Filing Your Taxes Online is Fast, Easy and Secure.
Start now and receive your tax refund in as little as 7 days.

1. Get Answers

Your online questions are customized to your unique tax situation.

2. Maximize your Refund

Find tax credits for everything from school tuition to buying a hybri

3. E-File for FREE

E-file free with direct deposit to get your refund in as few as 7 days.

Filing your taxes with paper mail can be difficult and it could take weeks for your refund to arrive. IRS e-file is easy, fast and secure. There is no paperwork going to the IRS so tax refunds can be processed in as little as 7 days with direct deposit. As you prepare your taxes online, you can see your tax refund in real time.

FREE audit support and representation from an enrolled agent – NEW and only from H&R Block

Free State Tax Return Online

1040x Tax Form 20111040ez 2012File Taxes 2010File State Tax Only For FreeEz Forms2012 1040ez Form1040 NrFree Tax Filing For Low IncomeForm 1040x Amended ReturnIrs Form 1040nrFile Corporate Tax Extension OnlineFree Income Tax PreparationW2 EzTurbotax Free State ReturnTurbo Tax2011 Taxes2012 Form 1040ezFree Tax File1040a Tax FormOrder 2012 Tax Forms From IrsForm 1040ez 20122014 1040 EzHow To File Back Income Taxes2010 Form 10402012 Tax Forms FederalEztaxFree Tax Prep1040ez 2012 InstructionsFiling An Amended Tax ReturnFile 1040x1040eztaxformFree 1040ez 2014Filing Previous Years TaxesHow To File 2012 Tax ReturnsTaxes HelpFree Tax Calculator 2011Irs1040 InstructionsFree Taxes For StudentsWww.irs.gov Form 1040xAmend My Tax Return Online

