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Turbotax 2011 Tax Return

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Turbotax 2011 Tax Return

Turbotax 2011 tax return Publication 527 - Introductory Material Table of Contents Future Developments What's New Reminders IntroductionSale of main home used as rental property. Turbotax 2011 tax return Tax-free exchange of rental property occasionally used for personal purposes. Turbotax 2011 tax return Ordering forms and publications. Turbotax 2011 tax return Tax questions. Turbotax 2011 tax return Useful Items - You may want to see: Future Developments For the latest information about developments related to Publication 527, such as legislation enacted after it was published, go to www. Turbotax 2011 tax return irs. Turbotax 2011 tax return gov/pub527. Turbotax 2011 tax return What's New Net Investment Income Tax (NIIT). Turbotax 2011 tax return  Beginning in 2013, you may be subject to the Net Investment Income Tax (NIIT). Turbotax 2011 tax return NIIT is a 3. Turbotax 2011 tax return 8% tax on the lesser of net investment income or the excess of modified adjusted gross income (MAGI) over the threshold amount. Turbotax 2011 tax return Net investment income may include rental income and other income from passive activities. Turbotax 2011 tax return Use Form 8960, Net Investment Income Tax, to figure this tax. Turbotax 2011 tax return For more information on NIIT, go to IRS. Turbotax 2011 tax return gov and enter “Net Investment Income Tax” in the search box. Turbotax 2011 tax return Reminders Photographs of missing children. Turbotax 2011 tax return  The Internal Revenue Service is a proud partner with the National Center for Missing and Exploited Children. Turbotax 2011 tax return Photographs of missing children selected by the Center may appear in this publication on pages that would otherwise be blank. Turbotax 2011 tax return 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. Turbotax 2011 tax return Introduction Do you own a second house that you rent out all the time? Do you own a vacation home that you rent out when you or your family isn't using it? These are two common types of residential rental activities discussed in this publication. Turbotax 2011 tax return In most cases, all rental income must be reported on your tax return, but there are differences in the expenses you are allowed to deduct and in the way the rental activity is reported on your return. Turbotax 2011 tax return First, this publication will look at the rental-for-profit activity in which there is no personal use of the property. Turbotax 2011 tax return We will look at types of income and when each is reported, and at types of expenses and which are deductible. Turbotax 2011 tax return Chapter 2 discusses depreciation as it applies to your rental real estate activity—what property can be depreciated and how to figure it. Turbotax 2011 tax return Chapter 3 covers the actual reporting of your rental income and deductions, including casualties and thefts, limitations on losses, and claiming the correct amount of depreciation. Turbotax 2011 tax return Special rental situations are grouped together in chapter 4. Turbotax 2011 tax return These include condominiums, cooperatives, property changed to rental use, renting only part of your property, and a not-for-profit rental activity. Turbotax 2011 tax return Finally, in chapter 5, we will look at the rules for rental income and expenses when there is also personal use of the dwelling unit, such as a vacation home. Turbotax 2011 tax return Sale or exchange of rental property. Turbotax 2011 tax return   For information on how to figure and report any gain or loss from the sale, exchange or other disposition of your rental property, see Publication 544, Sales and Other Dispositions of Assets. Turbotax 2011 tax return Sale of main home used as rental property. Turbotax 2011 tax return   For information on how to figure and report any gain or loss from the sale or other disposition of your main home that you also used as rental property, see Publication 523, Selling Your Home. Turbotax 2011 tax return Tax-free exchange of rental property occasionally used for personal purposes. Turbotax 2011 tax return   If you meet certain qualifying use standards, you may qualify for a tax-free exchange (a like-kind or section 1031 exchange) of one piece of rental property you own for a similar piece of rental property, even if you have used the rental property for personal purposes. Turbotax 2011 tax return   For information on the qualifying use standards, see Rev. Turbotax 2011 tax return Proc. Turbotax 2011 tax return 2008–16, 2008 IRB 547, at http://www. Turbotax 2011 tax return irs. Turbotax 2011 tax return gov/irb/2008-10_IRB/ar12. Turbotax 2011 tax return html . Turbotax 2011 tax return For more information on like-kind exchanges, see chapter 1 of Publication 544. Turbotax 2011 tax return Comments and suggestions. Turbotax 2011 tax return   We welcome your comments about this publication and your suggestions for future editions. Turbotax 2011 tax return   You can write to us at the following address: Internal Revenue Service Tax Forms and Publications Division 1111 Constitution Ave. Turbotax 2011 tax return NW, IR-6526 Washington, DC 20224   We respond to many letters by telephone. Turbotax 2011 tax return Therefore, it would be helpful if you would include your daytime phone number, including the area code, in your correspondence. Turbotax 2011 tax return   You can send your comments from www. Turbotax 2011 tax return irs. Turbotax 2011 tax return gov/formspubs/. Turbotax 2011 tax return Click on “More Information” and then on “Comment on Tax Forms and Publications”. Turbotax 2011 tax return   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. Turbotax 2011 tax return Ordering forms and publications. Turbotax 2011 tax return   Visit www. Turbotax 2011 tax return irs. Turbotax 2011 tax return 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. Turbotax 2011 tax return Internal Revenue Service 1201 N. Turbotax 2011 tax return Mitsubishi Motorway Bloomington, IL 61705-6613 Tax questions. Turbotax 2011 tax return   If you have a tax question, check the information available on IRS. Turbotax 2011 tax return gov or call 1-800-829-1040. Turbotax 2011 tax return We cannot answer tax questions sent to either of the above addresses. Turbotax 2011 tax return Useful Items - You may want to see: Publication 463 Travel, Entertainment, Gift, and Car Expenses 523 Selling Your Home 534 Depreciating Property Placed in Service Before 1987 535 Business Expenses 544 Sales and Other Dispositions of Assets 547 Casualties, Disasters, and Thefts 551 Basis of Assets 925 Passive Activity and At-Risk Rules 946 How To Depreciate Property Form (and Instructions) 4562 Depreciation and Amortization 5213 Election To Postpone Determination as To Whether the Presumption Applies That an Activity Is Engaged in for Profit 8582 Passive Activity Loss Limitations Schedule E (Form 1040) Supplemental Income and Loss   See chapter 6, How To Get Tax Help for information about getting these publications and forms. Turbotax 2011 tax return Prev  Up  Next   Home   More Online Publications
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Tax Relief for Victims of Hurricane Irene in Puerto Rico

