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E file federal state taxes free Publication 947 - Main Content Table of Contents Practice Before the IRSWhat Is Practice Before the IRS? Who Can Practice Before the IRS? Who Cannot Practice Before the IRS? How Does an Individual Become Enrolled? What Are the Rules of Practice? Authorizing a RepresentativeWhat Is a Power of Attorney? When Is a Power of Attorney Required? When Is a Power of Attorney Not Required? How Do I Fill Out Form 2848? What Happens to the Power of Attorney When Filed? How To Get Tax HelpLow Income Taxpayer Clinics (LITCs). E file federal state taxes free Practice Before the IRS The Office of Professional Responsibility and the Return Preparer Office generally are responsible for administering and enforcing the regulations governing practice before the IRS. E file federal state taxes free The Office of Professional Responsibility generally has responsibility for matters related to practitioner conduct and exclusive responsibility for discipline, including disciplinary proceedings and sanctions. E file federal state taxes free The Return Preparer Office is responsible for matters related to the authority to practice, including acting on applications for enrollment and administering competency testing and continuing education. E file federal state taxes free What Is Practice Before the IRS? Practice before the IRS covers all matters relating to any of the following. E file federal state taxes free Communicating with the IRS for a taxpayer regarding the taxpayer's rights, privileges, or liabilities under laws and regulations administered by the IRS. E file federal state taxes free Representing a taxpayer at conferences, hearings, or meetings with the IRS. E file federal state taxes free Preparing and filing documents, including tax returns, with the IRS for a taxpayer. E file federal state taxes free Providing a client with written advice which has a potential for tax avoidance or evasion. E file federal state taxes free Furnishing information at the request of the IRS or appearing as a witness for the taxpayer is not practice before the IRS. E file federal state taxes free Who Can Practice Before the IRS? The following individuals can practice before the IRS. E file federal state taxes free However, any individual who is recognized to practice (a recognized representative) must be designated as the taxpayer's representative and file a written declaration with the IRS stating that he or she is authorized and qualified to represent a particular taxpayer. E file federal state taxes free Form 2848 can be used for this purpose. E file federal state taxes free Attorneys. E file federal state taxes free   Any attorney who is not currently under suspension or disbarment from practice before the IRS and who is a member in good standing of the bar of the highest court of any state, possession, territory, commonwealth, or the District of Columbia may practice before the IRS. E file federal state taxes free Certified public accountants (CPAs). E file federal state taxes free   Any CPA who is not currently under suspension or disbarment from practice before the IRS and who is duly qualified to practice as a CPA in any state, possession, territory, commonwealth, or the District of Columbia may practice before the IRS. E file federal state taxes free Enrolled agents. E file federal state taxes free   Any enrolled agent in active status who is not currently under suspension or disbarment from practice before the IRS may practice before the IRS. E file federal state taxes free Enrolled retirement plan agents. E file federal state taxes free   Any enrolled retirement plan agent in active status who is not currently under suspension or disbarment from practice before the IRS may practice before the IRS. E file federal state taxes free The practice of enrolled retirement plan agents is limited to certain Internal Revenue Code sections that relate to their area of expertise, principally those sections governing employee retirement plans. E file federal state taxes free Enrolled actuaries. E file federal state taxes free   Any individual who is enrolled as an actuary by the Joint Board for the Enrollment of Actuaries who is not currently under suspension or disbarment from practice before the IRS may practice before the IRS. E file federal state taxes free The practice of enrolled actuaries is limited to certain Internal Revenue Code sections that relate to their area of expertise, principally those sections governing employee retirement plans. E file federal state taxes free Student. E file federal state taxes free    Under certain circumstances, a student who is supervised by a practitioner may request permission to represent another person before the IRS. E file federal state taxes free For more information, see Authorization for special appearances, later. E file federal state taxes free Registered tax return preparers and unenrolled return preparers. E file federal state taxes free   A registered tax return preparer is an individual who has passed an IRS competency test and is authorized to prepare and sign tax returns as the preparer. E file federal state taxes free An unenrolled return preparer is an individual other than an attorney, CPA, enrolled agent, enrolled retirement plan agent, or enrolled actuary who prepares and signs a taxpayer's return as the preparer, or who prepares a return but is not required (by the instructions to the return or regulations) to sign the return. E file federal state taxes free   Registered tax return preparers and unenrolled return preparers may only represent taxpayers before revenue agents, customer service representatives, or similar officers and employees of the Internal Revenue Service (including the Taxpayer Advocate Service) during an examination of the taxable year or period covered by the tax return they prepared and signed. E file federal state taxes free Registered tax return preparers and unenrolled return preparers cannot represent taxpayers, regardless of the circumstances requiring representation, before appeals officers, revenue officers, counsel or similar officers or employees of the Internal Revenue Service or the Department of Treasury. E file federal state taxes free Registered tax return preparers and unenrolled return preparers cannot execute closing agreements, extend the statutory period for tax assessments or collection of tax, execute waivers, execute claims for refund, or sign any document on behalf of a taxpayer. E file federal state taxes free   If the unenrolled return preparer does not meet the requirements for limited representation, you may file Form 8821 to allow the preparer to inspect your tax information and receive copies of notices sent to you by the IRS. E file federal state taxes free See Form 8821. E file federal state taxes free Practice denied. E file federal state taxes free   Any individual engaged in limited practice before the IRS who is involved in disreputable conduct is subject to disciplinary action. E file federal state taxes free Disreputable conduct includes, but is not limited to, the list of items under Incompetence and Disreputable Conduct shown later under What Are the Rules of Practice. E file federal state taxes free Other individuals who may serve as representatives. E file federal state taxes free   Because of their special relationship with a taxpayer, the following individuals can represent the specified taxpayers before the IRS, provided they present satisfactory identification and, except in the case of an individual described in (1) below, proof of authority to represent the taxpayer. E file federal state taxes free An individual. E file federal state taxes free An individual can represent himself or herself before the IRS and does not have to file a written declaration of qualification and authority. E file federal state taxes free A family member. E file federal state taxes free An individual can represent members of his or her immediate family. E file federal state taxes free Immediate family includes a spouse, child, parent, brother, or sister of the individual. E file federal state taxes free An officer. E file federal state taxes free A bona fide officer of a corporation (including a parent, subsidiary, or other affiliated corporation), association, or organized group can represent the corporation, association, or organized group. E file federal state taxes free An officer of a governmental unit, agency, or authority, in the course of his or her official duties, can represent the organization before the IRS. E file federal state taxes free A partner. E file federal state taxes free A general partner may represent the partnership before the IRS. E file federal state taxes free An employee. E file federal state taxes free A regular full-time employee can represent his or her employer. E file federal state taxes free An employer can be, but is not limited to, an individual, partnership, corporation (including a parent, subsidiary, or other affiliated corporation), association, trust, receivership, guardianship, estate, organized group, governmental unit, agency, or authority. E file federal state taxes free A fiduciary. E file federal state taxes free A fiduciary (trustee, executor, personal representative, administrator, receiver, or guardian) stands in the position of a taxpayer and acts as the taxpayer, not as a representative. E file federal state taxes free See Fiduciary under When Is a Power of Attorney Not Required, later. E file federal state taxes free Representation Outside the United States Any individual may represent an individual or entity, who is outside the United States, before personnel of the IRS when such representation occurs outside the United States. E file federal state taxes free See section 10. E file federal state taxes free 7(c)(1)(vii) of Circular 230. E file federal state taxes free Authorization for Special Appearances The Commissioner of Internal Revenue, or delegate, can authorize an individual who is not otherwise eligible to practice before the IRS to represent another person for a particular matter. E file federal state taxes free The prospective representative must request this authorization in writing from the Office of Professional Responsibility. E file federal state taxes free However, it is granted only when extremely compelling circumstances exist. E file federal state taxes free If granted, the Commissioner, or delegate, will issue a letter that details the conditions related to the appearance and the particular tax matter for which the authorization is granted. E file federal state taxes free The authorization letter should not be confused with a letter from an IRS center advising an individual that he or she has been assigned a Centralized Authorization File (CAF) number. E file federal state taxes free The issuance of a CAF number does not indicate that an individual is either recognized or authorized to practice before the IRS. E file federal state taxes free It merely confirms that a centralized file for authorizations has been established for the individual under that number. E file federal state taxes free Students in LITCs and the STCP. E file federal state taxes free   A student who works in a Low Income Taxpayer Clinic (LITC) or Student Tax Clinic Program (STCP) who is supervised by a practitioner may request permission to represent another person before the IRS. E file federal state taxes free Authorization requests must be made to the Office of Professional Responsibility. E file federal state taxes free If granted, a letter authorizing the student's special appearance and detailing any conditions related to the appearance will be issued. E file federal state taxes free Students receiving an authorization letter generally can represent taxpayers before any IRS function or office subject to any conditions in the authorization letter. E file federal state taxes free If you intend to have a student represent you, review the authorization letter and ask your student, your student's supervisor, or the Office of Professional Responsibility if you have questions about the terms of the authorization. E file federal state taxes free Who Cannot Practice Before the IRS? In general, individuals who are not eligible or who have lost the privilege as a result of certain actions cannot practice before the IRS. E file federal state taxes free If an individual loses eligibility to practice, the IRS will not recognize a power of attorney that names the individual as a representative. E file federal state taxes free Corporations, associations, partnerships, and other persons that are not individuals. E file federal state taxes free   These organizations (or persons) are not eligible to