Free State Tax Return Online

Free state tax return online Publication 15-B - Main Content Table of Contents 1. Free state tax return online Fringe Benefit OverviewAre Fringe Benefits Taxable? Cafeteria Plans Simple Cafeteria Plans 2. Free state tax return online Fringe Benefit Exclusion RulesAccident 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 Working Condition Benefits 3. Free state tax return online Fringe Benefit Valuation RulesGeneral Valuation Rule Cents-Per-Mile Rule Commuting Rule Lease Value Rule Unsafe Conditions Commuting Rule 4. Free state tax return online Rules for Withholding, Depositing, and ReportingTransfer of property. Free state tax return online Amount of deposit. Free state tax return online Limitation. Free state tax return online Conformity rules. Free state tax return online Election not to withhold income tax. Free state tax return online How To Get Tax Help 1. Free state tax return online Fringe Benefit Overview A fringe benefit is a form of pay for the performance of services. Free state tax return online For example, you provide an employee with a fringe benefit when you allow the employee to use a business vehicle to commute to and from work. Free state tax return online Performance of services. Free state tax return online   A person who performs services for you does not have to be your employee. Free state tax return online A person may perform services for you as an independent contractor, partner, or director. Free state tax return online Also, for fringe benefit purposes, treat a person who agrees not to perform services (such as under a covenant not to compete) as performing services. Free state tax return online Provider of benefit. Free state tax return online   You are the provider of a fringe benefit if it is provided for services performed for you. Free state tax return online You are considered the provider of a fringe benefit even if a third party, such as your client or customer, provides the benefit to your employee for services the employee performs for you. Free state tax return online For example, if, in exchange for goods or services, your customer provides day care services as a fringe benefit to your employees for services they provide for you as their employer, then you are the provider of this fringe benefit even though the customer is actually providing the day care. Free state tax return online Recipient of benefit. Free state tax return online   The person who performs services for you is considered the recipient of a fringe benefit provided for those services. Free state tax return online That person may be considered the recipient even if the benefit is provided to someone who did not perform services for you. Free state tax return online For example, your employee may be the recipient of a fringe benefit you provide to a member of the employee's family. Free state tax return online Are Fringe Benefits Taxable? Any fringe benefit you provide is taxable and must be included in the recipient's pay unless the law specifically excludes it. Free state tax return online Section 2 discusses the exclusions that apply to certain fringe benefits. Free state tax return online Any benefit not excluded under the rules discussed in section 2 is taxable. Free state tax return online Including taxable benefits in pay. Free state tax return online   You must include in a recipient's pay the amount by which the value of a fringe benefit is more than the sum of the following amounts. Free state tax return online Any amount the law excludes from pay. Free state tax return online Any amount the recipient paid for the benefit. Free state tax return online The rules used to determine the value of a fringe benefit are discussed in section 3. Free state tax return online   If the recipient of a taxable fringe benefit is your employee, the benefit is subject to employment taxes and must be reported on Form W-2, Wage and Tax Statement. Free state tax return online However, you can use special rules to withhold, deposit, and report the employment taxes. Free state tax return online These rules are discussed in section 4. Free state tax return online   If the recipient of a taxable fringe benefit is not your employee, the benefit is not subject to employment taxes. Free state tax return online However, you may have to report the benefit on one of the following information returns. Free state tax return online If the recipient receives the benefit as: Use: An independent contractor Form 1099-MISC, Miscellaneous Income A partner Schedule K-1 (Form 1065), Partner's Share of Income, Deductions, Credits, etc. Free state tax return online For more information, see the instructions for the forms listed above. Free state tax return online Cafeteria Plans A cafeteria plan, including a flexible spending arrangement, is a written plan that allows your employees to choose between receiving cash or taxable benefits instead of certain qualified benefits for which the law provides an exclusion from wages. Free state tax return online If an employee chooses to receive a qualified benefit under the plan, the fact that the employee could have received cash or a taxable benefit instead will not make the qualified benefit taxable. Free state tax return online Generally, a cafeteria plan does not include any plan that offers a benefit that defers pay. Free state tax return online However, a cafeteria plan can include a qualified 401(k) plan as a benefit. Free state tax return online Also, certain life insurance plans maintained by educational institutions can be offered as a benefit even though they defer pay. Free state tax return online Qualified benefits. Free state tax return online   A cafeteria plan can include the following benefits discussed in section 2. Free state tax return online Accident and health benefits (but not Archer medical savings accounts (Archer MSAs) or long-term care insurance). Free state tax return online Adoption assistance. Free state tax return online Dependent care assistance. Free state tax return online Group-term life insurance coverage (including costs that cannot be excluded from wages). Free state tax return online Health savings accounts (HSAs). Free state tax return online Distributions from an HSA may be used to pay eligible long-term care insurance premiums or qualified long-term care services. Free state tax return online Benefits not allowed. Free state tax return online   A cafeteria plan cannot include the following benefits discussed in section 2. Free state tax return online Archer MSAs. Free state tax return online See Accident and Health Benefits in section 2. Free state tax return online Athletic facilities. Free state tax return online De minimis (minimal) benefits. Free state tax return online Educational assistance. Free state tax return online Employee discounts. Free state tax return online Employer-provided cell phones. Free state tax return online Lodging on your business premises. Free state tax return online Meals. Free state tax return online Moving expense reimbursements. Free state tax return online No-additional-cost services. Free state tax return online Transportation (commuting) benefits. Free state tax return online Tuition reduction. Free state tax return online Working condition benefits. Free state tax return online It also cannot include scholarships or fellowships (discussed in Publication 970, Tax Benefits for Education). Free state tax return online $2,500 limit on a health flexible spending arrangement (FSA). Free state tax return online   For plan years beginning after December 31, 2012, a cafeteria plan may not allow an employee to request salary reduction contributions for a health FSA in excess of $2,500. Free state tax return online For plan years beginning after December 31, 2013, the limit is unchanged at $2,500. Free state tax return online   A cafeteria plan offering a health FSA must be amended to specify the $2,500 limit (or any lower limit set by the employer). Free state tax return online While cafeteria plans generally must be amended on a prospective basis, an amendment that is adopted on or before December 31, 2014, may be made effective retroactively, provided that in operation the cafeteria plan meets the limit for plan years beginning after December 31, 2012. Free state tax return online A cafeteria plan that does not limit health FSA contributions to the dollar limit is not a cafeteria plan and all benefits offered under the plan are includible in the employee's gross income. Free state tax return online   For more information, see Notice 2012-40, 2012-26 I. Free state tax return online R. Free state tax return online B. Free state tax return online 1046, available at www. Free state tax return online irs. Free state tax return online gov/irb/2012-26_IRB/ar09. Free state tax return online html. Free state tax return online Employee. Free state tax return online   For these plans, treat the following individuals as employees. Free state tax return online A current common-law employee. Free state tax return online See section 2 in Publication 15 (Circular E) for more information. Free state tax return online A full-time life insurance agent who is a current statutory employee. Free state tax return online A leased employee who has provided services to you on a substantially full-time basis for at least a year if the services are performed under your primary direction or control. Free state tax return online Exception for S corporation shareholders. Free state tax return online   Do not treat a 2% shareholder of an S corporation as an employee of the corporation for this purpose. Free state tax return online A 2% shareholder for this purpose is someone who directly or indirectly owns (at any time during the year) more than 2% of the corporation's stock or stock with more than 2% of the voting power. Free state tax return online Treat a 2% shareholder as you would a partner in a partnership for fringe benefit purposes, but do not treat the benefit as a reduction in distributions to the 2% shareholder. Free state tax return online Plans that favor highly compensated employees. Free state tax return online   If your plan favors highly compensated employees as to eligibility to participate, contributions, or benefits, you must include in their wages the value of taxable benefits they could have selected. Free state tax return online A plan you maintain under a collective bargaining agreement does not favor highly compensated employees. Free state tax return online   A highly compensated employee for this purpose is any of the following employees. Free state tax return online An officer. Free state tax return online A shareholder who owns more than 5% of the voting power or value of all classes of the employer's stock. Free state tax return online An employee who is highly compensated based on the facts and circumstances. Free state tax return online A spouse or dependent of a person described in (1), (2), or (3). Free state tax return online Plans that favor key employees. Free state tax return online   If your plan favors key employees, you must include in their wages the value of taxable benefits they could have selected. Free state tax return online A plan favors key employees if more than 25% of the total of the nontaxable benefits you provide for all employees under the plan go to key employees. Free state tax return online However, a plan you maintain under a collective bargaining agreement does not favor key employees. Free state tax return online   A key employee during 2014 is generally an employee who is either of the following. Free state tax return online An officer having annual pay of more than $170,000. Free state tax return online An employee who for 2014 is either of the following. Free state tax return online A 5% owner of your business. Free state tax return online A 1% owner of your business whose annual pay was more than $150,000. Free state tax return online Simple Cafeteria Plans Eligible employers meeting contribution requirements and eligibility and participation requirements can establish a simple cafeteria plan. Free state tax return online Simple cafeteria plans are treated as meeting the nondiscrimination requirements of a cafeteria plan and certain benefits under a cafeteria plan. Free state tax return online Eligible employer. Free state tax return online   You are an eligible employer if you employ an average of 100 or fewer employees during either of the 2 preceding years. Free state tax return online If your business was not in existence throughout the preceding year, you are eligible if you reasonably expect to employ an average of 100 or fewer employees in the current year. Free state tax return online If you establish a simple cafeteria plan in a year that you employ an average of 100 or fewer employees, you are considered an eligible employer for any subsequent year as long as you do not employ an average of 200 or more employees in a subsequent year. Free state tax return online Eligibility and participation requirements. Free state tax return online   These requirements are met if all employees who had at least 1,000 hours of service for the preceding plan year are eligible to participate and each employee eligible to participate in the plan may elect any benefit available under the plan. Free state tax return online You may elect to exclude from the plan employees who: Are under age 21 before the close of the plan year, Have less than 1 year of service with you as of any day during the plan year, Are covered under a collective bargaining agreement, or Are nonresident aliens working outside the United States whose income did not come from a U. Free state tax return online S. Free state tax return online source. Free state tax return online Contribution requirements. Free state tax