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How To File Your Own Taxes

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How To File Your Own Taxes

How to file your own taxes 1. How to file your own taxes   Filing and Paying Business Taxes Table of Contents Introduction Useful Items - You may want to see: Identification NumbersNew EIN. How to file your own taxes Employee. How to file your own taxes Other payee. How to file your own taxes Income TaxDo I Have To File an Income Tax Return? How Do I File? IRS e-file (Electronic Filing) When Is My Tax Return Due? How Do I Pay Income Tax? Self-Employment (SE) TaxHow to become insured under social security. How to file your own taxes Earning credits in 2013 and 2014. How to file your own taxes Employment Taxes Excise Taxes Information ReturnsWaiver of penalties. How to file your own taxes Penalties. How to file your own taxes Introduction This chapter explains the business taxes you may have to pay and the forms you may have to file. How to file your own taxes It also discusses taxpayer identification numbers. How to file your own taxes Table 1-1 lists the benefits of filing electronically. How to file your own taxes Table 1-2 lists the federal taxes you may have to pay, their due dates, and the forms you use to report them. How to file your own taxes Table 1-3 provides checklists that highlight the typical forms and schedules you may need to file if you ever go out of business. How to file your own taxes You may want to get Publication 509, Tax Calendars. How to file your own taxes It has tax calendars that tell you when to file returns and make tax payments. How to file your own taxes Useful Items - You may want to see: Publication 505 Tax Withholding and Estimated Tax Form (and Instructions) 1040 U. How to file your own taxes S. How to file your own taxes Individual Income Tax Return 1040-ES Estimated Tax for Individuals Sch C (Form 1040) Profit or Loss From Business Sch C-EZ (Form 1040) Net Profit From Business Sch SE (Form 1040) Self-Employment Tax See chapter 12 for information about getting publications and forms. How to file your own taxes Identification Numbers This section explains three types of taxpayer identification numbers, who needs them, when to use them, and how to get them. How to file your own taxes Social security number (SSN). How to file your own taxes   Generally, use your SSN as your taxpayer identification number. How to file your own taxes You must put this number on each of your individual income tax forms, such as Form 1040 and its schedules. How to file your own taxes   To apply for an SSN, use Form SS-5, Application for a Social Security Card. How to file your own taxes This form is available at Social Security Administration (SSA) offices or by calling 1-800-772-1213. How to file your own taxes It is also available from the SSA website at www. How to file your own taxes socialsecurity. How to file your own taxes gov. How to file your own taxes Individual taxpayer identification number (ITIN). How to file your own taxes   The IRS will issue an ITIN if you are a nonresident or resident alien and you do not have and are not eligible to get an SSN. How to file your own taxes In general, if you need to obtain an ITIN, you must attach Form W-7, Application for IRS Individual Taxpayer Identification Number, with your signed, original, completed tax return and any other required documentation and mail them to the following address. How to file your own taxes  Internal Revenue Service ITIN Operation P. How to file your own taxes O. How to file your own taxes Box 149342 Austin, TX 78714-9342 The exceptions are covered in detail in the instructions for Form W-7. How to file your own taxes If you must include another person's SSN on your return and that person does not have and cannot get an SSN, enter that person's ITIN. How to file your own taxes The application is also available in Spanish. How to file your own taxes The form is available at IRS. How to file your own taxes gov or you can call 1-800-829-3676 to order the form. How to file your own taxes    An ITIN is for tax use only. How to file your own taxes It does not entitle the holder to social security benefits or change the holder's employment or immigration status. How to file your own taxes Employer identification number (EIN). How to file your own taxes   You must also have an EIN to use as a taxpayer identification number if you do either of the following. How to file your own taxes Pay wages to one or more employees. How to file your own taxes File pension or excise tax returns. How to file your own taxes   If you must have an EIN, include it along with your SSN on your Schedule C or C-EZ. How to file your own taxes   You can apply for an EIN: Online by clicking on the Employer ID Numbers (EINs) link at www. How to file your own taxes irs. How to file your own taxes gov/businesses/small. How to file your own taxes The EIN is issued immediately once the application information is validated. How to file your own taxes By telephone at 1-800-829-4933. How to file your own taxes By mailing or faxing Form SS-4, Application for Employer Identification Number. How to file your own taxes New EIN. How to file your own taxes   You may need to get a new EIN if either the form or the ownership of your business changes. How to file your own taxes For more information, see Publication 1635, Understanding Your EIN. How to file your own taxes When you need identification numbers of other persons. How to file your own taxes   In operating your business, you will probably make certain payments you must report on information returns. How to file your own taxes These payments are discussed under Information Returns, later in this chapter. How to file your own taxes You must give the recipient of these payments (the payee) a statement showing the total amount paid during the year. How to file your own taxes You must include the payee's identification number and your identification number on the returns and statements. How to file your own taxes Employee. How to file your own taxes   If you have employees, you must get an SSN from each of them. How to file your own taxes Record the name and SSN of each