Updated 9/29/11 to add the municipalities of Adjuntas, Ciales, Guaynabo.

Updated 9/13/11 to add the municipalities of Fajardo, Gurabo, Las Piedras, Naguabo, Naranjito, Río Grande, San Lorenzo, Trujillo Alto, Vega Baja, Vieques and Villalba.

Updated 9/6/11 to add the municipalities of Arroyo, Aguas Buenas, Cidra, Coamo, Comerio, Humacao, Jayuya, Juncos, Orocovis, Patillas and Ponce.

SP-FL-2011-14, Aug. 30, 2011

MIAMI — Victims of Hurricane Irene that began on Aug. 21, 2011 in parts of Puerto Rico may qualify for tax relief from the Internal Revenue Service.

The President has declared the following municipalities a federal disaster area: Adjuntas, Arroyo, Aguas Buenas, Caguas, Canóvanas, Carolina, Cayey, Cidra, Ciales, Coamo, Comerío, Fajardo, Guaynabo, Gurabo, Humacao, Jayuya, Juncos, Las Piedras, Loíza, Luquillo, Naguabo, Naranjito, Orocovis, Patillas, Ponce, Río Grande,  San Juan, San Lorenzo, Trujillo Alto, Vega Baja, Vieques and Villalba. Individuals who reside or have a business in these municipalities may qualify for tax relief.

The declaration permits the IRS to postpone certain deadlines for taxpayers who reside or have a business in the disaster area. For instance, certain deadlines falling on or after Aug. 21, and on or before Oct. 31, have been postponed to Oct. 31, 2011. This includes corporations and other businesses that previously obtained an extension until Sept. 15 to file their 2010 returns, and individuals and businesses that received a similar extension until Oct. 17. It also includes the estimated tax payment for the third quarter, normally due Sept. 15.  

In addition, the IRS is waiving the failure-to-deposit penalties for employment and excise tax deposits due on or after Aug. 21, and on or before Sept. 6, as long as the deposits are made by Sept. 6, 2011.

If an affected taxpayer receives a penalty notice from the IRS, the taxpayer should call the telephone number on the notice to have the IRS abate any interest and any late filing or late payment penalties that would otherwise apply. Penalties or interest will be abated only for taxpayers who have an original or extended filing, payment or deposit due date, including an extended filing or payment due date, that falls within the postponement period.

The IRS automatically identifies taxpayers located in the covered disaster area and applies automatic filing and payment relief. But affected taxpayers who reside or have a business located outside the covered disaster area must call the IRS disaster hotline at 1-866-562-5227 to request this tax relief.

Covered Disaster Area

The municipalities listed above constitute a covered disaster area for purposes of Treas. Reg. § 301.7508A-1(d)(2) and are entitled to the relief detailed below.

