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File late 36. File late   Earned Income Credit (EIC) Table of Contents What's New Reminders Introduction Useful Items - You may want to see: Do You Qualify for the Credit?If Improper Claim Made in Prior Year Part A. File late Rules for EveryoneRule 1. File late Your AGI Must Be Less Than: Rule 2. File late You Must Have a Valid Social Security Number (SSN) Rule 3. File late Your Filing Status Cannot Be Married Filing Separately Rule 4. File late You Must Be a U. File late S. File late Citizen or Resident Alien All Year Rule 5. File late You Cannot File Form 2555 or Form 2555-EZ Rule 6. File late Your Investment Income Must Be $3,300 or Less Rule 7. File late You Must Have Earned Income Part B. File late Rules If You Have a Qualifying ChildRule 8. File late Your Child Must Meet the Relationship, Age, Residency, and Joint Return Tests Rule 9. File late Your Qualifying Child Cannot Be Used By More Than One Person To Claim the EIC Rule 10. File late You Cannot Be a Qualifying Child of Another Taxpayer Part C. File late Rules If You Do Not Have a Qualifying ChildRule 11. File late You Must Be at Least Age 25 but Under Age 65 Rule 12. File late You Cannot Be the Dependent of Another Person Rule 13. File late You Cannot Be a Qualifying Child of Another Taxpayer Rule 14. File late You Must Have Lived in the United States More Than Half of the Year Part D. File late Figuring and Claiming the EICRule 15. File late Your Earned Income Must Be Less Than: IRS Will Figure the EIC for You How To Figure the EIC Yourself ExamplesExample 1. File late John and Janet Smith (Form 1040A) Example 2. File late Kelly Green (Form 1040EZ) What's New Earned income amount is more. File late  The maximum amount of income you can earn and still get the credit has increased. File late You may be able to take the credit if: You have three or more qualifying children and you earned less than $46,227 ($51,567 if married filing jointly), You have two qualifying children and you earned less than $43,038 ($48,378 if married filing jointly), You have one qualifying child and you earned less than $37,870 ($43,210 if married filing jointly), or You do not have a qualifying child and you earned less than $14,340 ($19,680 if married filing jointly). File late Your adjusted gross income also must be less than the amount in the above list that applies to you. File late For details, see Rules 1 and 15. File late Investment income amount is more. File late  The maximum amount of investment income you can have and still get the credit has increased to $3,300. File late See Rule 6. File late Reminders Increased EIC on certain joint returns. File late  A married person filing a joint return may get more EIC than someone with the same income but a different filing status. File late As a result, the EIC table has different columns for married persons filing jointly than for everyone else. File late When you look up your EIC in the EIC Table, be sure to use the correct column for your filing status and the number of children you have. File late Online help. File late  You can use the EITC Assistant at www. File late irs. File late gov/eitc to find out if you are eligible for the credit. File late The EITC Assistant is available in English and Spanish. File late EIC questioned by IRS. File late  The IRS may ask you to provide documents to prove you are entitled to claim the EIC. File late We will tell you what documents to send us. File late These may include: birth certificates, school records, medical records, etc. File late The process of establishing your eligibility will delay your refund. File late Introduction The earned income credit (EIC) is a tax credit for certain people who work and have less than $51,567 of earned income. File late A tax credit usually means more money in your pocket. File late It reduces the amount of tax you owe. File late The EIC may also give you a refund. File late How do you get the earned income credit?   To claim the EIC, you must: Qualify by meeting certain rules, and File a tax return, even if you: Do not owe any tax, Did not earn enough money to file a return, or Did not have income taxes withheld from your pay. File late When you complete your return, you can figure your EIC by using a worksheet in the instructions for Form 1040, Form 1040A, or Form 1040EZ. File late Or, if you prefer, you can let the IRS figure the credit for you. File late How will this chapter help you?   This chapter will explain the following. File late The rules you must meet to qualify for the EIC. File late How to figure the EIC. File late Useful Items - You may want to see: Publication 596 Earned Income Credit (EIC) Form (and Instructions) Schedule EIC Earned Income Credit (Qualifying Child Information) 8862 Information To Claim Earned Income Credit After Disallowance Do You Qualify for the Credit? To qualify to claim the EIC, you must first meet all of the rules explained in Part A, Rules for Everyone . File late Then you must meet the rules in Part B, Rules If You Have a Qualifying Child , or Part C, Rules If You Do Not Have a Qualifying Child . File late There is one final rule you must meet in Part D, Figuring and Claiming the EIC . File late You qualify for the credit if you meet all the rules in each part that applies to you. File late If you have a qualifying child, the rules in Parts A, B, and D apply to you. File late If you do not have a qualifying child, the rules in Parts A, C, and D apply to you. File late Table 36-1, Earned Income Credit in a Nutshell. File late   Use Table 36–1 as a guide to Parts A, B, C, and D. File late The table is a summary of all the rules in each part. File late Do you have a qualifying child?   You have a qualifying child only if you have a child who meets the four tests described in Rule 8 and illustrated in Figure 36–1. File late If Improper Claim Made in Prior Year If your EIC for any year after 1996 was denied or reduced for any reason other than a math or clerical error, you must attach a completed Form 8862 to your next tax return to claim the EIC. File late You must also qualify to claim the EIC by meeting all the rules described in this chapter. File late However, if your EIC was denied or reduced as a result of a math or clerical error, do not attach Form 8862 to your next tax return. File late For example, if your arithmetic is incorrect, the IRS can correct it. File late If you do not provide a correct social security number, the IRS can deny the EIC. File late These kinds of errors are called math or clerical errors. File late If your EIC for any year after 1996 was denied and it was determined that your error was due to reckless or intentional disregard of the EIC rules, then you cannot claim the EIC for the next 2 years. File late If your error was due to fraud, then you cannot claim the EIC for the next 10 years. File late More information. File late   See chapter 5 in Publication 596 for more detailed information about the disallowance period and Form 8862. File late Part A. File late Rules for Everyone This part of the chapter discusses Rules 1 through 7. File late You must meet all seven rules to qualify for the earned income credit. File late If you do not meet all seven rules, you cannot get the credit and you do not need to read the rest of the chapter. File late If you meet all seven rules in this part, then read either Part B or Part C (whichever applies) for more rules you must meet. File late Rule 1. File late Your AGI Must Be Less Than: $46,227 ($51,567 for married filing jointly) if you have three or more qualifying children, $43,038 ($48,378 for married filing jointly) if you have two qualifying children, $37,870 ($43,210 for married filing jointly) if you have one qualifying child, or $14,340 ($19,680 for married filing jointly) if you do not have a qualifying child. File late Adjusted gross income (AGI). File late   AGI is the amount on line 38 (Form 1040), line 22 (Form 1040A), or line 4 (Form 1040EZ). File late If your AGI is equal to or more than the applicable limit listed above, you cannot claim the EIC. File late Example. File late Your AGI is $38,550, you are single, and you have one qualifying child. File late You cannot claim the EIC because your AGI is not less than $37,870. File late However, if your filing status was married filing jointly, you might be able to claim the EIC because your AGI is less than $43,210. File late Community property. File late   If you are married, but qualify to file as head of household under special rules for married taxpayers living apart (see Rule 3 ), and live in a state that has community property laws, your AGI includes that portion of both your and your spouse's wages that you are required to include in gross income. File late This is different from the community property rules that apply under Rule 7 . File late Rule 2. File late You Must Have a Valid Social Security Number (SSN) To claim the EIC, you (and your spouse, if filing a joint return) must have a valid SSN issued by the Social Security Administration (SSA). File late Any qualifying child listed on Schedule EIC also must have a valid SSN. File late (See Rule 8 if you have a qualifying child. File late ) If your social security card (or your spouse's, if filing a joint return) says “Not valid for employment” and your SSN was issued so that you (or your spouse) could get a federally funded benefit, you cannot get the EIC. File late An example of a federally funded benefit is Medicaid. File late If you have a card with the legend “Not valid for employment” and your immigration status has changed so that you are now a U. File late S. File late citizen or permanent resident, ask the SSA for a new social security card without the legend. File late U. File late S. File late citizen. File late   If you were a U. File late S. File late citizen when you received your SSN, you have a valid SSN. File late Valid for work only with INS or DHS authorization. File late   If your social security card reads “Valid for work only with INS authorization” or “Valid for work only with DHS authorization,” you have a valid SSN, but only if that authorization is still valid. File late SSN missing or incorrect. File late   If an SSN for you or your spouse is missing from your tax return or is incorrect, you may not get the EIC. File late Other taxpayer identification number. File late   You cannot get the EIC if, instead of an SSN, you (or your spouse, if filing a joint return) have an individual taxpayer identification number (ITIN). File late ITINs are issued by the Internal Revenue Service to noncitizens who cannot get an SSN. File late No SSN. File late   If you do not have a valid SSN, put “No” next to line 64a (Form 1040), line 38a (Form 1040A), or line 8a (Form 1040EZ). File late You cannot claim the EIC. File late Getting an SSN. File late   If you (or your spouse, if filing a joint return) do not have an SSN, you can apply for one by filing Form SS-5, Application for a Social Security Card, with the SSA. File late You can get Form SS-5 online at www. File late socialsecurity. File late gov, from your local SSA office, or by calling the SSA at 1-800-772-1213. File late Filing deadline approaching and still no SSN. File late   If the filing deadline is approaching and you still do not have an SSN, you have two choices. File late Request an automatic 6-month extension of time to file your return. File late You can get this extension by filing Form 4868, Application for Automatic Extension of Time to File U. File late S. File late Individual Income Tax Return. File late For more information, see chapter 1 . File late File the return on time without claiming the EIC. File late After receiving the SSN, file an amended return (Form 1040X, Amended U. File late S. File late Individual Income Tax Return) claiming the EIC. File late Attach a filled-in Schedule EIC if you have a qualifying child. File late Table 36-1. File late Earned Income Credit in a Nutshell First, you must meet all the rules in this column. File late Second, you must meet all the rules in one of these columns, whichever applies. File late Third, you must meet the rule in this column. File late Part A. File late  Rules for Everyone Part B. File late  Rules If You Have a Qualifying Child Part C. File late  Rules If You Do Not Have a Qualifying Child Part D. File late  Figuring and Claiming the EIC 1. File late Your adjusted gross income (AGI) must be less than: • $46,227 ($51,567 for married filing jointly) if you have three or more qualifying children,  • $43,038 ($48,378 for married filing jointly) if you have two qualifying children,  • $37,870 ($43,210 for married filing jointly) if you have one qualifying child, or   • $14,340 ($19,680 for married filing jointly) if you do not have a qualifying child. File late 2. File late You must have a valid social security number. File late  3. File late Your filing status cannot be “Married filing separately. File late ” 4. File late You must be a U. File late S. File late citizen or resident alien all year. File late  5. File late You cannot file Form 2555 or Form 2555-EZ (relating to foreign earned income). File late  6. File late Your investment income must be $3,300 or less. File late  7. File late You must have earned income. File late 8. File late Your child must meet the relationship, age, residency, and joint return tests. File late  9. File late Your qualifying child cannot be used by more than one person to claim the EIC. File late  10. File late You cannot be a qualifying child of another person. File late 11. File late You must be at least age 25 but under age 65. File late  12. File late You cannot be the dependent of another person. File late  13. File late You cannot be a qualifying child of another person. File late  14. File late You must have lived in the United States more than half of the year. File late 15. File late Your earned income must be less than: • $46,227 ($51,567 for married filing jointly) if you have three or more qualifying children,  • $43,038 ($48,378 for married filing jointly) if you have two qualifying children,  • $37,870 ($43,210 for married filing jointly) if you have one qualifying child, or   • $14,340 ($19,680 for married filing jointly) if you do not have a qualifying child. File late Rule 3. File late Your Filing Status Cannot Be Married Filing Separately If you are married, you usually must file a joint return to claim the EIC. File late Your filing status cannot be “Married filing separately. File late ” Spouse did not live with you. File late   If you are married and your spouse did not live in your home at any time during the last 6 months of the year, you may be able to file as head of household, instead of married filing separately. File late In that case, you may be able to claim the EIC. File late For detailed information about filing as head of household, see chapter 2 . File late Rule 4. File late You Must Be a U. File late S. File late Citizen or Resident Alien All Year If you (or your spouse, if married) were a nonresident alien for any part of the year, you cannot claim the earned income credit unless your filing status is married filing jointly. File late You can use that filing status only if one spouse is a U. File late S. File late citizen or resident alien and you choose to treat the nonresident spouse as a U. File late S. File late resident. File late If you make this choice, you and your spouse are taxed on your worldwide income. File late If you (or your spouse, if married) were a nonresident alien for any part of the year and your filing status is not married filing jointly, enter “No” on the dotted line next to line 64a (Form 1040) or in the space to the left of line 38a (Form 1040A). File late If you need more information on making this choice, get Publication 519, U. File late S. File late Tax Guide for Aliens. File late Rule 5. File late You Cannot File Form 2555 or Form 2555-EZ You cannot claim the earned income credit if you file Form 2555, Foreign Earned Income, or Form 2555-EZ, Foreign Earned Income Exclusion. File late You file these forms to exclude income earned in foreign countries from your gross income, or to deduct or exclude a foreign housing amount. File late U. File late S. File late possessions are not foreign countries. File late See Publication 54, Tax Guide for U. File late S. File late Citizens and Resident Aliens Abroad, for more detailed information. File late Rule 6. File late Your Investment Income Must Be $3,300 or Less You cannot claim the earned income credit unless your investment income is $3,300 or less. File late If your investment income is more than $3,300, you cannot claim the credit. File late For most people, investment income is the total of the following amounts. File late Taxable interest (line 8a of Form 1040 or 1040A). File late Tax-exempt interest (line 8b of Form 1040 or 1040A). File late Dividend income (line 9a of Form 1040 or 1040A). File late Capital gain net income (line 13 of Form 1040, if more than zero, or line 10 of Form 1040A). File late If you file Form 1040EZ, your investment income is the total of the amount of line 2 and the amount of any tax-exempt interest you wrote to the right of the words “Form 1040EZ” on line 2. File late However, see Rule 6 in chapter 1 of Publication 596 if: You are filing Schedule E (Form 1040), Form 4797, or Form 8814, or You are reporting income from the rental of personal property on Form 1040, line 21. File late Rule 7. File late You Must Have Earned Income This credit is called the “earned income” credit because, to qualify, you must work and have earned income. File late If you are married and file a joint return, you meet this rule if at least one spouse works and has earned