Filing Your Taxes Online is Fast, Easy and Secure.
Start now and receive your tax refund in as little as 7 days.

1. Get Answers

Your online questions are customized to your unique tax situation.

2. Maximize your Refund

Find tax credits for everything from school tuition to buying a hybri

3. E-File for FREE

E-file free with direct deposit to get your refund in as few as 7 days.

Filing your taxes with paper mail can be difficult and it could take weeks for your refund to arrive. IRS e-file is easy, fast and secure. There is no paperwork going to the IRS so tax refunds can be processed in as little as 7 days with direct deposit. As you prepare your taxes online, you can see your tax refund in real time.

FREE audit support and representation from an enrolled agent – NEW and only from H&R Block

1040x Fillable

Tax Act 2010How Do I Amend My 2013 Tax ReturnForm 1040 EsHow To Fill Out A 1040xCan I Amend My 2013 Tax ReturnFile 2011 Tax Return OnlineIrs Amended Return FormIrs GovFile Taxes Online For FreeState Tax EfileHow To Amend Previous Tax Returns2006 Tax FormsFile Amended Tax Return 2011 OnlineFree Electronic Tax FilingHow To Amend A Tax Return 2012Amending Tax Returns1040ez Form For 2014Free Tax Extension FormDeadline For TaxesFree Turbo Tax For MilitaryIrs FreeWww.state Tax FormsIrs Extention FormsAmmended Tax Return2010 Online Tax FilingSoftware For 1040nrIrs Form 1040IrsIrs 1040 Ez Form 2012File Federal And State Taxes Free1040 Ez Form OnlineFile Free Federal And State Taxes1040 OnlineFederal Ez FormPrior Year Tax ReturnFree 2010 Tax FilingTaxes LateTax Software 2012How To File Taxes For 20121040nr Form 2012

