010 The facts are the same as in Example 2, except you elect to use the flat rate method of withholding on the bonus. Irs form 990 ez 2010 You withhold 25% of $1,000, or $250, from Sharon's bonus payment. Irs form 990 ez 2010 Example 4. Irs form 990 ez 2010 The facts are the same as in Example 2, except you elect to pay Sharon a second bonus of $2,000 on May 28. Irs form 990 ez 2010 Using supplemental wage withholding method 1-b, you: Add the first and second bonus amounts to the amount of wages from the most recent base salary pay date (May 1) ($2,000 + $1,000 + $2,000 = $5,000). Irs form 990 ez 2010 Determine the amount of withholding on the combined $5,000 amount to be $781 using the wage bracket tables. Irs form 990 ez 2010 Subtract the amounts withheld from wages on the most recent base salary pay date (May 1) and the amounts withheld from the first bonus payment from the combined withholding amount ($781 – $188 – $150 = $443). Irs form 990 ez 2010 Withhold $443 from the second bonus payment. Irs form 990 ez 2010 Tips treated as supplemental wages. Irs form 990 ez 2010   Withhold income tax on tips from wages earned by the employee or from other funds the employee makes available. Irs form 990 ez 2010 If an employee receives regular wages and reports tips, figure income tax withholding as if the tips were supplemental wages. Irs form 990 ez 2010 If you have not withheld income tax from the regular wages, add the tips to the regular wages. Irs form 990 ez 2010 Then withhold income tax on the total. Irs form 990 ez 2010 If you withheld income tax from the regular wages, you can withhold on the tips by method 1-a or 1-b discussed earlier in this section under Supplemental wages identified separately from regular wages. Irs form 990 ez 2010 Vacation pay. Irs form 990 ez 2010   Vacation pay is subject to withholding as if it were a regular wage payment. Irs form 990 ez 2010 When vacation pay is in addition to regular wages for the vacation period, treat it as a supplemental wage payment. Irs form 990 ez 2010 If the vacation pay is for a time longer than your usual payroll period, spread it over the pay periods for which you pay it. Irs form 990 ez 2010 8. Irs form 990 ez 2010 Payroll Period Your payroll period is a period of service for which you usually pay wages. Irs form 990 ez 2010 When you have a regular payroll period, withhold income tax for that time period even if your employee does not work the full period. Irs form 990 ez 2010 No regular payroll period. Irs form 990 ez 2010   When you do not have a regular payroll period, withhold the tax as if you paid wages for a daily or miscellaneous payroll period. Irs form 990 ez 2010 Figure the number of days (including Sundays and holidays) in the period covered by the wage payment. Irs form 990 ez 2010 If the wages are unrelated to a specific length of time (for example, commissions paid on completion of a sale), count back the number of days from the payment period to the latest of: The last wage payment made during the same calendar year, The date employment began, if during the same calendar year, or January 1 of the same year. Irs form 990 ez 2010 Employee paid for period less than 1 week. Irs form 990 ez 2010   When you pay an employee for a period of less than one week, and the employee signs a statement under penalties of perjury indicating he or she is not working for any other employer during the same week for wages subject to withholding, figure withholding based on a weekly payroll period. Irs form 990 ez 2010 If the employee later begins to work for another employer for wages subject to withholding, the employee must notify you within 10 days. Irs form 990 ez 2010 You then figure withholding based on the daily or miscellaneous period. Irs form 990 ez 2010 9. Irs form 990 ez 2010 Withholding From Employees' Wages Income Tax Withholding Using Form W-4 to figure withholding. Irs form 990 ez 2010   To know how much federal income tax to withhold from employees' wages, you should have a Form W-4 on file for each employee. Irs form 990 ez 2010 Encourage your employees to file an updated Form W-4 for 2014, especially if they owed taxes or received a large refund when filing their 2013 tax return. Irs form 990 ez 2010 Advise your employees to use the IRS Withholding Calculator on the IRS website at www. Irs form 990 ez 2010 irs. Irs form 990 ez 2010 gov/individuals for help in determining how many withholding allowances to claim on their Forms W-4. Irs form 990 ez 2010   Ask all new employees to give you a signed Form W-4 when they start work. Irs form 990 ez 2010 Make the form effective with the first wage payment. Irs form 990 ez 2010 If a new employee does not give you a completed Form W-4, withhold income tax as if he or she is single, with no withholding allowances. Irs form 990 ez 2010 Form in Spanish. Irs form 990 ez 2010   You can provide Formulario W-4(SP), Certificado de Exención de Retenciones del Empleado, in place of Form W-4, to your Spanish-speaking employees. Irs form 990 ez 2010 For more information, see Publicación 17(SP), El Impuesto Federal sobre los Ingresos (Para Personas Físicas). Irs form 990 ez 2010 The rules discussed in this section that apply to Form W-4 also apply to Formulario W-4(SP). Irs form 990 ez 2010 Electronic system to receive Form W-4. Irs form 990 ez 2010   You may establish a system to electronically receive Forms W-4 from your employees. Irs form 990 ez 2010 See Regulations section 31. Irs form 990 ez 2010 3402(f)(5)-1(c) for more information. Irs form 990 ez 2010 Effective date of Form W-4. Irs form 990 ez 2010   A Form W-4 remains in effect until the employee gives you a new one. Irs form 990 ez 2010 When you receive a new Form W-4 from an employee, do not adjust withholding for pay periods before the effective date of the new form. Irs form 990 ez 2010 If an employee gives you a Form W-4 that replaces an existing Form W-4, begin withholding no later than the start of the first payroll period ending on or after the 30th day from the date when you received the replacement Form W-4. Irs form 990 ez 2010 For exceptions, see Exemption from federal income tax withholding , IRS review of requested Forms W-4 , and Invalid Forms W-4 , later in this section. Irs form 990 ez 2010 A Form W-4 that makes a change for the next calendar year will not take effect in the current calendar year. Irs form 990 ez 2010 Successor employer. Irs form 990 ez 2010   If you are a successor employer (see Successor employer , later in this section), secure new Forms W-4 from the transferred employees unless the “Alternative Procedure” in section 5 of Revenue Procedure 2004-53 applies. Irs form 990 ez 2010 See Revenue Procedure 2004-53, 2004-34 I. Irs form 990 ez 2010 R. Irs form 990 ez 2010 B. Irs form 990 ez 2010 320, available at www. Irs form 990 ez 2010 irs. Irs form 990 ez 2010 gov/irb/2004-34_IRB/ar13. Irs form 990 ez 2010 html. Irs form 990 ez 2010 Completing Form W-4. Irs form 990 ez 2010   The amount of any federal income tax withholding must be based on marital status and withholding allowances. Irs form 990 ez 2010 Your employees may not base their withholding amounts on a fixed dollar amount or percentage. Irs form 990 ez 2010 However, an employee may specify a dollar amount to be withheld in addition to the amount of withholding based on filing status and withholding allowances claimed on Form W-4. Irs form 990 ez 2010 Employees may claim fewer withholding allowances than they are entitled to claim. Irs form 990 ez 2010 They may wish to claim fewer allowances to ensure they have enough withholding or to offset the tax on other sources of taxable income not subject to withholding. Irs form 990 ez 2010 See Publication 505, Tax Withholding and Estimated Tax, for more information about completing Form W-4. Irs form 990 ez 2010 Along with Form W-4, you may wish to order Publication 505 for use by your employees. Irs form 990 ez 2010 Do not accept any withholding or estimated tax payments from your employees in addition to withholding based on their Form W-4. Irs form 990 ez 2010 If they require additional withholding, they should submit a new Form W-4 and, if necessary, pay estimated tax by filing Form 1040-ES, Estimated Tax for Individuals, or by using the Electronic Federal Tax Payment System (EFTPS) to make estimated tax payments. Irs form 990 ez 2010 Exemption from federal income tax withholding. Irs form 990 ez 2010   Generally, an employee may claim exemption from federal income tax withholding because he or she had no income tax liability last year and expects none this year. Irs form 990 ez 2010 See the Form W-4 instructions for more information. Irs form 990 ez 2010 However, the wages are still subject to social security and Medicare taxes. Irs form 990 ez 2010 See also Invalid Forms W-4 , later in this section. Irs form 990 ez 2010   A Form W-4 claiming exemption from withholding is effective when it is filed with the employer and only for that calendar year. Irs form 990 ez 2010 To continue to be exempt from withholding in the next calendar year, an employee must give you a new Form W-4 by February 15. Irs form 990 ez 2010 If the employee does not give you a new Form W-4 by February 15, begin withholding based on the last Form W-4 for the employee that did not claim an exemption from withholding or, if one was not filed, then withhold tax as if he or she is single with zero withholding allowances. Irs form 990 ez 2010 If the employee provides a new Form W-4 claiming exemption from withholding on February 16 or later, you may apply it to future wages but do not refund any taxes already withheld. Irs form 990 ez 2010 Withholding income taxes on the wages of nonresident alien employees. Irs form 990 ez 2010   In general, you must withhold federal income taxes on the wages of nonresident alien employees. Irs form 990 ez 2010 However, see Publication 515, Withholding of Tax on Nonresident Aliens and Foreign Entities, for exceptions to this general rule. Irs form 990 ez 2010 Also see section 3 of Publication 51 (Circular A), Agricultural Employer's Tax Guide, for guidance on H-2A visa workers. Irs form 990 ez 2010 Withholding adjustment for nonresident alien employees. Irs form 990 ez 2010   For 2014, apply the procedure discussed next to figure the amount of income tax to withhold from the wages of nonresident alien employees performing services within the United States. Irs form 990 ez 2010 Nonresident alien students from India and business apprentices from India are not subject to this procedure. Irs form 990 ez 2010 Instructions. Irs form 990 ez 2010   To figure how much income tax to withhold from the wages paid to a nonresident alien employee performing services in the United States, use the following steps. Irs form 990 ez 2010 Step 1. Irs form 990 ez 2010   Add to the wages paid to the nonresident alien employee for the payroll period the amount shown in the chart below for the applicable payroll period. Irs form 990 ez 2010    Amount to Add to Nonresident Alien Employee's Wages for Calculating Income Tax Withholding Only   Payroll Period Add Additional     Weekly $ 43. Irs form 990 ez 2010 30     Biweekly 86. Irs form 990 ez 2010 50     Semimonthly 93. Irs form 990 ez 2010 80     Monthly 187. Irs form 990 ez 2010 50     Quarterly 562. Irs form 990 ez 2010 50     Semiannually 1,125. Irs form 990 ez 2010 00     Annually 2,250. Irs form 990 ez 2010 00     Daily or Miscellaneous (each day of the payroll period) 8. Irs form 990 ez 2010 70   Step 2. Irs form 990 ez 2010   Use the amount figured in Step 1 and the number of withholding allowances claimed (generally limited to one allowance) to figure income tax withholding. Irs form 990 ez 2010 Determine the value of withholding allowances by multiplying the number of withholding allowances claimed by the appropriate amount from Table 5. Irs form 990 ez 2010 Percentage Method—2014 Amount for One Withholding Allowance shown on page 41. Irs form 990 ez 2010 If you are using the Percentage Method Tables for Income Tax Withholding, provided on pages 43–44, reduce the amount figured in Step 1 by the value of withholding allowances and use that reduced amount to figure the income tax withholding. Irs form 990 ez 2010 If you are using the Wage Bracket Method for Income Tax Withholding, provided on pages 45–64, use the amount figured in Step 1 and the number of withholding allowances to figure income tax withholding. Irs form 990 ez 2010 The amounts from the chart above are added to wages solely for calculating income tax withholding on the wages of the nonresident alien employee. Irs form 990 ez 2010 The