practice before the IRS. E file federal state taxes free Loss of Eligibility Generally, individuals lose their eligibility to practice before the IRS in the following ways. E file federal state taxes free Not meeting the requirements for renewal of enrollment (such as continuing professional education). E file federal state taxes free Requesting to be placed in inactive retirement status. E file federal state taxes free Being suspended or disbarred by the Office of Professional Responsibility for violating the regulations governing practice before the IRS. E file federal state taxes free Failure to meet requirements. E file federal state taxes free   Individuals who fail to comply with the requirements for eligibility for renewal of enrollment will be notified by the IRS. E file federal state taxes free The notice will explain the reason for noncompliance and provide the individual with an opportunity to furnish information for reconsideration. E file federal state taxes free The individual has 60 days from the date of the notice to respond. E file federal state taxes free Inactive roster. E file federal state taxes free   An individual will be placed on the roster of inactive individuals for a period of three years, if he or she: Fails to respond timely to the notice of noncompliance with the renewal requirements, Fails to file timely the application for renewal, or Does not satisfy the requirements of eligibility for renewal. E file federal state taxes free The individual must file an application for renewal and satisfy all requirements for renewal after being placed in inactive status. E file federal state taxes free Otherwise, at the conclusion of the next renewal cycle, he or she will be removed from the roster and the enrollment or registration terminated. E file federal state taxes free Inactive retirement status. E file federal state taxes free   Individuals who request to be placed in an inactive retirement status will be ineligible to practice before the IRS. E file federal state taxes free They must continue to adhere to all renewal requirements. E file federal state taxes free They can be reinstated to an active enrollment status by filing an application for renewal and providing evidence that they have completed the required continuing professional education hours for the enrollment cycle or registration year. E file federal state taxes free Suspension and disbarment. E file federal state taxes free   Individuals authorized to practice before the IRS are subject to disciplinary proceedings and may be suspended or disbarred for violating any regulation governing practice before the IRS. E file federal state taxes free This includes engaging in acts of disreputable conduct. E file federal state taxes free For more information, see Incompetence and Disreputable Conduct under What are the Rules of Practice, later. E file federal state taxes free   Practitioners who are suspended in a disciplinary proceeding are not allowed to practice before the IRS during the period of suspension. E file federal state taxes free See What Is Practice Before the IRS, earlier. E file federal state taxes free   Practitioners who are disbarred in a disciplinary proceeding are not allowed to practice before the IRS. E file federal state taxes free However, a practitioner can seek reinstatement from the Office of Professional Responsibility five years after disbarment. E file federal state taxes free   If the practitioner seeks reinstatement, he or she may not practice before the IRS until the Office of Professional Responsibility authorizes reinstatement. E file federal state taxes free The Office of Professional Responsibility may reinstate the practitioner if it is determined that: The practitioner's future conduct is not likely to be in violation of the regulations, and Granting the reinstatement would not be contrary to the public interest. E file federal state taxes free How Does an Individual Become Enrolled? The Return Preparer Office can grant enrollment to practice before the IRS to an applicant who demonstrates special competence in tax matters by passing a written examination administered by the IRS. E file federal state taxes free Enrollment also can be granted to an applicant who qualifies because of past service and technical experience in the IRS. E file federal state taxes free In either case, certain application forms, discussed next, must be filed. E file federal state taxes free Additionally, an applicant must not have engaged in any conduct that would justify suspension or disbarment from practice before the IRS. E file federal state taxes free See Incompetence and Disreputable Conduct, later. E file federal state taxes free Form 2587. E file federal state taxes free   Applicants can apply to take the special enrollment examination by filing Form 2587, Application for Special Enrollment Examination. E file federal state taxes free Form 2587 can be filed online, by mail, or by fax. E file federal state taxes free For more information, see instructions and fees listed on the form. E file federal state taxes free To get Form 2587, see How To Get Tax Help, later. E file federal state taxes free Form 23 and Form 23-EP. E file federal state taxes free   Individuals who have passed the examination or are applying on the basis of past service and technical experience with the IRS can apply for enrollment by filing Form 23, Application for Enrollment to Practice Before the Internal Revenue Service, or Form 23-EP, Application for Enrollment to Practice Before the Internal Revenue Service as an Enrolled Retirement Plan Agent. E file federal state taxes free The application must include a check or money order in the amount of the fee shown on Form 23 or Form 23-EP. E file federal state taxes free Alternatively, payment may be made electronically pursuant to instructions on the forms. E file federal state taxes free To get Form 23 or Form 23-EP, see How To Get Tax Help, later. E file federal state taxes free Form 5434. E file federal state taxes free   An individual may apply as an enrolled actuary on the basis of past employment with the IRS and technical experience by filing Form 5434, Application for Enrollment, with the Joint Board for the Enrollment of Actuaries. E file federal state taxes free The application must include a check or money order in the amount of the fee shown on Form 5434. E file federal state taxes free To get Form 5434, see How To Get Tax Help, later. E file federal state taxes free Period of enrollment. E file federal state taxes free   An enrollment card will be issued to each individual whose enrollment application is approved. E file federal state taxes free The individual is enrolled until the expiration date shown on the enrollment card or certificate. E file federal state taxes free To continue practicing beyond the expiration date, the individual must request renewal of the enrollment by filing Form 8554, Application for Renewal of Enrollment to Practice Before the Internal Revenue Service, or Form 8554-EP, Application for Renewal of Enrollment to Practice Before the Internal Revenue Service as an Enrolled Retirement Plan Agent (ERPA). E file federal state taxes free What Are the Rules of Practice? The rules governing practice before the IRS are published in the Code of Federal Regulations at 31 C. E file federal state taxes free F. E file federal state taxes free R. E file federal state taxes free part 10 and reprinted in Treasury Department Circular No. E file federal state taxes free 230 (Circular 230). E file federal state taxes free An attorney, CPA, enrolled agent, enrolled retirement plan agent, registered tax return preparer, or enrolled actuary authorized to practice before the IRS (referred to hereafter as a practitioner) has the duty to perform certain acts and is restricted from performing other acts. E file federal state taxes free In addition, a practitioner cannot engage in disreputable conduct (discussed later). E file federal state taxes free Any practitioner who does not comply with the rules of practice or engages in disreputable conduct is subject to disciplinary action. E file federal state taxes free Also, unenrolled preparers must comply with the rules of practice and conduct to exercise the privilege of limited practice before the IRS. E file federal state taxes free See Publication 470 for a discussion of the special rules for limited practice by unenrolled preparers. E file federal state taxes free Duties Practitioners must promptly submit records or information requested by officers or employees of the IRS, except when the practitioner believes on reasonable belief and good faith that the information is privileged. E file federal state taxes free Communications with respect to tax advice between a federally authorized tax practitioner and a taxpayer generally are confidential to the same extent that communication would be privileged if it were between a taxpayer and an attorney if the advice relates to: Noncriminal tax matters before the IRS, or Noncriminal tax proceedings brought in federal court by or against the United States. E file federal state taxes free Communications regarding corporate tax shelters. E file federal state taxes free   This protection of tax advice communications does not apply to any written communications between a federally authorized tax practitioner and any person, including a director, shareholder, officer, employee, agent, or representative of a corporation if the communication involves the promotion of the direct or indirect participation of the corporation in any tax shelter. E file federal state taxes free Duty to advise. E file federal state taxes free   A practitioner who knows that his or her client has not complied with the revenue laws or has made an error or omission in any return, document, affidavit, or other required paper, has the responsibility to advise the client promptly of the noncompliance, error, or omission, and the consequences of the noncompliance, error, or omission. E file federal state taxes free Due diligence. E file federal state taxes free   A practitioner must exercise due diligence when performing the following duties. E file federal state taxes free Preparing or assisting in the preparing, approving, and filing of returns, documents, affidavits, and other papers relating to IRS matters. E file federal state taxes free Determining the correctness of oral or written representations made by him or her to the Department of the Treasury. E file federal state taxes free Determining the correctness of oral or written representations made by him or her to clients with reference to any matter administered by the IRS. E file federal state taxes free Restrictions Practitioners are restricted from engaging in certain practices. E file federal state taxes free The following paragraphs discuss some of these restricted practices. E file federal state taxes free Delays. E file federal state taxes free   A practitioner must not unreasonably delay the prompt disposition of any matter before the IRS. E file federal state taxes free Assistance from disbarred or suspended persons and former IRS employees. E file federal state taxes free   A practitioner must not knowingly, directly or indirectly, do the following. E file federal state taxes free Accept assistance from, or assist, any person who is under disbarment or suspension from practice before the IRS if the assistance relates to matters considered practice before the IRS. E file federal state taxes free Accept assistance from any former government employee where provisions of Circular 230 or any federal law would be violated. E file federal state taxes free Performance as a notary. E file federal state taxes free   A practitioner who is a notary public and is employed as counsel, attorney, or agent in a matter before the IRS, or has a material interest in the matter, cannot engage in any notary activities related to that matter. E file federal state taxes free Negotiations of taxpayer refund checks. E file federal state taxes free   Practitioners must not endorse or otherwise negotiate (cash) any refund check (including directing or accepting payment by any means, electronic or otherwise, in an account owned or controlled by the practitioner or any firm or other entity with whom the practitioner is associated) issued to the taxpayer. E file federal state taxes free Incompetence and Disreputable Conduct Any practitioner or unenrolled return preparer may be disbarred or suspended from practice before the IRS, or censured, for incompetence or disreputable conduct. E file federal state taxes free The following list contains examples of conduct that is considered disreputable. E file federal state taxes free Being convicted of any criminal