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Filing 1040x Instructions

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Filing 1040x Instructions

Filing 1040x instructions Part Two -   Excise Taxes Other Than Fuel Taxes Table of Contents 3. Filing 1040x instructions   Environmental TaxesOil Spill Liability Tax ODCs Imported Taxable Products Floor Stocks Tax 4. Filing 1040x instructions   Communications and Air Transportation TaxesUncollected Tax Report Communications TaxLocal-only service. Filing 1040x instructions Private communication service. Filing 1040x instructions Exemptions Credits or Refunds Air Transportation TaxesTransportation of Persons by Air International Air Travel Facilities Transportation of Property by Air Special Rules on Transportation Taxes 5. Filing 1040x instructions   Manufacturers TaxesImporter. Filing 1040x instructions Use considered sale. Filing 1040x instructions Lease considered sale. Filing 1040x instructions Bonus goods. Filing 1040x instructions Taxable Event ExemptionsRequirements for Exempt Sales Credits or Refunds Sport Fishing EquipmentRelated person. Filing 1040x instructions Bows, Quivers, Broadheads, and Points Arrow ShaftsExemption for certain wooden arrows. Filing 1040x instructions CoalExported. Filing 1040x instructions Taxable TiresQualifying intercity or local bus. Filing 1040x instructions Qualifying school bus. Filing 1040x instructions Gas Guzzler TaxVehicles not subject to tax. Filing 1040x instructions Imported automobiles. Filing 1040x instructions VaccinesConditions to allowance. Filing 1040x instructions Taxable Medical Devices 6. Filing 1040x instructions   Retail Tax on Heavy Trucks, Trailers, and TractorsHighway vehicle. Filing 1040x instructions Vehicles not considered highway vehicles. Filing 1040x instructions Idling reduction device. Filing 1040x instructions Separate purchase. Filing 1040x instructions Leases. Filing 1040x instructions Exported vehicle. Filing 1040x instructions Tax on resale of tax-paid trailers and semitrailers. Filing 1040x instructions Use treated as sale. Filing 1040x instructions Sale. Filing 1040x instructions Long-term lease. Filing 1040x instructions Short-term lease. Filing 1040x instructions Related person. Filing 1040x instructions Exclusions from tax base. Filing 1040x instructions Sales not at arm's length. Filing 1040x instructions Installment sales. Filing 1040x instructions Repairs and modifications. Filing 1040x instructions Further manufacture. Filing 1040x instructions Rail trailers and rail vans. Filing 1040x instructions Parts and accessories. Filing 1040x instructions Trash containers. Filing 1040x instructions House trailers. Filing 1040x instructions Camper coaches or bodies for self-propelled mobile homes. Filing 1040x instructions Farm feed, seed, and fertilizer equipment. Filing 1040x instructions Ambulances and hearses. Filing 1040x instructions Truck-tractors. Filing 1040x instructions Concrete mixers. Filing 1040x instructions Registration requirement. Filing 1040x instructions Further manufacture. Filing 1040x instructions 7. Filing 1040x instructions   Ship Passenger Tax 8. Filing 1040x instructions   Foreign Insurance TaxesPremium. Filing 1040x instructions 9. Filing 1040x instructions   Obligations Not in Registered Form 10. Filing 1040x instructions   Indoor Tanning Services Tax 11. Filing 1040x instructions   Patient-Centered Outcomes Research Fee Prev  Up  Next   Home   More Online Publications
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Tax Relief for Victims of Severe Storms, Tornadoes, Straight-line Winds and Flooding in Kentucky

Updated 3/13/2012 to include Grayson, Larue, Ohio, Russell and Trimble counties.
Updated 3/12/2012 to include Magoffin and Wolfe counties.
Updated 3/9/2012 to include Bath, Campbell, Carroll, Grant, Martin, Montgomery and Rowan counties.

KY-2012-08, March 7, 2012

DETROIT — Victims of the severe storms, tornadoes, straight-line winds and flooding that started on Feb. 29, 2012 in parts of Kentucky may qualify for tax relief from the Internal Revenue Service.

The President has declared Bath, Campbell, Carroll, Grant, Grayson, Johnson, Kenton, Larue, Laurel, Lawrence, Magoffin, Martin, Menifee, Montgomery, Morgan, Ohio, Pendleton, Rowan, Russell, Trimble and Wolfe counties a federal disaster area. Individuals who reside or have a business in these counties may qualify for tax relief.

The declaration permits the IRS to postpone certain deadlines for taxpayers who reside or have a business in the disaster area. For instance, certain deadlines falling on or after Feb. 29, and on or before May 31, have been postponed to May 31, 2012. This includes the April 17 deadline for filing 2011 individual income tax returns, making income tax payments and making 2011 contributions to an individual retirement account (IRA).  

In addition, the IRS is waiving the failure-to-deposit penalties for employment and excise tax deposits due on or after Feb. 29, and on or before March 15, as long as the deposits are made by March 15, 2012.

If an affected taxpayer receives a penalty notice from the IRS, the taxpayer should call the telephone number on the notice to have the IRS abate any interest and any late filing or late payment penalties that would otherwise apply. Penalties or interest will be abated only for taxpayers who have an original or extended filing, payment or deposit due date, including an extended filing or payment due date, that falls within the postponement period.

The IRS automatically identifies taxpayers located in the covered disaster area and applies automatic filing and payment relief. But affected taxpayers who reside or have a business located outside the covered disaster area must call the IRS disaster hotline at 1-866-562-5227 to request this tax relief.

Covered Disaster Area

The counties listed above constitute a covered disaster area for purposes of Treas. Reg. § 301.7508A-1(d)(2) and are entitled to the relief detailed below.

Affected Taxpayers

Taxpayers considered to be affected taxpayers eligible for the postponement of time to file returns, pay taxes and perform other time-sensitive acts are those taxpayers listed in Treas. Reg. § 301.7508A-1(d)(1), and include individuals who live, and businesses whose principal place of business is located, in the covered disaster area. Taxpayers not in the covered disaster area, but whose records necessary to meet a deadline listed in Treas. Reg. § 301.7508A-1(c) are in the covered disaster area, are also entitled to relief. In addition, all relief workers affiliated with a recognized government or philanthropic organization assisting in the relief activities in the covered disaster area and any individual visiting the covered disaster area who was killed or injured as a result of the disaster are entitled to relief.