1040x Fillable

1040x fillable Listed Property Table of Contents Topics - This chapter discusses: Useful Items - You may want to see: Listed Property DefinedPassenger Automobile Defined Dwelling Unit Other Property Used for Transportation Computers and Related Peripheral Equipment Predominant Use TestMeeting the Predominant Use Test Qualified Business Use Method of Allocating Use Applying the Predominant Use Test Deductions After Recovery Period Leased PropertyLessor Lessee What Records Must Be KeptAdequate Records Reporting Information on Form 4562 Deductions in Later Years Appendix Topics - This chapter discusses: Listed property defined The predominant use test What records must be kept Useful Items - You may want to see: Publication 463 Travel, Entertainment, and Gift Expenses 587 Business Use of Your Home (Including Use by Day-Care Providers) 917 Business Use of a Car 946 How To Depreciate Property Form (and Instructions) 2106–EZ Unreimbursed Employee Business Expenses 2106 Employee Business Expenses 4255 Recapture of Investment Credit 4562 Depreciation and Amortization This chapter discusses some special rules and recordkeeping requirements for listed property. 1040x fillable For complete coverage of the rules, including the rules concerning passenger automobiles, see Publication 946. 1040x fillable If listed property is not used predominantly (more than 50%) in a qualified business use as discussed inPredominant Use Test, later, the section 179 deduction is not allowable and the property must be depreciated using the straight line method. 1040x fillable Listed Property Defined Listed property is any of the following: Any passenger automobile (defined later), Any other property used for transportation, Any property of a type generally used for entertainment, recreation, or amusement (including photographic, phonographic, communication, and video recording equipment), Any computer and related peripheral equipment, defined later, unless it is used only at a regular business establishment and owned or leased by the person operating the establishment. 1040x fillable A regular business establishment includes a portion of a dwelling unit (defined later), if, and only if, that portion is used both regularly and exclusively for business as discussed in Publication 587. 1040x fillable Any cellular telephone (or similar telecommunication equipment) placed in service or leased in a tax year beginning after 1989. 1040x fillable Passenger Automobile Defined A passenger automobile is any four-wheeled vehicle made primarily for use on public streets, roads, and highways and rated at 6,000 pounds or less of unloaded gross vehicle weight (at 6,000 pounds or less of gross vehicle weight for trucks and vans). 1040x fillable It includes any part, component, or other item physically attached to the automobile or usually included in the purchase price of an automobile. 1040x fillable A passenger automobile does not include: An ambulance, hearse, or combination ambulance-hearse used directly in a trade or business, and A vehicle used directly in the trade or business of transporting persons or property for compensation or hire. 1040x fillable Dwelling Unit A dwelling unit is a house or apartment used to provide living accommodations in a building or structure. 1040x fillable It does not include a unit in a hotel, motel, inn, or other establishment where more than half the units are used on a transient basis. 1040x fillable Other Property Used for Transportation Other property used for transportation includes trucks, buses, boats, airplanes, motorcycles, and any other vehicles for transporting persons or goods. 1040x fillable Listed property does not include: Any vehicle which, by reason of its design, is not likely to be used more than a minimal amount for personal purposes, such as clearly marked police and fire vehicles, ambulances, or hearses used for those purposes, Any vehicle that is designed to carry cargo and that has a loaded gross vehicle weight over 14,000 pounds, bucket trucks (cherry pickers), cement mixers, combines, cranes and derricks, delivery trucks with seating only for the driver (or only for the driver plus a folding jump seat), dump trucks (including garbage trucks), flatbed trucks, forklifts, qualified moving vans, qualified specialized utility repair trucks, and refrigerated trucks, Any passenger bus used for that purpose with a capacity of at least 20 passengers and school buses, Any tractor or other special purpose farm vehicle, and unmarked vehicles used by law enforcement officers if the use is officially authorized, and Any vehicle, such as a taxicab, if substantially all its use is in the trade or business of providing services to transport persons or property for compensation or hire by unrelated persons. 1040x fillable Computers and Related Peripheral Equipment A computer is a programmable electronically activated device that: Is capable of accepting information, applying prescribed processes to the information, and supplying the results of those processes with or without human intervention, and Consists of a central processing unit with extensive storage, logic, arithmetic, and control capabilities. 1040x fillable Related peripheral equipment is any auxiliary machine which is designed to be controlled by the central processing unit of a computer. 1040x fillable Computer or peripheral equipment does not include: Any equipment which is an integral part of property which is not a computer, Typewriters, calculators, adding and accounting machines, copiers, duplicating equipment, and similar equipment, and Equipment of a kind, used primarily for the user's amusement or entertainment, such as video games. 1040x fillable Predominant Use Test If “listed property,” defined earlier, placed in service after June 18, 1984, is not used predominantly (more than 50%) in a qualified business use during any tax year: The section 179 deduction on the property is not allowable, and You must depreciate the property using the straight line method. 1040x fillable Listed property placed in service before 1987. 1040x fillable   For listed property placed in service before 1987, depreciate the property over the following period: Class of Property Listed Property Recovery Period 3-year property 5 years 5-year property 12 years 10-year property 25 years 18-year real property 40 years 19-year real property 40 years If you must use the above recovery periods for listed property not used predominantly in a trade or business, use the percentages from Table 16 titled Listed Property Not Used Predominantly (Other Than 18- or 19-year Real Property), and Table 17 for 18- or 19-year real property, near the end of this publication in the Appendix. 1040x fillable Listed property placed in service after 1986. 1040x fillable   For information on listed property placed in service after 1986, see Publication 946. 1040x fillable Meeting the Predominant Use Test Listed property meets the predominant use test for any tax year if its business use is more than 50% of its total use. 1040x fillable You must allocate the use of any item of listed property used for more than one purpose during the tax year among its various uses. 1040x fillable The percentage of investment use of listed property cannot be used as part of the percentage of qualified business use to meet the predominant use test. 1040x fillable However, the combined total of business and investment use is taken into account to figure your depreciation deduction for the property. 1040x fillable Note: Property does not stop being predominantly used in a qualified business use because of a transfer at death. 1040x fillable Example. 1040x fillable Sarah Bradley uses a home computer 50% of the time to manage her investments. 1040x fillable She also uses the computer 40% of the time in her part-time consumer research business. 1040x fillable Sarah's home computer is listed property because it is not used at a regular business establishment. 1040x fillable Because her business use of the computer does not exceed 50%, the computer is not predominantly used in a qualified business use for the tax year. 1040x fillable Because she does not meet the predominant use test, she cannot elect a section 179 deduction for this property. 1040x fillable Her combined rate of business/investment use for determining her depreciation deduction is 90%. 1040x fillable Qualified Business Use A qualified business use is any use in your trade or business. 1040x fillable However, it does not include: The use of property held merely to produce income (investment use), The leasing of property to any 5% owner or related person (to the point that the property is used by a 5% owner or person related to the owner or lessee of the property), The use of property as compensation for the performance of services by a 5% owner or related person, or The use of property as compensation for the performance of services by any person (other than a5% owner or related person) unless the value of the use is included in that person's gross income for the use of the property and income tax is withheld on that amount where required. 1040x fillable See Employees, later. 1040x fillable 5% owner. 1040x fillable   A 5% owner of a business, other than a corporation, is any person who owns more than 5% of the capital or profits interest in the business. 1040x fillable   A 5% owner of a corporation is any person who owns, or is considered to own: More than 5% of the outstanding stock of the corporation, or Stock possessing more than 5% of the total combined voting power of all stock in the corporation. 1040x fillable Related person. 1040x fillable   A related person is anyone related to a taxpayer as discussed under Related persons, in chapter 2 under Nonqualifying Property in Publication 946. 1040x fillable Entertainment Use The use of listed property for entertainment, recreation, or amusement purposes is treated as a qualified business use only to the extent that expenses (other than interest and property tax expenses) for its use are deductible as ordinary and necessary business expenses. 1040x fillable See Publication 463. 1040x fillable Leasing or Compensatory Use of Aircraft If at least 25% of the total use of any aircraft during the tax year is for a qualified business use, the leasing or compensatory use of the aircraft by a 5% owner or related person is treated as a qualified business use. 1040x fillable Commuting The use of a vehicle for commuting is not business use, regardless of whether work is performed during the trip. 1040x fillable Use of Your Passenger Automobile by Another Person If someone else uses your automobile, that use is not business use unless: That use is directly connected with your business, The value of the use is property reported by you as income to the other person and tax is withheld on the income where required, or The value of the use results in a payment of fair market rent. 1040x fillable Any payment to you for the use of the automobile is treated as a rent payment for 3). 1040x fillable Employees Any use by an employee of his or her own listed property (or listed property rented by an employee) in performing services as an employee is not business use unless: The use is for the employer's convenience, and The use is required as a condition of employment. 1040x fillable Use for the employer's convenience. 1040x fillable   Whether the use of listed property is for the employer's convenience must be determined from all the facts. 1040x fillable The use is for the employer's convenience if it is for a substantial business reason of the employer. 1040x fillable The use of listed property during the employee's regular working hours to carry on the employer's business is generally for the employer's convenience. 1040x fillable Use required as a condition of employment. 1040x fillable   Whether the use of listed property is a condition of employment depends on all the facts and circumstances. 1040x fillable The use of property must be required for the employee to perform duties properly. 1040x fillable The employer need not explicitly require the employee to use the property. 1040x fillable A mere statement by the employer that the use of the property is a condition of employment is not sufficient. 1040x fillable Example 1. 1040x fillable Virginia Sycamore is employed as a courier with We Deliver which provides local courier services. 1040x fillable She owns and uses a motorcycle to deliver packages to downtown offices. 1040x fillable We Deliver explicitly requires all delivery persons to own a small car or motorcycle for use in their employment. 1040x fillable The company reimburses delivery persons for their costs. 1040x fillable Virginia's use of the motorcycle is for the convenience of We Deliver and is required as a condition of employment. 1040x fillable Example 2. 1040x fillable Bill Nelson is an inspector for Uplift, a construction company with many sites in the local area. 1040x fillable He must travel to these sites on a regular basis. 1040x fillable Uplift does not furnish an automobile or explicitly require him to use his own automobile. 1040x fillable However, it reimburses him for any costs he incurs in traveling to the various sites. 1040x fillable The use of his own automobile or a rental automobile is for the convenience of Uplift and is required as a condition of employment. 1040x fillable Method of Allocating Use For passenger automobiles and other means of transportation, allocate the property's use on the basis of mileage. 1040x fillable You determine the percentage of qualified business use by dividing the number of miles the vehicle is driven for business purposes during the year by the total number of miles the vehicle is driven for all purposes (including business miles) during the year. 1040x fillable For other items of listed property, allocate the property's use on the basis of the most appropriate unit of time. 1040x fillable For example, you can determine the percentage of business use of a computer by dividing the number of hours the computer is used for business purposes during the year by the total number of hours the computer is used for all purposes (including business hours) during the year. 1040x fillable Applying the Predominant Use Test You must apply the predominant use test for an item of listed property each year of the recovery period. 1040x fillable First Recovery Year If any item of listed property is not used predominantly in a qualified business use in the year it is placed in service: The property is not eligible for a section 179 deduction, and The depreciation deduction must be figured using the straight line method. 1040x fillable Note: The required use of the straight line method for an item of listed property that does not meet the predominant use test is not the same as electing the straight line method. 1040x fillable It does not mean that you have to use the straight line method for other property in the same class as the item of listed property. 1040x fillable Years After the First Recovery Year If you use listed property predominantly (more than 50%) in a qualified business use in the tax year you place it in service, but not in a subsequent tax year during the recovery period, the following rules apply: Figure depreciation using the straight line method. 1040x fillable Do this for each year, beginning with the year you no longer use the property predominantly in a qualified business use, and Figure any excess depreciation on the property and add it to: Your gross income, and The adjusted basis of your property. 1040x fillable See Recapture of excess depreciation, next. 1040x fillable Recapture of excess depreciation. 