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Volunteer Income Tax Assistance

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

Software developers and researchers can use these data feeds and APIs to help people find useful government information.

This page can be found at usa.gov/developer


Send Us Your Feedback

If you are using these resources and have feedback or want to tell us about your product, please e-mail us. We'd also like to know if you have suggestions for new APIs.


APIs

American Job Center Resources APIs
American Job Center partners with O'Net to provide a variety of APIs that are useful for jobseekers.
Style: RESTful APIs
Read the Documentation.

BusinessUSA Resource Access API
BusinessUSA connects businesses to government services and information. The API provides access to resource abstracts including programs, services, data, events, and more.
Style: RESTful API
Return Format: XML, CSV
Read the Documentation.

Citizen Topics API
This API lists the topics that we use to organize content on USA.gov. You can access it via the /tags call to the Social Media Registry.
Style: RESTful API
Return Format: HTML5, JSON, XML
Read the Documentation.

DigitalGov Search API (formerly USASearch)
Provides DigitalGov Search customers with results. This API is only available for use on official government websites. Sign in is required.
Style: RESTful API (requires DigitalGov Search account)
Return Format: JSON, JSONP, XML
Read the Documentation.

Federal Agency Directory API
This API contains directory information about federal agencies, such as contact methods, in English and Spanish.
Style: RESTful API
Return Format: JSON, JSONP, XML
Read the Documentation. Explore the Interactive Documentation.

Go.USA.gov API
Go.USA.gov is a URL shortener for government employees. The API can shorten, preview, and show clicks on short URLs.
Style: RESTful API
Return Format: JSON, JSONP, XML, plain text
Read the Documentation.

Government Jobs API
This API returns job openings across the federal government and includes all current openings posted on USAJobs.gov that are open to the public and located in the United States. It also includes some state and local government jobs.
Style: RESTful API
Return Format: JSON
Read the Documentation.

MyUSA APIs
Project MyUSA re-imagines how citizens interact with government. Use the MyUSA API to build apps that integrate with MyUSA.
Style: RESTful APIs (requires authentication and registration)
Read the Documentation.

Product Recall Data API
This API returns food recalls from FoodSafety.gov, car recalls from the National Highway Traffic Safety Administration, and product safety recalls from the Consumer Product Safety Commission.
Style: RESTful API
Return Format: JSON
Read the Documentation.

Social Media Registry API
The Social Media Registry is an official source of information about federal government social media accounts.
Style: RESTful API
Return Format: HTML5, JSON, XML
Read the Documentation.

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Data Feeds

1.USA.gov Data
1.USA.gov URLs are created whenever anyone shortens a .gov or .mil URL using bitly.
Style: Raw pub/sub feed
Return Format: JSON
Read the Documentation.

Frequently Asked Questions XML
The contents of our frequently asked questions are available in English and Spanish.
Style: XML data file
Read the Documentation.

List of Non-.gov URLs in Our Search
We search across all federal, state, local, tribal, and territorial government websites. Most government websites end in .gov or .mil, but many do not. This is a list of all government URLs that do not end in .gov or .mil.
Style: TXT file
Read the Documentation.

RSS Directory
Find feeds from across government.
Style: RSS

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The Volunteer Income Tax Assistance

Volunteer income tax assistance Publication 503 - Introductory Material Table of Contents Future Developments Reminders IntroductionOrdering forms and publications. Volunteer income tax assistance Tax questions. Volunteer income tax assistance Useful Items - You may want to see: Future Developments For the latest information about developments related to Publication 503, such as legislation enacted after it was published, go to www. Volunteer income tax assistance irs. Volunteer income tax assistance gov/pub503. Volunteer income tax assistance Reminders Taxpayer identification number needed for each qualifying person. Volunteer income tax assistance  You must include on line 2 of Form 2441, Child and Dependent Care Expenses, the name and taxpayer identification number (generally the social security number) of each qualifying person. Volunteer income tax assistance See Taxpayer identification number under Qualifying Person Test, later. Volunteer income tax assistance You may have to pay employment taxes. Volunteer income tax assistance  If you pay someone to come to your home and care for your dependent or spouse, you may be a household employer who has to pay employment taxes. Volunteer income tax assistance Usually, you are not a household employer if the person who cares for your dependent or spouse does so at his or her home or place of business. Volunteer income tax assistance See Employment Taxes for Household Employers, later. Volunteer income tax assistance Photographs of missing children. Volunteer income tax assistance  The Internal Revenue Service is a proud partner with the National Center for Missing and Exploited Children. Volunteer income tax assistance Photographs of missing children selected by the Center may appear in this publication on pages that would otherwise be blank. Volunteer income tax assistance 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. Volunteer income tax assistance Introduction This publication explains the tests you must meet to claim the credit for child and dependent care expenses. Volunteer income tax assistance It explains how to figure and claim the credit. Volunteer income tax assistance You may be able to claim the credit if you pay someone to care for your dependent who is under age 13 or for your spouse or dependent who is not able to care for himself or herself. Volunteer income tax assistance The credit can be up to 35% of your expenses. Volunteer income tax assistance To qualify, you must pay these expenses so you can work or look for work. Volunteer income tax assistance This publication also discusses some of the employment tax rules for household employers. Volunteer income tax assistance Dependent care benefits. Volunteer income tax assistance   If you received any dependent care benefits from your employer during the year, you may be able to exclude from your income all or part of them. Volunteer income tax assistance You must complete Form 2441, Part III, before you can figure the amount of your credit. Volunteer income tax assistance See Dependent Care Benefits under How To Figure the Credit, later. Volunteer income tax assistance Comments and suggestions. Volunteer income tax assistance   We welcome your comments about this publication and your suggestions for future editions. Volunteer income tax assistance   You can write to us at the following address: Internal Revenue Service Tax Forms and Publications Division 1111 Constitution Ave. Volunteer income tax assistance NW, IR-6526 Washington, DC 20224   We respond to many letters by telephone. Volunteer income tax assistance Therefore, it would be helpful if you would include your daytime phone number, including the area code, in your correspondence. Volunteer income tax assistance   You can send your comments from www. Volunteer income tax assistance irs. Volunteer income tax assistance gov/formspubs/. Volunteer income tax assistance Click on “More Information” and then on “Comment on Tax Forms and Publications. Volunteer income tax assistance ”   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. Volunteer income tax assistance Ordering forms and publications. Volunteer income tax assistance   Visit www. Volunteer income tax assistance irs. Volunteer income tax assistance 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. Volunteer income tax assistance Internal Revenue Service 1201 N. Volunteer income tax assistance Mitsubishi Motorway Bloomington, IL 61705-6613 Tax questions. Volunteer income tax assistance   If you have a tax question, check the information available on IRS. Volunteer income tax assistance gov or call 1-800-829-1040. Volunteer income tax assistance We cannot answer tax questions sent to either of the above addresses. Volunteer income tax assistance Useful Items - You may want to see: Publication 501 Exemptions, Standard Deduction, and Filing Information 926 Household Employer's Tax Guide Form (and Instructions) 2441 Child and Dependent Care Expenses Schedule H (Form 1040) Household Employment Taxes W-10 Dependent Care Provider's Identification and Certification See How To Get Tax Help , near the end of this publication, for information about getting these publications and forms. Volunteer income tax assistance Prev  Up  Next   Home   More Online Publications