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Free 1040x Publication 587 - Introductory Material Table of Contents Future Developments What's New Reminders IntroductionOrdering forms and publications. Free 1040x Tax questions. Free 1040x Useful Items - You may want to see: Future Developments For the latest information about developments related to Publication 587, such as legislation enacted after it was published, go to www. Free 1040x irs. Free 1040x gov/pub587. Free 1040x What's New The IRS now provides a simplified method to determine your expenses for business use of your home. Free 1040x The simplified method is an alternative to calculating and substantiating actual expenses. Free 1040x For more information, see Using the Simplified Method under Figuring the Deduction, later. Free 1040x Reminders Photographs of missing children. Free 1040x  The Internal Revenue Service is a proud partner with the National Center for Missing and Exploited Children. Free 1040x Photographs of missing children selected by the Center may appear in this publication on pages that would otherwise be blank. Free 1040x You can help bring these children home by looking at the photographs and calling 1-800-THE-LOST (1-800-843-5678) if you recognize a child. Free 1040x Introduction The purpose of this publication is to provide information on figuring and claiming the deduction for business use of your home. Free 1040x The term “home” includes a house, apartment, condominium, mobile home, boat, or similar property which provides basic living accommodations. Free 1040x It also includes structures on the property, such as an unattached garage, studio, barn, or greenhouse. Free 1040x However, it does not include any part of your property used exclusively as a hotel, motel, inn, or similar establishment. Free 1040x Qualifying for a Deduction gives the requirements for qualifying to deduct expenses for the business use of your home (including special rules for employees and special rules for storing inventory or product samples). Free 1040x For special rules that apply to daycare providers, see Daycare Facility . Free 1040x After you determine that you qualify for the deduction, Figuring the Deduction explains the expenses you can deduct using either your actual expenses or the simplified method. Free 1040x The simplified method is an alternative to calculating and substantiating actual expenses. Free 1040x Where To Deduct explains where a self-employed person, employee, or partner will report the deduction. Free 1040x This publication also includes information on the following. Free 1040x Selling a home that was used partly for business. Free 1040x Deducting expenses for furniture and equipment used in your business. Free 1040x Records you should keep. Free 1040x Finally, this publication contains worksheets to help you figure the amount of your deduction if you use your home in your farming business and you are filing Schedule F (Form 1040), you use your home for work as an employee, or you are a partner and the use of your home resulted in unreimbursed ordinary and necessary expenses that you are required to pay under the partnership agreement. Free 1040x If you used your home for business and you are filing Schedule C (Form 1040), you will use either Form 8829 or the Simplified Method Worksheet in your Instructions for Schedule C. Free 1040x The rules in this publication apply to individuals. Free 1040x If you need information on deductions for renting out your property, see Publication 527, Residential Rental Property. Free 1040x Comments and suggestions. Free 1040x   We welcome your comments about this publication and your suggestions for future editions. Free 1040x   You can write to us at the following address: Internal Revenue Service Tax Forms and Publications Division 1111 Constitution Ave. Free 1040x NW, IR-6526 Washington, DC 20224   We respond to many letters by telephone. Free 1040x Therefore, it would be helpful if you would include your daytime phone number, including the area code, in your correspondence. Free 1040x   You can send your comments from www. Free 1040x irs. Free 1040x gov/formspubs/. Free 1040x Click on “More Information” and then on “Comment on Tax Forms and Publications. Free 1040x ”   Although we cannot respond individually to each comment received, we do appreciate your feedback and will consider your comments as we revise our tax products. Free 1040x Ordering forms and publications. Free 1040x   Visit www. Free 1040x irs. Free 1040x gov/formspubs/ to download forms and publications, call 1-800-TAX-FORM (1-800-829-3676), or write to the address below and receive a response within 10 days after your request is received. Free 1040x Internal Revenue Service 1201 N. Free 1040x Mitsubishi Motorway Bloomington, IL 61705-6613 Tax questions. Free 1040x   If you have a tax question, check the information available on IRS. Free 1040x gov or call 1-800-829-1040. Free 1040x We cannot answer tax questions sent to either of the above addresses. Free 1040x Useful Items - You may want to see: Publications 523 Selling Your Home 551 Basis of Assets 583 Starting a Business and Keeping Records 946 How To Depreciate Property Forms (and Instructions) Schedule C (Form 1040) Profit or Loss from Business 2106 Employee Business Expenses 2106-EZ Unreimbursed Employee Business Expenses 4562 Depreciation and Amortization 8829 Expenses for Business Use of Your Home  See How To Get Tax Help , near the end of this publication for information about getting publications and forms. Free 1040x Prev  Up  Next   Home   More Online Publications
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General Car Tips

Whether you are buying or leasing a vehicle, these tips will help you get the best deal and avoid problems.

  • Decide what kind of vehicle best suits your needs and budget. Read our tips for choosing a safe vehicle. To compare models and get car buying tips, visit Edmunds.com or InternetAutoGuide.com.
  • Consider fuel economy. A vehicle that gets more miles per gallon is good for your wallet as well as for the environment.
  • Check out the seller. For car dealers, check with your local consumer protection office and Better Business Bureau. If you're buying from an individual, check the title to make sure you're dealing with the vehicle owner.
  • Take a test drive. Drive at different speeds and check for smooth right and left turns. On a straight stretch, make sure the vehicle doesn't pull to one side.
  • Handle trade-ins and financing separately from your purchase to get the best deal on each. Get a written price quote before you talk about a trade-in or dealer financing.