amounts from the chart should not be included in any box on the employee's Form W-2 and do not increase the income tax liability of the employee. Irs form 990 ez 2010 Also, the amounts from the chart do not increase the social security tax or Medicare tax liability of the employer or the employee, or the FUTA tax liability of the employer. Irs form 990 ez 2010 This procedure only applies to nonresident alien employees who have wages subject to income tax withholding. Irs form 990 ez 2010 Example. Irs form 990 ez 2010 An employer using the percentage method of withholding pays wages of $500 for a biweekly payroll period to a married nonresident alien employee. Irs form 990 ez 2010 The nonresident alien has properly completed Form W-4, entering marital status as “single” with one withholding allowance and indicating status as a nonresident alien on Form W-4, line 6 (see Nonresident alien employee's Form W-4 , later in this section). Irs form 990 ez 2010 The employer determines the wages to be used in the withholding tables by adding to the $500 amount of wages paid the amount of $86. Irs form 990 ez 2010 50 from the chart under Step 1 ($586. Irs form 990 ez 2010 50 total). Irs form 990 ez 2010 The employer then applies the applicable tables to determine the income tax withholding for nonresident aliens (see Step 2 ). Irs form 990 ez 2010 Reminder: If you use the Percentage Method Tables for Income Tax Withholding, reduce the amount figured in Step 1 by the value of withholding allowances and use that reduced amount to figure income tax withholding. Irs form 990 ez 2010 The $86. Irs form 990 ez 2010 50 added to wages for calculating income tax withholding is not reported on Form W-2, and does not increase the income tax liability of the employee. Irs form 990 ez 2010 Also, the $86. Irs form 990 ez 2010 50 added to wages does not affect the social security tax or Medicare tax liability of the employer or the employee, or the FUTA tax liability of the employer. Irs form 990 ez 2010 Supplemental wage payment. Irs form 990 ez 2010   This procedure for determining the amount of income tax withholding does not apply to a supplemental wage payment (see section 7) if the 39. Irs form 990 ez 2010 6% mandatory flat rate withholding applies or if the 25% optional flat rate withholding is being used to calculate income tax withholding on the supplemental wage payment. Irs form 990 ez 2010 Nonresident alien employee's Form W-4. Irs form 990 ez 2010   When completing Forms W-4, nonresident aliens are required to: Not claim exemption from income tax withholding, Request withholding as if they are single, regardless of their actual marital status, Claim only one allowance (if the nonresident alien is a resident of Canada, Mexico, or South Korea, or a student or business apprentice from India, he or she may claim more than one allowance), and Write “Nonresident Alien” or “NRA” above the dotted line on line 6 of Form W-4. Irs form 990 ez 2010   If you maintain an electronic Form W-4 system, you should provide a field for nonresident aliens to enter nonresident alien status in lieu of writing “Nonresident Alien” or “NRA” above the dotted line on line 6. Irs form 990 ez 2010 A nonresident alien employee may request additional withholding at his or her option for other purposes, although such additions should not be necessary for withholding to cover federal income tax liability related to employment. Irs form 990 ez 2010 Form 8233. Irs form 990 ez 2010   If a nonresident alien employee claims a tax treaty exemption from withholding, the employee must submit Form 8233, Exemption From Withholding on Compensation for Independent (and Certain Dependent) Personal Services of a Nonresident Alien Individual, with respect to the income exempt under the treaty, instead of Form W-4. Irs form 990 ez 2010 See Publication 515 for details. Irs form 990 ez 2010 IRS review of requested Forms W-4. Irs form 990 ez 2010   When requested by the IRS, you must make original Forms W-4 available for inspection by an IRS employee. Irs form 990 ez 2010 You may also be directed to send certain Forms W-4 to the IRS. Irs form 990 ez 2010 You may receive a notice from the IRS requiring you to submit a copy of Form W-4 for one or more of your named employees. Irs form 990 ez 2010 Send the requested copy or copies of Form W-4 to the IRS at the address provided and in the manner directed by the notice. Irs form 990 ez 2010 The IRS may also require you to submit copies of Form W-4 to the IRS as directed by Treasury Decision 9337, 2007-35 I. Irs form 990 ez 2010 R. Irs form 990 ez 2010 B. Irs form 990 ez 2010 455, which is available at www. Irs form 990 ez 2010 irs. Irs form 990 ez 2010 gov/irb/2007-35_IRB/ar10. Irs form 990 ez 2010 html. Irs form 990 ez 2010 When we refer to Form W-4, the same rules apply to Formulario W-4(SP), its Spanish translation. Irs form 990 ez 2010 After submitting a copy of a requested Form W-4 to the IRS, continue to withhold federal income tax based on that Form W-4 if it is valid (see Invalid Forms W-4 , later in this section). Irs form 990 ez 2010 However, if the IRS later notifies you in writing the employee is not entitled to claim exemption from withholding or a claimed number of withholding allowances, withhold federal income tax based on the effective date, marital status, and maximum number of withholding allowances specified in the IRS notice (commonly referred to as a "lock-in letter
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Know Your Rights

The Federal Deposit Insurance Corporation and other federal regulators require banks, insurance companies, brokerage firms and certain businesses who share financial information to tell you their privacy policies. They must give you this information when you open an account, and at least once every year after. They must include:

  • the kinds of information being collected;
  • how the confidentiality and security of this information will be protected; and
  • what types of businesses may be provided this information.

If a business is going to share the information with anyone outside its corporate family, it must also give you the chance to "opt-out" or say no to information sharing. Even if you don't opt out, your actual account numbers may not be shared with third parties for marketing purposes.

You cannot prevent certain types of information from being shared, including information needed to conduct normal business or protect against fraud, or information that is already publicly available. Also, a bank can share your information with a partner company to market products.

Your credit information has additional privacy protections under the Fair Credit Reporting Act. Only people with a legitimate business need can get a copy of your report. An employer can only get your report with your written consent. For more information on your rights under this federal law and to find out how you can get a copy of your credit report, visit the Credit Bureaus and Credit Scores section.

If Your Wallet is Lost or Stolen

Your wallet contains some of your most important personal items, from hard-earned money to credit cards and driver’s license. For an identity thief, your wallet offers a treasure trove of personal information. If your wallet is lost or stolen:

  • File a report with the police immediately.
  • Cancel your credit and debit cards and request new cards and account numbers.
  • Report the missing cards to the major credit reporting agencies.
  • Report your missing license to the department of motor vehicles.

Check with the Federal Trade Commission for more information on protecting your privacy

The Irs Form 990 Ez 2010

Irs form 990 ez 2010 Publication 583 - Main Content Table of Contents What New Business Owners Need To Know Forms of BusinessMore information. Irs form 990 ez 2010 More information. Irs form 990 ez 2010 Exception—Community Income. Irs form 990 ez 2010 Exception—Qualified joint venture. Irs form 990 ez 2010 More information. Irs form 990 ez 2010 More information. Irs form 990 ez 2010 Identification NumbersEmployer Identification Number (EIN) Payee's Identification Number Tax Year Accounting Method Business TaxesIncome Tax Self-Employment Tax Employment Taxes Excise Taxes Depositing Taxes Information Returns PenaltiesWaiver of penalty. Irs form 990 ez 2010 Business ExpensesBusiness Start-Up Costs Depreciation Business Use of Your Home Car and Truck Expenses RecordkeepingWhy Keep Records? Kinds of Records To Keep How Long To Keep Records Sample Record System How to Get More InformationInternal Revenue Service Small Business Administration Other Federal Agencies What New Business Owners Need To Know As a new business owner, you need to know your federal tax responsibilities. Irs form 990 ez 2010 Table 1 can help you learn what those responsibilities are. Irs form 990 ez 2010 Ask yourself each question listed in the table, then see the related discussion to find the answer. Irs form 990 ez 2010 In addition to knowing about federal taxes, you need to make some basic business decisions. Irs form 990 ez 2010 Ask yourself: What are my financial resources? What products and services will I sell? How will I market my products and services? How will I develop a strategic business plan? How will I manage my business on a day-to-day basis? How will I recruit employees? The Small Business Administration (SBA) is a federal agency that can help you answer these types of questions. Irs form 990 ez 2010 For information on how to contact the SBA, see How to Get More Information, later. Irs form 990 ez 2010 Forms of Business The most common forms of business are the sole proprietorship, partnership, and corporation. Irs form 990 ez 2010 When beginning a business, you must decide which form of business to use. Irs form 990 ez 2010 Legal and tax considerations enter into this decision. Irs form 990 ez 2010 Only tax considerations are discussed in this publication. Irs form 990 ez 2010 Your form of business determines which income tax return form you have to file. Irs form 990 ez 2010 See Table 2 to find out which form you have to file. Irs form 990 ez 2010 Sole proprietorships. Irs form 990 ez 2010   A sole proprietorship is an unincorporated business that is owned by one individual. Irs form 990 ez 2010 It is the simplest form of business organization to start and maintain. Irs form 990 ez 2010 The business has no existence apart from you, the owner. Irs form 990 ez 2010 Its liabilities are your personal liabilities. Irs form 990 ez 2010 You undertake the risks of the business for all assets owned, whether or not used in the business. Irs form 990 ez 2010 You include the income and expenses of the business on your personal tax return. Irs form 990 ez 2010 More information. Irs form 990 ez 2010   For more information on sole proprietorships, see Publication 334, Tax Guide for Small Business. Irs form 990 ez 2010 If you are a farmer, see Publication 225, Farmer's Tax Guide. Irs form 990 ez 2010 Partnerships. Irs form 990 ez 2010   A partnership is the relationship existing between two or more persons who join to carry on a trade or business. Irs form 990 ez 2010 Each person contributes money, property, labor, or skill, and expects to share in the profits and losses of the business. Irs form 990 ez 2010   A partnership must file an annual information return to report the income, deductions, gains, losses, etc. Irs form 990 ez 2010 , from its operations, but it does not pay income tax. Irs form 990 ez 2010 Instead, it “passes through” any profits or losses to its partners. Irs form 990 ez 2010 Each partner includes his or her share of the partnership's items on his or her tax return. Irs form 990 ez 2010 More information. Irs form 990 ez 2010   For more information on partnerships, see Publication 541, Partnerships. Irs form 990 ez 2010 Husband and wife business. Irs form 990 ez 2010   If you and your spouse jointly own and operate an unincorporated business and share in the profits and losses, you are partners in a partnership, whether or not you have a formal partnership agreement. Irs form 990 ez 2010 Do not use Schedule C or C-EZ. Irs form 990 ez 2010 Instead, file Form 1065, U. Irs form 990 ez 2010 S. Irs form 990 ez 2010 Return of Partnership Income. Irs form 990 ez 2010 For more information, see Publication 541, Partnerships. Irs form 990 ez 2010 Exception—Community Income. Irs form 990 ez 2010   If you and your spouse wholly own an unincorporated business as community property under the community property laws of a state, foreign country, or U. Irs form 990 ez 2010 S. Irs form 990 ez 2010 possession, you