Grant of Relief

Under section 7508A, the IRS gives affected taxpayers until May 31 to file most tax returns (including individual, corporate, and estate and trust income tax returns; partnership returns, S corporation returns, and trust returns; estate, gift, and generation-skipping transfer tax returns; and employment and certain excise tax returns), or to make tax payments, including estimated tax payments, that have either an original or extended due date occurring on or after Feb. 29 and on or before May 31.

The IRS also gives affected taxpayers until May 31 to perform other time-sensitive actions described in Treas. Reg. § 301.7508A-1(c)(1) and Rev. Proc. 2007-56, 2007-34 I.R.B. 388 (Aug. 20, 2007), that are due to be performed on or after Feb. 29 and on or before May 31.

This relief also includes the filing of Form 5500 series returns, in the manner described in section 8 of Rev. Proc. 2007-56. The relief described in section 17 of Rev. Proc. 2007-56, pertaining to like-kind exchanges of property, also applies to certain taxpayers who are not otherwise affected taxpayers and may include acts required to be performed before or after the period above.

The postponement of time to file and pay does not apply to information returns in the W-2, 1098, 1099 series, or to Forms 1042-S or 8027. Penalties for failure to timely file information returns can be waived under existing procedures for reasonable cause. Likewise, the postponement does not apply to employment and excise tax deposits. The IRS, however, will abate penalties for failure to make timely employment and excise tax deposits due on or after Feb. 29 and on or before March 15 provided the taxpayer makes these deposits by March 15.

Casualty Losses

Affected taxpayers in a federally declared disaster area have the option of claiming disaster-related casualty losses on their federal income tax return for either this year or last year. Claiming the loss on an original or amended return for last year will get the taxpayer an earlier refund, but waiting to claim the loss on this year’s return could result in a greater tax saving, depending on other income factors.

Individuals may deduct personal property losses that are not covered by insurance or other reimbursements. For details, see Form 4684 and its instructions.

Affected taxpayers claiming the disaster loss on last year’s return should put the Disaster Designation “Kentucky, Severe Storms, Tornadoes, Straight-line Winds, and Flooding” at the top of the form so that the IRS can expedite the processing of the refund.

Other Relief

The IRS will waive the usual fees and expedite requests for copies of previously filed tax returns for affected taxpayers. Taxpayers should put the assigned Disaster Designation in red ink at the top of Form 4506, Request for Copy of Tax Return, or Form 4506-T, Request for Transcript of Tax Return, as appropriate, and submit it to the IRS.

Affected taxpayers who are contacted by the IRS on a collection or examination matter should explain how the disaster impacts them so that the IRS can provide appropriate consideration to their case.

Taxpayers may download forms and publications from the official IRS website, irs.gov, or order them by calling 800-TAX-FORM (800-829-3676). The IRS toll-free number for general tax questions is 800-829-1040.