1040x fillable   You must include any excess depreciation in your gross income for the first tax year the property is not predominantly used in a qualified business use. 1040x fillable Any excess depreciation must also be added to the adjusted basis of your property. 1040x fillable Excess depreciation is the excess (if any) of: The amount of depreciation allowable for the property (including any section 179 deduction claimed) for tax years before the first tax year the property was not predominantly used in a qualified business use, over The amount of depreciation that would have been allowable for those years if the property were not used predominantly in a qualified business use for the year it was placed in service. 1040x fillable This means you figure your depreciation using the percentages fromTable 16 or 17. 1040x fillable For information on investment credit recapture, see the instructions for Form 4255. 1040x fillable Deductions After Recovery Period When listed property (other than passenger automobiles) is used for business, investment, and personal purposes, no deduction is ever allowable for the personal use. 1040x fillable In tax years after the recovery period, you must determine if there is any unrecovered basis remaining before you compute the depreciation deduction for that tax year. 1040x fillable To make this determination, figure the depreciation for earlier tax years as if your property were used 100% for business or investment purposes, beginning with the first tax year in which some or all use is for business or investment. 1040x fillable See Car Used 50% or Less for Business in Publication 917. 1040x fillable Leased Property The limitations on cost recovery deductions apply to the rental of listed property. 1040x fillable The following discussion covers the rules that apply to the lessor (the owner of the property) and the lessee (the person who rents the property from the owner). 1040x fillable SeeLeasing a Car in Publication 917 for a discussion of leased passenger automobiles. 1040x fillable Lessor The limitations on cost recovery generally do not apply to any listed property leased or held for leasing by anyone regularly engaged in the business of leasing listed property. 1040x fillable A person is considered regularly engaged in the business of leasing listed property only if contracts for leasing of listed property are entered into with some frequency over a continuous period of time. 1040x fillable This determination is made on the basis of the facts and circumstances in each case and takes into account the nature of the person's business in its entirety. 1040x fillable Occasional or incidental leasing activity is insufficient. 1040x fillable For example, a person leasing only one passenger automobile during a tax year is not regularly engaged in the business of leasing automobiles. 1040x fillable An employer who allows an employee to use the employer's property for personal purposes and charges the employee for the use is not regularly engaged in the business of leasing the property used by the employee. 1040x fillable Lessee A lessee of listed property (other than passenger automobiles), must include an amount in gross income called the inclusion amount for the first tax year the property is not used predominantly in a qualified business use. 1040x fillable Inclusion amount for property leased before 1987. 1040x fillable   You determine the inclusion amount for property leased after June 18, 1984 and before 1987 by multiplying the fair market value of the property by both the average business/investment use percentage and the applicable percentage. 1040x fillable You can find the applicable percentages for listed property that is 5- or 10-year recovery property in Tables 19 or 20 in Appendix A of Publication 946. 1040x fillable   The lease term for listed property other than 18- or 19-year real property, and residential rental or nonresidential real property, includes options to renew. 1040x fillable For 18- or 19-year real property and residential rental or nonresidential real property that is listed property, the period of the lease does not include any option to renew at fair market value, determined at the time of renewal. 1040x fillable You treat two or more successive leases that are part of the same transaction (or a series of related transactions) for the same or substantially similar property as one lease. 1040x fillable Special rules. 1040x fillable   The lessee adds the inclusion amount to gross income in the next tax year if: The lease term begins within 9 months before the close of the lessee's tax year, The lessee does not use the property predominantly in a qualified business use during that portion of the tax year, and The lease term continues into the lessee's next tax year. 1040x fillable The lessee determines the inclusion amount by taking into account the average of the business/investment use for both tax years and the applicable percentage for the tax year the lease term begins. 1040x fillable   If the lease term is less than one year, the amount included in gross income is the amount that bears the same ratio to the additional inclusion amount as the number of days in the lease term bears to 365. 1040x fillable Maximum inclusion amount. 1040x fillable   The inclusion amount cannot be more than the sum of the deductible amounts of rent allocable to the lessee's tax year in which the amount must be included in gross income. 1040x fillable What Records Must Be Kept You cannot take any depreciation or section 179 deduction for the use of listed property (including passenger automobiles) unless you can prove business/investment use with adequate records or sufficient evidence to support your own statements. 1040x fillable How long to keep records. 1040x fillable   For listed property, records must be kept for as long as any excess depreciation can be recaptured (included in income). 1040x fillable Adequate Records To meet the adequate records requirement, you must maintain an account book, diary, log, statement of expense, trip sheet, or similar record or other documentary evidence that, together with the receipt, is sufficient to establish each element of an expenditure or use. 1040x fillable It is not necessary to record information in an account book, diary, or similar record if the information is already shown on the receipt. 1040x fillable However, your records should back up your receipts in an orderly manner. 1040x fillable Elements of Expenditure or Use The records or other documentary evidence must support: The amount of each separate expenditure, such as the cost of acquiring the item, maintenance and repair costs, capital improvement costs, lease payments, and any other expenses, The amount of each business and investment use (based on an appropriate measure, such as mileage for vehicles and time for other listed property), and the total use of the property for the tax year, The date of the expenditure or use, and The business or investment purpose for the expenditure or use. 1040x fillable Written documents of your expenditure or use are generally better evidence than oral statements alone. 1040x fillable A written record prepared at or near the time of the expenditure or use has greater value as proof of the expenditure or use. 1040x fillable A daily log is not required. 1040x fillable However, some type of record containing the elements of an expenditure or the business or investment use of listed property made at or near the time and backed up by other documents is preferable to a statement prepared later. 1040x fillable Timeliness The elements of an expenditure or use must be recorded at the time you have full knowledge of the elements. 1040x fillable An expense account statement made from an account book, diary, or similar record prepared or maintained at or near the time of the expenditure or use is generally considered a timely record if in the regular course of business: The statement is submitted by an employee to the employer, or The statement is submitted by an independent contractor to the client or customer. 1040x fillable For example, a log maintained on a weekly basis, which accounts for use during the week, will be considered a record made at or near the time of use. 1040x fillable Business Purpose Supported An adequate record of business purpose must generally be in the form of a written statement. 1040x fillable However, the amount of backup necessary to establish a business purpose depends on the facts and circumstances of each case. 1040x fillable A written explanation of the business purpose will not be required if the purpose can be determined from the surrounding facts and circumstances. 1040x fillable For example, a salesperson visiting customers on an established sales route will not normally need a written explanation of the business purpose of his or her travel. 1040x fillable Business Use Supported An adequate record contains enough information on each element of every business or investment use. 1040x fillable The amount of detail required to support the use depends on the facts and circumstances. 1040x fillable For example, a taxpayer whose only business use of a truck is to make customer deliveries on an established route can satisfy the requirement by recording the length of the route, including the total number of miles driven during the tax year and the date of each trip at or near the time of the trips. 1040x fillable Although an adequate record generally must be written, a record of the business use of listed property, such as a computer or automobile, can be prepared in a computer memory device using a logging program. 1040x fillable Separate or Combined Expenditures or Uses Each use by you is normally considered a separate use. 1040x fillable However, repeated uses can be combined as a single item. 1040x fillable Each expenditure is recorded as a separate item and not combined with other expenditures. 1040x fillable If you choose, however, amounts spent for the use of listed property during a tax year, such as for gasoline or automobile repairs, can be combined. 1040x fillable If these expenses are combined, you do not need to support the business purpose of each expense. 1040x fillable Instead, you can divide the expenses based on the total business use of the listed property. 1040x fillable Uses which can be considered part of a single use, such as a round trip or uninterrupted business use, can be accounted for by a single record. 1040x fillable For example, use of a truck to make deliveries at several locations which begin and end at the business premises and can include a stop at the business in between deliveries can be accounted for by a single record of miles driven. 1040x fillable Use of a passenger automobile by a salesperson for a business trip away from home over a period of time can be accounted for by a single record of miles traveled. 1040x fillable Minimal personal use (such as a stop for lunch between two business stops) is not an interruption of business use. 1040x fillable Confidential Information If any of the information on the elements of an expenditure or use is confidential, it does not need to be in the account book or similar record if it is recorded at or near the time of the expenditure or use. 1040x fillable It must be kept elsewhere and made available as support to the district director on request. 1040x fillable Substantial Compliance If you have not fully supported a particular element of an expenditure or use, but have complied with the adequate records requirement for the expenditure or use to the district director's satisfaction, you can establish this element by any evidence the district director deems adequate. 1040x fillable If you fail to establish that you have substantially complied with the adequate records requirement for an element of an expenditure or use to the district director's satisfaction, you must establish the element: By your own oral or written statement containing detailed information as to the element, and By other evidence sufficient to establish the element. 1040x fillable If the element is the cost or amount, time, place, or date of an expenditure or use, its supporting evidence must be direct, such as oral testimony by witnesses or a written statement setting forth detailed information about the element or the documentary evidence. 1040x fillable If the element is the business purpose of an expenditure, its supporting evidence can be circumstantial evidence. 1040x fillable Sampling You can maintain an adequate record for portions of a tax year and use that record to support your business and investment use for the entire tax year if it can be shown by other evidence that the periods for which an adequate record is maintained are representative of use throughout the year. 1040x fillable Loss of Records When you establish that failure to produce adequate records is due to loss of the records through circumstances beyond your control, such as through fire, flood, earthquake, or other casualty, you have the right to support a deduction by reasonable reconstruction of your expenditures and use. 1040x fillable Reporting Information on Form 4562 If you claim a deduction for any listed property, you must provide the requested information on page 2, Section B of Form 4562. 1040x fillable If you claim a deduction for any vehicle, you must answer certain questions onpage 2 of Form 4562 to provide information about the vehicle use. 1040x fillable Employees. 1040x fillable   Employees claiming the standard mileage rate or actual expenses (including depreciation) must use Form 2106 instead of Part V of Form 4562. 1040x fillable Employees claiming the standard mileage rate may be able to use Form 2106–EZ. 1040x fillable Employer who provides vehicles to employees. 1040x fillable   An employer who provides vehicles to employees must obtain enough information from those employees to provide the requested information onForm 4562. 1040x fillable   An employer who provides more than five vehicles to employees need not include any information on his or her tax return. 1040x fillable Instead, the employer must obtain the information from his or her employees and indicate on his or her return that the information was obtained and is being retained. 1040x fillable   You do not need to provide the information requested on page 2 of Form 4562 if, as an employer: You can satisfy the requirements of a written policy statement for vehicles either not used for personal purposes, or not used for personal purposes other than commuting, or You treat all vehicle use by employees as personal use. 1040x fillable See the instructions for Form 4562. 1040x fillable Deductions in Later Years When listed property is used for business, investment, and personal purposes, no deduction is allowable for its personal use either in the current year or any later tax year. 1040x fillable In later years, you must determine if there is any remaining unadjusted or unrecovered basis before you compute the depreciation deduction for that tax year. 1040x fillable In making this determination, figure the depreciation deductions for earlier tax years as if the listed property were used 100% for business or investment purposes in those years, beginning with the first tax year in which some or all of the property use is for business or investment. 1040x fillable For more information about deductions after the recovery period for automobiles, see Publication 917. 1040x fillable Appendix The following tables are for use in figuring depreciation deductions under the ACRS system. 1040x fillable Table 1. 1040x fillable 15-Year Real Property* (Other Than Low-Inclome Housing) Table 3. 1040x fillable Low-Income Housing* Table 6 - Table 9 Table 6 - Table 9 Table 10 - Table 13 Table 14 - Table 17 Prev  Up  Next   Home   More Online Publications
Español