can treat the business either as a sole proprietorship or a partnership. Irs form 990 ez 2010 The only states with community property laws are Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington, and Wisconsin. Irs form 990 ez 2010 A change in your reporting position will be treated as a conversion of the entity. Irs form 990 ez 2010 Exception—Qualified joint venture. Irs form 990 ez 2010   If you and your spouse each materially participate as the only members of a jointly owned and operated business, and you file a joint return for the tax year, you can make a joint election to be treated as a qualified joint venture instead of a partnership for the tax year. Irs form 990 ez 2010 Making this election will allow you to avoid the complexity of Form 1065 but still give each spouse credit for social security earnings on which retirement benefits are based. Irs form 990 ez 2010 For an explanation of "material participation," see the Instructions for Schedule C, line G. Irs form 990 ez 2010   To make this election, you must divide all items of income, gain, loss, deduction, and credit attributable to the business between you and your spouse in accordance with your respective interests in the venture. Irs form 990 ez 2010 Each of you must file a separate Schedule C or C-EZ and a separate Schedule SE. Irs form 990 ez 2010 For more information, see Qualified Joint Venture in the Instructions for Schedule SE. Irs form 990 ez 2010 Corporations. Irs form 990 ez 2010   In forming a corporation, prospective shareholders exchange money, property, or both, for the corporation's capital stock. Irs form 990 ez 2010 A corporation generally takes the same deductions as a sole proprietorship to figure its taxable income. Irs form 990 ez 2010 A corporation can also take special deductions. Irs form 990 ez 2010   The profit of a corporation is taxed to the corporation when earned, and then is taxed to the shareholders when distributed as dividends. Irs form 990 ez 2010 However, shareholders cannot deduct any loss of the corporation. Irs form 990 ez 2010 More information. Irs form 990 ez 2010   For more information on corporations, see Publication 542, Corporations. Irs form 990 ez 2010 S corporations. Irs form 990 ez 2010   An eligible domestic corporation can avoid double taxation (once to the corporation and again to the shareholders) by electing to be treated as an S corporation. Irs form 990 ez 2010 Generally, an S corporation is exempt from federal income tax other than tax on certain capital gains and passive income. Irs form 990 ez 2010 On their tax returns, the S corporation's shareholders include their share of the corporation's separately stated items of income, deduction, loss, and credit, and their share of nonseparately stated income or loss. Irs form 990 ez 2010 More information. Irs form 990 ez 2010   For more information on S corporations, see the instructions for Form 2553, Election by a Small Business Corporation, and Form 1120S, U. Irs form 990 ez 2010 S. Irs form 990 ez 2010 Income Tax Return for an S Corporation. Irs form 990 ez 2010 Limited liability company. Irs form 990 ez 2010   A limited liability company (LLC) is an entity formed under state law by filing articles of organization as an LLC. Irs form 990 ez 2010 The members of an LLC are not personally liable for its debts. Irs form 990 ez 2010 An LLC may be classified for federal income tax purposes as either a partnership, a corporation, or an entity disregarded as an entity separate from its owner by applying the rules in regulations section 301. Irs form 990 ez 2010 7701-3. Irs form 990 ez 2010 For more information, see the instructions for Form 8832, Entity Classification Election. Irs form 990 ez 2010 Identification Numbers You must have a taxpayer identification number so the IRS can process your returns. Irs form 990 ez 2010 The two most common kinds of taxpayer identification numbers are the social security number (SSN) and the employer identification number (EIN). Irs form 990 ez 2010 An SSN is issued to individuals by the Social Security Administration (SSA) and is in the following format: 000–00–0000. Irs form 990 ez 2010 An EIN is issued to individuals (sole proprietors), partnerships, corporations, and other entities by the IRS and is in the following format: 00–0000000. Irs form 990 ez 2010 You must include your taxpayer identification number (SSN or EIN) on all returns and other documents you send to the IRS. Irs form 990 ez 2010 You must also furnish your number to other persons who use your identification number on any returns or documents they send to the IRS. Irs form 990 ez 2010 This includes returns or documents filed to report the following information. Irs form 990 ez 2010 Interest, dividends, royalties, etc. Irs form 990 ez 2010 , paid to you. Irs form 990 ez 2010 Any amount paid to you as a dependent care provider. Irs form 990 ez 2010 Certain other amounts paid to you that total $600 or more for the year. Irs form 990 ez 2010 If you do not furnish your identification number as required, you may be subject to penalties. Irs form 990 ez 2010 See Penalties, later. Irs form 990 ez 2010 Employer Identification Number (EIN) EINs are used to identify the tax accounts of employers, certain sole proprietors, corporations, partnerships, estates, trusts, and other entities. Irs form 990 ez 2010 If you don't already have an EIN, you need to get one if you: Have employees, Have a qualified retirement plan, Operate your business as a corporation or partnership, or File returns for: Employment taxes, or Excise taxes. Irs form 990 ez 2010 Applying for an EIN. Irs form 990 ez 2010   You may apply for an EIN: Online—Click on the EIN link at www. Irs form 990 ez 2010 irs. Irs form 990 ez 2010 gov/businesses/small. Irs form 990 ez 2010 The EIN is issued immediately once the application information is validated. Irs form 990 ez 2010 By telephone at 1-800-829-4933. Irs form 990 ez 2010 By mailing or faxing Form SS-4, Application for Employer Identification Number. Irs form 990 ez 2010 When to apply. Irs form 990 ez 2010   You should apply for an EIN early enough to receive the number by the time you must file a return or statement or make a tax deposit. Irs form 990 ez 2010 If you apply by mail, file Form SS-4 at least 4 weeks before you need an EIN. Irs form 990 ez 2010 If you apply by telephone or through the IRS website, you can get an EIN immediately. Irs form 990 ez 2010 If you apply by fax, you can get an EIN within 4 business days. Irs form 990 ez 2010   If you do not receive your EIN by the time a return is due, file your return anyway. Irs form 990 ez 2010 Write “Applied for” and the date you applied for the number in the space for the EIN. Irs form 990 ez 2010 Do not use your social security number as a substitute for an EIN on your tax returns. Irs form 990 ez 2010 More than one EIN. Irs form 990 ez 2010   You should have only one EIN. Irs form 990 ez 2010 If you have more than one EIN and are not sure which to use, contact the Internal Revenue Service Center where you file your return. Irs form 990 ez 2010 Give the numbers you have, the name and address to which each was assigned, and the address of your main place of business. Irs form 990 ez 2010 The IRS will tell you which number to use. Irs form 990 ez 2010 More information. Irs form 990 ez 2010   For more information about EINs, see Publication 1635, Understanding Your EIN. Irs form 990 ez 2010 Payee's Identification Number In the operation of a business, you will probably make certain payments you must report on information returns (discussed later under Information Returns). Irs form 990 ez 2010 The forms used to report these payments must include the payee's identification number. Irs form 990 ez 2010 Employee. Irs form 990 ez 2010   If you have employees, you must get an SSN from each of them. Irs form 990 ez 2010 Record the name and SSN of each employee exactly as they are shown on the employee's social security card. Irs form 990 ez 2010 If the employee's name is not correct as shown on the card, the employee should request a new card from the SSA. Irs form 990 ez 2010 This may occur, for example, if the employee's name has changed due to marriage or divorce. Irs form 990 ez 2010   If your employee does not have an SSN, he or she should file Form SS-5, Application for a Social Security Card, with the SSA. Irs form 990 ez 2010 This form is available at SSA offices or by calling 1-800-772-1213. Irs form 990 ez 2010 It is also available from the SSA website at www. Irs form 990 ez 2010 ssa. Irs form 990 ez 2010 gov. Irs form 990 ez 2010 Other payee. Irs form 990 ez 2010   If you make payments to someone who is not your employee and you must report the payments on an information return, get that person's SSN. Irs form 990 ez 2010 If you make reportable payments to an organization, such as a corporation or partnership, you must get its EIN. Irs form 990 ez 2010   To get the payee's SSN or EIN, use Form W-9, Request for Taxpayer Identification Number and Certification. Irs form 990 ez 2010 This form is available from IRS offices or by calling 1-800-829-3676. Irs form 990 ez 2010 It is also available from the IRS website at IRS. Irs form 990 ez 2010 gov. Irs form 990 ez 2010    If the payee does not provide you with an identification number, you may have to withhold part of the payments as backup withholding. Irs form 990 ez 2010 For information on backup withholding, see the Form W-9 instructions and the General Instructions for Certain Information Returns. Irs form 990 ez 2010 Tax Year You must figure your taxable income and file an income tax return based on an annual accounting period called a tax year. Irs form 990 ez 2010 A tax year is usually 12 consecutive months. Irs form 990 ez 2010 There are two kinds of tax years. Irs form 990 ez 2010 Calendar tax year. Irs form 990 ez 2010 A calendar tax year is 12 consecutive months beginning January 1 and ending December 31. Irs form 990 ez 2010 Fiscal tax year. Irs form 990 ez 2010 A fiscal tax year is 12 consecutive months ending on the last day of any month except December. Irs form 990 ez 2010 A 52-53-week tax year is a fiscal tax year that varies from 52 to 53 weeks but does not have to end on the last day of a month. Irs form 990 ez 2010 If you file your first tax return using the calendar tax year and you later begin business as a sole proprietor, become a partner in a partnership, or become a shareholder in an S corporation, you must continue to use the calendar year unless you get IRS approval to change it or are otherwise allowed to change it without IRS approval. Irs form 990 ez 2010 You must use a calendar tax year if: You keep no books. Irs form 990 ez 2010 You have no annual accounting period. Irs form 990 ez 2010 Your present tax year does not qualify as a fiscal year. Irs form 990 ez 2010 You are required to use a calendar year by a provision of the Internal Revenue Code or the Income Tax Regulations. Irs form 990 ez 2010 For more information, see Publication 538, Accounting Periods and Methods. Irs form 990 ez 2010 First-time filer. Irs form 990 ez 2010   If you have never filed an income tax return, you can adopt either a calendar tax year or a fiscal tax year. Irs form 990 ez 2010 You adopt a tax year by filing your first income tax return using that tax year. Irs form 990 ez 2010 You have not adopted a tax year if you merely did any of the following. Irs form 990 ez 2010 Filed an application for an extension of time to file an income tax return. Irs form 990 ez 2010 Filed an application for an employer identification number. Irs form 990 ez 2010 Paid estimated taxes for that tax year. Irs form 990 ez 2010 Changing your tax year. Irs form 990 ez 2010   Once you have adopted your tax year, you may have to get IRS approval to change it. Irs form 990 ez 2010 To get approval, you must file Form 1128, Application To Adopt, Change, or Retain a Tax Year. Irs form 990 ez 2010 You may have to pay a fee. Irs form 990 ez 2010 For more information, see Publication 538. Irs form 990 ez 2010 Accounting Method An accounting method is a set of rules used to determine when and how income and expenses are reported. Irs form 990 ez 2010 You choose an accounting method for your business when you file your first income tax return. Irs form 990 ez 2010 There are two basic accounting methods. Irs form 990 ez 2010 Cash method. Irs form 990 ez 2010 Under the cash method, you report income in the tax year you receive it. Irs form 990 ez 2010 You usually deduct or capitalize expenses in the tax year you pay them. Irs form 990 ez 2010 Accrual method. Irs form 