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Tax slayer Publication 575 - Introductory Material Table of Contents What's New Reminders IntroductionThe General Rule. Tax slayer Individual retirement arrangements (IRAs). Tax slayer Civil service retirement benefits. Tax slayer Social security and equivalent tier 1 railroad retirement benefits. Tax slayer Tax-sheltered annuity plans (403(b) plans). Tax slayer Ordering forms and publications. Tax slayer Tax questions. Tax slayer Useful Items - You may want to see: What's New For purposes of the net investment income tax (NIIT), net investment income does not include distributions from a qualified retirement plan (for example, 401(a), 403(a), 403(b), 408, 408A, or 457(b) plans). Tax slayer However, these distributions are taken into account when determining the modified adjusted gross income threshold. Tax slayer Distributions from a nonqualified retirement plan are included in net investment income. Tax slayer See Form 8960, Net Investment Income Tax - Individuals, Estates, and Trusts, and its instructions for more information. Tax slayer Reminders Future developments. Tax slayer  For the latest information about developments related to Publication 575, such as legislation enacted after it was published, go to www. Tax slayer irs. Tax slayer gov/pub575. Tax slayer In-plan Roth rollovers. Tax slayer   Starting in 2013, the American Taxpayer Relief Act of 2012 expanded the rules for in-plan Roth rollovers to include more taxpayers. Tax slayer For more information, see In-plan Roth rollovers under Rollovers, discussed later. Tax slayer Photographs of missing children. Tax slayer  The Internal Revenue Service is a proud partner with the National Center for Missing and Exploited Children. Tax slayer Photographs of missing children selected by the Center may appear in this publication on pages that would otherwise be blank. Tax slayer You can help bring these children home by looking at the photographs and calling 1-800-THE-LOST (1-800-843-5678) if you recognize a child. Tax slayer Introduction This publication discusses the tax treatment of distributions you receive from pension and annuity plans and also shows you how to report the income on your federal income tax return. Tax slayer How these distributions are taxed depends on whether they are periodic payments (amounts received as an annuity) that are paid at regular intervals over several years or nonperiodic payments (amounts not received as an annuity). Tax slayer What is covered in this publication?   This publication contains information that you need to understand the following topics. Tax slayer How to figure the tax-free part of periodic payments under a pension or annuity plan, including using a simple worksheet for payments under a qualified plan. Tax slayer How to figure the tax-free part of nonperiodic payments from qualified and nonqualified plans, and how to use the optional methods to figure the tax on lump-sum distributions from pension, stock bonus, and profit-sharing plans. Tax slayer How to roll over certain distributions from a retirement plan into another retirement plan or IRA. Tax slayer How to report disability payments, and how beneficiaries and survivors of employees and retirees must report benefits paid to them. Tax slayer How to report railroad retirement benefits. Tax slayer When additional taxes on certain distributions may apply (including the tax on early distributions and the tax on excess accumulation). Tax slayer For additional information on how to report pension or annuity payments on your federal income tax return, be sure to review the instructions on the back of Copies B, C, and 2 of the Form 1099-R that you received and the instructions for Form 1040, lines 16a and 16b (Form 1040A, lines 12a and 12b or Form 1040NR, lines 17a and 17b). Tax slayer A “corrected” Form 1099-R replaces the corresponding original Form 1099-R if the original Form 1099-R contained an error. Tax slayer Make sure you use the amounts shown on the corrected Form 1099-R when reporting information on your tax return. Tax slayer What is not covered in this publication?   The following topics are not discussed in this publication. Tax slayer The General Rule. Tax slayer   This is the method generally used to determine the tax treatment of pension and annuity income from nonqualified plans (including commercial annuities). Tax slayer For a qualified plan, you generally cannot use the General Rule unless your annuity starting date is before November 19, 1996. Tax slayer Although this publication will help you determine whether you can use the General Rule, it will not help you use it to determine the tax treatment of your pension or annuity income. Tax slayer For that and other information on the General Rule, see Publication 939, General Rule for Pensions and Annuities. Tax slayer Individual retirement arrangements (IRAs). Tax slayer   Information on the tax treatment of amounts you receive from an IRA is in Publication 590, Individual Retirement Arrangements (IRAs). Tax slayer Civil service retirement benefits. Tax slayer   If you are retired from the federal government (regular, phased, or disability retirement) or are the survivor or beneficiary of a federal employee or retiree who died, get Publication 721, Tax Guide to U. Tax slayer S. Tax slayer Civil Service Retirement Benefits. Tax slayer Publication 721 covers the tax treatment of federal retirement benefits, primarily those paid under the Civil Service Retirement System (CSRS) or the Federal Employees' Retirement System (FERS). Tax slayer It also covers benefits paid from the Thrift Savings Plan (TSP). Tax slayer Social security and equivalent tier 1 railroad retirement benefits. Tax slayer   For information about the tax treatment of these benefits, see Publication 915, Social Security and Equivalent Railroad Retirement Benefits. Tax slayer However, this publication (575) covers the tax treatment of the non-social security equivalent benefit portion of tier 1 railroad retirement benefits, tier 2 benefits, vested dual benefits, and supplemental annuity benefits paid by the U. Tax slayer S. Tax slayer Railroad Retirement Board. Tax slayer Tax-sheltered annuity plans (403(b) plans). Tax slayer   If you work for a public school or certain tax-exempt organizations, you may be eligible to participate in a 403(b) retirement plan offered by your employer. Tax slayer Although this publication covers the treatment of benefits under 403(b) plans and discusses in-plan Roth