  • Shop in advance for the best finance deal at your credit union, bank or finance company. Look at the total finance charges and the Annual Percentage Rate (APR), not just the monthly payment.
  • Read and understand every document you are asked to sign.
  • Don't take possession of the car until all paperwork is final.
  • Choose an auto insurance policy that is right for you.

Vehicle Financing

Most car buyers today need some form of financing to purchase a new vehicle. Many use direct lending, that is, a loan from a finance company, bank, or credit union. In direct lending, a buyer agrees to pay the amount financed, plus an agreed-upon finance charge, over a specified period. Once a buyer and a vehicle dealership enter into a contract to purchase a vehicle, the buyer uses the loan proceeds from the direct lender to pay the dealership for the vehicle.

Another common form is dealership financing, which offers convenience, financing options, and sometimes special, manufacturer-sponsored, low-rate deals. Before you make a financing decision, it’s important to do your research:

  • Decide in advance how much you can afford to spend and stick to your limit.
  • Get a copy of your credit report and correct any errors before applying for a loan.
  • Check buying guides to identify price ranges and best available deals.

The Federal Trade Commission has more information about vehicle financing, deciding what you can afford, and consumer protections. If you need to file a complaint about your auto loan, contact the Consumer Financial Protection Bureau.

The Free 1040x

Free 1040x 13. Free 1040x   Employment Taxes Table of Contents What's New for 2013 What's New for 2014 Reminders Important Dates for 2014 Introduction Topics - This chapter discusses: Useful Items - You may want to see: Farm Employment Family Employees Crew Leaders Social Security and Medicare TaxesReligious exemption. Free 1040x Wage limit. Free 1040x Federal Income Tax WithholdingNew Form W-4 for 2014. Free 1040x Required Notice to Employees About Earned Income Credit (EIC) Reporting and Paying Social Security, Medicare, and Withheld Federal Income TaxesElectronic deposit requirement. Free 1040x Federal Unemployment (FUTA) TaxReporting and Paying FUTA Tax What's New for 2013 Social security and Medicare tax for 2013. Free 1040x  The employee tax rate for social security is 6. Free 1040x 2%. Free 1040x Previously, the employee tax rate for social security was 4. Free 1040x 2%. Free 1040x The employer tax rate for social security remains unchanged at 6. Free 1040x 2%. Free 1040x The social security wage base limit is $113,700. Free 1040x The Medicare tax rate is 1. Free 1040x 45% each for the employee and employer, unchanged from 2012. Free 1040x There is no wage base limit for Medicare tax. Free 1040x Additional Medicare Tax. Free 1040x  In addition to withholding Medicare tax at 1. Free 1040x 45%, you must withhold a 0. Free 1040x 9% Additional Medicare Tax from wages you pay to an employee in excess of $200,000 in a calendar year. Free 1040x You are required to begin withholding Additional Medicare Tax in the pay period in which you pay wages in excess of $200,000 to an employee and continue to withhold it each pay period until the end of the calendar year. Free 1040x Additional Medicare Tax is only imposed on the employee. Free 1040x There is no employer share of Additional Medicare Tax. Free 1040x All wages that are subject to Medicare tax are subject to Additional Medicare Tax withholding if paid in excess of the $200,000 threshold. Free 1040x For more information on what wages are subject to Medicare tax, see the chart, Special Rules for Various Types of Services and Payments, in section 15 of Publication 15 (Circular E), Employer's Tax Guide. Free 1040x For more information on Additional Medicare Tax, visit IRS. Free 1040x gov and enter “Additional Medicare Tax” in the search box. Free 1040x Leave-based donation programs to aid victims of Hurricane Sandy. Free 1040x  Under these programs, employees may donate their vacation, sick, or personal leave in exchange for employer cash payments made before January 1, 2014, to qualified tax-exempt organizations providing relief for the victims of Hurricane Sandy. Free 1040x The donated leave will not be included in the income or wages of the employee. Free 1040x The employer may deduct the cash payments as business expenses or charitable contributions. Free 1040x For more information, see Notice 2012-69, 2012-51 I. Free 1040x R. Free 1040x B. Free 1040x 712, available at www. Free 1040x irs. Free 1040x gov/irb/2012-51_IRB/ar09. Free 1040x html. Free 1040x Work opportunity tax credit for qualified tax-exempt organizations hiring qualified veterans extended. Free 1040x  The work opportunity tax credit is now available for eligible unemployed veterans who begin work before January 1, 2014. Free 1040x Previously, the credit was available for unemployed veterans who began work on or after November 22, 2011, and before January 1, 2013. Free 1040x Qualified tax-exempt organizations that hire eligible unemployed veterans can claim the work opportunity tax credit against their payroll tax liability using Form 5884-C, Work Opportunity Credit for Qualified Tax-Exempt Organizations Hiring Qualified Veterans. Free 1040x For more information, visit IRS. Free 1040x gov and enter “work opportunity credit” in the search box. Free 1040x What's New for 2014 Social security and Medicare tax for 2014. Free 1040x  The employee and employer tax rates for social security and the maximum amount of wages subject to social security tax for 2014 will be discussed in Publication 51 (Circular A), Agricultural Employer's Tax Guide (For use in 2014). Free 1040x The Medicare tax rate for 2014 will also be discussed in Publication 51 (Circular A) (For use in 2014). Free 1040x There is no limit on the amount of wages subject to Medicare tax. Free 1040x Reminders Additional employment tax information for farmers. Free 1040x  See Publication 51 (Circular A) for more detailed guidance on employment taxes. Free 1040x For the latest information about employment tax developments impacting farmers, go to www. Free 1040x irs. Free 1040x gov/pub51. Free 1040x Correcting a previously filed Form 943. Free 1040x  If you discover an error on a previously filed Form 943, Employer's Annual