return online   You must make a contribution to provide qualified benefits on behalf of each qualified employee in an amount equal to: A uniform percentage (not less than 2%) of the employee’s compensation for the plan year, or An amount which is at least 6% of the employee’s compensation for the plan year or twice the amount of the salary reduction contributions of each qualified employee, whichever is less. Free state tax return online If the contribution requirements are met using option (2), the rate of contribution to any salary reduction contribution of a highly compensated or key employee can not be greater than the rate of contribution to any other employee. Free state tax return online More information. Free state tax return online   For more information about cafeteria plans, see section 125 of the Internal Revenue Code and its regulations. Free state tax return online 2. Free state tax return online Fringe Benefit Exclusion Rules This section discusses the exclusion rules that apply to fringe benefits. Free state tax return online These rules exclude all or part of the value of certain benefits from the recipient's pay. Free state tax return online The excluded benefits are not subject to federal income tax withholding. Free state tax return online Also, in most cases, they are not subject to social security, Medicare, or federal unemployment (FUTA) tax and are not reported on Form W-2. Free state tax return online This section discusses the exclusion rules for the following fringe benefits. Free state tax return online Accident and health benefits. Free state tax return online Achievement awards. Free state tax return online Adoption assistance. Free state tax return online Athletic facilities. Free state tax return online De minimis (minimal) benefits. Free state tax return online Dependent care assistance. Free state tax return online Educational assistance. Free state tax return online Employee discounts. Free state tax return online Employee stock options. Free state tax return online Employer-provided cell phones. Free state tax return online Group-term life insurance coverage. Free state tax return online Health savings accounts (HSAs). Free state tax return online Lodging on your business premises. Free state tax return online Meals. Free state tax return online Moving expense reimbursements. Free state tax return online No-additional-cost services. Free state tax return online Retirement planning services. Free state tax return online Transportation (commuting) benefits. Free state tax return online Tuition reduction. Free state tax return online Working condition benefits. Free state tax return online See Table 2-1, later, for an overview of the employment tax treatment of these benefits. Free state tax return online Table 2-1. Free state tax return online Special Rules for Various Types of Fringe Benefits (For more information, see the full discussion in this section. Free state tax return online ) Treatment Under Employment Taxes Type of Fringe Benefit Income Tax Withholding Social Security and Medicare (including Additional Medicare Tax when wages are paid in excess of $200,000) Federal Unemployment (FUTA) Accident and health benefits Exempt1,2, except for long-term care benefits provided through a flexible spending or similar arrangement. Free state tax return online Exempt, except for certain payments to S corporation employees who are 2% shareholders. Free state tax return online Exempt Achievement awards Exempt1 up to $1,600 for qualified plan awards ($400 for nonqualified awards). Free state tax return online Adoption assistance Exempt1,3 Taxable Taxable Athletic facilities Exempt if substantially all use during the calendar year is by employees, their spouses, and their dependent children and the facility is operated by the employer on premises owned or leased by the employer. Free state tax return online De minimis (minimal) benefits Exempt Exempt Exempt Dependent care assistance Exempt3 up to certain limits, $5,000 ($2,500 for married employee filing separate return). Free state tax return online Educational assistance Exempt up to $5,250 of benefits each year. Free state tax return online (See Educational Assistance , later in this section. Free state tax return online ) Employee discounts Exempt3 up to certain limits. Free state tax return online (See Employee Discounts , later in this section. Free state tax return online ) Employee stock options See Employee Stock Options , later in this section. Free state tax return online Employer-provided cell phones Exempt if provided primarily for noncompensatory business purposes. Free state tax return online Group-term life insurance coverage Exempt Exempt1,4, 7 up to cost of $50,000 of coverage. Free state tax return online (Special rules apply to former employees. Free state tax return online ) Exempt Health savings accounts (HSAs) Exempt for qualified individuals up to the HSA contribution limits. Free state tax return online (See Health Savings Accounts , later in this section. Free state tax return online ) Lodging on your business premises Exempt1 if furnished for your convenience as a condition of employment. Free state tax return online Meals Exempt if furnished on your business premises for your convenience. Free state tax return online Exempt if de minimis. Free state tax return online Moving expense reimbursements Exempt1 if expenses would be deductible if the employee had paid them. Free state tax return online No-additional-cost services Exempt3 Exempt3 Exempt3 Retirement planning services Exempt5 Exempt5 Exempt5 Transportation (commuting) benefits Exempt1 up to certain limits if for rides in a commuter highway vehicle and/or transit passes ($130), qualified parking ($250), or qualified bicycle commuting reimbursement6 ($20). Free state tax return online (See Transportation (Commuting) Benefits , later in this section. Free state tax return online ) Exempt if de minimis. Free state tax return online Tuition reduction Exempt3 if for undergraduate education (or graduate education if the employee performs teaching or research activities). Free state tax return online Working condition benefits Exempt Exempt Exempt 1 Exemption does not apply to S corporation employees who are 2% shareholders. Free state tax return online 2 Exemption does not apply to certain highly compensated employees under a self-insured plan that favors those employees. Free state tax return online 3 Exemption does not apply to certain highly compensated employees under a program that favors those employees. Free state tax return online 4 Exemption does not apply to certain key employees under a plan that favors those employees. Free state tax return online 5 Exemption does not apply to services for tax preparation, accounting, legal, or brokerage services. Free state tax return online 6 If the employee receives a qualified bicycle commuting reimbursement in a qualified bicycle commuting month, the employee cannot receive commuter highway vehicle, transit pass, or qualified parking benefits in that same month. Free state tax return online 7 You must include in your employee's wages the cost of group-term life insurance beyond $50,000 worth of coverage, reduced by the amount the employee paid toward the insurance. Free state tax return online Report it as wages in boxes 1, 3, and 5 of the employee's Form W-2. Free state tax return online Also, show it in box 12 with code “C. Free state tax return online ” The amount is subject to social security and Medicare taxes, and you may, at your option, withhold federal income tax. Free state tax return online Accident and Health Benefits This exclusion applies to contributions you make to an accident or health plan for an employee, including the following. Free state tax return online Contributions to the cost of accident or health insurance including qualified long-term care insurance. Free state tax return online Contributions to a separate trust or fund that directly or through insurance provides accident or health benefits. Free state tax return online Contributions to Archer MSAs or health savings accounts (discussed in Publication 969, Health Savings Accounts and Other Tax-Favored Health Plans). Free state tax return online This exclusion also applies to payments you directly or indirectly make to an employee under an accident or health plan for employees that are either of the following. Free state tax return online Payments or reimbursements of medical expenses. Free state tax return online Payments for specific injuries or illnesses (such as the loss of the use of an arm or leg). Free state tax return online The payments must be figured without regard to any period of absence from work. Free state tax return online Accident or health plan. Free state tax return online   This is an arrangement that provides benefits for your employees, their spouses, their dependents, and their children (under age 27) in the event of personal injury or sickness. Free state tax return online The plan may be insured or noninsured and does not need to be in writing. Free state tax return online Employee. Free state tax return online   For this exclusion, treat the following individuals as employees. Free state tax return online A current common-law employee. Free state tax return online A full-time life insurance agent who is a current statutory employee. Free state tax return online A retired employee. Free state tax return online A former employee you maintain coverage for based on the employment relationship. Free state tax return online A widow or widower of an individual who died while an employee. Free state tax return online A widow or widower of a retired employee. Free state tax return online For the exclusion of contributions to an accident or health plan, a leased employee who has provided services to you on a substantially full-time basis for at least a year if the services are performed under your primary direction or control. Free state tax return online Special rule for certain government plans. Free state tax return online   For certain government accident and health plans, payments to a deceased plan participant's beneficiary may qualify for the exclusion from gross income if the other requirements for exclusion are met. Free state tax return online See section 105(j) for details. Free state tax return online Exception for S corporation shareholders. Free state tax return online   Do not treat a 2% shareholder of an S corporation as an employee of the corporation for this purpose. Free state tax return online A 2% shareholder is someone who directly or indirectly owns (at any time during the year) more than 2% of the corporation's stock or stock with more than 2% of the voting power. Free state tax return online Treat a 2% shareholder as you would a partner in a partnership for fringe benefit purposes, but do not treat the benefit as a reduction in distributions to the 2% shareholder. Free state tax return online Exclusion from wages. Free state tax return online   You can generally exclude the value of accident or health benefits you provide to an employee from the employee's wages. Free state tax return online Exception for certain long-term care benefits. Free state tax return online   You cannot exclude contributions to the cost of long-term care insurance from an employee's wages subject to federal income tax withholding if the coverage is provided through a flexible spending or similar arrangement. Free state tax return online This is a benefit program that reimburses specified expenses up to a maximum amount that is reasonably available to the employee and is less than five times the total cost of the insurance. Free state tax return online However, you can exclude these contributions from the employee's wages subject to social security, Medicare, and federal unemployment (FUTA) taxes. Free state tax return online S corporation shareholders. Free state tax return online   Because you cannot treat a 2% shareholder of an S corporation as an employee for this exclusion, you must include the value of accident or health benefits you provide to the employee in the employee's wages subject to federal income tax withholding. Free state tax return online However, you can exclude the value of these benefits (other than payments for specific injuries or illnesses) from the employee's wages subject to social security, Medicare, and FUTA taxes. Free state tax return online Exception for highly compensated employees. Free state tax return online   If your plan is a self-insured medical reimbursement plan that favors highly compensated employees, you must include all or part of the amounts you pay to these employees in their wages subject to federal income tax withholding. Free state tax return online However, you can exclude these amounts (other than payments for specific injuries or illnesses) from the employee's wages subject to social security, Medicare, and FUTA taxes. Free state tax return online   A self-insured plan is a plan that reimburses your employees for medical expenses not covered by an accident or health insurance policy. Free state tax return online   A highly compensated employee for this exception is any of the following individuals. Free state tax return online One of the five highest paid officers. Free state tax return online An employee who owns (directly or indirectly) more than 10% in value of the employer's stock. Free state tax return online An employee who is among the highest paid 25% of all employees (other than those who can be excluded from the plan). Free state tax return online   For more information on this exception, see section 105(h) of the Internal Revenue Code and its regulations. Free state tax return online COBRA premiums. Free state tax return online   The exclusion for accident and