income. File late If you are an employee, earned income includes all the taxable income you get from your employer. File late If you are self-employed or a statutory employee, you will figure your earned income on EIC Worksheet B in the instructions for Form 1040. File late Earned Income Earned income includes all of the following types of income. File late Wages, salaries, tips, and other taxable employee pay. File late Employee pay is earned income only if it is taxable. File late Nontaxable employee pay, such as certain dependent care benefits and adoption benefits, is not earned income. File late But there is an exception for nontaxable combat pay, which you can choose to include in earned income, as explained below. File late Net earnings from self-employment. File late Gross income received as a statutory employee. File late Wages, salaries, and tips. File late   Wages, salaries, and tips you receive for working are reported to you on Form W-2, in box 1. File late You should report these on line 1 (Form 1040EZ) or line 7 (Forms 1040A and 1040). File late Nontaxable combat pay election. File late   You can elect to include your nontaxable combat pay in earned income for the earned income credit. File late Electing to include nontaxable combat pay in earned income may increase or decrease your EIC. File late Figure the credit with and without your nontaxable combat pay before making the election. File late   If you make the election, you must include in earned income all nontaxable combat pay you received. File late If you are filing a joint return and both you and your spouse received nontaxable combat pay, you can each make your own election. File late In other words, if one of you makes the election, the other one can also make it but does not have to. File late   The amount of your nontaxable combat pay should be shown in box 12 of your Form W-2 with code “Q. File late ” Self-employed persons and statutory employees. File late   If you are self-employed or received income as a statutory employee, you must use the Form 1040 instructions to see if you qualify to get the EIC. File late Approved Form 4361 or Form 4029 This section is for persons who have an approved: Form 4361, Application for Exemption From Self-Employment Tax for Use by Ministers, Members of Religious Orders and Christian Science Practitioners, or Form 4029, Application for Exemption From Social Security and Medicare Taxes and Waiver of Benefits. File late Each approved form exempts certain income from social security taxes. File late Each form is discussed here in terms of what is or is not earned income for the EIC. File late Form 4361. File late   Whether or not you have an approved Form 4361, amounts you received for performing ministerial duties as an employee count as earned income. File late This includes wages, salaries, tips, and other taxable employee compensation. File late A nontaxable housing allowance or the nontaxable rental value of a home is not earned income. File late Also, amounts you received for performing ministerial duties, but not as an employee, do not count as earned income. File late Examples include fees for performing marriages and honoraria for delivering speeches. File late Form 4029. File late   Whether or not you have an approved Form 4029, all wages, salaries, tips, and other taxable employee compensation count as earned income. File late However, amounts you received as a self-employed individual do not count as earned income. File late Also, in figuring earned income, do not subtract losses on Schedule C, C-EZ, or F from wages on line 7 of Form 1040. File late Disability Benefits If you retired on disability, taxable benefits you receive under your employer's disability retirement plan are considered earned income until you reach minimum retirement age. File late Minimum retirement age generally is the earliest age at which you could have received a pension or annuity if you were not disabled. File late You must report your taxable disability payments on line 7 of either Form 1040 or Form 1040A until you reach minimum retirement age. File late Beginning on the day after you reach minimum retirement age, payments you receive are taxable as a pension and are not considered earned income. File late Report taxable pension payments on Form 1040, lines 16a and 16b (or Form 1040A, lines 12a and 12b). File late Disability insurance payments. File late   Payments you received from a disability insurance policy that you paid the premiums for are not earned income. File late It does not matter whether you have reached minimum retirement age. File late If this policy is through your employer, the amount may be shown in box 12 of your Form W-2 with code “J. File late ” Income That Is Not Earned Income Examples of items that are not earned income include interest and dividends, pensions and annuities, social security and railroad retirement benefits (including disability benefits), alimony and child support, welfare benefits, workers' compensation benefits, unemployment compensation (insurance), nontaxable foster care payments, and veterans' benefits, including VA rehabilitation payments. File late Do not include any of these items in your earned income. File late Earnings while an inmate. File late   Amounts received for work performed while an inmate in a penal institution are not earned income when figuring the earned income credit. File late This includes amounts for work performed while in a work release program or while in a halfway house. File late Workfare payments. File late   Nontaxable workfare payments are not earned income for the EIC. File late These are cash payments certain people receive from a state or local agency that administers public assistance programs funded under the federal Temporary Assistance for Needy Families (TANF) program in return for certain work activities such as (1) work experience activities (including remodeling or repairing public housing) if private sector employment is not available, or (2) community service program activities. File late Community property. File late   If you are married, but qualify to file as head of household under special rules for married taxpayers living apart (see Rule 3 ), and live in a state that has community property laws, your earned income for the EIC does not include any amount earned by your spouse that is treated as belonging to you under those laws. File late That amount is not earned income for the EIC, even though you must include it in your gross income on your income tax return. File late Your earned income includes the entire amount you earned, even if part of it is treated as belonging to your spouse under your state's community property laws. File late Nevada, Washington, and California domestic partners. File late   If you are a registered domestic partner in Nevada, Washington, or California, the same rules apply. File late Your earned income for the EIC does not include any amount earned by your partner. File late Your earned income includes the entire amount you earned. File late For details, see Publication 555. File late Conservation Reserve Program (CRP) payments. File late   If you were receiving social security retirement benefits or social security disability benefits at the time you received any CRP payments, your CRP payments are not earned income for the EIC. File late Nontaxable military pay. File late   Nontaxable pay for members of the Armed Forces is not considered earned income for the EIC. File late Examples of nontaxable military pay are combat pay, the Basic Allowance for Housing (BAH), and the Basic Allowance for Subsistence (BAS). File late See Publication 3, Armed Forces' Tax Guide, for more information. File late    Combat pay. File late You can elect to include your nontaxable combat pay in earned income for the EIC. File late See Nontaxable combat pay election, earlier. File late Part B. File late Rules If You Have a Qualifying Child If you have met all of the rules in Part A , read Part B to see if you have a qualifying child. File late Part B discusses Rules 8 through 10. File late You must meet all three of these rules, in addition to the rules in Parts A and D , to qualify for the earned income credit with a qualifying child. File late You must file Form 1040 or Form 1040A to claim the EIC with a qualifying child. File late (You cannot file Form 1040EZ. File late ) You also must complete Schedule EIC and attach it to your return. File late If you meet all the rules in Part A and this part, read Part D to find out what to do next. File late If you do not meet Rule 8, you do not have a qualifying child. File late Read Part C to find out if you can get the earned income credit without a qualifying child. File late Rule 8. File late Your Child Must Meet the Relationship, Age, Residency, and Joint Return Tests Your child is a qualifying child if your child meets four tests. File late The four tests are: Relationship, Age, Residency, and Joint return. File late The four tests are illustrated in Figure 36–1. File late The paragraphs that follow contain more information about each test. File late Relationship Test To be your qualifying child, a child must be your: Son, daughter, stepchild, foster child, or a descendant of any of them (for example, your grandchild), or Brother, sister, half brother, half sister, stepbrother, stepsister, or a descendant of any of them (for example, your niece or nephew). File late The following definitions clarify the relationship test. File late Adopted child. File late   An adopted child is always treated as your own child. File late The term “adopted child” includes a child who was lawfully placed with you for legal adoption. File late Foster child. File late   For the EIC, a person is your foster child if the child is placed with you by an authorized placement agency or by judgement, decree, or other order of any court of competent jurisdiction. File late An authorized placement agency includes a state or local government agency. File late It also includes a tax-exempt organization licensed by a state. File late In addition, it includes an Indian tribal government or an organization authorized by an Indian tribal government to place Indian children. File late Example. File late Debbie, who is 12 years old, was placed in your care 2 years ago by an authorized agency responsible for placing children in foster homes. File late Debbie is your foster child. File late Age Test Your child must be: Under age 19 at the end of 2013 and younger than you (or your spouse, if filing jointly), Under age 24 at the end of 2013, a student, and younger than you (or your spouse, if filing jointly), or Permanently and totally disabled at any time during 2013, regardless of age. File late    The following examples and definitions clarify the age test. File late Example 1—child not under age 19. File late Your son turned 19 on December 10. File late Unless he was permanently and totally disabled or a student, he is not a qualifying child because, at the end of the year, he was not under age 19. File late Example 2—child not younger than you or your spouse. File late Your 23-year-old brother, who is a full-time student and unmarried, lives with you and your spouse. File late He is not disabled. File late Both you and your spouse are 21 years old and you file a joint return. File late Your brother is not your qualifying child because he is not younger than you or your spouse. File late Example 3—child younger than your spouse but not younger than you. File late The facts are the same as in Example 2 except that your spouse is 25 years old. File late Because your brother is younger than your spouse, he is your qualifying child even though he is not younger than you. File late Student defined. File late   To qualify as a student, your child must be, during some part of each of any 5 calendar months during the calendar year: A full-time student at a school that has a regular teaching staff, course of study, and regular student body at the school, or A student taking a full-time, on-farm training course given by a school described in (1), or a state, county, or local government. File late The 5 calendar months need not be consecutive. File late   A full-time student is a student who is enrolled for the number of hours or courses the school considers to be full-time attendance. File late School defined. File late   A school can be an elementary school, junior or senior high school, college, university, or technical, trade, or mechanical school. File late However, on-the-job training courses, correspondence schools, and schools offering courses only through the Internet do not count as schools for the EIC. File late Vocational high school students. File late   Students who work in co-op jobs in private industry as a part of a school's regular course of classroom and practical training are considered full-time students. File late Permanently and totally disabled. File late   Your child is permanently and totally disabled if both of the following apply. File late He or she cannot engage in any substantial gainful activity because of a physical or mental condition. File late A doctor determines the condition has lasted or can be expected to last continuously for at least a year or can lead to death. File late Residency Test Your child must have lived with you in the United States for more than half of 2013. File late The following definitions clarify the residency test. File late United States. File late   This means the 50 states and the District of Columbia. File late It does not include Puerto Rico or U. File late S. File late possessions such as Guam. File late Homeless shelter. File late   Your home can be any location where you regularly live. File late You do not need a traditional home. File late For example, if your child lived with you for more than half the year in one or more homeless shelters, your child meets the residency test. File late Military personnel stationed outside the United States. File late    U. File late S. File late military personnel stationed outside the United States on extended active duty are considered to live in the United States during that duty period for purposes of the EIC. File late Figure 36-1. File late Tests for Qualifying Child Please click here for the text description of the image. File late Qualifying child Extended active duty. File late   Extended active duty means you are called or ordered to duty for an indefinite period or for a period of more than 90 days. File late Once you begin serving your extended active duty, you are still considered to have been on extended active duty even if you do not serve more than 90 days. File late Birth or death of a child. File late   A child who was born or died in 2013 is treated as having lived with you for more than half of 2013 if your home was the child's home for more than half the time he or she was alive in 2013. File late Temporary absences. File late   Count time that you or your child is away from home on a temporary absence due to a special circumstance as time the child lived with you. File late Examples of a special circumstance include illness, school attendance, business, vacation, military service, and detention in a juvenile facility. File late Kidnapped child. File late    A kidnapped child is treated as living with you for more than half of the year if the child lived with you for more than half the part of the year before the date of the kidnapping. File late The child must be presumed by law enforcement authorities to have been kidnapped by someone who is not a member of your family or your child's family. File late This treatment applies for all years until the child is returned. File late However, the last year this treatment can apply is the earlier of: The year there is a determination that the child is dead, or The year the child would have reached age 18. File late   If your qualifying child has been kidnapped and meets these requirements, enter “KC,” instead of a number, on line 6 of Schedule EIC. File late Joint Return Test To meet this test, the child cannot file a joint return for the year. File late Exception. File late   An exception to the joint return test applies if your child and his or her spouse file a joint return only to claim a refund of income tax withheld or estimated tax paid. File late Example 1—child files joint return. File late You supported your 18-year-old daughter, and she lived with you all year while her husband was in the Armed Forces. File late He earned $25,000 for the year. File late The couple files a joint return. File late Because your daughter and her husband filed a joint return, she is not your qualifying child. File late Example 2—child files joint return only to claim a refund of withheld tax. File late Your 18-year-old son and his 17-year-old wife had $800 of wages from part-time jobs and no other income. File late They do not have a child. File late Neither is required to file a tax return. File late Taxes were taken out of their pay, so they filed a joint return only to get a refund of the withheld taxes. File late The exception to the joint return test applies, so your son may be your qualifying child if all the other tests are met. File late Example 3—child files joint return to claim American opportunity credit. File late The facts are the same as in Example 2 except no taxes were taken out of your son's pay. File late He and his wife are not required to file a tax return, but they file a joint return to claim an American opportunity credit of $124 and get a refund of that amount. File late Because claiming the American opportunity credit is their reason for filing the return, they are not filing it only to get a refund of income tax withheld or estimated