Department of Veterans Affairs (VA)

For information about VA medical care or benefits, write, call or visit your nearest VA facility.

Contact the Agency or Department

Website: Department of Veterans Affairs (VA)

Contact In-Person: Find Facilities and Services Near You

Address: 810 Vermont Ave NW
Washington, DC 20420

Toll-free: (800) 827-1000(800) 273-8255 (Veterans Crisis Line-Press 1)

TTY: (800) 829-4833

The 1040x Fillable

1040x fillable Publication 51 - Main Content Table of Contents 1. 1040x fillable Taxpayer Identification NumbersWhen you receive your EIN. 1040x fillable Registering for SSNVS. 1040x fillable 2. 1040x fillable Who Are Employees?Crew Leaders Business Owned and Operated by Spouses 3. 1040x fillable Wages and Other Compensation 4. 1040x fillable Social Security and Medicare TaxesThe $150 Test or the $2,500 Test Social Security and Medicare Tax Withholding 5. 1040x fillable Federal Income Tax WithholdingImplementation of lock-in letter. 1040x fillable Seasonal employees and employees not currently performing services. 1040x fillable Termination and re-hire of employees. 1040x fillable How To Figure Federal Income Tax Withholding 6. 1040x fillable Required Notice to Employees About Earned Income Credit (EIC) 7. 1040x fillable Depositing TaxesWhen To Deposit How To Deposit Deposit Penalties Employers of Both Farm and Nonfarm Workers 8. 1040x fillable Form 943 9. 1040x fillable Reporting Adjustments on Form 943Current Year Adjustments Prior Year Adjustments 10. 1040x fillable Federal Unemployment (FUTA) Tax 11. 1040x fillable Reconciling Wage Reporting Forms 13. 1040x fillable Federal Income Tax Withholding MethodsWage Bracket Method Percentage Method Alternative Methods of Federal Income Tax Withholding How To Get Tax Help 1. 1040x fillable Taxpayer Identification Numbers If you are required to withhold any federal income, social security, or Medicare taxes, you will need an employer identification number (EIN) for yourself. 1040x fillable Also, you will need the SSN of each employee and the name of each employee as shown on the employee's social security card. 1040x fillable Employer identification number (EIN). 1040x fillable   An employer identification number (EIN) is a nine-digit number that the IRS issues. 1040x fillable The digits are arranged as follows: 00-0000000. 1040x fillable It is used to identify the tax accounts of employers and certain others who have no employees. 1040x fillable Use your EIN on all of the items that you send to the IRS and SSA. 1040x fillable   If you do not have an EIN, you may apply for one online. 1040x fillable Visit IRS. 1040x fillable gov and click on the Apply for an EIN Online link under Tools. 1040x fillable You may also apply for an EIN by calling 1-800-829-4933, or you can fax or mail Form SS-4, Application for Employer Identification Number, to the IRS. 1040x fillable Do not use a SSN in place of an EIN. 1040x fillable   If you do not have an EIN by the time a return is due, write “Applied For” and the date you applied for it in the space shown for the number. 1040x fillable If you took over another employer's business, do not use that employer's EIN. 1040x fillable   You should have only one EIN. 1040x fillable If you have more than one, and are not sure which one to use, call the toll-free Business and Specialty Tax Line at 1-800-829-4933 or 1-800-829-4059 (TDD/TTY for persons who are deaf, hard of hearing, or have a speech disability). 1040x fillable Provide the EINs that you have, the name and address to which each number was assigned, and the address of your principal place of business. 1040x fillable The IRS will tell you which EIN to use. 1040x fillable   For more information, see Publication 1635 or Publication 583. 1040x fillable When you receive your EIN. 1040x fillable   If you are a new employer that indicated a federal tax obligation when requesting an EIN, you will be pre-enrolled in the Electronic Federal Tax Payment System (EFTPS). 1040x fillable You will receive information in your Employer Identification Number (EIN) Package about Express Enrollment and an additional mailing containing your EFTPS personal identification number (PIN) and instructions for activating your PIN. 1040x fillable Call the toll-free number located in your “How to Activate Your Enrollment” brochure to activate your enrollment and begin making your employment tax deposits. 1040x fillable If you outsource any of your payroll and related tax duties to a third party payer, such as a payroll service provider or reporting agent, be sure to tell them about your EFTPS enrollment. 1040x fillable Social security number (SSN). 1040x fillable   An employee's social security number (SSN) consists of nine digits arranged as follows: 000-00-0000. 1040x fillable You must obtain each employee's name and SSN as shown on the employee's social security card because you must enter them on Form W-2. 1040x fillable Do not accept a social security card that says “Not valid for employment. 1040x fillable ” A social security number issued with this legend does not permit employment. 1040x fillable You may, but are not required to, photocopy the social security card if the employee provides it. 1040x fillable If you do not show the employee's correct name and SSN on Form W-2, you may owe a penalty unless you have reasonable cause. 1040x fillable See Publication 1586, Reasonable Cause Regulations & Requirements for Missing and Incorrect Name/TINs. 1040x fillable Applying for a social security card. 1040x fillable   Any employee who is legally eligible to work in the United States and does not have a social security card can get one by completing Form SS-5, Application for a Social Security Card, and submitting the necessary documentation to SSA. 1040x fillable You can get Form SS-5 at SSA offices, by calling 1-800-772-1213 or 1-800-325-0778 (TTY), or from the SSA website at www. 1040x fillable socialsecurity. 1040x fillable gov/online/ss-5. 1040x fillable html. 1040x fillable The employee must complete and sign Form SS-5; it cannot be filed by the employer. 1040x fillable You may be asked to supply a letter to accompany Form SS-5 if the employee has exceeded his or her yearly or lifetime limit for the number of replacement cards allowed. 1040x fillable Applying for a social security number. 1040x fillable   If you file Form W-2 on paper and your employee has applied for an SSN but does not have one when you must file Form W-2, enter “Applied For” on the form. 1040x fillable If you are filing electronically, enter all zeros (000-00-0000) in the social security number field. 1040x fillable When the employee receives the SSN, file Copy A of Form W-2c, Corrected Wage and Tax Statement, with the SSA to show the employee's SSN. 1040x fillable Furnish Copies B, C, and 2 of Form W-2c to the employee. 1040x fillable Up to 25 Forms W-2c per Form W-3c, Transmittal of Corrected Wage and Tax Statements, may be filed per session over the Internet, with no limit on the number of sessions. 1040x fillable For more information, visit SSA's Employer W-2 Filing Instructions & Information webpage at www. 1040x fillable socialsecurity. 1040x fillable gov/employer. 1040x fillable Advise your employee to correct the SSN on his or her original Form W-2. 1040x fillable Correctly record the employee's name and SSN. 1040x fillable   Record the name and number of each employee as they are shown on the employee's social security card. 1040x fillable If the employee's name is not correct as shown on the card (for example, because of marriage or divorce), the employee should request a corrected card from the SSA. 1040x fillable Continue to report the employee's wages under the old name until the employee shows you an updated social security card with the new name. 1040x fillable   If the SSA issues the employee a replacement card after a name change, or a new card with a different social security number after a change in alien work status, file a Form W-2c to correct the name/SSN reported on the most recently filed Form W-2. 1040x fillable It is not necessary to correct other years if the previous name and SSN were used for years before the most recent Form W-2. 1040x fillable IRS individual taxpayer identification numbers (ITINs) for aliens. 1040x fillable   Do not accept an ITIN in place of an SSN for employee identification or for work. 1040x fillable An ITIN is issued for use by resident and nonresident aliens who need identification for tax purposes, but who are not eligible for U. 1040x fillable S. 1040x fillable employment. 1040x fillable The ITIN is a nine-digit number formatted like an SSN (for example, NNN-NN-NNNN). 1040x fillable However, it begins with the number “9” and has either a “7” or “8” as the fourth digit (for example, 9NN-7N-NNNN or 9NN-8N-NNNN). 1040x fillable    An individual with an ITIN who later becomes eligible to work in the United States must obtain an SSN. 1040x fillable If the individual is currently eligible to work in the United States, instruct the individual to apply for an SSN and follow the instructions under Applying for a social security number, earlier in this section. 1040x fillable Do not use an ITIN in place of an SSN on Form W-2. 1040x fillable Verification of social security numbers. 1040x fillable   Employers and authorized reporting agents can use the Social Security Number Verification Service (SSNVS) to instantly verify up to 10 employee names and SSNs (per screen) at a time, or submit an electronic file of up to 250,000 names and SSNs and usually receive results the next business day. 1040x fillable Visit www. 1040x fillable socialsecurity. 1040x fillable gov/employer/ssnv. 1040x fillable htm for more information. 1040x fillable Registering for SSNVS. 1040x fillable   You must register online and receive authorization from your employer to use SSNVS. 1040x fillable To register, visit SSA's website at www. 1040x fillable socialsecurity. 1040x fillable gov/employer and click on the Business Services Online link. 1040x fillable Follow the registration instructions to obtain a user identification (ID) and password. 1040x fillable You will need to provide the following information about yourself and your company. 1040x fillable Name. 1040x fillable SSN. 1040x fillable Date of birth. 1040x fillable Type of employer. 1040x fillable EIN. 1040x fillable Company name, address, and telephone number. 1040x fillable Email address. 1040x fillable When you have completed the online registration process, SSA will mail a one-time activation code to your employer. 1040x fillable You must enter the activation code online to use SSNVS. 1040x fillable 2. 1040x fillable Who Are Employees? Generally, employees are defined either under common law or under statutes for certain situations. 1040x fillable See Publication 15-A for details on statutory employees and nonemployees. 1040x fillable Employee status under common law. 1040x fillable   Generally, a worker who performs services for you is your employee if you have the right to control what will be done and how it will be done. 1040x fillable This is so even when you give the employee freedom of action. 1040x fillable What matters is that you have the right to control the details of how the services are performed. 1040x fillable See Publication 15-A for more information on how to determine whether an individual providing services is an independent contractor or an employee. 1040x fillable If an employer-employee relationship exists, it does not matter what it is called. 1040x fillable The employee may be called an agent or independent contractor. 1040x fillable It also does not matter how payments are measured or paid, what they are called, or if the employee works full or part time. 1040x fillable You are responsible for withholding and paying employment taxes for your employees. 1040x fillable You are also required to file employment tax returns. 1040x fillable These requirements do not apply to amounts that you pay to independent contractors. 1040x fillable The rules discussed in this publication apply only to workers who are your employees. 1040x fillable In general, you are an employer of farmworkers if your employees: Raise or harvest agricultural or horticultural products on your farm (including the raising and feeding of livestock); Work in connection with the operation, management, conservation, improvement, or maintenance of your farm and its tools and equipment; Provide services relating to salvaging timber, or clearing land of brush and other debris, left by a hurricane (also known as hurricane labor); Handle, process, or package any agricultural or horticultural commodity if you produced over half of the commodity (for a group of up to 20 unincorporated operators, all of the commodity); or Do work for you related to cotton ginning, turpentine, gum resin products, or the operation and maintenance of irrigation facilities. 1040x fillable For this purpose, the term “farm” includes stock, dairy, poultry, fruit, fur-bearing animal, and truck farms, as well as plantations, ranches, nurseries, ranges, greenhouses or other similar structures used primarily for the raising of agricultural or horticultural commodities, and orchards. 1040x fillable Farmwork does not include reselling activities that do not involve any substantial activity of raising agricultural or horticultural commodities, such as a retail store or a greenhouse used primarily for display or storage. 1040x fillable The table in section 12, How Do Employment Taxes Apply to Farmwork , distinguishes between farm and nonfarm activities, and also addresses rules that apply in special situations. 1040x fillable Crew Leaders If you are a crew leader, you are an employer of farmworkers. 1040x fillable A crew leader is a person who furnishes and pays (either on his or her own behalf or on behalf of the farm operator) workers to do farmwork for the farm operator. 1040x fillable If there is no written agreement between you and the farm operator stating that you are his or her employee and if you pay the workers (either for yourself or for the farm operator), then you are a crew leader. 1040x fillable For FUTA tax rules, see section 10. 1040x fillable Business Owned and Operated by Spouses If you and your spouse jointly own and operate a farm or nonfarm business and share in the profits and losses, you are partners in a partnership, whether or not you have a formal partnership agreement. 1040x fillable See Publication 541, Partnerships, for more details. 1040x fillable The partnership is considered the employer of any employees, and is liable for any employment taxes due on wages paid to its employees. 1040x fillable Exception—Qualified joint venture. 