offense under the revenue laws or of any offense involving dishonesty or breach of trust. E file federal state taxes free Knowingly giving false or misleading information in connection with federal tax matters, or participating in such activity. E file federal state taxes free Soliciting employment by prohibited means as discussed in section 10. E file federal state taxes free 30 of Circular 230. E file federal state taxes free Willfully failing to file a federal tax return, evading or attempting to evade any federal tax or payment, or participating in such actions. E file federal state taxes free Misappropriating, or failing to properly and promptly remit, funds received from clients for payment of taxes or other obligations due the United States. E file federal state taxes free Directly or indirectly attempting to influence the official action of IRS employees by the use of threats, false accusations, duress, or coercion, or by offering gifts, favors, or any special inducements. E file federal state taxes free Being disbarred or suspended from practice as an attorney, CPA, public accountant, or actuary, by the District of Columbia or any state, possession, territory, commonwealth, or any federal court, or any federal agency, body, or board. E file federal state taxes free Knowingly aiding and abetting another person to practice before the IRS during a period of suspension, disbarment, or ineligibility of that other person. E file federal state taxes free Using abusive language, making false accusations and statements knowing them to be false, circulating or publishing malicious or libelous matter, or engaging in any contemptuous conduct in connection with practice before the IRS. E file federal state taxes free Giving a false opinion knowingly, recklessly, or through gross incompetence; or following a pattern of providing incompetent opinions in questions arising under the federal tax laws. E file federal state taxes free Censure, Disbarments, and Suspensions The Office of Professional Responsibility may censure or institute proceedings to censure, suspend or disbar any attorney, CPA, or enrolled agent who has violated Circular 230. E file federal state taxes free A practitioner will be given the opportunity to demonstrate compliance with the rules before any disciplinary action is taken. E file federal state taxes free Authorizing a Representative You may either represent yourself, or you may authorize an individual to represent you before the IRS. E file federal state taxes free If you chose to have someone represent you, your representative must be a person eligible to practice before the IRS. E file federal state taxes free See Who Can Practice Before the IRS, earlier. E file federal state taxes free What Is a Power of Attorney? A power of attorney is your written authorization for an individual to act on your behalf. E file federal state taxes free If the authorization is not limited, the individual generally can perform all acts that you can perform. E file federal state taxes free The authority granted to a registered tax return preparer or an unenrolled preparer is limited. E file federal state taxes free For information on the limits regarding registered tax return preparers, see Circular 230 §10. E file federal state taxes free 3(f). E file federal state taxes free For information on the limits regarding unenrolled preparers, see Publication 470. E file federal state taxes free Acts performed. E file federal state taxes free   Any representative, other than a registered tax return preparer or an unenrolled return preparer, can usually perform the following acts. E file federal state taxes free Represent you before any office of the IRS. E file federal state taxes free Sign an offer or a waiver of restriction on assessment or collection of a tax deficiency, or a waiver of notice of disallowance of claim for credit or refund. E file federal state taxes free Sign a consent to extend the statutory time period for assessment or collection of a tax. E file federal state taxes free Sign a closing agreement. E file federal state taxes free Signing your return. E file federal state taxes free   The representative named under a power of attorney is not permitted to sign your income tax return unless: The signature is permitted under the Internal Revenue Code and the related regulations (see Regulations section 1. E file federal state taxes free 6012-1(a)(5)). E file federal state taxes free You specifically authorize this in your power of attorney. E file federal state taxes free For example, the regulation permits a representative to sign your return if you are unable to sign the return due to: Disease or injury. E file federal state taxes free Continuous absence from the United States (including Puerto Rico) for a period of at least 60 days prior to the date required by law for filing the return. E file federal state taxes free Other good cause if specific permission is requested of and granted by the IRS. E file federal state taxes free When a return is signed by a representative, it must be accompanied by a power of attorney (or copy) authorizing the representative to sign the return. E file federal state taxes free For more information, see the Form 2848 instructions. E file federal state taxes free Limitation on substitution or delegation. E file federal state taxes free   A recognized representative can substitute or delegate authority under the power of attorney to another recognized representative only if the act is specifically authorized by you on the power of attorney. E file federal state taxes free   After a substitution has been made, only the newly recognized representative will be recognized as the taxpayer's representative. E file federal state taxes free If a delegation of power has been made, both the original and the delegated representative will be recognized by the IRS to represent you. E file federal state taxes free Disclosure of returns to a third party. E file federal state taxes free   Your representative cannot execute consents that will allow the IRS to disclose tax return or return information to a third party unless you specifically delegate this authority to your representative on line 5 of Form 2848. E file federal state taxes free Incapacity or incompetency. E file federal state taxes free   A power of attorney is generally terminated if you become incapacitated or incompetent. E file federal state taxes free   The power of attorney can continue, however, in the case of your incapacity or incompetency if you authorize this on line 5 “Other” of the Form 2848 and if your non-IRS durable power of attorney meets all the requirements for acceptance by the IRS. E file federal state taxes free See Non-IRS powers of attorney, later. E file federal state taxes free When Is a Power of Attorney Required? Submit a power of attorney when you want to authorize an individual to represent you before the IRS, whether or not the representative performs any of the other acts cited earlier under What Is a Power of Attorney. E file federal state taxes free A power of attorney is most often required when you want to authorize another individual to perform at least one of the following acts on your behalf. E file federal state taxes free Represent you at a meeting with the IRS. E file federal state taxes free Prepare and file a written response to the IRS. E file federal state taxes free Form Required Use Form 2848 to appoint a recognized representative to act on your behalf before the IRS. E file federal state taxes free Individuals recognized to practice before the IRS are listed under Part II, Declaration of Representative, of Form 2848. E file federal state taxes free Your representative must complete that part of the form. E file federal state taxes free Non-IRS powers of attorney. E file federal state taxes free   The IRS will accept a non-IRS power of attorney, but a completed Form 2848 must be attached in order for the power of attorney to be entered on the Centralized Authorization File (CAF) system. E file federal state taxes free For more information, see Processing a non-IRS power of attorney, later. E file federal state taxes free   If you want to use a power of attorney document other than Form 2848, it must contain the following information. E file federal state taxes free Your name and mailing address. E file federal state taxes free Your social security number and/or employer identification number. E file federal state taxes free Your employee plan number, if applicable. E file federal state taxes free The name and mailing address of your representative(s). E file federal state taxes free The types of tax involved. E file federal state taxes free The federal tax form number. E file federal state taxes free The specific year(s) or period(s) involved. E file federal state taxes free For estate tax matters, the decedent's date of death. E file federal state taxes free A clear expression of your intention concerning the scope of authority granted to your representative(s). E file federal state taxes free Your signature and date. E file federal state taxes free You also must attach to the non-IRS power of attorney a signed and dated statement made by your representative. E file federal state taxes free This statement, which is referred to as the Declaration of Representative, is contained in Part II of Form 2848. E file federal state taxes free The statement should read: I am not currently under suspension or disbarment from practice before the Internal Revenue Service or other practice of my profession by any other authority, I am aware of the regulations contained in Circular 230, I am authorized to represent the taxpayer(s) identified in the power of attorney, and I am an individual described in 26 CFR 601. E file federal state taxes free 502(b). E file federal state taxes free Required information missing. E file federal state taxes free   The IRS will not accept your non-IRS power of attorney if it does not contain all the information listed above. E file federal state taxes free You can sign and submit a completed Form 2848 or a new non-IRS power of attorney that contains all the information. E file federal state taxes free If you cannot sign an acceptable replacement document, your attorney-in-fact may be able to perfect (make acceptable to the IRS) your non-IRS power of attorney by using the procedure described next. E file federal state taxes free Procedure for perfecting a non-IRS power of attorney. E file federal state taxes free   Under the following conditions, the attorney-in-fact named in your non-IRS power of attorney can sign a Form 2848 on your behalf. E file federal state taxes free The original non-IRS power of attorney grants authority to handle federal tax matters (for example, general authority to perform any acts). E file federal state taxes free The attorney-in-fact attaches a statement (signed under penalty of perjury) to the Form 2848 stating that the original non-IRS power of attorney is valid under the laws of the governing jurisdiction. E file federal state taxes free Example. E file federal state taxes free John Elm, a taxpayer, signs a non-IRS durable power of attorney that names his neighbor and CPA, Ed Larch, as his attorney-in-fact. E file federal state taxes free The power of attorney grants Ed the authority to perform any and all acts on John's behalf. E file federal state taxes free However, it does not list specific tax-related information such as types of tax or tax form numbers. E file federal state taxes free Shortly after John signs the power of attorney, he is declared incompetent. E file federal state taxes free Later, a federal tax matter arises concerning a prior year return filed by John. E file federal state taxes free Ed attempts to represent John before the IRS but is rejected because the durable power of attorney does not contain required information. E file federal state taxes free If Ed attaches a statement (signed under the penalty of perjury) that the durable power of attorney is valid under the laws of the governing jurisdiction, he can sign a completed Form 2848 and submit it on John's behalf. E file federal state taxes free If Ed can practice before the IRS (see Who Can Practice Before the IRS, earlier), he can name himself as representative on Form 2848. E file federal state taxes free Otherwise, he must name another individual who can practice before the IRS. E file federal state taxes free Processing a non-IRS power of attorney. E file federal state taxes free   The IRS has a centralized computer database system called the CAF system. E file federal state taxes free This system contains information on the authority of taxpayer representatives. E file federal state taxes free Generally, when