rollovers from 403(b) plans to designated Roth accounts, it does not cover other tax provisions that apply to these plans. Tax slayer For that and other information on 403(b) plans, see Publication 571, Tax-Sheltered Annuity Plans (403(b) Plans) For Employees of Public Schools and Certain Tax-Exempt Organizations. Tax slayer Comments and suggestions. Tax slayer   We welcome your comments about this publication and your suggestions for future editions. Tax slayer   You can write to us at the following address: Internal Revenue Service Tax Forms and Publications Division 1111 Constitution Ave. Tax slayer NW, IR-6526 Washington, DC 20224   We respond to many letters by telephone. Tax slayer Therefore, it would be helpful if you would include your daytime phone number, including the area code, in your correspondence. Tax slayer   You can send your comments from www. Tax slayer irs. Tax slayer gov/formspubs/. Tax slayer Click on “More Information” and then on “Comment on Tax Forms and Publications. Tax slayer ”   Although we cannot respond individually to each comment received, we do appreciate your feedback and will consider your comments as we revise our tax products. Tax slayer Ordering forms and publications. Tax slayer   Visit www. Tax slayer irs. Tax slayer gov/formspubs/ to download forms and publications, call 1-800-TAX-FORM (1-800-829-3676), or write to the address below and receive a response within 10 days after your request is received. Tax slayer Internal Revenue Service 1201 N. Tax slayer Mitsubishi Motorway Bloomington, IL 61705-6613 Tax questions. Tax slayer   If you have a tax question, check the information available on IRS. Tax slayer gov or call 1-800-829-1040. Tax slayer We cannot answer tax questions sent to either of the above addresses. Tax slayer Useful Items - You may want to see: Publication 524 Credit for the Elderly or the Disabled 525 Taxable and Nontaxable Income 560 Retirement Plans for Small Business (SEP, SIMPLE, and Qualified Plans) 571 Tax-Sheltered Annuity Plans (403(b) Plans) For Employees of Public Schools and Certain Tax-Exempt Organizations 590 Individual Retirement Arrangements (IRAs) 721 Tax Guide to U. Tax slayer S. Tax slayer Civil Service Retirement Benefits 915 Social Security and Equivalent Railroad Retirement Benefits 939 General Rule for Pensions and Annuities Form (and Instructions) W-4P Withholding Certificate for Pension or Annuity Payments 1099-R Distributions From Pensions, Annuities, Retirement or Profit-Sharing Plans, IRAs, Insurance Contracts, etc. Tax slayer 4972 Tax on Lump-Sum Distributions 5329 Additional Taxes on Qualified Plans (Including IRAs) and Other Tax-Favored Accounts See How To Get Tax Help near the end of this publication for information about getting publications and forms. Tax slayer Prev  Up  Next   Home   More Online Publications
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Tax slayer 13. Tax slayer   Employment Taxes Table of Contents What's New for 2013 What's New for 2014 Reminders Important Dates for 2014 Introduction Topics - This chapter discusses: Useful Items - You may want to see: Farm Employment Family Employees Crew Leaders Social Security and Medicare TaxesReligious exemption. Tax slayer Wage limit. Tax slayer Federal Income Tax WithholdingNew Form W-4 for 2014. Tax slayer Required Notice to Employees About Earned Income Credit (EIC) Reporting and Paying Social Security, Medicare, and Withheld Federal Income TaxesElectronic deposit requirement. Tax slayer Federal Unemployment (FUTA) TaxReporting and Paying FUTA Tax What's New for 2013 Social security and Medicare tax for 2013. Tax slayer  The employee tax rate for social security is 6. Tax slayer 2%. Tax slayer Previously, the employee tax rate for social security was 4. Tax slayer 2%. Tax slayer The employer tax rate for social security remains unchanged at 6. Tax slayer 2%. Tax slayer The social security wage base limit is $113,700. Tax slayer The Medicare tax rate is 1. Tax slayer 45% each for the employee and employer, unchanged from 2012. Tax slayer There is no wage base limit for Medicare tax. Tax slayer Additional Medicare Tax. Tax slayer  In addition to withholding Medicare tax at 1. Tax slayer 45%, you must withhold a 0. Tax slayer 9% Additional Medicare Tax from wages you pay to an employee in excess of $200,000 in a calendar year. Tax slayer You are required to begin withholding Additional Medicare Tax in the pay period in which you pay wages in excess of $200,000 to an employee and continue to withhold it each pay period until the end of the calendar year. Tax slayer Additional Medicare Tax is only imposed on the employee. Tax slayer There is no employer share of Additional Medicare Tax. Tax slayer All wages that are subject to Medicare tax are subject to Additional Medicare Tax withholding if paid in excess of the $200,000 threshold. Tax slayer For more information on what wages are subject to Medicare tax, see the chart, Special Rules for Various Types of Services and Payments, in section 15 of Publication 15 (Circular E), Employer's Tax Guide. Tax slayer For more information on Additional Medicare Tax, visit IRS. Tax slayer gov and enter “Additional Medicare Tax” in the search box. Tax slayer Leave-based donation programs to aid victims of Hurricane Sandy. Tax slayer  Under these programs, employees may donate their vacation, sick, or personal leave in exchange for employer cash payments made before January 1, 2014, to qualified tax-exempt organizations providing relief for the victims of Hurricane Sandy. Tax slayer The donated leave will not be included in the income or wages of the employee. Tax slayer The employer may deduct the cash payments as business expenses or charitable contributions. Tax slayer For more information, see Notice 2012-69, 2012-51 I. Tax slayer R. Tax slayer B. Tax slayer 712, available at www. Tax slayer irs. Tax slayer gov/irb/2012-51_IRB/ar09. Tax slayer html. Tax slayer Work opportunity tax credit for qualified tax-exempt organizations hiring qualified veterans extended. Tax slayer  The work opportunity tax credit is now available for eligible unemployed veterans who begin work before January 1, 2014. Tax slayer Previously, the credit was available for unemployed veterans who began work on or after November 22, 2011, and before January 1, 2013. Tax slayer Qualified tax-exempt organizations that hire eligible unemployed veterans can claim the work opportunity tax credit against their payroll tax liability using Form 5884-C, Work Opportunity Credit for