tax paid. File late The exception to the joint return test does not apply, so your son is not your qualifying child. File late Married child. File late   Even if your child does not file a joint return, if your child was married at the end of the year, he or she cannot be your qualifying child unless: You can claim an exemption for the child, or The reason you cannot claim an exemption for the child is that you let the child's other parent claim the exemption under the Special rule for divorced or separated parents (or parents who live apart) , described later. File late Social security number. File late   The qualifying child must have a valid social security number (SSN) unless the child was born and died in 2013 and you attach to your return a copy of the child's birth certificate, death certificate, or hospital records showing a live birth. File late You cannot claim the EIC on the basis of a qualifying child if: The qualifying child's SSN is missing from your tax return or is incorrect, The qualifying child's social security card says “Not valid for employment” and was issued for use in getting a federally funded benefit, or Instead of an SSN, the qualifying child has: An individual taxpayer identification number (ITIN), which is issued to a noncitizen who cannot get an SSN, or An adoption taxpayer identification number (ATIN), which is issued to adopting parents who cannot get an SSN for the child being adopted until the adoption is final. File late   If you have more than one qualifying child and only one has a valid SSN, you can use only that child to claim the EIC. File late For more information about SSNs, see Rule 2 . File late Rule 9. File late Your Qualifying Child Cannot Be Used By More Than One Person To Claim the EIC Sometimes a child meets the tests to be a qualifying child of more than one person. File late However, only one of these persons can actually treat the child as a qualifying child. File late Only that person can use the child as a qualifying child to take all of the following tax benefits (provided the person is eligible for each benefit). File late The exemption for the child. File late The child tax credit. File late Head of household filing status. File late The credit for child and dependent care expenses. File late The exclusion for dependent care benefits. File late The EIC. File late The other person cannot take any of these benefits based on this qualifying child. File late In other words, you and the other person cannot agree to divide these tax benefits between you. File late The other person cannot take any of these tax benefits unless he or she has a different qualifying child. File late The tiebreaker rules explained next explain who, if anyone, can claim the EIC when more than one person has the same qualifying child. File late However, the tiebreaker rules do not apply if the other person is your spouse and you file a joint return. File late Tiebreaker rules. File late   To determine which person can treat the child as a qualifying child to claim the six tax benefits just listed, the following tiebreaker rules apply. File late If only one of the persons is the child's parent, the child is treated as the qualifying child of the parent. File late If the parents file a joint return together and can claim the child as a qualifying child, the child is treated as the qualifying child of the parents. File late If the parents do not file a joint return together but both parents claim the child as a qualifying child, the IRS will treat the child as the qualifying child of the parent with whom the child lived for the longer period of time during the year. File late If the child lived with each parent for the same amount of time, the IRS will treat the child as the qualifying child of the parent who had the higher adjusted gross income (AGI) for the year. File late If no parent can claim the child as a qualifying child, the child is treated as the qualifying child of the person who had the highest AGI for the year. File late If a parent can claim the child as a qualifying child but no parent does so claim the child, the child is treated as the qualifying child of the person who had the highest AGI for the year, but only if that person's AGI is higher than the highest AGI of any of the child's parents who can claim the child. File late If the child's parents file a joint return with each other, this rule can be applied by treating the parents' total AGI as divided evenly between them. File late See Example 8 . File late   Subject to these tiebreaker rules, you and the other person may be able to choose which of you claims the child as a qualifying child. File late See Examples 1 through 13 . File late   If you cannot claim the EIC because your qualifying child is treated under the tiebreaker rules as the qualifying child of another person for 2013, you may be able to take the EIC using a different qualifying child, but you cannot take the EIC using the rules in Part C for people who do not have a qualifying child. File late If the other person cannot claim the EIC. File late   If you and someone else have the same qualifying child but the other person cannot claim the EIC because he or she is not eligible or his or her earned income or AGI is too high, you may be able to treat the child as a qualifying child. File late See Examples 6 and 7 . File late But you cannot treat the child as a qualifying child to claim the EIC if the other person uses the child to claim any of the other six tax benefits listed earlier. File late Examples. File late The following examples may help you in determining whether you can claim the EIC when you and someone else have the same qualifying child. File late Example 1. File late You and your 2-year-old son Jimmy lived with your mother all year. File late You are 25 years old, unmarried, and your AGI is $9,000. File late Your only income was $9,000 from a part-time job. File late Your mother's only income was $20,000 from her job, and her AGI is $20,000. File late Jimmy's father did not live with you or Jimmy. File late The special rule explained later for divorced or separated parents (or parents who live apart) does not apply. File late Jimmy is a qualifying child of both you and your mother because he meets the relationship, age, residency, and joint return tests for both you and your mother. File late However, only one of you can treat him as a qualifying child to claim the EIC (and the other tax benefits listed earlier for which that person qualifies). File late He is not a qualifying child of anyone else, including his father. File late If you do not claim Jimmy as a qualifying child for the EIC or any of the other tax benefits listed earlier, your mother can treat him as a qualifying child to claim the EIC (and any of the other tax benefits listed earlier for which she qualifies). File late Example 2. File late The facts are the same as in Example 1 except your AGI is $25,000. File late Because your mother's AGI is not higher than yours, she cannot claim Jimmy as a qualifying child. File late Only you can claim him. File late Example 3. File late The facts are the same as in Example 1 except that you and your mother both claim Jimmy as a qualifying child. File late In this case, you as the child's parent will be the only one allowed to claim Jimmy as a qualifying child for the EIC and the other tax benefits listed earlier for which you qualify. File late The IRS will disallow your mother's claim to the EIC and any of the other tax benefits listed earlier unless she has another qualifying child. File late Example 4. File late The facts are the same as in Example 1 except that you also have two other young children who are qualifying children of both you and your mother. File late Only one of you can claim each child. File late However, if your mother's AGI is higher than yours, you can allow your mother to claim one or more of the children. File late For example, if you claim one child, your mother can claim the other two. File late Example 5. File late The facts are the same as in Example 1 except that you are only 18 years old. File late This means you are a qualifying child of your mother. File late Because of Rule 10 , discussed next, you cannot claim the EIC and cannot claim Jimmy as a qualifying child. File late Only your mother may be able to treat Jimmy as a qualifying child to claim the EIC. File late If your mother meets all the other requirements for claiming the EIC and you do not claim Jimmy as a qualifying child for any of the other tax benefits listed earlier, your mother can claim both you and Jimmy as qualifying children for the EIC. File late Example 6. File late The facts are the same as in Example 1 except that your mother earned $50,000 from her job. File late Because your mother's earned income is too high for her to claim the EIC, only you can claim the EIC using your son. File late Example 7. File late The facts are the same as in Example 1 except that you earned $50,000 from your job and your AGI is $50,500. File late Your earned income is too high for you to claim the EIC. File late But your mother cannot claim the EIC either, because her AGI is not higher than yours. File late Example 8. File late The facts are the same as in Example 1 except that you and Jimmy's father are married to each other, live with Jimmy and your mother, and have an AGI of $30,000 on a joint return. File late If you and your husband do not claim Jimmy as a qualifying child for the EIC or any of the other tax benefits listed earlier, your mother can claim him instead. File late Even though the AGI on your joint return, $30,000, is more than your mother's AGI of $20,000, for this purpose half of the joint AGI can be treated as yours and half as your husband's. File late In other words, each parent's AGI can be treated as $15,000. File late Example 9. File late You, your husband, and your 10-year-old son Joey lived together until August 1, 2013, when your husband moved out of the household. File late In August and September, Joey lived with you. File late For the rest of the year, Joey lived with your husband, who is Joey's father. File late Joey is a qualifying child of both you and your husband because he lived with each of you for more than half the year and because he met the relationship, age, and joint return tests for both of you. File late At the end of the year, you and your husband still were not divorced, legally separated, or separated under a written separation agreement, so the special rule for divorced or separated parents (or parents who live apart) does not apply. File late You and your husband will file separate returns. File late Your husband agrees to let you treat Joey as a qualifying child. File late This means, if your husband does not claim Joey as a qualifying child for any of the tax benefits listed earlier, you can claim him as a qualifying child for any tax benefit listed earlier for which you qualify. File late However, your filing status is married filing separately, so you cannot claim the EIC or the credit for child and dependent care expenses. File late See Rule 3 . File late Example 10. File late The facts are the same as in Example 9 except that you and your husband both claim Joey as a qualifying child. File late In this case, only your husband will be allowed to treat Joey as a qualifying child. File late This is because, during 2013, the boy lived with him longer than with you. File late You cannot claim the EIC (either with or without a qualifying child). File late However, your husband's filing status is married filing separately, so he cannot claim the EIC or the credit for child and dependent care expenses. File late See Rule 3 . File late Example 11. File late You, your 5-year-old son and your son's father lived together all year. File late You and your son's father are not married. File late Your son is a qualifying child of both you and his father because he meets the relationship, age, residency, and joint return tests for both you and his father. File late Your earned income and AGI are $12,000, and your son's father's earned income and AGI are $14,000. File late Neither of you had any other income. File late Your son's father agrees to let you treat the child as a qualifying child. File late This means, if your son's father does not claim your son as a qualifying child for the EIC or any of the other tax benefits listed earlier, you can claim him as a qualifying child for the EIC and any of the other tax benefits listed earlier for which you qualify. File late Example 12. File late The facts are the same as in Example 11 except that you and your son's father both claim your son as a qualifying child. File late In this case, only your son's father will be allowed to treat your son as a qualifying child. File late This is because his AGI, $14,000, is more than your AGI, $12,000. File late You cannot claim the EIC (either with or without a qualifying child). File late Example 13. File late You and your 7-year-old niece, your sister's child, lived with your mother all year. File late You are 25 years old, and your AGI is $9,300. File late Your only income was from a part-time job. File late Your mother's AGI is $15,000. File late Her only income was from her job. File late Your niece's parents file jointly, have an AGI of less than $9,000, and do not live with you or their child. File late Your niece is a qualifying child of both you and your mother because she meets the relationship, age, residency, and joint return tests for both you and your mother. File late However, only your mother can treat her as a qualifying child. File late This is because your mother's AGI, $15,000, is more than your AGI, $9,300. File late Special rule for divorced or separated parents (or parents who live apart). File late   A child will be treated as the qualifying child of his or her noncustodial parent (for purposes of claiming an exemption and the child tax credit, but not for the EIC) if all of the following statements are true. File late The parents: Are divorced or legally separated under a decree of divorce or separate maintenance, Are separated under a written separation agreement, or Lived apart at all times during the last 6 months of 2013, whether or not they are or were married. File late The child received over half of his or her support for the year from the parents. File late The child is in the custody of one or both parents for more than half of 2013. File late Either of the following statements is true. File late The custodial parent signs Form 8332 or a substantially similar statement that he or she will not claim the child as a dependent for the year, and the noncustodial parent attaches the form or statement to his or her return. File late If the divorce decree or separation agreement went into effect after 1984 and before 2009, the noncustodial parent may be able to attach certain pages from the decree or agreement instead of Form 8332. File late A pre-1985 decree of divorce or separate maintenance or written separation agreement that applies to 2013 provides that the noncustodial parent can claim the child as a dependent, and the noncustodial parent provides at least $600 for support of the child during 2013. File late  For details, see chapter 3. File late Also see Applying Rule 9 to divorced or separated parents (or parents who live apart) , next. File late Applying Rule 9 to divorced or separated parents (or parents who live apart). File late   If a child is treated as the qualifying child of the noncustodial parent under the special rule just described for children of divorced or separated parents (or parents who live apart), only the noncustodial parent can claim an exemption and the child tax credit for the child. File late However, the custodial parent, if eligible, or another eligible taxpayer can claim the child as a qualifying child for the EIC and other tax benefits listed earlier in this chapter. File late If the child is the qualifying child of more than one person for these benefits, then the tiebreaker rules determine which person can treat the child as a qualifying child. File late Example 1. File late You and your 5-year-old son lived all year with your mother, who paid the entire cost of keeping up the home. File late Your AGI is $10,000. File late Your mother’s AGI is $25,000. File late Your son's father did not live with you or your son. File late Under the special rule for children of divorced or separated parents (or parents who live apart), your son is treated as the qualifying child of his father, who can claim an exemption and the child tax credit for the child. File late However, your son's father cannot claim your son as a qualifying child for head of household filing status, the credit for child and dependent care expenses, the exclusion for dependent care benefits, or the EIC. File late You and your mother did not have any child care expenses or dependent care benefits. File late If you do not claim your son as a qualifying child, your mother can claim him as a qualifying child for the EIC and head of household filing status, if she qualifies for these tax benefits. File late Example 2. File late The facts are the same as in Example 1 except that your AGI is $25,000 and your mother's AGI is $21,000. File late Your mother cannot claim your son as a qualifying child for any purpose because her AGI is not higher than yours. File late Example 3. File late The facts are the same as in Example 1 except that you and your mother both claim your son as a qualifying child for the EIC. File late Your mother also claims him as a qualifying child for head of household filing status. File late You as the child's parent will be the only one allowed to claim your son as a qualifying child for