Related Information

Page Last Reviewed or Updated: 30-Jan-2014

The Filing 1040x Instructions

Filing 1040x instructions Publication 15 - Main Content Table of Contents 1. Filing 1040x instructions Employer Identification Number (EIN) 2. Filing 1040x instructions Who Are Employees?Relief provisions. Filing 1040x instructions Business Owned and Operated by Spouses 3. Filing 1040x instructions Family Employees 4. Filing 1040x instructions Employee's Social Security Number (SSN)Registering for SSNVS. Filing 1040x instructions 5. Filing 1040x instructions Wages and Other CompensationAccountable plan. Filing 1040x instructions Nonaccountable plan. Filing 1040x instructions Per diem or other fixed allowance. Filing 1040x instructions 50% test. Filing 1040x instructions Health Savings Accounts and medical savings accounts. Filing 1040x instructions Nontaxable fringe benefits. Filing 1040x instructions When fringe benefits are treated as paid. Filing 1040x instructions Valuation of fringe benefits. Filing 1040x instructions Withholding on fringe benefits. Filing 1040x instructions Depositing taxes on fringe benefits. Filing 1040x instructions 6. Filing 1040x instructions TipsOrdering rule. Filing 1040x instructions 7. Filing 1040x instructions Supplemental Wages 8. Filing 1040x instructions Payroll Period 9. Filing 1040x instructions Withholding From Employees' WagesIncome Tax Withholding Social Security and Medicare Taxes Part-Time Workers 10. Filing 1040x instructions Required Notice to Employees About the Earned Income Credit (EIC) 11. Filing 1040x instructions Depositing TaxesWhen To Deposit How To Deposit Deposit Penalties 12. Filing 1040x instructions Filing Form 941 or Form 944 13. Filing 1040x instructions Reporting Adjustments to Form 941 or Form 944Current Period Adjustments Prior Period Adjustments Wage Repayments 14. Filing 1040x instructions Federal Unemployment (FUTA) TaxSuccessor employer. Filing 1040x instructions Household employees. Filing 1040x instructions When to deposit. Filing 1040x instructions Household employees. Filing 1040x instructions Electronic filing by reporting agents. Filing 1040x instructions 16. Filing 1040x instructions How To Use the Income Tax Withholding TablesWage Bracket Method Percentage Method Alternative Methods of Income Tax Withholding How To Get Tax Help 1. Filing 1040x instructions Employer Identification Number (EIN) If you are required to report employment taxes or give tax statements to employees or annuitants, you need an EIN. Filing 1040x instructions The EIN is a nine-digit number the IRS issues. Filing 1040x instructions The digits are arranged as follows: 00-0000000. Filing 1040x instructions It is used to identify the tax accounts of employers and certain others who have no employees. Filing 1040x instructions Use your EIN on all of the items you send to the IRS and SSA. Filing 1040x instructions For more information, see Publication 1635, Employer Identification Number: Understanding Your EIN. Filing 1040x instructions If you do not have an EIN, you may apply for one online. Filing 1040x instructions Go to the IRS. Filing 1040x instructions gov and click on the Apply for an EIN Online link under Tools. Filing 1040x instructions 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. Filing 1040x instructions Do not use an SSN in place of an EIN. Filing 1040x instructions You should have only one EIN. Filing 1040x instructions 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). Filing 1040x instructions Give the numbers you have, the name and address to which each was assigned, and the address of your main place of business. Filing 1040x instructions The IRS will tell you which number to use. Filing 1040x instructions If you took over another employer's business (see Successor employer in section 9), do not use that employer's EIN. Filing 1040x instructions 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. Filing 1040x instructions 2. Filing 1040x instructions Who Are Employees? Generally, employees are defined either under common law or under statutes for certain situations. Filing 1040x instructions See Publication 15-A for details on statutory employees and nonemployees. Filing 1040x instructions Employee status under common law. Filing 1040x instructions   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. Filing 1040x instructions This is so even when you give the employee freedom of action. Filing 1040x instructions What matters is that you have the right to control the details of how the services are performed. Filing 1040x instructions See Publication 15-A for more information on how to determine whether an individual providing services is an independent contractor or an employee. Filing 1040x instructions   Generally, people in business for themselves are not employees. Filing 1040x instructions For example, doctors, lawyers, veterinarians, and others in an independent trade in which they offer their services to the public are usually not employees. Filing 1040x instructions However, if the business is incorporated, corporate officers who work in the business are employees of the corporation. Filing 1040x instructions   If an employer-employee relationship exists, it does not matter what it is called. Filing 1040x instructions The employee may be called an agent or independent contractor. Filing 1040x instructions It also does not matter how payments are measured or paid, what they are called, or if the employee works full or part time. Filing 1040x instructions Statutory employees. Filing 1040x instructions   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. Filing 1040x instructions 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. Filing 1040x instructions An agent (or commission) driver who delivers food, beverages (other than milk), laundry, or dry cleaning for someone else. Filing 1040x instructions A full-time life insurance salesperson who sells primarily for one company. Filing 1040x instructions 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. Filing 1040x instructions 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. Filing 1040x instructions The orders must be for merchandise for resale or supplies for use in the customer's business. Filing 1040x instructions The customers must be retailers, wholesalers, contractors, or operators of hotels, restaurants, or other businesses dealing with food or lodging. Filing 1040x instructions    Statutory nonemployees. Filing 1040x instructions   Direct sellers, qualified real estate agents, and certain companion sitters are, by law, considered nonemployees. Filing 1040x instructions They are generally treated as self-employed for all federal tax purposes, including income and employment taxes. Filing 1040x instructions H-2A agricultural workers. Filing 1040x instructions   On Form W-2, do not check box 13 (Statutory employee), as H-2A workers are not statutory employees. Filing 1040x instructions Treating employees as nonemployees. Filing 1040x instructions   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. Filing 1040x instructions 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. Filing 1040x instructions The applicable rates depend on whether you filed required Forms 1099. Filing 1040x instructions 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. Filing 1040x instructions You are liable for the income tax withholding regardless of whether the employee paid income tax on the wages. Filing 1040x instructions You continue to owe the full employer share of social security and Medicare taxes. Filing 1040x instructions The employee remains liable for the employee share of social security and Medicare taxes. Filing 1040x instructions See Internal Revenue Code section 3509 for details. Filing 1040x instructions Also see the Instructions for Form 941-X. Filing 1040x instructions   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. Filing 1040x instructions Section 3509 is not available for reclassifying statutory employees. Filing 1040x instructions See Statutory employees , earlier in this section. Filing 1040x instructions   If the employer issued required information returns, the section 3509 rates are: For social security taxes; employer rate of 6. Filing 1040x instructions 2% plus 20% of the employee rate (see the Instructions for Form 941-X). Filing 1040x instructions For Medicare taxes; employer rate of 1. Filing 1040x instructions 45% plus 20% of the employee rate of 1. Filing 1040x instructions 45%, for a total rate of 1. Filing 1040x instructions 74% of wages. Filing 1040x instructions For Additional Medicare Tax; 0. Filing 1040x instructions 18% (20% of the employee rate of 0. Filing 1040x instructions 9%) of wages subject to Additional Medicare Tax. Filing 1040x instructions For income tax withholding, the rate is 1. Filing 1040x instructions 5% of wages. Filing 1040x instructions   If the employer did not issue required information returns, the section 3509 rates are: For social security taxes; employer rate of 6. Filing 1040x instructions 2% plus 40% of the employee rate (see the Instructions for Form 941-X). Filing 1040x instructions For Medicare taxes; employer rate of 1. Filing 1040x instructions 45% plus 40% of the employee rate of 1. Filing 1040x instructions 45%, for a total rate of 2. Filing 1040x instructions 03% of wages. Filing 1040x instructions For Additional Medicare Tax; 0. Filing 1040x instructions 36% (40% of the employee rate of 0. Filing 1040x instructions 9%) of