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Hrblock login Index Symbols 10% additional tax, Early Distributions Tax, Age 59½ Rule, Additional 10% tax 2-year rule SIMPLE IRAs, Two-year rule. Hrblock login 20% withholding, Other withholding rules. Hrblock login 5-year rule, 5-year rule. Hrblock login , Death before required beginning date. Hrblock login 6% excise tax on excess contributions to Roth IRAs, What if You Contribute Too Much? 60-day period for rollovers, Time Limit for Making a Rollover Contribution A Account balance, IRA account balance. Hrblock login Additional taxes, What Acts Result in Penalties or Additional Taxes?, Additional 10% tax (see also Penalties) Reporting, Reporting Additional Taxes Adjusted gross income (AGI), Modified adjusted gross income (AGI). Hrblock login , Modified AGI. Hrblock login (see also Modified adjusted gross income (AGI)) Retirement savings contributions credit, Adjusted gross income. Hrblock login Age 50 Contributions, General Limit Age 59 1/2 rule, Age 59½ Rule Age 70 1/2 rule, Age 70½ rule. Hrblock login Required minimum distributions, Distributions after the required beginning date. Hrblock login Age limit Traditional IRA, When Can Contributions Be Made? Airline payments, Rollover of Airline Payments Alimony, Alimony and separate maintenance. Hrblock login Annuity contracts, Annuity or endowment contracts. Hrblock login Borrowing on, Borrowing on an annuity contract. Hrblock login Distribution from insurance company, Annuity distributions from an insurance company. Hrblock login Distribution from IRA account, Distribution of an annuity contract from your IRA account. Hrblock login Early distributions, Annuity. Hrblock login Assistance (see Tax help) B Basis Inherited IRAs, IRA with basis. Hrblock login Roth IRAs, Basis of distributed property. Hrblock login Traditional IRAs, Cost basis. Hrblock login Beginning date, required, Distributions after the required beginning date. Hrblock login Beneficiaries, IRA Beneficiaries, Death before required beginning date. Hrblock login Change of, Change of beneficiary. Hrblock login Death of beneficiary, Death of a beneficiary. Hrblock login Early distributions to, Beneficiary. Hrblock login Individual as, Beneficiary an individual. Hrblock login More than one, More than one beneficiary. Hrblock login , Multiple individual beneficiaries. Hrblock login Not an individual, Beneficiary not an individual. Hrblock login Roth IRAs, Distributions to beneficiaries. Hrblock login Sole beneficiary spouse more than 10 years younger, Sole beneficiary spouse who is more than 10 years younger. Hrblock login Bond purchase plans Rollovers from, Rollover from bond purchase plan. Hrblock login Bonds, retirement (see Individual retirement bonds) Broker's commissions, Brokers' commissions. Hrblock login , Brokers' commissions. Hrblock login C Change in marital status, Change in marital status. Hrblock login Change of beneficiary, Change of beneficiary. Hrblock login Charitable distributions, qualified, Qualified charitable distributions. Hrblock login Collectibles, Investment in Collectibles, Collectibles. Hrblock login Community property, Community property laws. Hrblock login Compensation Alimony, Alimony and separate maintenance. Hrblock login Defined, What Is Compensation? Nontaxable combat pay, Nontaxable combat pay. Hrblock login Self-employment, Self-employment loss. Hrblock login Wages, salaries, etc. Hrblock login , Wages, salaries, etc. Hrblock login Conduit IRAs, IRA as a holding account (conduit IRA) for rollovers to other eligible plans. Hrblock login Contribution limits More than one IRA, More than one IRA. Hrblock login Contributions Designating the year, Designating year for which contribution is made. Hrblock login Distributions in same year as, Both contributions for 2013 and distributions in 2013. Hrblock login Excess (see Excess contributions) Less than maximum, Less Than Maximum Contributions Matching (SIMPLE), Matching contributions. Hrblock login Nondeductible (see Nondeductible contributions) Not required, Contributions not required. Hrblock login Qualified reservist repayments, Qualified reservist repayments. Hrblock login Recharacterizing (see Recharacterization) Retirement savings contributions credit, Eligible contributions. Hrblock login Roth IRAs, Can You Contribute to a Roth IRA?, Applying excess contributions. Hrblock login SIMPLE plans, How Are Contributions Made?, How Much Can Be Contributed on Your Behalf? Traditional IRAs, How Much Can Be Contributed?, More Than Maximum Contributions When to contribute, When Can Contributions Be Made? Withdrawing before due date of return, Contributions Returned Before Due Date of Return Conversions From SIMPLE IRAs, Converting from a SIMPLE IRA. Hrblock login To Roth IRAs, Conversions Credits Retirement savings contributions credit, Retirement Savings Contributions Credit (Saver's Credit), How to figure and report the credit. Hrblock login D Death of beneficiary, Death of a beneficiary. Hrblock login Deductions Figuring reduced IRA deduction, How To Figure Your Reduced IRA Deduction Phaseout, Deduction Phaseout Traditional IRAs, How Much Can You Deduct?, Examples — Worksheet for Reduced IRA Deduction for 2013 Deemed IRAs, Reminders, Reminders Defined benefit plans, Defined benefit plan. Hrblock login Defined contribution plans, Defined contribution plan. Hrblock login Disabilities, persons with Early distributions to, Disabled. Hrblock login Distributions After required beginning date, Distributions after the required beginning date. Hrblock login Age 59 1/2 rule, Age 59½ Rule Beneficiaries (see Beneficiaries) Contributions in same year as, Both contributions for 2013 and distributions in 2013. Hrblock login Delivered outside U. Hrblock login S. Hrblock login , IRA distributions delivered outside the United States. Hrblock login Figuring nontaxable and taxable amounts, Figuring the Nontaxable and Taxable Amounts From individual retirement accounts, Distributions from individual retirement account. Hrblock login From individual retirement annuities, Distributions from individual retirement annuities. Hrblock login Fully or partly taxable, Distributions Fully or Partly Taxable Income from, Income from IRA distributions. Hrblock login Inherited IRAs (see Inherited IRAs) Insufficient, Excess Accumulations (Insufficient Distributions) Qualified charitable, Qualified charitable distributions. Hrblock login Qualified HSA funding, One-time qualified HSA funding distribution. Hrblock login Qualified reservist, Qualified reservist distributions. Hrblock login Roth IRAs, Are Distributions Taxable?, How Do You Figure the Taxable Part? Ordering rules for, Ordering Rules for Distributions Recapture amount, Figuring your recapture amount. Hrblock login SIMPLE IRAs, Are Distributions Taxable? Taxable status of, Are Distributions Taxable? Divorce Rollovers by former spouse, Distributions under divorce or similar proceedings (alternate payees). Hrblock login Transfers incident to, Transfers Incident To Divorce E Early distributions, What Acts Result in Penalties or Additional Taxes?, Early Distributions, Nondeductible contributions. Hrblock login (see also Penalties) Age 59 1/2 rule, Age 59½ Rule Defined, Early distributions defined. Hrblock login Disability exception, Disabled. Hrblock login First-time homebuyers, exception, First home. Hrblock login Higher education expenses, exception, Higher education expenses. Hrblock login Medical insurance, exception, Medical insurance. Hrblock login Roth IRAs, Additional Tax on Early Distributions SIMPLE IRAs, Additional Tax on Early Distributions Tax, Early Distributions Tax Unreimbursed medical expenses, exception, Unreimbursed medical expenses. Hrblock login Education expenses, Higher education expenses. Hrblock login Employer and employee association trust accounts, Employer and Employee Association Trust Accounts Employer plans Covered by, Covered by an employer retirement plan. Hrblock login Year(s) covered, For Which