1040x fillable   For tax years beginning after December 31, 2006, the Small Business and Work Opportunity Tax Act of 2007 (Public Law 110-28) provides that a “qualified joint venture,” whose only members are spouses filing a joint income tax return, can elect not to be treated as a partnership for federal tax purposes. 1040x fillable A qualified joint venture conducts a trade or business where: The only members of the joint venture are spouses who file a joint income tax return, Both spouses materially participate (see Material participation in the Instructions for Schedule C (Form 1040), line G) in the trade or business (mere joint ownership of property is not enough), Both spouses elect to not be treated as a partnership, and The business is co-owned by both spouses and is not held in the name of a state law entity such as a partnership or limited liability company (LLC). 1040x fillable   To make the election, all items of income, gain, loss, deduction, and credit must be divided between the spouses, in accordance with each spouse's interest in the venture, and reported on separate Schedules C or F as sole proprietors. 1040x fillable Each spouse must also file a separate Schedule SE to pay self-employment taxes, as applicable. 1040x fillable   Spouses using the qualified joint venture rules are treated as sole proprietors for federal tax purposes and generally do not need an EIN. 1040x fillable If employment taxes are owed by the qualified joint venture, either spouse may report and pay the employment taxes due on the wages paid to the employees using the EIN of that spouse's sole proprietorship. 1040x fillable Generally, filing as a qualified joint venture will not increase the spouses' total tax owed on the joint income tax return. 1040x fillable However, it gives each spouse credit for social security earnings on which retirement benefits are based and for Medicare coverage without filing a partnership return. 1040x fillable    Note. 1040x fillable If your spouse is your employee, not your partner, you must pay social security and Medicare taxes for him or her. 1040x fillable   For more information on qualified joint ventures, visit IRS. 1040x fillable gov and enter “qualified joint venture” in the search box. 1040x fillable Exception—Community income. 1040x fillable   If you and your spouse wholly own an unincorporated business as community property under the community property laws of a state, foreign country, or U. 1040x fillable S. 1040x fillable possession, you can treat the business either as a sole proprietorship (of the spouse who carried on the business) or a partnership. 1040x fillable You may still make an election to be taxed as a qualified joint venture instead of a partnership. 1040x fillable See Exception—Qualified joint venture , earlier in this section. 1040x fillable 3. 1040x fillable Wages and Other Compensation Cash wages that you pay to employees for farmwork are generally subject to social security tax and Medicare tax. 1040x fillable You may also be required to withhold, deposit, and report Additional Medicare Tax. 1040x fillable See section 4 for more information. 1040x fillable If the wages are subject to social security and Medicare taxes, they are also subject to federal income tax withholding. 1040x fillable You may also be liable for FUTA tax, which is not withheld by you or paid by the employee. 1040x fillable FUTA tax is discussed in section 10. 1040x fillable Cash wages include checks, money orders, etc. 1040x fillable Do not count as cash wages the value of food, lodging, and other noncash items. 1040x fillable For more information on what payments are considered taxable wages, see Publication 15 (Circular E). 1040x fillable Commodity wages. 1040x fillable   Commodity wages are not cash and are not subject to social security and Medicare taxes or federal income tax withholding. 1040x fillable However, noncash payments, including commodity wages, are treated as cash wages (see above) if the substance of the transaction is a cash payment. 1040x fillable These noncash payments are subject to social security and Medicare taxes and federal income tax withholding. 1040x fillable Other compensation. 1040x fillable   Publications 15-A and 15-B discuss other forms of compensation that may be taxable. 1040x fillable Family members. 1040x fillable   Generally, the wages that you pay to family members who are your employees are subject to social security and Medicare taxes, federal income tax withholding, and FUTA tax. 1040x fillable However, certain exemptions may apply for your child, spouse, or parent. 1040x fillable See the table, How Do Employment Taxes Apply to Farmwork , in section 12. 1040x fillable Household employees. 1040x fillable   The wages of an employee who performs household services, such as a maid, babysitter, gardener, or cook, in your home are not subject to social security and Medicare taxes if you pay that employee cash wages of less than $1,900 in 2014. 1040x fillable   Social security and Medicare taxes do not apply to cash wages for housework in your private home if it was done by your spouse or your child under age 21. 1040x fillable Nor do the taxes apply to housework done by your parent unless: You have a child living in your home who is under age 18 or has a physical or mental condition that requires care by an adult for at least 4 continuous weeks in a calendar quarter, and You are a widow or widower, or divorced and not remarried, or have a spouse in the home who, because of a physical or mental condition, cannot care for your child for at least 4 continuous weeks in the quarter. 1040x fillable   For more information, see Publication 926, Household Employer's Tax Guide. 1040x fillable    Wages for household work may not be a deductible farm expense. 1040x fillable See Publication 225, Farmer's Tax Guide. 1040x fillable Share farmers. 1040x fillable   You do not have to withhold or pay social security and Medicare taxes on amounts paid to share farmers under share-farming arrangements. 1040x fillable Compensation paid to H-2A visa holders. 1040x fillable   Report compensation of $600 or more paid to foreign agricultural workers who entered the country on H-2A visas in box 1 of Form W-2 but do not report it as social security wages (box 3) or Medicare wages (box 5) on Form W-2 because compensation paid to H-2A workers for agricultural labor performed in connection with this visa is not subject to social security and Medicare taxes. 1040x fillable On Form W-2, do not check box 13 (Statutory employee), as H-2A workers are not statutory employees. 1040x fillable   An employer is not required to withhold federal income tax from compensation it pays an H-2A worker for agricultural labor performed in connection with this visa unless the worker asks for withholding and the employer agrees. 1040x fillable In that case, the worker must give the employer a completed Form W-4. 1040x fillable Federal income tax withheld should be reported in box 2 of Form W-2. 1040x fillable These reporting rules apply when the H-2A worker provides his or her taxpayer identification number (TIN) to the employer. 1040x fillable For rules relating to backup withholding and reporting when the H-2A worker does not provide a TIN, see the Instructions for Form 1099-MISC and the Instructions for Form 945. 1040x fillable 4. 1040x fillable Social Security and Medicare Taxes Generally, you must withhold social security and Medicare taxes on all cash wage payments that you make to your employees. 1040x fillable You may also be required to withhold Additional Medicare Tax. 1040x fillable For more information, see Additional Medicare Tax withholding , later. 1040x fillable The $150 Test or the $2,500 Test All cash wages that you pay to an employee during the year for farmwork are subject to social security and Medicare taxes and federal income tax withholding if either of the two tests below is met. 1040x fillable You pay cash wages to an employee of $150 or more in a year for farmwork (count all cash wages paid on a time, piecework, or other basis). 1040x fillable The $150 test applies separately to each farmworker that you employ. 1040x fillable If you employ a family of workers, each member is treated separately. 1040x fillable Do not count wages paid by other employers. 1040x fillable The total that you pay for farmwork (cash and noncash) to all your employees is $2,500 or more during the year. 1040x fillable Exceptions. 1040x fillable   The $150 and $2,500 tests do not apply to wages that you pay to a farmworker who receives less than $150 in annual cash wages and the wages are not subject to social security and Medicare taxes, or federal income tax withholding, even if you pay $2,500 or more in that year to all of your farmworkers if the farmworker: Is employed in agriculture as a hand-harvest laborer, Is paid piece rates in an operation that is usually paid on a piece-rate basis in the region of employment, Commutes daily from his or her permanent home to the farm, and Had been employed in agriculture less than 13 weeks in the preceding calendar year. 1040x fillable   Amounts that you pay to these seasonal farmworkers, however, count toward the $2,500-or-more test to determine whether wages that you pay to other farmworkers are subject to social security and Medicare taxes. 1040x fillable Social Security and Medicare Tax Withholding The social security tax rate is 6. 1040x fillable 2%, for both the employee and employer, on the first $117,000 paid to each employee. 1040x fillable You must withhold at this rate from each employee and pay a matching amount. 1040x fillable The Medicare tax rate is 1. 1040x fillable 45% each for the employee and employer on all wages. 1040x fillable You must withhold at this rate from each employee and pay a matching amount. 1040x fillable There is no wage base limit for Medicare tax; all covered wages are subject to Medicare tax. 1040x fillable Social security and Medicare taxes apply to most payments of sick pay, including payments made by third parties such as insurance companies. 1040x fillable For details, see Publication 15-A. 1040x fillable Additional Medicare Tax withholding. 1040x fillable   In addition to withholding Medicare tax at 1. 1040x fillable 45%, you must withhold a 0. 1040x fillable 9% Additional Medicare Tax from wages you pay to an employee in excess of $200,000 in a calendar year. 1040x fillable You are required to begin withholding Additional Medicare Tax in the pay period in which you pay wages in excess of $200,000 to an employee and continue to withhold it each pay period until the end of the calendar year. 1040x fillable Additional Medicare Tax is only imposed on the employee. 1040x fillable There is no employer share of Additional Medicare Tax. 1040x fillable All wages that are subject to Medicare tax are subject to Additional Medicare Tax withholding if paid in excess of the $200,000 withholding threshold. 1040x fillable   For more information on what wages are subject to Medicare tax, see the chart, Special Rules for Various Types of Services and Payments, in section 15 of Publication 15 (Circular E). 1040x fillable For more information on Additional Medicare Tax, visit IRS. 1040x fillable gov and enter “Additional Medicare Tax” in the search box. 1040x fillable Employee share paid by employer. 1040x fillable   If you would rather pay a household or agricultural employee's share of the social security and Medicare taxes without withholding them from his or her wages, you may do so. 1040x fillable If you do not withhold the taxes, however, you must still pay them. 1040x fillable Any employee social security and Medicare taxes that you pay is additional income to the employee. 1040x fillable Include it in box 1 of the employee's Form W-2, but do not count it as social security and Medicare wages and do not include it in boxes 3 and 5. 1040x fillable Also, do not count the additional income as wages for FUTA tax purposes. 1040x fillable Different rules apply to employer payments of social security and Medicare taxes for non-household and non-agricultural employees. 1040x fillable See section 7 of Publication 15-A. 1040x fillable Withholding social security and Medicare taxes on nonresident alien employees. 1040x fillable   In general, if you pay wages to nonresident alien employees, you must withhold social security and Medicare taxes as you would for a U. 1040x fillable S. 1040x fillable citizen or resident alien. 1040x fillable However, see Publication 515, Withholding of Tax on Nonresident Aliens and Foreign Entities, for exceptions to this general rule. 1040x fillable Also see Compensation paid to H-2A visa holders in section 3. 1040x fillable Religious exemption. 1040x fillable    An exemption from social security and Medicare taxes is available to members of a recognized religious sect opposed to public insurance. 1040x fillable This exemption is available only if both the employee and the employer are members of the sect. 1040x fillable   For more information, see Publication 517, Social Security and Other Information for Members of the Clergy and Religious Workers. 1040x fillable 5. 1040x fillable Federal Income Tax Withholding Farmers and crew leaders must withhold federal income tax from the wages of farmworkers if the wages are subject to social security and Medicare taxes. 1040x fillable The amount to withhold is figured on gross wages before taking out social security and Medicare taxes, union dues, insurance, etc. 1040x fillable You may use one of several methods to determine the amount of federal income tax withholding. 1040x fillable They are discussed in section 13. 1040x fillable Form W-4. 1040x fillable   To know how much federal income tax to withhold from employees' wages, you should have a Form W-4 on file for each employee. 1040x fillable Encourage your employees to file an updated Form W-4 for 2014, especially if they owed taxes or received a large refund when filing their 2013 tax return. 1040x fillable Advise your employees to use the IRS Withholding Calculator on the IRS website at www. 1040x fillable irs. 1040x fillable gov/individuals for help in determining how many withholding allowances to claim on their Form W-4. 1040x fillable   Ask each new employee to give you a signed Form W-4 when starting work. 1040x fillable Make the form effective with the first wage payment. 1040x fillable If a new employee does not give you a completed Form W-4, withhold tax as if he or she is single, with no withholding allowances. 1040x fillable Forms in Spanish. 1040x fillable   You can provide Formulario W-4(SP) in place of Form W-4 to your Spanish-speaking employees. 1040x fillable For more information, see Publicación 17(SP). 1040x fillable Effective date of Form W-4. 1040x fillable   A Form W-4 remains in effect until the employee gives you a new one. 1040x fillable When you receive a new Form W-4, do not adjust withholding for pay periods before the effective date of the new form. 1040x fillable Do not adjust withholding retroactively. 