Federal Tax Return for Agricultural Employees, make the correction using Form 943-X, Adjusted Employer's Annual Federal Tax Return for Agricultural Employees or Claim for Refund. Free 1040x Form 943-X is filed separately from Form 943. Free 1040x For more information on correcting Form 943, see the Instructions for Form 943-X. Free 1040x Federal tax deposits must be made by electronic funds transfer. Free 1040x  You must use electronic funds transfer to make all federal tax deposits. Free 1040x Generally, electronic funds transfers are made using the Electronic Federal Tax Payment System (EFTPS). Free 1040x If you do not want to use EFTPS, you can arrange for your tax professional, financial institution, payroll service, or other trusted third party to make electronic deposits on your behalf. Free 1040x Also, you may arrange for your financial institution to initiate a same-day wire payment on your behalf. Free 1040x EFTPS is a free service provided by the Department of Treasury. Free 1040x Services provided by your tax professional, financial institution, payroll service, or other third party may have a fee. Free 1040x For more information on making federal tax deposits, see section 7 of Publication 51 (Circular A). Free 1040x To get more information about EFTPS or to enroll in EFTPS, visit www. Free 1040x eftps. Free 1040x gov or call 1-800-555-4477 or 1-800-733-4829 (TDD). Free 1040x Additional information about EFTPS is also available in Publication 966, Electronic Federal Tax Payment System: A Guide To Getting Started. Free 1040x Important Dates for 2014 You should take the action indicated by the dates listed. Free 1040x See By February 15 and On February 16 for Form W-4, Employee's Withholding Allowance Certificate, information. Free 1040x Due dates for deposits of withheld federal income taxes, social security taxes, and Medicare taxes are not listed here. Free 1040x For these dates, see Publication 509, Tax Calendars (For use in 2014). Free 1040x Note. Free 1040x  If any date shown below for filing a return, furnishing a form, or depositing taxes falls on a Saturday, Sunday, or legal holiday, the due date is the next business day. Free 1040x A statewide legal holiday delays a filing or furnishing due date only if the IRS office where you are required to file a return or furnish a form is located in that state. Free 1040x For any due date, you will meet the “file” or “furnish” date requirement if the envelope containing the tax return or form is properly addressed, contains sufficient postage, and is postmarked by the U. Free 1040x S. Free 1040x Postal Service by the due date, or sent by an IRS-designated delivery service by the due date. Free 1040x See Private delivery services in Publication 51 (Circular A). Free 1040x Federal tax deposits can only be made by electronic funds transfer and are governed by legal holidays in the District of Columbia. Free 1040x Statewide holidays no longer apply. Free 1040x For a list of legal holidays that delay the due date of a federal tax deposit, see section 7 of Publication 51 (Circular A). Free 1040x Fiscal year taxpayers. Free 1040x  The due dates listed below apply whether you use a calendar or a fiscal year. Free 1040x By January 31. Free 1040x   File Form 943 with the IRS. Free 1040x If you deposited all Form 943 taxes when due, you have 10 additional days to file. Free 1040x Furnish each employee with a completed Form W-2, Wage and Tax Statement. Free 1040x Furnish each recipient to whom you paid $600 or more in nonemployee compensation with a completed Form 1099 (for example, Form 1099-MISC). Free 1040x File Form 940, Employer's Annual Federal Unemployment (FUTA) Tax Return, with the IRS. Free 1040x If you deposited all the FUTA tax when due, you have 10 additional days to file. Free 1040x File Form 945, Annual Return of Withheld Federal Income Tax, with the IRS to report any nonpayroll income tax withheld during 2013. Free 1040x If you deposited all Form 945 taxes when due, you have 10 additional days to file. Free 1040x By February 15. Free 1040x  Ask for a new Form W-4 or Formulario W-4(SP), Certificado de Exención de Retenciones del Empleado, from each employee who claimed exemption from federal income tax withholding last year. Free 1040x On February 16. Free 1040x  Any Form W-4 claiming exemption from withholding for the previous year has now expired. Free 1040x Begin withholding for any employee who previously claimed exemption from withholding but has not given you a new Form W-4 for the current year. Free 1040x If the employee does not give you a new Form W-4, withhold taxes based on the last valid Form W-4 you have for the employee that does not claim exemption from withholding or, if one does not exist, as if he or she is single with zero withholding allowances. Free 1040x If the employee furnishes a new Form W-4 claiming exemption from withholding after February 15, you may apply the exemption to future wages, but do not refund taxes withheld while the exempt status was not in place. Free 1040x By February 28. Free 1040x   File paper Forms 1099 and 1096. Free 1040x File Copy A of all paper Forms 1099 with Form 1096, Annual Summary and Transmittal of U. Free 1040x S. Free 1040x Information Returns, with the IRS. Free 1040x For electronically filed returns, see By March 31 below. Free 1040x File paper Forms W-2 and W-3. Free 1040x File Copy A of all paper Forms W-2 with Form W-3, Transmittal of Wage and Tax Statements, with the Social Security Administration (SSA). Free 1040x For electronically filed returns, see By March 31 below. Free 1040x By March 31. Free 1040x   File electronic Forms W-2 and 1099. Free 1040x File electronic Forms W-2 with the SSA and Forms 1099 with the IRS. Free 1040x For more information on reporting Form W-2 information to the SSA electronically, visit the SSA's Employer W-2 Filing Instructions & Information webpage at www. Free 1040x socialsecurity. Free 1040x gov/employer. Free 1040x For information on filing information returns electronically with the IRS, see Publication 1220, Specifications for Filing Forms 1097, 1098, 1099, 3921, 3922, 5498, 8935, and W-2G Electronically. Free 1040x By April 30, July 31, October 31, and January 31. Free 1040x   Deposit FUTA taxes. Free 1040x Deposit FUTA tax due if it is more than $500. Free 1040x Before December 1. Free 