Year(s) Are You Covered? Employer retirement plans, Are You Covered by an Employer Plan? Defined benefit plans, Defined benefit plan. Hrblock login Defined contribution plans, Defined contribution plan. Hrblock login Effect of modified AGI on deduction (Table 1-2), Table 1-2. Hrblock login Effect of Modified AGI1 on Deduction if You Are Covered by a Retirement Plan at Work Limit if covered by, Limit if Covered by Employer Plan Prohibited transactions, Trust account set up by an employer or an employee association. Hrblock login Endowment contracts (see Annuity contracts) Estate tax, Estate tax. Hrblock login Deduction for inherited IRAs, Federal estate tax deduction. Hrblock login Excess accumulations, Excess Accumulations (Insufficient Distributions), Make up of shortfall in distribution. Hrblock login Roth IRAs, Distributions After Owner's Death Excess contributions, Excess Contributions Closed tax year, Closed tax year. Hrblock login Deducted in earlier year, Excess contribution deducted in an earlier year. Hrblock login Deducting in a later year, Deducting an Excess Contribution in a Later Year Due to incorrect rollover information, Excess due to incorrect rollover information. Hrblock login Recharacterizing, Recharacterizing excess contributions. Hrblock login Roth IRAs, What if You Contribute Too Much? Tax, Excess Contributions Tax Withdrawn after due date of return, Excess Contributions Withdrawn After Due Date of Return Withdrawn by due date of return, Excess Contributions Withdrawn by Due Date of Return Exempt transactions, Exempt Transactions Exxon Valdez settlement income, Rollover of Exxon Valdez Settlement Income , Rollover of Exxon Valdez Settlement Income F Failed financial institutions, Failed financial institutions. Hrblock login Federal judges, Federal judges. Hrblock login Fiduciaries Prohibited transactions, Fiduciary. Hrblock login Filing before IRA contribution is made, Filing before a contribution is made. Hrblock login Filing status, Filing Status Deduction phaseout and, Filing status. Hrblock login Firefighters, volunteer, Volunteer firefighters. Hrblock login First-time homebuyers, First home. Hrblock login Five-year rule (see 5-year rule) Form 1040 Modified AGI calculation from, Form 1040. Hrblock login , Form 1040NR. Hrblock login Form 1040A Modified AGI calculation from, Form 1040A. Hrblock login Form 1099-R, Reporting and Withholding Requirements for Taxable Amounts Distribution code 1 used on, Form 5329 not required. Hrblock login Letter codes used on, Letter codes. Hrblock login Number codes used on, Number codes. Hrblock login Withdrawal of excess contribution, Form 1099-R. Hrblock login Form 5329, Additional 10% tax, Reporting the tax. Hrblock login , Reporting Additional Taxes Recapture tax, Recapture tax for changes in distribution method under equal payment exception. Hrblock login Form 8606, Form 8606. Hrblock login , Form 8606. Hrblock login , Reporting your nontaxable distribution on Form 8606. Hrblock login , Figuring the Nontaxable and Taxable Amounts Failure to file, penalty, Penalty for failure to file Form 8606. Hrblock login Form 8880, How to figure and report the credit. Hrblock login Form W-2 Employer retirement plans, Are You Covered by an Employer Plan? Free tax services, Free help with your tax return. Hrblock login Frozen deposits, Frozen deposit. Hrblock login Full-time student Retirement savings contributions credit, Full-time student. Hrblock login H Help (see Tax help) Higher education expenses, Higher education expenses. Hrblock login How to Set up an IRA, How Can a Traditional IRA Be Opened? Treat withdrawn contributions, How to treat withdrawn contributions. Hrblock login HSA funding distributions, qualified, One-time qualified HSA funding distribution. Hrblock login I Individual retirement accounts, Individual Retirement Account Distributions from, Distributions from individual retirement account. Hrblock login Individual retirement annuities, Individual Retirement Annuity Distributions from, Distributions from individual retirement annuities. Hrblock login Individual retirement arrangements (IRAs) How to set up, How Can a Traditional IRA Be Opened? When to set up, When Can a Traditional IRA Be Opened? Individual retirement bonds, Individual Retirement Bonds Cashing in, Cashing in retirement bonds. Hrblock login Inherited IRAs, What if You Inherit an IRA?, More information. Hrblock login Rollovers, Inherited IRAs. Hrblock login Insufficient distributions, Excess Accumulations (Insufficient Distributions) Interest on IRA, Reminders Investment in collectibles Collectibles defined, Collectibles. Hrblock login Exception, Exception. Hrblock login K Kay Bailey Hutchison Spousal IRAs Contribution limits, Kay Bailey Hutchison Spousal IRA Limit Deductions, Kay Bailey Hutchison Spousal IRA. Hrblock login Roth IRA contribution limits, Can you contribute to a Roth IRA for your spouse? Keogh plans Rollovers from, Keogh plans and rollovers. Hrblock login L Last-in first-out rule, Last-in first-out rule. Hrblock login Life expectancy, Life expectancy. Hrblock login Life insurance, Life insurance contract. Hrblock login Losses Roth IRAs, Recognizing Losses on Investments Traditional IRAs, Recognizing Losses on Traditional IRA Investments M Marital status, change in, Change in marital status. Hrblock login Matching contributions (SIMPLE), Matching contributions. Hrblock login Medical expenses, unreimbursed, Unreimbursed medical expenses. Hrblock login Medical insurance, Medical insurance. Hrblock login Military death gratuities, Military Death Gratuities and Servicemembers' Group Life Insurance (SGLI) Payments Minimum distribution (see Required minimum distribution) Missing children, photographs of, Reminders Modified adjusted gross income (AGI) Employer retirement plan coverage and deduction (Table 1-2), Table 1-2. Hrblock login Effect of Modified AGI1 on Deduction if You Are Covered by a Retirement Plan at Work Figuring (Worksheet 1-1), Worksheet 1-1. Hrblock login Figuring Your Modified AGI No employer retirement plan coverage and deduction (Table 1-3), Table 1-3. Hrblock login Effect of Modified AGI1 on Deduction if You Are NOT Covered by a Retirement Plan at Work Roth IRAs, Modified AGI. Hrblock login Effect on contribution amount (Table 2-1), Table 2-1. Hrblock login Effect of Modified AGI on Roth IRA Contribution More than one beneficiary, More than one beneficiary. Hrblock login More than one IRA, More than one IRA. Hrblock login Recharacterization, More than one IRA. Hrblock login Required minimum distribution, More than one IRA. Hrblock login N Nondeductible contributions, Nondeductible Contributions, Nondeductible contributions. Hrblock login Failure to report, Failure to report nondeductible contributions. Hrblock login Overstatement penalty, Penalty for overstatement. Hrblock login Notice Qualified employer plan to provide prior to rollover distribution, Written explanation to recipients. Hrblock login Rollovers, Rollover notice. Hrblock login P Partial rollovers, Partial rollovers. Hrblock login , Partial rollover. Hrblock login Penalties, What Acts Result in Penalties or Additional Taxes?, Form 5329 not required. Hrblock login Early distributions, Early Distributions, Nondeductible contributions. Hrblock login Excess accumulations, Excess Accumulations (Insufficient Distributions), Make up of shortfall in distribution. Hrblock login Excess contributions, Excess Contributions Roth IRAs, What if You Contribute Too Much? Exempt transactions, Exempt Transactions, Services received at reduced or no cost. Hrblock login Failure to file Form 8606, Penalty for failure to file Form 8606. Hrblock login Overstatement of nondeductible contributions, Penalty for overstatement. Hrblock login Prohibited transactions, Prohibited Transactions, Services received at reduced or no cost. Hrblock login Reporting, Reporting Additional Taxes SIMPLE IRAs, Additional Tax on Early Distributions Phaseout of deduction, Deduction Phaseout Pledging account