you submit a power of attorney document to the IRS, it is processed for inclusion on the CAF system. E file federal state taxes free Entry of your power of attorney on the CAF system enables IRS personnel, who do not have a copy of your power of attorney, to verify the authority of your representative by accessing the CAF. E file federal state taxes free It also enables the IRS to automatically send copies of notices and other IRS communications to your representative if you specify that your representative should receive those communications. E file federal state taxes free   You can have your non-IRS power of attorney entered on the CAF system by attaching it to a completed Form 2848 and submitting it to the IRS. E file federal state taxes free Your signature is not required; however, your attorney-in-fact must sign the Declaration of Representative (see Part II of Form 2848). E file federal state taxes free Preparation of Form — Helpful Hints The preparation of Form 2848 is illustrated by an example, later under How Do I Fill Out Form 2848. E file federal state taxes free However, the following will also assist you in preparing the form. E file federal state taxes free Line-by-line hints. E file federal state taxes free   The following hints are summaries of some of the line-by-line instructions for Form 2848. E file federal state taxes free Line 1—Taxpayer information. E file federal state taxes free   If a joint return is involved, the husband and wife each file a separate Form 2848 if they both want to be represented. E file federal state taxes free If only one spouse wants to be represented in the matter, that spouse files a Form 2848. E file federal state taxes free Line 2—Representative(s). E file federal state taxes free   Only individuals may be named as representatives. E file federal state taxes free If your representative has not been assigned a CAF number, enter “None” on that line and the IRS will issue one to your representative. E file federal state taxes free If the representative's address or phone number has changed since the CAF number was issued, you should check the appropriate box. E file federal state taxes free Enter your representative's fax number if available. E file federal state taxes free   If you want to name more than three representatives, attach additional Form(s) 2848. E file federal state taxes free The IRS can send copies of notices and communications to two of your representatives. E file federal state taxes free You must, however, check the boxes on line 2 of the Form 2848 if you want the IRS to routinely send copies of notices and communications to your representatives. E file federal state taxes free If you do not check the boxes, your representatives will not routinely receive copies of notices and communications. E file federal state taxes free Line 3—Tax matters. E file federal state taxes free   You may list any tax years or periods that have already ended as of the date you sign the power of attorney. E file federal state taxes free However, you may include on a power of attorney only future tax periods that end no later than 3 years after the date the power of attorney is received by the IRS. E file federal state taxes free The 3 future periods are determined starting after December 31 of the year the power of attorney is received by the IRS. E file federal state taxes free However, avoid general references such as “all years” or “all taxes. E file federal state taxes free ” Any Form 2848 with general references will be returned. E file federal state taxes free Line 4—Specific use not recorded on Centralized Authorization File (CAF). E file federal state taxes free   Certain matters cannot be recorded on the CAF system. E file federal state taxes free Examples of such matters include, but are not limited to, the following. E file federal state taxes free Requests for a private letter ruling or technical advice. E file federal state taxes free Applications for an employer identification number (EIN). E file federal state taxes free Claims filed on Form 843, Claim for Refund and Request for Abatement. E file federal state taxes free Corporate dissolutions. E file federal state taxes free Requests for change of accounting method. E file federal state taxes free Requests for change of accounting period. E file federal state taxes free Applications for recognition of exemption under sections 501(c)(3), 501(a), or 521 (Forms 1023, 1034, or 1028). E file federal state taxes free Request for a determination of the qualified status of an employee benefit plan (Forms 5300, 5307, or 5310). E file federal state taxes free Application for Award for Original Information under section 7623. E file federal state taxes free Voluntary submissions under the Employee Plans Compliance Resolution System (EPCRS). E file federal state taxes free Freedom of Information Act requests. E file federal state taxes free If the tax matter described on line 3 of Form 2848 concerns one of these matters specifically, check the box on line 4. E file federal state taxes free If this box is checked, the representative should mail or fax the power of attorney to the IRS office handling the matter. E file federal state taxes free Otherwise, the representative should bring a copy of the power of attorney to each meeting with the IRS. E file federal state taxes free Where To File a Power of Attorney Generally, you can mail or fax a paper Form 2848 directly to the IRS. E file federal state taxes free To determine where you should file Form 2848, see Where To File in the instructions for Form 2848. E file federal state taxes free If Form 2848 is for a specific use, mail or fax it to the office handling that matter. E file federal state taxes free For more information on specific use, see the Instructions for Form 2848, line 4. E file federal state taxes free FAX copies. E file federal state taxes free   The IRS will accept a copy of a power of attorney that is submitted by facsimile transmission (fax). E file federal state taxes free If you choose to file a power of attorney by fax, be sure the appropriate IRS office is equipped to accept this type of transmission. E file federal state taxes free Your representative may be able to file Form 2848 electronically via the IRS website. E file federal state taxes free For more information, your representative can go to www. E file federal state taxes free irs. E file federal state taxes free gov and under the Tax Professionals tab, click on e-services–Online Tools for Tax Professionals. E file federal state taxes free If you complete Form 2848 for electronic signature authorization, do not file Form 2848 with the IRS. E file federal state taxes free Instead, give it to your representative, who will retain the document. E file federal state taxes free Updating a power of attorney. E file federal state taxes free   Submit any update or modification to an existing power of attorney in writing. E file federal state taxes free Your signature (or the signature of the individual(s) authorized to sign on your behalf) is required. E file federal state taxes free Do this by sending the updated Form 2848 or non-IRS power of attorney to the IRS office(s) where you previously sent the original(s), including the center where the related return was, or will be filed. E file federal state taxes free   A recognized representative may substitute or delegate authority if you specifically authorize your representative to substitute or delegate representation in the original power of attorney. E file federal state taxes free To make a substitution or delegation, the representative must file the following items with the IRS office(s) where the power of attorney was filed. E file federal state taxes free A written notice of substitution or delegation signed by the recognized representative. E file federal state taxes free A written declaration of representative made by the new representative. E file federal state taxes free A copy of the power of attorney that specifically authorizes the substitution or delegation. E file federal state taxes free Retention/Revocation of Prior Power(s) of Attorney A newly filed power of attorney concerning the same matter will revoke a previously filed power of attorney. E file federal state taxes free However, the new power of attorney will not revoke the prior power of attorney if it specifically states it does not revoke such prior power of attorney and either of the following are attached to the new power of attorney. E file federal state taxes free A copy of the unrevoked prior power of attorney, or A statement signed by the taxpayer listing the name and address of each representative authorized under the prior unrevoked power of attorney. E file federal state taxes free Note. E file federal state taxes free The filing of Form 2848 will not revoke any  Form 8821 that is in effect. E file federal state taxes free Revocation of Power of Attorney/Withdrawal of Representative If you want to revoke an existing power of attorney and do not want to name a new representative, or if a representative wants to withdraw from representation, mail or fax a copy of the previously executed power of attorney to the IRS, or if the power of attorney is for a specific matter, to the IRS office handling the matter. E file federal state taxes free If the taxpayer is revoking the power of attorney, the taxpayer must write “REVOKE” across the top of the first page with a current signature and date below this annotation. E file federal state taxes free If the representative is withdrawing from the representation, the representative must write “WITHDRAW” across the top of the first page with a current signature and date below this annotation. E file federal state taxes free If you do not have a copy of the power of attorney you want to revoke or withdraw, send a statement to the IRS. E file federal state taxes free The statement of revocation or withdrawal must indicate that the authority of the power of attorney is revoked or withdrawn, list the matters and periods, and must be signed and dated by the taxpayer or representative as applicable. E file federal state taxes free If the taxpayer is revoking, list the name and address of each recognized representative whose authority is revoked. E file federal state taxes free When the taxpayer is completely revoking authority, the form should state “remove all years/periods” instead of listing the specific tax matter, years, or periods. E file federal state taxes free If the representative is withdrawing, list the name, TIN, and address (if known) of the taxpayer. E file federal state taxes free To revoke a specific use power of attorney, send the power of attorney or statement of revocation to the IRS office handling your case, using the above instructions. E file federal state taxes free A power of attorney held by a student will be recorded on the CAF system for 130 days from the receipt date. E file federal state taxes free If you are authorizing a student to represent you after that time, you will need to submit a current and valid Form 2848. E file federal state taxes free When Is a Power of Attorney Not Required? A power of attorney is not required when the third party is not dealing with the IRS as your representative. E file federal state taxes free The following situations do not require a power of attorney. E file federal state taxes free Providing information to the IRS. E file federal state taxes free Authorizing the disclosure of tax return information through Form 8821, Tax Information Authorization, or other written or oral disclosure consent. E file federal state taxes free Allowing the IRS to discuss return information with a third party via the checkbox provided on a tax return or other document. E file federal state taxes free Allowing a tax matters partner or person (TMP) to perform acts for the partnership. E file federal state taxes free Allowing the IRS to discuss return information with a fiduciary. E file federal state taxes free How Do I Fill Out Form 2848? The following example illustrates how to complete Form 2848. E file federal state taxes free The two completed forms for this example are shown on the next pages. E file federal state taxes free Example. E file federal state taxes free Stan and Mary Doe have been notified that their joint tax returns (Forms 1040) for 2009, 2010, and 2011 are being examined. E file federal state taxes free They have decided to appoint Jim Smith, an enrolled agent, to represent them in this matter and any future matters concerning these returns. E file federal state taxes free Jim, who has prepared returns at the same location for years, already has a Centralized Authorization File (CAF) number assigned to him. E file federal state