employee exactly as they are shown on the employee's social security card. How to file your own taxes If the employee's name is not correct as shown on the card, the employee should request a new card from the SSA. How to file your own taxes This may occur if the employee's name was changed due to marriage or divorce. How to file your own taxes   Form W-4, Employee's Withholding Allowance Certificate, is completed by each employee so the correct federal income tax can be withheld from their pay. How to file your own taxes   If your employee does not have an SSN, he or she should file Form SS-5 with the SSA. How to file your own taxes Other payee. How to file your own taxes   If you make payments to someone who is not your employee and you must report the payments on an information return, get that person's SSN. How to file your own taxes If you must report payments to an organization, such as a corporation or partnership, you must get its EIN. How to file your own taxes   To get the payee's SSN or EIN, use Form W-9, Request for Taxpayer Identification Number and Certification. How to file your own taxes   A payee who does not provide you with an identification number may be subject to backup withholding. How to file your own taxes For information on backup withholding, see the Form W-9 instructions and the General Instructions for Certain Information Returns. How to file your own taxes Income Tax This part explains whether you have to file an income tax return and when you file it. How to file your own taxes It also explains how you pay the tax. How to file your own taxes Do I Have To File an Income Tax Return? You have to file an income tax return for 2013 if your net earnings from self-employment were $400 or more. How to file your own taxes If your net earnings from self-employment were less than $400, you still have to file an income tax return if you meet any other filing requirement listed in the Form 1040 instructions. How to file your own taxes How Do I File? File your income tax return on Form 1040 and attach Schedule C or Schedule C-EZ. How to file your own taxes Enter the net profit or loss from Schedule C or Schedule C-EZ on page 1 of Form 1040. How to file your own taxes Use Schedule C to figure your net profit or loss from your business. How to file your own taxes If you operated more than one business as a sole proprietorship, you must attach a separate Schedule C for each business. How to file your own taxes You can use the simpler Schedule C-EZ if you operated only one business as a sole proprietorship, you did not have a net loss, and you meet the other requirements listed in Part I of the schedule. How to file your own taxes IRS e-file (Electronic Filing) Please click here for the text description of the image. How to file your own taxes E-file logo You may be able to file your tax returns electronically using an IRS e-file option. How to file your own taxes Table 1-1 lists the benefits of IRS e-file. How to file your own taxes IRS e-file uses automation to replace most of the manual steps needed to process paper returns. How to file your own taxes As a result, the processing of e-file returns is faster and more accurate than the processing of paper returns. How to file your own taxes As with a paper return, you are responsible for making sure your return contains accurate information and is filed on time. How to file your own taxes Using e-file does not affect your chances of an IRS examination of your return. How to file your own taxes You can file most commonly used business forms using IRS e-file. How to file your own taxes For more information, visit IRS. How to file your own taxes gov. How to file your own taxes Electronic signatures. How to file your own taxes   Paperless filing is easier than you think and it's available to most taxpayers who file electronically—including those first-time filers who were 16 or older at the end of 2013. How to file your own taxes If you file electronically using tax preparation software or a tax professional, you will participate in the Self-Select PIN (personal identification number) program. How to file your own taxes If you are married filing jointly, you and your spouse will each need to create a PIN and enter these PINs as your electronic signatures. How to file your own taxes    To create a PIN, you must know your adjusted gross income (AGI) from your originally filed 2012 income tax return (not from an amended return, Form 1040X, or any math error notice from the IRS). How to file your own taxes You will also need to provide your date of birth (DOB). How to file your own taxes Make sure your DOB is accurate and matches the information on record with the Social Security Administration before you e-file. How to file your own taxes To do this, check your annual Social Security Statement. How to file your own taxes   With a Self-Select PIN, there is nothing to sign and nothing to mail—not even your Forms W-2. How to file your own taxes For more details on the Self-Select PIN program, visit IRS. How to file your own taxes gov. How to file your own taxes State returns. How to file your own taxes   In most states, you can file an electronic state return simultaneously with your federal return. How to file your own taxes For more information, check with your local IRS office, state tax agency, tax professional, or IRS. How to file your own taxes gov. How to file your own taxes Refunds. How to file your own taxes   You can have your refund check mailed to you, or you can have your refund deposited directly to your checking or savings account. How to file your own taxes   With e-file, your refund will be issued in half the time as when filing on paper. How to file your own taxes Most refunds are issued within 3 weeks. How to file your own taxes If you choose Direct Deposit, you can receive your refund in as few as 10 days. How to file your own taxes Offset against debts. How to file your own taxes   As with a paper return, you may not get all of your refund if you owe certain past-due amounts, such as federal tax, state tax, a student loan, or child support. How to file your own taxes You will be notified if the refund you claimed has been offset against your debts. How