as security, Pledging an account as security. Hrblock login Prohibited transactions, Prohibited Transactions, Services received at reduced or no cost. Hrblock login Taxes on, Taxes on prohibited transactions. Hrblock login Publications (see Tax help) Q Qualified charitable distributions, Qualified charitable distributions. Hrblock login Qualified domestic relations orders (QDROs), Qualified domestic relations order. Hrblock login Qualified settlement income, Rollover of Exxon Valdez Settlement Income , Rollover of Exxon Valdez Settlement Income R Recapture tax Changes in distribution method, Recapture tax for changes in distribution method under equal payment exception. Hrblock login Receivership distributions, Receivership distributions. Hrblock login Recharacterization, Recharacterizations, More than one IRA. Hrblock login Determining amount of net income due to contribution and total amount to be recharacterized (Worksheet 1-3), Worksheet 1-3. Hrblock login Determining the Amount of Net Income Due To an IRA Contribution and Total Amount To Be Recharacterized Reporting, Reporting a Recharacterization SIMPLE employer contributions, Recharacterizing employer contributions. Hrblock login Timing of, Timing. Hrblock login Reconversion, Reconversions Recordkeeping requirements Traditional IRAs, Nondeductible Contributions Reporting Additional taxes, Reporting Additional Taxes Deductible contributions, Reporting Deductible Contributions Nontaxable distribution on Form 8606, Reporting your nontaxable distribution on Form 8606. Hrblock login Recharacterization, Reporting a Recharacterization Rollovers From employer plans, Reporting rollovers from employer plans. Hrblock login From IRAs, Reporting rollovers from IRAs. Hrblock login Taxable amounts, Reporting and Withholding Requirements for Taxable Amounts Taxable distributions, Reporting taxable distributions on your return. Hrblock login Required beginning date, Distributions after the required beginning date. Hrblock login Required minimum distribution, Reminders, When Must You Withdraw Assets? (Required Minimum Distributions), Annuity distributions from an insurance company. Hrblock login Distribution period, Distribution period. Hrblock login During lifetime, Distributions during your lifetime. Hrblock login Figuring, Figuring the Owner's Required Minimum Distribution For beneficiary, Figuring the Beneficiary's Required Minimum Distribution Table to use, Which Table Do You Use To Determine Your Required Minimum Distribution? In year of owner's death, Distributions in the year of the owner's death. Hrblock login Installments allowed, Installments allowed. Hrblock login More than one IRA, More than one IRA. Hrblock login Sole beneficiary spouse who is more than 10 years younger, Sole beneficiary spouse who is more than 10 years younger. Hrblock login Reservists, Reservists. Hrblock login Qualified reservist distribution, Qualified reservist distributions. Hrblock login Qualified reservist repayments, Qualified reservist repayments. Hrblock login Retirement bonds (see Individual retirement bonds) Retirement savings contributions credit, Retirement Savings Contributions Credit (Saver's Credit), How to figure and report the credit. Hrblock login Rollovers, Rollovers, Reporting rollovers from employer plans. Hrblock login Airline payments, Rollover of Airline Payments Amount, Amount. Hrblock login Choosing an option (Table 1-5), Table 1-5. Hrblock login Comparison of Payment to You Versus Direct Rollover Completed after 60-day period, Rollovers completed after the 60-day period. Hrblock login Conduit IRAs, IRA as a holding account (conduit IRA) for rollovers to other eligible plans. Hrblock login Direct rollover option, Direct rollover option. Hrblock login Extension of period, Extension of rollover period. Hrblock login From bond purchase plan, Rollover from bond purchase plan. Hrblock login From employer's plan into a Roth IRA, Rollover From Employer's Plan Into a Roth IRA From employer's plan into an IRA, Rollover From Employer's Plan Into an IRA From Keogh plans, Keogh plans and rollovers. Hrblock login From one IRA into another, Rollover From One IRA Into Another From Roth IRAs, Rollover From a Roth IRA From traditional IRA, Kinds of rollovers from a traditional IRA. Hrblock login Inherited IRAs, Inherited IRAs. Hrblock login Nonspouse beneficiary, Rollover by nonspouse beneficiary. Hrblock login Notice, Rollover notice. Hrblock login Partial, Partial rollovers. Hrblock login , Partial rollover. Hrblock login SIMPLE IRAs, Rollovers and Transfers Exception Tax treatment of rollover from traditional IRA to eligible retirement plan other than an IRA, Tax treatment of a rollover from a traditional IRA to an eligible retirement plan other than an IRA. Hrblock login Time limit, Time Limit for Making a Rollover Contribution To Roth IRAs, Conversion methods. Hrblock login To traditional IRA, Kinds of rollovers to a traditional IRA. Hrblock login Waiting period between, Waiting period between rollovers. Hrblock login , No waiting period between rollovers. Hrblock login Withholding (see Withholding) Roth IRAs, Roth IRAs, Distributions After Owner's Death Age limit, Is there an age limit for contributions? Contribution limit reduced, Contribution limit reduced. Hrblock login Contributions, Can You Contribute to a Roth IRA?, Applying excess contributions. Hrblock login Timing of, When Can You Make Contributions? To traditional IRAs and to Roth IRAs, Roth IRAs and traditional IRAs. Hrblock login Conversion, Converting From Any Traditional IRA Into a Roth IRA, Conversion by rollover from traditional to Roth IRA. Hrblock login , Recharacterizing to a SEP IRA or SIMPLE IRA. Hrblock login , Conversions Defined, What Is a Roth IRA? Distributions, Are Distributions Taxable?, How Do You Figure the Taxable Part? After death of owner, Distributions After Owner's Death Insufficient, Distributions After Owner's Death Ordering rules for, Ordering Rules for Distributions Early distributions, Additional Tax on Early Distributions Excess accumulations, Distributions After Owner's Death Excess contributions, What if You Contribute Too Much? Figuring taxable part, How Do You Figure the Taxable Part? Losses, Recognizing Losses on Investments Modified AGI Effect on contribution amount (Table 2-1), Table 2-1. Hrblock login Effect of Modified AGI on Roth IRA Contribution Figuring (Worksheet 2-1), Worksheet 2-1. Hrblock login Modified Adjusted Gross Income for Roth IRA Purposes Rollovers from, Rollover From a Roth IRA Setting up, When Can a Roth IRA Be Opened? Spouse, Can you contribute to a Roth IRA for your spouse? Traditional IRAs converted into, Converting From Any Traditional IRA Into a Roth IRA Withdrawing or using assets, Must You Withdraw or Use Assets? S Salary reduction arrangement, What Is a SIMPLE Plan? Savings Incentive Match Plans for Employees (see SIMPLE IRAs) Section 501(c)(18) plan, General Limit, Kay Bailey Hutchison Spousal IRA Limit Self-employed persons Deductible contributions, Self-employed. Hrblock login Income of, Self-employment income. Hrblock login SIMPLE plans, Self-employed individual. Hrblock login SEP IRAs Recharacterizing to, Recharacterizing to a SEP IRA or SIMPLE IRA. Hrblock login Separated taxpayers Filing status of, Lived apart from spouse. Hrblock login Servicemembers group life insurance, Military Death Gratuities and Servicemembers' Group Life Insurance (SGLI) Payments Services received at reduced or no cost, Services received at reduced or no cost. Hrblock login SIMPLE IRAs, Savings Incentive Match Plans for Employees (SIMPLE), Two-year rule. Hrblock login Contributions, How Are Contributions Made?, How Much Can Be Contributed on Your Behalf? Conversion from, Converting from a SIMPLE IRA. Hrblock login Distributions, Are Distributions Taxable? Early distributions, , Additional Tax on Early Distributions Eligible employees, Eligible Employees Penalties, Additional Tax on Early Distributions Recharacterizing to, Recharacterizing to a