1040x  Remind employees to submit a new Form W-4 if their withholding allowances have changed or will change for the next year. Free 1040x Introduction You are generally required to withhold federal income tax from the wages of your employees. Free 1040x You may also be subject to social security and Medicare taxes under the Federal Insurance Contributions Act (FICA) and federal unemployment tax under the Federal Unemployment Tax Act (FUTA). Free 1040x You must also withhold Additional Medicare Tax from wages you pay to an employee in excess of $200,000 in a calendar year. Free 1040x This chapter includes information about these taxes. Free 1040x You must also pay self-employment tax on your net earnings from farming. Free 1040x See chapter 12 for information on self-employment tax. Free 1040x Topics - This chapter discusses: Farm employment, Family employees, Crew leaders, Social security and Medicare taxes, Additional Medicare Tax withholding, Federal income tax withholding, Reporting and paying social security, Medicare, and withheld federal income taxes, and FUTA tax. Free 1040x Useful Items - You may want to see: Publication 15 (Circular E), Employer's Tax Guide 15-A Employer's Supplemental Tax Guide 15-B Employer's Tax Guide to Fringe Benefits 51 (Circular A), Agricultural Employer's Tax Guide 926 Household Employer's Tax Guide Form (and Instructions) W-2 Wage and Tax Statement W-4 Employee's Withholding Allowance Certificate W-9 Request for Taxpayer Identification Number and Certification 940 Employer's Annual Federal Unemployment (FUTA) Tax Return 943 Employer's Annual Federal Tax Return for Agricultural Employees 943-X Adjusted Employer's Annual Federal Tax Return for Agricultural Employees or Claim for Refund See chapter 16 for information about getting publications and forms. Free 1040x Farm Employment In general, you are an employer of farmworkers if your employees do any of the following types of work. Free 1040x Raising or harvesting agricultural or horticultural products on a farm, including raising and feeding of livestock. Free 1040x Operating, managing, conserving, improving, or maintaining your farm and its tools and equipment. Free 1040x Services performed in salvaging timber, or clearing land of brush and other debris, left by a hurricane (also known as hurricane labor). Free 1040x Handling, processing, or packaging any agricultural or horticultural commodity if you produced more than half of the commodity (for a group of up to 20 unincorporated operators, all of the commodity). Free 1040x Work related to cotton ginning, turpentine, gum resin products, or the operation and maintenance of irrigation facilities. Free 1040x For more information, see Publication 51 (Circular A). Free 1040x 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. Free 1040x This is so even when you give the employee freedom of action. Free 1040x What matters is that you have the right to control the details of how the services are performed. Free 1040x You are responsible for withholding and paying employment taxes for your employees. Free 1040x You are also required to file employment tax returns. Free 1040x These requirements do not apply to amounts that you pay to independent contractors. Free 1040x See Publication 15-A for more information on how to determine whether an individual providing services is an independent contractor or an employee. Free 1040x If you employ a family of workers, each worker subject to your control (not just the head of the family) is an employee. Free 1040x Special rules apply to crew leaders. Free 1040x See Crew Leaders , later. Free 1040x Employer identification number (EIN). Free 1040x   If you have employees, you must have an EIN. Free 1040x If you do not have an EIN, you may apply for one online. Free 1040x Go to IRS. Free 1040x gov and click on the Apply for an EIN Online link under Tools. Free 1040x You may also apply for an EIN by calling 1-800-829-4933 or 1-800-829-4059 (TDD/TTY for persons who are deaf, hard of hearing, or have a speech disability). Free 1040x The hours of operation for both numbers are Monday–Friday form 7:00 a. Free 1040x m. Free 1040x –7:00 p. Free 1040x m. Free 1040x local time (Alaska and Hawaii follow Pacific time). Free 1040x You can also fax or mail Form SS-4, Application for Employer Identification Number, to the IRS. Free 1040x Employee's social security number (SSN). Free 1040x   An employee who does not have an SSN should submit Form SS-5, Application for a Social Security Card, to the Social Security Administration (SSA). Free 1040x Form SS-5 is available from any SSA office or by calling 1-800-772-1213 (operates 24 hours per day). Free 1040x It is also available from the SSA's website at www. Free 1040x socialsecurity. Free 1040x gov. Free 1040x   The employee must furnish evidence of age, identity, and U. Free 1040x S. Free 1040x citizenship or lawful immigration status permitting employment with the Form SS-5. Free 1040x An employee who is age 18 or older must appear in person with this evidence at an SSA office. Free 1040x Form I-9. Free 1040x    You must verify that each new employee is legally eligible to work in the United States. Free 1040x This includes completing the Form I-9, Employment Eligibility Verification. Free 1040x Form I-9 is available from the U. Free 1040x S. Free 1040x Citizenship and Immigration Services (USCIS) offices or by calling the Bureau of Citizenship and Immigration Services Forms Request Line at 1-800-870-3676. Free 1040x Form I-9 is also available from the USCIS website at www. Free 1040x uscis. Free 1040x gov. Free 1040x You can also contact the USCIS at 1-800-375-5283 for more information. Free 1040x New hire reporting. Free 1040x   You are required to report any new employee to a designated state new hire registry. Free 1040x Many states accept a copy of Form W-4 with employer information added. Free 1040x Visit the Office of Child Support Enforcement website at www. Free 1040x acf. Free 1040x hhs. Free 1040x gov/programs/cse/newhire for more information. Free 1040x Family Employees Generally, the wages you pay to family members who are your employees are subject to employment taxes. Free 1040x However, certain exemptions may apply to wages paid to your child, spouse, or parent. Free 1040x Exemptions for your child. Free 1040x   Payments for the