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File 1040 online 34. File 1040 online   Crédito Tributario por Hijos Table of Contents Introduction Useful Items - You may want to see: Hijo Calificado Cantidad de CréditoLímites del Crédito Cómo Reclamar el Crédito Crédito Tributario Adicional por Hijos Cómo Completar el Anexo 8812 (Formulario 1040A o Formulario 1040)Parte I Partes II a IV Introduction El crédito tributario por hijos es un crédito que puede reducir su impuesto hasta $1,000 por cada uno de sus hijos calificados. File 1040 online El crédito tributario adicional por hijos es un crédito que podría tomar en el caso de que no pueda reclamar la cantidad completa del crédito tributario por hijos. File 1040 online Este capítulo le explica lo siguiente: Quién es un hijo calificado. File 1040 online La cantidad del crédito. File 1040 online Cómo se puede reclamar el crédito. File 1040 online El crédito tributario por hijos y el crédito tributario adicional por hijos no deben confundirse con el crédito por gastos del cuidado de menores y dependientes, el cual se explica en el capítulo 32. File 1040 online Si no está sujeto al pago de impuestos. File 1040 online   Algunos créditos, tales como el crédito tributario por hijos o el crédito por gastos del cuidado de menores y dependientes, se usan para reducir el impuesto. File 1040 online Si la cantidad del impuesto en la línea 46 del Formulario 1040 o en la línea 28 del Formulario 1040A es cero, no calcule el crédito tributario por hijos ya que no hay impuesto que se pueda reducir. File 1040 online Sin embargo, podría reunir los requisitos para el crédito tributario adicional por hijos en la línea 65 (Formulario 1040) o en la línea 39 (Formulario 1040A). File 1040 online Useful Items - You may want to see: Publicación 972 Child Tax Credit (Crédito tributario por hijos), en inglés Formulario (e Instrucciones) Anexo 8812   (Formulario 1040A o 1040) Child Tax Credit (Crédito tributario por hijos), en inglés W-4(SP) Certificado de Exención de Retenciones del Empleado W-4 Employee's Withholding Allowance Certificate (Certificado de exención de retenciones del empleado), en inglés Hijo Calificado Un hijo calificado, para propósitos del crédito tributario por hijos, es aquél que: Es su hijo o hija, hijastro o hijastra, hijo de crianza, hermano o hermana, hermanastro o hermanastra o descendiente de cualquiera de ellos (por ejemplo, su nieto, nieta, sobrina o sobrino), Tenía menos de 17 años de edad al finalizar el año 2013, No proveyó más de la mitad de su propia manutención durante el año 2013, Vivió con usted durante más de la mitad del año 2013 (vea Excepciones al tiempo vivido con usted , más adelante), Fue reclamado como dependiente en la declaración de usted, No presenta una declaración conjunta para el año (o la presenta solamente para reclamar un reembolso), y Era ciudadano, nacional o residente de los Estados Unidos. File 1040 online Si el hijo fue adoptado, vea Hijo adoptivo , más adelante. File 1040 online Para cada hijo calificado, tiene que marcar el recuadro que aparece en la línea 6c del Formulario 1040 o del Formulario 1040A. File 1040 online Ejemplo 1. File 1040 online Su hijo cumplió 17 años de edad el día 30 de diciembre del año 2013. File 1040 online Él es ciudadano de los Estados Unidos y usted lo declara como dependiente en la declaración de impuestos. File 1040 online Su hijo no es hijo calificado para el crédito tributario por hijos porque no tenía menos de 17 años de edad al finalizar el año 2013. File 1040 online Ejemplo 2. File 1040 online Su hija cumplió 8 años en el año 2013. File 1040 online Ella no es ciudadana de los Estados Unidos, tiene un ITIN y vivió en México durante todo el año 2013. File 1040 online Ella no es un hijo calificado para el crédito tributario por hijos debido a que no fue residente de los Estados Unidos en 2013. File 1040 online Contribuyentes que tienen determinados hijos dependientes con un número de identificación personal del contribuyente (ITIN, por sus siglas en inglés). File 1040 online   Si está reclamando un crédito tributario por hijos o un crédito tributario adicional por hijos basándose en un hijo que identificó en su declaración de impuestos con un número de identificación personal del contribuyente (ITIN, por sus siglas en inglés), en lugar de un número de Seguro Social (SSN, por sus siglas en inglés), tiene que completar la Parte I del Anexo 8812 (Formulario 1040A o 1040). File 1040 online   Aun si su hijo es dependiente suyo, sólo puede reclamar un crédito tributario por hijos o un crédito tributario adicional por hijos basándose en un dependiente que sea ciudadano, nacional o residente de los Estados Unidos. File 1040 online Para ser tratado como residente de los Estados Unidos, un hijo normalmente tiene que cumplir el requisito de presencia sustancial. File 1040 online Para más información sobre el requisito de presencia sustancial, vea la Publicación 519, U. File 1040 online S. File 1040 online Tax Guide for Aliens (Guía sobre los impuestos federales estadounidenses para extranjeros), en inglés. File 1040 online Hijo adoptivo. File 1040 online   A un hijo adoptivo siempre se le trata como si fuera su hijo. File 1040 online Un hijo adoptivo incluye un