wages subject to Additional Medicare Tax. Filing 1040x instructions For income tax withholding, the rate is 3. Filing 1040x instructions 0% of wages. Filing 1040x instructions Relief provisions. Filing 1040x instructions   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. Filing 1040x instructions 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. Filing 1040x instructions You (or your predecessor) must not have treated any worker holding a substantially similar position as an employee for any periods beginning after 1977. Filing 1040x instructions See Publication 1976, Do You Qualify for Relief Under Section 530. Filing 1040x instructions IRS help. Filing 1040x instructions   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. Filing 1040x instructions Voluntary Classification Settlement Program (VCSP). Filing 1040x instructions   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. Filing 1040x instructions To apply, use Form 8952, Application for Voluntary Classification Settlement Program (VCSP). Filing 1040x instructions For more information visit IRS. Filing 1040x instructions gov and enter “VCSP” in the search box. Filing 1040x instructions 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. Filing 1040x instructions See Publication 541, Partnerships, for more details. Filing 1040x instructions The partnership is considered the employer of any employees, and is liable for any employment taxes due on wages paid to its employees. Filing 1040x instructions Exception—Qualified joint venture. Filing 1040x instructions   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. Filing 1040x instructions 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). Filing 1040x instructions   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. Filing 1040x instructions Each spouse must also file a separate Schedule SE to pay self-employment taxes, as applicable. Filing 1040x instructions   Spouses using the qualified joint venture rules are treated as sole proprietors for federal tax purposes and generally do not need an EIN. Filing 1040x instructions 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. Filing 1040x instructions Generally, filing as a qualified joint venture will not increase the spouses' total tax owed on the joint income tax return. Filing 1040x instructions 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. Filing 1040x instructions    Note. Filing 1040x instructions If your spouse is your employee, not your partner, see One spouse employed by another in section 3. Filing 1040x instructions   For more information on qualified joint ventures, visit IRS. Filing 1040x instructions gov and enter “qualified joint venture” in the search box. Filing 1040x instructions Exception—Community income. Filing 1040x instructions   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. Filing 1040x instructions S. Filing 1040x instructions possession, you can treat the business either as a sole proprietorship (of the spouse who carried on the business) or a partnership. Filing 1040x instructions You may still make an election to be taxed as a qualified joint venture instead of a partnership. Filing 1040x instructions See Exception—Qualified joint venture , earlier. Filing 1040x instructions 3. Filing 1040x instructions Family Employees Child employed by parents. Filing 1040x instructions   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. Filing 1040x instructions 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. Filing 1040x instructions However, see Covered services of a child or spouse , later in this section. Filing 1040x instructions 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. Filing 1040x instructions 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. Filing 1040x instructions One spouse employed by another. Filing 1040x instructions   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. Filing 1040x instructions 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. Filing 1040x instructions Covered services of a child or spouse. Filing 1040x instructions   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. Filing 1040x instructions Parent employed by son or daughter. Filing 1040x instructions   When the employer is a son or daughter employing his or her parent the following rules apply. Filing 1040x instructions 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. Filing 1040x instructions 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. Filing 1040x instructions    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. Filing 1040x instructions   Payments made to a parent employed by his or her child are not subject to FUTA tax, regardless of the type of services provided. Filing 1040x instructions 4. Filing 1040x instructions 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. Filing 1040x instructions This requirement also applies to resident and nonresident alien employees. Filing 1040x instructions You should ask your employee to show you his or her social security card. Filing 1040x instructions The employee may show the card if it is available. Filing 1040x instructions Do not accept a social security card that says “Not valid for employment. Filing 1040x instructions ” A social security number issued with this legend does not permit employment. Filing 1040x instructions You may, but are not required to, photocopy the social security card if the employee provides it. Filing 1040x instructions 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. Filing 1040x instructions See Publication 1586, Reasonable Cause Regulations & Requirements for Missing and Incorrect Name/TINs, for information on the requirement to solicit the employee's SSN. Filing 1040x instructions Applying for a social security card. Filing 1040x instructions   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. Filing 1040x instructions You can get Form SS-5 at SSA offices, by calling 1-800-772-1213, or from the SSA website at www. Filing 1040x instructions socialsecurity. Filing 1040x instructions gov/online/ss-5. Filing 1040x instructions html. Filing 1040x instructions The employee must complete and sign Form SS-5; it cannot be filed by the employer. Filing 1040x instructions 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. Filing 1040x instructions Applying for a social security number. Filing 1040x instructions   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. Filing 1040x instructions If you are filing electronically, enter all zeros (000-00-000) in the social security number field. Filing 1040x instructions 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. Filing 1040x instructions Furnish copies B, C, and 2 of Form W-2c to the employee. Filing 1040x instructions 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. Filing 1040x instructions For more information, visit the SSA's Employer W-2 Filing Instructions & Information webpage at www. Filing 1040x instructions socialsecurity. Filing 1040x instructions gov/employer. Filing 1040x instructions Advise your employee to correct the SSN on his or her original Form W-2. Filing 1040x instructions Correctly record the employee's name and SSN. Filing 1040x instructions   Record the name and number of each employee as they are shown on the employee's social security card. Filing 1040x instructions 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. Filing 1040x instructions 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. Filing 1040x instructions 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. Filing 1040x instructions 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. Filing 1040x instructions IRS individual taxpayer identification numbers (ITINs) for aliens. Filing 1040x instructions   Do not accept an ITIN in place of an SSN for employee identification or for work. Filing 1040x instructions An ITIN is only available to resident and nonresident aliens who are not eligible for U. Filing 1040x instructions S. Filing 1040x instructions employment and need identification for other tax purposes. Filing 1040x instructions 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). Filing 1040x instructions    An individual with an ITIN who later becomes eligible to work in the United States must obtain an SSN. Filing 1040x instructions 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. Filing 1040x instructions Do not use an ITIN in place of an SSN on Form W-2. Filing 1040x instructions Verification of social security numbers. Filing 1040x instructions   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. Filing 1040x instructions Visit www. Filing 1040x instructions socialsecurity. Filing 1040x instructions gov/employer/ssnv. Filing 1040x instructions htm for more information. Filing 1040x instructions Registering for SSNVS. Filing 1040x instructions   You must register online and receive authorization from your employer to use SSNVS. Filing 1040x instructions To register, visit SSA's website at www. Filing 1040x instructions ssa. Filing 1040x instructions gov/employer and click on the Business Services Online link. Filing 1040x instructions Follow the registration instructions to obtain a user identification (ID) and password. Filing 1040x instructions You will need to provide the following information about yourself and your company. Filing 1040x instructions Name. Filing 1040x instructions SSN. Filing 1040x instructions Date of birth. Filing 1040x instructions Type of employer. Filing 1040x instructions