health benefits applies to amounts you pay to maintain medical coverage for a current or former employee under the Combined Omnibus Budget Reconciliation Act of 1986 (COBRA). Free state tax return online The exclusion applies regardless of the length of employment, whether you directly pay the premiums or reimburse the former employee for premiums paid, and whether the employee's separation is permanent or temporary. Free state tax return online Achievement Awards This exclusion applies to the value of any tangible personal property you give to an employee as an award for either length of service or safety achievement. Free state tax return online The exclusion does not apply to awards of cash, cash equivalents, gift certificates, or other intangible property such as vacations, meals, lodging, tickets to theater or sporting events, stocks, bonds, and other securities. Free state tax return online The award must meet the requirements for employee achievement awards discussed in chapter 2 of Publication 535, Business Expenses. Free state tax return online Employee. Free state tax return online   For this exclusion, treat the following individuals as employees. Free state tax return online A current employee. Free state tax return online A former common-law employee you maintain coverage for in consideration of or based on an agreement relating to prior service as an employee. Free state tax return online A leased employee who has provided services to you on a substantially full-time basis for at least a year if the services are performed under your primary direction or control. Free state tax return online Exception for S corporation shareholders. Free state tax return online   Do not treat a 2% shareholder of an S corporation as an employee of the corporation for this purpose. Free state tax return online A 2% shareholder is someone who directly or indirectly owns (at any time during the year) more than 2% of the corporation's stock or stock with more than 2% of the voting power. Free state tax return online Treat a 2% shareholder as you would a partner in a partnership for fringe benefit purposes, but do not treat the benefit as a reduction in distributions to the 2% shareholder. Free state tax return online Exclusion from wages. Free state tax return online   You can generally exclude the value of achievement awards you give to an employee from the employee's wages if their cost is not more than the amount you can deduct as a business expense for the year. Free state tax return online The excludable annual amount is $1,600 ($400 for awards that are not “qualified plan awards”). Free state tax return online See chapter 2 of Publication 535 for more information about the limit on deductions for employee achievement awards. Free state tax return online    To determine for 2014 whether an achievement award is a “qualified plan award” under the deduction rules described in Publication 535, treat any employee who received more than $115,000 in pay for 2013 as a highly compensated employee. Free state tax return online   If the cost of awards given to an employee is more than your allowable deduction, include in the employee's wages the larger of the following amounts. Free state tax return online The part of the cost that is more than your allowable deduction (up to the value of the awards). Free state tax return online The amount by which the value of the awards exceeds your allowable deduction. Free state tax return online Exclude the remaining value of the awards from the employee's wages. Free state tax return online Adoption Assistance An adoption assistance program is a separate written plan of an employer that meets all of the following requirements. Free state tax return online It benefits employees who qualify under rules set up by you, which do not favor highly compensated employees or their dependents. Free state tax return online To determine whether your plan meets this test, do not consider employees excluded from your plan who are covered by a collective bargaining agreement, if there is evidence that adoption assistance was a subject of good-faith bargaining. Free state tax return online It does not pay more than 5% of its payments during the year for shareholders or owners (or their spouses or dependents). Free state tax return online A shareholder or owner is someone who owns (on any day of the year) more than 5% of the stock or of the capital or profits interest of your business. Free state tax return online You give reasonable notice of the plan to eligible employees. Free state tax return online Employees provide reasonable substantiation that payments or reimbursements are for qualifying expenses. Free state tax return online For this exclusion, a highly compensated employee for 2014 is an employee who meets either of the following tests. Free state tax return online The employee was a 5% owner at any time during the year or the preceding year. Free state tax return online The employee received more than $115,000 in pay for the preceding year. Free state tax return online You can choose to ignore test (2) if the employee was not also in the top 20% of employees when ranked by pay for the preceding year. Free state tax return online You must exclude all payments or reimbursements you make under an adoption assistance program for an employee's qualified adoption expenses from the employee's wages subject to federal income tax withholding. Free state tax return online However, you cannot exclude these payments from wages subject to social security, Medicare, and federal unemployment (FUTA) taxes. Free state tax return online For more information, see the Instructions for Form 8839, Qualified Adoption Expenses. Free state tax return online You must report all qualifying adoption expenses you paid or reimbursed under your adoption assistance program for each employee for the year in box 12 of the employee's Form W-2. Free state tax return online Use code “T” to identify this amount. Free state tax return online Exception for S corporation shareholders. Free state tax return online   For this exclusion, do not treat a 2% shareholder of an S corporation as an employee of the corporation. Free state tax return online A 2% shareholder is someone who directly or indirectly owns (at any time during the year) more than 2% of the corporation's stock or stock with more than 2% of the voting power. Free state tax return online Treat a 2% shareholder as you would a partner in a partnership for fringe benefit purposes, including using the benefit as a reduction in distributions to the 2% shareholder. Free state tax return online Athletic Facilities You can exclude the value of an employee's use of an on-premises gym or other athletic facility you operate from an employee's wages if substantially all use of the facility during the calendar year is by your employees, their spouses, and their dependent children. Free state tax return online For this purpose, an employee's dependent child is a child or stepchild who is the employee's dependent or who, if both parents are deceased, has not attained the age of 25. Free state tax return online On-premises facility. Free state tax return online   The athletic facility must be located on premises you own or lease. Free state tax return online It does not have to be located on your business premises. Free state tax return online However, the exclusion does not apply to an athletic facility for residential use, such as athletic facilities that are part of a resort. Free state tax return online Employee. Free state tax return online   For this exclusion, treat the following individuals as employees. Free state tax return online A current employee. Free state tax return online A former employee who retired or left on disability. Free state tax return online A widow or widower of an individual who died while an employee. Free state tax return online A widow or widower of a former employee who retired or left on disability. Free state tax return online A leased employee who has provided services to you on a substantially full-time basis for at least a year if the services are performed under your primary direction or control. Free state tax return online A partner who performs services for a partnership. Free state tax return online De Minimis (Minimal) Benefits You can exclude the value of a de minimis benefit you provide to an employee from the employee's wages. Free state tax return online A de minimis benefit is any property or service you provide to an employee that has so little value (taking into account how frequently you provide similar benefits to your employees) that accounting for it would be unreasonable or administratively impracticable. Free state tax return online Cash and cash equivalent fringe benefits (for example, use of gift card, charge card, or credit card), no matter how little, are never excludable as a de minimis benefit, except for occasional meal money or transportation fare. Free state tax return online Examples of de minimis benefits include the following. Free state tax return online Personal use of an employer-provided cell phone provided primarily for noncompensatory business purposes. Free state tax return online See Employer-Provided Cell Phones , later in this section, for details. Free state tax return online Occasional personal use of a company copying machine if you sufficiently control its use so that at least 85% of its use is for business purposes. Free state tax return online Holiday gifts, other than cash, with a low fair market value. Free state tax return online Group-term life insurance payable on the death of an employee's spouse or dependent if the face amount is not more than $2,000. Free state tax return online Meals. Free state tax return online See Meals , later in this section, for details. Free state tax return online Occasional parties or picnics for employees and their guests. Free state tax return online Occasional tickets for theater or sporting events. Free state tax return online Transportation fare. Free state tax return online See Transportation (Commuting) Benefits , later in this section, for details. Free state tax return online Employee. Free state tax return online   For this exclusion, treat any recipient of a de minimis benefit as an employee. Free state tax return online Dependent Care Assistance This exclusion applies to household and dependent care services you directly or indirectly pay for or provide to an employee under a dependent care assistance program that covers only your employees. Free state tax return online The services must be for a qualifying person's care and must be provided to allow the employee to work. Free state tax return online These requirements are basically the same as the tests the employee would have to meet to claim the dependent care credit if the employee paid for the services. Free state tax return online For more information, see Qualifying Person Test and Work-Related Expense Test in Publication 503, Child and Dependent Care Expenses. Free state tax return online Employee. Free state tax return online   For this exclusion, treat the following individuals as employees. Free state tax return online A current employee. Free state tax return online A leased employee who has provided services to you on a substantially full-time basis for at least a year if the services are performed under your primary direction or control. Free state tax return online Yourself (if you are a sole proprietor). Free state tax return online A partner who performs services for a partnership. Free state tax return online Exclusion from wages. Free state tax return online   You can exclude the value of benefits you provide to an employee under a dependent care assistance program from the employee's wages if you reasonably believe that the employee can exclude the benefits from gross income. Free state tax return online   An employee can generally exclude from gross income up to $5,000 of benefits received under a dependent care assistance program each year. Free state tax return online This limit is reduced to $2,500 for married employees filing separate returns. Free state tax return online   However, the exclusion cannot be more than the smaller of the earned income of either the employee or employee's spouse. Free state tax return online Special rules apply to determine the earned income of a spouse who is either a student or not able to care for himself or herself. Free state tax return online For more information on the earned income limit, see Publication 503. Free state tax return online Exception for highly compensated employees. Free state tax return online   You cannot exclude dependent care assistance from the wages of a highly compensated employee unless the benefits provided under the program do not favor highly compensated employees and the program meets the requirements described in section 129(d) of the Internal Revenue Code. Free state tax return online   For this exclusion, a highly compensated employee for 2014 is an employee who meets either of the following tests. Free state tax return online The employee was a 5% owner at any time during the year or the preceding year. Free state tax return online The employee received more than $115,000 in pay for the preceding year. Free state tax return online You can choose to ignore test (2) if the employee was not also in the top 20% of employees when ranked by pay for the preceding year. Free state tax return online Form W-2. Free state tax return online   Report the value of all dependent care assistance you provide to an employee under a dependent care assistance program in box 10 of the employee's Form W-2. Free state tax return online Include any amounts you cannot exclude from the employee's wages in boxes 1, 3, and 5. Free state tax return online