niño colocado en su hogar por una agencia autorizada, con la intención de que sea legalmente adoptado. File 1040 online   Si usted es ciudadano o nacional de los EE. File 1040 online UU. File 1040 online y su hijo adoptivo vivió con usted como integrante de su unidad familiar durante todo el año en 2013, dicho hijo cumple el requisito (7), anteriormente, para ser un hijo calificado para propósitos del crédito tributario por hijos. File 1040 online Excepciones al tiempo vivido con usted. File 1040 online   Se considera que un hijo vivió con usted más de la mitad del año 2013 si nació o murió en el año 2013, y su hogar (el de usted) fue el hogar del hijo más de la mitad del tiempo en el cual estuvo vivo. File 1040 online Las ausencias temporales por usted o su hijo debidas a circunstancias especiales, tales como las ausencias por educación, vacaciones, negocios, atención médica, servicio militar o estancia en un centro de detención para delincuentes juveniles cuentan como tiempo que el hijo vivió con usted. File 1040 online   También hay excepciones para hijos secuestrados e hijos de padres divorciados o separados. File 1040 online Para detalles, vea Requisito de Residencia , en el capítulo 3. File 1040 online Hijo calificado de más de una persona. File 1040 online   Se aplica una regla especial si su hijo calificado es el hijo calificado de más de una persona. File 1040 online Para detalles, vea Requisito Especial para el Hijo Calificado de Más de una Persona , en el capítulo 3. File 1040 online Cantidad de Crédito La cantidad máxima de crédito que puede reclamar es $1,000 por cada hijo calificado. File 1040 online Límites del Crédito Usted tiene que reducir su crédito tributario por hijos si la condición (1) o la condición (2) le corresponde: La cantidad de la línea 46 (Formulario 1040) o de la línea 28 (Formulario 1040A) es menor que el crédito. File 1040 online Si esta cantidad es cero, no puede reclamar este crédito porque no hay impuesto que se pueda reducir. File 1040 online Sin embargo, es posible que pueda tomar el crédito tributario adicional por hijos. File 1040 online Vea Crédito Tributario Adicional por Hijos , más adelante. File 1040 online Su ingreso bruto ajustado (AGI, por sus siglas en inglés) modificado es mayor que la cantidad que se indica a continuación para su estado civil para efectos de la declaración. File 1040 online Casados que presentan una declaración conjunta: $110,000. File 1040 online Soltero, cabeza de familia o viudo que reúne los requisitos: $75,000. File 1040 online Casados que presentan la declaración por separado: $55,000. File 1040 online Ingresos brutos ajustados modificados. File 1040 online   Para propósitos del crédito tributario por hijos, su ingreso bruto ajustado (AGI, por sus siglas en inglés) modificado es su ingreso bruto ajustado más las cantidades siguientes que puedan ser aplicables en su caso: Toda cantidad excluida del ingreso debido a la exclusión de ingresos de fuentes de  Puerto Rico. File 1040 online En la línea de puntos directamente al lado de la línea 38 del Formulario 1040, anote la cantidad excluida e indentifíquela como “ EPRI. File 1040 online ” Además, adjunte una copia de todo Formulario 499R-2/W-2PR a su declaración. File 1040 online Toda cantidad de las líneas 45 ó 50 del Formulario 2555, Foreign Earned Income (Ingreso devengado en el extranjero), en inglés. File 1040 online Toda cantidad de la línea 18 del Formulario 2555-EZ, Foreign Earned Income Exclusion (Exclusión de ingreso devengado en el extranjero), en inglés. File 1040 online Toda cantidad de la línea 15 del Formulario 4563, Exclusion of Income for Bona Fide Residents of American Samoa (Exclusión del ingreso para residentes bona fide de la Samoa Estadounidense), en inglés. File 1040 online   Si no tiene ninguna de las cantidades mencionadas anteriormente, su ingreso bruto ajustado modificado es igual a su ingreso bruto ajustado. File 1040 online Ingreso bruto ajustado. File 1040 online   El ingreso bruto ajustado (AGI, por sus siglas en inglés) es la cantidad de la línea 38 del Formulario 1040 o de la línea 22 del Formulario 1040A. File 1040 online Cómo Reclamar el Crédito Para reclamar el crédito tributario por hijos, tiene que presentar el Formulario 1040 o el Formulario 1040A. File 1040 online No puede reclamar el crédito tributario por hijos en el Formulario 1040EZ. File 1040 online Tiene que proveer el nombre y número de identificación (normalmente el número de Seguro Social) de cada hijo calificado en su declaración de impuestos. File 1040 online Si reclama el crédito tributario por hijos con un hijo identificado por un ITIN, usted también tiene que presentar el Anexo 8812. File 1040 online Para calcular el crédito, primero revise la Child Tax Credit Worksheet (Hoja de trabajo del crédito tributario por hijos), en las Instrucciones para el Formulario 1040 o el Formulario 1040A. File 1040 online Si se le indica que consulte la Publicación 972, Child Tax Credit (Crédito tributario por hijos), en inglés, no puede utilizar la Hoja de trabajo de las instrucciones en la declaración de impuestos; en su lugar, usted tiene que utilizar la Publicación 972, en inglés, para calcular el crédito. File 1040 online Si no se le indica que utilice la