taxes free Mary does not want Jim to sign any agreements on her behalf, but Stan is willing to have Jim do so. E file federal state taxes free They want copies of all notices and written communications sent to Jim. E file federal state taxes free This is the first time Stan and Mary have given power of attorney to anyone. E file federal state taxes free They should each complete a Form 2848 as follows. E file federal state taxes free Line 1—Taxpayer information. E file federal state taxes free   Stan and Mary must each file a separate Form 2848. E file federal state taxes free On his separate Form 2848, Stan enters his name, street address, and social security number in the spaces provided. E file federal state taxes free Mary does likewise on her separate Form 2848. E file federal state taxes free Line 2—Representative(s). E file federal state taxes free   On their separate Forms 2848, Stan and Mary each enters the name and current address of their chosen representative, Jim Smith. E file federal state taxes free Both Stan and Mary want Jim Smith to receive notices and communications concerning the matters identified in line 3, so on their separate Forms 2848, Stan and Mary each checks the box in the first column of line 2. E file federal state taxes free They also enter Mr. E file federal state taxes free Smith's CAF number, his telephone number, and his fax number. E file federal state taxes free Mr. E file federal state taxes free Smith's address, telephone number, and fax number have not changed since the IRS issued his CAF number, so Stan and Mary do not check the boxes in the second column. E file federal state taxes free Line 3—Tax Matters. E file federal state taxes free   On their separate Forms 2848, Stan and Mary each enters “income” for the type of tax, “1040” for the form number, and “2009, 2010, and 2011” for the tax years. E file federal state taxes free Line 4—Specific use not recorded on Centralized Authorization File (CAF). E file federal state taxes free   On their separate Forms 2848, Stan and Mary make no entry on this line because they do not want to restrict the use of their powers of attorney to a specific use that is not recorded on the CAF. E file federal state taxes free See Preparation of Form — Helpful Hints, earlier. E file federal state taxes free Line 5—Acts authorized. E file federal state taxes free   Mary wants to sign any agreement that reflects changes to her and Stan's joint 2009, 2010, and 2011 income tax liability, so she writes “Taxpayer must sign any agreement form” on line 5 of her Form 2848. E file federal state taxes free Stan does not wish to restrict the authority of Jim Smith in this regard, so he leaves line 5 of his Form 2848 blank. E file federal state taxes free If either Mary or Stan had chosen, they could have listed other restrictions on line 5 of their separate Forms 2848. E file federal state taxes free Line 6—Retention/revocation of prior power(s) of attorney. E file federal state taxes free   Stan and Mary are each filing their first powers of attorney, so they make no entry on this line. E file federal state taxes free However, if they had filed prior powers of attorney, the filing of this current power would revoke any earlier ones for the same tax matter(s) unless they checked the box on line 6 and attached a copy of the prior power of attorney that they wanted to remain in effect. E file federal state taxes free   If Mary later decides that she can handle the examination on her own, she can revoke her power of attorney even though Stan does not revoke his power of attorney. E file federal state taxes free (See Revocation of Power of Attorney/Withdrawal of Representative, earlier, for the special rules that apply. E file federal state taxes free ) Line 7—Signature of taxpayer. E file federal state taxes free   Stan and Mary each signs and dates his or her Form 2848. E file federal state taxes free If a taxpayer does not sign, the IRS cannot accept the form. E file federal state taxes free Part II—Declaration of Representative. E file federal state taxes free   Jim Smith must complete this part of Form 2848. E file federal state taxes free If he does not sign this part, the IRS cannot accept the form. E file federal state taxes free What Happens to the Power of Attorney When Filed? A power of attorney will be recognized after it is received, reviewed, and determined by the IRS to contain the required information. E file federal state taxes free However, until a power of attorney is entered on the CAF system, IRS personnel may be unaware of the authority of the person you have named to represent you. E file federal state taxes free Therefore, during this interim period, IRS personnel may request that you or your representative bring a copy to any meeting with the IRS. E file federal state taxes free This image is too large to be displayed in the current screen. E file federal state taxes free Please click the link to view the image. E file federal state taxes free Filled-in Form 2848 - Page 1 This image is too large to be displayed in the current screen. E file federal state taxes free Please click the link to view the image. E file federal state taxes free Filled-in Form 2848 - Page 2 This image is too large to be displayed in the current screen. E file federal state taxes free Please click the link to view the image. E file federal state taxes free Filled-in Form 2848 - Page 1 This image is too large to be displayed in the current screen. E file federal state taxes free Please click the link to view the image. E file federal state taxes free Filled-in Form 2848 - Page 2 Processing and Handling How the power of attorney is processed and handled depends on whether it is a complete or incomplete document. E file federal state taxes free Incomplete document. E file federal state taxes free   If Form 2848 is incomplete, the IRS will attempt to secure the missing information either by writing or telephoning you or your representative. E file federal state taxes free For example, if your signature or signature date is missing, the IRS will contact you. E file federal state taxes free If information concerning your representative is missing and information sufficient to make a contact (such as an address and/or a telephone number) is on the document, the IRS will try to contact your representative. E file federal state taxes free   In either case, the power of attorney is not considered valid until all required information is entered on the document. E file federal state taxes free The individual(s) named as representative(s) will not be recognized to practice before the IRS, on your behalf, until the document is complete and accepted by the IRS. E file federal state taxes free Complete document. E file federal state taxes free   If the power of attorney is complete and valid, the IRS will take action to recognize the representative. E file federal state taxes free In most instances, this includes processing the document on the CAF system. E file federal state taxes free Recording the data on the CAF system enables the IRS to direct copies of mailings to authorized representatives and to readily recognize the scope of authority granted. E file federal state taxes free Documents not processed on CAF. E file federal state taxes free   Specific-use powers of attorney are not processed on the CAF system (see Preparation of Form – Helpful Hints, earlier). E file federal state taxes free For example, a power of attorney that is a one-time or specific-issue grant of authority is not processed on the CAF system. E file federal state taxes free These documents remain with the related case files. E file federal state taxes free In this situation, you should check the box on line 4 of Form 2848. E file federal state taxes free In these situations, the representative should bring a copy of the power of attorney to each meeting with the IRS. E file federal state taxes free Dealing With the Representative After a valid power of attorney is filed, the IRS will recognize your representative. E file federal state taxes free However, if it appears the representative is responsible for unreasonably delaying or hindering the prompt disposition of an IRS matter by failing to furnish, after repeated requests, nonprivileged information, the IRS can contact you directly. E file federal state taxes free For example, in most instances in which a power of attorney is recognized, the IRS will contact the representative to set up appointments and to provide lists of required items. E file federal state taxes free However, if the representative is unavailable, does not respond to repeated requests, and does not provide required items (other than items considered privileged), the IRS can bypass your representative and contact you directly. E file federal state taxes free If a representative engages in conduct described above, the matter can be referred to the Office of Professional Responsibility for consideration of possible disciplinary action. E file federal state taxes free Notices and other correspondence. E file federal state taxes free   If you have a recognized representative, you and the representative will routinely receive notices and other correspondence from the IRS (either the original or a copy) if you checked the box in the left column of line 2 of Form 2848. E file federal state taxes free If the power of attorney is processed on the CAF system, the IRS will send your representative(s) a duplicate of all computer-generated correspondence that is sent to you. E file federal state taxes free This includes notices and letters produced either at the Martinsburg Computing Center, or other IRS centers. E file federal state taxes free The IRS employee handling the case is responsible for ensuring that the original and any requested copies of each manually-generated correspondence are sent to you and your representative(s) in accordance with your authorization. E file federal state taxes free How To Get Tax Help You can get help with unresolved tax issues, order free publications and forms, ask tax questions, and get information from the IRS in several ways. E file federal state taxes free By selecting the method that is best for you, you will have quick and easy access to tax help. E file federal state taxes free Free help with your return. E file federal state taxes free   Free help in preparing your return is available nationwide from IRS-certified volunteers. E file federal state taxes free The Volunteer Income Tax Assistance (VITA) program is designed to help low and moderate income taxpayers and the Tax Counseling for the Elderly (TCE) program is designed to assist taxpayers age 60 and older with their tax returns. E file federal state taxes free Most VITA and TCE sites offer free electronic filing and all volunteers will let you know about credits and deductions you may be entitled to claim. E file federal state taxes free To find the nearest VITA or TCE site, visit IRS. E file federal state taxes free gov or call 1-800-906-9887 or 1-800-829-1040. E file federal state taxes free   As part of the TCE program, AARP offers the Tax-Aide counseling program. E file federal state taxes free To find the nearest AARP Tax-Aide site, call 1-888-227-7669 or visit AARP's website at www. E file federal state taxes free aarp. E file federal state taxes free org/money/taxaide. E file federal state taxes free   For more information on these programs, go to IRS. E file federal state taxes free gov and enter keyword “VITA” in the upper right-hand corner. E file federal state taxes free Internet. E file federal state taxes free You can access the IRS website at IRS. E file federal state taxes free gov 24 hours a day, 7 days a week to: E-file your return. E file federal state taxes free Find out about commercial tax preparation and e-file services available free to eligible taxpayers. E file federal state taxes free Check the status of your refund. E file federal state taxes free Go to IRS. E file federal state taxes free gov and click on Where's My Refund. E file federal state taxes free Wait at least 72 hours after the IRS acknowledges receipt of your e-filed return, or 3 to 4 weeks after mailing a paper return. E file federal state taxes free If you filed Form 8379 with your return, wait 14 weeks (11 weeks if you filed electronically). E file federal state taxes free Have your tax return available so you can provide your social security number, your filing status, and the exact whole dollar amount of your refund. E file federal state taxes free Download forms, including talking tax forms, instructions, and publications. E file federal state taxes free Order IRS products online. E file federal state taxes free Research your tax questions online. E file federal