to file your own taxes Refund inquiries. How to file your own taxes   You can check the status of your refund if it has been at least 24 hours (4 weeks if you mailed a paper return) from the date you filed your return. How to file your own taxes Be sure to have a copy of your tax return available because you will need to know the filing status, the first social security number shown on the return, and the exact whole-dollar amount of the refund. How to file your own taxes To check on your refund, do one of the following. How to file your own taxes Go to IRS. How to file your own taxes gov and click on Where's My Refund. How to file your own taxes Call 1-800-829-4477 for automated refund information, and follow the recorded instructions. How to file your own taxes Call 1-800-829-1954 during the hours shown in your form instructions. How to file your own taxes Balance due. How to file your own taxes   If you owe tax, you must pay it by April 15, 2014, to avoid late-payment penalties and interest. How to file your own taxes You can make your payment electronically by scheduling an electronic funds withdrawal from your checking or savings account or by credit card. How to file your own taxes Using an Authorized IRS e-file Provider Many tax professionals can electronically file paperless returns for their clients. How to file your own taxes You have two options. How to file your own taxes You can prepare your return, take it to an authorized IRS e-file provider, and have the provider transmit it electronically to the IRS. How to file your own taxes You can have an authorized IRS e-file provider prepare your return and transmit it for you electronically. How to file your own taxes You will be asked to complete Form 8879, IRS e-file Signature Authorization, to authorize the provider to enter your self-selected PIN on your return. How to file your own taxes Depending on the provider and the specific services requested, a fee may be charged. How to file your own taxes To find an authorized IRS e-file provider near you, go to IRS. How to file your own taxes gov or look for an “Authorized IRS e-file Provider” sign. How to file your own taxes Using Your Personal Computer A computer with Internet access is all you need to file your tax return using IRS e-file. How to file your own taxes When you use your personal computer, you can e-file your return from your home any time of the day or night. How to file your own taxes Sign your return electronically using a self-selected PIN to complete the process. How to file your own taxes There is no signature form to submit or Forms W-2 to send in. How to file your own taxes Free Internet filing options. How to file your own taxes   More taxpayers can now prepare and e-file their individual income tax returns free using commercial tax preparation software accessible through IRS. How to file your own taxes gov or www. How to file your own taxes usa. How to file your own taxes gov. How to file your own taxes The IRS is partnering with the tax software industry to offer free preparation and filing services to a significant number of taxpayers. How to file your own taxes Security and privacy certificate programs will assure tax data is safe and secure. How to file your own taxes To see if you qualify for these services, visit the Return Preparation and Filing Options page at IRS. How to file your own taxes gov. How to file your own taxes   If you cannot use the free services, you can buy tax preparation software at various electronics stores or computer and office supply stores. How to file your own taxes You can also download software from the Internet or prepare and file your return completely online by using tax preparation software available on the Internet. How to file your own taxes Filing Through Employers and Financial Institutions Some businesses offer free e-file to their employees, members, or customers. How to file your own taxes Others offer it for a fee. How to file your own taxes Ask your employer or financial institution if they offer IRS e-file as an employee, member, or customer benefit. How to file your own taxes Free Help With Your Return Free help in preparing your return is available nationwide from IRS-trained volunteers. How to file your own taxes The Volunteer Income Tax Assistance (VITA) program is designed to help low-income taxpayers, and the Tax Counseling for the Elderly (TCE) program is designed to assist taxpayers age 60 or older with their tax returns. How to file your own taxes Some locations offer free electronic filing. How to file your own taxes Table 1-1. How to file your own taxes Benefits of IRS e-file Accuracy • Your chance of getting an error notice from the IRS is significantly reduced. How to file your own taxes Security • Your privacy and security are assured. How to file your own taxes Electronic signatures • Create your own personal identification number (PIN) and file a completely paperless return through your tax preparation software or tax professional. How to file your own taxes There is nothing to mail. How to file your own taxes Proof of acceptance • You receive an electronic acknowledgment within 48 hours that the IRS has accepted your return for processing. How to file your own taxes Fast refunds • You get your refund faster with Direct Deposit—in as few as 10 days. How to file your own taxes Free Internet filing options • Use IRS. How to file your own taxes gov to access commercial tax preparation and e-file services available at no cost to eligible taxpayers. How to file your own taxes Electronic payment options • Convenient, safe, and secure electronic payment options are available. How to file your own taxes E-file and pay your taxes in a single step. How to file your own taxes Schedule an electronic funds withdrawal from your checking or savings account (up to and including April 15, 2014) or pay by credit card. How to file your own taxes Federal/State filing • Prepare and file your federal and state tax returns together and double the benefits you get from e-file. How to file your own taxes When Is My Tax Return Due? Form 1040 for calendar year 2013 is due by April 15, 2014. How to file your own taxes If you use a fiscal year (explained in