Publicación 972, puede usar la Hoja de trabajo del crédito tributario por hijos, que se encuentra en las Instrucciones para el Formulario 1040 o las Instrucciones para el Formulario 1040A o la Publicación 972, todas en inglés, para calcular el crédito. File 1040 online Crédito Tributario Adicional por Hijos Este crédito es para determinadas personas que reciban menos de la cantidad total del crédito tributario por hijos. File 1040 online El crédito tributario adicional por hijos puede darle un reembolso aunque no adeude ningún impuesto. File 1040 online Cómo se reclama el crédito tributario adicional por hijos. File 1040 online   Para reclamar el crédito tributario adicional por hijos, siga los pasos que aparecen a continuación: Asegúrese de haber calculado la cantidad, si existe, de su crédito tributario por hijos. File 1040 online Vea anteriormente el tema titulado Cómo Reclamar el Crédito . File 1040 online Use las Partes II a la IV del Anexo 8812 para determinar si puede reclamar el crédito tributario adicional por hijos si usted contestó “Yes” (Sí) en la línea 9 ó 10 de la Child Tax Credit Worksheet (Hoja de trabajo del crédito tributario por hijos) en las Instrucciones para el Formulario 1040 o en las Instrucciones para el Formulario 1040A, o en la línea 13 de la Child Tax Credit Worksheet (Hoja de trabajo del crédito tributario por hijos) en la Publicación 972, todas en inglés. File 1040 online Si tiene un crédito tributario adicional por hijos en la línea 13 del Anexo 8812, anótelo en la línea 65 del Formulario 1040 o en la línea 39 del Formulario 1040A. File 1040 online Cómo Completar el Anexo 8812 (Formulario 1040A o Formulario 1040) El Anexo 8812 tiene cuatro partes, pero se puede considerar como que consta de dos secciones. File 1040 online La Parte I es independiente de las Partes II a la IV. File 1040 online Si todos sus hijos tienen números de Seguro Social o números de identificación del contribuyente para adopción del IRS(ATIN, por sus siglas en inglés),y usted no reclama el crédito tributario adicional por hijos, no necesita completar ni adjuntar el Anexo 8812 a su declaración de impuestos. File 1040 online Parte I Usted sólo necesitará completar la Parte I si está reclamando el crédito tributario por hijos para un hijo que aparece identificado con un número de identificación personal del contribuyente del IRS (ITIN, por sus siglas en inglés). File 1040 online Si todos los hijos por los cuales usted marcó la casilla en la columna 4 de la línea 6c de su Formulario 1040 o Formulario 1040A tienen números de Seguro Social (SSN, por sus siglas en inglés) o números de identificación del contribuyente para adopción del IRS (ATIN, por sus siglas en inglés), no tiene que completar la Parte I del Anexo 8812. File 1040 online Partes II a IV Las Partes II a la IV le ayudan a calcular el crédito adicional por hijos que le corresponde a usted. File 1040 online Por lo general, deberá completar las Partes II a la IV únicamente si se le indica luego de que completa la Hoja de trabajo del crédito tributario por hijos que aparece en las instrucciones de su declaración de impuestos o en la Publicación 972. File 1040 online Vea Cómo se reclama el crédito tributario adicional por hijos , anteriormente. File 1040 online Prev  Up  Next   Home   More Online Publications
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File 1040 online 2. File 1040 online   Simplified Employee Pensions (SEPs) Table of Contents Topics - This chapter discusses: Useful Items - You may want to see: Setting Up a SEPWhen not to use Form 5305-SEP. File 1040 online How Much Can I Contribute?Contribution Limits Deducting ContributionsDeduction Limit for Contributions for Participants Deduction Limit for Self-Employed Individuals Carryover of Excess SEP Contributions When To Deduct Contributions Where To Deduct Contributions Salary Reduction Simplified Employee Pensions (SARSEPs)SARSEP ADP test. File 1040 online Deferral percentage. File 1040 online Employee compensation. File 1040 online Compensation of self-employed individuals. File 1040 online Choice not to treat deferrals as compensation. File 1040 online Limit on Elective Deferrals Tax Treatment of Deferrals Distributions (Withdrawals) Additional TaxesEffects on employee. File 1040 online Reporting and Disclosure Requirements Topics - This chapter discusses: Setting up a SEP How much can I contribute Deducting contributions Salary reduction simplified employee pensions (SARSEPs) Distributions (withdrawals) Additional taxes Reporting and disclosure requirements Useful Items - You may want to see: Publication 590 Individual Retirement Arrangements (IRAs) 3998 Choosing A Retirement Solution for Your Small Business 4285 SEP Checklist 4286 SARSEP Checklist 4333 SEP Retirement Plans for Small Businesses 4336 SARSEP for Small Businesses 4407 SARSEP—Key Issues and Assistance Forms (and Instructions) W-2 Wage and Tax Statement 1040 U. File 1040 online S. File 1040 online Individual Income Tax Return 5305-SEP Simplified Employee Pension—Individual Retirement Accounts Contribution Agreement 5305A-SEP Salary Reduction Simplified Employee Pension—Individual Retirement Accounts Contribution Agreement 8880 Credit for Qualified Retirement Savings Contributions 8881 