Report both the nontaxable portion of assistance (up to $5,000) and any assistance above the amount that is non-taxable to the employee. Free state tax return online Example. Free state tax return online   Company A provides a dependent care assistance flexible spending arrangement to its employees through a cafeteria plan. Free state tax return online In addition, it provides occasional on-site dependent care to its employees at no cost. Free state tax return online Emily, an employee of company A, had $4,500 deducted from her pay for the dependent care flexible spending arrangement. Free state tax return online In addition, Emily used the on-site dependent care several times. Free state tax return online The fair market value of the on-site care was $700. Free state tax return online Emily's Form W-2 should report $5,200 of dependent care assistance in box 10 ($4,500 flexible spending arrangement plus $700 on-site dependent care). Free state tax return online Boxes 1, 3, and 5 should include $200 (the amount in excess of the nontaxable assistance), and applicable taxes should be withheld on that amount. Free state tax return online Educational Assistance This exclusion applies to educational assistance you provide to employees under an educational assistance program. Free state tax return online The exclusion also applies to graduate level courses. Free state tax return online Educational assistance means amounts you pay or incur for your employees' education expenses. Free state tax return online These expenses generally include the cost of books, equipment, fees, supplies, and tuition. Free state tax return online However, these expenses do not include the cost of a course or other education involving sports, games, or hobbies, unless the education: Has a reasonable relationship to your business, or Is required as part of a degree program. Free state tax return online Education expenses do not include the cost of tools or supplies (other than textbooks) your employee is allowed to keep at the end of the course. Free state tax return online Nor do they include the cost of lodging, meals, or transportation. Free state tax return online Educational assistance program. Free state tax return online   An educational assistance program is a separate written plan that provides educational assistance only to your employees. Free state tax return online The program qualifies only if all of the following tests are met. Free state tax return online The program benefits employees who qualify under rules set up by you that do not favor highly compensated employees. Free state tax return online To determine whether your program meets this test, do not consider employees excluded from your program who are covered by a collective bargaining agreement if there is evidence that educational assistance was a subject of good-faith bargaining. Free state tax return online The program does not provide more than 5% of its benefits during the year for shareholders or owners. Free state tax return online A shareholder or owner is someone who owns (on any day of the year) more than 5% of the stock or of the capital or profits interest of your business. Free state tax return online The program does not allow employees to choose to receive cash or other benefits that must be included in gross income instead of educational assistance. Free state tax return online You give reasonable notice of the program to eligible employees. Free state tax return online Your program can cover former employees if their employment is the reason for the coverage. Free state tax return online   For this exclusion, a highly compensated employee for 2014 is an employee who meets either of the following tests. Free state tax return online The employee was a 5% owner at any time during the year or the preceding year. Free state tax return online The employee received more than $115,000 in pay for the preceding year. Free state tax return online You can choose to ignore test (2) if the employee was not also in the top 20% of employees when ranked by pay for the preceding year. Free state tax return online Employee. Free state tax return online   For this exclusion, treat the following individuals as employees. Free state tax return online A current employee. Free state tax return online A former employee who retired, left on disability, or was laid off. Free state tax return online A leased employee who has provided services to you on a substantially full-time basis for at least a year if the services are performed under your primary direction or control. Free state tax return online Yourself (if you are a sole proprietor). Free state tax return online A partner who performs services for a partnership. Free state tax return online Exclusion from wages. Free state tax return online   You can exclude up to $5,250 of educational assistance you provide to an employee under an educational assistance program from the employee's wages each year. Free state tax return online Assistance over $5,250. Free state tax return online   If you do not have an educational assistance plan, or you provide an employee with assistance exceeding $5,250, you must include the value of these benefits as wages, unless the benefits are working condition benefits. Free state tax return online Working condition benefits may be excluded from wages. Free state tax return online Property or a service provided is a working condition benefit to the extent that if the employee paid for it, the amount paid would have been deductible as a business or depreciation expense. Free state tax return online See Working Condition Benefits , later, in this section. Free state tax return online Employee Discounts This exclusion applies to a price reduction you give an employee on property or services you offer to customers in the ordinary course of the line of business in which the employee performs substantial services. Free state tax return online However, it does not apply to discounts on real property or discounts on personal property of a kind commonly held for investment (such as stocks or bonds). Free state tax return online Employee. Free state tax return online   For this exclusion, treat the following individuals as employees. Free state tax return online A current employee. Free state tax return online A former employee who retired or left on disability. Free state tax return online A widow or widower of an individual who died while an employee. Free state tax return online A widow or widower of an employee who retired or left on disability. Free state tax return online A leased employee who has provided services to you on a substantially full-time basis for at least a year if the services are performed under your primary direction or control. Free state tax return online A partner who performs services for a partnership. Free state tax return online Exclusion from wages. Free state tax return online   You can generally exclude the value of an employee discount you provide an employee from the employee's wages, up to the following limits. Free state tax return online For a discount on services, 20% of the price you charge nonemployee customers for the service. Free state tax return online For a discount on merchandise or other property, your gross profit percentage times the price you charge nonemployee customers for the property. Free state tax return online   Determine your gross profit percentage in the line of business based on all property you offer to customers (including employee customers) and your experience during the tax year immediately before the tax year in which the discount is available. Free state tax return online To figure your gross profit percentage, subtract the total cost of the property from the total sales price of the property and divide the result by the total sales price of the property. Free state tax return online Exception for highly compensated employees. Free state tax return online   You cannot exclude from the wages of a highly compensated employee any part of the value of a discount that is not available on the same terms to one of the following groups. Free state tax return online All of your employees. Free state tax return online A group of employees defined under a reasonable classification you set up that does not favor highly compensated employees. Free state tax return online   For this exclusion, a highly compensated employee for 2014 is an employee who meets either of the following tests. Free state tax return online The employee was a 5% owner at any time during the year or the preceding year. Free state tax return online The employee received more than $115,000 in pay for the preceding year. Free state tax return online You can choose to ignore test (2) if the employee was not also in the top 20% of employees when ranked by pay for the preceding year. Free state tax return online Employee Stock Options There are three kinds of stock options—incentive stock options, employee stock purchase plan options, and nonstatutory (nonqualified) stock options. Free state tax return online Wages for social security, Medicare, and federal unemployment (FUTA) taxes do not include remuneration resulting from the exercise, after October 22, 2004, of an incentive stock option or under an employee stock purchase plan option, or from any disposition of stock acquired by exercising such an option. Free state tax return online The IRS will not apply these taxes to an exercise before October 23, 2004, of an incentive stock option or an employee stock purchase plan option or to a disposition of stock acquired by such exercise. Free state tax return online Additionally, federal income tax withholding is not required on the income resulting from a disqualifying disposition of stock acquired by the exercise after October 22, 2004, of an incentive stock option or under an employee stock purchase plan option, or on income equal to the discount portion of stock acquired by the exercise, after October 22, 2004, of an employee stock purchase plan option resulting from any disposition of the stock. Free state tax return online The IRS will not apply federal income tax withholding upon the disposition of stock acquired by the exercise, before October 23, 2004, of an incentive stock option or an employee stock purchase plan option. Free state tax return online However, the employer must report as income in box 1 of Form W-2, (a) the discount portion of stock acquired by the exercise of an employee stock purchase plan option upon disposition of the stock, and (b) the spread (between the exercise price and the fair market value of the stock at the time of exercise) upon a disqualifying disposition of stock acquired by the exercise of an incentive stock option or an employee stock purchase plan option. Free state tax return online An employer must report the excess of the fair market value of stock received upon exercise of a nonstatutory stock option over the amount paid for the stock option on Form W-2 in boxes 1, 3 (up to the social security wage base), 5, and in box 12 using the code “V. Free state tax return online ” See Regulations section 1. Free state tax return online 83-7. Free state tax return online An employee who transfers his or her interest in nonstatutory stock options to the employee's former spouse incident to a divorce is not required to include an amount in gross income upon the transfer. Free state tax return online The former spouse, rather than the employee, is required to include an amount in gross income when the former spouse exercises the stock options. Free state tax return online See Revenue Ruling 2002-22 and Revenue Ruling 2004-60 for details. Free state tax return online You can find Revenue Ruling 2002-22 on page 849 of Internal Revenue Bulletin 2002-19 at www. Free state tax return online irs. Free state tax return online gov/pub/irs-irbs/irb02-19. Free state tax return online pdf. Free state tax return online See Revenue Ruling 2004-60, 2004-24 I. Free state tax return online R. Free state tax return online B. Free state tax return online 1051, available at www. Free state tax return online irs. Free state tax return online gov/irb/2004-24_IRB/ar13. Free state tax return online html. Free state tax return online For more information about employee stock options, see sections 421, 422, and 423 of the Internal Revenue Code and their related regulations. Free state tax return online Employer-Provided Cell Phones The value of an employer-provided cell phone, provided primarily for noncompensatory business reasons, is excludable from an employee's income as a working condition fringe benefit. Free state tax return online Personal use of an employer-provided cell phone, provided primarily for noncompensatory business reasons, is excludable from an employee's income as a de minimis fringe benefit. Free state tax return online For the rules relating to these types of benefits, see De Minimis (Minimal) Benefits , earlier in this section, and Working Condition Benefits , later in this section. Free state tax return online Noncompensatory business purposes. Free state tax return online   You provide a cell phone primarily for noncompensatory business purposes if there are substantial business reasons for providing the cell phone. Free state tax return online Examples of substantial business reasons include the employer's: Need to contact the employee at all times for work-related emergencies, Requirement that the employee be available to speak with clients at times when the employee is away from the office, and Need to speak with clients located in other time zones at times outside the employee's normal workday. Free state tax return online Cell phones provided to promote goodwill, boost morale, or attract prospective employees. Free state tax return online   You cannot exclude