chapter 2), your return is due by the 15th day of the 4th month after the end of your fiscal year. How to file your own taxes If you file late, you may have to pay penalties and interest. How to file your own taxes If you cannot file your return on time, use Form 4868, Application for Automatic Extension of Time To File U. How to file your own taxes S. How to file your own taxes Individual Income Tax Return, to request an automatic 6-month extension. How to file your own taxes For calendar year taxpayers, this will extend the tax filing due date until October 15. How to file your own taxes Filing an extension does not extend the time to pay your taxes, only the time to file the tax return. How to file your own taxes How Do I Pay Income Tax? Federal income tax is a pay-as-you-go tax. How to file your own taxes You must pay it as you earn or receive income during the year. How to file your own taxes An employee usually has income tax withheld from his or her pay. How to file your own taxes If you do not pay your tax through withholding, or do not pay enough tax that way, you might have to pay estimated tax. How to file your own taxes You generally have to make estimated tax payments if you expect to owe taxes, including self-employment tax (discussed later), of $1,000 or more when you file your return. How to file your own taxes Use Form 1040-ES to figure and pay the tax. How to file your own taxes If you do not have to make estimated tax payments, you can pay any tax due when you file your return. How to file your own taxes For more information on estimated tax, see Publication 505, Tax Withholding and Estimated Tax. How to file your own taxes What are my payment options?   You can pay your estimated tax electronically using various options. How to file your own taxes If you pay electronically, there is no need to mail in Form 1040-ES payment vouchers. How to file your own taxes These options include: Paying electronically through the Electronic Federal Tax Payment System (EFTPS). How to file your own taxes Paying by authorizing an electronic funds withdrawal when you file Form 1040 electronically. How to file your own taxes Paying by credit or debit card over the phone or by Internet. How to file your own taxes Other options include crediting an overpayment from your 2013 return to your 2014 estimated tax, or mailing a check or money order with a Form 1040-ES payment voucher. How to file your own taxes EFTPS    To enroll in EFTPS, go to www. How to file your own taxes eftps. How to file your own taxes gov or call 1-800-555-4477. How to file your own taxes When you request a new EIN and you will have a tax obligation, you are automatically enrolled in EFTPS. How to file your own taxes Benefits of EFTPS: The chance of an error in making your payments is reduced. How to file your own taxes You receive immediate confirmation of every transaction. How to file your own taxes Penalty for underpayment of tax. How to file your own taxes   If you did not pay enough income tax and self-employment tax for 2013 by withholding or by making estimated tax payments, you may have to pay a penalty on the amount not paid. How to file your own taxes The IRS will figure the penalty for you and send you a bill. How to file your own taxes Or you can use Form 2210, Underpayment of Estimated Tax by Individuals, Estates, and Trusts, to see if you have to pay a penalty and to figure the penalty amount. How to file your own taxes For more information, see Publication 505. How to file your own taxes Self-Employment (SE) Tax Self-employment tax (SE tax) is a social security and Medicare tax primarily for individuals who work for themselves. How to file your own taxes It is similar to the social security and Medicare taxes withheld from the pay of most wage earners. How to file your own taxes If you earned income as a statutory employee, you do not pay SE tax on that income. How to file your own taxes Social security coverage. How to file your own taxes   Social security benefits are available to self-employed persons just as they are to wage earners. How to file your own taxes Your payments of SE tax contribute to your coverage under the social security system. How to file your own taxes Social security coverage provides you with retirement benefits, disability benefits, survivor benefits, and hospital insurance (Medicare) benefits. How to file your own taxes By not reporting all of your self-employment income, you could cause your social security benefits to be lower when you retire. How to file your own taxes How to become insured under social security. How to file your own taxes   You must be insured under the social security system before you begin receiving social security benefits. How to file your own taxes You are insured if you have the required number of credits (also called quarters of coverage), discussed next. How to file your own taxes Earning credits in 2013 and 2014. How to file your own taxes   For 2013, you received one credit, up to a maximum of four credits, for each $1,160 ($1,200 for 2014) of income subject to social security taxes. How to file your own taxes Therefore, for 2013, if you had income (self-employment and wages) of $4,640 that was subject to social security taxes, you receive four credits ($4,640 ÷ $1,160). How to file your own taxes   For an explanation of the number of credits you must have to be insured and the benefits available to you and your family under the social security program, consult your nearest Social Security Administration (SSA) office. How to file your own taxes    Making false statements to get or to increase social security benefits may subject you to penalties. How to file your own taxes The Social Security Administration (SSA) time limit for posting self-employment income. How to file your own taxes   Generally, the SSA will give you credit only for self-employment income reported on a tax return filed within 3 years, 3 months, and 15 days after the tax year you earned the income. How to file your own taxes If you file your tax return or report a change in your self-employment income after this time limit, the SSA may change its records, but only to remove or reduce the amount. How to file your