Credit for Small Employer Pension Plan Startup Costs A SEP is a written plan that allows you to make contributions toward your own retirement and your employees' retirement without getting involved in a more complex qualified plan. File 1040 online Under a SEP, you make contributions to a traditional individual retirement arrangement (called a SEP-IRA) set up by or for each eligible employee. File 1040 online A SEP-IRA is owned and controlled by the employee, and you make contributions to the financial institution where the SEP-IRA is maintained. File 1040 online SEP-IRAs are set up for, at a minimum, each eligible employee (defined below). File 1040 online A SEP-IRA may have to be set up for a leased employee (defined in chapter 1), but does not need to be set up for excludable employees (defined later). File 1040 online Eligible employee. File 1040 online   An eligible employee is an individual who meets all the following requirements. File 1040 online Has reached age 21. File 1040 online Has worked for you in at least 3 of the last 5 years. File 1040 online Has received at least $550 in compensation from you in 2013. File 1040 online This amount remains the same in 2014. File 1040 online    You can use less restrictive participation requirements than those listed, but not more restrictive ones. File 1040 online Excludable employees. File 1040 online   The following employees can be excluded from coverage under a SEP. File 1040 online Employees covered by a union agreement and whose retirement benefits were bargained for in good faith by the employees' union and you. File 1040 online Nonresident alien employees who have received no U. File 1040 online S. File 1040 online source wages, salaries, or other personal services compensation from you. File 1040 online For more information about nonresident aliens, see Publication 519, U. File 1040 online S. File 1040 online Tax Guide for Aliens. File 1040 online Setting Up a SEP There are three basic steps in setting up a SEP. File 1040 online You must execute a formal written agreement to provide benefits to all eligible employees. File 1040 online You must give each eligible employee certain information about the SEP. File 1040 online A SEP-IRA must be set up by or for each eligible employee. File 1040 online Many financial institutions will help you set up a SEP. File 1040 online Formal written agreement. File 1040 online   You must execute a formal written agreement to provide benefits to all eligible employees under a SEP. File 1040 online You can satisfy the written agreement requirement by adopting an IRS model SEP using Form 5305-SEP. File 1040 online However, see When not to use Form 5305-SEP, below. File 1040 online   If you adopt an IRS model SEP using Form 5305-SEP, no prior IRS approval or determination letter is required. File 1040 online Keep the original form. File 1040 online Do not file it with the IRS. File 1040 online Also, using Form 5305-SEP will usually relieve you from filing annual retirement plan information returns with the IRS and the Department of Labor. File 1040 online See the Form 5305-SEP instructions for details. File 1040 online If you choose not to use Form 5305-SEP, you should seek professional advice in adopting a SEP. File 1040 online When not to use Form 5305-SEP. File 1040 online   You cannot use Form 5305-SEP if any of the following apply. File 1040 online You currently maintain any other qualified retirement plan other than another SEP. File 1040 online You have any eligible employees for whom IRAs have not been set up. File 1040 online You use the services of leased employees, who are not your common-law employees (as described in chapter 1). File 1040 online You are a member of any of the following unless all eligible employees of all the members of these groups, trades, or businesses participate under the SEP. File 1040 online An affiliated service group described in section 414(m). File 1040 online A controlled group of corporations described in section 414(b). File 1040 online Trades or businesses under common control described in section 414(c). File 1040 online You do not pay the cost of the SEP contributions. File 1040 online Information you must give to employees. File 1040 online   You must give each eligible employee a copy of Form 5305-SEP, its instructions, and the other information listed in the Form 5305-SEP instructions. File 1040 online An IRS model SEP is not considered adopted until you give each employee this information. File 1040 online Setting up the employee's SEP-IRA. File 1040 online   A SEP-IRA must be set up by or for each eligible employee. File 1040 online SEP-IRAs can be set up with banks, insurance companies, or other qualified financial institutions. File 1040 online You send SEP contributions to the financial institution where the SEP-IRA is maintained. File 1040 online Deadline for setting up a SEP. File 1040 online   You can set up a SEP for any year as late as the due date (including extensions) of your income tax return for that year. File 1040 online Credit for startup costs. File 1040 online   You may be able to claim a tax credit for part of the ordinary and necessary costs of starting a SEP that first became effective in 2013. File 1040 