1040x fillable If an employee gives you a replacement Form W-4, begin withholding no later than the start of the first payroll period ending on or after the 30th day from the date when you received the replacement Form W-4. 1040x fillable For exceptions, see Exemption from federal income tax withholding , IRS review of requested Forms W-4 , and Invalid Forms W-4 , later in this section. 1040x fillable A Form W-4 that makes a change for the next calendar year will not take effect in the current calendar year. 1040x fillable Completing Form W-4. 1040x fillable   The amount of federal income tax withholding is based on marital status and withholding allowances. 1040x fillable Your employees may not base their withholding amounts on a fixed dollar amount or percentage. 1040x fillable However, the employee may specify a dollar amount to be withheld in addition to the amount of withholding based on filing status and withholding allowances claimed on Form W-4. 1040x fillable   Employees may claim fewer withholding allowances than they are entitled to claim. 1040x fillable They may do this to ensure that they have enough withholding or to offset other sources of taxable income that are not subject to withholding. 1040x fillable   See Publication 505, Tax Withholding and Estimated Tax, for more information about completing Form W-4. 1040x fillable Along with Form W-4, you may wish to order Publication 505 for use by your employees. 1040x fillable    Do not accept any withholding or estimated tax payments from your employees in addition to withholding based on their Form W-4. 1040x fillable If an employee wants additional withholding, he or she should submit a new Form W-4 and, if necessary, pay estimated tax by filing Form 1040-ES, Estimated Tax for Individuals, or by using the Electronic Federal Tax Payment System (EFTPS) to make estimated tax payments. 1040x fillable Exemption from federal income tax withholding. 1040x fillable   Generally, an employee may claim exemption from federal income tax withholding because he or she had no federal income tax liability last year and expects none this year. 1040x fillable See the Form W-4 instructions for more information. 1040x fillable However, the wages are still subject to social security and Medicare taxes. 1040x fillable   A Form W-4 claiming exemption from withholding is effective when it is filed with the employer and only for that calendar year. 1040x fillable To continue to be exempt from withholding in the next calendar year, an employee must give you a new Form W-4 by February 15. 1040x fillable If the employee does not give you a new Form W-4 by February 15, withhold tax based on the last valid Form W-4 you have for the employee that did not claim an exemption from withholding or, if one does not exist, withhold as if he or she is single with zero withholding allowances. 1040x fillable If the employee provides a new Form W-4 claiming an exemption from withholding on February 16 or later, you may apply the exemption to future wages, but do not refund taxes withheld while the exempt status was not in place. 1040x fillable Withholding income taxes on the wages of nonresident alien employees. 1040x fillable   In general, you must withhold federal income taxes on the wages of nonresident alien employees. 1040x fillable However, see Publication 515 for exceptions to this general rule. 1040x fillable Also see Compensation paid to H-2A visa workers in section 3. 1040x fillable Withholding adjustment for nonresident alien employees. 1040x fillable   A special procedure applies for figuring the amount of income tax to withhold from wages of nonresident alien employees performing services within the United States for wages paid in 2014. 1040x fillable This procedure requires a special chart to be used with the withholding tables to determine the amount to withhold from the wages of the nonresident alien employee. 1040x fillable See Withholding adjustment for nonresident alien employees in section 9 of Publication 15 (Circular E). 1040x fillable Nonresident alien employee's Form W-4. 1040x fillable   When completing Forms W-4, nonresident aliens are required to: Not claim exemption from income tax withholding; Request withholding as if they are single, regardless of their actual marital status; Claim only one allowance (if the nonresident alien is a resident of Canada, Mexico, or Korea, he or she may claim more than one allowance); and Write “Nonresident Alien” or “NRA” above the dotted line on line 6 of Form W-4. 1040x fillable   If you maintain an electronic Form W-4 system, you should provide a field for nonresident alien employees to enter nonresident alien status in lieu of writing “Nonresident Alien” or “NRA” above the dotted line on line 6. 1040x fillable    A nonresident alien employee may request additional withholding at his or her option for other purposes, although such additions should not be necessary for withholding to cover federal income tax liability related to employment. 1040x fillable Form 8233. 1040x fillable   If a nonresident alien employee claims a tax treaty exemption from withholding, the employee must submit Form 8233, Exemption from Withholding on Compensation for Independent (and Certain Dependent) Personal Services of a Nonresident Alien Individual, with respect to the income exempt under the treaty, instead of Form W-4. 1040x fillable See Publication 515 for details. 1040x fillable IRS review of requested Forms W-4. 1040x fillable   When requested by the IRS, you must make original Forms W-4 available for inspection by an IRS employee. 1040x fillable You may also be directed to send certain Forms W-4 to the IRS. 1040x fillable You may receive a notice from the IRS requiring you to submit a copy of Form W-4 for one or more of your named employees. 1040x fillable Send the requested copy or copies of Form W-4 to the IRS at the address provided and in the manner directed by the notice. 1040x fillable The IRS may also require you to submit copies of Form W-4 to the IRS as directed by a revenue procedure or notice published in the Internal Revenue Bulletin. 1040x fillable When we refer to Form W-4, the same rules apply to Formulario W-4(SP), its Spanish translation. 1040x fillable   After submitting a copy of the requested Form W-4 to the IRS, continue to withhold federal income tax based on that Form W-4 if it is valid (see Invalid Forms W-4 , later in this section). 1040x fillable However, if the IRS later notifies you in writing that the employee is not entitled to claim a complete exemption from withholding or more than the maximum number of withholding allowances specified by the IRS in the written notice, withhold federal income tax based on the effective date, marital status, and maximum number of withholding allowances specified in the notice (commonly referred to as a “lock-in letter”). 1040x fillable Initial lock-in letter. 1040x fillable   The IRS uses information reported on Form W-2 to identify employees with withholding compliance problems. 1040x fillable In some cases, where a serious under-withholding problem is found to exist for a particular employee, the IRS may issue a lock-in letter to the employer specifying the maximum number of withholding allowances and marital status permitted for a specific employee. 1040x fillable You will also receive a copy for the employee that identifies the maximum number of withholding allowances permitted and the process by which the employee can provide additional information to the IRS for purposes of determining the appropriate number of withholding allowances. 1040x fillable If the employee is employed by you as of the date of the notice, you must furnish the employee copy to the employee within 10 business days of receipt. 1040x fillable You may follow any reasonable business practice to furnish the employee copy to the employee. 1040x fillable Implementation of lock-in letter. 1040x fillable   When you receive the notice specifying the maximum number of withholding allowances and marital status permitted, you may not withhold immediately on the basis of the notice. 1040x fillable You must begin withholding tax on the basis of the notice for any wages paid after the date specified in the notice. 1040x fillable The delay between your receipt of the notice and the date to begin the withholding on the basis of the notice permits the employee to contact the IRS. 1040x fillable Seasonal employees and employees not currently performing services. 1040x fillable   If you receive a notice for an employee who is not currently performing services for you, you are still required to furnish the employee copy to the employee and withhold based on the notice if any of the following apply. 1040x fillable You are paying wages for the employee's prior services and the wages are subject to income tax withholding on or after the date specified in the notice. 1040x fillable You reasonably expect the employee to resume services within 12 months of the date of the notice. 1040x fillable The employee is on a bona fide leave of absence that does not exceed 12 months or the employee has a right to reemployment after the leave of absence. 1040x fillable Termination and re-hire of employees. 1040x fillable   If you are required to furnish and withhold based on the notice and the employment relationship is terminated after the date of the notice, you must continue to withhold based on the notice if you continue to pay any wages subject to income tax withholding. 1040x fillable You must also withhold based on the notice or modification notice (explained next) if the employee resumes the employment relationship with you within 12 months after the termination of the employment relationship. 1040x fillable Modification notice. 1040x fillable   After issuing the notice specifying the maximum number of withholding allowances and marital status permitted, the IRS may issue a subsequent notice (modification notice) that modifies the original notice. 1040x fillable The modification notice may change the marital status and/or the number of withholding allowances permitted. 1040x fillable You must withhold federal income tax based on the effective date specified in the modification notice. 1040x fillable New Form W-4 after IRS notice. 1040x fillable   After the IRS issues a notice or modification notice, if the employee provides you with a new Form W-4 claiming complete exemption from withholding or claims a marital status, a number of withholding allowances, and any additional withholding that results in less withholding than would result under the IRS notice or modification notice, you must disregard the new Form W-4. 1040x fillable You are required to withhold on the basis of the notice or modification notice unless the IRS subsequently notifies you to withhold based on the new Form W-4. 1040x fillable If the employee wants to put a new Form W-4 into effect that results in less withholding than required, the employee must contact the IRS. 1040x fillable   If, after you receive an IRS notice or modification notice, your employee provides you with a new Form W-4 that does not claim exemption from federal income tax withholding and claims a marital status, a number of withholding allowances, and any additional withholding that results in more withholding than would result under the notice or modification notice, you must withhold tax on the basis of that new Form W-4. 1040x fillable Otherwise, disregard any subsequent Forms W-4 provided by the employee and withhold based on the IRS notice or modification notice. 1040x fillable Substitute Forms W-4. 1040x fillable   You are encouraged to have your employees use the official version of Form W-4 to claim withholding allowances or exemption from withholding. 1040x fillable Call the IRS at 1-800-TAX-FORM (1-800-829-3676) or visit IRS. 1040x fillable gov to obtain copies of Form W-4. 1040x fillable   You may use a substitute version of Form W-4 to meet your business needs. 1040x fillable However, your substitute Form W-4 must contain language that is identical to the official Form W-4 and your form must meet all current IRS rules for substitute forms. 1040x fillable At the time that you provide your substitute form to the employee, you must provide him or her with all tables, instructions, and worksheets from the current Form W-4. 1040x fillable   You cannot accept a substitute Form W-4 developed by an employee, and the employee submitting such form will be treated as failing to furnish a Form W-4. 1040x fillable However, continue to use any valid Forms W-4 developed by your employees that you accepted before October 11, 2007. 1040x fillable Invalid Forms W-4. 1040x fillable   Any unauthorized change or addition to Form W-4 makes it invalid. 1040x fillable This includes taking out any language by which the employee certifies that the form is correct. 1040x fillable A Form W-4 is also invalid if, by the date an employee gives it to you, he or she indicates in any way that it is false. 1040x fillable An employee who submits a false Form W-4 may be subject to a $500 penalty. 1040x fillable You may treat a Form W-4 as invalid if the employee wrote “exempt” on line 7 and also entered a number on line 5 or an amount on line 6. 1040x fillable   When you get an invalid Form W-4, do not use it to figure federal income tax withholding. 1040x fillable Tell the employee that it is invalid and ask for another one. 1040x fillable If the employee does not give you a valid one, withhold taxes as if the employee was single and claiming no withholding allowances. 1040x fillable However, if you have an earlier Form W-4 for this worker that is valid, withhold as you did before. 1040x fillable   For additional information about these rules, see Treasury Decision 9337, 2007-35 I. 1040x fillable R. 1040x fillable B. 1040x fillable 455, available at www. 1040x fillable irs. 1040x fillable gov/irb/2007-35_IRB/ar10. 1040x fillable html. 1040x fillable Amounts exempt from levy on wages, salary, and other income. 1040x fillable   If you receive a Notice of Levy on Wages, Salary, and Other Income—Forms 668-W(ACS), 668-W(c)(DO), or 668-W(ICS), you must withhold amounts as described in the instructions for these forms. 1040x fillable Publication 1494, Tables for Figuring Amount Exempt From Levy on Wages, Salary, and Other Income—Forms 668-W(ACS), 668-W(c)(DO), and 668-W(ICS), shows the exempt amount. 1040x fillable If a levy issued in a prior year is still in effect and the taxpayer submits a new Statement of Exemptions and Filing Status, use the current year Publication 1494 to compute the exempt amount. 1040x fillable How To Figure Federal Income Tax Withholding There are several ways to figure federal income tax withholding. 