EIN. Filing 1040x instructions Company name, address, and telephone number. Filing 1040x instructions Email address. Filing 1040x instructions   When you have completed the online registration process, SSA will mail a one-time activation code to your employer. Filing 1040x instructions You must enter the activation code online to use SSNVS. Filing 1040x instructions 5. Filing 1040x instructions Wages and Other Compensation Wages subject to federal employment taxes generally include all pay you give to an employee for services performed. Filing 1040x instructions The pay may be in cash or in other forms. Filing 1040x instructions It includes salaries, vacation allowances, bonuses, commissions, and fringe benefits. Filing 1040x instructions It does not matter how you measure or make the payments. Filing 1040x instructions 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. Filing 1040x instructions Also, compensation paid to a former employee for services performed while still employed is wages subject to employment taxes. Filing 1040x instructions More information. Filing 1040x instructions   See section 6 for a discussion of tips and section 7 for a discussion of supplemental wages. Filing 1040x instructions Also, see section 15 for exceptions to the general rules for wages. Filing 1040x instructions Publication 15-A provides additional information on wages, including nonqualified deferred compensation, and other compensation. Filing 1040x instructions 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. Filing 1040x instructions Employee business expense reimbursements. Filing 1040x instructions   A reimbursement or allowance arrangement is a system by which you pay the advances, reimbursements, and charges for your employees' business expenses. Filing 1040x instructions How you report a reimbursement or allowance amount depends on whether you have an accountable or a nonaccountable plan. Filing 1040x instructions If a single payment includes both wages and an expense reimbursement, you must specify the amount of the reimbursement. Filing 1040x instructions   These rules apply to all ordinary and necessary employee business expenses that would otherwise qualify for a deduction by the employee. Filing 1040x instructions Accountable plan. Filing 1040x instructions   To be an accountable plan, your reimbursement or allowance arrangement must require your employees to meet all three of the following rules. Filing 1040x instructions They must have paid or incurred deductible expenses while performing services as your employees. Filing 1040x instructions 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. Filing 1040x instructions They must substantiate these expenses to you within a reasonable period of time. Filing 1040x instructions They must return any amounts in excess of substantiated expenses within a reasonable period of time. Filing 1040x instructions   Amounts paid under an accountable plan are not wages and are not subject to income, social security, Medicare, and FUTA taxes. Filing 1040x instructions   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. Filing 1040x instructions 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. Filing 1040x instructions   A reasonable period of time depends on the facts and circumstances. Filing 1040x instructions 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. Filing 1040x instructions 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. Filing 1040x instructions Nonaccountable plan. Filing 1040x instructions   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. Filing 1040x instructions 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. Filing 1040x instructions   See section 7 for more information on supplemental wages. Filing 1040x instructions Per diem or other fixed allowance. Filing 1040x instructions   You may reimburse your employees by travel days, miles, or some other fixed allowance under the applicable revenue procedure. Filing 1040x instructions In these cases, your employee is considered to have accounted to you if your reimbursement does not exceed rates established by the Federal Government. Filing 1040x instructions The 2013 standard mileage rate for auto expenses was 56. Filing 1040x instructions 5 cents per mile. Filing 1040x instructions The rate for 2014 is 56 cents per mile. Filing 1040x instructions   The government per diem rates for meals and lodging in the continental United States are listed in Publication 1542, Per Diem Rates. Filing 1040x instructions 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). Filing 1040x instructions   If the per diem or allowance paid exceeds the amounts substantiated, you must report the excess amount as wages. Filing 1040x instructions This excess amount is subject to income tax withholding and payment of social security, Medicare, and FUTA taxes. Filing 1040x instructions Show the amount equal to the substantiated amount (for example, the nontaxable portion) in box 12 of Form W-2 using code “L. Filing 1040x instructions ” Wages not paid in money. Filing 1040x instructions   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. Filing 1040x instructions ” Payments in kind may be in the form of goods, lodging, food, clothing, or services. Filing 1040x instructions 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. Filing 1040x instructions   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. Filing 1040x instructions Withhold income tax on these payments only if you and the employee agree to do so. Filing 1040x instructions 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. Filing 1040x instructions Moving expenses. Filing 1040x instructions   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. Filing 1040x instructions Reimbursed and employer-paid nonqualified moving expenses are includible in income and are subject to employment taxes and income tax withholding. Filing 1040x instructions For more information on moving expenses, see Publication 521, Moving Expenses. Filing 1040x instructions Meals and lodging. Filing 1040x instructions   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. Filing 1040x instructions 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. Filing 1040x instructions    “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. Filing 1040x instructions 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. Filing 1040x instructions   However, whether meals or lodging are provided for the convenience of the employer depends on all of the facts and circumstances. Filing 1040x instructions A written statement that the meals or lodging are for your convenience is not sufficient. Filing 1040x instructions 50% test. Filing 1040x instructions   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. Filing 1040x instructions 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. Filing 1040x instructions For more information, see Publication 15-B. Filing 1040x instructions Health insurance plans. Filing 1040x instructions   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. Filing 1040x instructions Generally, this exclusion also applies to qualified long-term care insurance contracts. Filing 1040x instructions 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). Filing 1040x instructions 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. Filing 1040x instructions See Announcement 92-16 for more information. Filing 1040x instructions You can find Announcement 92-16 on page 53 of Internal Revenue Bulletin 1992-5. Filing 1040x instructions Health Savings Accounts and medical savings accounts. Filing 1040x instructions   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. Filing 1040x instructions To the extent it is not reasonable to believe they will be excludable, your contributions are subject to these taxes. Filing 1040x instructions 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. Filing 1040x instructions 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. Filing 1040x instructions For more information, see the Instructions for Form 8889, Health Savings Accounts (HSAs). Filing 1040x instructions Medical care reimbursements. Filing 1040x instructions   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. Filing 1040x instructions See Publication 15-B for an exception for highly compensated employees. Filing 1040x instructions Differential wage payments. Filing 1040x instructions   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. Filing 1040x instructions   Differential wage payments are wages for income tax withholding, but are not subject to social security, Medicare, or FUTA taxes. Filing 1040x instructions Employers should report differential wage payments in box 1 of Form W-2. Filing 1040x instructions For more information about the tax treatment of differential wage payments, visit IRS. Filing 1040x instructions gov and enter “employees in a combat zone” in the search box. Filing 1040x instructions Fringe benefits. Filing 1040x instructions   You generally must include fringe benefits in an employee's gross income (but see Nontaxable fringe benefits next). Filing 1040x instructions The benefits are subject to income tax withholding and employment taxes. Filing 1040x instructions 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. Filing 1040x instructions 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. Filing 1040x instructions There are other special rules you and your employees may use to value certain fringe benefits. Filing 