Qualified Tax-Exempt Organizations Hiring Qualified Veterans. Tax slayer For more information, visit IRS. Tax slayer gov and enter “work opportunity credit” in the search box. Tax slayer What's New for 2014 Social security and Medicare tax for 2014. Tax slayer  The employee and employer tax rates for social security and the maximum amount of wages subject to social security tax for 2014 will be discussed in Publication 51 (Circular A), Agricultural Employer's Tax Guide (For use in 2014). Tax slayer The Medicare tax rate for 2014 will also be discussed in Publication 51 (Circular A) (For use in 2014). Tax slayer There is no limit on the amount of wages subject to Medicare tax. Tax slayer Reminders Additional employment tax information for farmers. Tax slayer  See Publication 51 (Circular A) for more detailed guidance on employment taxes. Tax slayer For the latest information about employment tax developments impacting farmers, go to www. Tax slayer irs. Tax slayer gov/pub51. Tax slayer Correcting a previously filed Form 943. Tax slayer  If you discover an error on a previously filed Form 943, Employer's Annual Federal Tax Return for Agricultural Employees, make the correction using Form 943-X, Adjusted Employer's Annual Federal Tax Return for Agricultural Employees or Claim for Refund. Tax slayer Form 943-X is filed separately from Form 943. Tax slayer For more information on correcting Form 943, see the Instructions for Form 943-X. Tax slayer Federal tax deposits must be made by electronic funds transfer. Tax slayer  You must use electronic funds transfer to make all federal tax deposits. Tax slayer Generally, electronic funds transfers are made using the Electronic Federal Tax Payment System (EFTPS). Tax slayer If you do not want to use EFTPS, you can arrange for your tax professional, financial institution, payroll service, or other trusted third party to make electronic deposits on your behalf. Tax slayer Also, you may arrange for your financial institution to initiate a same-day wire payment on your behalf. Tax slayer EFTPS is a free service provided by the Department of Treasury. Tax slayer Services provided by your tax professional, financial institution, payroll service, or other third party may have a fee. Tax slayer For more information on making federal tax deposits, see section 7 of Publication 51 (Circular A). Tax slayer To get more information about EFTPS or to enroll in EFTPS, visit www. Tax slayer eftps. Tax slayer gov or call 1-800-555-4477 or 1-800-733-4829 (TDD). Tax slayer Additional information about EFTPS is also available in Publication 966, Electronic Federal Tax Payment System: A Guide To Getting Started. Tax slayer Important Dates for 2014 You should take the action indicated by the dates listed. Tax slayer See By February 15 and On February 16 for Form W-4, Employee's Withholding Allowance Certificate, information. Tax slayer Due dates for deposits of withheld federal income taxes, social security taxes, and Medicare taxes are not listed here. Tax slayer For these dates, see Publication 509, Tax Calendars (For use in 2014). Tax slayer Note. Tax slayer  If any date shown below for filing a return, furnishing a form, or depositing taxes falls on a Saturday, Sunday, or legal holiday, the due date is the next business day. Tax slayer A statewide legal holiday delays a filing or furnishing due date only if the IRS office where you are required to file a return or furnish a form is located in that state. Tax slayer For any due date, you will meet the “file” or “furnish” date requirement if the envelope containing the tax return or form is properly addressed, contains sufficient postage, and is postmarked by the U. Tax slayer S. Tax slayer Postal Service by the due date, or sent by an IRS-designated delivery service by the due date. Tax slayer See Private delivery services in Publication 51 (Circular A). Tax slayer Federal tax deposits can only be made by electronic funds transfer and are governed by legal holidays in the District of Columbia. Tax slayer Statewide holidays no longer apply. Tax slayer For a list of legal holidays that delay the due date of a federal tax deposit, see section 7 of Publication 51 (Circular A). Tax slayer Fiscal year taxpayers. Tax slayer  The due dates listed below apply whether you use a calendar or a fiscal year. Tax slayer By January 31. Tax slayer   File Form 943 with the IRS. Tax slayer If you deposited all Form 943 taxes when due, you have 10 additional days to file. Tax slayer Furnish each employee with a completed Form W-2, Wage and Tax Statement. Tax slayer Furnish each recipient to whom you paid $600 or more in nonemployee compensation with a completed Form 1099 (for example, Form 1099-MISC). Tax slayer File Form 940, Employer's Annual Federal Unemployment (FUTA) Tax Return, with the IRS. Tax slayer If you deposited all the FUTA tax when due, you have 10 additional days to file. Tax slayer File Form 945, Annual Return of Withheld Federal Income Tax, with the IRS to report any nonpayroll income tax withheld during 2013. Tax slayer If you deposited all Form 945 taxes when due, you have 10 additional days to file. Tax slayer By February 15. Tax slayer  Ask for a new Form W-4 or Formulario W-4(SP), Certificado de Exención de Retenciones del Empleado, from each employee who claimed exemption from federal income tax withholding last year. Tax slayer On February 16. Tax slayer  Any Form W-4 claiming exemption from withholding for the previous year has now expired. Tax slayer Begin withholding for any employee who previously claimed exemption from withholding but has not given you a new Form W-4 for the current year. Tax slayer If the employee does not give you a new Form W-4, withhold taxes based on the last valid Form W-4 you have for the employee that does not claim exemption from withholding or, if one does not exist, as if he or she is single with zero withholding allowances. Tax slayer If the employee furnishes a new Form W-4 claiming exemption from withholding after February 15, you may apply the exemption to future wages, but do not refund taxes withheld while the exempt status was not in place. Tax slayer By February 28. Tax slayer   File paper Forms 1099 and 1096. Tax slayer File Copy A of all paper Forms 1099 with Form 1096, Annual Summary and Transmittal of U. Tax slayer S. Tax slayer Information Returns, with the IRS. Tax slayer For electronically filed returns, see By March 31 below. Tax slayer File paper Forms W-2 and W-3. Tax slayer File Copy A of all paper Forms W-2 with