state taxes free Search publications online by topic or keyword. E file federal state taxes free Use the online Internal Revenue Code, regulations, or other official guidance. E file federal state taxes free View Internal Revenue Bulletins (IRBs) published in the last few years. E file federal state taxes free Figure your withholding allowances using the withholding calculator online at www. E file federal state taxes free irs. E file federal state taxes free gov/individuals. E file federal state taxes free Determine if Form 6251 must be filed by using our Alternative Minimum Tax (AMT) Assistant available online at www. E file federal state taxes free irs. E file federal state taxes free gov/individuals. E file federal state taxes free Sign up to receive local and national tax news by email. E file federal state taxes free Get information on starting and operating a small business. E file federal state taxes free Phone. E file federal state taxes free Many services are available by phone. E file federal state taxes free   Ordering forms, instructions, and publications. E file federal state taxes free Call 1-800-TAX -FORM (1-800-829-3676) to order current-year forms, instructions, and publications, and prior-year forms and instructions. E file federal state taxes free You should receive your order within 10 days. E file federal state taxes free Asking tax questions. E file federal state taxes free Call the IRS with your tax questions at 1-800-829-1040. E file federal state taxes free Solving problems. E file federal state taxes free You can get face-to-face help solving tax problems every business day in IRS Taxpayer Assistance Centers. E file federal state taxes free An employee can explain IRS letters, request adjustments to your account, or help you set up a payment plan. E file federal state taxes free Call your local Taxpayer Assistance Center for an appointment. E file federal state taxes free To find the number, go to www. E file federal state taxes free irs. E file federal state taxes free gov/localcontacts or look in the phone book under United States Government, Internal Revenue Service. E file federal state taxes free TTY/TDD equipment. E file federal state taxes free If you have access to TTY/TDD equipment, call 1-800-829-4059 to ask tax questions or to order forms and publications. E file federal state taxes free TeleTax topics. E file federal state taxes free Call 1-800-829-4477 to listen to pre-recorded messages covering various tax topics. E file federal state taxes free Refund information. E file federal state taxes free To check the status of your refund, call 1-800-829-1954 or 1-800-829-4477 (automated refund information 24 hours a day, 7 days a week). E file federal state taxes free Wait at least 72 hours after the IRS acknowledges receipt of your e-filed return, or 3 to 4 weeks after mailing a paper return. E file federal state taxes free If you filed Form 8379 with your return, wait 14 weeks (11 weeks if you filed electronically). E file federal state taxes free Have your tax return available so you can provide your social security number, your filing status, and the exact whole dollar amount of your refund. E file federal state taxes free If you check the status of your refund and are not given the date it will be issued, please wait until the next week before checking back. E file federal state taxes free Other refund information. E file federal state taxes free To check the status of a prior-year refund or amended return refund, call 1-800-829-1040. E file federal state taxes free Evaluating the quality of our telephone services. E file federal state taxes free To ensure IRS representatives give accurate, courteous, and professional answers, we use several methods to evaluate the quality of our telephone services. E file federal state taxes free One method is for a second IRS representative to listen in on or record random telephone calls. E file federal state taxes free Another is to ask some callers to complete a short survey at the end of the call. E file federal state taxes free Walk-in. E file federal state taxes free Many products and services are available on a walk-in basis. E file federal state taxes free   Products. E file federal state taxes free You can walk in to many post offices, libraries, and IRS offices to pick up certain forms, instructions, and publications. E file federal state taxes free Some IRS offices, libraries, grocery stores, copy centers, city and county government offices, credit unions, and office supply stores have a collection of products available to print from a CD or photocopy from reproducible proofs. E file federal state taxes free Also, some IRS offices and libraries have the Internal Revenue Code, regulations, Internal Revenue Bulletins, and Cumulative Bulletins available for research purposes. E file federal state taxes free Services. E file federal state taxes free You can walk in to your local Taxpayer Assistance Center every business day for personal, face-to-face tax help. E file federal state taxes free An employee can explain IRS letters, request adjustments to your tax account, or help you set up a payment plan. E file federal state taxes free If you need to resolve a tax problem, have questions about how the tax law applies to your individual tax return, or you are more comfortable talking with someone in person, visit your local Taxpayer Assistance Center where you can spread out your records and talk with an IRS representative face-to-face. E file federal state taxes free No appointment is necessary—just walk in. E file federal state taxes free If you prefer, you can call your local Center and leave a message requesting an appointment to resolve a tax account issue. E file federal state taxes free A representative will call you back within 2 business days to schedule an in-person appointment at your convenience. E file federal state taxes free If you have an ongoing, complex tax account problem or a special need, such as a disability, an appointment can be requested. E file federal state taxes free All other issues will be handled without an appointment. E file federal state taxes free To find the number of your local office, go to  www. E file federal state taxes free irs. E file federal state taxes free gov/localcontacts or look in the phone book under United States Government, Internal Revenue Service. E file federal state taxes free Mail. E file federal state taxes free You can send your order for forms, instructions, and publications to the address below. E file federal state taxes free You should receive a response within 10 days after your request is received. E file federal state taxes free  Internal Revenue Service 1201 N. E file federal state taxes free Mitsubishi Motorway Bloomington, IL 61705-6613 Taxpayer Advocate Service. E file federal state taxes free   The Taxpayer Advocate Service (TAS) is your voice at the IRS. E file federal state taxes free Our job is to ensure that every taxpayer is treated fairly, and that you know and understand your rights. E file federal state taxes free We offer free help to guide you through the often-confusing process of resolving tax problems that you haven’t been able to solve on your own. E file federal state taxes free Remember, the worst thing you can do is nothing at all. E file federal state taxes free   TAS can help if you can’t resolve your problem with the IRS and: Your problem is causing financial difficulties for you, your family, or your business. E file federal state taxes free You face (or your business is facing) an immediate threat of adverse action. E file federal state taxes free You have tried repeatedly to contact the IRS but no one has responded, or the IRS has not responded to you by the date promised. E file federal state taxes free   If you qualify for our help, we’ll do everything we can to get your problem resolved. E file federal state taxes free You will be assigned to one advocate who will be with you at every turn. E file federal state taxes free We have offices in every state, the District of Columbia, and Puerto Rico. E file federal state taxes free Although TAS is independent within the IRS, our advocates know how to work with the IRS to get your problems resolved. E file federal state taxes free And our services are always free. E file federal state taxes free   As a taxpayer, you have rights that the IRS must abide by in its dealings with you. E file federal state taxes free Our tax toolkit at www. E file federal state taxes free TaxpayerAdvocate. E file federal state taxes free irs. E file federal state taxes free gov can help you understand these rights. E file federal state taxes free   If you think TAS might be able to help you, call your local advocate, whose number is in your phone book and on our website at www. E file federal state taxes free irs. E file federal state taxes free gov/advocate. E file federal state taxes free You can also call our toll-free number at 1-877-777-4778 or TTY/TDD 1-800-829-4059. E file federal state taxes free   TAS also handles large-scale or systemic problems that affect many taxpayers. E file federal state taxes free If you know of one of these broad issues, please report it to us through our Systemic Advocacy Management System at www. E file federal state taxes free irs. E file federal state taxes free gov/advocate. E file federal state taxes free Low Income Taxpayer Clinics (LITCs). E file federal state taxes free   Low Income Taxpayer Clinics (LITCs) are independent from the IRS. E file federal state taxes free Some clinics serve individuals whose income is below a certain level and who need to resolve a tax problem. E file federal state taxes free These clinics provide professional representation before the IRS or in court on audits, appeals, tax collection disputes, and other issues for free or for a small fee. E file federal state taxes free Some clinics can provide information about taxpayer rights and responsibilities in many different languages for individuals who speak English as a second language. E file federal state taxes free For more information and to find a clinic near you, see the LITC page on www. E file federal state taxes free irs. E file federal state taxes free gov/advocate or IRS Publication 4134, Low Income Taxpayer Clinic List. E file federal state taxes free This publication is also available by calling 1-800-829-3676 or at your local IRS office. E file federal state taxes free Free tax services. E file federal state taxes free   Publication 910, IRS Guide to Free Tax Services, is your guide to IRS services and resources. E file federal state taxes free Learn about free tax information from the IRS, including publications, services, and education and assistance programs. E file federal state taxes free The publication also has an index of over 100 TeleTax topics (recorded tax information) you can listen to on the telephone. E file federal state taxes free The majority of the information and services listed in this publication are available to you free of charge. E file federal state taxes free If there is a fee associated with a resource or service, it is listed in the publication. E file federal state taxes free   Accessible versions of IRS published products are available on request in a variety of alternative formats for people with disabilities. E file federal state taxes free DVD for tax products. E file federal state taxes free You can order Publication 1796, IRS Tax Products DVD, and obtain: Current-year forms, instructions, and publications. E file federal state taxes free Prior-year forms, instructions, and publications. E file federal state taxes free Tax Map: an electronic research tool and finding aid. E file federal state taxes free Tax law frequently asked questions. E file federal state taxes free Tax Topics from the IRS telephone response system. E file federal state taxes free Internal Revenue Code—Title 26 of the U. E file federal state taxes free S. E file federal state taxes free Code. E file federal state taxes free Links to other Internet based Tax Research Materials. E file federal state taxes free Fill-in, print, and save features for most tax forms. E file federal state taxes free Internal Revenue Bulletins. E file federal state taxes free Toll-free and email technical support. E file federal state taxes free Two releases during the year. E file federal state taxes free  – The first release will ship the beginning of January. E file federal state taxes free  – The final release will ship the beginning of March. E file federal state taxes free Purchase the DVD from National Technical Information Service (NTIS) at www. E file federal state taxes free irs. 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Forms and Schedules for Form 1040