online For more information, see Credit for startup costs under Reminders, earlier. File 1040 online How Much Can I Contribute? The SEP rules permit you to contribute a limited amount of money each year to each employee's SEP-IRA. File 1040 online If you are self-employed, you can contribute to your own SEP-IRA. File 1040 online Contributions must be in the form of money (cash, check, or money order). File 1040 online You cannot contribute property. File 1040 online However, participants may be able to transfer or roll over certain property from one retirement plan to another. File 1040 online See Publication 590 for more information about rollovers. File 1040 online You do not have to make contributions every year. File 1040 online But if you make contributions, they must be based on a written allocation formula and must not discriminate in favor of highly compensated employees (defined in chapter 1). File 1040 online When you contribute, you must contribute to the SEP-IRAs of all participants who actually performed personal services during the year for which the contributions are made, including employees who die or terminate employment before the contributions are made. File 1040 online Contributions are deductible within limits, as discussed later, and generally are not taxable to the plan participants. File 1040 online A SEP-IRA cannot be a Roth IRA. File 1040 online Employer contributions to a SEP-IRA will not affect the amount an individual can contribute to a Roth or traditional IRA. File 1040 online Unlike regular contributions to a traditional IRA, contributions under a SEP can be made to participants over age 70½. File 1040 online If you are self-employed, you can also make contributions under the SEP for yourself even if you are over 70½. File 1040 online Participants age 70½ or over must take required minimum distributions. File 1040 online Time limit for making contributions. File 1040 online   To deduct contributions for a year, you must make the contributions by the due date (including extensions) of your tax return for the year. File 1040 online Contribution Limits Contributions you make for 2013 to a common-law employee's SEP-IRA cannot exceed the lesser of 25% of the employee's compensation or $51,000. File 1040 online Compensation generally does not include your contributions to the SEP. File 1040 online The SEP plan document will specify how the employer contribution is determined and how it will be allocated to participants. File 1040 online Example. File 1040 online Your employee, Mary Plant, earned $21,000 for 2013. File 1040 online The maximum contribution you can make to her SEP-IRA is $5,250 (25% x $21,000). File 1040 online Contributions for yourself. File 1040 online   The annual limits on your contributions to a common-law employee's SEP-IRA also apply to contributions you make to your own SEP-IRA. File 1040 online However, special rules apply when figuring your maximum deductible contribution. File 1040 online See Deduction Limit for Self-Employed Individuals , later. File 1040 online Annual compensation limit. File 1040 online   You cannot consider the part of an employee's compensation over $255,000 when figuring your contribution limit for that employee. File 1040 online However, $51,000 is the maximum contribution for an eligible employee. File 1040 online These limits are $260,000 and $52,000, respectively, in 2014. File 1040 online Example. File 1040 online Your employee, Susan Green, earned $210,000 for 2013. File 1040 online Because of the maximum contribution limit for 2013, you can only contribute $51,000 to her SEP-IRA. File 1040 online More than one plan. File 1040 online   If you contribute to a defined contribution plan (defined in chapter 4), annual additions to an account are limited to the lesser of $51,000 or 100% of the participant's compensation. File 1040 online When you figure this limit, you must add your contributions to all defined contribution plans maintained by you. File 1040 online Because a SEP is considered a defined contribution plan for this limit, your contributions to a SEP must be added to your contributions to other defined contribution plans you maintain. File 1040 online Tax treatment of excess contributions. File 1040 online   Excess contributions are your contributions to an employee's SEP-IRA (or to your own SEP-IRA) for 2013 that exceed the lesser of the following amounts. File 1040 online 25% of the employee's compensation (or, for you, 20% of your net earnings from self-employment). File 1040 online $51,000. File 1040 online Excess contributions are included in the employee's income for the year and are treated as contributions by the employee to his or her SEP-IRA. File 1040 online For more information on employee tax treatment of excess contributions, see chapter 1 in Publication 590. File 1040 online Reporting on Form W-2. File 1040 online   Do not include SEP contributions on your employee's Form W-2 unless contributions were made under a salary reduction arrangement (discussed later). File 1040 online Deducting Contributions Generally, you can deduct the contributions you make each year to each employee's SEP-IRA. File 1040 online If you are self-employed, you can deduct the contributions you