Form W-3, Transmittal of Wage and Tax Statements, with the Social Security Administration (SSA). Tax slayer For electronically filed returns, see By March 31 below. Tax slayer By March 31. Tax slayer   File electronic Forms W-2 and 1099. Tax slayer File electronic Forms W-2 with the SSA and Forms 1099 with the IRS. Tax slayer For more information on reporting Form W-2 information to the SSA electronically, visit the SSA's Employer W-2 Filing Instructions & Information webpage at www. Tax slayer socialsecurity. Tax slayer gov/employer. Tax slayer For information on filing information returns electronically with the IRS, see Publication 1220, Specifications for Filing Forms 1097, 1098, 1099, 3921, 3922, 5498, 8935, and W-2G Electronically. Tax slayer By April 30, July 31, October 31, and January 31. Tax slayer   Deposit FUTA taxes. Tax slayer Deposit FUTA tax due if it is more than $500. Tax slayer Before December 1. Tax slayer  Remind employees to submit a new Form W-4 if their withholding allowances have changed or will change for the next year. Tax slayer Introduction You are generally required to withhold federal income tax from the wages of your employees. Tax slayer You may also be subject to social security and Medicare taxes under the Federal Insurance Contributions Act (FICA) and federal unemployment tax under the Federal Unemployment Tax Act (FUTA). Tax slayer You must also withhold Additional Medicare Tax from wages you pay to an employee in excess of $200,000 in a calendar year. Tax slayer This chapter includes information about these taxes. Tax slayer You must also pay self-employment tax on your net earnings from farming. Tax slayer See chapter 12 for information on self-employment tax. Tax slayer Topics - This chapter discusses: Farm employment, Family employees, Crew leaders, Social security and Medicare taxes, Additional Medicare Tax withholding, Federal income tax withholding, Reporting and paying social security, Medicare, and withheld federal income taxes, and FUTA tax. Tax slayer Useful Items - You may want to see: Publication 15 (Circular E), Employer's Tax Guide 15-A Employer's Supplemental Tax Guide 15-B Employer's Tax Guide to Fringe Benefits 51 (Circular A), Agricultural Employer's Tax Guide 926 Household Employer's Tax Guide Form (and Instructions) W-2 Wage and Tax Statement W-4 Employee's Withholding Allowance Certificate W-9 Request for Taxpayer Identification Number and Certification 940 Employer's Annual Federal Unemployment (FUTA) Tax Return 943 Employer's Annual Federal Tax Return for Agricultural Employees 943-X Adjusted Employer's Annual Federal Tax Return for Agricultural Employees or Claim for Refund See chapter 16 for information about getting publications and forms. Tax slayer Farm Employment In general, you are an employer of farmworkers if your employees do any of the following types of work. Tax slayer Raising or harvesting agricultural or horticultural products on a farm, including raising and feeding of livestock. Tax slayer Operating, managing, conserving, improving, or maintaining your farm and its tools and equipment. Tax slayer Services performed in salvaging timber, or clearing land of brush and other debris, left by a hurricane (also known as hurricane labor). Tax slayer Handling, processing, or packaging any agricultural or horticultural commodity if you produced more than half of the commodity (for a group of up to 20 unincorporated operators, all of the commodity). Tax slayer Work related to cotton ginning, turpentine, gum resin products, or the operation and maintenance of irrigation facilities. Tax slayer For more information, see Publication 51 (Circular A). Tax slayer 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. Tax slayer This is so even when you give the employee freedom of action. Tax slayer What matters is that you have the right to control the details of how the services are performed. Tax slayer You are responsible for withholding and paying employment taxes for your employees. Tax slayer You are also required to file employment tax returns. Tax slayer These requirements do not apply to amounts that you pay to independent contractors. Tax slayer See Publication 15-A for more information on how to determine whether an individual providing services is an independent contractor or an employee. Tax slayer If you employ a family of workers, each worker subject to your control (not just the head of the family) is an employee. Tax slayer Special rules apply to crew leaders. Tax slayer See Crew Leaders , later. Tax slayer Employer identification number (EIN). Tax slayer   If you have employees, you must have an EIN. Tax slayer If you do not have an EIN, you may apply for one online. Tax slayer Go to IRS. Tax slayer gov and click on the Apply for an EIN Online link under Tools. Tax slayer You may also apply for an EIN by calling 1-800-829-4933 or 1-800-829-4059 (TDD/TTY for persons who are deaf, hard of hearing, or have a speech disability). Tax slayer The hours of operation for both numbers are Monday–Friday form 7:00 a. Tax slayer m. Tax slayer –7:00 p. Tax slayer m. Tax slayer local time (Alaska and Hawaii follow Pacific time). Tax slayer You can also fax or mail Form SS-4, Application for Employer Identification Number, to the IRS. Tax slayer Employee's social security number (SSN). Tax slayer   An employee who does not have an SSN should submit Form SS-5, Application for a Social Security Card, to the Social Security Administration (SSA). Tax slayer Form SS-5 is available from any SSA office or by calling 1-800-772-1213 (operates 24 hours per day). Tax slayer It is also available from the SSA's website at www. Tax slayer socialsecurity. Tax slayer gov. Tax slayer   The employee must furnish evidence of age, identity, and U. Tax slayer S. Tax slayer citizenship or lawful immigration status permitting employment with the Form SS-5. Tax slayer An employee who is age 18 or older must appear in person with this evidence at an SSA office. Tax slayer Form I-9. Tax slayer    You must verify that each new employee is legally eligible to work in the United States. Tax slayer This includes completing the Form I-9, Employment Eligibility Verification. Tax slayer Form I-9 is available from the U. Tax slayer S. Tax slayer Citizenship and Immigration Services (USCIS) offices or by calling the Bureau of Citizenship and Immigration Services Forms Request Line at 1-800-870-3676. Tax slayer Form I-9 is also available from the USCIS website at www. Tax slayer uscis. Tax slayer gov. Tax