own taxes The SSA will not change its records to increase your self-employment income. How to file your own taxes Who must pay self-employment tax. How to file your own taxes   You must pay SE tax and file Schedule SE (Form 1040) if either of the following applies. How to file your own taxes Your net earnings from self-employment (excluding church employee income) were $400 or more. How to file your own taxes You had church employee income of $108. How to file your own taxes 28 or more. How to file your own taxes The SE tax rules apply no matter how old you are and even if you are already receiving social security or Medicare benefits. How to file your own taxes SE tax rate. How to file your own taxes   For 2013, the SE tax rate on net earnings is 15. How to file your own taxes 3% (12. How to file your own taxes 4% social security tax plus 2. How to file your own taxes 9% Medicare tax). How to file your own taxes Maximum earnings subject to SE tax. How to file your own taxes   Only the first $113,700 of your combined wages, tips, and net earnings in 2013 is subject to any combination of the 12. How to file your own taxes 4% social security part of SE tax, social security tax, or railroad retirement (tier 1) tax. How to file your own taxes   All your combined wages, tips, and net earnings in 2013 are subject to any combination of the 2. How to file your own taxes 9% Medicare part of SE tax, social security tax, or railroad retirement (tier 1) tax. How to file your own taxes   If wages and tips you receive as an employee are subject to either social security or railroad retirement (tier 1) tax, or both, and total at least $113,700, do not pay the 12. How to file your own taxes 4% social security part of the SE tax on any of your net earnings. How to file your own taxes However, you must pay the 2. How to file your own taxes 9% Medicare part of the SE tax on all your net earnings. How to file your own taxes Deduct one-half of your SE tax as an adjustment to income on line 27 of Form 1040. How to file your own taxes   More information. How to file your own taxes   For information on methods of calculating SE tax, see Chapter 10, Self-Employment Tax. How to file your own taxes Table 1-2. How to file your own taxes Which Forms Must I File? IF you are liable for: THEN use Form: DUE by:1 Income tax 1040 and Schedule C or C-EZ2 15th day of 4th month after end of  tax year. How to file your own taxes Self-employment tax Schedule SE File with Form 1040. How to file your own taxes Estimated tax 1040-ES 15th day of 4th, 6th, and 9th months of tax year, and 15th day of 1st month after the end of tax year. How to file your own taxes Social security and Medicare taxes and income tax withholding 941 or 944 April 30, July 31, October 31, and January 313. How to file your own taxes     See Publication 15. How to file your own taxes Providing information on social security and Medicare taxes and income tax withholding W-2 (to employee)  W-2 and W-3 (to the Social Security Administration) January 313. How to file your own taxes   Last day of February (March 31 if filing electronically)3. How to file your own taxes Federal unemployment (FUTA) tax 940 January 313. How to file your own taxes     April 30, July 31, October 31, and January 31, but only if the liability for unpaid tax is more than $500. How to file your own taxes Filing information returns for payments to nonemployees and transactions with other persons See Information Returns Forms 1099 – to the recipient by January 31 and to the IRS by February 28 (March 31 if filing electronically). How to file your own taxes     Other forms – see the General Instructions for Certain Information Returns. How to file your own taxes Excise tax See Excise Taxes See the instructions to the forms. How to file your own taxes 1 If a due date falls on a Saturday, Sunday, or legal holiday, file by the next day that is not a Saturday, Sunday, or legal holiday. How to file your own taxes For more information, see Publication 509, Tax Calendars. How to file your own taxes 2 File a separate schedule for each business. How to file your own taxes 3 See the form instructions if you go out of business, change the form of your business, or stop paying wages. How to file your own taxes     Employment Taxes If you have employees, you will need to file forms to report employment taxes. How to file your own taxes Employment taxes include the following items. How to file your own taxes Social security and Medicare taxes. How to file your own taxes Federal income tax withholding. How to file your own taxes Federal unemployment (FUTA) tax. How to file your own taxes For more information, see Publication 15 (Circular E), Employer's Tax Guide. How to file your own taxes That publication explains your tax responsibilities as an employer. How to file your own taxes To help you determine whether the people working for you are your employees, see Publication 15-A, Employer's Supplemental Tax Guide. How to file your own taxes That publication has information to help you determine whether an individual is an independent contractor or an employee. How to file your own taxes If you incorrectly classify an employee as an independent contractor, you may be held liable for employment taxes for that worker plus a penalty. How to file your own taxes An independent contractor is someone who is self-employed. How to file your own taxes You do not generally have to withhold or pay any taxes on payments made to an independent contractor. How to file your own taxes Excise Taxes This section identifies some of the excise taxes you may have to pay and the forms you have to file if you do any of the following. How to file your own taxes Manufacture or sell certain products. How to file your own taxes Operate certain kinds of businesses. How to file your own taxes Use various kinds of equipment, facilities, or products. How to file your own taxes Receive payment for certain services. How to file your own taxes For more information on excise taxes, see Publication 510, Excise Taxes. How to file your own taxes Form 720. How to file your own taxes   The federal excise taxes reported on Form 720, Quarterly Federal Excise Tax Return, consist of several