from an employee's wages the value of a cell phone provided to promote goodwill of an employee, to attract a prospective employee, or as a means of providing additional compensation to an employee. Free state tax return online Additional information. Free state tax return online   For additional information on the tax treatment of employer-provided cell phones, see Notice 2011-72, 2011-38 I. Free state tax return online R. Free state tax return online B. Free state tax return online 407, available at  www. Free state tax return online irs. Free state tax return online gov/irb/2011-38_IRB/ar07. Free state tax return online html. Free state tax return online Group-Term Life Insurance Coverage This exclusion applies to life insurance coverage that meets all the following conditions. Free state tax return online It provides a general death benefit that is not included in income. Free state tax return online You provide it to a group of employees. Free state tax return online See The 10-employee rule , later. Free state tax return online It provides an amount of insurance to each employee based on a formula that prevents individual selection. Free state tax return online This formula must use factors such as the employee's age, years of service, pay, or position. Free state tax return online You provide it under a policy you directly or indirectly carry. Free state tax return online Even if you do not pay any of the policy's cost, you are considered to carry it if you arrange for payment of its cost by your employees and charge at least one employee less than, and at least one other employee more than, the cost of his or her insurance. Free state tax return online Determine the cost of the insurance, for this purpose, as explained under Coverage over the limit , later. Free state tax return online Group-term life insurance does not include the following insurance. Free state tax return online Insurance that does not provide general death benefits, such as travel insurance or a policy providing only accidental death benefits. Free state tax return online Life insurance on the life of your employee's spouse or dependent. Free state tax return online However, you may be able to exclude the cost of this insurance from the employee's wages as a de minimis benefit. Free state tax return online See De Minimis (Minimal) Benefits , earlier in this section. Free state tax return online Insurance provided under a policy that provides a permanent benefit (an economic value that extends beyond 1 policy year, such as paid-up or cash surrender value), unless certain requirements are met. Free state tax return online See Regulations section 1. Free state tax return online 79-1 for details. Free state tax return online Employee. Free state tax return online   For this exclusion, treat the following individuals as employees. Free state tax return online A current common-law employee. Free state tax return online A full-time life insurance agent who is a current statutory employee. Free state tax return online An individual who was formerly your employee under (1) or (2). Free state tax return online A leased employee who has provided services to you on a substantially full-time basis for at least a year if the services are performed under your primary direction and control. Free state tax return online Exception for S corporation shareholders. Free state tax return online   Do not treat a 2% shareholder of an S corporation as an employee of the corporation for this purpose. Free state tax return online A 2% shareholder is someone who directly or indirectly owns (at any time during the year) more than 2% of the corporation's stock or stock with more than 2% of the voting power. Free state tax return online Treat a 2% shareholder as you would a partner in a partnership for fringe benefit purposes, but do not treat the benefit as a reduction in distributions to the 2% shareholder. Free state tax return online The 10-employee rule. Free state tax return online   Generally, life insurance is not group-term life insurance unless you provide it to at least 10 full-time employees at some time during the year. Free state tax return online   For this rule, count employees who choose not to receive the insurance unless, to receive it, they must contribute to the cost of benefits other than the group-term life insurance. Free state tax return online For example, count an employee who could receive insurance by paying part of the cost, even if that employee chooses not to receive it. Free state tax return online However, do not count an employee who must pay part or all of the cost of permanent benefits to get insurance, unless that employee chooses to receive it. Free state tax return online A permanent benefit is an economic value extending beyond one policy year (for example, a paid-up or cash-surrender value) that is provided under a life insurance policy. Free state tax return online Exceptions. Free state tax return online   Even if you do not meet the 10-employee rule, two exceptions allow you to treat insurance as group-term life insurance. Free state tax return online   Under the first exception, you do not have to meet the 10-employee rule if all the following conditions are met. Free state tax return online If evidence that the employee is insurable is required, it is limited to a medical questionnaire (completed by the employee) that does not require a physical. Free state tax return online You provide the insurance to all your full-time employees or, if the insurer requires the evidence mentioned in (1), to all full-time employees who provide evidence the insurer accepts. Free state tax return online You figure the coverage based on either a uniform percentage of pay or the insurer's coverage brackets that meet certain requirements. Free state tax return online See Regulations section 1. Free state tax return online 79-1 for details. Free state tax return online   Under the second exception, you do not have to meet the 10-employee rule if all the following conditions are met. Free state tax return online You provide the insurance under a common plan covering your employees and the employees of at least one other employer who is not related to you. Free state tax return online The insurance is restricted to, but mandatory for, all your employees who belong to, or are represented by, an organization (such as a union) that carries on substantial activities besides obtaining insurance. Free state tax return online Evidence of whether an employee is insurable does not affect an employee's eligibility for insurance or the amount of insurance that employee gets. Free state tax return online   To apply either exception, do not consider employees who were denied insurance for any of the following reasons. Free state tax return online They were 65 or older. Free state tax return online They customarily work 20 hours or less a week or 5 months or less in a calendar year. Free state tax return online They have not been employed for the waiting period given in the policy. Free state tax return online This waiting period cannot be more than 6 months. Free state tax return online Exclusion from wages. Free state tax return online   You can generally exclude the cost of up to $50,000 of group-term life insurance from the wages of an insured employee. Free state tax return online You can exclude the same amount from the employee's wages when figuring social security and Medicare taxes. Free state tax return online In addition, you do not have to withhold federal income tax or pay FUTA tax on any group-term life insurance you provide to an employee. Free state tax return online Coverage over the limit. Free state tax return online   You must include in your employee's wages the cost of group-term life insurance beyond $50,000 worth of coverage, reduced by the amount the employee paid toward the insurance. Free state tax return online Report it as wages in boxes 1, 3, and 5 of the employee's Form W-2. Free state tax return online Also, show it in box 12 with code “C. Free state tax return online ” The amount is subject to social security and Medicare taxes, and you may, at your option, withhold federal income tax. Free state tax return online   Figure the monthly cost of the insurance to include in the employee's wages by multiplying the number of thousands of dollars of all insurance coverage over $50,000 (figured to the nearest $100) by the cost shown in Table 2-2. Free state tax return online For all coverage provided within the calendar year, use the employee's age on the last day of the employee's tax year. Free state tax return online You must prorate the cost from the table if less than a full month of coverage is involved. Free state tax return online Table 2-2. Free state tax return online Cost Per $1,000 of Protection For 1 Month Age Cost Under 25 $ . Free state tax return online 05 25 through 29 . Free state tax return online 06 30 through 34 . Free state tax return online 08 35 through 39 . Free state tax return online 09 40 through 44 . Free state tax return online 10 45 through 49 . Free state tax return online 15 50 through 54 . Free state tax return online 23 55 through 59 . Free state tax return online 43 60 through 64 . Free state tax return online 66 65 through 69 1. Free state tax return online 27 70 and older 2. Free state tax return online 06 You figure the total cost to include in the employee's wages by multiplying the monthly cost by the number of full months' coverage at that cost. Free state tax return online Example. Free state tax return online Tom's employer provides him with group-term life insurance coverage of $200,000. Free state tax return online Tom is 45 years old, is not a key employee, and pays $100 per year toward the cost of the insurance. Free state tax return online Tom's employer must include $170 in his wages. Free state tax return online The $200,000 of insurance coverage is reduced by $50,000. Free state tax return online The yearly cost of $150,000 of coverage is $270 ($. Free state tax return online 15 x 150 x 12), and is reduced by the $100 Tom pays for the insurance. Free state tax return online The employer includes $170 in boxes 1, 3, and 5 of Tom's Form W-2. Free state tax return online The employer also enters $170 in box 12 with code “C. Free state tax return online ” Coverage for dependents. Free state tax return online   Group-term life insurance coverage paid by the employer for the spouse or dependents of an employee may be excludable from income as a de minimis fringe benefit if the face amount is not more than $2,000. Free state tax return online If the face amount is greater than $2,000, the entire cost of the dependent coverage must be included in income unless the amount over $2,000 is purchased with employee contributions on an after-tax basis. Free state tax return online The cost of the insurance is determined by using Table 2-2. Free state tax return online Former employees. Free state tax return online   When group-term life insurance over $50,000 is provided to an employee (including retirees) after his or her termination, the employee share of social security and Medicare taxes on that period of coverage is paid by the former employee with his or her tax return and is not collected by the employer. Free state tax return online You are not required to collect those taxes. Free state tax return online Use the table above to determine the amount of social security and Medicare taxes owed by the former employee for coverage provided after separation from service. Free state tax return online Report those uncollected amounts separately in box 12 of Form W-2 using codes “M” and “N. Free state tax return online ” See the General Instructions for Forms W-2 and W-3 and the Instructions for Form 941. Free state tax return online Exception for key employees. Free state tax return online   Generally, if your group-term life insurance plan favors key employees as to participation or benefits, you must include the entire cost of the insurance in your key employees' wages. Free state tax return online This exception generally does not apply to church plans. Free state tax return online When figuring social security and Medicare taxes, you must also include the entire cost in the employees' wages. Free state tax return online Include the cost in boxes 1, 3, and 5 of Form W-2. Free state tax return online However, you do not have to withhold federal income tax or pay FUTA tax on the cost of any group-term life insurance you provide to an employee. Free state tax return online   For this purpose, the cost of the insurance is the greater of the following amounts. Free state tax return online The premiums you pay for the employee's insurance. Free state tax return online See Regulations section 1. Free state tax return online 79-4T(Q&A 6) for more information. Free state tax return online The cost you figure using Table 2-2. Free state tax return online   For this exclusion, a key employee during 2014 is an employee or former employee who is one of the following individuals. Free state tax return online See section 416(i) of the Internal Revenue Code for more information. Free state tax return online An officer having annual pay of more than $170,000. Free state tax return online An individual who for 2014 was either of the following. Free state tax return online A 5% owner of your business. Free state tax return online A 1% owner of your business whose annual pay was more than $150,000. Free state tax return online   A former employee who was a key employee upon retirement or separation from service is also a key employee. Free state tax return online   Your plan does not favor key employees as to participation if at least one of the following is true. Free state tax return online It benefits at least 70% of your