Affected Taxpayers

Taxpayers considered to be affected taxpayers eligible for the postponement of time to file returns, pay taxes and perform other time-sensitive acts are those taxpayers listed in Treas. Reg. § 301.7508A-1(d)(1), and include individuals who live, and businesses whose principal place of business is located, in the covered disaster area. Taxpayers not in the covered disaster area, but whose records necessary to meet a deadline listed in Treas. Reg. § 301.7508A-1(c) are in the covered disaster area, are also entitled to relief. In addition, all relief workers affiliated with a recognized government or philanthropic organization assisting in the relief activities in the covered disaster area and any individual visiting the covered disaster area who was killed or injured as a result of the disaster are entitled to relief.

Grant of Relief

Under section 7508A, the IRS gives affected taxpayers until Oct. 31 to file most tax returns (including individual, corporate, and estate and trust income tax returns; partnership returns, S corporation returns, and trust returns; estate, gift, and generation-skipping transfer tax returns; and employment and certain excise tax returns), or to make tax payments, including estimated tax payments, that have either an original or extended due date occurring on or after Aug. 21 and on or before Oct. 31.

The IRS also gives affected taxpayers until Oct. 31 to perform other time-sensitive actions described in Treas. Reg. § 301.7508A-1(c)(1) and Rev. Proc. 2007-56, 2007-34 I.R.B. 388 (Aug. 20, 2007), that are due to be performed on or after Aug. 21 and on or before Oct. 31.

This relief also includes the filing of Form 5500 series returns, in the manner described in section 8 of Rev. Proc. 2007-56. The relief described in section 17 of Rev. Proc. 2007-56, pertaining to like-kind exchanges of property, also applies to certain taxpayers who are not otherwise affected taxpayers and may include acts required to be performed before or after the period above.

The postponement of time to file and pay does not apply to information returns in the W-2, 1098, 1099 series, or to Forms 1042-S or 8027. Penalties for failure to timely file information returns can be waived under existing procedures for reasonable cause. Likewise, the postponement does not apply to employment and excise tax deposits. The IRS, however, will abate penalties for failure to make timely employment and excise tax deposits due on or after Aug. 21 and on or before Sept. 6 provided the taxpayer makes these deposits by Sept. 6.

Casualty Losses

Affected taxpayers in a federally declared disaster area have the option of claiming disaster-related casualty losses on their federal income tax return for either this year or last year. Claiming the loss on an original or amended return for last year will get the taxpayer an earlier refund, but waiting to claim the loss on this year’s return could result in a greater tax saving, depending on other income factors.

Individuals may deduct personal property losses that are not covered by insurance or other reimbursements. For details, see Form 4684 and its instructions.
Affected taxpayers claiming the disaster loss on last year’s return should put the Disaster Designation “Puerto Rico/Hurricane Irene” at the top of the form so that the IRS can expedite the processing of the refund.

Other Relief

The IRS will waive the usual fees and expedite requests for copies of previously filed tax returns for affected taxpayers. Taxpayers should put the assigned Disaster Designation in red ink at the top of Form 4506, Request for Copy of Tax Return, or Form 4506-T, Request for Transcript of Tax Return, as appropriate, and submit it to the IRS.

Affected taxpayers who are contacted by the IRS on a collection or examination matter should explain how the disaster impacts them so that the IRS can provide appropriate consideration to their case.

Taxpayers may download forms and publications from the official IRS website, irs.gov, or order them by calling 1-800-TAX-FORM (1-800-829-3676). The IRS toll-free number for general tax questions is 1-800-829-1040.

Related Information

SP-FL-2011-14SP, Alivio Tributario a Víctimas del Huracán Irene en Puerto Rico
Disaster Assistance and Emergency Relief for Individuals and Businesses
Recent IRS Disaster Relief Announcements

 

Page Last Reviewed or Updated: 20-Mar-2014

The Turbotax 2011 Tax Return

Turbotax 2011 tax return 3. Turbotax 2011 tax return   SIMPLE Plans Table of Contents Topics - This chapter discusses: Useful Items - You may want to see: SIMPLE IRA PlanWho Can Set Up a SIMPLE IRA Plan? Who Can Participate in a SIMPLE IRA Plan? How To Set Up a SIMPLE IRA Plan Notification Requirement Contribution Limits When To Deduct Contributions Where To Deduct Contributions Tax Treatment of Contributions Distributions (Withdrawals) More Information on SIMPLE IRA Plans SIMPLE 401(k) Plan Topics - This chapter discusses: SIMPLE IRA plan SIMPLE 401(k) plan Useful Items - You may want to see: Publications 590 Individual Retirement Arrangements (IRAs) 3998 Choosing A Retirement Solution for Your Small Business 4284 SIMPLE IRA Plan Checklist 4334 SIMPLE IRA Plans for Small Businesses Forms (and Instructions) W-2 Wage and Tax Statement 5304-SIMPLE Savings Incentive Match Plan for Employees of Small Employers (SIMPLE)–Not for Use With a Designated Financial Institution 5305-SIMPLE Savings Incentive Match Plan for Employees of Small Employers (SIMPLE)–for Use With a Designated Financial Institution 8880 Credit for Qualified Retirement Savings Contributions 8881 Credit for Small Employer Pension Plan Startup Costs A savings incentive match plan for employees (SIMPLE plan) is a written arrangement that provides you and your employees with a simplified way to make contributions to provide retirement income. Turbotax 2011 tax return Under a SIMPLE plan, employees can choose to make salary reduction contributions to the plan rather than receiving these amounts as part of their regular pay. Turbotax 2011 tax return In addition, you will contribute matching or nonelective contributions. Turbotax 2011 tax return SIMPLE plans can only be maintained on a calendar-year basis. Turbotax 2011 tax return A SIMPLE plan can be set up in either of the following ways. Turbotax 2011 tax return Using SIMPLE IRAs (SIMPLE IRA plan). Turbotax 2011 tax return As part of a 401(k) plan (SIMPLE 401(k) plan). Turbotax 2011 tax return Many financial institutions will help you set up a SIMPLE plan. Turbotax 2011 tax return SIMPLE IRA Plan A SIMPLE IRA plan is a retirement plan that uses SIMPLE IRAs for each eligible employee. Turbotax 2011 tax return Under a SIMPLE IRA plan, a SIMPLE IRA must be set up for each eligible employee. Turbotax 2011 tax return For the definition of an eligible employee, see Who Can Participate in a SIMPLE IRA Plan , later. Turbotax 2011 tax return Who Can Set Up a SIMPLE IRA Plan? You can set up a SIMPLE IRA plan if you meet both the following requirements. Turbotax 2011 tax return You meet the employee limit. Turbotax 2011 tax return You do not maintain another qualified plan unless the other plan is for collective bargaining employees. Turbotax 2011 tax return Employee limit. Turbotax 2011 tax return   You can set up a SIMPLE IRA plan only if you had 100 or fewer employees who received $5,000 or more in compensation from you for the preceding year. Turbotax 2011 tax return Under this rule, you must take into account all employees employed at any time during the calendar year regardless of whether they are eligible to participate. Turbotax 2011 tax return Employees include self-employed individuals who received earned income and leased employees (defined in chapter 1). Turbotax 2011 tax return   Once you set up a SIMPLE IRA plan, you must continue to meet the 100-employee limit each year you maintain the plan. Turbotax 2011 tax return Grace period for employers who cease to meet the 100-employee limit. Turbotax 2011 tax return   If you maintain the SIMPLE IRA plan for at least 1 year and you cease to meet the 100-employee limit in a later year, you will be treated as meeting it for the 2 calendar years immediately following the calendar year for which you last met it. Turbotax 2011 tax return   A different rule applies if you do not meet the 100-employee limit because of an acquisition, disposition, or similar transaction. Turbotax 2011 tax return Under this rule, the SIMPLE IRA plan will be treated as meeting the 100-employee limit for the year of the transaction and the 2 following years if both the following conditions are satisfied. Turbotax 2011 tax return Coverage under the plan has not significantly changed during the grace period. Turbotax 2011 tax return The SIMPLE IRA plan would have continued to qualify after the transaction if you had remained a separate employer. Turbotax 2011 tax return    The grace period for acquisitions, dispositions, and similar transactions also applies if, because of these types of transactions, you do not meet the rules explained under Other qualified plan or Who Can Participate in a SIMPLE IRA Plan, below. Turbotax 2011 tax return Other qualified plan. Turbotax 2011 tax return   The SIMPLE IRA plan generally must be the only retirement plan to which you make contributions, or to which benefits accrue, for service in any year beginning with the year the SIMPLE IRA plan becomes effective. Turbotax 2011 tax return Exception. Turbotax 2011 tax return   If you maintain a qualified plan for collective bargaining employees, you are permitted to maintain a SIMPLE IRA plan for other employees. Turbotax 2011 tax return Who Can Participate in a SIMPLE IRA Plan? Eligible employee. Turbotax 2011 tax return   Any employee who received at least $5,000 in compensation during any 2 years preceding the current calendar year and is reasonably expected to receive at least $5,000 during the current calendar year is eligible to participate. Turbotax 2011 tax return The term “employee” includes a self-employed individual who received earned income. Turbotax 2011 tax return   You can use less restrictive eligibility requirements (but not more restrictive ones) by eliminating or reducing the prior year compensation requirements, the current year compensation requirements, or both. Turbotax 2011 tax return For example, you can allow participation for employees who received at least $3,000 in compensation during any preceding calendar year. Turbotax 2011 tax return However, you cannot impose any other conditions for participating in a SIMPLE IRA plan. Turbotax 2011 tax return Excludable employees. Turbotax 2011 tax return   The following employees do not need to be covered under a SIMPLE IRA plan. Turbotax 2011 tax return Employees who are covered by a union agreement and whose retirement benefits were bargained for in good faith by the employees' union and you. Turbotax 2011 tax return Nonresident alien employees who have received no U. Turbotax 2011 tax return S. Turbotax 2011 tax return source wages, salaries, or other personal services compensation from you. Turbotax 2011 tax return Compensation. Turbotax 2011 tax return   Compensation for employees is the total wages, tips, and other compensation from the employer subject to federal income tax withholding and the amounts paid for domestic service in a private home, local college club, or local chapter of a college fraternity or sorority. Turbotax 2011 tax return Compensation also includes the employee's salary reduction contributions made under this plan and, if applicable, elective deferrals under a section 401(k) plan, a SARSEP, or a section 403(b) annuity contract and compensation deferred under a section 457 plan required to be reported by the employer on Form W-2. Turbotax 2011 tax return If you are self-employed, compensation is your net earnings from self-employment (line 4 of Short Schedule SE or line 6 of Long Schedule SE (Form 1040)) before subtracting any contributions made to the SIMPLE IRA plan for yourself. Turbotax 2011 tax return How To Set Up a SIMPLE IRA Plan You can use Form 5304-SIMPLE or Form 5305-SIMPLE to set up a SIMPLE IRA plan. Turbotax 2011 tax return Each form is a model savings incentive match plan for employees (SIMPLE) plan document. Turbotax 2011 tax return Which form you use depends on whether you select a financial institution or your employees select the institution that will receive the contributions. Turbotax 2011 tax return Use Form 5304-SIMPLE if you allow each plan participant to select the financial institution for receiving his or her SIMPLE IRA plan contributions. Turbotax 2011 tax return Use Form 5305-SIMPLE if you require that all contributions under the SIMPLE IRA plan be deposited initially at a designated financial institution. Turbotax 2011 tax return The SIMPLE IRA plan is adopted when you have completed all appropriate boxes and blanks on the form and you (and the designated financial institution, if any) have signed it. Turbotax 2011 tax return Keep the original form. Turbotax 2011 tax return Do not file it with the IRS. Turbotax 2011 tax return Other uses of the forms. Turbotax 2011 tax return   If you set up a SIMPLE IRA plan using Form 5304-SIMPLE or Form 5305-SIMPLE, you can use the form to satisfy other requirements, including the following. Turbotax 2011 tax return Meeting employer notification requirements for the SIMPLE IRA plan. Turbotax 2011 tax return Form 5304-SIMPLE and Form 5305-SIMPLE contain a Model Notification to Eligible Employees that provides the necessary information to the employee. Turbotax 2011 tax return Maintaining the SIMPLE IRA plan records and proving you set up a SIMPLE IRA plan for employees. Turbotax 2011 tax return Deadline for setting up a SIMPLE IRA plan. Turbotax 2011 tax return   You can set up a SIMPLE IRA plan effective on any date from January 1 through October 1 of a year, provided you did not previously maintain a SIMPLE IRA plan. Turbotax 2011 tax return This requirement does not apply if you are a new employer that comes into existence after October 1 of the year the SIMPLE IRA plan is set up and you set up a SIMPLE IRA plan as soon as administratively feasible after your business comes into existence. Turbotax 2011 tax return If you previously maintained a SIMPLE IRA plan, you can set up a SIMPLE IRA plan effective only on January 1 of a year. Turbotax 2011 tax return A SIMPLE IRA plan cannot have an effective date that is before the date you actually adopt the plan. Turbotax 2011 tax return Setting up a SIMPLE IRA. Turbotax 2011 tax return   SIMPLE IRAs are the individual retirement accounts or annuities into which the contributions are deposited. Turbotax 2011 tax return A SIMPLE IRA must be set up for each eligible employee. Turbotax 2011 tax return Forms 5305-S, SIMPLE Individual Retirement Trust Account, and 5305-SA, SIMPLE Individual Retirement Custodial Account, are model trust and custodial account documents the participant and the trustee (or custodian) can use for this purpose. Turbotax 2011 tax return   A SIMPLE IRA cannot be a Roth IRA. Turbotax 2011 tax return Contributions to a SIMPLE IRA will not affect the amount an individual can contribute to a Roth or traditional IRA. Turbotax 2011 tax return Deadline for setting up a SIMPLE IRA. Turbotax 2011 tax return   A SIMPLE IRA must be set up for an employee before the first date by which a contribution is required to be deposited into the employee's IRA. Turbotax 2011 tax return See Time limits for contributing funds , later, under Contribution Limits. Turbotax 2011 tax return Credit for startup costs. Turbotax 2011 tax return   You may be able to claim a tax credit for part of the ordinary and necessary costs of starting a SIMPLE IRA plan that first became effective in 2013. Turbotax 2011 tax return For more information, see Credit for startup costs under Reminders, earlier. Turbotax 2011 tax return Notification Requirement If you adopt a SIMPLE IRA plan, you must notify each employee of the following information before the beginning of the election period. Turbotax 2011 tax return The employee's opportunity to make or change a salary reduction choice under a SIMPLE IRA plan. Turbotax 2011 tax return Your decision to make either matching contributions or nonelective contributions (discussed later). Turbotax 2011 tax return A summary description provided by the financial institution. Turbotax 2011 tax return Written notice that his or her balance can be transferred without cost or penalty if they use a designated financial institution. Turbotax 2011 tax return Election period. Turbotax 2011 tax return   The election period is generally the 60-day period immediately preceding January 1 of a calendar year (November 2 to December 31 of the preceding calendar year). Turbotax 2011 tax return However, the dates of this period are modified if you set up a SIMPLE IRA plan in mid-year (for example, on July 1) or if the 60-day period falls before the first day an employee becomes eligible to participate in the SIMPLE IRA plan. Turbotax 2011 tax return   A SIMPLE IRA plan can provide longer periods for permitting employees to enter into salary reduction agreements or to modify prior agreements. Turbotax 2011 tax return For example, a SIMPLE IRA plan can provide a 90-day election period instead of the 60-day period. Turbotax 2011 tax return Similarly, in addition to the 60-day period, a SIMPLE IRA plan can provide quarterly election periods during the 30 days before each calendar quarter, other than the first quarter of each year. Turbotax 2011 tax return Contribution Limits Contributions are made up of salary reduction contributions and employer contributions. Turbotax 2011 tax return You, as the employer, must make either matching contributions or nonelective contributions, defined later. Turbotax 2011 tax return No other contributions can be made to the SIMPLE IRA plan. Turbotax 2011 tax return These contributions, which you can deduct, must be made timely. Turbotax 2011 tax return See Time limits for contributing funds , later. Turbotax 2011 tax return Salary reduction contributions. Turbotax 2011 tax return   The amount the employee chooses to have you contribute to a SIMPLE IRA on his or her behalf cannot be more than $12,000 for 2013 and 2014. Turbotax 2011 tax return These contributions must be expressed as a percentage of the employee's compensation unless you permit the employee to express them as a specific dollar amount. Turbotax 2011 tax return You cannot place restrictions on the contribution amount (such as limiting the contribution percentage), except to comply with the $12,000 limit. Turbotax 2011 tax return   If you or an employee participates in any other qualified plan during the year and you or your employee have salary reduction contributions (elective deferrals) under those plans, the salary reduction contributions under a SIMPLE IRA plan also count toward the overall annual limit ($17,500 for 2013 and 2014) on exclusion of salary reduction contributions and other elective deferrals. Turbotax 2011 tax return Catch-up contributions. Turbotax 2011 tax return   A SIMPLE IRA plan can permit participants who are age 50 or over at the end of the calendar year to also make catch-up contributions. Turbotax 2011 tax return The catch-up contribution limit for 2013 and 2014 for SIMPLE IRA plans is $2,500. Turbotax 2011 tax return Salary reduction contributions are not treated as catch-up contributions for 2013 or 2014 until they exceed $12,000. Turbotax 2011 tax return However, the catch-up contribution a participant can make for a year cannot exceed the lesser of the following amounts. Turbotax 2011 tax return The catch-up contribution limit. Turbotax 2011 tax return The excess of the participant's compensation over the salary reduction contributions that are not catch-up contributions. Turbotax 2011 tax return Employer matching contributions. Turbotax 2011 tax return   You are generally required to match each employee's salary reduction contributions on a dollar-for-dollar basis up to 3% of the employee's compensation. Turbotax 2011 tax return This requirement does not apply if you make nonelective contributions as discussed later. Turbotax 2011 tax return Example. Turbotax 2011 tax return In 2013, your employee, John Rose, earned $25,000 and chose to defer 5% of his salary. Turbotax 2011 tax return Your net earnings from self-employment are $40,000, and you choose to contribute 10% of your earnings to your SIMPLE IRA. Turbotax 2011 tax return You make 3% matching