SEP IRA or SIMPLE IRA. Hrblock login Rollovers, Rollovers and Transfers Exception Salary reduction contribution limits, Salary reduction contributions limit. Hrblock login Self-employed persons, Self-employed individual. Hrblock login SIMPLE plan, defined, What Is a SIMPLE Plan? Traditional IRA, mistakenly moved to, Traditional IRA mistakenly moved to SIMPLE IRA. Hrblock login , Traditional IRA mistakenly moved to SIMPLE IRA. Hrblock login Two-year rule, Two-year rule. Hrblock login Withdrawing or using assets, When Can You Withdraw or Use Assets? Simplified employee pensions (SEPs), Simplified Employee Pension (SEP) Social Security recipients, Social Security Recipients Spousal IRAs (see Kay Bailey Hutchison Spousal IRAs or Inherited IRAs) Students Education expenses, Higher education expenses. Hrblock login Retirement savings contributions credit, Full-time student. Hrblock login Surviving spouse, Surviving spouse. Hrblock login , Surviving spouse. Hrblock login Rollovers by, Distributions received by a surviving spouse. Hrblock login T Tables Modified AGI Employer retirement plan coverage and deduction (Table 1-2), Table 1-2. Hrblock login Effect of Modified AGI1 on Deduction if You Are Covered by a Retirement Plan at Work No employer retirement plan coverage and deduction (Table 1-3), Table 1-3. Hrblock login Effect of Modified AGI1 on Deduction if You Are NOT Covered by a Retirement Plan at Work Roth IRAs, effect on contribution (Table 2-1), Table 2-1. Hrblock login Effect of Modified AGI on Roth IRA Contribution Rollover vs. Hrblock login direct payment to taxpayer (Table 1-5), Table 1-5. Hrblock login Comparison of Payment to You Versus Direct Rollover Using this publication (Table I-1), Table I-1. Hrblock login Using This Publication Tax advantages of IRAs, What are some tax advantages of an IRA? Tax credits Retirement savings contributions credit, Retirement Savings Contributions Credit (Saver's Credit), How to figure and report the credit. Hrblock login Tax help, How To Get Tax Help Tax year, Tax year. Hrblock login Tax-sheltered annuities Rollovers from, Distribution from a tax-sheltered annuity. Hrblock login Traditional IRAs, Traditional IRAs, Form 5329 not required. Hrblock login Age 59 1/2 rule, Age 59½ Rule Contribution limits, How Much Can Be Contributed?, More Than Maximum Contributions Contributions, How Much Can Be Contributed?, More Than Maximum Contributions Due date, Contributions must be made by due date. Hrblock login To Roth IRAs and to traditional IRAs, Roth IRAs and traditional IRAs. Hrblock login Converting into Roth IRA, Converting From Any Traditional IRA Into a Roth IRA Cost basis, Cost basis. Hrblock login Deductions, How Much Can You Deduct?, Examples — Worksheet for Reduced IRA Deduction for 2013 Defined, Introduction Disclosures, Required Disclosures Excess contributions, Excess Contributions Inherited IRAs, What if You Inherit an IRA?, More information. Hrblock login Loss of IRA status, Loss of IRA status. Hrblock login Losses, Recognizing Losses on Traditional IRA Investments Mistakenly moved to SIMPLE IRA, Traditional IRA mistakenly moved to SIMPLE IRA. Hrblock login , Traditional IRA mistakenly moved to SIMPLE IRA. Hrblock login Recordkeeping, Nondeductible Contributions Reduced IRA deduction for 2013, Examples — Worksheet for Reduced IRA Deduction for 2013 Rollovers (see Rollovers) Setting up, Who Can Open a Traditional IRA?, Required Disclosures Social Security recipients, Social Security Recipients Transfers, Can You Move Retirement Plan Assets? Types of, Kinds of traditional IRAs. Hrblock login Withdrawing or using assets, When Can You Withdraw or Use Assets?, Excess Contributions Tax Transfers, Can You Move Retirement Plan Assets? Divorce, Transfers Incident To Divorce To Roth IRAs, Transfers to Roth IRAs. Hrblock login , Can You Move Amounts Into a Roth IRA? Trustee to trustee, Trustee-to-Trustee Transfer, Conversion methods. Hrblock login Trustee-to-trustee transfers, Trustee-to-Trustee Transfer To Roth IRAs, Conversion methods. Hrblock login Trustees' fees, Trustees' fees. Hrblock login , Trustees' fees. Hrblock login Trusts As beneficiary, Trust as beneficiary. Hrblock login TTY/TDD information, How To Get Tax Help Two-year rule SIMPLE IRAs, Two-year rule. Hrblock login U Unreimbursed medical expenses, Unreimbursed medical expenses. Hrblock login V Volunteer firefighters, Volunteer firefighters. Hrblock login W Withdrawing or using assets Contribution withdrawal, before due date of return, Contributions Returned Before Due Date of Return Roth IRAs, Must You Withdraw or Use Assets? SIMPLE IRAs, When Can You Withdraw or Use Assets? Traditional IRAs, When Can You Withdraw or Use Assets?, Excess Contributions Tax Withholding, Reporting and Withholding Requirements for Taxable Amounts, Withholding. Hrblock login Direct rollover option, Withholding. Hrblock login Eligible rollover distribution paid to taxpayer, Withholding requirement. Hrblock login Worksheets Figuring amount of net income due to IRA contribution and total amount to be recharacterized (Worksheet 1-3), Worksheet 1-3. Hrblock login Determining the Amount of Net Income Due To an IRA Contribution and Total Amount To Be Recharacterized Figuring modified AGI (Worksheet 1-1), Worksheet 1-1. Hrblock login Figuring Your Modified AGI Roth IRAs Figuring modified AGI (Worksheet 2-1), Worksheet 2-1. Hrblock login Modified Adjusted Gross Income for Roth IRA Purposes Prev  Up     Home   More Online Publications
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Can I Deduct My Charitable Contributions?

Information You Will Need:

  • Your and your spouse’s filing status
  • Your adjusted gross income amount
  • Amounts donated and to what organization
  • For non-cash contributions, any appraisal or information you have to determine the fair market value of the donation
  • Is the charitable organization qualified? Refer to Search for Charities for a list or verify with the organization that they are.

Note: This application is not designed to address the following types of charitable contributions:

  • Business property/inventory
  • A partial interest and Right to Use property
  • A fractional interest in tangible personal property
  • A qualified conservation contribution
  • A future interest in tangible personal property
  • A patent or other intellectual property

Please refer to Publication 526, Charitable Contributions, for these contributions.

Estimated Completion Time: 12 minutes. However: 5 minutes of inactivity will end the interview and you will be forced to start over.

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Page Last Reviewed or Updated: 14-Feb-2014

The Hrblock Login

Hrblock login Publication 15-B - Main Content Table of Contents 1. Hrblock login Fringe Benefit OverviewAre Fringe Benefits Taxable? Cafeteria Plans Simple Cafeteria Plans 2. Hrblock login 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. Hrblock login Fringe Benefit Valuation RulesGeneral Valuation Rule Cents-Per-Mile Rule Commuting Rule Lease Value Rule Unsafe Conditions Commuting Rule 4. Hrblock login Rules for Withholding, Depositing, and ReportingTransfer of property. Hrblock login Amount of deposit. Hrblock login Limitation. Hrblock login Conformity rules. Hrblock login Election not to withhold income tax. Hrblock login How To Get Tax Help 1. Hrblock login Fringe Benefit Overview A fringe benefit is a form of pay for the performance of services. Hrblock login 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. Hrblock login Performance of services. Hrblock login   A person who performs services for you does not have to be your employee. Hrblock login A person may perform services for you as an independent contractor, partner, or director. Hrblock login 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. Hrblock login Provider of benefit. Hrblock login   You are the provider of a fringe benefit if it is provided for services performed for you. Hrblock login 