Schedule A (Form 1040), Itemized Deductions
Use Schedule A (Form 1040) to figure your itemized deductions. In most cases, your federal income tax will be less if you take the larger of your itemized deductions or your standard deduction.

Schedule B (Form 1040), Interest and Ordinary Dividends
Use Schedule B to report your taxable interest or ordinary dividends.

Schedule C (Form 1040), Profit or Loss From Business
Use this schedule to report income or loss from a business you operated or a profession you practiced as a sole proprietor. An activity qualifies as a business if your primary purpose for engaging in the activity is for income or profit and you are involved in the activity with continuity and regularity.

Schedule C-EZ (Form 1040), Net Profit From Business
You can use Schedule C-EZ instead of Schedule C if you operated a business or practiced a profession as a sole proprietorship or qualified joint venture, or you were a statutory employee and you have met all the requirements listed in Schedule C-EZ, Part I.

Schedule D (Form 1040), Capital Gains and Losses
Use Schedule D (Form 1040) to report the sale or exchange of capital assets, gains from involuntary conversions of capital assets, capital gain distributions and nonbusiness bad debts.

Schedule E (Form 1040), Supplemental Income and Loss
Use Schedule E (Form 1040) to report income or loss from rental real estate, royalties, partnerships, S corporations, estates, trusts, and residual interests in REMICs.