employees. Free state tax return online At least 85% of the participating employees are not key employees. Free state tax return online It benefits employees who qualify under a set of rules you set up that do not favor key employees. Free state tax return online   Your plan meets this participation test if it is part of a cafeteria plan (discussed in section 1) and it meets the participation test for those plans. Free state tax return online   When applying this test, do not consider employees who: Have not completed 3 years of service, Are part-time or seasonal, Are nonresident aliens who receive no U. Free state tax return online S. Free state tax return online source earned income from you, or Are not included in the plan but are in a unit of employees covered by a collective bargaining agreement, if the benefits provided under the plan were the subject of good-faith bargaining between you and employee representatives. Free state tax return online   Your plan does not favor key employees as to benefits if all benefits available to participating key employees are also available to all other participating employees. Free state tax return online Your plan does not favor key employees just because the amount of insurance you provide to your employees is uniformly related to their pay. Free state tax return online S corporation shareholders. Free state tax return online   Because you cannot treat a 2% shareholder of an S corporation as an employee for this exclusion, you must include the cost of all group-term life insurance coverage you provide the 2% shareholder in his or her wages. Free state tax return online When figuring social security and Medicare taxes, you must also include the cost of this coverage in the 2% shareholder's wages. Free state tax return online Include the cost in boxes 1, 3, and 5 of Form W-2. Free state tax return online However, you do not have to withhold federal income tax or pay federal unemployment tax on the cost of any group-term life insurance coverage you provide to the 2% shareholder. Free state tax return online Health Savings Accounts A Health Savings Account (HSA) is an account owned by a qualified individual who is generally your employee or former employee. Free state tax return online Any contributions that you make to an HSA become the employee's property and cannot be withdrawn by you. Free state tax return online Contributions to the account are used to pay current or future medical expenses of the account owner, his or her spouse, and any qualified dependent. Free state tax return online The medical expenses must not be reimbursable by insurance or other sources and their payment from HSA funds (distribution) will not give rise to a medical expense deduction on the individual's federal income tax return. Free state tax return online For more information about HSAs, visit the Department of Treasury's website at www. Free state tax return online treasury. Free state tax return online gov and enter “HSA” in the search box. Free state tax return online Eligibility. Free state tax return online   A qualified individual must be covered by a High Deductible Health Plan (HDHP) and not be covered by other health insurance except for permitted insurance listed under section 223(c)(3) or insurance for accidents, disability, dental care, vision care, or long-term care. Free state tax return online For calendar year 2014, a qualifying HDHP must have a deductible of at least $1,250 for self-only coverage or $2,500 for family coverage and must limit annual out-of-pocket expenses of the beneficiary to $6,350 for self-only coverage and $12,700 for family coverage. Free state tax return online   There are no income limits that restrict an individual's eligibility to contribute to an HSA nor is there a requirement that the account owner have earned income to make a contribution. Free state tax return online Exceptions. Free state tax return online   An individual is not a qualified individual if he or she can be claimed as a dependent on another person's tax return. Free state tax return online Also, an employee's participation in a health flexible spending arrangement (FSA) or health reimbursement arrangement (HRA) generally disqualifies the individual (and employer) from making contributions to his or her HSA. Free state tax return online However, an individual may qualify to participate in an HSA if he or she is participating in only a limited-purpose FSA or HRA or a post-deductible FSA. Free state tax return online For more information, see Other employee health plans in Publication 969. Free state tax return online Employer contributions. Free state tax return online   Up to specified dollar limits, cash contributions to the HSA of a qualified individual (determined monthly) are exempt from federal income tax withholding, social security tax, Medicare tax, and FUTA tax. Free state tax return online For 2014, you can contribute up to $3,300 for self-only coverage or $6,550 for family coverage to a qualified individual's HSA. Free state tax return online   The contribution amounts listed above are increased by $1,000 for a qualified individual who is age 55 or older at any time during the year. Free state tax return online For two qualified individuals who are married to each other and who each are age 55 or older at any time during the year, each spouse's contribution limit is increased by $1,000 provided each spouse has a separate HSA. Free state tax return online No contributions can be made to an individual's HSA after he or she becomes enrolled in Medicare Part A or Part B. Free state tax return online Nondiscrimination rules. Free state tax return online    Your contribution amount to an employee's HSA must be comparable for all employees who have comparable coverage during the same period. Free state tax return online Otherwise, there will be an excise tax equal to 35% of the amount you contributed to all employees' HSAs. Free state tax return online   For guidance on employer comparable contributions to HSAs under section 4980G in instances where an employee has not established an HSA by December 31 and in instances where an employer accelerates contributions for the calendar year for employees who have incurred qualified medical expenses, see Regulations section 54. Free state tax return online 4980G-4. Free state tax return online Exception. Free state tax return online   The Tax Relief and Health Care Act of 2006 allows employers to make larger HSA contributions for a nonhighly compensated employee than for a highly compensated employee. Free state tax return online A highly compensated employee for 2014 is an employee who meets either of the following tests. Free state tax return online The employee was a 5% owner at any time during the year or the preceding year. Free state tax return online The employee received more than $115,000 in pay for the preceding year. Free state tax return online You can choose to ignore test (2) if the employee was not also in the top 20% of employees when ranked by pay for the preceding year. Free state tax return online Partnerships and S corporations. Free state tax return online   Partners and 2% shareholders of an S corporation are not eligible for salary reduction (pre-tax) contributions to an HSA. Free state tax return online Employer contributions to the HSA of a bona fide partner or 2% shareholder are treated as distributions or guaranteed payments as determined by the facts and circumstances. Free state tax return online Cafeteria plans. Free state tax return online   You may contribute to an employee's HSA using a cafeteria plan and your contributions are not subject to the statutory comparability rules. Free state tax return online However, cafeteria plan nondiscrimination rules still apply. Free state tax return online For example, contributions under a cafeteria plan to employee HSAs cannot be greater for higher-paid employees than they are for lower-paid employees. Free state tax return online Contributions that favor lower-paid employees are not prohibited. Free state tax return online Reporting requirements. Free state tax return online   You must report your contributions to an employee's HSA in box 12 of Form W-2 using code “W. Free state tax return online ” The trustee or custodian of the HSA, generally a bank or insurance company, reports distributions from the HSA using Form 1099-SA, Distributions From an HSA, Archer MSA, or Medicare Advantage MSA. Free state tax return online Lodging on Your Business Premises You can exclude the value of lodging you furnish to an employee from the employee's wages if it meets the following tests. Free state tax return online It is furnished on your business premises. Free state tax return online It is furnished for your convenience. Free state tax return online The employee must accept it as a condition of employment. Free state tax return online Different tests may apply to lodging furnished by educational institutions. Free state tax return online See section 119(d) of the Internal Revenue Code for details. Free state tax return online The exclusion does not apply if you allow your employee to choose to receive additional pay instead of lodging. Free state tax return online On your business premises. Free state tax return online   For this exclusion, your business premises is generally your employee's place of work. Free state tax return online For special rules that apply to lodging furnished in a camp located in a foreign country, see section 119(c) of the Internal Revenue Code and its regulations. Free state tax return online For your convenience. Free state tax return online   Whether or not you furnish lodging for your convenience as an employer depends on all the facts and circumstances. Free state tax return online You furnish the lodging to your employee for your convenience if you do this for a substantial business reason other than to provide the employee with additional pay. Free state tax return online This is true even if a law or an employment contract provides that the lodging is furnished as pay. Free state tax return online However, a written statement that the lodging is furnished for your convenience is not sufficient. Free state tax return online Condition of employment. Free state tax return online   Lodging meets this test if you require your employees to accept the lodging because they need to live on your business premises to be able to properly perform their duties. Free state tax return online Examples include employees who must be available at all times and employees who could not perform their required duties without being furnished the lodging. Free state tax return online   It does not matter whether you must furnish the lodging as pay under the terms of an employment contract or a law fixing the terms of employment. Free state tax return online Example. Free state tax return online A hospital gives Joan, an employee of the hospital, the choice of living at the hospital free of charge or living elsewhere and receiving a cash allowance in addition to her regular salary. Free state tax return online If Joan chooses to live at the hospital, the hospital cannot exclude the value of the lodging from her wages because she is not required to live at the hospital to properly perform the duties of her employment. Free state tax return online S corporation shareholders. Free state tax return online   For this exclusion, do not treat a 2% shareholder of an S corporation as an employee of the corporation. Free state tax return online A 2% shareholder is someone who directly or indirectly owns (at any time during the year) more than 2% of the corporation's stock or stock with more than 2% of the voting power. Free state tax return online Treat a 2% shareholder as you would a partner in a partnership for fringe benefit purposes, but do not treat the benefit as a reduction in distributions to the 2% shareholder. Free state tax return online Meals This section discusses the exclusion rules that apply to de minimis meals and meals on your business premises. Free state tax return online De Minimis Meals You can exclude any occasional meal or meal money you provide to an employee if it has so little value (taking into account how frequently you provide meals to your employees) that accounting for it would be unreasonable or administratively impracticable. Free state tax return online The exclusion applies, for example, to the following items. Free state tax return online Coffee, doughnuts, or soft drinks. Free state tax return online Occasional meals or meal money provided to enable an employee to work overtime. Free state tax return online However, the exclusion does not apply to meal money figured on the basis of hours worked. Free state tax return online Occasional parties or picnics for employees and their guests. Free state tax return online This exclusion also applies to meals you provide at an employer-operated eating facility for employees if the annual revenue from the facility equals or exceeds the direct costs of the facility. Free state tax return online For this purpose, your revenue from providing a meal is considered equal to the facility's direct operating costs to provide that meal if its value can be excluded from an employee's wages as explained under Meals on Your Business Premises , later. Free state tax return online If food or beverages you furnish to employees qualify as a de minimis benefit, you can deduct their full cost. Free state tax return online The 50% limit on deductions for the cost of meals does not apply. Free state tax return online The deduction limit on meals is discussed in chapter 2 of Publication 535. Free state tax return online Employee. Free state tax return online   For this exclusion, treat any recipient of a de minimis meal as
Español