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. Hrblock login 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. Hrblock login Recipient of benefit. Hrblock login   The person who performs services for you is considered the recipient of a fringe benefit provided for those services. Hrblock login That person may be considered the recipient even if the benefit is provided to someone who did not perform services for you. Hrblock login For example, your employee may be the recipient of a fringe benefit you provide to a member of the employee's family. Hrblock login 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. Hrblock login Section 2 discusses the exclusions that apply to certain fringe benefits. Hrblock login Any benefit not excluded under the rules discussed in section 2 is taxable. Hrblock login Including taxable benefits in pay. Hrblock login   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. Hrblock login Any amount the law excludes from pay. Hrblock login Any amount the recipient paid for the benefit. Hrblock login The rules used to determine the value of a fringe benefit are discussed in section 3. Hrblock login   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. Hrblock login However, you can use special rules to withhold, deposit, and report the employment taxes. Hrblock login These rules are discussed in section 4. Hrblock login   If the recipient of a taxable fringe benefit is not your employee, the benefit is not subject to employment taxes. Hrblock login However, you may have to report the benefit on one of the following information returns. Hrblock login 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. Hrblock login For more information, see the instructions for the forms listed above. Hrblock login 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. Hrblock login 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. Hrblock login Generally, a cafeteria plan does not include any plan that offers a benefit that defers pay. Hrblock login However, a cafeteria plan can include a qualified 401(k) plan as a benefit. Hrblock login Also, certain life insurance plans maintained by educational institutions can be offered as a benefit even though they defer pay. Hrblock login Qualified benefits. Hrblock login   A cafeteria plan can include the following benefits discussed in section 2. Hrblock login Accident and health benefits (but not Archer medical savings accounts (Archer MSAs) or long-term care insurance). Hrblock login Adoption assistance. Hrblock login Dependent care assistance. Hrblock login Group-term life insurance coverage (including costs that cannot be excluded from wages). Hrblock login Health savings accounts (HSAs). Hrblock login Distributions from an HSA may be used to pay eligible long-term care insurance premiums or qualified long-term care services. Hrblock login Benefits not allowed. Hrblock login   A cafeteria plan cannot include the following benefits discussed in section 2. Hrblock login Archer MSAs. Hrblock login See Accident and Health Benefits in section 2. Hrblock login Athletic facilities. Hrblock login De minimis (minimal) benefits. Hrblock login Educational assistance. Hrblock login Employee discounts. Hrblock login Employer-provided cell phones. Hrblock login Lodging on your business premises. Hrblock login Meals. Hrblock login Moving expense reimbursements. Hrblock login No-additional-cost services. Hrblock login Transportation (commuting) benefits. Hrblock login Tuition reduction. Hrblock login Working condition benefits. Hrblock login It also cannot include scholarships or fellowships (discussed in Publication 970, Tax Benefits for Education). Hrblock login $2,500 limit on a health flexible spending arrangement (FSA). Hrblock login   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. Hrblock login For plan years beginning after December 31, 2013, the limit is unchanged at $2,500. Hrblock login   A cafeteria plan offering a health FSA must be amended to specify the $2,500 limit (or any lower limit set by the employer). Hrblock login 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. Hrblock login 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. Hrblock login   For more information, see Notice 2012-40, 2012-26 I. Hrblock login R. Hrblock login B. Hrblock login 1046, available at www. Hrblock login irs. Hrblock login gov/irb/2012-26_IRB/ar09. Hrblock login html. Hrblock login Employee. Hrblock login   For these plans, treat the following individuals as employees. Hrblock login A current common-law employee. Hrblock login See section 2 in Publication 15 (Circular E) for more information. Hrblock login A full-time life insurance agent who is a current statutory employee. Hrblock login 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. Hrblock login Exception for S corporation shareholders. Hrblock login   Do not treat a 2% shareholder of an S corporation as an employee of the corporation for this purpose. Hrblock login 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. Hrblock login 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. Hrblock login Plans that favor highly compensated employees. Hrblock login   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. Hrblock login A plan you maintain under a collective bargaining agreement does not favor highly compensated employees. Hrblock login   A highly compensated employee for this purpose is any of the following employees. Hrblock login An officer. Hrblock login A shareholder who owns more than 5% of the voting power or value of all classes of the employer's stock. Hrblock login An employee who is highly compensated based on the facts and circumstances. Hrblock login A spouse or dependent of a person described in (1), (2), or (3). Hrblock login Plans that favor key employees. Hrblock login   If your plan favors key employees, you must include in their wages the value of taxable benefits they could have selected. Hrblock login 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. Hrblock login However, a plan you maintain under a collective bargaining agreement does not favor key employees. Hrblock login   A key employee during 2014 is generally an employee who is either of the following. Hrblock login An officer having annual pay of more than $170,000. Hrblock login An employee who for 2014 is either of the following. Hrblock login A 5% owner of your business. Hrblock login A 1% owner of your business whose annual pay was more than $150,000. Hrblock login Simple Cafeteria Plans Eligible employers meeting contribution requirements and eligibility and participation requirements can establish a simple cafeteria plan. Hrblock login Simple cafeteria plans are treated as meeting the nondiscrimination requirements of a cafeteria plan and certain benefits under a cafeteria plan. Hrblock login Eligible employer. Hrblock login   You are an eligible employer if you employ an average of 100 or fewer employees during either of the 2 preceding years. Hrblock login 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. Hrblock login 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. Hrblock login Eligibility and participation requirements. Hrblock login   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. Hrblock login 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. Hrblock login S. Hrblock login source. Hrblock login Contribution requirements. Hrblock login   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. Hrblock login 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. Hrblock login More information. Hrblock login   For more information about cafeteria plans, see section 125 of the Internal Revenue Code and its regulations. Hrblock login 2. Hrblock login Fringe Benefit Exclusion Rules This section discusses the exclusion rules that apply to fringe benefits. Hrblock login These rules exclude all or part of the value of certain benefits from the recipient's pay. Hrblock login The excluded benefits are not subject to federal income tax withholding. Hrblock