1040x fillable Wage bracket tables. 1040x fillable See section 13 for directions on how to use the tables. 1040x fillable Percentage method. 1040x fillable See section 13 for directions on how to use the percentage method. 1040x fillable Alternative formula tables for percentage method withholding. 1040x fillable See Publication 15-A. 1040x fillable Wage bracket percentage method withholding tables. 1040x fillable See Publication 15-A. 1040x fillable Other alternative methods. 1040x fillable See Publication 15-A. 1040x fillable Employers with automated payroll systems will find the two alternative formula tables and the two alternative wage bracket percentage method tables in Publication 15-A useful. 1040x fillable If an employee wants additional federal tax withheld, have the employee show the extra amount on Form W-4. 1040x fillable Supplemental wages. 1040x fillable   Supplemental wages are wage payments to an employee that are not regular wages. 1040x fillable They include, but are not limited to, bonuses, commissions, overtime pay, accumulated sick leave, severance pay, awards, prizes, back pay and retroactive pay increases for current employees, and payments for nondeductible moving expenses. 1040x fillable Other payments subject to the supplemental wage rules include taxable fringe benefits and expense allowances paid under a nonaccountable plan. 1040x fillable   If you pay supplemental wages with regular wages but do not specify the amount of each, withhold federal income tax as if the total was a single payment for a regular payroll period. 1040x fillable   If you pay supplemental wages separately (or combine them in a single payment and specify the amount of each), the federal income tax withholding method depends partly on whether you withhold federal income tax from your employee's regular wages. 1040x fillable If you withheld federal income tax from an employee's regular wages in the current or immediately preceding calendar year, you can use one of the following methods for the supplemental wages. 1040x fillable Withhold a flat 25% (no other percentage allowed). 1040x fillable If the supplemental wages are paid concurrently with regular wages, add the supplemental wages to the concurrently paid regular wages. 1040x fillable If there are no concurrently paid regular wages, add the supplemental wages to alternatively, either the regular wages paid or to be paid for the current payroll period or the regular wages paid for the preceding payroll period. 1040x fillable Figure the income tax withholding as if the total of the regular wages and supplemental wages is a single payment. 1040x fillable Subtract the tax withheld from the regular wages. 1040x fillable Withhold the remaining tax from the supplemental wages. 1040x fillable If there were other payments of supplemental wages paid during the payroll period made before the current payment of supplemental wages, aggregate all the payments of supplemental wages paid during the payroll period with the regular wages paid during the payroll period, calculate the tax on the total, subtract the tax already withheld from the regular wages and previous supplemental wage payments, and withhold the remaining tax from the current payment of supplemental wages. 1040x fillable If you did not withhold federal income tax from the employee's regular wages in the current or immediately preceding calendar year, use method 1-b above. 1040x fillable This would occur, for example, when the value of the employee's withholding allowances claimed on Form W-4 is more than the wages. 1040x fillable    Separate rules apply to any supplemental wages exceeding $1 million that you pay to an individual during the year. 1040x fillable See section 7 in Publication 15 (Circular E) for details. 1040x fillable   Regardless of the method that you use to withhold federal income tax on supplemental wages, they are generally subject to social security, Medicare, and FUTA taxes. 1040x fillable 6. 1040x fillable Required Notice to Employees About Earned Income Credit (EIC) You must notify employees who have no federal income tax withheld that they may be able to claim a tax refund because of the EIC. 1040x fillable Although you do not have to notify employees who claim exemption from withholding on Form W-4 about the EIC, you are encouraged to notify any employees whose wages for 2013 were less than $46,227 ($51,567 if married filing jointly) that they may be eligible to claim the credit for 2013. 1040x fillable This is because eligible employees may get a refund of the amount of EIC that is more than the tax that they owe. 1040x fillable You will meet the notification requirement if you issue to the employee Form W-2 with the EIC notice on the back of Copy B, or a substitute Form W-2 with the same statement. 1040x fillable You may also meet the requirement by providing Notice 797, Possible Federal Tax Refund Due to the Earned Income Credit (EIC), or your own statement that contains the same wording. 1040x fillable If a substitute Form W-2 is given to the employee on time but does not have the required statement, you must notify the employee within 1 week of the date that the substitute Form W-2 is given. 1040x fillable If Form W-2 is required but is not given on time, you must give the employee Notice 797 or your written statement by the date that Form W-2 is required to be given. 1040x fillable If Form W-2 is not required, you must notify the employee by February 7, 2014. 1040x fillable 7. 1040x fillable Depositing Taxes Generally, you must deposit both the employer and employee shares of social security and Medicare taxes and federal income tax withheld. 1040x fillable You must use electronic funds transfer to make all federal tax deposits. 1040x fillable See How To Deposit , later in this section. 1040x fillable The credit against employment taxes for COBRA premium assistance payments is treated as a deposit of taxes on the first day of your return period. 1040x fillable For more information, see COBRA premium assistance credit under Introduction. 1040x fillable Payment with return. 1040x fillable   You may make payments with Forms 943 or 945 instead of depositing if one of the following applies. 1040x fillable You report less than a $2,500 tax liability for the year (Form 943, line 11; Form 945, line 3) and you pay in full with a return that is filed on time. 1040x fillable However, if you are unsure that you will report less than $2,500, deposit under the rules explained in this section so that you will not be subject to failure-to-deposit penalties. 1040x fillable You are a monthly schedule depositor and make a payment in accordance with the Accuracy of Deposits Rule discussed later in this section. 1040x fillable This payment may be $2,500 or more. 1040x fillable Only monthly schedule depositors, defined later, are allowed to make an Accuracy of Deposits Rule payment with the return. 1040x fillable Semiweekly schedule depositors must timely deposit the amount. 1040x fillable See Accuracy of Deposits Rule and How To Deposit, later in this section. 1040x fillable When To Deposit If you employ both farm and nonfarm workers, do not combine the taxes reportable on Forms 941 or 944 with Form 943 to decide whether to make a deposit. 1040x fillable See Employers of Both Farm and Nonfarm Workers, later in this section. 1040x fillable The rules for determining when to deposit Form 943 taxes are discussed below. 1040x fillable See section 10 for the separate rules that apply to FUTA tax. 1040x fillable Under these rules, you are classified as either a monthly schedule depositor or a semiweekly schedule depositor. 1040x fillable The terms “monthly schedule depositor” and “semiweekly schedule depositor” do not refer to how often your business pays its employees or how often you are required to make deposits. 1040x fillable The terms identify which set of rules you must follow when you incur a tax liability (for example, when you have a payday). 1040x fillable The deposit schedule that you must use for a calendar year is determined from the tax liability reported on your Form 943, line 9, for the lookback period, discussed next. 1040x fillable If you reported $50,000 or less of Form 943 taxes for the lookback period, you are a monthly schedule depositor. 1040x fillable If you reported more than $50,000 of Form 943 taxes for the lookback period, you are a semiweekly schedule depositor. 1040x fillable Lookback period. 1040x fillable   The lookback period is the second calendar year preceding the current calendar year. 1040x fillable For example, the lookback period for 2014 is 2012. 1040x fillable Example of deposit schedule based on lookback period. 1040x fillable Rose Co. 1040x fillable reported taxes on Form 943 as follows. 1040x fillable 2012 — $48,000 2013 — $60,000 Rose Co. 1040x fillable is a monthly schedule depositor for 2014 because its taxes for the lookback period ($48,000 for calendar year 2012) were not more than $50,000. 1040x fillable However, for 2015, Rose Co. 1040x fillable is a semiweekly schedule depositor because the total taxes before adjustment for its lookback period ($60,000 for calendar year 2013) exceeded $50,000. 1040x fillable Adjustments to lookback period taxes. 1040x fillable   To determine your taxes for the lookback period, use only the tax that you reported on the original return (Form 943, line 9). 1040x fillable Do not include adjustments shown on Form 943-X, Adjusted Employer's Annual Federal Tax Return for Agricultural Employees or Claim for Refund. 1040x fillable Example of adjustments. 1040x fillable An employer originally reported total tax of $45,000 for the lookback period in 2012. 1040x fillable The employer discovered during March 2014 that the tax reported for the lookback period was understated by $10,000 and corrected this error by filing Form 943-X. 1040x fillable The total tax reported in the lookback period is still $45,000. 1040x fillable The $10,000 adjustment is also not treated as part of the 2014 taxes. 1040x fillable Deposit period. 1040x fillable   The term “deposit period” refers to the period during which tax liabilities are accumulated for each required deposit due date. 1040x fillable For monthly schedule depositors, the deposit period is a calendar month. 1040x fillable The deposit periods for semiweekly schedule depositors are Wednesday through Friday and Saturday through Tuesday. 1040x fillable Monthly Deposit Schedule If the tax liability reported on Form 943, line 9, for the lookback period is $50,000 or less, you are a monthly schedule depositor for the current year. 1040x fillable You must deposit Form 943 taxes on payments made during a calendar month by the 15th day of the following month. 1040x fillable Monthly schedule example. 1040x fillable   Red Co. 1040x fillable is a seasonal employer and a monthly schedule depositor. 1040x fillable It pays wages each Friday. 1040x fillable It paid wages during August 2014, but did not pay any wages during September. 1040x fillable Red Co. 1040x fillable must deposit the combined tax liabilities for the August paydays by September 15. 1040x fillable Red Co. 1040x fillable does not have a deposit requirement for September (that is, due by October 15, 2014) because no wages were paid in September; therefore, it did not have a tax liability for September. 1040x fillable New employers. 1040x fillable   For agricultural employers, your tax liability for any year in the lookback period before the date you started or acquired your business is considered to be zero. 1040x fillable Therefore, you are a monthly schedule depositor for the first and second calendar years of your agricultural business (but see the $100,000 Next-Day Deposit Rule , later in this section). 1040x fillable Semiweekly Deposit Schedule You are a semiweekly schedule depositor for a calendar year if the tax liability on Form 943, line 9, during your lookback period was more than $50,000. 1040x fillable Under the semiweekly deposit schedule, deposit Form 943 taxes for payments made on Wednesday, Thursday, and/or Friday by the following Wednesday. 1040x fillable Deposit amounts accumulated for payments made on Saturday, Sunday, Monday, and/or Tuesday by the following Friday. 1040x fillable Semiweekly depositors are not required to deposit twice a week if their payments were in the same semiweekly period unless the $100,000 Next-Day Deposit Rule (discussed later in this section) applies. 1040x fillable For example, if you made a payment on both Wednesday and Friday and incurred taxes of $10,000 for each pay date, deposit the $20,000 by the following Wednesday. 1040x fillable If you made no additional payments on Saturday through Tuesday, no deposit is due on Friday. 1040x fillable Semiweekly schedule depositors must complete Form 943-A, Agricultural Employer's Record of Federal Tax Liability, and submit it with Form 943. 1040x fillable Semiweekly Deposit Schedule IF the payday falls on a. 1040x fillable . 1040x fillable . 1040x fillable THEN deposit taxes by the following. 1040x fillable . 1040x fillable . 1040x fillable Wednesday, Thursday, and/or Friday Wednesday Saturday, Sunday, Monday, and/or Tuesday Friday Semiweekly schedule example. 1040x fillable   Green, Inc. 1040x fillable , is a semiweekly schedule depositor and pays wages once each month on the last Friday of the month. 1040x fillable Green, Inc. 1040x fillable , will deposit only once a month, but the deposit will be made under the semiweekly deposit schedule as follows. 1040x fillable Green, Inc. 1040x fillable 's tax liability for the April 25, 2014 (Friday), wage payment must be deposited by April 30, 2014 (Wednesday). 1040x fillable Semiweekly deposit period spanning two quarters. 1040x fillable   If you have more than one pay date during a semiweekly period and the pay dates fall in different calendar quarters, you will need to make separate deposits for the separate liabilities. 1040x fillable For example, if you have a pay date on Monday, March 31, 2014 (first quarter), and another pay date on Tuesday, April 1, 2014 (second quarter), two separate deposits will be required even though the pay dates fall within the same semiweekly period. 1040x fillable Both deposits will be due Friday, April 4, 2014 (3 business days from the end of the semiweekly deposit period). 1040x fillable Deposits on Business Days Only If a deposit is required to be made on a day that is not a business day, the deposit is considered timely if it is made by the close of the next business day. 1040x fillable A business day is any day other than a Saturday, Sunday, or legal holiday. 1040x fillable For example, if a deposit is required to be made on Friday and Friday is a legal holiday, the deposit is considered timely if it is made by the following Monday (if Monday is a business day). 