broad categories of taxes, including the following. How to file your own taxes Environmental taxes on the sale or use of ozone-depleting chemicals and imported products containing or manufactured with these chemicals. How to file your own taxes Communications and air transportation taxes. How to file your own taxes Fuel taxes. How to file your own taxes Tax on the first retail sale of heavy trucks, trailers, and tractors. How to file your own taxes Manufacturers taxes on the sale or use of a variety of different articles. How to file your own taxes Tax on indoor tanning services. How to file your own taxes Form 2290. How to file your own taxes   There is a federal excise tax on the use of certain trucks, truck tractors, and buses on public highways. How to file your own taxes The tax applies to vehicles having a taxable gross weight of 55,000 pounds or more. How to file your own taxes Report the tax on Form 2290, Heavy Highway Vehicle Use Tax Return. How to file your own taxes For more information, see the Instructions for Form 2290. How to file your own taxes Depositing excise taxes. How to file your own taxes   If you have to file a quarterly excise tax return on Form 720, you may have to deposit your excise taxes before the return is due. How to file your own taxes For details on depositing excise taxes, see the Instructions for Form 720. How to file your own taxes Information Returns If you make or receive payments in your business, you may have to report them to the IRS on information returns. How to file your own taxes The IRS compares the payments shown on the information returns with each person's income tax return to see if the payments were included in income. How to file your own taxes You must give a copy of each information return you are required to file to the recipient or payer. How to file your own taxes In addition to the forms described below, you may have to use other returns to report certain kinds of payments or transactions. How to file your own taxes For more details on information returns and when you have to file them, see the General Instructions for Certain Information Returns. How to file your own taxes Form 1099-MISC. How to file your own taxes   Use Form 1099-MISC, Miscellaneous Income, to report certain payments you make in your business. How to file your own taxes These payments include the following items. How to file your own taxes Payments of $600 or more for services performed for your business by people not treated as your employees, such as fees to subcontractors, attorneys, accountants, or directors. How to file your own taxes Rent payments of $600 or more, other than rents paid to real estate agents. How to file your own taxes Prizes and awards of $600 or more that are not for services, such as winnings on TV or radio shows. How to file your own taxes Royalty payments of $10 or more. How to file your own taxes Payments to certain crew members by operators of fishing boats. How to file your own taxes You also use Form 1099-MISC to report your sales of $5,000 or more of consumer goods to a person for resale anywhere other than in a permanent retail establishment. How to file your own taxes Form W-2. How to file your own taxes   You must file Form W-2, Wage and Tax Statement, to report payments to your employees, such as wages, tips, and other compensation, withheld income, social security, and Medicare taxes. How to file your own taxes You can file Form W-2 online. How to file your own taxes For more information about Form W-2, see the General Instructions for Forms W-2 and W-3. How to file your own taxes Penalties. How to file your own taxes   The law provides for the following penalties if you do not file Form 1099-MISC or Form W-2 or do not correctly report the information. How to file your own taxes For more information, see the General Instructions for Certain Information Returns. How to file your own taxes Failure to file information returns. How to file your own taxes This penalty applies if you do not file information returns by the due date, do not include all required information, or report incorrect information. How to file your own taxes Failure to furnish correct payee statements. How to file your own taxes This penalty applies if you do not furnish a required statement to a payee by the required date, do not include all required information, or report incorrect information. How to file your own taxes Waiver of penalties. How to file your own taxes   These penalties will not apply if you can show that the failure was due to reasonable cause and not willful neglect. How to file your own taxes   In addition, there is no penalty for failure to include all required information, or for including incorrect information, on a de minimis (small) number of information returns if you correct the errors by August 1 of the year the returns are due. How to file your own taxes (A de minimis number of returns is the greater of 10 or ½ of 1% of the total number of returns you are required to file for the year. How to file your own taxes ) Form 8300. How to file your own taxes   You must file Form 8300, Report of Cash Payments Over $10,000 Received in a Trade or Business, if you receive more than $10,000 in cash in one transaction, or two or more related business transactions. How to file your own taxes Cash includes U. How to file your own taxes S. How to file your own taxes and foreign coin and currency. How to file your own taxes It also includes certain monetary instruments such as cashier's and traveler's checks and money orders. How to file your own taxes Cash does not include a check drawn on an individual's personal account (personal check). How to file your own taxes For more information, see Publication 1544, Reporting Cash Payments of Over $10,000 (Received in a Trade or Business). How to file your own taxes Penalties. How to file your own taxes   There are civil and criminal penalties, including up to 5 years in prison, for not filing Form 8300, filing (or causing the filing of) a false or fraudulent Form 8300, or structuring a transaction to evade reporting requirements. How to file your own taxes Table 1-3. How to file your own taxes Going Out of Business Checklists (Note. How