login 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. Hrblock login This section discusses the exclusion rules for the following fringe benefits. Hrblock login Accident and health benefits. Hrblock login Achievement awards. Hrblock login Adoption assistance. Hrblock login Athletic facilities. Hrblock login De minimis (minimal) benefits. Hrblock login Dependent care assistance. Hrblock login Educational assistance. Hrblock login Employee discounts. Hrblock login Employee stock options. Hrblock login Employer-provided cell phones. Hrblock login Group-term life insurance coverage. Hrblock login Health savings accounts (HSAs). Hrblock login Lodging on your business premises. Hrblock login Meals. Hrblock login Moving expense reimbursements. Hrblock login No-additional-cost services. Hrblock login Retirement planning services. Hrblock login Transportation (commuting) benefits. Hrblock login Tuition reduction. Hrblock login Working condition benefits. Hrblock login See Table 2-1, later, for an overview of the employment tax treatment of these benefits. Hrblock login Table 2-1. Hrblock login Special Rules for Various Types of Fringe Benefits (For more information, see the full discussion in this section. Hrblock login ) 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. Hrblock login Exempt, except for certain payments to S corporation employees who are 2% shareholders. Hrblock login Exempt Achievement awards Exempt1 up to $1,600 for qualified plan awards ($400 for nonqualified awards). Hrblock login 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. Hrblock login 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). Hrblock login Educational assistance Exempt up to $5,250 of benefits each year. Hrblock login (See Educational Assistance , later in this section. Hrblock login ) Employee discounts Exempt3 up to certain limits. Hrblock login (See Employee Discounts , later in this section. Hrblock login ) Employee stock options See Employee Stock Options , later in this section. Hrblock login Employer-provided cell phones Exempt if provided primarily for noncompensatory business purposes. Hrblock login Group-term life insurance coverage Exempt Exempt1,4, 7 up to cost of $50,000 of coverage. Hrblock login (Special rules apply to former employees. Hrblock login ) Exempt Health savings accounts (HSAs) Exempt for qualified individuals up to the HSA contribution limits. Hrblock login (See Health Savings Accounts , later in this section. Hrblock login ) Lodging on your business premises Exempt1 if furnished for your convenience as a condition of employment. Hrblock login Meals Exempt if furnished on your business premises for your convenience. Hrblock login Exempt if de minimis. Hrblock login Moving expense reimbursements Exempt1 if expenses would be deductible if the employee had paid them. Hrblock login 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). Hrblock login (See Transportation (Commuting) Benefits , later in this section. Hrblock login ) Exempt if de minimis. Hrblock login Tuition reduction Exempt3 if for undergraduate education (or graduate education if the employee performs teaching or research activities). Hrblock login Working condition benefits Exempt Exempt Exempt 1 Exemption does not apply to S corporation employees who are 2% shareholders. Hrblock login 2 Exemption does not apply to certain highly compensated employees under a self-insured plan that favors those employees. Hrblock login 3 Exemption does not apply to certain highly compensated employees under a program that favors those employees. Hrblock login 4 Exemption does not apply to certain key employees under a plan that favors those employees. Hrblock login 5 Exemption does not apply to services for tax preparation, accounting, legal, or brokerage services. Hrblock login 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. Hrblock login 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. Hrblock login Report it as wages in boxes 1, 3, and 5 of the employee's Form W-2. Hrblock login Also, show it in box 12 with code “C. Hrblock login ” The amount is subject to social security and Medicare taxes, and you may, at your option, withhold federal income tax. Hrblock login Accident and Health Benefits This exclusion applies to contributions you make to an accident or health plan for an employee, including the following. Hrblock login Contributions to the cost of accident or health insurance including qualified long-term care insurance. Hrblock login Contributions to a separate trust or fund that directly or through insurance provides accident or health benefits. Hrblock login Contributions to Archer MSAs or health savings accounts (discussed in Publication 969, Health Savings Accounts and Other Tax-Favored Health Plans). Hrblock login 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. Hrblock login Payments or reimbursements of medical expenses. Hrblock login Payments for specific injuries or illnesses (such as the loss of the use of an arm or leg). Hrblock login The payments must be figured without regard to any period of absence from work. Hrblock login Accident or health plan. Hrblock login   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. Hrblock login The plan may be insured or noninsured and does not need to be in writing. Hrblock login Employee. Hrblock login   For this exclusion, treat the following individuals as employees. Hrblock login A current common-law employee. Hrblock login A full-time life insurance agent who is a current statutory employee. Hrblock login A retired employee. Hrblock login A former employee you maintain coverage for based on the employment relationship. Hrblock login A widow or widower of an individual who died while an employee. Hrblock login A widow or widower of a retired employee. Hrblock login 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. Hrblock login Special rule for certain government plans. Hrblock login   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. Hrblock login See section 105(j) for details. Hrblock login Exception for S corporation shareholders. Hrblock login   Do not treat a 2% shareholder of an S corporation as an employee of the corporation for this purpose. Hrblock login 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. Hrblock login 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. Hrblock login Exclusion from wages. Hrblock login   You can generally exclude the value of accident or health benefits you provide to an employee from the employee's wages. Hrblock login Exception for certain long-term care benefits. Hrblock login   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. Hrblock login 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. Hrblock login However, you can exclude these contributions from the employee's wages subject to social security, Medicare, and federal unemployment (FUTA) taxes. Hrblock login S corporation shareholders. Hrblock login   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. Hrblock login 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. Hrblock login Exception for highly compensated employees. Hrblock login   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. Hrblock login 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. Hrblock login   A self-insured plan is a plan that reimburses your employees for medical expenses not covered by an accident or health insurance policy. Hrblock login   A highly compensated employee for this exception is any of the following individuals. Hrblock login One of the five highest paid officers. Hrblock login An employee who owns (directly or indirectly) more than 10% in value of the employer's stock. Hrblock login An employee who is among the highest paid 25% of all employees (other than those who can be excluded from the plan). Hrblock login   For more information on this exception, see section 105(h) of the Internal Revenue Code and its regulations. Hrblock login COBRA premiums. Hrblock login   