990 ez 2010 Under an accrual method, you generally report income in the tax year you earn it, even though you may receive payment in a later year. Irs form 990 ez 2010 You deduct or capitalize expenses in the tax year you incur them, whether or not you pay them that year. Irs form 990 ez 2010 For other methods, see Publication 538. Irs form 990 ez 2010 If you need inventories to show income correctly, you must generally use an accrual method of accounting for purchases and sales. Irs form 990 ez 2010 Inventories include goods held for sale in the normal course of business. Irs form 990 ez 2010 They also include raw materials and supplies that will physically become a part of merchandise intended for sale. Irs form 990 ez 2010 Inventories are explained in Publication 538. Irs form 990 ez 2010 Certain small business taxpayers can use the cash method of accounting and can also account for inventoriable items as materials and supplies that are not incidental. Irs form 990 ez 2010 For more information, see Publication 538. Irs form 990 ez 2010 You must use the same accounting method to figure your taxable income and to keep your books. Irs form 990 ez 2010 Also, you must use an accounting method that clearly shows your income. Irs form 990 ez 2010 In general, any accounting method that consistently uses accounting principles suitable for your trade or business clearly shows income. Irs form 990 ez 2010 An accounting method clearly shows income only if it treats all items of gross income and expense the same from year to year. Irs form 990 ez 2010 More than one business. Irs form 990 ez 2010   When you own more than one business, you can use a different accounting method for each business if the method you use for each clearly shows your income. Irs form 990 ez 2010 You must keep a complete and separate set of books and records for each business. Irs form 990 ez 2010 Changing your method of accounting. Irs form 990 ez 2010   Once you have set up your accounting method, you must generally get IRS approval before you can change to another method. Irs form 990 ez 2010 A change in accounting method not only includes a change in your overall system of accounting, but also a change in the treatment of any material item. Irs form 990 ez 2010 For examples of changes that require approval and information on how to get approval for the change, see Publication 538. Irs form 990 ez 2010 Business Taxes The form of business you operate determines what taxes you must pay and how you pay them. Irs form 990 ez 2010 The following are the four general kinds of business taxes. Irs form 990 ez 2010 Income tax. Irs form 990 ez 2010 Self-employment tax. Irs form 990 ez 2010 Employment taxes. Irs form 990 ez 2010 Excise taxes. Irs form 990 ez 2010 See Table 2 for the forms you file to report these taxes. Irs form 990 ez 2010 You may want to get Publication 509. Irs form 990 ez 2010 It has tax calendars that tell you when to file returns and make tax payments. Irs form 990 ez 2010 Income Tax All businesses except partnerships must file an annual income tax return. Irs form 990 ez 2010 Partnerships file an information return. Irs form 990 ez 2010 Which form you use depends on how your business is organized. Irs form 990 ez 2010 See Table 2 to find out which return you have to file. Irs form 990 ez 2010 The federal income tax is a pay-as-you-go tax. Irs form 990 ez 2010 You must pay the tax as you earn or receive income during the year. Irs form 990 ez 2010 An employee usually has income tax withheld from his or her pay. Irs form 990 ez 2010 If you do not pay your tax through withholding, or do not pay enough tax that way, you might have to pay estimated tax. Irs form 990 ez 2010 If you are not required to make estimated tax payments, you may pay any tax due when you file your return. Irs form 990 ez 2010 Table 2. Irs form 990 ez 2010 Which Forms Must I File? IF you are a. Irs form 990 ez 2010 . Irs form 990 ez 2010 . Irs form 990 ez 2010   THEN you may be liable for. Irs form 990 ez 2010 . Irs form 990 ez 2010 . Irs form 990 ez 2010   Use Form. Irs form 990 ez 2010 . Irs form 990 ez 2010 . Irs form 990 ez 2010 Sole proprietor   Income tax   1040 and Schedule C 1 or C-EZ (Schedule F 1 for farm business)     Self-employment tax   1040 and Schedule SE     Estimated tax   1040-ES     Employment taxes:         • Social security and Medicare   taxes and income tax   withholding   941 or 944 (943 for farm employees)     • Federal unemployment (FUTA)   tax   940     Excise taxes   See Excise Taxes Partnership   Annual return of income   1065     Employment taxes   Same as sole proprietor     Excise taxes   See Excise Taxes Partner in a partnership (individual)   Income tax   1040 and Schedule E 2     Self-employment tax   1040 and Schedule SE     Estimated tax   1040-ES Corporation or S corporation   Income tax   1120 (corporation) 2  1120S (S corporation) 2     Estimated tax   1120-W (corporation only)     Employment taxes   Same as sole proprietor     Excise taxes   See Excise Taxes S corporation shareholder   Income tax   1040 and Schedule E 2     Estimated tax   1040-ES 1 File a separate schedule for each business. Irs form 990 ez 2010 2 Various other schedules may be needed. Irs form 990 ez 2010 Estimated tax. Irs form 990 ez 2010   Generally, you must pay taxes on income, including self-employment tax (discussed next), by making regular payments of estimated tax during the year. Irs form 990 ez 2010 Sole proprietors, partners, and S corporation shareholders. Irs form 990 ez 2010   You generally have to make estimated tax payments if you expect to owe tax of $1,000 or more when you file your return. Irs form 990 ez 2010 Use Form 1040-ES, Estimated Tax for Individuals, to figure and pay your estimated tax. Irs form 990 ez 2010 For more information, see Publication 505, Tax Withholding and Estimated Tax. Irs form 990 ez 2010 Corporations. Irs form 990 ez 2010   You generally have to make estimated tax payments for your corporation if you expect it to owe tax of $500 or more when you file its return. Irs form 990 ez 2010 Use Form 1120-W, Estimated Tax for Corporations, to figure the estimated tax. Irs form 990 ez 2010 You must deposit the payments as explained later under Depositing Taxes. Irs form 990 ez 2010 For more information, see Publication 542. Irs form 990 ez 2010 Self-Employment Tax Self-employment tax (SE tax) is a social security and Medicare tax primarily for individuals who work for themselves. Irs form 990 ez 2010 Your payments of SE tax contribute to your coverage under the social security system. Irs form 990 ez 2010 Social security coverage provides you with retirement benefits, disability benefits, survivor benefits, and hospital insurance (Medicare) benefits. Irs form 990 ez 2010 You must pay SE tax and file Schedule SE (Form 1040) if either of the following applies. Irs form 990 ez 2010 Your net earnings from self-employment were $400 or more. Irs form 990 ez 2010 You had church employee income of $108. Irs form 990 ez 2010 28 or more. Irs form 990 ez 2010 Use Schedule SE (Form 1040) to figure your SE tax. Irs form 990 ez 2010 For more information, see Publication 334, Tax Guide for Small Business. Irs form 990 ez 2010 You can deduct a portion of your SE tax as an adjustment to income on your Form 1040. Irs form 990 ez 2010 The Social Security Administration (SSA) time limit for posting self-employment income. Irs form 990 ez 2010   Generally, the SSA will give you credit only for self-employment income reported on a tax return filed within 3 years, 3 months, and 15 days after the tax year you earned the income. Irs form 990 ez 2010 If you file your tax return or report a change in your self-employment income after this time limit, the SSA may change its records, but only to remove or reduce the amount. Irs form 990 ez 2010 The SSA will not change its records to increase your self-employment income. Irs form 990 ez 2010 Employment Taxes This section briefly discusses the employment taxes you must pay, the forms you must file to report them, and other forms that must be filed when you have employees. Irs form 990 ez 2010 Employment taxes include the following. Irs form 990 ez 2010 Social security and Medicare taxes. Irs form 990 ez 2010 Federal income tax withholding. Irs form 990 ez 2010 Federal unemployment (FUTA) tax. Irs form 990 ez 2010 If you have employees, you will need to get Publication 15, Circular E, Employer's Tax Guide. Irs form 990 ez 2010 If you have agricultural employees, get Publication 51, Circular A, Agricultural Employer's Tax Guide. Irs form 990 ez 2010 These publications explain your tax responsibilities as an employer. Irs form 990 ez 2010 If you are not sure whether the people working for you are your employees, see Publication 15-A, Employer's Supplemental Tax Guide. Irs form 990 ez 2010 That publication has information to help you determine whether an individual is an employee or an independent contractor. Irs form 990 ez 2010 If you classify an employee as an independent contractor, you can be held liable for employment taxes for that worker plus a penalty. Irs form 990 ez 2010 An independent contractor is someone who is self-employed. Irs form 990 ez 2010 Generally, you do not have to withhold or pay any taxes on payments to an independent contractor. Irs form 990 ez 2010 Federal Income, Social Security, and Medicare Taxes You generally must withhold federal income tax from your employee's wages. Irs form 990 ez 2010 To figure how much federal income tax to withhold from each wage payment, use the employee's Form W-4 (discussed later under Hiring Employees) and the methods described in Publication 15. Irs form 990 ez 2010 Social security and Medicare taxes pay for benefits that workers and their families receive under the Federal Insurance Contributions Act (FICA). Irs form 990 ez 2010 Social security tax pays for benefits under the old-age, survivors, and disability insurance part of FICA. Irs form 990 ez 2010 Medicare tax pays for benefits under the hospital insurance part of FICA. Irs form 990 ez 2010 You withhold part of these taxes from your employee's wages and you pay a part yourself. Irs form 990 ez 2010 To find out how much social security and Medicare tax to withhold and to pay, see Publication 15. Irs form 990 ez 2010 Which form do I file?   Report these taxes on Form 941, Employer's QUARTERLY Federal Tax Return, or Form 944, Employer's ANNUAL Federal Tax Return. Irs form 990 ez 2010 (Farm employers use Form 943, Employer's Annual Federal Tax Return for Agricultural Employees. Irs form 990 ez 2010 ) Federal Unemployment (FUTA) Tax The federal unemployment tax is part of the federal and state program under the Federal Unemployment Tax Act (FUTA) that pays unemployment compensation to workers who lose their jobs. Irs form 990 ez 2010 You report and pay FUTA tax separately from social security and Medicare taxes and withheld income tax. Irs form 990 ez 2010 You pay FUTA tax only from your own funds. Irs form 990 ez 2010 Employees do not pay this tax or have it withheld from their pay. Irs form 990 ez 2010 Which form do I file?   