slayer You can also contact the USCIS at 1-800-375-5283 for more information. Tax slayer New hire reporting. Tax slayer   You are required to report any new employee to a designated state new hire registry. Tax slayer Many states accept a copy of Form W-4 with employer information added. Tax slayer Visit the Office of Child Support Enforcement website at www. Tax slayer acf. Tax slayer hhs. Tax slayer gov/programs/cse/newhire for more information. Tax slayer Family Employees Generally, the wages you pay to family members who are your employees are subject to employment taxes. Tax slayer However, certain exemptions may apply to wages paid to your child, spouse, or parent. Tax slayer Exemptions for your child. Tax slayer   Payments for the services of your child under age 18 who works for you in your trade or business (including a farm) are not subject to social security and Medicare taxes. Tax slayer However, see Nonexempt services of a child or spouse , later. Tax slayer Payments for the services of your child under age 21 employed by you in other than a trade or business, such as payments for household services in your home, are also not subject to social security or Medicare taxes. Tax slayer Payments for the services of your child under age 21 employed by you, whether or not in your trade or business, are not subject to FUTA tax. Tax slayer Although not subject to social security, Medicare, or FUTA tax, the child's wages still may be subject to federal income tax withholding. Tax slayer Exemptions for your spouse. Tax slayer   Payments for the services of your spouse who works for you in your trade or business are subject to federal income tax withholding and social security and Medicare taxes, but not FUTA tax. Tax slayer   Payments for the services of your spouse employed by you in other than a trade or business, such as payments for household services in your home, are not subject to social security, Medicare, or FUTA taxes. Tax slayer Nonexempt services of a child or spouse. Tax slayer   Payments for the services of your child or spouse are subject to federal income tax withholding as well as social security, Medicare, and FUTA taxes if he or she works for any of the following entities. Tax slayer A corporation, even if it is controlled by you. Tax slayer A partnership, even if you are a partner. Tax slayer This does not apply to wages paid to your child if each partner is a parent of the child. Tax slayer An estate or trust, even if it is the estate of a deceased parent. Tax slayer In these situations, the child or spouse is considered to work for the corporation, partnership, or estate, not you. Tax slayer Exemptions for your parent. Tax slayer   Payments for the services of your parent employed by you in your trade or business are subject to federal income tax withholding and social security and Medicare taxes. Tax slayer Social security and Medicare taxes do not apply to wages paid to your parent for services not in your trade or business, but they do apply to payments for household services in your home if both the following conditions are satisfied. Tax slayer You have a child living in your home who is under age 18 or has a physical or mental condition that requires care by an adult for at least 4 continuous weeks in a calendar quarter. Tax slayer You are a widow or widower; or divorced and not remarried; or have a spouse in the home who, because of a physical or mental condition, cannot care for your child for at least 4 continuous weeks in the quarter. Tax slayer   Wages you pay to your parent are not subject to FUTA tax, regardless of the type of services provided. Tax slayer Qualified joint venture. Tax slayer   If spouses elect to be treated as a qualified joint venture instead of a partnership, either spouse may report and pay the employment taxes due on the wages paid to employees using the EIN of that spouse's sole proprietorship. Tax slayer For more information about qualified joint ventures, see chapter 12. Tax slayer Crew Leaders If farmworkers are provided by a crew leader, the crew leader may be the employer of the workers. Tax slayer Social security and Medicare taxes. Tax slayer   For social security and Medicare tax purposes, the crew leader is the employer of the workers if both of the following requirements are met. Tax slayer The crew leader pays (either on his or her own behalf or on behalf of the farmer) the workers for their farm labor. Tax slayer The crew leader has not entered into a written agreement with the farmer under which the crew leader is designated as an employee of the farmer. Tax slayer Federal income tax withholding. Tax slayer   If the crew leader is the employer for social security and Medicare tax purposes, the crew leader is the employer for federal income tax withholding purposes. Tax slayer Federal unemployment (FUTA) tax. Tax slayer   For FUTA tax purposes, the crew leader is the employer of the workers if, in addition to the earlier requirements, either of the following requirements are met. Tax slayer The crew leader is registered under the Migrant and Seasonal Agricultural Worker Protection Act. Tax slayer Substantially all crew members operate or maintain mechanized equipment provided by the crew leader as part of the service to the farmer. Tax slayer   The farmer is the employer of workers furnished by a crew leader in all other situations. Tax slayer In addition, the farmer is the employer of workers furnished by a registered crew leader if the workers are the employees of the farmer under the common-law test. Tax slayer For example, some farmers employ individuals to recruit farmworkers exclusively for them. Tax slayer Although these individuals may be required to register under the Migrant and Seasonal Agricultural Worker Protection Act, the workers are employed directly by the farmer. Tax slayer The farmer is the employer in these cases. Tax slayer For information about common-law employees, see section 1 of Publication 15-A. Tax slayer For information about crew leaders, see the Department of Labor website at www. Tax slayer dol. Tax slayer gov/whd/regs/compliance/whdfs49. Tax slayer htm. Tax slayer Social Security and Medicare Taxes All cash wages you pay to an employee during the year for farmwork are subject to social security and Medicare taxes if you meet either of the following tests. Tax slayer You pay the employee $150 or more in cash wages (count all wages paid on a time, piecework, or other basis) during the year for farmwork (the $150 test). Tax slayer The $150 test applies separately to each farmworker that you employ. Tax slayer If you employ a family of workers, each member is treated separately. Tax slayer Do not count wages paid by other employers. Tax slayer You pay cash and noncash wages of $2,500 or more during the year to all your employees for farmwork (the $2,500 test). Tax slayer If the $2,500 test for the group is not met, the $150 test for an employee still applies. Tax slayer Exceptions. Tax slayer   Annual cash wages of less than $150 you pay to a seasonal farmworker are not subject to social security and Medicare taxes, even if you pay $2,500 or more to all your farmworkers. Tax slayer However, these wages count toward the $2,500 test for determining whether other farmworkers' wages are subject to social security and Medicare taxes. Tax slayer   A seasonal farmworker is a worker who: Works as a hand-harvest laborer, Is paid piece rates in an operation usually paid on this basis in the region of employment, Commutes daily from his or her permanent home to the farm, and Worked in agriculture less than 13 weeks in the preceding calendar year. Tax slayer   See Family Employees , earlier, for certain exemptions from social security and Medicare taxes that apply to your child, spouse, and parent. Tax slayer Religious exemption. Tax slayer   An exemption from social security and Medicare taxes is available to members of a recognized religious group or division opposed to public insurance. Tax slayer This exemption is available only if both the employee and the employer are members of the group or division. Tax slayer   For more information, see Publication 517, Social Security and Other Information for Members of the Clergy and Religious Workers. Tax slayer Cash wages. Tax slayer   Only cash wages paid to farmworkers are subject to social security and Medicare taxes. Tax slayer Cash wages include checks, money orders, and any kind of money or cash. Tax slayer   Only cash wages subject to social security and Medicare taxes are credited to your employees for social security benefit purposes. Tax slayer Payments not subject to these taxes, such as commodity wages, do not contribute to your employees' social security coverage. Tax slayer For information about social security benefits, contact the SSA at 1-800-772-1213 or online at www. Tax slayer socialsecurity. Tax slayer gov. Tax slayer Noncash wages. Tax slayer    Noncash wages include food, lodging, clothing, transportation passes, and other goods and services. Tax slayer Noncash wages paid to farmworkers, including commodity wages, are not subject to social security and Medicare taxes. Tax slayer However, they are subject to these taxes if the substance of the transaction is a cash payment. Tax slayer For information on lodging provided as a condition of employment, see Publication 15-B. Tax slayer   Report the value of noncash wages in box 1 of Form W-2 together with cash wages. Tax slayer Do not show noncash wages in box 3 or in box 5, (unless the substance of the transaction is a cash payment). Tax slayer Tax rates and social security wage limit. Tax slayer   For 2013, the employer and the employee will pay the following taxes. Tax slayer The employer and employee each pay 6. Tax slayer 2% of cash wages for social security tax (old-age, survivors, and disability insurance). Tax slayer The employer and employee each pay 1. Tax slayer 45% of cash wages for Medicare tax (hospital insurance). Tax slayer The employee pays 0. Tax slayer 9% of cash wages in excess of $200,000 for Additional Medicare Tax. Tax slayer Wage limit. Tax slayer   The limit on wages subject to the social security tax for 2013 is $113,700. Tax slayer There is no limit on wages subject to the Medicare tax. Tax slayer All covered wages are subject to the Medicare tax. Tax slayer Additionally, all wages in excess of $200,000 are subject to Additional Medicare Tax withholding. Tax slayer Paying employee's share. Tax slayer   If you would rather pay the employee's share of social security and Medicare taxes without deducting it from his or her wages, you may do so. Tax slayer It is additional income to the employee. Tax slayer You must include it in box 1 of the employee's Form W-2, but do not count it as social security and Medicare wages (boxes 3 and 5 on Form W-2) or as wages for federal unemployment (FUTA) tax purposes. Tax slayer Example. Tax slayer Jane operates a small family fruit farm. Tax slayer She employs day laborers in the picking season to enable her to timely get her crop to market. Tax slayer She does not deduct the employees' share of social security and Medicare taxes from their pay; instead, she pays it on their behalf. Tax slayer When her accountant, Susan, prepares the employees' Forms W-2, she adds each employee's share of social security and Medicare taxes paid by Jane to the employee's wage income (box 1 of Form W-2), but does not include it in box 3 (social security wages) or box 5 (Medicare wages and tips). Tax slayer For 2013, Jane paid Mary $1,000 during the year. Tax slayer Susan enters $1,076. Tax slayer 50 in box 1 of Mary's Form W-2 ($1,000 wages plus $76. Tax slayer 50 social security and Medicare taxes paid for Mary). Tax slayer She enters $1,000 in boxes 3 and 5 of Mary's Form W-2. Tax slayer Additional Medicare Tax. Tax slayer   In addition to withholding Medicare tax at 1. Tax slayer 45%, you must withhold a 0. Tax slayer 9% Additional Medicare Tax from wages you pay to an employee in excess of $200,000 in a calendar year. Tax slayer You are required to begin withholding Additional Medicare Tax in the pay period in which you pay wages in excess of $200,000 to an employee and continue to withhold it each pay period until the end of the calendar year. Tax slayer Additional Medicare Tax is only imposed on the employee. Tax slayer There is no employer share of Additional Medicare Tax. Tax slayer All wages that are subject to Medicare tax are subject to Additional Medicare Tax withholding if paid in excess of the $200,000 threshold. Tax slayer   For more information on what wages are subject to Medicare tax, see the chart, Special Rules for Various Types of Services and Payments, in section 15 of Publication 15 (Circular E). Tax slayer For more information on Additional Medicare Tax, visit IRS. Tax slayer gov and enter “Additional Medicare Tax” in the search box. Tax slayer Federal Income Tax Withholding If the cash wages you pay to farmworkers are subject to social security and Medicare taxes, they are also subject to federal