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). Hrblock login 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. Hrblock login 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. Hrblock login 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. Hrblock login The award must meet the requirements for employee achievement awards discussed in chapter 2 of Publication 535, Business Expenses. Hrblock login Employee. Hrblock login   For this exclusion, treat the following individuals as employees. Hrblock login A current employee. Hrblock login A former common-law employee you maintain coverage for in consideration of or based on an agreement relating to prior service as an employee. Hrblock login 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. Hrblock login Exception for S corporation shareholders. Hrblock login   Do not treat a 2% shareholder of an S corporation as an employee of the corporation for this purpose. Hrblock login 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. Hrblock login 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. Hrblock login Exclusion from wages. Hrblock login   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. Hrblock login The excludable annual amount is $1,600 ($400 for awards that are not “qualified plan awards”). Hrblock login See chapter 2 of Publication 535 for more information about the limit on deductions for employee achievement awards. Hrblock login    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. Hrblock login   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. Hrblock login The part of the cost that is more than your allowable deduction (up to the value of the awards). Hrblock login The amount by which the value of the awards exceeds your allowable deduction. Hrblock login Exclude the remaining value of the awards from the employee's wages. Hrblock login Adoption Assistance An adoption assistance program is a separate written plan of an employer that meets all of the following requirements. Hrblock login It benefits employees who qualify under rules set up by you, which do not favor highly compensated employees or their dependents. Hrblock login 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. Hrblock login It does not pay more than 5% of its payments during the year for shareholders or owners (or their spouses or dependents). Hrblock login 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. Hrblock login You give reasonable notice of the plan to eligible employees. Hrblock login Employees provide reasonable substantiation that payments or reimbursements are for qualifying expenses. Hrblock login For this exclusion, a highly compensated employee for 2014 is an employee who meets either of the following tests. Hrblock login The employee was a 5% owner at any time during the year or the preceding year. Hrblock login The employee received more than $115,000 in pay for the preceding year. Hrblock login 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. Hrblock login 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. Hrblock login However, you cannot exclude these payments from wages subject to social security, Medicare, and federal unemployment (FUTA) taxes. Hrblock login For more information, see the Instructions for Form 8839, Qualified Adoption Expenses. Hrblock login 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. Hrblock login Use code “T” to identify this amount. Hrblock login Exception for S corporation shareholders. Hrblock login   For this exclusion, do not treat a 2% shareholder of an S corporation as an employee of the corporation. Hrblock login 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. Hrblock login 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. Hrblock login 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. Hrblock login 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. Hrblock login On-premises facility. Hrblock login   The athletic facility must be located on premises you own or lease. Hrblock login It does not have to be located on your business premises. Hrblock login However, the exclusion does not apply to an athletic facility for residential use, such as athletic facilities that are part of a resort. Hrblock login Employee. Hrblock login   For this exclusion, treat the following individuals as employees. Hrblock login A current employee. Hrblock login A former employee who retired or left on disability. Hrblock login A widow or widower of an individual who died while an employee. Hrblock login A widow or widower of a former employee who retired or left on disability. Hrblock login 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. Hrblock login A partner who performs services for a partnership. Hrblock login De Minimis (Minimal) Benefits You can exclude the value of a de minimis benefit you provide to an employee from the employee's wages. Hrblock login 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. Hrblock login 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. Hrblock login Examples of de minimis benefits include the following. Hrblock login Personal use of an employer-provided cell phone provided primarily for noncompensatory business purposes. Hrblock login See Employer-Provided Cell Phones , later in this section, for details. Hrblock login 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. Hrblock login Holiday gifts, other than cash, with a low fair market value. Hrblock login 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. Hrblock login Meals. Hrblock login See Meals , later in this section, for details. Hrblock login Occasional parties or picnics for employees and their guests. Hrblock login Occasional tickets for theater or sporting events. Hrblock login Transportation fare. Hrblock login See Transportation (Commuting) Benefits , later in this section, for details. Hrblock login Employee. Hrblock login   For this exclusion, treat any recipient of a de minimis benefit as an employee. Hrblock login 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. Hrblock login The services must be for a qualifying person's care and must be provided to allow the employee to work. Hrblock login 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. Hrblock login For more information, see Qualifying Person Test and Work-Related Expense Test in Publication 503, Child and Dependent Care Expenses. Hrblock login Employee. Hrblock login   For this exclusion, treat the following individuals as employees. Hrblock login A current employee. Hrblock login 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. Hrblock login Yourself (if you are a sole proprietor). Hrblock login A partner who performs services for a partnership. Hrblock login Exclusion from wages. Hrblock login   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. Hrblock login   An employee can generally exclude from gross income up to $5,000 of benefits received under a dependent care assistance program each year. Hrblock login This limit is reduced to $2,500 for married employees filing separate returns. Hrblock login   However, the exclusion cannot be more than the smaller of the earned income of either the employee or employee's spouse. Hrblock login 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. Hrblock login For more information on the earned income limit, see Publication 503. Hrblock login Exception for highly compensated employees. Hrblock login   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. Hrblock login   For this exclusion, a highly compensated employee for 2014 is an employee who meets either of the following tests. Hrblock login The employee was a 5% owner at any time during the year or the preceding year. Hrblock login The employee received more than $115,000 in pay for the preceding year. Hrblock login 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. Hrblock login Form W-2. Hrblock login   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. Hrblock login Include any amounts you cannot exclude from the employee's wages in boxes 