the EIC. File late The IRS will disallow your mother's claim to the EIC and head of household filing status unless she has another qualifying child. File late Rule 10. File late You Cannot Be a Qualifying Child of Another Taxpayer You are a qualifying child of another taxpayer (your parent, guardian, foster parent, etc. File late ) if all of the following statements are true. File late You are that person's son, daughter, stepchild, foster child, or a descendant of any of them. File late Or, you are that person's brother, sister, half brother, half sister, stepbrother, or stepsister (or a descendant of any of them). File late You were: Under age 19 at the end of the year and younger than that person (or that person's spouse, if the person files jointly), Under age 24 at the end of the year, a student, and younger than that person (or that person's spouse, if the person files jointly), or Permanently and totally disabled, regardless of age. File late You lived with that person in the United States for more than half of the year. File late You are not filing a joint return for the year (or are filing a joint return only to claim a refund of withheld income tax or estimated tax paid). File late For more details about the tests to be a qualifying child, see Rule 8 . File late If you are a qualifying child of another taxpayer, you cannot claim the EIC. File late This is true even if the person for whom you are a qualifying child does not claim the EIC or meet all of the rules to claim the EIC. File late Put “No” beside line 64a (Form 1040) or line 38a (Form 1040A). File late Example. File late You and your daughter lived with your mother all year. File late You are 22 years old, unmarried, and attended a trade school full time. File late You had a part-time job and earned $5,700. File late You had no other income. File late Because you meet the relationship, age, residency, and joint return tests, you are a qualifying child of your mother. File late She can claim the EIC if she meets all the other requirements. File late Because you are your mother's qualifying child, you cannot claim the EIC. File late This is so even if your mother cannot or does not claim the EIC. File late Child of person not required to file a return. File late   You are not the qualifying child of another taxpayer (and so may qualify to claim the EIC) if the person for whom you meet the relationship, age, residency, and joint return tests is not required to file an income tax return and either: Does not file an income tax return, or Files a return only to get a refund of income tax withheld or estimated tax paid. File late Example. File late The facts are the same as in the last example except your mother had no gross income, is not required to file a 2013 tax return, and does not file a 2013 tax return. File late As a result, you are not your mother's qualifying child. File late You can claim the EIC if you meet all the other requirements to do so. File late   See Rule 10 in Publication 596 for additional examples. File late Part C. File late Rules If You Do Not Have a Qualifying Child Read this part if you: Do not have a qualifying child, and Have met all the rules in Part A . File late  Part C discusses Rules 11 through 14. File late You must meet all four of these rules, in addition to the rules in Parts A and D , to qualify for the earned income credit without a qualifying child. File late If you have a qualifying child, the rules in this part do not apply to you. File late You can claim the credit only if you meet all the rules in Parts A, B, and D. File late See Rule 8 to find out if you have a qualifying child. File late Rule 11. File late You Must Be at Least Age 25 but Under Age 65 You must be at least age 25 but under age 65 at the end of 2013. File late If you are married filing a joint return, either you or your spouse must be at least age 25 but under age 65 at the end of 2013. File late It does not matter which spouse meets the age test, as long as one of the spouses does. File late You meet the age test if you were born after December 31, 1948, and before January 2, 1989. File late If you are married filing a joint return, you meet the age test if either you or your spouse was born after December 31, 1948, and before January 2, 1989. File late If neither you nor your spouse meets the age test, you cannot claim the EIC. File late Put “No” next to line 64a (Form 1040), line 38a (Form 1040A), or line 8a (Form 1040EZ). File late Death of spouse. File late   If you are filing a joint return with your spouse who died in 2013, you meet the age test if your spouse was at least age 25 but under age 65 at the time of death. File late Example 1. File late You are age 28 and unmarried. File late You meet the age test. File late Example 2—spouse meets age test. File late You are married and filing a joint return. File late You are age 23 and your spouse is age 27. File late You meet the age test because your spouse is at least age 25 but under age 65. File late Example 3—spouse dies in 2013. File late You are married and filing a joint return with your spouse who died in August 2013. File late You are age 67. File late Your spouse would have become age 65 in November 2013. File late Because your spouse was under age 65 when she died, you meet the age test. File late Rule 12. File late You Cannot Be the Dependent of Another Person If you are not filing a joint return, you meet this rule if: You checked box 6a on Form 1040 or 1040A, or You did not check the “You” box on line 5 of Form 1040EZ, and you entered $10,000 on that line. File late If you are filing a joint return, you meet this rule if: You checked both box 6a and box 6b on Form 1040 or 1040A, or You and your spouse did not check either the “You” box or the “Spouse” box on line 5 of Form 1040EZ, and you entered $20,000 on that line. File late If you are not sure whether someone else can claim you (or your spouse, if filing a joint return) as a dependent, read the rules for claiming a dependent in chapter 3. File late If someone else can claim you (or your spouse, if filing a joint return) as a dependent on his or her return, but does not, you still cannot claim the credit. File late Example 1. File late In 2013, you were age 25, single, and living at home with your parents. File late You worked and were not a student. File late You earned $7,500. File late Your parents cannot claim you as a dependent. File late When you file your return, you claim an exemption for yourself by not checking the “You” box on line 5 of your Form 1040EZ and by entering $10,000 on that line. File late You meet this rule. File late You can claim the EIC if you meet all the other requirements. File late Example 2. File late The facts are the same as in Example 1 , except that you earned $2,000. File late Your parents can claim you as a dependent but decide not to. File late You do not meet this rule. File late You cannot claim the credit because your parents could have claimed you as a dependent. File late Joint returns. File late   You generally cannot be claimed as a dependent by another person if you are married and file a joint return. File late   However, another person may be able to claim you as a dependent if you and your spouse file a joint return only to get a refund of income tax withheld or estimated tax paid. File late But neither you nor your spouse can be claimed as a dependent by another person if you claim the EIC on your joint return. File late Example 1. File late You are 26 years old. File late You and your wife live with your parents and had $800 of wages from part-time jobs and no other income. File late Neither you nor your wife is required to file a tax return. File late You do not have a child. File late Taxes were taken out of your pay, so you file a joint return only to get a refund of the withheld taxes. File late Your parents are not disqualified from claiming an exemption for you just because you filed a joint return. File late They can claim exemptions for you and your wife if all the other tests to do so are met. File late Example 2. File late The facts are the same as in Example 1 except no taxes were taken out of your pay. File late Also, you and your wife are not required to file a tax return, but you file a joint return to claim an EIC of $63 and get a refund of that amount. File late Because claiming the EIC is your reason for filing the return, you are not filing it only to get a refund of income tax withheld or estimated tax paid. File late Your parents cannot claim an exemption for either you or your wife. File late Rule 13. File late You Cannot Be a Qualifying Child of Another Taxpayer You are a qualifying child of another taxpayer (your parent, guardian, foster parent, etc. File late ) if all of the following statements are true. File late You are that person's son, daughter, stepchild, foster child, or a descendant of any of them. File late Or, you are that person's brother, sister, half brother, half sister, stepbrother, or stepsister (or a descendant of any of them). File late You were: Under age 19 at the end of the year and younger than that person (or that person's spouse, if the person files jointly), Under age 24 at the end of the year, a student (as defined in Rule 8 ), and younger than that person (or that person's spouse, if the person files jointly), or Permanently and totally disabled, regardless of age. File late You lived with that person in the United States for more than half of the year. File late You are not filing a joint return for the year (or are filing a joint return only to claim a refund of withheld income tax or estimated tax paid). File late For more details about the tests to be a qualifying child, see Rule 8 . File late If you are a qualifying child of another taxpayer, you cannot claim the EIC. File late This is true even if the person for whom you are a qualifying child does not claim the EIC or meet all of the rules to claim the EIC. File late Put “No” next to line 64a (Form 1040), line 38a (Form 1040A), or line 8a (Form 1040EZ). File late Example. File late You lived with your mother all year. File late You are age 26, unmarried, and permanently and totally disabled. File late Your only income was from a community center where you went three days a week to answer telephones. File late You earned $5,000 for the year and provided more than half of your own support. File late Because you meet the relationship, age, residency, and joint return tests, you are a qualifying child of your mother for the EIC. File late She can claim the EIC if she meets all the other requirements. File late Because you are a qualifying child of your mother, you cannot claim the EIC. File late This is so even if your mother cannot or does not claim the EIC. File late Joint returns. File late   You generally cannot be a qualifying child of another taxpayer if you are married and file a joint return. File late   However, you may be a qualifying child of another taxpayer if you and your spouse file a joint return for the year only to get a refund of income tax withheld or estimated tax paid. File late But neither you nor your spouse can be a qualifying child of another taxpayer if you claim the EIC on your joint return. File late Child of person not required to file a return. File late   You are not the qualifying child of another taxpayer (and so may qualify to claim the EIC) if the person for whom you meet the relationship, age, residency, and joint return tests is not required to file an income tax return and either: Does not file an income tax return, or Files a return only to get a refund of income tax withheld or estimated tax paid. File late Example. File late You lived all year with your father. File late You are 27 years old, unmarried, permanently and totally disabled, and earned $13,000. File late You have no other income, no children, and provided more than half of your own support. File late Your father had no gross income, is not required to file a 2013 tax return, and does not file a 2013 tax return. File late As a result, you are not your father's qualifying child. File late You can claim the EIC if you meet all the other requirements to do so. File late   See Rule 13 in Publication 596 for additional examples. File late Rule 14. File late You Must Have Lived in the United States More Than Half of the Year Your home (and your spouse's, if filing a joint return) must have been in the United States for more than half the year. File late If it was not, put “No” next to line 64a (Form 1040), line 38a (Form 1040A), or line 8a (Form 1040EZ). File late United States. File late   This means the 50 states and the District of Columbia. File late It does not include Puerto Rico or U. File late S. File late possessions such as Guam. File late Homeless shelter. File late   Your home can be any location where you regularly live. File late You do not need a traditional home. File late If you lived in one or more homeless shelters in the United States for more than half the year, you meet this rule. File late Military personnel stationed outside the United States. File late   U. File late S. File late military personnel stationed outside the United States on extended active duty (defined in Rule 8 ) are considered to live in the United States during that duty period for purposes of the EIC. File late Part D. File late Figuring and Claiming the EIC Read this part if you have met all the rules in Parts A and B, or all the rules in Parts A and C. File late Part D discusses Rule 15 . File late You must meet this rule, in addition to the rules in Parts A and B , or Parts A and C , to qualify for the earned income credit. File late This part of the chapter also explains how to figure the amount of your credit. File late You have two choices. File late Have the IRS figure the EIC for you. File late If you want to do this, see IRS Will Figure the EIC for You . File late Figure the EIC yourself. File late If you want to do this, see How To Figure the EIC Yourself . File late Rule 15. File late Your Earned Income Must Be Less Than: $46,227 ($51,567 for married filing jointly) if you have three or more qualifying children, $43,038 ($48,378 for married filing jointly) if you have two qualifying children, $37,870 ($43,210 for married filing jointly) if you have one qualifying child, or $14,340 ($19,680 for married filing jointly) if you do not have a qualifying child. File late Earned income generally means wages, salaries, tips, other taxable employee pay, and net earnings from self-employment. File late Employee pay is earned income only if it is taxable. File late Nontaxable employee pay, such as certain dependent care benefits and adoption benefits, is not earned income. File late But there is an exception for nontaxable combat pay, which you can choose to include in earned income. File late Earned income is explained in detail in Rule 7 . File late Figuring earned income. File late   If you are self-employed, a statutory employee, or a member of the clergy or a church employee who files Schedule SE (Form 1040), you will figure your earned income when you fill out Part 4 of EIC Worksheet B in the Form 1040 instructions. File late   Otherwise, figure your earned income by using the worksheet in Step 5 of the Form 1040 instructions for lines 64a and 64b or the Form 1040A instructions for lines 38a and 38b, or the worksheet in Step 2 of the Form 1040EZ instructions for lines 8a and 8b. File late   When using one of those worksheets to figure your earned income, you will start with the amount on line 7 (Form 1040 or Form 1040A) or line 1 (Form 1040EZ). File late You will then reduce that amount by any amount included on that line and described in the following list: Scholarship or fellowship grants not reported on a Form W-2, Inmate's income, and Pension or annuity from deferred compensation plans. File late Scholarship or fellowship grants not reported on a Form W-2. File late   A scholarship or fellowship grant that was not reported to you on a Form W-2 is not considered earned income for the earned income credit. File late Inmate's income. File late   Amounts received for work performed while an inmate in a penal institution are not earned income for the earned income credit. File late This includes amounts received for work performed while in a work release program or while in a halfway house. File late If you received any amount for work done while an inmate in a penal institution and that amount is included in the total on line 7 (Form 1040 or Form 1040A) or line 1 (Form 1040EZ), put “PRI” and the amount on the dotted line next to line 7 (Form 1040), in the space to the left of the entry space for line 7 (Form 1040A), or in the space to the left of line 1 (Form 1040EZ). File late Pension or annuity from deferred compensation plans. File late   A pension or annuity from a nonqualified deferred compensation plan or a nongovernmental section 457 plan is not considered earned income for the earned income credit. File late If you received such an amount and it was included in the total on line 7 (Form 1040 or Form 1040A) or line 1 (Form 1040EZ), put “DFC” and the amount on the dotted line next to line 7 (Form 1040), in the space to the left of the entry space for line 7 (Form 1040A), or in the space to the left of line 1 (Form 1040EZ). File late This amount may be reported in box 11 of your Form W-2. File late If you received such an amount but box 11 is blank, contact your employer for the amount received as a pension or annuity. File late Clergy. File late   If you are a member of the clergy who files Schedule SE and the amount on line 2 of that schedule includes an amount that was also reported on line 7 (Form 1040), subtract that amount from the amount on line 7 (Form 1040) and enter the result in the first space of the worksheet in Step 5 of the Form 1040 instructions for lines 64a and 64b. File late Put “Clergy” on the dotted line next to line 64a (Form 1040). File late Church employees. File late    A church employee means an employee (other than a minister or member of a religious order) of a church or qualified church-controlled organization that is exempt from employer social security and Medicare taxes. File late If you received wages as a