1040x fillable Semiweekly schedule depositors   will always have 3 business days to make a deposit. 1040x fillable That is, if any of the 3 weekdays after the end of a semiweekly period is a legal holiday, you will have an additional day for each day that is a legal holiday to make the deposit. 1040x fillable For example, if a semiweekly schedule depositor accumulated taxes on Friday and the following Monday is a legal holiday, the deposit normally due on Wednesday may be made on Thursday (this allows 3 business days to make the deposit). 1040x fillable Legal holiday. 1040x fillable   The term “legal holiday” means any legal holiday in the District of Columbia. 1040x fillable Legal holidays for 2014 are listed below. 1040x fillable January 1— New Year's Day January 20— Birthday of Martin Luther King, Jr. 1040x fillable February 17— Washington's Birthday April 16— District of Columbia Emancipation Day May 26— Memorial Day July 4— Independence Day September 1— Labor Day October 13— Columbus Day November 11— Veterans' Day November 27— Thanksgiving Day December 25— Christmas Day $100,000 Next-Day Deposit Rule If you accumulate $100,000 or more of Form 943 taxes (that is, taxes reported on Form 943, line 11) on any day during a deposit period, you must deposit the tax by the close of the next business day, whether you are a monthly or a semiweekly schedule depositor. 1040x fillable For purposes of the $100,000 rule, do not continue accumulating a tax liability after the end of a deposit period. 1040x fillable For example, if a semiweekly schedule depositor has accumulated a liability of $95,000 on a Tuesday (of a Saturday-through-Tuesday deposit period) and accumulated a $10,000 liability on Wednesday, the $100,000 next-day deposit rule does not apply because the $10,000 is accumulated in the next deposit period. 1040x fillable Thus, $95,000 must be deposited by Friday and $10,000 must be deposited by the following Wednesday. 1040x fillable However, once you accumulate at least $100,000 in a deposit period, stop accumulating at the end of that day and begin to accumulate anew on the next day. 1040x fillable For example, Fir Co. 1040x fillable is a semiweekly schedule depositor. 1040x fillable On Monday, Fir Co. 1040x fillable accumulates taxes of $110,000 and must deposit this amount on Tuesday, the next business day. 1040x fillable On Tuesday, Fir Co. 1040x fillable accumulates additional taxes of $30,000. 1040x fillable Because the $30,000 is not added to the previous $110,000 and is less than $100,000, Fir Co. 1040x fillable does not have to deposit the $30,000 until Friday (following the semiweekly deposit schedule). 1040x fillable If you are a monthly schedule depositor and you accumulate a $100,000 tax liability on any day, you become a semiweekly schedule depositor on the next day and remain so for at least the rest of the calendar year and for the following calendar year. 1040x fillable Example of the $100,000 next-day deposit rule. 1040x fillable   Elm, Inc. 1040x fillable , started its business on May 1, 2014. 1040x fillable Because Elm, Inc. 1040x fillable , is a new employer, the taxes for its lookback period are considered to be zero; therefore, Elm, Inc. 1040x fillable , is a monthly schedule depositor. 1040x fillable On May 8, Elm, Inc. 1040x fillable , paid wages for the first time and accumulated taxes of $50,000. 1040x fillable On May 9 (Friday), Elm, Inc. 1040x fillable , paid wages and accumulated taxes of $60,000, for a total of $110,000. 1040x fillable Because Elm, Inc. 1040x fillable , accumulated $110,000 on May 9, it must deposit $110,000 by May 12 (Monday), the next business day. 1040x fillable Elm, Inc. 1040x fillable , became a semiweekly schedule depositor on May 10. 1040x fillable It will be a semiweekly schedule depositor for the remainder of 2014 and for 2015. 1040x fillable Accuracy of Deposits Rule You are required to deposit 100% of your tax liability on or before the deposit due date. 1040x fillable However, penalties will not be applied for depositing less than 100% if both of the following conditions are met. 1040x fillable Any deposit shortfall does not exceed the greater of $100 or 2% of the amount of taxes otherwise required to be deposited. 1040x fillable The deposit shortfall is paid or deposited by the shortfall makeup date as described below. 1040x fillable Makeup Date for Deposit Shortfall:    Monthly Schedule Depositor—Deposit the shortfall or pay it with your return by the due date of your Form 943. 1040x fillable You may pay the shortfall with your Form 943 even if the amount is $2,500 or more. 1040x fillable Semiweekly Schedule Depositor—Deposit by the earlier of (a) the first Wednesday or Friday (whichever comes first) that falls on or after the 15th of the month following the month in which the shortfall occurred, or (b) the due date for Form 943. 1040x fillable For example, if a semiweekly schedule depositor has a deposit shortfall during February 2014, the shortfall makeup date is March 19, 2014 (Wednesday). 1040x fillable How To Deposit You must deposit employment taxes by electronic funds transfer. 1040x fillable See Payment with return , earlier in this section, for exceptions explaining when taxes may be paid with the tax return instead of being deposited. 1040x fillable Electronic deposit requirement. 1040x fillable   You must use electronic funds transfer to make all federal tax deposits (such as deposits of employment tax, excise tax, and corporate income tax). 1040x fillable Generally, electronic funds transfers are made using the Electronic Federal Tax Payment System (EFTPS). 1040x fillable If you do not want to use EFTPS, you can arrange for your tax professional, financial institution, payroll service, or other trusted third party to make electronic deposits on your behalf. 1040x fillable   EFTPS is a free service provided by the Department of Treasury. 1040x fillable To get more information or to enroll in EFTPS, call 1-800-555-4477 (business), 1-800-316-6541 (individual), or 1-800-733-4829 (TDD). 1040x fillable You can also visit the EFTPS website at www. 1040x fillable eftps. 1040x fillable gov. 1040x fillable Additional information about EFTPS is also available in Publication 966. 1040x fillable New employers that have a federal tax obligation will be pre-enrolled in EFTPS. 1040x fillable Call the toll-free number located in your Employer Identification Number (EIN) Package to activate your enrollment and begin making your tax deposit payments. 1040x fillable See When you receive your EIN in section 1 for more information. 1040x fillable Deposit record. 1040x fillable   For your records, an Electronic Funds Transfer (EFT) Trace Number will be provided with each successful payment. 1040x fillable The number can be used as a receipt or to trace the payment. 1040x fillable Depositing on time. 1040x fillable   For deposits made by EFTPS to be on time, you must initiate the deposit by 8 p. 1040x fillable m. 1040x fillable Eastern time the day before the date a deposit is due. 1040x fillable If you use a third party to make a deposit on your behalf, they may have different cutoff times. 1040x fillable Same-day payment option. 1040x fillable   If you fail to initiate a deposit transaction on EFTPS by 8 p. 1040x fillable m. 1040x fillable Eastern time the day before the date a deposit is due, you can still make your deposit on time by using the Federal Tax Application (FTA). 1040x fillable To use the same-day payment method, you will need to make arrangements with your financial institution ahead of time. 1040x fillable Please check with your financial institution regarding availability, deadlines, and costs. 1040x fillable Your financial institution may charge you a fee for payments made this way. 1040x fillable To learn more about the information you will need to provide to your financial institution to make a same-day wire payment, visit www. 1040x fillable eftps. 1040x fillable gov to download the Same-Day Payment Worksheet. 1040x fillable Deposit Penalties Penalties may apply if you do not make required deposits on time or if you make deposits for less than the required amount. 1040x fillable The penalties do not apply if any failure to make a proper and timely deposit was due to reasonable cause and not to willful neglect. 1040x fillable IRS may also waive deposit penalties if you inadvertently fail to deposit in the first quarter that a deposit is due, or the first quarter during which your frequency of deposits changed, if you timely filed your employment tax return. 1040x fillable For amounts not properly deposited or not deposited on time, the penalty rates are shown next. 1040x fillable Penalty Charged for. 1040x fillable . 1040x fillable . 1040x fillable 2% Deposits made 1 to 5 days late. 1040x fillable 5% Deposits made 6 to 15 days late. 1040x fillable 10% Deposits made 16 or more days late. 1040x fillable Also applies to amounts paid within 10 days of the date of the first notice the IRS sent asking for the tax due. 1040x fillable 10% Amounts (that should have been deposited) paid directly to the IRS or paid with your tax return. 1040x fillable See Payment with return , earlier in this section, for exceptions. 1040x fillable 15% Amounts still unpaid more than 10 days after the date of the first notice that the IRS sent asking for the tax due or the day on which you received notice and demand for immediate payment, whichever is earlier. 1040x fillable Late deposit penalty amounts are determined using calendar days, starting from the due date of the liability. 1040x fillable Order in which deposits are applied. 1040x fillable   Deposits generally are applied to the most recent tax liability within the year. 1040x fillable If you receive a failure-to-deposit penalty notice, you may designate how your deposits are to be applied in order to minimize the amount of the penalty, if you do so within 90 days of the date of the notice. 1040x fillable Follow the instructions on the penalty notice that you received. 1040x fillable For examples on how the IRS will apply deposits and more information on designating deposits, see Revenue Procedure 2001-58. 1040x fillable You can find Revenue Procedure 2001-58 on page 579 of Internal Revenue Bulletin 2001-50 at www. 1040x fillable irs. 1040x fillable gov/pub/irs-irbs/irb01-50. 1040x fillable pdf. 1040x fillable Example. 1040x fillable Cedar, Inc. 1040x fillable , is required to make a deposit of $1,000 on July 15 and $1,500 on August 15. 1040x fillable It does not make the deposit on July 15. 1040x fillable On August 15, Cedar, Inc. 1040x fillable , deposits $2,000. 1040x fillable Under the deposits rule, which applies deposits to the most recent tax liability, $1,500 of the deposit is applied to the August 15 deposit and the remaining $500 is applied to the July deposit. 1040x fillable Accordingly, $500 of the July 15 liability remains undeposited. 1040x fillable The penalty on this underdeposit will apply as explained above. 1040x fillable Trust fund recovery penalty. 1040x fillable   If federal income, social security, or Medicare taxes that must be withheld are not withheld or are not deposited or paid to the United States Treasury, the trust fund recovery penalty may apply. 1040x fillable The penalty is the full amount of the unpaid trust fund tax. 1040x fillable This penalty may apply to you if these unpaid taxes cannot be immediately collected from the employer or business. 1040x fillable   The trust fund recovery penalty may be imposed on all persons who are determined by the IRS to be responsible for collecting, accounting for, and paying over these taxes, and who acted willfully in not doing so. 1040x fillable   A responsible person can be an officer or employee of a corporation, a partner or employee of a partnership, an accountant, a volunteer director/trustee, or an employee of a sole proprietorship. 1040x fillable A responsible person also may include one who signs checks for the business or otherwise has authority to cause the spending of business funds. 1040x fillable    Willfully means voluntarily, consciously, and intentionally. 1040x fillable A responsible person acts willfully if the person knows that the required actions of collecting, accounting for or paying over trust fund taxes are not taking place, or recklessly disregards obvious and known risks to the government's right to receive trust fund taxes. 1040x fillable “Average” failure-to-deposit penalty. 1040x fillable   IRS may assess an “averaged” failure-to-deposit penalty of 2% to 10% if you are a monthly schedule depositor and did not properly complete Form 943, line 17, when your tax liability shown on Form 943, line 11, was $2,500 or more. 1040x fillable IRS may also assess this penalty of 2% to 10% if you are a semiweekly schedule depositor and your tax liability shown on Form 943, line 11, was $2,500 or more and you did any of the following. 1040x fillable Completed Form 943, line 17, instead of Form 943-A. 1040x fillable Failed to attach a properly completed Form 943-A. 1040x fillable Completed Form 943-A incorrectly, for example, by entering tax deposits instead of tax liabilities in the numbered spaces. 1040x fillable   IRS figures the penalty by allocating your tax liability on Form 943, line 11, equally throughout the tax period. 1040x fillable Your deposits and payments may not be counted as timely because IRS does not know the actual dates of your tax liabilities. 1040x fillable   You can avoid the penalty by reviewing your return before filing it. 1040x fillable Follow these steps before filing your Form 943. 1040x fillable If you are a monthly schedule depositor, report your tax liabilities (not your deposits) in the monthly entry spaces on Form 943, line 17. 1040x fillable If you are a semiweekly schedule depositor, report your tax liabilities (not your deposits) on Form 943-A in the lines that represent the dates you paid your employees. 1040x fillable Verify that your total liability shown on Form 943, line 17, or Form 943-A, line M, equals your tax liability shown on Form 943, line 11. 1040x fillable Do not show negative amounts on Form 943, line 17, or Form 943-A. 1040x fillable For prior period errors discovered after December 31, 2008, do not adjust your tax liabilities reported on Form 943, line 17, or on Form 943-A. 1040x fillable Employers of Both Farm and Nonfarm Workers If you employ both farm and nonfarm workers, you must treat employment taxes for the farmworkers (Form 943 taxes) separately from employment taxes for the nonfarm workers (Form 941 and 944 taxes). 1040x fillable Form 943 taxes and Form 941/944 taxes are not combined for purposes of applying any of the deposit schedule rules. 1040x fillable If a deposit is due, deposi