1, 3, and 5. Hrblock login Report both the nontaxable portion of assistance (up to $5,000) and any assistance above the amount that is non-taxable to the employee. Hrblock login Example. Hrblock login   Company A provides a dependent care assistance flexible spending arrangement to its employees through a cafeteria plan. Hrblock login In addition, it provides occasional on-site dependent care to its employees at no cost. Hrblock login Emily, an employee of company A, had $4,500 deducted from her pay for the dependent care flexible spending arrangement. Hrblock login In addition, Emily used the on-site dependent care several times. Hrblock login The fair market value of the on-site care was $700. Hrblock login 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). Hrblock login 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. Hrblock login Educational Assistance This exclusion applies to educational assistance you provide to employees under an educational assistance program. Hrblock login The exclusion also applies to graduate level courses. Hrblock login Educational assistance means amounts you pay or incur for your employees' education expenses. Hrblock login These expenses generally include the cost of books, equipment, fees, supplies, and tuition. Hrblock login 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. Hrblock login 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. Hrblock login Nor do they include the cost of lodging, meals, or transportation. Hrblock login Educational assistance program. Hrblock login   An educational assistance program is a separate written plan that provides educational assistance only to your employees. Hrblock login The program qualifies only if all of the following tests are met. Hrblock login The program benefits employees who qualify under rules set up by you that do not favor highly compensated employees. Hrblock login 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. Hrblock login The program does not provide more than 5% of its benefits during the year for shareholders or owners. Hrblock login 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. Hrblock login 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. Hrblock login You give reasonable notice of the program to eligible employees. Hrblock login Your program can cover former employees if their employment is the reason for the coverage. Hrblock login   For this exclusion, a highly compensated employee for 2014 is an employee who meets either of the following tests. Hrblock login The employee was a 5% owner at any time during the year or the preceding year. Hrblock login The employee received more than $115,000 in pay for the preceding year. Hrblock login 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. Hrblock login Employee. Hrblock login   For this exclusion, treat the following individuals as employees. Hrblock login A current employee. Hrblock login A former employee who retired, left on disability, or was laid off. Hrblock login 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. Hrblock login Yourself (if you are a sole proprietor). Hrblock login A partner who performs services for a partnership. Hrblock login Exclusion from wages. Hrblock login   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. Hrblock login Assistance over $5,250. Hrblock login   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. Hrblock login Working condition benefits may be excluded from wages. Hrblock login 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. Hrblock login See Working Condition Benefits , later, in this section. Hrblock login 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. Hrblock login 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). Hrblock login Employee. Hrblock login   For this exclusion, treat the following individuals as employees. Hrblock login A current employee. Hrblock login A former employee who retired or left on disability. Hrblock login A widow or widower of an individual who died while an employee. Hrblock login A widow or widower of an employee who retired or left on disability. Hrblock login 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. Hrblock login A partner who performs services for a partnership. Hrblock login Exclusion from wages. Hrblock login   You can generally exclude the value of an employee discount you provide an employee from the employee's wages, up to the following limits. Hrblock login For a discount on services, 20% of the price you charge nonemployee customers for the service. Hrblock login For a discount on merchandise or other property, your gross profit percentage times the price you charge nonemployee customers for the property. Hrblock login   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. Hrblock login 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. Hrblock login Exception for highly compensated employees. Hrblock login   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. Hrblock login All of your employees. Hrblock login A group of employees defined under a reasonable classification you set up that does not favor highly compensated employees. Hrblock login   For this exclusion, a highly compensated employee for 2014 is an employee who meets either of the following tests. Hrblock login The employee was a 5% owner at any time during the year or the preceding year. Hrblock login The employee received more than $115,000 in pay for the preceding year. Hrblock login 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. Hrblock login Employee Stock Options There are three kinds of stock options—incentive stock options, employee stock purchase plan options, and nonstatutory (nonqualified) stock options. Hrblock login 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. Hrblock login 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. Hrblock login 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. Hrblock login 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. Hrblock login 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. Hrblock login 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. Hrblock login ” See Regulations section 1. Hrblock login 83-7. Hrblock login 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. Hrblock login The former spouse, rather than the employee, is required to include an amount in gross income when the former spouse exercises the stock options. Hrblock login See Revenue Ruling 2002-22 and Revenue Ruling 2004-60 for details. Hrblock login You can find Revenue Ruling 2002-22 on page 849 of Internal Revenue Bulletin 2002-19 at www. Hrblock login irs. Hrblock login gov/pub/irs-irbs/irb02-19. Hrblock login pdf. Hrblock login See Revenue Ruling 2004-60, 2004-24 I. Hrblock login R. Hrblock login B. Hrblock login 1051, available at www. Hrblock login irs. Hrblock login gov/irb/2004-24_IRB/ar13. Hrblock login html. Hrblock login For more information about employee stock options, see sections 421, 422, and 423 of the Internal Revenue Code and their related regulations. Hrblock login 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. Hrblock login 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. Hrblock login 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. Hrblock login Noncompensatory business purposes. Hrblock login   You provide a cell phone primarily for noncompensatory business purposes if there are substantial business reasons for providing the cell phone. Hrblock login 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. Hrblock login Cell phones provided to promote goodwill, boost morale, or attract prospective employees. Hrblock login   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. Hrblock login Additional information. Hrblock login   For additional information on the tax treatment of employer-provided cell phones, see Notice 2011-72, 2011-38 I. Hrblock login R. Hrblock login B. Hrblock login 407, available at  www. Hrblock login irs. Hrblock login gov/irb/2011-38_IRB/ar07. Hrblock login html. