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Unemployed And Taxes

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Unemployed And Taxes

Unemployed and taxes Publication 526 - Introductory Material Table of Contents Future Developments What's New Reminders IntroductionOrdering forms and publications. Unemployed and taxes Tax questions. Unemployed and taxes Useful Items - You may want to see: Future Developments For the latest information about developments related to Publication 526 (such as legislation enacted after we release it), go to www. Unemployed and taxes irs. Unemployed and taxes gov/pub526. Unemployed and taxes What's New Limit on itemized deductions. Unemployed and taxes  For 2013, you may have to reduce the total amount of certain itemized deductions, including charitable contributions, if your adjusted gross income is more than: $150,000 if married filing separately, $250,000 if single, $275,000 if head of household, or $300,000 if married filing jointly or qualifying widow(er). Unemployed and taxes For more information and a worksheet, see the instructions for Schedule A (Form 1040). Unemployed and taxes Reminders Disaster relief. Unemployed and taxes  You can deduct contributions for flood relief, hurricane relief, or other disaster relief to a qualified organization (defined under Organizations That Qualify To Receive Deductible Contributions ). Unemployed and taxes However, you cannot deduct contributions earmarked for relief of a particular individual or family. Unemployed and taxes Publication 3833, Disaster Relief: Providing Assistance through Charitable Organizations, has more information about disaster relief, including how to establish a new charitable organization. Unemployed and taxes You can also find more information on IRS. Unemployed and taxes gov. Unemployed and taxes Enter “disaster relief” in the search box. Unemployed and taxes Photographs of missing children. Unemployed and taxes  The IRS is a proud partner with the National Center for Missing and Exploited Children. Unemployed and taxes Photographs of missing children selected by the Center may appear in this publication on pages that would otherwise be blank. Unemployed and taxes 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. Unemployed and taxes Introduction This publication explains how to claim a deduction for your charitable contributions. Unemployed and taxes It discusses the types of organizations to which you can make deductible charitable contributions and the types of contributions you can deduct. Unemployed and taxes It also discusses how much you can deduct, what records you must keep, and how to report charitable contributions. Unemployed and taxes A charitable contribution is a donation or gift to, or for the use of, a qualified organization. Unemployed and taxes It is voluntary and is made without getting, or expecting to get, anything of equal value. Unemployed and taxes Qualified organizations. Unemployed and taxes   Qualified organizations include nonprofit groups that are religious, charitable, educational, scientific, or literary in purpose, or that work to prevent cruelty to children or animals. Unemployed and taxes You will find descriptions of these organizations under Organizations That Qualify To Receive Deductible Contributions . Unemployed and taxes Form 1040 required. Unemployed and taxes   To deduct a charitable contribution, you must file Form 1040 and itemize deductions on Schedule A (Form 1040). Unemployed and taxes The amount of your deduction may be limited if certain rules and limits explained in this publication apply to you. Unemployed and taxes Comments and suggestions. Unemployed and taxes   We welcome your comments about this publication and your suggestions for future editions. Unemployed and taxes   You can write to us at the following address: Internal Revenue Service Tax Forms and Publications Division 1111 Constitution Ave. Unemployed and taxes NW, IR-6526 Washington, DC 20224   We respond to many letters by telephone. Unemployed and taxes Therefore, it would be helpful if you would include your daytime phone number, including the area code, in your correspondence. Unemployed and taxes   You can send your comments from www. Unemployed and taxes irs. Unemployed and taxes gov/formspubs/. Unemployed and taxes Click on “More Information” and then on “Comment on Tax Forms and Publications. Unemployed and taxes ”   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. Unemployed and taxes Ordering forms and publications. Unemployed and taxes   Visit www. Unemployed and taxes irs. Unemployed and taxes 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. Unemployed and taxes Internal Revenue Service 1201 N. Unemployed and taxes Mitsubishi Motorway Bloomington, IL 61705-6613 Tax questions. Unemployed and taxes   If you have a tax question, check the information available on IRS. Unemployed and taxes gov or call 1-800-829-1040. Unemployed and taxes We cannot answer tax questions sent to either of the above addresses. Unemployed and taxes Useful Items - You may want to see: Publication 561 Determining the Value of Donated Property Form (and Instructions) Schedule A (Form 1040) Itemized Deductions 8283 Noncash Charitable Contributions  See How To Get Tax Help near the end of this publication for information about getting these publications and forms. Unemployed and taxes Table 1. Unemployed and taxes Examples of Charitable Contributions—A Quick Check Use the following lists for a quick check of whether you can deduct a contribution. Unemployed and taxes See the rest of this publication for more information and additional rules and limits that may apply. Unemployed and taxes Deductible As Charitable Contributions Not Deductible As Charitable Contributions Money or property you give to: Money or property you give to: Churches, synagogues, temples, mosques, and other religious organizations  Federal, state, and local governments, if your contribution is solely for public purposes (for example, a gift to reduce the public debt or maintain a public park)  Nonprofit schools and hospitals  The Salvation Army, American Red Cross, CARE, Goodwill Industries, United Way, Boy Scouts of America, Girl Scouts of America, Boys and Girls Clubs of America, etc. Unemployed and taxes   War veterans' groups    Expenses paid for a student living with you, sponsored by a qualified organization  Out-of-pocket expenses when you serve a qualified organization as a volunteer Civic leagues, social and sports clubs, labor unions, and chambers of commerce  Foreign organizations (except certain Canadian, Israeli, and Mexican charities)  Groups that are run for personal profit  Groups whose purpose is to lobby for law changes  Homeowners' associations  Individuals  Political groups or candidates for public office    Cost of raffle, bingo, or lottery tickets  Dues, fees, or bills paid to country clubs, lodges, fraternal orders, or similar groups  Tuition  Value of your time or services  Value of blood given to a blood bank   Prev  Up  Next   Home   More Online Publications
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The Unemployed And Taxes

Unemployed and taxes 3. Unemployed and taxes   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. Unemployed and taxes 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. Unemployed and taxes In addition, you will contribute matching or nonelective contributions. Unemployed and taxes SIMPLE plans can only be maintained on a calendar-year basis. Unemployed and taxes A SIMPLE plan can be set up in either of the following ways. Unemployed and taxes Using SIMPLE IRAs (SIMPLE IRA plan). Unemployed and taxes As part of a 401(k) plan (SIMPLE 401(k) plan). Unemployed and taxes Many financial institutions will help you set up a SIMPLE plan. Unemployed and taxes SIMPLE IRA Plan A SIMPLE IRA plan is a retirement plan that uses SIMPLE IRAs for each eligible employee. Unemployed and taxes Under a SIMPLE IRA plan, a SIMPLE IRA must be set up for each eligible employee. Unemployed and taxes For the definition of an eligible employee, see Who Can Participate in a SIMPLE IRA Plan , later. Unemployed and taxes Who Can Set Up a SIMPLE IRA Plan? You can set up a SIMPLE IRA plan if you meet both the following requirements. Unemployed and taxes You meet the employee limit. Unemployed and taxes You do not maintain another qualified plan unless the other plan is for collective bargaining employees. Unemployed and taxes Employee limit. Unemployed and taxes   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. Unemployed and taxes 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. Unemployed and taxes Employees include self-employed individuals who received earned income and leased employees (defined in chapter 1). Unemployed and taxes   Once you set up a SIMPLE IRA plan, you must continue to meet the 100-employee limit each year you maintain the plan. Unemployed and taxes Grace period for employers who cease to meet the 100-employee limit. Unemployed and taxes   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. Unemployed and taxes   A different rule applies if you do not meet the 100-employee limit because of an acquisition, disposition, or similar transaction. Unemployed and taxes 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. Unemployed and taxes Coverage under the plan has not significantly changed during the grace period. Unemployed and taxes The SIMPLE IRA plan would have continued to qualify after the transaction if you had remained a separate employer. Unemployed and taxes    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. Unemployed and taxes Other qualified plan. Unemployed and taxes   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. Unemployed and taxes Exception. Unemployed and taxes   If you maintain a qualified plan for collective bargaining employees, you are permitted to maintain a SIMPLE IRA plan for other employees. Unemployed and taxes Who Can Participate in a SIMPLE IRA Plan? Eligible employee. Unemployed and taxes   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. Unemployed and taxes The term “employee” includes a self-employed individual who received earned income. Unemployed and taxes   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. Unemployed and taxes For example, you can allow participation for employees who received at least $3,000 in compensation during any preceding calendar year. Unemployed and taxes However, you cannot impose any other conditions for participating in a SIMPLE IRA plan. Unemployed and taxes Excludable employees. Unemployed and taxes   The following employees do not need to be covered under a SIMPLE IRA plan. Unemployed and taxes Employees who are covered by a union agreement and whose retirement benefits were bargained for in good faith by the employees' union and you. Unemployed and taxes Nonresident alien employees who have received no U. Unemployed and taxes S. Unemployed and taxes source wages, salaries, or other personal services compensation from you. Unemployed and taxes Compensation. Unemployed and taxes   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. Unemployed and taxes 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. Unemployed and taxes 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. Unemployed and taxes 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. Unemployed and taxes Each form is a model savings incentive match plan for employees (SIMPLE) plan document. Unemployed and taxes Which form you use depends on whether you select a financial institution or your employees select the institution that will receive the contributions. Unemployed and taxes Use Form 5304-SIMPLE if you allow each plan participant to select the financial institution for receiving his or her SIMPLE IRA plan contributions. Unemployed and taxes Use Form 5305-SIMPLE if you require that all contributions under the SIMPLE IRA plan be deposited initially at a designated financial institution. Unemployed and taxes 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. Unemployed and taxes Keep the original form. Unemployed and taxes Do not file it with the IRS. Unemployed and taxes Other uses of the forms. Unemployed and taxes   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. Unemployed and taxes Meeting employer notification requirements for the SIMPLE IRA plan. Unemployed and taxes Form 5304-SIMPLE and Form 5305-SIMPLE contain a Model Notification to Eligible Employees that provides the necessary information to the employee. Unemployed and taxes Maintaining the SIMPLE IRA plan records and proving you set up a SIMPLE IRA plan for employees. Unemployed and taxes Deadline for setting up a SIMPLE IRA plan. Unemployed and taxes   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. Unemployed and taxes 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. Unemployed and taxes If you previously maintained a SIMPLE IRA plan, you can set up a SIMPLE IRA plan effective only on January 1 of a year. Unemployed and taxes A SIMPLE IRA plan cannot have an effective date that is before the date you actually adopt the plan. Unemployed and taxes Setting up a SIMPLE IRA. Unemployed and taxes   SIMPLE IRAs are the individual retirement accounts or annuities into which the contributions are deposited. Unemployed and taxes A SIMPLE IRA must be set up for each eligible employee. Unemployed and taxes 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. Unemployed and taxes   A SIMPLE IRA cannot be a Roth IRA. Unemployed and taxes Contributions to a SIMPLE IRA will not affect the amount an individual can contribute to a Roth or traditional IRA. Unemployed and taxes Deadline for setting up a SIMPLE IRA. Unemployed and taxes   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. Unemployed and taxes See Time limits for contributing funds , later, under Contribution Limits. Unemployed and taxes Credit for startup costs. Unemployed and taxes   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. Unemployed and taxes For more information, see Credit for startup costs under Reminders, earlier. Unemployed and taxes 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. Unemployed and taxes The employee's opportunity to make or change a salary reduction choice under a SIMPLE IRA plan. Unemployed and taxes Your decision to make either matching contributions or nonelective contributions (discussed later). Unemployed and taxes A summary description provided by the financial institution. Unemployed and taxes Written notice that his or her balance can be transferred without cost or penalty if they use a designated financial institution. Unemployed and taxes Election period. Unemployed and taxes   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). Unemployed and taxes 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. Unemployed and taxes   A SIMPLE IRA plan can provide longer periods for permitting employees to enter into salary reduction agreements or to modify prior agreements. Unemployed and taxes For example, a SIMPLE IRA plan can provide a 90-day election period instead of the 60-day period. Unemployed and taxes 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. Unemployed and taxes Contribution Limits Contributions are made up of salary reduction contributions and employer contributions. Unemployed and taxes You, as the employer, must make either matching contributions or nonelective contributions, defined later. Unemployed and taxes No other contributions can be made to the SIMPLE IRA plan. Unemployed and taxes These contributions, which you can deduct, must be made timely. Unemployed and taxes See Time limits for contributing funds , later. Unemployed and taxes Salary reduction contributions. Unemployed and taxes   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. Unemployed and taxes 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. Unemployed and taxes You cannot place restrictions on the contribution amount (such as limiting the contribution percentage), except to comply with the $12,000 limit. Unemployed and taxes   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. Unemployed and taxes Catch-up contributions. Unemployed and taxes   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. Unemployed and taxes The catch-up contribution limit for 2013 and 2014 for SIMPLE IRA plans is $2,500. Unemployed and taxes Salary reduction contributions are not treated as catch-up contributions for 2013 or 2014 until they exceed $12,000. Unemployed and taxes However, the catch-up contribution a participant can make for a year cannot exceed the lesser of the following amounts. Unemployed and taxes The catch-up contribution limit. Unemployed and taxes The excess of the participant's compensation over the salary reduction contributions that are not catch-up contributions. Unemployed and taxes Employer matching contributions. Unemployed and taxes   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. Unemployed and taxes This requirement does not apply if you make nonelective contributions as discussed later. Unemployed and taxes Example. Unemployed and taxes In 2013, your employee, John Rose, earned $25,000 and chose to defer 5% of his salary. Unemployed and taxes Your net earnings from self-employment are $40,000, and you choose to contribute 10% of your earnings to your SIMPLE IRA. Unemployed and taxes You make 3% matching contributions. Unemployed and taxes The total contribution you make for John is $2,000, figured as follows. Unemployed and taxes Salary reduction contributions ($25,000 × . Unemployed and taxes 05) $1,250 Employer matching contribution ($25,000 × . Unemployed and taxes 03) 750 Total contributions $2,000     The total contribution you make for yourself is $5,200, figured as follows. Unemployed and taxes Salary reduction contributions ($40,000 × . Unemployed and taxes 10) $4,000 Employer matching contribution ($40,000 × . Unemployed and taxes 03) 1,200 Total contributions $5,200 Lower percentage. Unemployed and taxes   If you choose a matching contribution less than 3%, the percentage must be at least 1%. Unemployed and taxes 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. Unemployed and taxes 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. Unemployed and taxes Nonelective contributions. Unemployed and taxes   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. Unemployed and taxes If you make this choice, you must make nonelective contributions whether or not the employee chooses to make salary reduction contributions. Unemployed and taxes Only $255,000 of the employee's compensation can be taken into account to figure the contribution limit in 2013 ($260,000 in 2014). Unemployed and taxes   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. Unemployed and taxes Example 1. Unemployed and taxes In 2013, your employee, Jane Wood, earned $36,000 and chose to have you contribute 10% of her salary. Unemployed and taxes Your net earnings from self-employment are $50,000, and you choose to contribute 10% of your earnings to your SIMPLE IRA. Unemployed and taxes You make a 2% nonelective contribution. Unemployed and taxes Both of you are under age 50. Unemployed and taxes The total contribution you make for Jane is $4,320, figured as follows. Unemployed and taxes Salary reduction contributions ($36,000 × . Unemployed and taxes 10) $3,600 2% nonelective contributions ($36,000 × . Unemployed and taxes 02) 720 Total contributions $4,320     The total contribution you make for yourself is $6,000, figured as follows. Unemployed and taxes Salary reduction contributions ($50,000 × . Unemployed and taxes 10) $5,000 2% nonelective contributions ($50,000 × . Unemployed and taxes 02) 1,000 Total contributions $6,000 Example 2. Unemployed and taxes 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. Unemployed and taxes Salary reduction contributions (maximum amount allowed) $12,000 2% nonelective contributions ($75,000 × . Unemployed and taxes 02) 1,500 Total contributions $13,500 Time limits for contributing funds. Unemployed and taxes   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. Unemployed and taxes You must make matching contributions or nonelective contributions by the due date (including extensions) for filing your federal income tax return for the year. Unemployed and taxes Certain plans subject to Department of Labor rules may have an earlier due date for salary reduction contributions. Unemployed and taxes 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. Unemployed and taxes 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. Unemployed and taxes Example 1. Unemployed and taxes Your tax year is the fiscal year ending June 30. Unemployed and taxes 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. Unemployed and taxes Example 2. Unemployed and taxes You are a sole proprietor whose tax year is the calendar year. Unemployed and taxes 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. Unemployed and taxes Where To Deduct Contributions Deduct the contributions you make for your common-law employees on your tax return. Unemployed and taxes 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. Unemployed and taxes Sole proprietors and partners deduct contributions for themselves on line 28 of Form 1040. Unemployed and taxes (If you are a partner, contributions for yourself are shown on the Schedule K-1 (Form 1065) you receive from the partnership. Unemployed and taxes ) Tax Treatment of Contributions You can deduct your contributions and your employees can exclude these contributions from their gross income. Unemployed and taxes SIMPLE IRA plan contributions are not subject to federal income tax withholding. Unemployed and taxes However, salary reduction contributions are subject to social security, Medicare, and federal unemployment (FUTA) taxes. Unemployed and taxes Matching and nonelective contributions are not subject to these taxes. Unemployed and taxes Reporting on Form W-2. Unemployed and taxes   Do not include SIMPLE IRA plan contributions in the “Wages, tips, other compensation” box of Form W-2. Unemployed and taxes You must, however, include them in the “Social security wages” and “Medicare wages and tips” boxes. Unemployed and taxes You must also include them in box 12. Unemployed and taxes Mark the “Retirement plan” checkbox in box 13. Unemployed and taxes For more information, see the Form W-2 instructions. Unemployed and taxes Distributions (Withdrawals) Distributions from a SIMPLE IRA are subject to IRA rules and generally are includible in income for the year received. Unemployed and taxes Tax-free rollovers can be made from one SIMPLE IRA into another SIMPLE IRA. Unemployed and taxes 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. Unemployed and taxes 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. Unemployed and taxes Early withdrawals generally are subject to a 10% additional tax. Unemployed and taxes However, the additional tax is increased to 25% if funds are withdrawn within 2 years of beginning participation. Unemployed and taxes More information. Unemployed and taxes   See Publication 590 for information about IRA rules, including those on the tax treatment of distributions, rollovers, required distributions, and income tax withholding. Unemployed and taxes 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. Unemployed and taxes 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. Unemployed and taxes 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. Unemployed and taxes 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. Unemployed and taxes 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. Unemployed and taxes 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. Unemployed and taxes See Catch-up contributions , earlier under Contribution Limits. Unemployed and taxes 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. Unemployed and taxes No other contributions can be made to the trust. Unemployed and taxes 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. Unemployed and taxes The employee's rights to any contributions are nonforfeitable. Unemployed and taxes 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). Unemployed and taxes Compensation is defined earlier in this chapter. Unemployed and taxes Employee notification. Unemployed and taxes   The notification requirement that applies to SIMPLE IRA plans also applies to SIMPLE 401(k) plans. Unemployed and taxes See Notification Requirement in this chapter. Unemployed and taxes Credit for startup costs. Unemployed and taxes   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. Unemployed and taxes For more information, see Credit for startup costs under Reminders, earlier. Unemployed and taxes Note on Forms. Unemployed and taxes   Please note that Forms 5304-SIMPLE and 5305-SIMPLE can not be used to establish a SIMPLE 401(k) plan. Unemployed and taxes To set up a SIMPLE 401(k) plan, see Adopting a Written Plan in chapter 4. Unemployed and taxes Prev  Up  Next   Home   More Online Publications