contributions. Turbotax 2011 tax return The total contribution you make for John is $2,000, figured as follows. Turbotax 2011 tax return Salary reduction contributions ($25,000 × . Turbotax 2011 tax return 05) $1,250 Employer matching contribution ($25,000 × . Turbotax 2011 tax return 03) 750 Total contributions $2,000     The total contribution you make for yourself is $5,200, figured as follows. Turbotax 2011 tax return Salary reduction contributions ($40,000 × . Turbotax 2011 tax return 10) $4,000 Employer matching contribution ($40,000 × . Turbotax 2011 tax return 03) 1,200 Total contributions $5,200 Lower percentage. Turbotax 2011 tax return   If you choose a matching contribution less than 3%, the percentage must be at least 1%. Turbotax 2011 tax return You must notify the employees of the lower match within a reasonable period of time before the 60-day election period (discussed earlier) for the calendar year. Turbotax 2011 tax return You cannot choose a percentage less than 3% for more than 2 years during the 5-year period that ends with (and includes) the year for which the choice is effective. Turbotax 2011 tax return Nonelective contributions. Turbotax 2011 tax return   Instead of matching contributions, you can choose to make nonelective contributions of 2% of compensation on behalf of each eligible employee who has at least $5,000 (or some lower amount you select) of compensation from you for the year. Turbotax 2011 tax return If you make this choice, you must make nonelective contributions whether or not the employee chooses to make salary reduction contributions. Turbotax 2011 tax return Only $255,000 of the employee's compensation can be taken into account to figure the contribution limit in 2013 ($260,000 in 2014). Turbotax 2011 tax return   If you choose this 2% contribution formula, you must notify the employees within a reasonable period of time before the 60-day election period (discussed earlier) for the calendar year. Turbotax 2011 tax return Example 1. Turbotax 2011 tax return In 2013, your employee, Jane Wood, earned $36,000 and chose to have you contribute 10% of her salary. Turbotax 2011 tax return Your net earnings from self-employment are $50,000, and you choose to contribute 10% of your earnings to your SIMPLE IRA. Turbotax 2011 tax return You make a 2% nonelective contribution. Turbotax 2011 tax return Both of you are under age 50. Turbotax 2011 tax return The total contribution you make for Jane is $4,320, figured as follows. Turbotax 2011 tax return Salary reduction contributions ($36,000 × . Turbotax 2011 tax return 10) $3,600 2% nonelective contributions ($36,000 × . Turbotax 2011 tax return 02) 720 Total contributions $4,320     The total contribution you make for yourself is $6,000, figured as follows. Turbotax 2011 tax return Salary reduction contributions ($50,000 × . Turbotax 2011 tax return 10) $5,000 2% nonelective contributions ($50,000 × . Turbotax 2011 tax return 02) 1,000 Total contributions $6,000 Example 2. Turbotax 2011 tax return Using the same facts as in Example 1, above, the maximum contribution you make for Jane or for yourself if you each earned $75,000 is $13,500, figured as follows. Turbotax 2011 tax return Salary reduction contributions (maximum amount allowed) $12,000 2% nonelective contributions ($75,000 × . Turbotax 2011 tax return 02) 1,500 Total contributions $13,500 Time limits for contributing funds. Turbotax 2011 tax return   You must make the salary reduction contributions to the SIMPLE IRA within 30 days after the end of the month in which the amounts would otherwise have been payable to the employee in cash. Turbotax 2011 tax return You must make matching contributions or nonelective contributions by the due date (including extensions) for filing your federal income tax return for the year. Turbotax 2011 tax return Certain plans subject to Department of Labor rules may have an earlier due date for salary reduction contributions. Turbotax 2011 tax return When To Deduct Contributions You can deduct SIMPLE IRA contributions in the tax year within which the calendar year for which contributions were made ends. Turbotax 2011 tax return You can deduct contributions for a particular tax year if they are made for that tax year and are made by the due date (including extensions) of your federal income tax return for that year. Turbotax 2011 tax return Example 1. Turbotax 2011 tax return Your tax year is the fiscal year ending June 30. Turbotax 2011 tax return Contributions under a SIMPLE IRA plan for the calendar year 2013 (including contributions made in 2013 before July 1, 2013) are deductible in the tax year ending June 30, 2014. Turbotax 2011 tax return Example 2. Turbotax 2011 tax return You are a sole proprietor whose tax year is the calendar year. Turbotax 2011 tax return Contributions under a SIMPLE IRA plan for the calendar year 2013 (including contributions made in 2014 by April 15, 2014) are deductible in the 2013 tax year. Turbotax 2011 tax return Where To Deduct Contributions Deduct the contributions you make for your common-law employees on your tax return. Turbotax 2011 tax return For example, sole proprietors deduct them on Schedule C (Form 1040) or Schedule F (Form 1040); partnerships deduct them on Form 1065; and corporations deduct them on Form 1120 or Form 1120S. Turbotax 2011 tax return Sole proprietors and partners deduct contributions for