Schedule EIC (Form 1040A or 1040), Earned Income Credit
After you have figured your earned income credit (EIC), use this schedule to give the IRS information about your qualifying child(ren).

Schedule F (Form 1040), Profit or Loss From Farming
Use Schedule F (Form 1040) to report farm income and expenses.

Schedule H (Form 1040), Household Employment Taxes
Use this schedule to report household employment taxes if you paid any one household employee cash wages of $1,800 or more during the calendar year, withheld federal income tax during the calendar year for any household employee, or paid total cash wages of $1,000 or more in any calendar quarter of the year or previous year to all household employees.

Schedule J (Form 1040), Income Averaging for Farmers and Fishermen
Use Schedule J (Form 1040) to elect to figure your income tax by averaging, over the previous 3 years (base years), all or part of your taxable income from your trade or business of farming or fishing.

Schedule R (Form 1040A or 1040), Credit for the Elderly or the Disabled
Use this schedule to figure the credit for the elderly or the disabled.

Schedule SE (Form 1040), Self-Employment Tax
Use this schedule to figure the tax due on net earnings from self-employment.

Form 1040-V, Payment Voucher for Form 1040
This form is a statement you send with your check or money order for any balance due on the “Amount you owe” line of your Form 1040, Form 1040A, or Form 1040EZ.

Form 1040X, Amended U.S. Individual Income Tax Return
Used by individual taxpayers to amend prior year tax returns.

Form 2106, Employee Business Expenses
Use this form if you are an employee deducting ordinary and necessary expenses for your job.

Form 2210, Underpayment of Estimated Tax by Individuals, Estates, and Trusts
Use this form to see if you owe a penalty for underpaying your estimated tax and, if you do, to figure the amount of the penalty.

Form 2441, Child and Dependent Care Expenses
If you paid someone to care for your child (under age 13) or other qualifying person so you (and your spouse if filing jointly) could work or look for work, you may be able to take the credit for child and dependent care expenses.

Form 2848, Power of Attorney and Declaration of Representative
Use Form 2848 to authorize an individual to represent you before the IRS. The individual you authorize must be a person eligible to practice before the IRS.

Form 3903, Moving Expenses
Use Form 3903 to figure your moving expense deduction for a move related to the start of work at a new principal place of work (workplace). If the new workplace is outside the United States or its possessions, you must be a U.S. citizen or resident alien to deduct your expenses.

Form 4562, Depreciation and Amortization
Use Form 4562 to claim your deduction for depreciation and amortization, make the election under section 179 to expense certain property, and provide information on the business/investment use of automobiles and other listed property.

Form 4868, Application for Automatic Extension of Time To File U.S. Individual Income Tax Return
A U.S. citizen or resident files this form to request an automatic extension of time to file a U.S. individual income tax return.

Form 4952, Investment Interest Expense Deduction
Use this form to figure the amount of investment interest expense you can deduct for the current year and the amount you can carry forward to future years.

Form 5329, Additional Taxes on Qualified Plans (Including IRAs) and Other Tax-Favored Accounts
Use Form 5329 to report additional taxes on IRAs, other qualified retirement plans, modified endowment contracts, Coverdell ESAs, QTPs, Archer MSAs, or HSAs.

Form 6251, Alternative Minimum Tax - Individuals
Use this form to figure the amount, if any, of your alternative minimum tax (AMT).

Form 8283, Noncash Charitable Contributions
Individuals, partnerships, and corporations file this form to report information about noncash charitable contributions when the amount of their deduction for all noncash gifts is more than $500.

Form 8582, Passive Activity Loss Limitations
Noncorporate taxpayers use this form to figure the amount of any passive activity loss (PAL) for the current tax year.

Form 8606, Nondeductible IRAs
Use this form to report nondeductible contributions you made to traditional IRAs; distributions from traditional, SEP, or SIMPLE IRAs, if you have ever made nondeductible contributions to traditional IRAs; conversions from traditional, SEP, or SIMPLE IRAs to Roth IRAs; and distributions from Roth IRAs

Schedule 8812 (Form 1040A or 1040), Child Tax Credit
Use Part I of this schedule to document that any child for whom you entered an ITIN and for whom you also checked the "if qualifying child for child tax credit" box, is a resident of the United States because the child meets the substantial presence test and is not otherwise treated as a nonresident alien. Use Parts II–IV of Schedule 8812 to figure the additional child tax credit.

Form 8822, Change of Address
Use this form to notify the Internal Revenue Service of a change to your home mailing address.

Form 8829, Expenses for Business Use of Your Home
Use this form to figure the allowable expenses for business use of your home on Schedule C (Form 1040) and any carryover to next year of amounts not deductible this year.

Form 8863, Education Credits (American Opportunity and Lifetime Learning Credits)
Use this form to figure and claim your education credits, which are based on qualified education expenses paid to an eligible postsecondary educational institution.

Form 8949, Sales and Other Dispositions of Capital Assets
Use this form to reconcile amounts that were reported to you and the IRS on Form 1099-B or 1099-S (or substitute statement) with the amounts you report on your return.

Form 9465, Installment Agreement Request
Use form to request a monthly installment plan if you cannot pay the full amount you owe shown on your tax return (or on a notice we sent you).

Page Last Reviewed or Updated: 20-Feb-2014

The E File Federal State Taxes Free

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