income tax withholding. Tax slayer Although noncash wages are subject to federal income tax, withhold income tax only if you and the employee agree to do so. Tax slayer The amount to withhold is figured on gross wages without taking out social security and Medicare taxes, union dues, insurance, etc. Tax slayer Form W-4. Tax slayer   Generally, the amount of federal income tax you withhold is based on the employee's marital status and withholding allowances claimed on the employee's Form W-4. Tax slayer In general, an employee can claim withholding allowances on Form W-4 equal to the number of exemptions the employee will be entitled to claim on his or her tax return. Tax slayer An employee may also be able to claim a special withholding allowance and allowances for estimated deductions and credits. Tax slayer   Do not withhold federal income tax from the wages of an employee who, by filing Form W-4, certifies that he or she had no federal income tax liability last year and anticipates no liability for the current year. Tax slayer   You should give each new employee a Form W-4 as soon as you hire the employee. Tax slayer For Spanish-speaking employees, you may use Formulario W-4(SP) which is the Spanish translation of Form W-4. Tax slayer Have the employee complete and return the form to you before the first payday. Tax slayer If the employee does not return the completed form, you must withhold federal income tax as if the employee is single and claims no withholding allowances. Tax slayer New Form W-4 for 2014. Tax slayer   You should make the 2014 Form W-4 available to your employees and encourage them to check their income tax withholding for 2014. Tax slayer Those employees who owed a large amount of tax or received a large refund for 2013 may want to submit a new Form W-4. Tax slayer You cannot accept substitute Forms W-4 developed by employees. Tax slayer How to figure withholding. Tax slayer   You can use one of several methods to determine the amount to withhold. Tax slayer The methods are described in Publication 51 (Circular A), which contains tables showing the correct amount of federal income tax you should withhold. Tax slayer Publication 51 (Circular A) also contains additional information about federal income tax withholding. Tax slayer Nonemployee compensation. Tax slayer   Generally, you do not have to withhold federal income tax on payments for services to individuals who are not your employees. Tax slayer However, you may be required to report these payments on Form 1099-MISC, Miscellaneous Income, and to withhold under the backup withholding rules. Tax slayer For more information, see the Instructions for Form 1099-MISC. Tax slayer Required Notice to Employees About Earned Income Credit (EIC) You must provide notification about EIC to each employee who worked for you at any time during the year and from whom you did not withhold any federal income tax. Tax slayer However, you do not have to notify employees who claim exemption from federal income tax withholding on Form W-4. Tax slayer You meet the notification requirement by giving each employee any of the following. Tax slayer Form W-2, which contains EIC notification on the back of Copy B. Tax slayer A substitute Form W-2 with the exact EIC wording shown on the back of copy B of Form W-2. Tax slayer Notice 797, Possible Federal Tax Refund Due to the Earned Income Credit (EIC). Tax slayer Your own written statement with the exact wording of Notice 797. Tax slayer For more information, see Publication 51 (Circular A). Tax slayer Reporting and Paying Social Security, Medicare, and Withheld Federal Income Taxes You must withhold federal income, social security, and Medicare taxes required to be withheld from the salaries and wages of your employees. Tax slayer You are liable for the payment of these taxes to the federal government whether or not you collect them from your employees. Tax slayer If, for example, you withhold less than the correct tax from an employee's wages, you are still liable for the full amount. Tax slayer You must also pay the employer's share of social security and Medicare taxes. Tax slayer There is no employer share of Additional Medicare Tax. Tax slayer Form 943. Tax slayer   Report withheld federal income tax, social security tax, and Medicare tax on Form 943. Tax slayer Your 2013 Form 943 is due by January 31, 2014 (or February 10, 2014, if you made deposits on time in full payment of the taxes due for the year). Tax slayer Deposits. Tax slayer   Generally, you must deposit both the employer and employee shares of social security and Medicare taxes and federal income tax withheld during the year. Tax slayer However, you may make payments with Form 943 instead of depositing them if you accumulate less than a $2,500 tax liability (“Total taxes after adjustments” line on Form 943) during the year and you pay in full with a timely filed return. Tax slayer   For more information on deposit rules, see Publication 51 (Circular A). Tax slayer Electronic deposit requirement. Tax slayer   You must use electronic funds transfer to make all federal tax deposits. Tax slayer Generally, electronic funds transfers are made using EFTPS. Tax slayer If you do not want to use EFTPS, you can arrange for your tax professional, financial institution, payroll service, or other trusted third party to make electronic deposits on your behalf. Tax slayer Also, you may arrange for your financial institution to initiate a same-day wire payment on your behalf. Tax slayer EFTPS is a free service provided by the Department of Treasury. Tax slayer Services provided by your tax professional, financial institution, payroll service, or other third party may have a fee. Tax slayer   For more information on making federal tax deposits, see section 7 of Publication 51 (Circular A). Tax slayer To get more information about EFTPS or to enroll in EFTPS, visit www. Tax slayer eftps. Tax slayer gov or call 1-800-555-4477 or 1-800-733-4829 (TDD). Tax slayer Additional information about EFTPS is also available in Publication 966. Tax slayer Form W-2. Tax slayer   By January 31, you must furnish each employee a Form W-2 showing total wages for the previous year and total federal income tax, social security tax, and Medicare tax withheld. Tax slayer However, if an employee stops working for you and requests the form earlier, you must give it to the employee within 30 days of the later of the following dates. Tax slayer The date the employee requests the form. Tax slayer The date you make