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The Social Security Advisory Board advises the president, congress and the commissioner of Social Security on Social Security and Supplemental Security Income policy.

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File late Publication 15 - Main Content Table of Contents 1. File late Employer Identification Number (EIN) 2. File late Who Are Employees?Relief provisions. File late Business Owned and Operated by Spouses 3. File late Family Employees 4. File late Employee's Social Security Number (SSN)Registering for SSNVS. File late 5. File late Wages and Other CompensationAccountable plan. File late Nonaccountable plan. File late Per diem or other fixed allowance. File late 50% test. File late Health Savings Accounts and medical savings accounts. File late Nontaxable fringe benefits. File late When fringe benefits are treated as paid. File late Valuation of fringe benefits. File late Withholding on fringe benefits. File late Depositing taxes on fringe benefits. File late 6. File late TipsOrdering rule. File late 7. File late Supplemental Wages 8. File late Payroll Period 9. File late Withholding From Employees' WagesIncome Tax Withholding Social Security and Medicare Taxes Part-Time Workers 10. File late Required Notice to Employees About the Earned Income Credit (EIC) 11. File late Depositing TaxesWhen To Deposit How To Deposit Deposit Penalties 12. File late Filing Form 941 or Form 944 13. File late Reporting Adjustments to Form 941 or Form 944Current Period Adjustments Prior Period Adjustments Wage Repayments 14. File late Federal Unemployment (FUTA) TaxSuccessor employer. File late Household employees. File late When to deposit. File late Household employees. File late Electronic filing by reporting agents. File late 16. File late How To Use the Income Tax Withholding TablesWage Bracket Method Percentage Method Alternative Methods of Income Tax Withholding How To Get Tax Help 1. File late Employer Identification Number (EIN) If you are required to report employment taxes or give tax statements to employees or annuitants, you need an EIN. File late The EIN is a nine-digit number the IRS issues. File late The digits are arranged as follows: 00-0000000. File late It is used to identify the tax accounts of employers and certain others who have no employees. File late Use your EIN on all of the items you send to the IRS and SSA. File late For more information, see Publication 1635, Employer Identification Number: Understanding Your EIN. File late If you do not have an EIN, you may apply for one online. File late Go to the IRS. File late gov and click on the Apply for an EIN Online link under Tools. File late You may also apply for an EIN by calling 1-800-829-4933, or you can fax or mail Form SS-4, Application for Employer Identification Number, to the IRS. File late Do not use an SSN in place of an EIN. File late You should have only one EIN. File late If you have more than one and are not sure which one to use, call 1-800-829-4933 or 1-800-829-4059 (TDD/TTY for persons who are deaf, hard of hearing, or have a speech disability). File late Give the numbers you have, the name and address to which each was assigned, and the address of your main place of business. File late The IRS will tell you which number to use. File late If you took over another employer's business (see Successor employer in section 9), do not use that employer's EIN. File late If you have applied for an EIN but do not have your EIN by the time a return is due, file a paper return and write “Applied For” and the date you applied for it in the space shown for the number. File late 2. File late Who Are Employees? Generally, employees are defined either under common law or under statutes for certain situations. File late See Publication 15-A for details on statutory employees and nonemployees. File late Employee status under common law. File late   Generally, a worker who performs services for you is your employee if you have the right to control what will be done and how it will be done. File late This is so even when you give the employee freedom of action. File late What matters is that you have the right to control the details of how the services are performed. File late See Publication 15-A for more information on how to determine whether an individual providing services is an independent contractor or an employee. File late   Generally, people in business for themselves are not employees. File late For example, doctors, lawyers, veterinarians, and others in an independent trade in which they offer their services to the public are usually not employees. File late However, if the business is incorporated, corporate officers who work in the business are employees of the corporation. File late   If an employer-employee relationship exists, it does not matter what it is called. File late The employee may be called an agent or independent contractor. File late It also does not matter how payments are measured or paid, what they are called, or if the employee works full or part time. File late Statutory employees. File late   If someone who works for you is not an employee under the common law rules discussed earlier, do not withhold federal income tax from his or her pay, unless backup withholding applies. File late Although the following persons may not be common law employees, they are considered employees by statute for social security, Medicare, and FUTA tax purposes under certain conditions. File late An agent (or commission) driver who delivers food, beverages (other than milk), laundry, or dry cleaning for someone else. File late A full-time life insurance salesperson who sells primarily for one company. File late A homeworker who works by guidelines of the person for whom the work is done, with materials furnished by and returned to that person or to someone that person designates. File late A traveling or city salesperson (other than an agent-driver or commission-driver) who works full time (except for sideline sales activities) for one firm or person getting orders from customers. File late The orders must be for merchandise for resale or supplies for use in the customer's business. File late The customers must be retailers, wholesalers, contractors, or operators of hotels, restaurants, or other businesses dealing with food or lodging. File late    Statutory nonemployees. File late   Direct sellers, qualified real estate agents, and certain companion sitters are, by law, considered nonemployees. File late They are generally treated as self-employed for all federal tax purposes, including income and employment taxes. File late H-2A agricultural workers. File late   On Form W-2, do not check box 13 (Statutory employee), as H-2A workers are not statutory employees. File late Treating employees as nonemployees. File late   You will generally be liable for social security and Medicare taxes and withheld income tax if you do not deduct and withhold these taxes because you treated an employee as a nonemployee. File late You may be able to calculate your liability using special section 3509 rates for the employee share of social security and Medicare taxes and the federal income tax withholding. File late The applicable rates depend on whether you filed required Forms 1099. File late You cannot recover the employee share of social security, or Medicare tax, or income tax withholding from the employee if the tax is paid under section 3509. File late You are liable for the income tax withholding regardless of whether the employee paid income tax on the wages. File late You continue to owe the full employer share of social security and Medicare taxes. File late The employee remains liable for the employee share of social security and Medicare taxes. File late See Internal Revenue Code section 3509 for details. File late Also see the Instructions for Form 941-X. File late   Section 3509 rates are not available if you intentionally disregard the requirement to withhold taxes from the employee or if you withheld income taxes but not social security or Medicare taxes. File late Section 3509 is not available for reclassifying statutory employees. File late See Statutory employees , earlier in this section. File late   If the employer issued required information returns, the section 3509 rates are: For social security taxes; employer rate of 6. File late 2% plus 20% of the employee rate (see the Instructions for Form 941-X). File late For Medicare taxes; employer rate of 1. File late 45% plus 20% of the employee rate of 1. File late 45%, for a total rate of 1. File late 74% of wages. File late For Additional Medicare Tax; 0. File late 18% (20% of the employee rate of 0. File late 9%) of wages subject to Additional Medicare Tax. File late For income tax withholding, the rate is 1. File late 5% of wages. File late   If the employer did not issue required information returns, the section 3509 rates are: For social security taxes; employer rate of 6. File late 2% plus 40% of the employee rate (see the Instructions for Form 941-X). File late For Medicare taxes; employer rate of 1. File late 45% plus 40% of the employee rate of 1. File late 45%, for a total rate of 2. File late 03% of wages. File late For Additional Medicare Tax; 0. File late 36% (40% of the employee rate of 0. File late 9%) of wages subject to Additional Medicare Tax. File late For income tax withholding, the rate is 3. File late 0% of wages. File late Relief provisions. File late   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. File late To get this relief, you must file all required federal tax returns, including information returns, on a basis consistent with your treatment of the worker. File late You (or your predecessor) must not have treated any worker holding a substantially similar position as an employee for any periods beginning after 1977. File late See Publication 1976, Do You Qualify for Relief Under Section 530. File late IRS help. File late   If you want the IRS to determine whether a worker is an employee, file Form SS-8, Determination of Worker Status for Purposes of Federal Employment Taxes and Income Tax Withholding. File late Voluntary Classification Settlement Program (VCSP). File late   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. File late To apply, use Form 8952, Application for Voluntary Classification Settlement Program (VCSP). File late For more information visit IRS. File late gov and enter “VCSP” in the search box. File late Business Owned and Operated by Spouses If you and your spouse jointly own and operate a business and share in the profits and losses, you are partners in a partnership, whether or not you have a formal partnership agreement. File late See Publication 541, Partnerships, for more details. File late The partnership is considered the employer of any employees, and is liable for any employment taxes due on wages paid to its employees. File late Exception—Qualified joint venture. File late   For tax years beginning after December 31, 2006, the Small Business and Work Opportunity Tax Act of 2007 (Public Law 110-28) provides that a “qualified joint venture,” whose only members are spouses filing a joint income tax return, can elect not to be treated as a partnership for federal tax purposes. File late A qualified joint venture conducts a trade or business where: The only members of the joint venture are spouses who file a joint income tax return, Both spouses materially participate (see Material participation in the Instructions for Schedule C (Form 1040), line G) in the trade or business (mere joint ownership of property is not enough), Both spouses elect to not be treated as a partnership, and The business is co-owned by both spouses and is not held in the name of a state law entity such as a partnership or limited liability company (LLC). File late   To make the election, all items of income, gain, loss, deduction, and credit must be divided between the spouses, in accordance with each spouse's interest in the venture, and reported on separate Schedules C or F as sole proprietors. File late Each spouse must also file a separate Schedule SE to pay self-employment taxes, as applicable. File late   Spouses using the qualified joint venture rules are treated as sole proprietors for federal tax purposes and generally do not need an EIN. File late If employment taxes are owed by the qualified joint venture, either spouse may report and pay the employment taxes due on the wages paid to the employees using the EIN of that spouse's sole proprietorship. File late Generally, filing as a qualified joint venture will not increase the spouses' total tax owed on the joint income tax return. File late However, it gives each spouse credit for social security earnings on which retirement benefits are based and for Medicare coverage without filing a partnership return. File late    Note. File late If your spouse is your employee, not your partner, see One spouse employed by another in section 3. File late   For more information on qualified joint ventures, visit IRS. File late gov and enter “qualified joint venture” in the search box. File late Exception—Community income. File late   If you and your spouse wholly own an unincorporated business as community property under the community property laws of a state, foreign country, or U. File late S. File late possession, you can treat the business either as a sole proprietorship (of the spouse who carried on the business) or a partnership. File late You may still make an election to be taxed as a qualified joint venture instead of a partnership. File late See Exception—Qualified joint venture , earlier. File late 3. File late Family Employees Child employed by parents. File late   Payments for the services of a child under age 18 who works for his or her parent in a trade or business are not subject to social security and Medicare taxes if the trade or business is a sole proprietorship or a partnership in which each partner is a parent of the child. File late If these payments are for work other than in a trade or business, such as domestic work in the parent's private home, they are not subject to social security and Medicare taxes until the child reaches age 21. File late However, see Covered services of a child or spouse , later in this section. File late Payments for the services of a child under age 21 who works for his or her parent, whether or not in a trade or business, are not subject to FUTA tax. File late Payments for the services of a child of any age who works for his or her parent are generally subject to income tax withholding unless the payments are for domestic work in the parent's home, or unless the payments are for work other than in a trade or business and are less than $50 in the quarter or the child is not regularly employed to do such work. File late One spouse employed by another. File late   The wages for the services of an individual who works for his or her spouse in a trade or business are subject to income tax withholding and social security and Medicare taxes, but not to FUTA tax. File late However, the payments for services of one spouse employed by another in other than a trade or business, such as domestic service in a private home, are not subject to social security, Medicare, and FUTA taxes. File late Covered services of a child or spouse. File late   The wages for the services of a child or spouse are subject to income tax withholding as well as social security, Medicare, and FUTA taxes if he or she works for: A corporation, even if it is controlled by the child's parent or the individual's spouse; A partnership, even if the child's parent is a partner, unless each partner is a parent of the child; A partnership, even if the individual's spouse is a partner; or An estate, even if it is the estate of a deceased parent. File late Parent employed by son or daughter. File late   When the employer is a son or daughter employing his or her parent the following rules apply. File late Payments for the services of a parent in the son’s or daughter’s (the employer’s) trade or business are subject to income tax withholding and social security and Medicare taxes. File late Payments for the services of a parent not in the son’s or daughter’s (the employer’s) trade or business are generally not subject to social security and Medicare taxes. File late    Social security and Medicare taxes do apply to payments made to a parent for domestic services if all of the following apply: The parent is employed by his or her son or daughter; The son or daughter (the employer) has a child or stepchild living in the home; The son or daughter (the employer) is a widow or widower, divorced, or living with a spouse who, because of a mental or physical condition, cannot care for the child or stepchild for at least 4 continuous weeks in a calendar quarter; and The child or stepchild is either under age 18 or requires the personal care of an adult for at least 4 continuous weeks in a calendar quarter due to a mental or physical condition. File late   Payments made to a parent employed by his or her child are not subject to FUTA tax, regardless of the type of services provided. File late 4. File late Employee's Social Security Number (SSN) You are required to get each