make each year to your own SEP-IRA. File 1040 online Deduction Limit for Contributions for Participants The most you can deduct for your contributions to you or your employee's SEP-IRA is the lesser of the following amounts. File 1040 online Your contributions (including any excess contributions carryover). File 1040 online 25% of the compensation (limited to $255,000 per participant) paid to the participants during 2013 from the business that has the plan, not to exceed $51,000 per participant. File 1040 online In 2014, the amounts in (2) above are $260,000 and $52,000, respectively. File 1040 online Deduction Limit for Self-Employed Individuals If you contribute to your own SEP-IRA, you must make a special computation to figure your maximum deduction for these contributions. File 1040 online When figuring the deduction for contributions made to your own SEP-IRA, compensation is your net earnings from self-employment (defined in chapter 1), which takes into account both the following deductions. File 1040 online The deduction for the deductible part of your self-employment tax. File 1040 online The deduction for contributions to your own SEP-IRA. File 1040 online The deduction for contributions to your own SEP-IRA and your net earnings depend on each other. File 1040 online For this reason, you determine the deduction for contributions to your own SEP-IRA indirectly by reducing the contribution rate called for in your plan. File 1040 online To do this, use the Rate Table for Self-Employed or the Rate Worksheet for Self-Employed, whichever is appropriate for your plan's contribution rate, in chapter 5. File 1040 online Then figure your maximum deduction by using the Deduction Worksheet for Self-Employed in chapter 5. File 1040 online Carryover of Excess SEP Contributions If you made SEP contributions that are more than the deduction limit (nondeductible contributions), you can carry over and deduct the difference in later years. File 1040 online However, the carryover, when combined with the contribution for the later year, is subject to the deduction limit for that year. File 1040 online If you also contributed to a defined benefit plan or defined contribution plan, see Carryover of Excess Contributions under Employer Deduction in chapter 4 for the carryover limit. File 1040 online Excise tax. File 1040 online   If you made nondeductible (excess) contributions to a SEP, you may be subject to a 10% excise tax. File 1040 online For information about the excise tax, see Excise Tax for Nondeductible (Excess) Contributions under Employer Deduction in chapter 4. File 1040 online When To Deduct Contributions When you can deduct contributions made for a year depends on the tax year on which the SEP is maintained. File 1040 online If the SEP is maintained on a calendar year basis, you deduct the yearly contributions on your tax return for the year within which the calendar year ends. File 1040 online If you file your tax return and maintain the SEP using a fiscal year or short tax year, you deduct contributions made for a year on your tax return for that year. File 1040 online Example. File 1040 online You are a fiscal year taxpayer whose tax year ends June 30. File 1040 online You maintain a SEP on a calendar year basis. File 1040 online You deduct SEP contributions made for calendar year 2013 on your tax return for your tax year ending June 30, 2014. File 1040 online Where To Deduct Contributions Deduct the contributions you make for your common-law employees on your tax return. File 1040 online For example, sole proprietors deduct them on Schedule C (Form 1040) or Schedule F (Form 1040), Profit or Loss From Farming; partnerships deduct them on Form 1065, U. File 1040 online S. File 1040 online Return of Partnership Income; and corporations deduct them on Form 1120, U. File 1040 online S. File 1040 online Corporation Income Tax Return, or Form 1120S, U. File 1040 online S. File 1040 online Income Tax Return for an S Corporation. File 1040 online Sole proprietors and partners deduct contributions for themselves on line 28 of Form 1040. File 1040 online (If you are a partner, contributions for yourself are shown on the Schedule K-1 (Form 1065), Partner's Share of Income, Deductions, Credits, etc. File 1040 online , you receive from the partnership. File 1040 online ) Remember that sole proprietors and partners can't deduct as a business expense contributions made to a SEP for themselves, only those made for their common-law employees. File 1040 online Salary Reduction Simplified Employee Pensions (SARSEPs) A SARSEP is a SEP set up before 1997 that includes a salary reduction arrangement. File 1040 online (See the Caution, next. File 1040 online ) Under a SARSEP, your employees can choose to have you contribute part of their pay to their SEP-IRAs rather than receive it in cash. File 1040 online This contribution is called an “elective deferral” because employees choose (elect) to set aside the money, and they defer the tax on the money until it is distributed to them. File 1040 online You are not allowed to set up a SARSEP after 1996. File 1040 online However, participants (including employees hired after 1996) in a SARSEP set up before 1997 can continue to have you contribute part of their pay to the plan. File 1040 online If you are interested in setting up a retirement plan that includes a salary reduction arrangement, see chapter 3. File 1040 online Who can have a SARSEP?   