to file your own taxes The following checklists highlight the typical final forms and schedules you may need to file if you ever go out of business. How to file your own taxes For more information, see the instructions for the listed forms. How to file your own taxes ) IF you are liable for:   THEN you may need to: Income tax □ File Schedule C or C-EZ with your Form 1040 for the year in which you go out of business. How to file your own taxes   □ File Form 4797 with your Form 1040 for each year in which you sell or exchange property used in your business or in which the business use of certain section 179 or listed property drops to 50% or less. How to file your own taxes   □ File Form 8594 with your Form 1040 if you sold your business. How to file your own taxes Self-employment tax □ File Schedule SE with your Form 1040 for the year in which you go out of business. How to file your own taxes Employment taxes □ File Form 941 (or Form 944) for the calendar quarter in which you make final wage payments. How to file your own taxes Note. How to file your own taxes Do not forget to check the box and enter the date final wages were paid on line 15 of Form 941 or line 14 of Form 944. How to file your own taxes   □ File Form 940 for the calendar year in which final wages were paid. How to file your own taxes Note. How to file your own taxes Do not forget to check box d, Final: Business closed or stopped paying wages, under Type of Return. How to file your own taxes Information returns □ Provide Forms W-2 to your employees for the calendar year in which you make final wage payments. How to file your own taxes Note. How to file your own taxes These forms are generally due by the due date of your final Form 941 or Form 944. How to file your own taxes   □ File Form W-3 to file Forms W-2. How to file your own taxes Note. How to file your own taxes These forms are generally due within 1 month after the due date of your final Form 941 or Form 944. How to file your own taxes   □ Provide Forms 1099-MISC to each person to whom you have paid at least $600 for services (including parts and materials) during the calendar year in which you go out of business. How to file your own taxes   □ File Form 1096 to file Forms 1099-MISC. How to file your own taxes Prev  Up  Next   Home   More Online Publications
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The How To File Your Own Taxes

How to file your own taxes Car Expenses Table of Contents Introduction Depreciation of CarSpecial Depreciation Allowance Depreciation Limit Amended Return Election Not To Claim Special Allowance If you purchased a car after September 10, 2001, for use in your business (or as an employee) and figure your deductible expenses using the actual car expense method, new law contains provisions that may affect your depreciation deduction for that car. How to file your own taxes Publication 463, Travel, Entertainment, Gift, and Car Expenses, contains information on figuring depreciation on your car. How to file your own taxes However, Publication 463 does not contain the new provisions because it was printed before the law was enacted. How to file your own taxes The new provisions are in the Supplement to Publication 463, which is reprinted below. How to file your own taxes Supplement to Publication 463 Travel, Entertainment, Gift, and Car Expenses   Introduction This supplemental publication is for taxpayers who purchased a car for business purposes after September 10, 2001, and figure their deductible expenses, including a deduction for depreciation, using the actual car expense method. How to file your own taxes After Publication 463 was printed, the Job Creation and Worker Assistance Act of 2002 was signed into law by the President. How to file your own taxes Certain provisions of this new law may reduce your taxes for 2001. How to file your own taxes The new law contains the following provisions. How to file your own taxes A new depreciation deduction, the special depreciation allowance. How to file your own taxes An increase in the limit on depreciation for any car for which you claim the new special depreciation allowance. How to file your own taxes If you have already filed your 2001 return, you may wish to file an amended return to claim any of these benefits. How to file your own taxes See Amended Return, later. How to file your own taxes Depreciation of Car If you used the actual car expense method to figure your deduction for a car you own and use in your business (or as an employee), you generally can claim a depreciation deduction. How to file your own taxes However, there is a limit on the depreciation deduction you can take for your car each year. How to file your own taxes See Depreciation Limit later. How to file your own taxes Special Depreciation Allowance The new law allows you to claim a special depreciation allowance. How to file your own taxes This special allowance is a deduction equal to 30% of the depreciable basis of qualified property. How to file your own taxes You figure the amount of the special depreciation allowance after any section 179 deduction you choose to claim, but before figuring your regular depreciation deduction under the Modified Accelerated Cost Recovery System (MACRS). How to file your own taxes See Depreciation Deduction under Actual Car Expenses in chapter 4 of Publication 463 for information about MACRS. How to file your own taxes You can claim the special depreciation allowance only for the year the qualified property is placed in service. How to file your own taxes Qualified property. How to file your own taxes   Qualified property includes a car (any four-wheeled vehicle, including a truck or van not more than 6,000 pounds, that is made primarily for use on public streets, roads, and highways) that meets all of the following requirements. How to file your own taxes You bought it new. How to file your own taxes You bought it after September 10, 2001. How to file your own taxes (But a car is not qualified property if a binding written contract for you to buy the car was in effect before September 11, 2001. How to file your own taxes ) You began using it for business after September 10, 2001, and used it more than 50% in