employee's name and SSN and to enter them on Form W-2. File late This requirement also applies to resident and nonresident alien employees. File late You should ask your employee to show you his or her social security card. File late The employee may show the card if it is available. File late Do not accept a social security card that says “Not valid for employment. File late ” A social security number issued with this legend does not permit employment. File late You may, but are not required to, photocopy the social security card if the employee provides it. File late If you do not provide the correct employee name and SSN on Form W-2, you may owe a penalty unless you have reasonable cause. File late See Publication 1586, Reasonable Cause Regulations & Requirements for Missing and Incorrect Name/TINs, for information on the requirement to solicit the employee's SSN. File late Applying for a social security card. File late   Any employee who is legally eligible to work in the United States and does not have a social security card can get one by completing Form SS-5, Application for a Social Security Card, and submitting the necessary documentation. File late You can get Form SS-5 at SSA offices, by calling 1-800-772-1213, or from the SSA website at www. File late socialsecurity. File late gov/online/ss-5. File late html. File late The employee must complete and sign Form SS-5; it cannot be filed by the employer. File late You may be asked to supply a letter to accompany Form SS-5 if the employee has exceeded his or her yearly or lifetime limit for the number of replacement cards allowed. File late Applying for a social security number. File late   If you file Form W-2 on paper and your employee applied for an SSN but does not have one when you must file Form W-2, enter “Applied For” on the form. File late If you are filing electronically, enter all zeros (000-00-000) in the social security number field. File late When the employee receives the SSN, file Copy A of Form W-2c, Corrected Wage and Tax Statement, with the SSA to show the employee's SSN. File late Furnish copies B, C, and 2 of Form W-2c to the employee. File late Up to 25 Forms W-2c for each Form W-3c, Transmittal of Corrected Wage and Tax Statements, may now be filed per session over the Internet, with no limit on the number of sessions. File late For more information, visit the SSA's Employer W-2 Filing Instructions & Information webpage at www. File late socialsecurity. File late gov/employer. File late Advise your employee to correct the SSN on his or her original Form W-2. File late Correctly record the employee's name and SSN. File late   Record the name and number of each employee as they are shown on the employee's social security card. File late If the employee's name is not correct as shown on the card (for example, because of marriage or divorce), the employee should request a corrected card from the SSA. File late Continue to report the employee's wages under the old name until the employee shows you an updated social security card with the new name. File late If the SSA issues the employee a replacement card after a name change, or a new card with a different social security number after a change in alien work status, file a Form W-2c to correct the name/SSN reported for the most recently filed Form W-2. File late It is not necessary to correct other years if the previous name and number were used for years before the most recent Form W-2. File late IRS individual taxpayer identification numbers (ITINs) for aliens. File late   Do not accept an ITIN in place of an SSN for employee identification or for work. File late An ITIN is only available to resident and nonresident aliens who are not eligible for U. File late S. File late employment and need identification for other tax purposes. File late You can identify an ITIN because it is a nine-digit number, beginning with the number “9” with either a “7” or “8” as the fourth digit and is formatted like an SSN (for example, 9NN-7N-NNNN). File late    An individual with an ITIN who later becomes eligible to work in the United States must obtain an SSN. File late If the individual is currently eligible to work in the United States, instruct the individual to apply for an SSN and follow the instructions under Applying for a social security number, earlier. File late Do not use an ITIN in place of an SSN on Form W-2. File late Verification of social security numbers. File late   Employers and authorized reporting agents can use the Social Security Number Verification Service (SSNVS) to instantly verify up to 10 names and SSNs (per screen) at a time, or submit an electronic file of up to 250,000 names and SSNs and usually receive the results the next business day. File late Visit www. File late socialsecurity. File late gov/employer/ssnv. File late htm for more information. File late Registering for SSNVS. File late   You must register online and receive authorization from your employer to use SSNVS. File late To register, visit SSA's website at www. File late ssa. File late gov/employer and click on the Business Services Online link. File late Follow the registration instructions to obtain a user identification (ID) and password. File late You will need to provide the following information about yourself and your company. File late Name. File late SSN. File late Date of birth. File late Type of employer. File late EIN. File late Company name, address, and telephone number. File late Email address. File late   When you have completed the online registration process, SSA will mail a one-time activation code to your employer. File late You must enter the activation code online to use SSNVS. File late 5. File late Wages and Other Compensation Wages subject to federal employment taxes generally include all pay you give to an employee for services performed. File late The pay may be in cash or in other forms. File late It includes salaries, vacation allowances, bonuses, commissions, and fringe benefits. File late It does not matter how you measure or make the payments. File late Amounts an employer pays as a bonus for signing or ratifying a contract in connection with the establishment of an employer-employee relationship and an amount paid to an employee for cancellation of an employment contract and relinquishment of contract rights are wages subject to social security, Medicare, and FUTA taxes and income tax withholding. File late Also, compensation paid to a former employee for services performed while still employed is wages subject to employment taxes. File late More information. File late   See section 6 for a discussion of tips and section 7 for a discussion of supplemental wages. File late Also, see section 15 for exceptions to the general rules for wages. File late Publication 15-A provides additional information on wages, including nonqualified deferred compensation, and other compensation. File late Publication 15-B provides information on other forms of compensation, including: Accident and health benefits, Achievement awards, Adoption assistance, Athletic facilities, De minimis (minimal) benefits, Dependent care assistance, Educational assistance, Employee discounts, Employee stock options, Employer-provided cell phones, Group-term life insurance coverage, Health Savings Accounts, Lodging on your business premises, Meals, Moving expense reimbursements, No-additional-cost services, Retirement planning services, Transportation (commuting) benefits, Tuition reduction, and Working condition benefits. File late Employee business expense reimbursements. File late   A reimbursement or allowance arrangement is a system by which you pay the advances, reimbursements, and charges for your employees' business expenses. File late How you report a reimbursement or allowance amount depends on whether you have an accountable or a nonaccountable plan. File late If a single payment includes both wages and an expense reimbursement, you must specify the amount of the reimbursement. File late   These rules apply to all ordinary and necessary employee business expenses that would otherwise qualify for a deduction by the employee. File late Accountable plan. File late   To be an accountable plan, your reimbursement or allowance arrangement must require your employees to meet all three of the following rules. File late They must have paid or incurred deductible expenses while performing services as your employees. File late The reimbursement or advance must be paid for the expense and must not be an amount that would have otherwise been paid by the employee. File late They must substantiate these expenses to you within a reasonable period of time. File late They must return any amounts in excess of substantiated expenses within a reasonable period of time. File late   Amounts paid under an accountable plan are not wages and are not subject to income, social security, Medicare, and FUTA taxes. File late   If the expenses covered by this arrangement are not substantiated (or amounts in excess of substantiated expenses are not returned within a reasonable period of time), the amount paid under the arrangement in excess of the substantiated expenses is treated as paid under a nonaccountable plan. File late This amount is subject to income, social security, Medicare, and FUTA taxes for the first payroll period following the end of the reasonable period of time. File late   A reasonable period of time depends on the facts and circumstances. File late Generally, it is considered reasonable if your employees receive their advance within 30 days of the time they incur the expenses, adequately account for the expenses within 60 days after the expenses were paid or incurred, and return any amounts in excess of expenses within 120 days after the expenses were paid or incurred. File late Also, it is considered reasonable if you give your employees a periodic statement (at least quarterly) that asks them to either return or adequately account for outstanding amounts and they do so within 120 days. File late Nonaccountable plan. File late   Payments to your employee for travel and other necessary expenses of your business under a nonaccountable plan are wages and are treated as supplemental wages and subject to income, social security, Medicare, and FUTA taxes. File late Your payments are treated as paid under a nonaccountable plan if: Your employee is not required to or does not substantiate timely those expenses to you with receipts or other documentation, You advance an amount to your employee for business expenses and your employee is not required to or does not return timely any amount he or she does not use for business expenses, You advance or pay an amount to your employee regardless of whether you reasonably expect the employee to have business expenses related to your business, or You pay an amount as a reimbursement you would have otherwise paid as wages. File late   See section 7 for more information on supplemental wages. File late Per diem or other fixed allowance. File late   You may reimburse your employees by travel days, miles, or some other fixed allowance under the applicable revenue procedure. File late In these cases, your employee is considered to have accounted to you if your reimbursement does not exceed rates established by the Federal Government. File late The 2013 standard mileage rate for auto expenses was 56. File late 5 cents per mile. File late The rate for 2014 is 56 cents per mile. File late   The government per diem rates for meals and lodging in the continental United States are listed in Publication 1542, Per Diem Rates. File late Other than the amount of these expenses, your employees' business expenses must be substantiated (for example, the business purpose of the travel or the number of business miles driven). File late   If the per diem or allowance paid exceeds the amounts substantiated, you must report the excess amount as wages. File late This excess amount is subject to income tax withholding and payment of social security, Medicare, and FUTA taxes. File late Show the amount equal to the substantiated amount (for example, the nontaxable portion) in box 12 of Form W-2 using code “L. File late ” Wages not paid in money. File late   If in the course of your trade or business you pay your employees in a medium that is neither cash nor a readily negotiable instrument, such as a check, you are said to pay them “in kind. File late ” Payments in kind may be in the form of goods, lodging, food, clothing, or services. File late Generally, the fair market value of such payments at the time they are provided is subject to federal income tax withholding and social security, Medicare, and FUTA taxes. File late   However, noncash payments for household work, agricultural labor, and service not in the employer's trade or business are exempt from social security, Medicare, and FUTA taxes. File late Withhold income tax on these payments only if you and the employee agree to do so. File late Nonetheless, noncash payments for agricultural labor, such as commodity wages, are treated as cash payments subject to employment taxes if the substance of the transaction is a cash payment. File late Moving expenses. File late   Reimbursed and employer-paid qualified moving expenses (those that would otherwise be deductible by the employee) paid under an accountable plan are not includible in an employee's income unless you have knowledge the employee deducted the expenses in a prior year. File late Reimbursed and employer-paid nonqualified moving expenses are includible in income and are subject to employment taxes and income tax withholding. File late For more information on moving expenses, see Publication 521, Moving Expenses. File late Meals and lodging. File late   The value of meals is not taxable income and is not subject to income tax withholding and social security, Medicare, and FUTA taxes if the meals are furnished for the employer's convenience and on the employer's premises. File late The value of lodging is not subject to income tax withholding and social security, Medicare, and FUTA taxes if the lodging is furnished for the employer's convenience, on the employer's premises, and as a condition of employment. File late    “For the convenience of the employer” means you have a substantial business reason for providing the meals and lodging other than to provide additional compensation to the employee. File late For example, meals you provide at the place of work so that an employee is available for emergencies during his or her lunch period are generally considered to be for your convenience. File late   However, whether meals or lodging are provided for the convenience of the employer depends on all of the facts and circumstances. File late A written statement that the meals or lodging are for your convenience is not sufficient. File late 50% test. File late   If over 50% of the employees who are provided meals on an employer's business premises receive these meals for the convenience of the employer, all meals provided on the premises are treated as furnished for the convenience of the employer. File late If this 50% test is met, the value of the meals is excludable from income for all employees and is not subject to federal income tax withholding or employment taxes. File late For more information, see Publication 15-B. File late Health insurance plans. File late   If you pay the cost of an accident or health insurance plan for your employees, including an employee's spouse and dependents, your payments are not wages and are not subject to social security, Medicare, and FUTA taxes, or federal income tax withholding. File late Generally, this exclusion also applies to qualified long-term care insurance contracts. File late However, for income tax withholding, the value of health insurance benefits must be included in the wages of S corporation employees who own more than 2% of the S corporation (2% shareholders). File late For social security, Medicare, and FUTA taxes, the health insurance benefits are excluded from the wages only for employees and their dependents or for a class or classes of employees and their dependents. File late See Announcement 92-16 for more information. File late You can find Announcement 92-16 on page 53 of Internal Revenue Bulletin 1992-5. File late Health Savings Accounts and medical savings accounts. File late   Your contributions to an employee's Health Savings Account (HSA) or Archer medical savings account (MSA) are not subject to social security, Medicare, or FUTA taxes, or federal income tax withholding if it is reasonable to believe at the time of payment of the contributions they will be excludable from the income of the employee. File late To the extent it is not reasonable to believe they will be excludable, your contributions are subject to these taxes. File late Employee contributions to their HSAs or MSAs through a payroll deduction plan must be included in wages and are subject to social security, Medicare, and FUTA taxes and income tax withholding. File late However, HSA contributions made under a salary reduction arrangement in a section 125 cafeteria plan are not wages and are not subject to employment taxes or withholding. File late For more information, see the Instructions for Form 8889, Health Savings Accounts (HSAs). File late Medical care reimbursements. File late   Generally, medical care reimbursements paid for an employee under an employer's self-insured medical reimbursement plan are not wages and are not subject to social security, Medicare, and FUTA taxes, or income tax withholding. File late See Publication 15-B for an exception for highly compensated employees. File late Differential wage payments. File late   Differential wage payments are