your final payment of wages to the employee. Tax slayer Compensation paid to H-2A visa holders. Tax slayer   Report compensation of $600 or more paid to foreign agricultural workers who entered the country on H-2A visas in box 1 of Form W-2. Tax slayer Compensation paid to H-2A workers for agricultural labor performed in connection with this visa is not subject to social security and Medicare taxes, and therefore should not be reported as wages subject to social security tax (line 2), Medicare tax (line 4), or Additional Medicare Tax (line 6) on Form 943, and should not be reported as social security wages (box 3) or Medicare wages (box 5) on Form W-2. Tax slayer   An employer is not required to withhold federal income tax from compensation it pays to an H-2A worker for agricultural labor performed in connection with this visa unless the worker asks for withholding and the employer agrees. Tax slayer In this case, the worker must give the employer a completed Form W-4. Tax slayer Federal income tax withheld should be reported on Form 943, line 8, and in box 2 of Form W-2. Tax slayer   These reporting rules apply when the H-2A worker provides his or her taxpayer identification number (TIN) to the employer. Tax slayer For the rules relating to backup withholding and reporting when the H-2A worker does not provide a TIN, see the Instructions for Form 1099-MISC and the Instructions for Form 945. Tax slayer Trust fund recovery penalty. Tax slayer   If you are responsible for withholding, accounting for, depositing, or paying federal withholding taxes and willfully fail to do so, you can be held liable for a penalty equal to the withheld tax not paid. Tax slayer A responsible person can be an officer of a corporation, a partner, a sole proprietor, or an employee of any form of business. Tax slayer A trustee or agent with authority over the funds of the business can also be held responsible for the penalty. Tax slayer   Willfully means voluntarily, consciously, and intentionally. Tax slayer Paying other expenses of the business instead of the taxes due is acting willfully. Tax slayer Consequences of treating an employee as an independent contractor. Tax slayer   If you classify an employee as an independent contractor and you have no reasonable basis for doing so, you may be held liable for employment taxes for that worker. Tax slayer See Publication 15-A for more information. Tax slayer Federal Unemployment (FUTA) Tax You must pay FUTA tax if you meet either of the following tests. Tax slayer You paid cash wages of $20,000 or more to farmworkers in any calendar quarter during the current or preceding calendar year. Tax slayer You employed 10 or more farmworkers for some part of at least 1 day during any 20 or more different calendar weeks during the current or preceding calendar year. Tax slayer These rules do not apply to exempt services of your spouse, your parents, or your children under age 21. Tax slayer See Family Employees , earlier. Tax slayer Alien farmworkers. Tax slayer   Wages paid to aliens admitted on a temporary basis to the United States to perform farmwork (also known as “H-2A visa workers”) are exempt from FUTA tax. Tax slayer However, include your employment of these workers and the wages you paid them to determine whether you meet either of the above tests. Tax slayer Commodity wages. Tax slayer   Payments in kind for farm labor are not cash wages. Tax slayer Do not count them to figure whether you are subject to FUTA tax or to figure how much tax you owe. Tax slayer Tax rate and credit. Tax slayer   The gross FUTA tax rate is 6. Tax slayer 0% of the first $7,000 cash wages you pay to each employee during the year. Tax slayer However, you are given a credit of up to 5. Tax slayer 4% of the first $7,000 cash wages you pay to each employee for the state unemployment tax you pay. Tax slayer If your state tax rate (experience rate) is less than 5. Tax slayer 4%, you may still be allowed the full 5. Tax slayer 4% credit. Tax slayer   If you do not pay the state tax, you cannot take the credit. Tax slayer If you are exempt from state unemployment tax for any reason, the full 6. Tax slayer 0% rate applies. Tax slayer See the Instructions for Form 940 for additional information. Tax slayer More information. Tax slayer   For more information on FUTA tax, see Publication 51 (Circular A). Tax slayer Reporting and Paying FUTA Tax The FUTA tax is imposed on you as the employer. Tax slayer It must not be collected or deducted from the wages of your employees. Tax slayer Form 940. Tax slayer   Report FUTA tax on Form 940. Tax slayer The 2013 Form 940 is due January 31, 2014 (or February 10, 2014, if you timely deposited the full amount of your 2013 FUTA tax). Tax slayer Deposits. Tax slayer   If at the end of any calendar quarter you owe, but have not yet deposited, more than $500 in FUTA tax for the year, you must make a deposit by the end of the following month. Tax slayer If the undeposited tax is $500 or less at the end of a quarter, you do not have to deposit it. Tax slayer You can add it to the tax for the next quarter. Tax slayer If the total undeposited tax is more than $500 at the end of the next quarter, a deposit will be required. Tax slayer If the total undeposited tax at the end of the 4th quarter is $500 or less, you can either make a deposit or pay it with your return by the January 31, 2014, due date. Tax slayer Electronic deposit requirement. Tax slayer   You must use electronic funds transfer to make all federal tax deposits. Tax slayer Generally, electronic funds transfers are made using EFTPS. Tax slayer If you do not want to use EFTPS, you can arrange for your tax professional, financial institution, payroll service, or other trusted third party to make electronic deposits on your behalf. Tax slayer Also, you may arrange for your financial institution to initiate a same-day wire payment on your behalf. Tax slayer EFTPS is a free service provided by the Department of Treasury. Tax slayer Services provided by your tax professional, financial institution, payroll service, or other third party may have a fee. Tax slayer   For more information on making federal tax deposits, see section 7 of Publication 51 (Circular A). Tax slayer To get more information about EFTPS or to enroll in EFTPS, visit www. Tax slayer eftps. Tax slayer gov or call 1-800-555-4477 or 1-800-733-4829 (TDD). Tax slayer Additional information about EFTPS is also available in Publication 966. Tax slayer Prev  Up  Next   Home   More Online Publications