Report federal unemployment tax on Form 940, Employer's Annual Federal Unemployment (FUTA) Tax Return. Irs form 990 ez 2010 See Publication 15 to find out if you can use this form. Irs form 990 ez 2010 Hiring Employees Have the employees you hire fill out Form I-9 and Form W-4. Irs form 990 ez 2010 Form I-9. Irs form 990 ez 2010   You must verify that each new employee is legally eligible to work in the United States. Irs form 990 ez 2010 Both you and the employee must complete the U. Irs form 990 ez 2010 S. Irs form 990 ez 2010 Citizenship and Immigration Services (USCIS) Form I-9, Employment Eligibility Verification. Irs form 990 ez 2010 You can get the form from USCIS offices or from the USCIS website at www. Irs form 990 ez 2010 uscis. Irs form 990 ez 2010 gov. Irs form 990 ez 2010 Call the USCIS at 1-800-375-5283 for more information about your responsibilities. Irs form 990 ez 2010 Form W-4. Irs form 990 ez 2010   Each employee must fill out Form W-4, Employee's Withholding Allowance Certificate. Irs form 990 ez 2010 You will use the filing status and withholding allowances shown on this form to figure the amount of income tax to withhold from your employee's wages. Irs form 990 ez 2010 For more information, see Publication 15. Irs form 990 ez 2010 Employees claiming more than 10 withholding allowances. Irs form 990 ez 2010   An employer of an employee who claims more than 10 withholding allowances for wages paid can use several methods of withholding. Irs form 990 ez 2010 See section 16 of Publication 15. Irs form 990 ez 2010 Form W-2 Wage Reporting After the calendar year is over, you must furnish copies of Form W-2, Wage and Tax Statement, to each employee to whom you paid wages during the year. Irs form 990 ez 2010 You must also send copies to the Social Security Administration. Irs form 990 ez 2010 See Information Returns, later, for more information on Form W-2. Irs form 990 ez 2010 Excise Taxes This section describes the excise taxes you may have to pay and the forms you have to file if you do any of the following. Irs form 990 ez 2010 Manufacture or sell certain products. Irs form 990 ez 2010 Operate certain kinds of businesses. Irs form 990 ez 2010 Use various kinds of equipment, facilities, or products. Irs form 990 ez 2010 Receive payment for certain services. Irs form 990 ez 2010 For more information on excise taxes, see Publication 510, Excise Taxes. Irs form 990 ez 2010 Form 720. Irs form 990 ez 2010   The federal excise taxes reported on Form 720, Quarterly Federal Excise Tax Return, consist of several broad categories of taxes, including the following. Irs form 990 ez 2010 Environmental taxes. Irs form 990 ez 2010 Communications and air transportation taxes. Irs form 990 ez 2010 Fuel taxes. Irs form 990 ez 2010 Tax on the first retail sale of heavy trucks, trailers, and tractors. Irs form 990 ez 2010 Manufacturers taxes on the sale or use of a variety of different articles. Irs form 990 ez 2010 Form 2290. Irs form 990 ez 2010   There is a federal excise tax on certain trucks, truck tractors, and buses used on public highways. Irs form 990 ez 2010 The tax applies to vehicles having a taxable gross weight of 55,000 pounds or more. Irs form 990 ez 2010 Report the tax on Form 2290, Heavy Highway Vehicle Use Tax Return. Irs form 990 ez 2010 For more information, see the instructions for Form 2290. Irs form 990 ez 2010 Form 730. Irs form 990 ez 2010   If you are in the business of accepting wagers or conducting a wagering pool or lottery, you may be liable for the federal excise tax on wagering. Irs form 990 ez 2010 Use Form 730, Monthly Tax Return for Wagers, to figure the tax on the wagers you receive. Irs form 990 ez 2010 Form 11-C. Irs form 990 ez 2010   Use Form 11-C, Occupational Tax and Registration Return for Wagering, to register for any wagering activity and to pay the federal occupational tax on wagering. Irs form 990 ez 2010 Depositing Taxes You generally have to deposit employment taxes, certain excise taxes, corporate income tax, and S corporation taxes before you file your return. Irs form 990 ez 2010 Generally, taxpayers are required to deposit taxes through the Electronic Federal Tax Payment System (EFTPS). Irs form 990 ez 2010 Any business that has a federal tax obligation and requests a new EIN will automatically be enrolled in EFTPS. Irs form 990 ez 2010 Through the mail, the business will receive an EFTPS PIN package that contains instructions for activating its EFTPS enrollment. Irs form 990 ez 2010 Information Returns If you make or receive payments in your business, you may have to report them to the IRS on information returns. Irs form 990 ez 2010 The IRS compares the payments shown on the information returns with each person's income tax return to see if the payments were included in income. Irs form 990 ez 2010 You must give a copy of each information return you are required to file to the recipient or payer. Irs form 990 ez 2010 In addition to the forms described below, you may have to use other returns to report certain kinds of payments or transactions. Irs form 990 ez 2010 For more details on information returns and when you have to file them, see the General Instructions for Certain Information Returns. Irs form 990 ez 2010 Form 1099-MISC. Irs form 990 ez 2010   Use Form 1099-MISC, Miscellaneous Income, to report certain payments you make in your trade or business. Irs form 990 ez 2010 These payments include the following items. Irs form 990 ez 2010 Payments of $600 or more for services performed for your business by people not treated as your employees, such as subcontractors, attorneys, accountants, or directors. Irs form 990 ez 2010 Rent payments of $600 or more, other than rents paid to real estate agents. Irs form 990 ez 2010 Prizes and awards of $600 or more that are not for services, such as winnings on TV or radio shows. Irs form 990 ez 2010 Royalty payments of $10 or more. Irs form 990 ez 2010 Payments to certain crew members by operators of fishing boats. Irs form 990 ez 2010 You also use Form 1099-MISC to report your sales of $5,000 or more of consumer goods to a person for resale anywhere other than in a permanent retail establishment. Irs form 990 ez 2010 Form W-2. Irs form 990 ez 2010   You must file Form W-2, Wage and Tax Statement, to report payments to your employees, such as wages, tips, and other compensation, withheld income, social security, and Medicare taxes. Irs form 990 ez 2010 For more information on what to report on Form W-2, see the Instructions for Forms W-2 and W-3. Irs form 990 ez 2010 Form 8300. Irs form 990 ez 2010   You must file Form 8300, Report of Cash Payments Over $10,000 Received in a Trade or Business, if you receive more than $10,000 in cash in one transaction or two or more related business transactions. Irs form 990 ez 2010 Cash includes U. Irs form 990 ez 2010 S. Irs form 990 ez 2010 and foreign coin and currency. Irs form 990 ez 2010 It also includes certain monetary instruments such as cashier's and traveler's checks and money orders. Irs form 990 ez 2010 For more information, see Publication 1544, Reporting Cash Payments of Over $10,000 (Received in a Trade or Business). Irs form 990 ez 2010 Penalties The law provides penalties for not filing returns or paying taxes as required. Irs form 990 ez 2010 Criminal penalties may be imposed for willful failure to file, tax evasion, or making a false statement. Irs form 990 ez 2010 Failure to file tax returns. Irs form 990 ez 2010   If you do not file your tax return by the due date, you may have to pay a penalty. Irs form 990 ez 2010 The penalty is based on the tax not paid by the due date. Irs form 990 ez 2010 See your tax return instructions for more information about this penalty. Irs form 990 ez 2010 Failure to pay tax. Irs form 990 ez 2010   If you do not pay your taxes by the due date, you will have to pay a penalty for each month, or part of a month, that your taxes are not paid. Irs form 990 ez 2010 For more information, see your tax return instructions. Irs form 990 ez 2010 Failure to withhold, deposit, or pay taxes. Irs form 990 ez 2010   If you do not withhold income, social security, or Medicare taxes from employees, or if you withhold taxes but do not deposit them or pay them to the IRS, you may be subject to a penalty of the unpaid tax, plus interest. Irs form 990 ez 2010 You may also be subject to penalties if you deposit the taxes late. Irs form 990 ez 2010 For more information, see Publication 15. Irs form 990 ez 2010 Failure to follow information reporting requirements. Irs form 990 ez 2010   The following penalties apply if you are required to file information returns. Irs form 990 ez 2010 For more information, see the General Instructions for Certain Information Returns. Irs form 990 ez 2010 Failure to file information returns. Irs form 990 ez 2010 A penalty applies if you do not file information returns by the due date, if you do not include all required information, or if you report incorrect information. Irs form 990 ez 2010 Failure to furnish correct payee statements. Irs form 990 ez 2010 A penalty applies if you do not furnish a required statement to a payee by the due date, if you do not include all required information, or if you report incorrect information. Irs form 990 ez 2010 Waiver of penalty. Irs form 990 ez 2010   These penalties will not apply if you can show that the failures were due to reasonable cause and not willful neglect. Irs form 990 ez 2010   In addition, there is no penalty for failure to include all the required information, or for including incorrect information, on a de minimis number of information returns if you correct the errors by August 1 of the year the returns are due. Irs form 990 ez 2010 (To be considered de minimis, the number of returns cannot exceed the greater of 10 or ½ of 1% of the total number of returns you are required to file for the year. Irs form 990 ez 2010 ) Failure to supply taxpayer identification number. Irs form 990 ez 2010   If you do not include your taxpayer identification number (SSN or EIN) or the taxpayer identification number of another person where required on a return, statement, or other document, you may be subject to a penalty of $50 for each failure. Irs form 990 ez 2010 You may also be subject to the $50 penalty if you do not give your taxpayer identification number to another person when it is required on a return, statement, or other document. Irs form 990 ez 2010 Business Expenses You can deduct business expenses on your income tax return. Irs form 990 ez 2010 These are the current operating costs of running your business. Irs form 990 ez 2010 To be deductible, a business expense must be both ordinary and necessary. Irs form 990 ez 2010 An ordinary expense is one that is common and accepted in your field of business, trade, or profession. Irs form 990 ez 2010 A necessary expense is one that is helpful and appropriate for your business, trade, or profession. Irs form 990 ez 2010 An expense does not have to be indispensable to be considered necessary. Irs form 990 ez 2010 The following are brief explanations of some expenses that are of interest to people starting a business. Irs form 990 ez 2010 There are many other expenses that you may be able to deduct. Irs form 990 ez 2010 See your form instructions and Publication 535, Business Expenses. Irs form 990 ez 2010 Business Start-Up Costs Business start-up costs are the expenses you incur before you actually begin business operations. Irs form 990 ez 2010 Your business start-up costs will depend on the type of business you are starting. Irs form 990 ez 2010 They may include costs for advertising, travel, surveys, and training. Irs form 990 ez 2010 These costs are generally capital expenses. Irs form 990 ez 2010 You usually recover costs for a particular asset (such as machinery or office equipment) through depreciation (discussed next). Irs form 990 ez 2010 You can elect to deduct up to $5,000 of business start-up costs and $5,000 of organizational costs paid or incurred after October 22, 2004. Irs form 990 ez 2010 The $5,000 deduction is reduced by the amount your total start-up or organizational costs exceed $50,000. Irs form 990 ez 2010 Any remaining cost must be amortized. Irs form 990 ez 2010 For more information about amortizing start-up and organizational costs, see chapter 7 in Publication 535. Irs form 990 ez 2010 Depreciation If property you acquire to use in your business has a useful life that extends substantially beyond the year it is placed in service, you generally cannot deduct the entire cost as a business expense in the year you acquire it. Irs form 990 ez 2010 You must spread the cost over more than one tax year and deduct part of it each year. Irs form 990 ez 2010 This method of deducting the cost of business property is called depreciation. Irs form 990 ez 2010 Business property you must depreciate includes the following items. Irs form 990 ez 2010 Office furniture. Irs form 990 ez 2010 Buildings. Irs form 990 ez 2010 Machinery and equipment. Irs form 990 ez 2010 You can choose to deduct a limited amount of the cost of certain depreciable property in the year you place the property in service. Irs form 990 ez 2010 This deduction is known as the “section 179 deduction. Irs form 990 ez 2010 ” For more information about depreciation and the section 179 deduction, see Publication 946, How To Depreciate Property. Irs form 990 ez 2010 Depreciation must be taken in the year it is allowable. Irs form 990 ez 2010 Allowable depreciation not taken in a prior year cannot be taken in the current year. Irs form 990 ez 2010 If you do not deduct the correct depreciation, you may be able to make a correction by filing Form 1040X, Amended U. Irs form 990 ez 2010 S. Irs form 990 ez 2010 Individual Income Tax Return, or by changing your accounting method. Irs form 990 ez 2010 For more information on how to correct depreciation deductions, see chapter 1 in Publication 946. Irs form 990 ez 2010 Business Use of Your Home To deduct expenses related to the business use of part of your home, you must meet specific requirements. Irs form 990 ez 2010 