any payments made by an employer to an individual for a period during which the individual is performing service in the uniformed services while on active duty for a period of more than 30 days and represent all or a portion of the wages the individual would have received from the employer if the individual were performing services for the employer. File late   Differential wage payments are wages for income tax withholding, but are not subject to social security, Medicare, or FUTA taxes. File late Employers should report differential wage payments in box 1 of Form W-2. File late For more information about the tax treatment of differential wage payments, visit IRS. File late gov and enter “employees in a combat zone” in the search box. File late Fringe benefits. File late   You generally must include fringe benefits in an employee's gross income (but see Nontaxable fringe benefits next). File late The benefits are subject to income tax withholding and employment taxes. File late Fringe benefits include cars you provide, flights on aircraft you provide, free or discounted commercial flights, vacations, discounts on property or services, memberships in country clubs or other social clubs, and tickets to entertainment or sporting events. File late In general, the amount you must include is the amount by which the fair market value of the benefits is more than the sum of what the employee paid for it plus any amount the law excludes. File late There are other special rules you and your employees may use to value certain fringe benefits. File late See Publication 15-B for more information. File late Nontaxable fringe benefits. File late   Some fringe benefits are not taxable (or are minimally taxable) if certain conditions are met. File late See Publication 15-B for details. File late The following are some examples of nontaxable fringe benefits. File late Services provided to your employees at no additional cost to you. File late Qualified employee discounts. File late Working condition fringes that are property or services the employee could deduct as a business expense if he or she had paid for it. File late Examples include a company car for business use and subscriptions to business magazines. File late Certain minimal value fringes (including an occasional cab ride when an employee must work overtime and meals you provide at eating places you run for your employees if the meals are not furnished at below cost). File late Qualified transportation fringes subject to specified conditions and dollar limitations (including transportation in a commuter highway vehicle, any transit pass, and qualified parking). File late Qualified moving expense reimbursement. File late See Moving expenses , earlier in this section, for details. File late The use of on-premises athletic facilities, if substantially all of the use is by employees, their spouses, and their dependent children. File late Qualified tuition reduction an educational organization provides to its employees for education. File late For more information, see Publication 970, Tax Benefits for Education. File late Employer-provided cell phones provided primarily for a noncompensatory business reason. File late   However, do not exclude the following fringe benefits from the income of highly compensated employees unless the benefit is available to other employees on a nondiscriminatory basis. File late No-additional-cost services. File late Qualified employee discounts. File late Meals provided at an employer operated eating facility. File late Reduced tuition for education. File late  For more information, including the definition of a highly compensated employee, see Publication 15-B. File late When fringe benefits are treated as paid. File late   You may choose to treat certain noncash fringe benefits as paid by the pay period, by the quarter, or on any other basis you choose as long as you treat the benefits as paid at least once a year. File late You do not have to make a formal choice of payment dates or notify the IRS of the dates you choose. File late You do not have to make this choice for all employees. File late You may change methods as often as you like, as long as you treat all benefits provided in a calendar year as paid by December 31 of the calendar year. File late See Publication 15-B for more information, including a discussion of the special accounting rule for fringe benefits provided during November and December. File late Valuation of fringe benefits. File late   Generally, you must determine the value of fringe benefits no later than January 31 of the next year. File late Before January 31, you may reasonably estimate the value of the fringe benefits for purposes of withholding and depositing on time. File late Withholding on fringe benefits. File late   You may add the value of fringe benefits to regular wages for a payroll period and figure withholding taxes on the total, or you may withhold federal income tax on the value of the fringe benefits at the optional flat 25% supplemental wage rate. File late However, see Withholding on supplemental wages when an employee receives more than $1 million of supplemental wages during the calendar year in section 7. File late   You may choose not to withhold income tax on the value of an employee's personal use of a vehicle you provide. File late You must, however, withhold social security and Medicare taxes on the use of the vehicle. File late See Publication 15-B for more information on this election. File late Depositing taxes on fringe benefits. File late   Once you choose when fringe benefits are paid, you must deposit taxes in the same deposit period you treat the fringe benefits as paid. File late To avoid a penalty, deposit the taxes following the general deposit rules for that deposit period. File late   If you determine by January 31 you overestimated the value of a fringe benefit at the time you withheld and deposited for it, you may claim a refund for the overpayment or have it applied to your next employment tax return. File late See Valuation of fringe benefits , earlier. File late If you underestimated the value and deposited too little, you may be subject to a failure-to-deposit penalty. File late See section 11 for information on deposit penalties. File late   If you deposited the required amount of taxes but withheld a lesser amount from the employee, you can recover from the employee the social security, Medicare, or income taxes you deposited on his or her behalf, and included in the employee's Form W-2. File late However, you must recover the income taxes before April 1 of the following year. File late Sick pay. File late   In general, sick pay is any amount you pay under a plan to an employee who is unable to work because of sickness or injury. File late These amounts are sometimes paid by a third party, such as an insurance company or an employees' trust. File late In either case, these payments are subject to social security, Medicare, and FUTA taxes. File late Sick pay becomes exempt from these taxes after the end of 6 calendar months after the calendar month the employee last worked for the employer. File late The payments are always subject to federal income tax. File late See Publication 15-A for more information. File late 6. File late Tips Tips your employee receives from customers are generally subject to withholding. File late Your employee must report cash tips to you by the 10th of the month after the month the tips are received. File late The report should include tips you paid over to the employee for charge customers, tips the employee received directly from customers, and tips received from other employees under any tip-sharing arrangement. File late Both directly and indirectly tipped employees must report tips to you. File late No report is required for months when tips are less than $20. File late Your employee reports the tips on Form 4070, Employee's Report of Tips to Employer, or on a similar statement. File late The statement must be signed by the employee and must include: The employee's name, address, and SSN, Your name and address, The month or period the report covers, and The total of tips received during the month or period. File late Both Forms 4070 and 4070-A, Employee's Daily Record of Tips, are included in Publication 1244, Employee's Daily Record of Tips and Report to Employer. File late You are permitted to establish a system for electronic tip reporting by employees. File late See Regulations section 31. File late 6053-1(d). File late Collecting taxes on tips. File late   You must collect income tax, employee social security tax, and employee Medicare tax on the employee's tips. File late The withholding rules for withholding an employee's share of Medicare tax on tips also apply to withholding the Additional Medicare Tax once wages and tips exceed $200,000 in the calendar year. File late If an employee reports to you in writing $20 or more of tips in a month, the tips are also subject to FUTA tax. File late   You can collect these taxes from the employee's wages or from other funds he or she makes available. File late See Tips treated as supplemental wages in section 7 for more information. File late Stop collecting the employee social security tax when his or her wages and tips for tax year 2014 reach $117,000; collect the income and employee Medicare taxes for the whole year on all wages and tips. File late You are responsible for the employer social security tax on wages and tips until the wages (including tips) reach the limit. File late You are responsible for the employer Medicare tax for the whole year on all wages and tips. File late File Form 941 or Form 944 to report withholding and employment taxes on tips. File late Ordering rule. File late   If, by the 10th of the month after the month for which you received an employee's report on tips, you do not have enough employee funds available to deduct the employee tax, you no longer have to collect it. File late If there are not enough funds available, withhold taxes in the following order. File late Withhold on regular wages and other compensation. File late Withhold social security and Medicare taxes on tips. File late Withhold income tax on tips. File late Reporting tips. File late   Report tips and any collected and uncollected social security and Medicare taxes on Form W-2 and on Form 941, lines 5b, 5c, and 5d (Form 944, lines 4b, 4c, and 4d). File late Report an adjustment on Form 941, line 9 (Form 944, line 6), for the uncollected social security and Medicare taxes. File late Enter the amount of uncollected social security tax and Medicare tax on Form W-2, box 12, with codes “A” and “B. File late ” Do not include any uncollected Additional Medicare Tax in box 12 of Form W-2. File late See section 13 and the General Instructions for Forms W-2 and W-3. File late   Revenue Ruling 2012-18 provides guidance for employers regarding social security and Medicare taxes imposed on tips, including information on the reporting of the employer share of social security and Medicare taxes under section 3121(q), the difference between tips and service charges, and the section 45B credit. File late See Revenue Ruling 2012-18, 2012-26 I. File late R. File late B. File late 1032, available at www. File late irs. File late gov/irb/2012-26_IRB/ar07. File late html. File late Allocated tips. File late   If you operate a large food or beverage establishment, you must report allocated tips under certain circumstances. File late However, do not withhold income, social security, or Medicare taxes on allocated tips. File late   A large food or beverage establishment is one that provides food or beverages for consumption on the premises, where tipping is customary, and where there were normally more than 10 employees on a typical business day during the preceding year. File late   The tips may be allocated by one of three methods—hours worked, gross receipts, or good faith agreement. File late For information about these allocation methods, including the requirement to file Forms 8027 electronically if 250 or more forms are filed, see the Instructions for Form 8027. File late For information on filing Form 8027 electronically with the IRS, see Publication 1239. File late Tip Rate Determination and Education Program. File late   Employers may participate in the Tip Rate Determination and Education Program. File late The program primarily consists of two voluntary agreements developed to improve tip income reporting by helping taxpayers to understand and meet their tip reporting responsibilities. File late The two agreements are the Tip Rate Determination Agreement (TRDA) and the Tip Reporting Alternative Commitment (TRAC). File late A tip agreement, the Gaming Industry Tip Compliance Agreement (GITCA), is available for the gaming (casino) industry. File late To get more information about TRDA and TRAC agreements, see Publication 3144, Tips on Tips. File late Additionally, visit IRS. File late gov and enter “MSU tips” in the search box to get more information about GITCA, TRDA, or TRAC agreements. File late 7. File late Supplemental Wages Supplemental wages are wage payments to an employee that are not regular wages. File late They include, but are not limited to, bonuses, commissions, overtime pay, payments for accumulated sick leave, severance pay, awards, prizes, back pay, retroactive pay increases, and payments for nondeductible moving expenses. File late Other payments subject to the supplemental wage rules include taxable fringe benefits and expense allowances paid under a nonaccountable plan. File late How you withhold on supplemental wages depends on whether the supplemental payment is identified as a separate payment from regular wages. File late See Regulations section 31. File late 3402(g)-1 for additional guidance for wages paid after January 1, 2007. File late Also see Revenue Ruling 2008-29, 2008-24 I. File late R. File late B. File late 1149, available at www. File late irs. File late gov/irb/2008-24_IRB/ar08. File late html. File late Withholding on supplemental wages when an employee receives more than $1 million of supplemental wages from you during the calendar year. File late   Special rules apply to the extent supplemental wages paid to any one employee during the calendar year exceed $1 million. File late If a supplemental wage payment, together with other supplemental wage payments made to the employee during the calendar year, exceeds $1 million, the excess is subject to withholding at 39. File late 6% (or the highest rate of income tax for the year). File late Withhold using the 39. File late 6% rate without regard to the employee's Form W-4. File late In determining supplemental wages paid to the employee during the year, include payments from all businesses under common control. File late For more information, see Treasury Decision 9276, 2006-37 I. File late R. File late B. File late 423, available at www. File late irs. File late gov/irb/2006-37_IRB/ar09. File late html. File late Withholding on supplemental wage payments to an employee who does not receive $1 million of supplemental wages during the calendar year. File late   If the supplemental wages paid to the employee during the calendar year are less than or equal to $1 million, the following rules apply in determining the amount of income tax to be withheld. File late Supplemental wages combined with regular wages. File late   If you pay supplemental wages with regular wages but do not specify the amount of each, withhold federal income tax as if the total were a single payment for a regular payroll period. File late Supplemental wages identified separately from regular wages. File late   If you pay supplemental wages separately (or combine them in a single payment and specify the amount of each), the federal income tax withholding method depends partly on whether you withhold income tax from your employee's regular wages. File late If you withheld income tax from an employee's regular wages in the current or immediately preceding calendar year, you can use one of the following methods for the supplemental wages. File late Withhold a flat 25% (no other percentage allowed). File late If the supplemental wages are paid concurrently with regular wages, add the supplemental wages to the concurrently paid regular wages. File late If there are no concurrently paid regular wages, add the supplemental wages to alternatively, either the regular wages paid or to be paid for the current payroll period or the regular wages paid for the preceding payroll period. File late Figure the income tax withholding as if the total of the regular wages and supplemental wages is a single payment. File late Subtract the tax withheld from the regular wages. File late Withhold the remaining tax from the supplemental wages. File late If there were other payments of supplemental wages paid during the payroll period made before the current payment of supplemental wages, aggregate all the payments of supplemental wages paid during the payroll period with the regular wages paid during the payroll period, calculate the tax on the total, subtract the tax already withheld from the regular wages and the previous supplemental wage payments, and withhold the remaining tax. File late If you did not withhold income tax from the employee's regular wages in the current or immediately preceding calendar year, use method 1-b. File late This would occur, for example, when the value of the employee's withholding allowances claimed on Form W-4 is more than the wages. File late Regardless of the method you use to withhold income tax on supplemental wages, they are subject to social security, Medicare, and FUTA taxes. File late Example 1. File late You pay John Peters a base