1040x instructions See Publication 15-B for more information. Filing 1040x instructions Nontaxable fringe benefits. Filing 1040x instructions   Some fringe benefits are not taxable (or are minimally taxable) if certain conditions are met. Filing 1040x instructions See Publication 15-B for details. Filing 1040x instructions The following are some examples of nontaxable fringe benefits. Filing 1040x instructions Services provided to your employees at no additional cost to you. Filing 1040x instructions Qualified employee discounts. Filing 1040x instructions Working condition fringes that are property or services the employee could deduct as a business expense if he or she had paid for it. Filing 1040x instructions Examples include a company car for business use and subscriptions to business magazines. Filing 1040x instructions 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). Filing 1040x instructions Qualified transportation fringes subject to specified conditions and dollar limitations (including transportation in a commuter highway vehicle, any transit pass, and qualified parking). Filing 1040x instructions Qualified moving expense reimbursement. Filing 1040x instructions See Moving expenses , earlier in this section, for details. Filing 1040x instructions The use of on-premises athletic facilities, if substantially all of the use is by employees, their spouses, and their dependent children. Filing 1040x instructions Qualified tuition reduction an educational organization provides to its employees for education. Filing 1040x instructions For more information, see Publication 970, Tax Benefits for Education. Filing 1040x instructions Employer-provided cell phones provided primarily for a noncompensatory business reason. Filing 1040x instructions   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. Filing 1040x instructions No-additional-cost services. Filing 1040x instructions Qualified employee discounts. Filing 1040x instructions Meals provided at an employer operated eating facility. Filing 1040x instructions Reduced tuition for education. Filing 1040x instructions  For more information, including the definition of a highly compensated employee, see Publication 15-B. Filing 1040x instructions When fringe benefits are treated as paid. Filing 1040x instructions   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. Filing 1040x instructions You do not have to make a formal choice of payment dates or notify the IRS of the dates you choose. Filing 1040x instructions You do not have to make this choice for all employees. Filing 1040x instructions 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. Filing 1040x instructions See Publication 15-B for more information, including a discussion of the special accounting rule for fringe benefits provided during November and December. Filing 1040x instructions Valuation of fringe benefits. Filing 1040x instructions   Generally, you must determine the value of fringe benefits no later than January 31 of the next year. Filing 1040x instructions Before January 31, you may reasonably estimate the value of the fringe benefits for purposes of withholding and depositing on time. Filing 1040x instructions Withholding on fringe benefits. Filing 1040x instructions   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. Filing 1040x instructions However, see Withholding on supplemental wages when an employee receives more than $1 million of supplemental wages during the calendar year in section 7. Filing 1040x instructions   You may choose not to withhold income tax on the value of an employee's personal use of a vehicle you provide. Filing 1040x instructions You must, however, withhold social security and Medicare taxes on the use of the vehicle. Filing 1040x instructions See Publication 15-B for more information on this election. Filing 1040x instructions Depositing taxes on fringe benefits. Filing 1040x instructions   Once you choose when fringe benefits are paid, you must deposit taxes in the same deposit period you treat the fringe benefits as paid. Filing 1040x instructions To avoid a penalty, deposit the taxes following the general deposit rules for that deposit period. Filing 1040x instructions   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. Filing 1040x instructions See Valuation of fringe benefits , earlier. Filing 1040x instructions If you underestimated the value and deposited too little, you may be subject to a failure-to-deposit penalty. Filing 1040x instructions See section 11 for information on deposit penalties. Filing 1040x instructions   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. Filing 1040x instructions However, you must recover the income taxes before April 1 of the following year. Filing 1040x instructions Sick pay. Filing 1040x instructions   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. Filing 1040x instructions These amounts are sometimes paid by a third party, such as an insurance company or an employees' trust. Filing 1040x instructions In either case, these payments are subject to social security, Medicare, and FUTA taxes. Filing 1040x instructions 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. Filing 1040x instructions The payments are always subject to federal income tax. Filing 1040x instructions See Publication 15-A for more information. Filing 1040x instructions 6. Filing 1040x instructions Tips Tips your employee receives from customers are generally subject to withholding. Filing 1040x instructions Your employee must report cash tips to you by the 10th of the month after the month the tips are received. Filing 1040x instructions 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. Filing 1040x instructions Both directly and indirectly tipped employees must report tips to you. Filing 1040x instructions No report is required for months when tips are less than $20. Filing 1040x instructions Your employee reports the tips on Form 4070, Employee's Report of Tips to Employer, or on a similar statement. Filing 1040x instructions 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. Filing 1040x instructions 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. Filing 1040x instructions You are permitted to establish a system for electronic tip reporting by employees. Filing 1040x instructions See Regulations section 31. Filing 1040x instructions 6053-1(d). Filing 1040x instructions Collecting taxes on tips. Filing 1040x instructions   You must collect income tax, employee social security tax, and employee Medicare tax on the employee's tips. Filing 1040x instructions 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. Filing 1040x instructions If an employee reports to you in writing $20 or more of tips in a month, the tips are also subject to FUTA tax. Filing 1040x instructions   You can collect these taxes from the employee's wages or from other funds he or she makes available. Filing 1040x instructions See Tips treated as supplemental wages in section 7 for more information. Filing 1040x instructions 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. Filing 1040x instructions You are responsible for the employer social security tax on wages and tips until the wages (including tips) reach the limit. Filing 1040x instructions You are responsible for the employer Medicare tax for the whole year on all wages and tips. Filing 1040x instructions File Form 941 or Form 944 to report withholding and employment taxes on tips. Filing 1040x instructions Ordering rule. Filing 1040x instructions   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. Filing 1040x instructions If there are not enough funds available, withhold taxes in the following order. Filing 1040x instructions Withhold on regular wages and other compensation. Filing 1040x instructions Withhold social security and Medicare taxes on tips. Filing 1040x instructions Withhold income tax on tips. Filing 1040x instructions Reporting tips. Filing 1040x instructions   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). Filing 1040x instructions Report an adjustment on Form 941, line 9 (Form 944, line 6), for the uncollected social security and Medicare taxes. Filing 1040x instructions Enter the amount of uncollected social security tax and Medicare tax on Form W-2, box 12, with codes “A” and “B. Filing 1040x instructions ” Do not include any uncollected Additional Medicare Tax in box 12 of Form W-2. Filing 1040x instructions See section 13 and the General Instructions for Forms W-2 and W-3. Filing 1040x instructions   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. Filing 1040x instructions See Revenue Ruling 2012-18, 2012-26 I. Filing 1040x instructions R. Filing 1040x instructions B. Filing 1040x instructions 1032, available at www. Filing 1040x instructions irs. Filing 1040x instructions gov/irb/2012-26_IRB/ar07. Filing 1040x instructions html. Filing 1040x instructions Allocated tips. Filing 1040x instructions   If you operate a large food or beverage establishment, you must report allocated tips under certain circumstances. Filing 1040x instructions However, do not withhold income, social security, or Medicare taxes on allocated tips. Filing 1040x instructions   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. Filing 1040x instructions   The tips may be allocated by one of three methods—hours worked, gross receipts, or good faith agreement. Filing 1040x instructions 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. Filing 1040x instructions For