Even then, your deduction may be limited. Irs form 990 ez 2010 To qualify to claim expenses for business use of your home, you must meet both the following tests. Irs form 990 ez 2010 Your use of the business part of your home must be: Exclusive (however, see Exceptions to exclusive use, later), Regular, For your trade or business, AND The business part of your home must be one of the following: Your principal place of business (defined later), A place where you meet or deal with patients, clients, or customers in the normal course of your trade or business, or A separate structure (not attached to your home) you use in connection with your trade or business. Irs form 990 ez 2010 Exclusive use. Irs form 990 ez 2010   To qualify under the exclusive use test, you must use a specific area of your home only for your trade or business. Irs form 990 ez 2010 The area used for business can be a room or other separately identifiable space. Irs form 990 ez 2010 The space does not need to be marked off by a permanent partition. Irs form 990 ez 2010   You do not meet the requirements of the exclusive use test if you use the area in question both for business and for personal purposes. Irs form 990 ez 2010 Exceptions to exclusive use. Irs form 990 ez 2010   You do not have to meet the exclusive use test if either of the following applies. Irs form 990 ez 2010 You use part of your home for the storage of inventory or product samples. Irs form 990 ez 2010 You use part of your home as a daycare facility. Irs form 990 ez 2010 For an explanation of these exceptions, see Publication 587, Business Use of Your Home (Including Use by Daycare Providers). Irs form 990 ez 2010 Principal place of business. Irs form 990 ez 2010   Your home office will qualify as your principal place of business for deducting expenses for its use if you meet the following requirements. Irs form 990 ez 2010 You use it exclusively and regularly for administrative or management activities of your trade or business. Irs form 990 ez 2010 You have no other fixed location where you conduct substantial administrative or management activities of your trade or business. Irs form 990 ez 2010   Alternatively, if you use your home exclusively and regularly for your business, but your home office does not qualify as your principal place of business based on the previous rules, you determine your principal place of business based on the following factors. Irs form 990 ez 2010 The relative importance of the activities performed at each location. Irs form 990 ez 2010 If the relative importance factor does not determine your principal place of business, the time spent at each location. Irs form 990 ez 2010    If, after considering your business locations, your home cannot be identified as your principal place of business, you cannot deduct home office expenses. Irs form 990 ez 2010 However, for other ways to qualify to deduct home office expenses, see Publication 587. Irs form 990 ez 2010 Which form do I file?   If you file Schedule C (Form 1040), use Form 8829, Expenses for Business Use of Your Home, to figure your deduction. Irs form 990 ez 2010 If you file Schedule F (Form 1040) or you are a partner, you can use the worksheet in Publication 587. Irs form 990 ez 2010 More information. Irs form 990 ez 2010   For more information about business use of your home, see Publication 587. Irs form 990 ez 2010 Car and Truck Expenses If you use your car or truck in your business, you can deduct the costs of operating and maintaining it. Irs form 990 ez 2010 You generally can deduct either your actual expenses or the standard mileage rate. Irs form 990 ez 2010 Actual expenses. Irs form 990 ez 2010   If you deduct actual expenses, you can deduct the cost of the following items: Depreciation Lease payments Registration Garage rent Licenses Repairs Gas Oil Tires Insurance Parking fees Tolls   If you use your vehicle for both business and personal purposes, you must divide your expenses between business and personal use. Irs form 990 ez 2010 You can divide your expenses based on the miles driven for each purpose. Irs form 990 ez 2010 Example. Irs form 990 ez 2010 You are the sole proprietor of a flower shop. Irs form 990 ez 2010 You drove your van 20,000 miles during the year. Irs form 990 ez 2010 16,000 miles were for delivering flowers to customers and 4,000 miles were for personal use. Irs form 990 ez 2010 You can claim only 80% (16,000 ÷ 20,000) of the cost of operating your van as a business expense. Irs form 990 ez 2010 Standard mileage rate. Irs form 990 ez 2010   Instead of figuring actual expenses, you may be able to use the standard mileage rate to figure the deductible costs of operating your car, van, pickup, or panel truck for business purposes. Irs form 990 ez 2010 You can use the standard mileage rate for a vehicle you own or lease. Irs form 990 ez 2010 The standard mileage rate is a specified amount of money you can deduct for each business mile you drive. Irs form 990 ez 2010 It is announced annually by the IRS. Irs form 990 ez 2010 To figure your deduction, multiply your business miles by the standard mileage rate for the year. Irs form 990 ez 2010    Generally, if you use the standard mileage rate, you cannot deduct your actual expenses. Irs form 990 ez 2010 However, you may be able to deduct business-related parking fees, tolls, interest on your car loan, and certain state and local taxes. Irs form 990 ez 2010 Choosing the standard mileage rate. Irs form 990 ez 2010   If you want to use the standard mileage rate for a car you own, you must choose to use it in the first year the car is available for use in your business. Irs form 990 ez 2010 In later years, you can choose to use either the standard mileage rate or actual expenses. Irs form 990 ez 2010   If you use the standard mileage rate for a car you lease, you must choose to use it for the entire lease period (including renewals). Irs form 990 ez 2010 Additional information. Irs form 990 ez 2010   For more information about the rules for claiming car and truck expenses, see Publication 463, Travel, Entertainment, Gift, and Car Expenses. Irs form 990 ez 2010 Recordkeeping This part explains why you must keep records, what kinds of records you must keep, and how to keep them. Irs form 990 ez 2010 It also explains how long you must keep your records for federal tax purposes. Irs form 990 ez 2010 A sample recordkeeping system is illustrated at the end of this part. Irs form 990 ez 2010 Why Keep Records? Everyone in business must keep records. Irs form 990 ez 2010 Good records will help you do the following. Irs form 990 ez 2010 Monitor the progress of your business. Irs form 990 ez 2010   You need good records to monitor the progress of your business. Irs form 990 ez 2010 Records can show whether your business is improving, which items are selling, or what changes you need to make. Irs form 990 ez 2010 Good records can increase the likelihood of business success. Irs form 990 ez 2010 Prepare your financial statements. Irs form 990 ez 2010   You need good records to prepare accurate financial statements. Irs form 990 ez 2010 These include income (profit and loss) statements and balance sheets. Irs form 990 ez 2010 These statements can help you in dealing with your bank or creditors and help you manage your business. Irs form 990 ez 2010 An income statement shows the income and expenses of the business for a given period of time. Irs form 990 ez 2010 A balance sheet shows the assets, liabilities, and your equity in the business on a given date. Irs form 990 ez 2010 Identify source of receipts. Irs form 990 ez 2010   You will receive money or property from many sources. Irs form 990 ez 2010 Your records can identify the source of your receipts. Irs form 990 ez 2010 You need this information to separate business from nonbusiness receipts and taxable from nontaxable income. Irs form 990 ez 2010 Keep track of deductible expenses. Irs form 990 ez 2010   You may forget expenses when you prepare your tax return unless you record them when they occur. Irs form 990 ez 2010 Prepare your tax returns. Irs form 990 ez 2010   You need good records to prepare your tax returns. Irs form 990 ez 2010 These records must support the income, expenses, and credits you report. Irs form 990 ez 2010 Generally, these are the same records you use to monitor your business and prepare your financial statements. Irs form 990 ez 2010 Support items reported on tax returns. Irs form 990 ez 2010   You must keep your business records available at all times for inspection by the IRS. Irs form 990 ez 2010 If the IRS examines any of your tax returns, you may be asked to explain the items reported. Irs form 990 ez 2010 A complete set of records will speed up the examination. Irs form 990 ez 2010 Kinds of Records To Keep Except in a few cases, the law does not require any specific kind of records. Irs form 990 ez 2010 You can choose any recordkeeping system suited to your business that clearly shows your income and expenses. Irs form 990 ez 2010 The business you are in affects the type of records you need to keep for federal tax purposes. Irs form 990 ez 2010 You should set up your recordkeeping system using an accounting method that clearly shows your income for your tax year. Irs form 990 ez 2010 See Accounting Method, earlier. Irs form 990 ez 2010 If you are in more than one business, you should keep a complete and separate set of records for each business. Irs form 990 ez 2010 A corporation should keep minutes of board of directors' meetings. Irs form 990 ez 2010 Your recordkeeping system should include a summary of your business transactions. Irs form 990 ez 2010 This summary is ordinarily made in your books (for example, accounting journals and ledgers). Irs form 990 ez 2010 Your books must show your gross income, as well as your deductions and credits. Irs form 990 ez 2010 For most small businesses, the business checkbook (discussed later) is the main source for entries in the business books. Irs form 990 ez 2010 In addition, you must keep supporting documents, explained later. Irs form 990 ez 2010 Electronic records. Irs form 990 ez 2010   All requirements that apply to hard copy books and records also apply to electronic storage systems that maintain tax books and records. Irs form 990 ez 2010 When you replace hard copy books and records, you must maintain the electronic storage systems for as long as they are material to the administration of tax law. Irs form 990 ez 2010 An electronic storage system is any system for preparing or keeping your records either by electronic imaging or by transfer to an electronic storage media. Irs form 990 ez 2010 The electronic storage system must index, store, preserve, retrieve and reproduce the electronically stored books and records in legible format. Irs form 990 ez 2010 All electronic storage systems must provide a complete and accurate record of your data that is accessible to the IRS. Irs form 990 ez 2010 Electronic storage systems are also subject to the same controls and retention guidelines as those imposed on your original hard copy books and records. Irs form 990 ez 2010   The original hard copy books and records may be destroyed provided that the electronic storage system has been tested to establish that the hard copy books and records are being reproduced in compliance with IRS requirements for an electronic storage system and procedures are established to ensure continued compliance with all applicable rules and regulations. Irs form 990 ez 2010 You still have the responsibility of retaining any other books and records that are required to be retained. Irs form 990 ez 2010   The IRS may test your electronic storage system, including the equipment used, indexing methodology, software and retrieval capabilities. Irs form 990 ez 2010 This test is not considered an examination and the results must be shared with you. Irs form 990 ez 2010 If your electronic storage system meets the requirements mentioned earlier, you will be in compliance. Irs form 990 ez 2010 If not, you may be subject to penalties for non-compliance, unless you continue to maintain your original hard copy books and records in a manner that allows you and the IRS to determine your correct tax. Irs form 990 ez 2010 For details on electronic storage system requirements, see Revenue Procedure 97-22, available in Internal Revenue Bulletin 1997-13. Irs form 990 ez 2010 Supporting Documents Purchases, sales, payroll, and other transactions you have in your business generate supporting documents. Irs form 990 ez 2010 Supporting documents include sales slips, paid