themselves on line 28 of Form 1040. Turbotax 2011 tax return (If you are a partner, contributions for yourself are shown on the Schedule K-1 (Form 1065) you receive from the partnership. Turbotax 2011 tax return ) Tax Treatment of Contributions You can deduct your contributions and your employees can exclude these contributions from their gross income. Turbotax 2011 tax return SIMPLE IRA plan contributions are not subject to federal income tax withholding. Turbotax 2011 tax return However, salary reduction contributions are subject to social security, Medicare, and federal unemployment (FUTA) taxes. Turbotax 2011 tax return Matching and nonelective contributions are not subject to these taxes. Turbotax 2011 tax return Reporting on Form W-2. Turbotax 2011 tax return   Do not include SIMPLE IRA plan contributions in the “Wages, tips, other compensation” box of Form W-2. Turbotax 2011 tax return You must, however, include them in the “Social security wages” and “Medicare wages and tips” boxes. Turbotax 2011 tax return You must also include them in box 12. Turbotax 2011 tax return Mark the “Retirement plan” checkbox in box 13. Turbotax 2011 tax return For more information, see the Form W-2 instructions. Turbotax 2011 tax return Distributions (Withdrawals) Distributions from a SIMPLE IRA are subject to IRA rules and generally are includible in income for the year received. Turbotax 2011 tax return Tax-free rollovers can be made from one SIMPLE IRA into another SIMPLE IRA. Turbotax 2011 tax return However, a rollover from a SIMPLE IRA to a non-SIMPLE IRA can be made tax free only after a 2-year participation in the SIMPLE IRA plan. Turbotax 2011 tax return Generally, you or your employee must begin to receive distributions from a SIMPLE IRA by April 1 of the first year after the calendar year in which you or your employee reaches age 70½. Turbotax 2011 tax return Early withdrawals generally are subject to a 10% additional tax. Turbotax 2011 tax return However, the additional tax is increased to 25% if funds are withdrawn within 2 years of beginning participation. Turbotax 2011 tax return More information. Turbotax 2011 tax return   See Publication 590 for information about IRA rules, including those on the tax treatment of distributions, rollovers, required distributions, and income tax withholding. Turbotax 2011 tax return More Information on SIMPLE IRA Plans If you need help to set up or maintain a SIMPLE IRA plan, go to the IRS website and search SIMPLE IRA Plan. Turbotax 2011 tax return SIMPLE 401(k) Plan You can adopt a SIMPLE plan as part of a 401(k) plan if you meet the 100-employee limit as discussed earlier under SIMPLE IRA Plan. Turbotax 2011 tax return A SIMPLE 401(k) plan is a qualified retirement plan and generally must satisfy the rules discussed under Qualification Rules in chapter 4, including the required distribution rules. Turbotax 2011 tax return However, a SIMPLE 401(k) plan is not subject to the nondiscrimination and top-heavy rules discussed in chapter 4 if the plan meets the conditions listed below. Turbotax 2011 tax return Under the plan, an employee can choose to have you make salary reduction contributions for the year to a trust in an amount expressed as a percentage of the employee's compensation, but not more than $12,000 for 2013 and 2014. Turbotax 2011 tax return If permitted under the plan, an employee who is age 50 or over can also make a catch-up contribution of up to $2,500 for 2013 and 2014. Turbotax 2011 tax return See Catch-up contributions , earlier under Contribution Limits. Turbotax 2011 tax return You must make either: Matching contributions up to 3% of compensation for the year, or Nonelective contributions of 2% of compensation on behalf of each eligible employee who has at least $5,000 of compensation from you for the year. Turbotax 2011 tax return No other contributions can be made to the trust. Turbotax 2011 tax return No contributions are made, and no benefits accrue, for services during the year under any other qualified retirement plan sponsored by you on behalf of any employee eligible to participate in the SIMPLE 401(k) plan. Turbotax 2011 tax return The employee's rights to any contributions are nonforfeitable. Turbotax 2011 tax return No more than $255,000 of the employee's compensation can be taken into account in figuring matching contributions and nonelective contributions in 2013 ($260,000 in 2014). Turbotax 2011 tax return Compensation is defined earlier in this chapter. Turbotax 2011 tax return Employee notification. Turbotax 2011 tax return   The notification requirement that applies to SIMPLE IRA plans also applies to SIMPLE 401(k) plans. Turbotax 2011 tax return See Notification Requirement in this chapter. Turbotax 2011 tax return Credit for startup costs. Turbotax 2011 tax return   You may be able to claim a tax credit for part of the ordinary and necessary costs of starting a SIMPLE 401(k) plan that first became effective in 2013. Turbotax 2011 tax return For more information, see Credit for startup costs under Reminders, earlier. Turbotax 2011 tax return Note on Forms. Turbotax 2011 tax return   Please note that Forms 5304-SIMPLE and 5305-SIMPLE can not be used to establish a SIMPLE 401(k) plan. Turbotax 2011 tax return To set up a SIMPLE 401(k) plan, see Adopting a Written Plan in chapter 4. Turbotax 2011 tax return Prev  Up  Next   Home   More Online Publications