A SARSEP set up before 1997 is available to you and your eligible employees only if all the following requirements are met. File 1040 online At least 50% of your employees eligible to participate choose to make elective deferrals. File 1040 online You have 25 or fewer employees who were eligible to participate in the SEP at any time during the preceding year. File 1040 online The elective deferrals of your highly compensated employees meet the SARSEP ADP test. File 1040 online SARSEP ADP test. File 1040 online   Under the SARSEP ADP test, the amount deferred each year by each eligible highly compensated employee as a percentage of pay (the deferral percentage) cannot be more than 125% of the average deferral percentage (ADP) of all non-highly compensated employees eligible to participate. File 1040 online A highly compensated employee is defined in chapter 1. File 1040 online Deferral percentage. File 1040 online   The deferral percentage for an employee for a year is figured as follows. File 1040 online   The elective employer contributions (excluding certain catch-up contributions)  paid to the SEP for the employee for the year     The employee's compensation (limited to $255,000 in 2013)   The instructions for Form 5305A-SEP have a worksheet you can use to determine whether the elective deferrals of your highly compensated employees meet the SARSEP ADP test. File 1040 online Employee compensation. File 1040 online   For figuring the deferral percentage, compensation is generally the amount you pay to the employee for the year. File 1040 online Compensation includes the elective deferral and other amounts deferred in certain employee benefit plans. File 1040 online See Compensation in chapter 1. File 1040 online Elective deferrals under the SARSEP are included in figuring your employees' deferral percentage even though they are not included in the income of your employees for income tax purposes. File 1040 online Compensation of self-employed individuals. File 1040 online   If you are self-employed, compensation is your net earnings from self-employment as defined in chapter 1. File 1040 online   Compensation does not include tax-free items (or deductions related to them) other than foreign earned income and housing cost amounts. File 1040 online Choice not to treat deferrals as compensation. File 1040 online   You can choose not to treat elective deferrals (and other amounts deferred in certain employee benefit plans) for a year as compensation under your SARSEP. File 1040 online Limit on Elective Deferrals The most a participant can choose to defer for calendar year 2013 is the lesser of the following amounts. File 1040 online 25% of the participant's compensation (limited to $255,000 of the participant's compensation). File 1040 online $17,500. File 1040 online The $17,500 limit applies to the total elective deferrals the employee makes for the year to a SEP and any of the following. File 1040 online Cash or deferred arrangement (section 401(k) plan). File 1040 online Salary reduction arrangement under a tax-sheltered annuity plan (section 403(b) plan). File 1040 online SIMPLE IRA plan. File 1040 online In 2014, the $255,000 limit increases to $260,000 and the $17,500 limit remains at $17,500. File 1040 online Catch-up contributions. File 1040 online   A SARSEP can permit participants who are age 50 or over at the end of the calendar year to also make catch-up contributions. File 1040 online The catch-up contribution limit for 2013 is $5,500 and remains at $5,500 for 2014. File 1040 online Elective deferrals are not treated as catch-up contributions for 2013 until they exceed the elective deferral limit (the lesser of 25% of compensation or $17,500), the SARSEP ADP test limit discussed earlier, or the plan limit (if any). File 1040 online However, the catch-up contribution a participant can make for a year cannot exceed the lesser of the following amounts. File 1040 online The catch-up contribution limit. File 1040 online The excess of the participant's compensation over the elective deferrals that are not catch-up contributions. File 1040 online   Catch-up contributions are not subject to the elective deferral limit (the lesser of 25% of compensation or $17,500 in 2013 and in 2014). File 1040 online Overall limit on SEP contributions. File 1040 online   If you also make nonelective contributions to a SEP-IRA, the total of the nonelective and elective contributions to that SEP-IRA cannot exceed the lesser of 25% of the employee's compensation or $51,000 for 2013 ($52,000 for 2014). File 1040 online The same rule applies to contributions you make to your own SEP-IRA. File 1040 online See Contribution Limits , earlier. File 1040 online Figuring the elective deferral. File 1040 online   For figuring the 25% limit on elective deferrals, compensation does not include SEP contributions, including elective deferrals or other amounts deferred in certain employee benefit plans. File 1040 online Tax Treatment of Deferrals Elective deferrals that are not more than the limits discussed earlier under Limit on Elective Deferrals are excluded from your employees' wages subject to federal income tax in the year of deferral. File 1040 online However, these deferrals are included in wages for social security, Medicare, and federal unemployment (FUTA) tax. File 1040 online Excess deferrals. File 1040 online   For 2013, excess deferrals are the elective deferrals for the year that are more than the $17,500 limit discussed earlier. File 1040 online For a participant who is eligible to make catch-up contributions, excess deferrals are the elective deferrals that are more than $23,000. File 1040 online The treatment of excess deferrals made under a SARSEP is similar to the treatment of excess deferrals made under a qualified plan. File 1040 online See Treatment of Excess Deferrals under Elective Deferrals (401(k) Plans) in chapter 4. File 1040 online Excess SEP contributions. File 1040 online   Excess SEP contributions are elective deferrals of highly compensated employees that are more than the amount permitted under the SARSEP ADP test. File 1040 online You must notify your highly compensated employees within 2½ months after the end of the plan year of their excess SEP contributions. File 1040 online If you do not notify them within this time period, you must pay a 10% tax on the excess. File 1040 online For an explanation of the notification requirements, see Rev. File 1040 online Proc. File 1040 online 91-44, 1991-2 C. File 1040 online B. File 1040 online 733. File 1040 online If you adopted a SARSEP using Form 5305A-SEP, the notification requirements are explained in the instructions for that form. File 1040 online Reporting on Form W-2. File 1040 online   Do not include elective deferrals in the “Wages, tips, other compensation” box of Form W-2. File 1040 online You must, however, include them in the “Social security wages” and “Medicare wages and tips” boxes. File 1040 online You must also include them in box 12. File 1040 online Mark the “Retirement plan” checkbox in box 13. File 1040 online For more information, see the Form W-2 instructions. File 1040 online Distributions (Withdrawals) As an employer, you cannot prohibit distributions from a SEP-IRA. File 1040 online Also, you cannot make your contributions on the condition that any part of them must be kept in the account after you have made your contributions to the employee's accounts. File 1040 online Distributions are subject to IRA rules. File 1040 online Generally, you or your employee must begin to receive distributions from a SEP-IRA by April 1 of the first year after the calendar year in which you or your employee reaches age 70½. File 1040 online For more information about IRA rules, including the tax treatment of distributions, rollovers, required distributions, and income tax withholding, see Publication 590. File 1040 online Additional Taxes The tax advantages of using SEP-IRAs for retirement savings can be offset by additional taxes that may be imposed for all the following actions. File 1040 online Making excess contributions. File 1040 online Making early withdrawals. File 1040 online Not making required withdrawals. File 1040 online For information about these taxes, see chapter 1 in Publication 590. File 1040 online Also, a SEP-IRA may be disqualified, or an excise tax may apply, if the account is involved in a prohibited transaction, discussed next. File 1040 online Prohibited transaction. File 1040 online   If an employee improperly uses his or her SEP-IRA, such as by borrowing money from it, the employee has engaged in a prohibited transaction. File 1040 online In that case, the SEP-IRA will no longer qualify as an IRA. File 1040 online For a list of prohibited transactions, see Prohibited Transactions in chapter 4. File 1040 online Effects on employee. File 1040 online   If a SEP-IRA is disqualified because of a prohibited transaction, the assets in the account will be treated as having been distributed to the employee on the first day of the year in which the transaction occurred. File 1040 online The employee must include in income the fair market value of the assets (on the first day of the year) that is more than any cost basis in the account. File 1040 online Also, the employee may have to pay the additional tax for making early withdrawals. File 1040 online Reporting and Disclosure Requirements If you set up a SEP using Form 5305-SEP, you must give your eligible employees certain information about the SEP when you set it up. File 1040 online See Setting Up a SEP , earlier. File 1040 online Also, you must give your eligible employees a statement each year showing any contributions to their SEP-IRAs. File 1040 online You must also give them notice of any excess contributions. File 1040 online For details about other information you must give them, see the instructions for Form 5305-SEP or Form 5305A-SEP (for a salary reduction SEP). File 1040 online Even if you did not use Form 5305-SEP or Form 5305A-SEP to set up your SEP, you must give your employees information similar to that described above. File 1040 online For more information, see the instructions for either Form 5305-SEP or Form 5305A-SEP. File 1040 online Prev  Up  Next   Home   More Online Publications