salary on the 1st of each month. File late He is single and claims one withholding allowance. File late In January he is paid $1,000. File late Using the wage bracket tables, you withhold $50 from this amount. File late In February, he receives salary of $1,000 plus a commission of $2,000, which you combine with regular wages and do not separately identify. File late You figure the withholding based on the total of $3,000. File late The correct withholding from the tables is $338. File late Example 2. File late You pay Sharon Warren a base salary on the 1st of each month. File late She is single and claims one allowance. File late Her May 1 pay is $2,000. File late Using the wage bracket tables, you withhold $188. File late On May 14 she receives a bonus of $1,000. File late Electing to use supplemental wage withholding method 1-b, you: Add the bonus amount to the amount of wages from the most recent base salary pay date (May 1) ($2,000 + $1,000 = $3,000). File late Determine the amount of withholding on the combined $3,000 amount to be $338 using the wage bracket tables. File late Subtract the amount withheld from wages on the most recent base salary pay date (May 1) from the combined withholding amount ($338 – $188 = $150). File late Withhold $150 from the bonus payment. File late Example 3. File late The facts are the same as in Example 2, except you elect to use the flat rate method of withholding on the bonus. File late You withhold 25% of $1,000, or $250, from Sharon's bonus payment. File late Example 4. File late The facts are the same as in Example 2, except you elect to pay Sharon a second bonus of $2,000 on May 28. File late Using supplemental wage withholding method 1-b, you: Add the first and second bonus amounts to the amount of wages from the most recent base salary pay date (May 1) ($2,000 + $1,000 + $2,000 = $5,000). File late Determine the amount of withholding on the combined $5,000 amount to be $781 using the wage bracket tables. File late Subtract the amounts withheld from wages on the most recent base salary pay date (May 1) and the amounts withheld from the first bonus payment from the combined withholding amount ($781 – $188 – $150 = $443). File late Withhold $443 from the second bonus payment. File late Tips treated as supplemental wages. File late   Withhold income tax on tips from wages earned by the employee or from other funds the employee makes available. File late If an employee receives regular wages and reports tips, figure income tax withholding as if the tips were supplemental wages. File late If you have not withheld income tax from the regular wages, add the tips to the regular wages. File late Then withhold income tax on the total. File late If you withheld income tax from the regular wages, you can withhold on the tips by method 1-a or 1-b discussed earlier in this section under Supplemental wages identified separately from regular wages. File late Vacation pay. File late   Vacation pay is subject to withholding as if it were a regular wage payment. File late When vacation pay is in addition to regular wages for the vacation period, treat it as a supplemental wage payment. File late If the vacation pay is for a time longer than your usual payroll period, spread it over the pay periods for which you pay it. File late 8. File late Payroll Period Your payroll period is a period of service for which you usually pay wages. File late When you have a regular payroll period, withhold income tax for that time period even if your employee does not work the full period. File late No regular payroll period. File late   When you do not have a regular payroll period, withhold the tax as if you paid wages for a daily or miscellaneous payroll period. File late Figure the number of days (including Sundays and holidays) in the period covered by the wage payment. File late If the wages are unrelated to a specific length of time (for example, commissions paid on completion of a sale), count back the number of days from the payment period to the latest of: The last wage payment made during the same calendar year, The date employment began, if during the same calendar year, or January 1 of the same year. File late Employee paid for period less than 1 week. File late   When you pay an employee for a period of less than one week, and the employee signs a statement under penalties of perjury indicating he or she is not working for any other employer during the same week for wages subject to withholding, figure withholding based on a weekly payroll period. File late If the employee later begins to work for another employer for wages subject to withholding, the employee must notify you within 10 days. File late You then figure withholding based on the daily or miscellaneous period. File late 9. File late Withholding From Employees' Wages Income Tax Withholding Using Form W-4 to figure withholding. File late   To know how much federal income tax to withhold from employees' wages, you should have a Form W-4 on file for each employee. File late Encourage your employees to file an updated Form W-4 for 2014, especially if they owed taxes or received a large refund when filing their 2013 tax return. File late Advise your employees to use the IRS Withholding Calculator on the IRS website at www. File late irs. File late gov/individuals for help in determining how many withholding allowances to claim on their Forms W-4. File late   Ask all new employees to give you a signed Form W-4 when they start work. File late Make the form effective with the first wage payment. File late If a new employee does not give you a completed Form W-4, withhold income tax as if he or she is single, with no withholding allowances. File late Form in Spanish. File late   You can provide Formulario W-4(SP), Certificado de Exención de Retenciones del Empleado, in place of Form W-4, to your Spanish-speaking employees. File late For more information, see Publicación 17(SP), El Impuesto Federal sobre los Ingresos (Para Personas Físicas). File late The rules discussed in this section that apply to Form W-4 also apply to Formulario W-4(SP). File late Electronic system to receive Form W-4. File late   You may establish a system to electronically receive Forms W-4 from your employees. File late See Regulations section 31. File late 3402(f)(5)-1(c) for more information. File late Effective date of Form W-4. File late   A Form W-4 remains in effect until the employee gives you a new one. File late When you receive a new Form W-4 from an employee, do not adjust withholding for pay periods before the effective date of the new form. File late If an employee gives you a Form W-4 that replaces an existing Form W-4, begin withholding no later than the start of the first payroll period ending on or after the 30th day from the date when you received the replacement Form W-4. File late For exceptions, see Exemption from federal income tax withholding , IRS review of requested Forms W-4 , and Invalid Forms W-4 , later in this section. File late A Form W-4 that makes a change for the next calendar year will not take effect in the current calendar year. File late Successor employer. File late   If you are a successor employer (see Successor employer , later in this section), secure new Forms W-4 from the transferred employees unless the “Alternative Procedure” in section 5 of Revenue Procedure 2004-53 applies. File late See Revenue Procedure 2004-53, 2004-34 I. File late R. File late B. File late 320, available at www. File late irs. File late gov/irb/2004-34_IRB/ar13. File late html. File late Completing Form W-4. File late   The amount of any federal income tax withholding must be based on marital status and withholding allowances. File late Your employees may not base their withholding amounts on a fixed dollar amount or percentage. File late However, an employee may specify a dollar amount to be withheld in addition to the amount of withholding based on filing status and withholding allowances claimed on Form W-4. File late Employees may claim fewer withholding allowances than they are entitled to claim. File late They may wish to claim fewer allowances to ensure they have enough withholding or to offset the tax on other sources of taxable income not subject to withholding. File late See Publication 505, Tax Withholding and Estimated Tax, for more information about completing Form W-4. File late Along with Form W-4, you may wish to order Publication 505 for use by your employees. File late Do not accept any withholding or estimated tax payments from your employees in addition to withholding based on their Form W-4. File late If they require additional withholding, they should submit a new Form W-4 and, if necessary, pay estimated tax by filing Form 1040-ES, Estimated Tax for Individuals, or by using the Electronic Federal Tax Payment System (EFTPS) to make estimated tax payments. File late Exemption from federal income tax withholding. File late   Generally, an employee may claim exemption from federal income tax withholding because he or she had no income tax liability last year and expects none this year. File late See the Form W-4 instructions for more information. File late However, the wages are still subject to social security and Medicare taxes. File late See also Invalid Forms W-4 , later in this section. File late   A Form W-4 claiming exemption from withholding is effective when it is filed with the employer and only for that calendar year. File late To continue to be exempt from withholding in the next calendar year, an employee must give you a new Form W-4 by February 15. File late If the employee does not give you a new Form W-4 by February 15, begin withholding based on the last Form W-4 for the employee that did not claim an exemption from withholding or, if one was not filed, then withhold tax as if he or she is single with zero withholding allowances. File late If the employee provides a new Form W-4 claiming exemption from withholding on February 16 or later, you may apply it to future wages but do not refund any taxes already withheld. File late Withholding income taxes on the wages of nonresident alien employees. File late   In general, you must withhold federal income taxes on the wages of nonresident alien employees. File late However, see Publication 515, Withholding of Tax on Nonresident Aliens and Foreign Entities, for exceptions to this general rule. File late Also see section 3 of Publication 51 (Circular A), Agricultural Employer's Tax Guide, for guidance on H-2A visa workers. File late Withholding adjustment for nonresident alien employees. File late   For 2014, apply the procedure discussed next to figure the amount of income tax to withhold from the wages of nonresident alien employees performing services within the United States. File late Nonresident alien students from India and business apprentices from India are not subject to this procedure. File late Instructions. File late   To figure how much income tax to withhold from the wages paid to a nonresident alien employee performing services in the United States, use the following steps. File late Step 1. File late   Add to the wages paid to the nonresident alien employee for the payroll period the amount shown in the chart below for the applicable payroll period. File late    Amount to Add to Nonresident Alien Employee's Wages for Calculating Income Tax Withholding Only   Payroll Period Add Additional     Weekly $ 43. File late 30     Biweekly 86. File late 50     Semimonthly 93. File late 80     Monthly 187. File late 50     Quarterly 562. File late 50     Semiannually 1,125. File late 00     Annually 2,250. File late 00     Daily or Miscellaneous (each day of the payroll period) 8. File late 70   Step 2. File late   Use the amount figured in Step 1 and the number of withholding allowances claimed (generally limited to one allowance) to figure income tax withholding. File late Determine the value of withholding allowances by multiplying the number of withholding allowances claimed by the appropriate amount from Table 5. File late Percentage Method—2014 Amount for One Withholding Allowance shown on page 41. File late If you are using the Percentage Method Tables for Income Tax Withholding, provided on pages 43–44, reduce the amount figured in Step 1 by the value of withholding allowances and use that reduced amount to figure the income tax withholding. File late If you are using the Wage Bracket Method for Income Tax Withholding, provided on pages 45–64, use the amount figured in Step 1 and the number of withholding allowances to figure income tax withholding. File late The amounts from the chart above are added to wages solely for calculating income tax withholding on the wages of the nonresident alien employee. File late The amounts from the chart should not be included in any box on the employee's Form W-2 and do not increase the income tax liability of the employee. File late Also, the amounts from the chart do not increase the social security tax or Medicare tax liability of the employer or the employee, or the FUTA tax liability of the employer. File late This procedure only applies to nonresident alien employees who have wages subject to income tax withholding. File late Example. File late An employer using the percentage method of withholding pays wages of $500 for a biweekly payroll period to a married nonresident alien employee. File late The nonresident alien has properly completed Form W-4, entering marital status as “single” with one withholding allowance and indicating status as a nonresident alien on Form W-4, line 6 (see Nonresident alien employee's Form W-4 , later in this section). File late The employer determines the wages to be used in the withholding tables by adding to the $500 amount of wages paid the amount of $86. File late 50 from the chart under Step 1 ($586. File late 50 total). File late The employer then applies the applicable tables to determine the income tax withholding for nonresident aliens (see Step 2 ). File late Reminder: If you use the Percentage Method Tables for Income Tax Withholding, reduce the amount figured in Step 1 by the value of withholding allowances and use that reduced amount to figure income tax withholding. File late The $86. File late 50 added to wages for calculating income tax withholding is not reported on Form W-2, and does not increase the income tax liability of the employee. File late Also, the $86. File late 50 added to wages does not affect the social security tax or Medicare tax liability of the employer or the employee, or the FUTA tax liability of the employer. File late Supplemental wage payment. File late   This procedure for determining the amount of income tax withholding does not apply to a supplemental wage payment (see section 7) if the 39. File late 6% mandatory flat rate withholding applies or if the 25% optional flat rate withholding is being used to calculate income tax withholding on the supplemental wage payment. File late Nonresident alien employee's Form W-4. File late   When completing Forms W-4, nonresident aliens are required to: Not claim exemption from income tax withholding, Request withholding as if they are single, regardless of their actual marital status, Claim only one allowance (if the nonresident alien is a resident of Canada, Mexico, or South Korea, or a student or business apprentice from India, he or she may claim more than one allowance), and Write “Nonresident Alien” or “NRA” above the dotted line on line 6 of Form W-4. File late   If you maintain an electronic Form W-4 system, you should provide a field for nonresident aliens to enter nonresident alien status in lieu of writing “Nonresident Alien” or “NRA” above the dotted line on line 6. File late A nonresident alien employee may request additional withholding at his or her option for other purposes, although such additions should not be necessary for withholding to cover federal income tax liability related to employment. File late Form 8233. File late   If a nonresident alien employee claims a tax treaty exemption from withholding, the employee must submit Form 8233, Exemption From Withholding on Compensation for Independent (and Certain Dependent) Personal Services of a Nonresident Alien Individual, with respect to the income exempt under the treaty, instead of Form W-4. File late See Publication 515 for details. File late IRS review of requested Forms W-4. File late   When requested by the IRS, you must make original Forms W-4 available for inspection by an IRS employee. File late You may also be directed to send certain Forms W-4 to the IRS. File late You may receive a notice from the IRS requiring you to submit a copy of Form W-4 for one or more of your named employees. File late Send the requested copy or copies of Form W-4 to the IRS at the address provided and in the manner directed by the notice. File late The IRS may also require you to submit copies of Form W-4 to the IRS as directed by Treasury Decision 9337, 2007-35 I. File late R. File late B. File late 455, which is available at www. File late irs. File late gov/irb/2007-35_IRB/ar10. File late html. File late When we refer to Form W-4, the same rules apply to Formulario W-4(SP), its Spanish translation. File late After submitting a copy of a requested Form W-4 to the IRS, continue to withhold federal income tax based on that Form W-4 if it is valid (see Invalid Forms W-4 , later in this section). File late However, if the IRS later notifies you in writing the employee is not entitled to claim exemption from withholding or a claimed number of withholding allowances, withhold federal income tax based on the effective date, marital status, and maximum number of withholding allowances specified in the IRS notice (commonly referred to as a "lock-in letter