a qualified business use. How to file your own taxes Example. How to file your own taxes Bob bought a new car on October 15, 2001, for $20,000 and placed it in service immediately, using it 75% for business. How to file your own taxes Bob's car is qualified property. How to file your own taxes Bob chooses not to take a section 179 deduction for the car. How to file your own taxes He does claim the new special depreciation allowance. How to file your own taxes Bob first must figure the car's depreciable basis, which is $15,000 ($20,000 × . How to file your own taxes 75). How to file your own taxes He then figures the special depreciation allowance of $4,500 ($15,000 × . How to file your own taxes 30). How to file your own taxes The remaining depreciable basis of $10,500 ($15,000 - $4,500) is depreciated using MACRS (200% declining balance method, half-year convention) and results in a deduction of $2,100 ($10,500 × . How to file your own taxes 20), for a total depreciation deduction for 2001 of $6,600 ($4,500 + $2,100). How to file your own taxes However, Bob's depreciation deduction is limited to $5,745 ($7,660 × . How to file your own taxes 75), as discussed next. How to file your own taxes Depreciation Limit The limit on your depreciation deduction for 2001 is increased to $7,660 for a car that is qualified property (defined above) and for which you claim the special depreciation allowance. How to file your own taxes The limit is increased to $23,080 if the car is an electric car. How to file your own taxes The section 179 deduction is treated as depreciation for purposes of this limit. How to file your own taxes If you use a car less than 100% in your business or work, the limit is $7,660 (or $23,080 for an electric car) multiplied by the percentage of business and investment use during the year. How to file your own taxes For cars that do not qualify for (or for which you choose not to claim) the special depreciation allowance, the limit remains $3,060 ($9,280 for electric cars). How to file your own taxes Amended Return If you filed your 2001 calendar year return before June 1, 2002, and did not claim the new special depreciation allowance for a qualified car, you can claim it by filing an amended return on Form 1040X, Amended U. How to file your own taxes S. How to file your own taxes Individual Income Tax Return, by April 15, 2003. How to file your own taxes At the top of the Form 1040X, print “Filed pursuant to Revenue Procedure 2002–33. How to file your own taxes ” If you are an employee, attach Form 2106, Employee Business Expenses (revised March 2002). How to file your own taxes If you are self-employed, attach Form 4562, Depreciation and Amortization (revised March 2002). How to file your own taxes Or, you can claim the special depreciation allowance by filing Form 3115, Application for Change in Accounting Method, with your 2002 return. How to file your own taxes For details, see Revenue Procedure 2002–33. How to file your own taxes (But, filing Form 1040X for 2001 enables you to claim the special allowance earlier than attaching Form 3115 to your 2002 return. How to file your own taxes ) You cannot claim the special depreciation allowance on an amended return (or by using Form 3115) if you made, or are treated as having made, the election not to claim it described later. How to file your own taxes Example. How to file your own taxes The facts are the same as in the previous example except that Bob filed his original 2001 income tax return on April 15, 2002, and claimed a $3,000 ($20,000 x . How to file your own taxes 75 x . How to file your own taxes 20) depreciation deduction for his new car using MACRS. How to file your own taxes Bob now wishes to claim the special depreciation allowance for his new car on an amended 2001 return. How to file your own taxes Bob, who is an employee, files Form 1040X, by April 15, 2003, with an updated Form 2106 (revised March 2002) attached, increasing his total depreciation deduction to $5,745, as figured in the earlier example. How to file your own taxes Bob's new filled-in Form 2106 is shown later. How to file your own taxes Election Not To Claim Special Allowance You can elect not to claim the special depreciation allowance for a car by making a statement attached to, or written on, your return indicating that you are electing not to claim the special depreciation allowance for 5-year property. How to file your own taxes As a general rule, you must make this election by the due date (including extensions) of your return. How to file your own taxes You can have an automatic extension of 6 months from the due date of your return (excluding extensions) to make the election with an amended return. How to file your own taxes To get this extension, you must have filed your original return by the due date (including extensions). How to file your own taxes At the top of the statement, print “Filed pursuant to section 301. How to file your own taxes 9100–2. How to file your own taxes ” If you elect not to claim the special depreciation allowance for a car, you cannot claim it for any other 5-year property placed in service during the same year. How to file your own taxes Unless you elect (or are treated as electing) not to claim the special depreciation allowance, you must reduce the car's adjusted basis by the amount of the allowance, even if the allowance was not claimed. How to file your own taxes Deemed election for return filed before June 1, 2002. How to file your own taxes   If you did not make the election not to claim the special depreciation allowance in the time and manner described above, you will still be treated as electing not to claim it if all of the following apply. How to file your own taxes You filed your 2001 return before June 1, 2002. How to file your own taxes You claimed depreciation on your return but did not claim the special depreciation allowance. How to file your own taxes You did not file an amended 2001 return by April 15, 2003, or a Form 3115 with your 2002 return, to claim the special depreciation allowance. How to file your own taxes Form 2106, Page 1, for Bob Smith Form 2106, Page 2, for Bob Smith Prev  Up  Next   Home   More Online Publications