Tribal Governments

Official information and services from the U.S. government

The Free State Tax Return Online

Free state tax return online Tax Changes for Individuals Table of Contents 2001 ChangesNew 5-Year Carryback Rule for Net Operating Losses (NOLs) Wash Sale Rules Do Not Apply to Section 1256 Contracts Other 2001 Changes 2002 ChangesDeduction for Educator Expenses Personal Credits Still Allowed Against Alternative Minimum Tax Later ChangeChild and Dependent Care Expenses 2001 Changes New 5-Year Carryback Rule for Net Operating Losses (NOLs) If you have an NOL from a tax year ending during 2001 or 2002, you must generally carry back the entire amount of the NOL to the 5 tax years before the NOL year (the carryback period). Free state tax return online However, you can still choose to use the previous carryback period. Free state tax return online You also can choose not to carry back an NOL and only carry it forward. Free state tax return online Individuals, estates, and trusts can file Form 1045, Application for Tentative Refund. Free state tax return online The instructions for this form will be revised to reflect the new law. Free state tax return online Wash Sale Rules Do Not Apply to Section 1256 Contracts The wash sale rules that generally apply to losses from the sale of stock or securities, do not apply to any loss arising from a section 1256 contract. Free state tax return online A section 1256 contract is any: Regulated futures contract, Foreign currency contract, Nonequity option, Dealer equity option, or Dealer securities futures contract. Free state tax return online Wash sales and section 1256 contracts are explained in detail in Publication 550, Investment Income and Expenses. Free state tax return online Other 2001 Changes Other changes are discussed in the following chapters. Free state tax return online Chapter 4 Car Expenses Chapter 5 Depreciation 2002 Changes Deduction for Educator Expenses If you are an eligible educator, you can deduct as an adjustment to income up to $250 in qualified expenses. Free state tax return online You can deduct these expenses even if you do not itemize deductions on Schedule A (Form 1040). Free state tax return online This adjustment to income is for expenses paid or incurred in tax years beginning during 2002 or 2003. Free state tax return online Previously, these expenses were deductible only as a miscellaneous itemized deduction subject to the 2% of adjusted gross income limit. Free state tax return online Eligible educator. Free state tax return online   You are an eligible educator if, for the tax year, you meet the following requirements. Free state tax return online You are a kindergarten through grade 12: Teacher, Instructor, Counselor, Principal, or Aide. Free state tax return online You work at least 900 hours during a school year in a school that provides elementary or secondary education, as determined under state law. Free state tax return online Qualified expenses. Free state tax return online   These are unreimbursed expenses you paid or incurred for books, supplies, computer equipment (including related software and services), other equipment, and supplementary materials that you use in the classroom. Free state tax return online For courses in health and physical education, expenses for supplies are qualified expenses only if they are related to athletics. Free state tax return online   To be deductible as an adjustment to income, the qualified expenses must be more than the following amounts for the tax year. Free state tax return online The interest on qualified U. Free state tax return online S. Free state tax return online savings bonds that you excluded from income because you paid qualified higher education expenses, Any distribution from a qualified tuition program that you excluded from income, or Any tax-free withdrawals from your Coverdell education savings account. Free state tax return online Personal Credits Still Allowed Against Alternative Minimum Tax The provision that allowed certain nonrefundable personal credits to reduce both your regular tax and any alternative minimum tax (AMT) has been extended and will be in effect for 2002 and 2003. Free state tax return online This provision, as it applies to the AMT, was originally scheduled to expire after 2001. Free state tax return online Without the extension, these credits could not have been used to reduce any AMT in 2002 or 2003. Free state tax return online Later Change Child and Dependent Care Expenses For the purpose of figuring the child and dependent care credit, your spouse is treated as having at least a minimum amount of earned income for any month that he or she is a full-time student or not able to care for himself or herself. Free state tax return online Beginning in 2003, this amount is increased to $250 a month if there is one qualifying person and to $500 a month if there are two or more qualifying persons. Free state tax return online Before 2003, the amounts were $200 and $400. Free state tax return online The same rule applies for the exclusion of employer-provided dependent care benefits. Free state tax return online For more information about the credit and exclusion, see Publication 503, Child and Dependent Care Expenses. Free state tax return online Prev  Up  Next   Home   More Online Publications