information on filing Form 8027 electronically with the IRS, see Publication 1239. Filing 1040x instructions Tip Rate Determination and Education Program. Filing 1040x instructions   Employers may participate in the Tip Rate Determination and Education Program. Filing 1040x instructions 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. Filing 1040x instructions The two agreements are the Tip Rate Determination Agreement (TRDA) and the Tip Reporting Alternative Commitment (TRAC). Filing 1040x instructions A tip agreement, the Gaming Industry Tip Compliance Agreement (GITCA), is available for the gaming (casino) industry. Filing 1040x instructions To get more information about TRDA and TRAC agreements, see Publication 3144, Tips on Tips. Filing 1040x instructions Additionally, visit IRS. Filing 1040x instructions gov and enter “MSU tips” in the search box to get more information about GITCA, TRDA, or TRAC agreements. Filing 1040x instructions 7. Filing 1040x instructions Supplemental Wages Supplemental wages are wage payments to an employee that are not regular wages. Filing 1040x instructions 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. Filing 1040x instructions Other payments subject to the supplemental wage rules include taxable fringe benefits and expense allowances paid under a nonaccountable plan. Filing 1040x instructions How you withhold on supplemental wages depends on whether the supplemental payment is identified as a separate payment from regular wages. Filing 1040x instructions See Regulations section 31. Filing 1040x instructions 3402(g)-1 for additional guidance for wages paid after January 1, 2007. Filing 1040x instructions Also see Revenue Ruling 2008-29, 2008-24 I. Filing 1040x instructions R. Filing 1040x instructions B. Filing 1040x instructions 1149, available at www. Filing 1040x instructions irs. Filing 1040x instructions gov/irb/2008-24_IRB/ar08. Filing 1040x instructions html. Filing 1040x instructions Withholding on supplemental wages when an employee receives more than $1 million of supplemental wages from you during the calendar year. Filing 1040x instructions   Special rules apply to the extent supplemental wages paid to any one employee during the calendar year exceed $1 million. Filing 1040x instructions 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. Filing 1040x instructions 6% (or the highest rate of income tax for the year). Filing 1040x instructions Withhold using the 39. Filing 1040x instructions 6% rate without regard to the employee's Form W-4. Filing 1040x instructions In determining supplemental wages paid to the employee during the year, include payments from all businesses under common control. Filing 1040x instructions For more information, see Treasury Decision 9276, 2006-37 I. Filing 1040x instructions R. Filing 1040x instructions B. Filing 1040x instructions 423, available at www. Filing 1040x instructions irs. Filing 1040x instructions gov/irb/2006-37_IRB/ar09. Filing 1040x instructions html. Filing 1040x instructions Withholding on supplemental wage payments to an employee who does not receive $1 million of supplemental wages during the calendar year. Filing 1040x instructions   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. Filing 1040x instructions Supplemental wages combined with regular wages. Filing 1040x instructions   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. Filing 1040x instructions Supplemental wages identified separately from regular wages. Filing 1040x instructions   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. Filing 1040x instructions 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. Filing 1040x instructions Withhold a flat 25% (no other percentage allowed). Filing 1040x instructions If the supplemental wages are paid concurrently with regular wages, add the supplemental wages to the concurrently paid regular wages. Filing 1040x instructions 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. Filing 1040x instructions Figure the income tax withholding as if the total of the regular wages and supplemental wages is a single payment. Filing 1040x instructions Subtract the tax withheld from the regular wages. Filing 1040x instructions Withhold the remaining tax from the supplemental wages. Filing 1040x instructions 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. Filing 1040x instructions 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. Filing 1040x instructions This would occur, for example, when the value of the employee's withholding allowances claimed on Form W-4 is more than the wages. Filing 1040x instructions Regardless of the method you use to withhold income tax on supplemental wages, they are subject to social security, Medicare, and FUTA taxes. Filing 1040x instructions Example 1. Filing 1040x instructions You pay John Peters a base salary on the 1st of each month. Filing 1040x instructions He is single and claims one withholding allowance. Filing 1040x instructions In January he is paid $1,000. Filing 1040x instructions Using the wage bracket tables, you withhold $50 from this amount. Filing 1040x instructions 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. Filing 1040x instructions You figure the withholding based on the total of $3,000. Filing 1040x instructions The correct withholding from the tables is $338. Filing 1040x instructions Example 2. Filing 1040x instructions You pay Sharon Warren a base salary on the 1st of each month. Filing 1040x instructions She is single and claims one allowance. Filing 1040x instructions Her May 1 pay is $2,000. Filing 1040x instructions Using the wage bracket tables, you withhold $188. Filing 1040x instructions On May 14 she receives a bonus of $1,000. Filing 1040x instructions 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). Filing 1040x instructions Determine the amount of withholding on the combined $3,000 amount to be $338 using the wage bracket tables. Filing 1040x instructions Subtract the amount withheld from wages on the most recent base salary pay date (May 1) from the combined withholding amount ($338 – $188 = $150). Filing 1040x instructions Withhold $150 from the bonus payment. Filing 1040x instructions Example 3. Filing 1040x instructions The facts are the same as in Example 2, except you elect to use the flat rate method of withholding on the bonus. Filing 1040x instructions You withhold 25% of $1,000, or $250, from Sharon's bonus payment. Filing 1040x instructions Example 4. Filing 1040x instructions The facts are the same as in Example 2, except you elect to pay Sharon a second bonus of $2,000 on May 28. Filing 1040x instructions 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). Filing 1040x instructions Determine the amount of withholding on the combined $5,000 amount to be $781 using the wage bracket tables. Filing 1040x instructions 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). Filing 1040x instructions Withhold $443 from the second bonus payment. Filing 1040x instructions Tips treated as supplemental wages. Filing 1040x instructions   Withhold income tax on tips from wages earned by the employee or from other funds the employee makes available. Filing 1040x instructions If an employee receives regular wages and reports tips, figure income tax withholding as if the tips were supplemental wages. Filing 1040x instructions If you have not withheld income tax from the regular wages, add the tips to the regular wages. Filing 1040x instructions Then withhold income tax on the total. Filing 1040x instructions 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. Filing 1040x instructions Vacation pay. Filing 1040x instructions   Vacation pay is subject to withholding as if it were a regular wage payment. Filing 1040x instructions When vacation pay is in addition to regular wages for the vacation period, treat it as a supplemental wage payment. Filing 1040x instructions 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. Filing 1040x instructions 8. Filing 1040x instructions Payroll Period Your payroll period is a period of service for which you usually pay wages. Filing 1040x instructions When you have a regular payroll period, withhold income tax for that time period even if your employee does not work the full period. Filing 1040x instructions No regular payroll period. Filing 1040x instructions   When you do not have a regular payroll period, withhold the tax as if you paid wages for a daily or miscellaneous payroll period. Filing 1040x instructions Figure the number of days (including Sundays and holidays) in the period covered by the wage payment. Filing 1040x instructions 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. Filing 1040x instructions Employee paid for period less than 1 week. Filing 1040x instructions   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. Filing 1040x instructions If the employee later begins to work for another employer for wages subject to withholding, the employee must notify you within 10 days. Filing 1040x instructions You then figure withholding based on the daily or miscellaneous period. Filing 1040x instructions 9. Filing 1040x instructions Withholding From Employees' Wages Income Tax Withholding Using Form W-4 to figure withholding. Filing 1040x instructions   To know how much federal income tax to withhold from employees' wages, you should have a Form W-4 on file for each employee. Filing 1040x instructions 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. Filing 1040x