services of your child under age 18 who works for you in your trade or business (including a farm) are not subject to social security and Medicare taxes. Free 1040x However, see Nonexempt services of a child or spouse , later. Free 1040x Payments for the services of your child under age 21 employed by you in other than a trade or business, such as payments for household services in your home, are also not subject to social security or Medicare taxes. Free 1040x Payments for the services of your child under age 21 employed by you, whether or not in your trade or business, are not subject to FUTA tax. Free 1040x Although not subject to social security, Medicare, or FUTA tax, the child's wages still may be subject to federal income tax withholding. Free 1040x Exemptions for your spouse. Free 1040x   Payments for the services of your spouse who works for you in your trade or business are subject to federal income tax withholding and social security and Medicare taxes, but not FUTA tax. Free 1040x   Payments for the services of your spouse employed by you in other than a trade or business, such as payments for household services in your home, are not subject to social security, Medicare, or FUTA taxes. Free 1040x Nonexempt services of a child or spouse. Free 1040x   Payments for the services of your child or spouse are subject to federal income tax withholding as well as social security, Medicare, and FUTA taxes if he or she works for any of the following entities. Free 1040x A corporation, even if it is controlled by you. Free 1040x A partnership, even if you are a partner. Free 1040x This does not apply to wages paid to your child if each partner is a parent of the child. Free 1040x An estate or trust, even if it is the estate of a deceased parent. Free 1040x In these situations, the child or spouse is considered to work for the corporation, partnership, or estate, not you. Free 1040x Exemptions for your parent. Free 1040x   Payments for the services of your parent employed by you in your trade or business are subject to federal income tax withholding and social security and Medicare taxes. Free 1040x Social security and Medicare taxes do not apply to wages paid to your parent for services not in your trade or business, but they do apply to payments for household services in your home if both the following conditions are satisfied. Free 1040x You have a child living in your home who is under age 18 or has a physical or mental condition that requires care by an adult for at least 4 continuous weeks in a calendar quarter. Free 1040x You are a widow or widower; or divorced and not remarried; or have a spouse in the home who, because of a physical or mental condition, cannot care for your child for at least 4 continuous weeks in the quarter. Free 1040x   Wages you pay to your parent are not subject to FUTA tax, regardless of the type of services provided. Free 1040x Qualified joint venture. Free 1040x   If spouses elect to be treated as a qualified joint venture instead of a partnership, either spouse may report and pay the employment taxes due on the wages paid to employees using the EIN of that spouse's sole proprietorship. Free 1040x For more information about qualified joint ventures, see chapter 12. Free 1040x Crew Leaders If farmworkers are provided by a crew leader, the crew leader may be the employer of the workers. Free 1040x Social security and Medicare taxes. Free 1040x   For social security and Medicare tax purposes, the crew leader is the employer of the workers if both of the following requirements are met. Free 1040x The crew leader pays (either on his or her own behalf or on behalf of the farmer) the workers for their farm labor. Free 1040x The crew leader has not entered into a written agreement with the farmer under which the crew leader is designated as an employee of the farmer. Free 1040x Federal income tax withholding. Free 1040x   If the crew leader is the employer for social security and Medicare tax purposes, the crew leader is the employer for federal income tax withholding purposes. Free 1040x Federal unemployment (FUTA) tax. Free 1040x   For FUTA tax purposes, the crew leader is the employer of the workers if, in addition to the earlier requirements, either of the following requirements are met. Free 1040x The crew leader is registered under the Migrant and Seasonal Agricultural Worker Protection Act. Free 1040x Substantially all crew members operate or maintain mechanized equipment provided by the crew leader as part of the service to the farmer. Free 1040x   The farmer is the employer of workers furnished by a crew leader in all other situations. Free 1040x In addition, the farmer is the employer of workers furnished by a registered crew leader if the workers are the employees of the farmer under the common-law test. Free 1040x For example, some farmers employ individuals to recruit farmworkers exclusively for them. Free 1040x Although these individuals may be required to register under the Migrant and Seasonal Agricultural Worker Protection Act, the workers are employed directly by the farmer. Free 1040x The farmer is the employer in these cases. Free 1040x For information about common-law employees, see section 1 of Publication 15-A. Free 1040x For information about crew leaders, see the Department of Labor website at www. Free 1040x dol. Free 1040x gov/whd/regs/compliance/whdfs49. Free 1040x htm. Free 1040x Social Security and Medicare Taxes All cash wages you pay to an employee during the year for farmwork are subject to social security and Medicare taxes if you meet either of the following tests. Free 1040x You pay the employee $150 or more in cash wages (count all wages paid on a time, piecework, or other basis) during the year for farmwork (the $150 test). Free 1040x The $150 test applies separately to each farmworker that you employ. Free 1040x If you employ a family of workers, each member is treated separately. Free 1040x Do not count wages paid by other employers. Free 1040x You pay cash and noncash wages of $2,500 or more during the year to all your employees for farmwork (the $2,500 test). Free 1040x If the $2,500 test for the group is not met, the $150 test for an employee still applies. Free 1040x Exceptions. Free 1040x   Annual cash wages of less than $150 you pay to a seasonal farmworker are not subject to social security and Medicare taxes, even if you pay $2,500 or more to all your farmworkers. Free 1040x However, these wages count toward the $2,500 test for determining whether other farmworkers' wages are subject to social security and Medicare taxes. Free 1040x   A seasonal farmworker is a worker who: Works as a hand-harvest laborer, Is paid piece rates in an operation usually paid on this basis in the region of employment, Commutes daily from his or her permanent home to the farm, and Worked in agriculture less than 13 weeks in the preceding calendar year. Free 1040x   See Family Employees , earlier, for certain exemptions from social security and Medicare taxes that apply to your child, spouse, and parent. Free 1040x Religious exemption. Free 1040x   An exemption from social security and Medicare taxes is available to members of a recognized religious group or division opposed to public insurance. Free 1040x This exemption is available only if both the employee and the employer are members of the group or division. Free 1040x   For more information, see Publication 517, Social Security and Other Information for Members of the Clergy and Religious Workers. Free 1040x Cash wages. Free 1040x   Only cash wages paid to farmworkers are subject to social security and Medicare taxes. Free 1040x Cash wages include checks, money orders, and any kind of money or cash. Free 1040x   Only cash wages subject to social security and Medicare taxes are credited to your employees for social security benefit purposes. Free 1040x Payments not subject to these taxes, such as commodity wages, do not contribute to your employees' social security coverage. Free 1040x For information about social security benefits, contact the SSA at 1-800-772-1213 or online at www. Free 1040x socialsecurity. Free 1040x gov. Free 1040x Noncash wages. Free 1040x    Noncash wages include food, lodging, clothing, transportation passes, and other goods and services. Free 1040x Noncash wages paid to farmworkers, including commodity wages, are not subject to social security and Medicare taxes. Free 1040x However, they are subject to these taxes if the substance of the transaction is a cash payment. Free 1040x For information on lodging provided as a condition of employment, see Publication 15-B. Free 1040x   Report the value of noncash wages in box 1 of Form W-2 together with cash wages. Free 1040x Do not show noncash wages in box 3 or in box 5, (unless the substance of the transaction is a cash payment). Free 1040x Tax rates and social security wage limit. Free 1040x   For 2013, the employer and the employee will pay the following taxes. Free 1040x The employer and employee each pay 6. Free 1040x 2% of cash wages for social security tax (old-age, survivors, and disability insurance). Free 1040x The employer and employee each pay 1. Free 1040x 45% of cash wages for Medicare tax (hospital insurance). Free 1040x The employee pays 0. Free 1040x 9% of cash wages in excess of $200,000 for Additional Medicare Tax. Free 1040x Wage limit. Free 1040x   The limit on wages subject to the social security tax for 2013 is $113,700. Free 1040x There is no limit on wages subject to the Medicare tax. Free 1040x All covered wages are subject to the Medicare tax. Free 1040x Additionally, all wages in excess of $200,000 are subject to Additional Medicare Tax withholding. Free 1040x Paying employee's share. Free 1040x   If you would rather pay the employee's share of social security and Medicare taxes without deducting it from his or her wages, you may do so. Free 1040x It is additional income to the employee. Free 1040x You must include it in box 1 of the employee's Form W-2, but do not count it as social security and Medicare wages (boxes 3 and 5 on Form W-2) or as wages for federal unemployment (FUTA) tax purposes. Free 1040x Example. Free 1040x Jane operates a small family fruit farm. Free 1040x She employs day laborers in the picking season to enable her to timely get her crop to market. Free 1040x She does not deduct the employees' share of social security and Medicare taxes from their pay; instead, she pays it on their behalf. Free 1040x When her accountant, Susan, prepares the employees' Forms W-2, she adds each employee's share of social security and Medicare taxes paid by Jane to the employee's wage income (box 1 of Form W-2), but does not include it in box 3 (social security wages) or box 5 (Medicare wages and tips). Free 1040x For 2013, Jane paid Mary $1,000 during the year. Free 1040x Susan enters $1,076. Free 1040x 50 in box 1 of Mary's Form W-2 ($1,000 wages plus $76. Free 1040x 50 social security and Medicare taxes paid for Mary). Free 1040x She enters $1,000 in boxes 3 and 5 of Mary's Form W-2. Free 1040x Additional Medicare Tax. Free 1040x   In addition to withholding Medicare tax at 1. Free 1040x 45%, you must withhold a 0. Free 1040x 9% Additional Medicare Tax from wages you pay to an employee in excess of $200,000 in a calendar year. Free 1040x You are required to begin withholding Additional Medicare Tax in the pay period in which you pay wages in excess of $200,000 to an employee and continue to withhold it each pay period until the end of the calendar year. Free 1040x Additional Medicare Tax is only imposed on the employee. Free 1040x There is no employer share of Additional Medicare Tax. Free 1040x All wages that are subject to Medicare tax are subject to Additional Medicare Tax withholding if paid in excess of the $200,000 threshold. Free 1040x   For more information on what wages are subject to Medicare tax, see the chart, Special Rules for Various Types of Services and Payments, in section 15 of Publication 15 (Circular E). Free 1040x For more information on Additional Medicare Tax, visit IRS. Free 1040x gov and enter “Additional Medicare Tax” in the search box. Free 1040x Federal Income Tax Withholding If the cash wages you pay to farmworkers are subject to social security and Medicare taxes, they are also subject to federal income tax withholding. Free 1040x Although noncash wages are subject to federal income tax, withhold income tax only if you and the employee agree to do so. Free 1040x The amount to withhold is figured on gross wages without taking out social security and Medicare taxes, union dues, insurance, etc. Free 1040x Form W-4. Free 1040x   Generally, the amount of federal income tax you withhold is based on the employee's marital status and withholding allowances claimed on the employee's Form W-4. Free 1040x In general, an employee can claim withholding allowances on Form W-4 equal to the number of exemptions the employee will be entitled to claim on his or her tax return. Free 1040x An employee may also be able to claim a special withholding allowance and allowances for estimated deductions and credits. Free 1040x   Do not withhold federal income tax from the wages of an employee who, by filing Form W-4, certifies that he or she had no federal income tax liability last year and anticipates no liability for the current year. Free 1040x   You should give each new employee a Form W-4 as soon as you hire the employee. Free 1040x For Spanish-speaking employees, you may use Formulario W-4(SP) which is the Spanish translation of Form W-4. Free 1040x Have the employee complete and return the form to you before the first payday. Free 1040x If the employee does not return the completed form, you must withhold federal income tax as if the employee is single and claims no withholding allowances. Free 1040x New Form W-4 for 2014. Free 1040x   You should make the 2014 Form W-4 available to your employees and encourage them to check their income tax withholding for 2014. Free 1040x Those employees who owed a large amount of tax or received a large refund for 2013 may want to submit a new Form W-4. Free 1040x You cannot accept substitute Forms W-4 developed by employees. Free 1040x How to figure withholding. Free 1040x   You can use one of several methods to determine the amount to withhold. Free 1040x The methods are described in Publication 51 (Circular A), which contains tables showing the correct amount of federal income tax you should withhold. Free 1040x Publication 51 (Circular A) also contains additional information about federal income tax withholding. Free 1040x Nonemployee compensation. Free 1040x   Generally, you do not have to withhold federal income tax on payments for services to individuals who are not your employees. Free 1040x However, you may be required to report these payments on Form 1099-MISC, Miscellaneous Income, and to withhold under the backup withholding rules. Free 1040x For more information, see the Instructions for Form 1099-MISC. Free 1040x Required Notice to Employees About Earned Income Credit (EIC) You must provide notification about EIC to each employee who worked for you at any time during the year and from whom you did not withhold any federal income tax. Free 1040x However, you do not have to notify employees who claim exemption from federal income tax withholding on Form W-4. Free 1040x You meet the notification requirement by giving each employee any of the following. Free 1040x Form W-2, which contains EIC notification on the back of Copy B. Free 1040x A substitute Form W-2 with the exact EIC wording shown on the back of copy B of Form W-2. Free 1040x Notice 797, Possible Federal Tax Refund Due to the Earned Income Credit (EIC). Free 1040x Your own written statement with the exact wording of Notice 797. Free 1040x For more information, see Publication 51 (Circular A). Free 1040x Reporting and Paying Social Security, Medicare, and Withheld Federal Income Taxes You must withhold federal income, social security, and Medicare taxes required to be withheld from the salaries and wages of your employees. Free 1040x You are liable for the payment of these taxes to the federal government whether or not you collect them from your employees. Free 1040x If, for example, you withhold less than the correct tax from an employee's wages, you are still liable for the full amount. Free 1040x You must also pay the employer's share of social security and Medicare taxes. Free 1040x There is no employer share of Additional Medicare Tax. Free 1040x Form 943. Free 1040x   Report withheld federal income tax, social security tax, and Medicare tax on Form 943. Free 1040x Your 2013 Form 943 is due by January 31, 2014 (or February 10, 2014, if you made deposits on time in full payment of the taxes due for the year). Free 1040x Deposits. Free 1040x   Generally, you must deposit both the employer and employee shares of social security and Medicare taxes and federal income tax withheld during the year. Free 1040x However, you may make payments with Form 943 instead of depositing them if you accumulate less than a $2,500 tax liability (“Total taxes after adjustments” line on Form 943) during the year and you pay in full with a timely filed return. Free 1040x   For more information on deposit rules, see Publication 51 (Circular A). Free 1040x Electronic deposit requirement. Free 1040x   You must use electronic funds transfer to make all federal tax deposits. Free 1040x Generally, electronic funds transfers are made using EFTPS. Free 1040x If you do not want to use EFTPS, you can arrange for your tax professional, financial institution, payroll service, or other trusted third party to make electronic deposits on your behalf. Free 1040x Also, you may arrange for your financial institution to initiate a same-day wire payment on your behalf. Free 1040x EFTPS is a free service provided by the Department of Treasury. Free 1040x Services provided by your tax professional, financial institution, payroll service, or other third party may have a fee. Free 1040x   For more information on making federal tax deposits, see section 7 of Publication 51 (Circular A). Free 1040x To get more information about EFTPS or to enroll in EFTPS, visit www. Free 1040x eftps. Free 1040x gov or call 1-800-555-4477 or 1-800-733-4829 (TDD). Free 1040x Additional information about EFTPS is also available in Publication 966. Free 1040x Form W-2. Free 1040x   By January 31, you must furnish each employee a Form W-2 showing total wages for the previous year and total federal income tax, social security tax, and Medicare tax withheld. Free 1040x However, if an employee stops working for you and requests the form earlier, you must give it to the employee within 30 days of the later of the following dates. Free 1040x The date the employee requests the form. Free 1040x The date you make your final payment of wages to the employee. Free 1040x Compensation paid to H-2A visa holders. Free 1040x   Report compensation of $600 or more paid to foreign agricultural workers who entered the country on H-2A visas in box 1 of Form W-2. Free 1040x Compensation paid to H-2A workers for agricultural labor performed in connection with this visa is not subject to social security and Medicare taxes, and therefore should not be reported as wages subject to social security tax (line 2), Medicare tax (line 4), or Additional Medicare Tax (line 6) on Form 943, and should not be reported as social security wages (box 3) or Medicare wages (box 5) on Form W-2. Free 1040x   An employer is not required to withhold federal income tax from compensation it pays to an H-2A worker for agricultural labor performed in connection with this visa unless the worker asks for withholding and the employer agrees. Free 1040x In this case, the worker must give the employer a completed Form W-4. Free 1040x Federal income tax withheld should be reported on Form 943, line 8, and in box 2 of Form W-2. Free 1040x   These reporting rules apply when the H-2A worker provides his or her taxpayer identification number (TIN) to the employer. Free 1040x For the rules relating to backup withholding and reporting when the H-2A worker does not provide a TIN, see the Instructions for Form 1099-MISC and the Instructions for Form 945. Free 1040x Trust fund recovery penalty. Free 1040x   If you are responsible for withholding, accounting for, depositing, or paying federal withholding taxes and willfully fail to do so, you can be held liable for a penalty equal to the withheld tax not paid. Free 1040x A responsible person can be an officer of a corporation, a partner, a sole proprietor, or an employee of any form of business. Free 1040x A trustee or agent with authority over the funds of the business can also be held responsible for the penalty. Free 1040x   Willfully means voluntarily, consciously, and intentionally. Free 1040x Paying other expenses of the business instead of the taxes due is acting willfully. Free 1040x Consequences of treating an employee as an independent contractor. Free 1040x   If you classify an employee as an independent contractor and you have no reasonable basis for doing so, you may be held liable for employment taxes for that worker. Free 1040x See Publication 15-A for more information. Free 1040x Federal Unemployment (FUTA) Tax You must pay FUTA tax if you meet either of the following tests. Free 1040x You paid cash wages of $20,000 or more to farmworkers in any calendar quarter during the current or preceding calendar year. Free 1040x You employed 10 or more farmworkers for some part of at least 1 day during any 20 or more different calendar weeks during the current or preceding calendar year. Free 1040x These rules do not apply to exempt services of your spouse, your parents, or your children under age 21. Free 1040x See Family Employees , earlier. Free 1040x Alien farmworkers. Free 1040x   Wages paid to aliens admitted on a temporary basis to the United States to perform farmwork (also known as “H-2A visa workers”) are exempt from FUTA tax. Free 1040x However, include your employment of these workers and the wages you paid them to determine whether you meet either of the above tests. Free 1040x Commodity wages. Free 1040x   Payments in kind for farm labor are not cash wages. Free 1040x Do not count them to figure whether you are subject to FUTA tax or to figure how much tax you owe. Free 1040x Tax rate and credit. Free 1040x   The gross FUTA tax rate is 6. Free 1040x 0% of the first $7,000 cash wages you pay to each employee during the year. Free 1040x However, you are given a credit of up to 5. Free 1040x 4% of the first $7,000 cash wages you pay to each employee for the state unemployment tax you pay. Free 1040x If your state tax rate (experience rate) is less than 5. Free 1040x 4%, you may still be allowed the full 5. Free 1040x 4% credit. Free 1040x   If you do not pay the state tax, you cannot take the credit. Free 1040x If you are exempt from state unemployment tax for any reason, the full 6. Free 1040x 0% rate applies. Free 1040x See the Instructions for Form 940 for additional information. Free 1040x More information. Free 1040x   For more information on FUTA tax, see Publication 51 (Circular A). Free 1040x Reporting and Paying FUTA Tax The FUTA tax is imposed on you as the employer. Free 1040x It must not be collected or deducted from the wages of your employees. Free 1040x Form 940. Free 1040x   Report FUTA tax on Form 940. Free 1040x The 2013 Form 940 is due January 31, 2014 (or February 10, 2014, if you timely deposited the full amount of your 2013 FUTA tax). Free 1040x Deposits. Free 1040x   If at the end of any calendar quarter you owe, but have not yet deposited, more than $500 in FUTA tax for the year, you must make a deposit by the end of the following month. Free 1040x If the undeposited tax is $500 or less at the end of a quarter, you do not have to deposit it. Free 1040x You can add it to the tax for the next quarter. Free 1040x If the total undeposited tax is more than $500 at the end of the next quarter, a deposit will be required. Free 1040x If the total undeposited tax at the end of the 4th quarter is $500 or less, you can either make a deposit or pay it with your return by the January 31, 2014, due date. Free 1040x Electronic deposit requirement. Free 1040x   You must use electronic funds transfer to make all federal tax deposits. Free 1040x Generally, electronic funds transfers are made using EFTPS. Free 1040x If you do not want to use EFTPS, you can arrange for your tax professional, financial institution, payroll service, or other trusted third party to make electronic deposits on your behalf. Free 1040x Also, you may arrange for your financial institution to initiate a same-day wire payment on your behalf. Free 1040x EFTPS is a free service provided by the Department of Treasury. Free 1040x Services provided by your tax professional, financial institution, payroll service, or other third party may have a fee. Free 1040x   For more information on making federal tax deposits, see section 7 of Publication 51 (Circular A). Free 1040x To get more information about EFTPS or to enroll in EFTPS, visit www. Free 1040x eftps. Free 1040x gov or call 1-800-555-4477 or 1-800-733-4829 (TDD). Free 1040x Additional information about EFTPS is also available in Publication 966. Free 1040x Prev  Up  Next   Home   More Online Publications