bills, invoices, receipts, deposit slips, and canceled checks. Irs form 990 ez 2010 These documents contain information you need to record in your books. Irs form 990 ez 2010 It is important to keep these documents because they support the entries in your books and on your tax return. Irs form 990 ez 2010 Keep them in an orderly fashion and in a safe place. Irs form 990 ez 2010 For instance, organize them by year and type of income or expense. Irs form 990 ez 2010 Gross receipts. Irs form 990 ez 2010   Gross receipts are the income you receive from your business. Irs form 990 ez 2010 You should keep supporting documents that show the amounts and sources of your gross receipts. Irs form 990 ez 2010 Documents that show gross receipts include the following. Irs form 990 ez 2010 Cash register tapes. Irs form 990 ez 2010 Bank deposit slips. Irs form 990 ez 2010 Receipt books. Irs form 990 ez 2010 Invoices. Irs form 990 ez 2010 Credit card charge slips. Irs form 990 ez 2010 Forms 1099-MISC. Irs form 990 ez 2010 Purchases. Irs form 990 ez 2010   Purchases are the items you buy and resell to customers. Irs form 990 ez 2010 If you are a manufacturer or producer, this includes the cost of all raw materials or parts purchased for manufacture into finished products. Irs form 990 ez 2010 Your supporting documents should show the amount paid and that the amount was for purchases. Irs form 990 ez 2010 Documents for purchases include the following. Irs form 990 ez 2010 Canceled checks. Irs form 990 ez 2010 Cash register tape receipts. Irs form 990 ez 2010 Credit card sales slips. Irs form 990 ez 2010 Invoices. Irs form 990 ez 2010 These records will help you determine the value of your inventory at the end of the year. Irs form 990 ez 2010 See Publication 538 for information on methods for valuing inventory. Irs form 990 ez 2010 Expenses. Irs form 990 ez 2010   Expenses are the costs you incur (other than purchases) to carry on your business. Irs form 990 ez 2010 Your supporting documents should show the amount paid and that the amount was for a business expense. Irs form 990 ez 2010 Documents for expenses include the following. Irs form 990 ez 2010 Canceled checks. Irs form 990 ez 2010 Cash register tapes. Irs form 990 ez 2010 Account statements. Irs form 990 ez 2010 Credit card sales slips. Irs form 990 ez 2010 Invoices. Irs form 990 ez 2010 Petty cash slips for small cash payments. Irs form 990 ez 2010    A petty cash fund allows you to make small payments without having to write checks for small amounts. Irs form 990 ez 2010 Each time you make a payment from this fund, you should make out a petty cash slip and attach it to your receipt as proof of payment. Irs form 990 ez 2010 Travel, transportation, entertainment, and gift expenses. Irs form 990 ez 2010   Specific recordkeeping rules apply to these expenses. Irs form 990 ez 2010 For more information, see Publication 463. Irs form 990 ez 2010 Employment taxes. Irs form 990 ez 2010   There are specific employment tax records you must keep. Irs form 990 ez 2010 For a list, see Publication 15. Irs form 990 ez 2010 Assets. Irs form 990 ez 2010   Assets are the property, such as machinery and furniture you own and use in your business. Irs form 990 ez 2010 You must keep records to verify certain information about your business assets. Irs form 990 ez 2010 You need records to figure the annual depreciation and the gain or loss when you sell the assets. Irs form 990 ez 2010 Your records should show the following information. Irs form 990 ez 2010 When and how you acquired the asset. Irs form 990 ez 2010 Purchase price. Irs form 990 ez 2010 Cost of any improvements. Irs form 990 ez 2010 Section 179 deduction taken. Irs form 990 ez 2010 Deductions taken for depreciation. Irs form 990 ez 2010 Deductions taken for casualty losses, such as losses resulting from fires or storms. Irs form 990 ez 2010 How you used the asset. Irs form 990 ez 2010 When and how you disposed of the asset. Irs form 990 ez 2010 Selling price. Irs form 990 ez 2010 Expenses of sale. Irs form 990 ez 2010   The following documents may show this information. Irs form 990 ez 2010 Purchase and sales invoices. Irs form 990 ez 2010 Real estate closing statements. Irs form 990 ez 2010 Canceled checks. Irs form 990 ez 2010 What if I don't have a canceled check?   If you do not have a canceled check, you may be able to prove payment with certain financial account statements prepared by financial institutions. Irs form 990 ez 2010 These include account statements prepared for the financial institution by a third party. Irs form 990 ez 2010 These account statements must be highly legible. Irs form 990 ez 2010 The following table lists acceptable account statements. Irs form 990 ez 2010  IF payment is by. Irs form 990 ez 2010 . Irs form 990 ez 2010 . Irs form 990 ez 2010 THEN the statement must show the. Irs form 990 ez 2010 . Irs form 990 ez 2010 . Irs form 990 ez 2010 Check Check number. Irs form 990 ez 2010 Amount. Irs form 990 ez 2010 Payee's name. Irs form 990 ez 2010 Date the check amount was posted to the account by the financial institution. Irs form 990 ez 2010 Electronic funds transfer Amount transferred. Irs form 990 ez 2010 Payee's name. Irs form 990 ez 2010 Date the transfer was posted to the account by the financial institution. Irs form 990 ez 2010 Credit card Amount charged. Irs form 990 ez 2010 Payee's name. Irs form 990 ez 2010 Transaction date. Irs form 990 ez 2010    Proof of payment of an amount, by itself, does not establish you are entitled to a tax deduction. Irs form 990 ez 2010 You should also keep other documents, such as credit card sales slips and invoices, to show that you also incurred the cost. Irs form 990 ez 2010 Recording Business Transactions A good recordkeeping system includes a summary of your business transactions. Irs form 990 ez 2010 (Your business transactions are shown on the supporting documents just discussed. Irs form 990 ez 2010 ) Business transactions are ordinarily summarized in books called journals and ledgers. Irs form 990 ez 2010 You can buy them at your local stationery or office supply store. Irs form 990 ez 2010 A journal is a book where you record each business transaction shown on your supporting documents. Irs form 990 ez 2010 You may have to keep separate journals for transactions that occur frequently. Irs form 990 ez 2010 A ledger is a book that contains the totals from all of your journals. Irs form 990 ez 2010 It is organized into different accounts. Irs form 990 ez 2010 Whether you keep journals and ledgers and how you keep them depends on the type of business you are in. Irs form 990 ez 2010 For example, a recordkeeping system for a small business might include the following items. Irs form 990 ez 2010 Business checkbook. Irs form 990 ez 2010 Daily summary of cash receipts. Irs form 990 ez 2010 Monthly summary of cash receipts. Irs form 990 ez 2010 Check disbursements journal. Irs form 990 ez 2010 Depreciation worksheet. Irs form 990 ez 2010 Employee compensation record. Irs form 990 ez 2010 The business checkbook is explained next. Irs form 990 ez 2010 The other items are illustrated later under Sample Record System. Irs form 990 ez 2010 The system you use to record business transactions will be more effective if you follow good recordkeeping practices. Irs form 990 ez 2010 For example, record expenses when they occur, and identify the source of recorded receipts. Irs form 990 ez 2010 Generally, it is best to record transactions on a daily basis. Irs form 990 ez 2010 Business checkbook. Irs form 990 ez 2010   One of the first things you should do when you start a business is open a business checking account. Irs form 990 ez 2010 You should keep your business account separate from your personal checking account. Irs form 990 ez 2010   The business checkbook is your basic source of information for recording your business expenses. Irs form 990 ez 2010 You should deposit all daily receipts in your business checking account. Irs form 990 ez 2010 You should check your account for errors by reconciling it. Irs form 990 ez 2010 See Reconciling the checking account, later. Irs form 990 ez 2010   Consider using a checkbook that allows enough space to identify the source of deposits as business income, personal funds, or loans. Irs form 990 ez 2010 You should also note on the deposit slip the source of the deposit and keep copies of all slips. Irs form 990 ez 2010   You should make all payments by check to document business expenses. Irs form 990 ez 2010 Write checks payable to yourself only when making withdrawals from your business for personal use. Irs form 990 ez 2010 Avoid writing checks payable to cash. Irs form 990 ez 2010 If you must write a check for cash to pay a business expense, include the receipt for the cash payment in your records. Irs form 990 ez 2010 If you cannot get a receipt for a cash payment, you should make an adequate explanation in your records at the time of payment. Irs form 990 ez 2010    Use the business account for business purposes only. Irs form 990 ez 2010 Indicate the source of deposits and the type of expense in the checkbook. Irs form 990 ez 2010 Reconciling the checking account. Irs form 990 ez 2010   When you receive your bank statement, make sure the statement, your checkbook, and your books agree. Irs form 990 ez 2010 The statement balance may not agree with the balance in your checkbook and books if the statement: Includes bank charges you did not enter in your books and subtract from your checkbook balance, or Does not include deposits made after the statement date or checks that did not clear your account before the statement date. Irs form 990 ez 2010   By reconciling your checking account, you will: Verify how much money you have in the account, Make sure that your checkbook and books reflect all bank charges and the correct balance in the checking account, and Correct any errors in your bank statement, checkbook, and books. Irs form 990 ez 2010    You should reconcile your checking account each month. Irs form 990 ez 2010     Before you reconcile your monthly bank statement, check your own figures. Irs form 990 ez 2010 Begin with the balance shown in your checkbook at the end of the previous month. Irs form 990 ez 2010 To this balance, add the total cash deposited during the month and subtract the total cash disbursements. Irs form 990 ez 2010   After checking your figures, the result should agree with your checkbook balance at the end of the month. Irs form 990 ez 2010 If the result does not agree, you may have made an error in recording a check or deposit. Irs form 990 ez 2010 You can find the error by doing the following. Irs form 990 ez 2010 Adding the amounts on your check stubs and comparing that total with the total in the “amount of check” column in your check disbursements journal. Irs form 990 ez 2010 If the totals do not agree, check the individual amounts to see if an error was made in your check stub record or in the related entry in your check disbursements journal. Irs form 990 ez 2010 Adding the deposit amounts in your checkbook. Irs form 990 ez 2010 Compare that total with the monthly total in your cash receipt book, if you have one. Irs form 990 ez 2010 If the totals do not agree, check the individual amounts to find any errors. Irs form 990 ez 2010   If your checkbook and journal entries still disagree, then refigure the running balance in your checkbook to make sure additions and subtractions are correct. Irs form 990 ez 2010   When your checkbook balance agrees with the balance figured from the journal entries, you may begin reconciling your checkbook with the bank statement. Irs form 990 ez 2010 Many banks print a reconciliation worksheet on the back of the statement. Irs form 990 ez 2010   To reconcile your account, follow these steps. Irs form 990 ez 2010 Compare the deposits listed on the bank statement with the deposits shown in your checkbook. Irs form 990 ez 2010 Note all differences in the dollar amounts. Irs form 990 ez 2010 Compare each canceled check, including both check number and dollar amount, with the entry in your checkbook. Irs form 990 ez 2010 Note all differences in the dollar amounts. Irs form 990 ez 2010 Mark the check number in the checkbook as having cleared the bank. Irs form 990 ez 2010 After accounting for all checks returned by the bank, those not marked in your checkbook are your outstanding checks. Irs form 990 ez 2010 Prepare a bank reconciliation. Irs form 990 ez 2010 One is illustrated later under Sample Record System. Irs form 990 ez 2010 Update your checkbook and journals for items shown on the reconciliation as not recorded (such as service charges) or recorded incorrectly. Irs form 990 ez 2010 At this point, the adjusted bank statement balance should equal your adjusted checkbook balance. Irs form 990 ez 2010 If you still have differences, check the previous steps to find the errors. Irs form 990 ez 2010   Table 3. Irs form 990 ez 2010 Period of Limitations IF you. Irs form 990 ez 2010 . Irs form 990 ez 2010 . Irs form 990 ez 2010   THEN the period is. Irs form 990 ez 2010 . Irs form 990 ez 2010 . Irs form 990 ez 2010 1. Irs form 990 ez 2010 Owe additional tax and situations (2), (3), and (4), below, do not apply to you   3 years 2. Irs form 990 ez 2010 Do not report income that you should report and it is more than 25% of the gross income shown on the return   6 years 3. Irs form 990 ez 2010 File a fraudulent return   Not limited 4. Irs form 990 ez 2010 Do not file a return   Not limited 5. Irs form 990 ez 2010 File a claim for credit or refund after you filed your return   Later of: 3 years or  2 years after tax   was paid 6. Irs form 990 ez 2010 File a claim for a loss from worthless securities or a bad debt deduction   7 years Bookkeeping System You must decide whether to use a single-entry or a double-entry bookkeeping system. Irs form 990 ez 2010 The single-entry system of bookkeeping is the simplest to maintain, but it may not be suitable for everyone. Irs form 990 ez 2010 You may find the double-entry system better because it has built-in checks and balances to assure accuracy and control. Irs form 990 ez 2010 Single-entry. Irs form 990 ez 2010   A single-entry system is based on the income statement (profit or loss statement). Irs form 990 ez 2010 It can be a simple and practical system if you are starting a small business. Irs form 990 ez 2010 The system records the flow of income and expenses through the use of: A daily summary of cash receipts, and Monthly summaries of cash receipts and disbursements. Irs form 990 ez 2010 Double-entry. Irs form 990 ez 2010   A double-entry bookkeeping system uses journals and ledgers. Irs form 990 ez 2010 Transactions are first entered in a journal and then posted to ledger accounts. Irs form 990 ez 2010 These accounts show income, expenses, assets (property a business owns), liabilities (debts of a business), and net worth (excess of assets over liabilities). Irs form 990 ez 2010 You close income and expense accounts at the end of each tax year. Irs form 990 ez 2010 You keep asset, liability, and net worth accounts open on a permanent basis. Irs form 990 ez 2010   In the double-entry system, each account has a left side for debits and a right side for credits. Irs form 990 ez 2010 It is self-balancing because you record every transaction as a debit entry in one account and as a credit entry in another. Irs form 990 ez 2010   Under this system, the total debits must equal the total credits after you post the journal entries to the ledger accounts. Irs form 990 ez 2010 If the amounts do not balance, you have made an error and you must find and correct it. Irs form 990 ez 2010   An example of a journal entry exhibiting a payment of rent in October is shown next. Irs form 990 ez 2010 General Journal Date Description of Entry Debit  Credit Oct. Irs form 990 ez 2010 5 Rent expense 780. Irs form 990 ez 2010 00     Cash   780. Irs form 990 ez 2010 00                 Computerized System There are computer software packages you can use for recordkeeping. Irs form 990 ez 2010 They can be purchased in many retail stores. Irs form 990 ez 2010 These packages are very helpful and relatively easy to use; they require very little knowledge of bookkeeping and accounting. Irs form 990 ez 2010 If you use a computerized system, you must be able to produce sufficient legible records to support and verify entries made on your return and determine your correct tax liability. Irs form 990 ez 2010 To meet this qualification, the machine-sensible records must reconcile with your books and return. Irs form 990 ez 2010 These records must provide enough detail to identify the underlying source documents. Irs form 990 ez 2010 You must also keep all machine-sensible records and a complete description of the computerized portion of your recordkeeping system. Irs form 990 ez 2010 This documentation must be sufficiently detailed to show all of the following items. Irs form 990 ez 2010 Functions being performed as the data flows through the system. Irs form 990 ez 2010 Controls used to ensure accurate and reliable processing. Irs form 990 ez 2010 Controls used to prevent the unauthorized addition, alteration, or deletion of retained records. Irs form 990 ez 2010 Charts of accounts and detailed account descriptions. Irs form 990 ez 2010 See Revenue Procedure 98-25 in Cumulative Bulletin 1998-1 for more information. Irs form 990 ez 2010 How Long To Keep Records You must keep your records as long as they may be needed for the administration of any provision of the Internal Revenue Code. Irs form 990 ez 2010 Generally, this means you must keep records that support an item of income or deduction on a return until the period of limitations for that return runs out. Irs form 990 ez 2010 The period of limitations is the period of time in which you can amend your return to claim a credit or refund, or the IRS can assess additional tax. Irs form 990 ez 2010 Table 3 contains the periods of limitations that apply to income tax returns. Irs form 990 ez 2010 Unless otherwise stated, the years refer to the period after the return was filed. Irs form 990 ez 2010 Returns filed before the due date are treated as filed on the due date. Irs form 990 ez 2010 Keep copies of your filed tax returns. Irs form 990 ez 2010 They help in preparing future tax returns and making computations if you file an amended return. Irs form 990 ez 2010 Employment taxes. Irs form 990 ez 2010   If you have employees, you must keep all employment tax records for at least 4 years after the date the tax becomes due or is paid, whichever is later. Irs form 990 ez 2010 For more information about recordkeeping for employment taxes, see Publication 15. Irs form 990 ez 2010 Assets. Irs form 990 ez 2010   Keep records relating to property until the period of limitations expires for the year in which you dispose of the property in a taxable disposition. Irs form 990 ez 2010 You must keep these records to figure any depreciation, amortization, or depletion deduction, and to figure your basis for computing gain or loss when you sell or otherwise dispose of the property. Irs form 990 ez 2010   Generally, if you received property in a nontaxable exchange, your basis in that property is the same as the basis of the property you gave up, increased by any money you paid. Irs form 990 ez 2010 You must keep the records on the old property, as well as on the new property, until the period of limitations expires for the year in which you dispose of the new property in a taxable disposition. Irs form 990 ez 2010 Records for nontax purposes. Irs form 990 ez 2010   When your records are no longer needed for tax purposes, do not discard them until you check to see if you have to keep them longer for other purposes. Irs form 990 ez 2010 For example, your insurance company or creditors may require you to keep them longer than the IRS does. Irs form 990 ez 2010 Sample Record System This example illustrates a single-entry system used by Henry Brown, who is the sole proprietor of a small automobile body shop. Irs form 990 ez 2010 Henry uses part-time help, has no inventory of items held for sale, and uses the cash method of accounting. Irs form 990 ez 2010 These sample records should not be viewed as a recommendation of how to keep your records. Irs form 990 ez 2010 They are intended only to show how one business keeps its records. Irs form 990 ez 2010 1. Irs form 990 ez 2010 Daily Summary of Cash Receipts This summary is a record of cash sales for the day. Irs form 990 ez 2010 It accounts for cash at the end of the day over the amount in the Change and Petty Cash Fund at the beginning of the day. Irs form 990 ez 2010 Henry takes the cash sales entry from his cash register tape. Irs form 990 ez 2010 If he had no cash register, he would simply total his cash sale slips and any other cash received that day. Irs form 990 ez 2010 He carries the total receipts shown in this summary for January 3 ($267. Irs form 990 ez 2010 80), including cash sales ($263. Irs form 990 ez 2010 60) and sales tax ($4. Irs form 990 ez 2010 20), to the Monthly Summary of Cash Receipts. Irs form 990 ez 2010 Petty cash fund. Irs form 990 ez 2010   Henry uses a petty cash fund to make small payments without having to write checks for small amounts. Irs form 990 ez 2010 Each time he makes a payment from this fund, he makes out a petty cash slip and attaches it to his receipt as proof of payment. Irs form 990 ez 2010 He sets up a fixed amount ($50) in his petty cash fund. Irs form 990 ez 2010 The total of the unspent petty cash and the amounts on the petty cash slips should equal the fixed amount of the fund. Irs form 990 ez 2010 When the totals on the petty cash slips approach the fixed amount, he brings the cash in the fund back to the fixed amount by writing a check to “Petty Cash” for the total of the outstanding slips. Irs form 990 ez 2010 (See the Check Disbursements Journal entry for check number 92. Irs form 990 ez 2010 ) This restores the fund to its fixed amount of $50. Irs form 990 ez 2010 He then summarizes the slips and enters them in the proper columns in the monthly check disbursements journal. Irs form 990 ez 2010 2. Irs form 990 ez 2010 Monthly Summary of Cash Receipts This shows the income activity for the month. Irs form 990 ez 2010 Henry carries the total monthly net sales shown in this summary for January ($4,865. Irs form 990 ez 2010 05) to his Annual Summary. Irs form 990 ez 2010 To figure total monthly net sales, Henry reduces the total monthly receipts by the sales tax imposed on his customers and turned over to the state. Irs form 990 ez 2010 He cannot take a deduction for sales tax turned over to the state because he only collected the tax. Irs form 990 ez 2010 He does not include the tax in his income. Irs form 990 ez 2010 3. Irs form 990 ez 2010 Check Disbursements Journal Henry enters checks drawn on the business checking account in the Check Disbursements Journal each day. Irs form 990 ez 2010 All checks are prenumbered and each check number is listed and accounted for in the column provided in the journal. Irs form 990 ez 2010 Frequent expenses have their own headings across the sheet. Irs form 990 ez 2010 He enters in a separate column expenses that require comparatively numerous or large payments each month, such as materials, gross payroll, and rent. Irs form 990 ez 2010 Under the General Accounts column, he enters small expenses that normally have only one or two monthly payments, such as licenses and postage. Irs form 990 ez 2010 Henry does not pay personal or nonbusiness expenses by checks drawn on the business account. Irs form 990 ez 2010 If he did, he would record them in the journal, even though he could not deduct them as business expenses. Irs form 990 ez 2010 Henry carries the January total of expenses for materials ($1,083. Irs form 990 ez 2010 50) to the Annual Summary. Irs form 990 ez 2010 Similarly, he enters the monthly total of expenses for telephone, truck/auto, etc. Irs form 990 ez 2010 , in the appropriate columns of that summary. Irs form 990 ez 2010 4. Irs form 990 ez 2010 Employee Compensation Record This record shows the following information. Irs form 990 ez 2010 The number of hours Henry's employee worked in a pay period. Irs form 990 ez 2010 The employee's total pay for the period. Irs form 990 ez 2010 The deductions Henry withheld in figuring the employee's net pay. Irs form 990 ez 2010 The monthly gross payroll. Irs form 990 ez 2010 Henry carries the January gross payroll ($520) to the Annual Summary. Irs form 990 ez 2010 5. Irs form 990 ez 2010 Annual Summary This annual summary of monthly cash receipts and expense totals provides the final amounts to enter on Henry's tax return. Irs form 990 ez 2010 He figures the cash receipts total from the total of monthly cash receipts shown in the Monthly Summary of Cash Receipts. Irs form 990 ez 2010 He figures the expense totals from the totals of monthly expense items shown in the Check Disbursements Journal. Irs form 990 ez 2010 As in the journal, he keeps each major expense in a separate column. Irs form 990 ez 2010 Henry carries the cash receipts total shown in the annual summary ($47,440. Irs form 990 ez 2010 9