instructions Advise your employees to use the IRS Withholding Calculator on the IRS website at www. Filing 1040x instructions irs. Filing 1040x instructions gov/individuals for help in determining how many withholding allowances to claim on their Forms W-4. Filing 1040x instructions   Ask all new employees to give you a signed Form W-4 when they start work. Filing 1040x instructions Make the form effective with the first wage payment. Filing 1040x instructions 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. Filing 1040x instructions Form in Spanish. Filing 1040x instructions   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. Filing 1040x instructions For more information, see Publicación 17(SP), El Impuesto Federal sobre los Ingresos (Para Personas Físicas). Filing 1040x instructions The rules discussed in this section that apply to Form W-4 also apply to Formulario W-4(SP). Filing 1040x instructions Electronic system to receive Form W-4. Filing 1040x instructions   You may establish a system to electronically receive Forms W-4 from your employees. Filing 1040x instructions See Regulations section 31. Filing 1040x instructions 3402(f)(5)-1(c) for more information. Filing 1040x instructions Effective date of Form W-4. Filing 1040x instructions   A Form W-4 remains in effect until the employee gives you a new one. Filing 1040x instructions 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. Filing 1040x instructions 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. Filing 1040x instructions 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. Filing 1040x instructions A Form W-4 that makes a change for the next calendar year will not take effect in the current calendar year. Filing 1040x instructions Successor employer. Filing 1040x instructions   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. Filing 1040x instructions See Revenue Procedure 2004-53, 2004-34 I. Filing 1040x instructions R. Filing 1040x instructions B. Filing 1040x instructions 320, available at www. Filing 1040x instructions irs. Filing 1040x instructions gov/irb/2004-34_IRB/ar13. Filing 1040x instructions html. Filing 1040x instructions Completing Form W-4. Filing 1040x instructions   The amount of any federal income tax withholding must be based on marital status and withholding allowances. Filing 1040x instructions Your employees may not base their withholding amounts on a fixed dollar amount or percentage. Filing 1040x instructions 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. Filing 1040x instructions Employees may claim fewer withholding allowances than they are entitled to claim. Filing 1040x instructions 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. Filing 1040x instructions See Publication 505, Tax Withholding and Estimated Tax, for more information about completing Form W-4. Filing 1040x instructions Along with Form W-4, you may wish to order Publication 505 for use by your employees. Filing 1040x instructions Do not accept any withholding or estimated tax payments from your employees in addition to withholding based on their Form W-4. Filing 1040x instructions 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. Filing 1040x instructions Exemption from federal income tax withholding. Filing 1040x instructions   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. Filing 1040x instructions See the Form W-4 instructions for more information. Filing 1040x instructions However, the wages are still subject to social security and Medicare taxes. Filing 1040x instructions See also Invalid Forms W-4 , later in this section. Filing 1040x instructions   A Form W-4 claiming exemption from withholding is effective when it is filed with the employer and only for that calendar year. Filing 1040x instructions 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. Filing 1040x instructions 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. Filing 1040x instructions 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. Filing 1040x instructions Withholding income taxes on the wages of nonresident alien employees. Filing 1040x instructions   In general, you must withhold federal income taxes on the wages of nonresident alien employees. Filing 1040x instructions However, see Publication 515, Withholding of Tax on Nonresident Aliens and Foreign Entities, for exceptions to this general rule. Filing 1040x instructions Also see section 3 of Publication 51 (Circular A), Agricultural Employer's Tax Guide, for guidance on H-2A visa workers. Filing 1040x instructions Withholding adjustment for nonresident alien employees. Filing 1040x instructions   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. Filing 1040x instructions Nonresident alien students from India and business apprentices from India are not subject to this procedure. Filing 1040x instructions Instructions. Filing 1040x instructions   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. Filing 1040x instructions Step 1. Filing 1040x instructions   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. Filing 1040x instructions    Amount to Add to Nonresident Alien Employee's Wages for Calculating Income Tax Withholding Only   Payroll Period Add Additional     Weekly $ 43. Filing 1040x instructions 30     Biweekly 86. Filing 1040x instructions 50     Semimonthly 93. Filing 1040x instructions 80     Monthly 187. Filing 1040x instructions 50     Quarterly 562. Filing 1040x instructions 50     Semiannually 1,125. Filing 1040x instructions 00     Annually 2,250. Filing 1040x instructions 00     Daily or Miscellaneous (each day of the payroll period) 8. Filing 1040x instructions 70   Step 2. Filing 1040x instructions   Use the amount figured in Step 1 and the number of withholding allowances claimed (generally limited to one allowance) to figure income tax withholding. Filing 1040x instructions Determine the value of withholding allowances by multiplying the number of withholding allowances claimed by the appropriate amount from Table 5. Filing 1040x instructions Percentage Method—2014 Amount for One Withholding Allowance shown on page 41. Filing 1040x instructions 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. Filing 1040x instructions 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. Filing 1040x instructions The amounts from the chart above are added to wages solely for calculating income tax withholding on the wages of the nonresident alien employee. Filing 1040x instructions 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. Filing 1040x instructions 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. Filing 1040x instructions This procedure only applies to nonresident alien employees who have wages subject to income tax withholding. Filing 1040x instructions Example. Filing 1040x instructions An employer using the percentage method of withholding pays wages of $500 for a biweekly payroll period to a married nonresident alien employee. Filing 1040x instructions 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). Filing 1040x instructions 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. Filing 1040x instructions 50 from the chart under Step 1 ($586. Filing 1040x instructions 50 total). Filing 1040x instructions The employer then applies the applicable tables to determine the income tax withholding for nonresident aliens (see Step 2 ). Filing 1040x instructions 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. Filing 1040x instructions The $86. Filing 1040x instructions 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. Filing 1040x instructions Also, the $86. Filing 1040x instructions 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. Filing 1040x instructions Supplemental wage payment. Filing 1040x instructions   This procedure for determining the amount of income tax withholding does not apply to a supplemental wage payment (see section 7) if the 39. Filing 1040x instructions 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. Filing 1040x instructions Nonresident alien employee's Form W-4. Filing 1040x instructions   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. Filing 1040x instructions   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. Filing 1040x instructions 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. Filing 1040x instructions Form 8233. Filing 1040x instructions   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. Filing 1040x instructions See Publication 515 for details. Filing 1040x instructions IRS review of requested Forms W-4. Filing 1040x instructions   When requested by the IRS, you must make original Forms W-4 available for inspection by an IRS employee. Filing 1040x instructions You may also be directed to send certain Forms W-4 to the IRS. Filing 1040x instructions 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. Filing 1040x instructions 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. Filing 1040x instructions 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. Filing 1040x instructions R. Filing 1040x instructions B. Filing 1040x instructions 455, which is available at www. Filing 1040x instructions irs. Filing 1040x instructions gov/irb/2007-35_IRB/ar10. Filing 1040x instructions html. Filing 1040x instructions When we refer to Form W-4, the same rules apply to Formulario W-4(SP), its Spanish translation. Filing 1040x instructions 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). Filing 1040x instructions 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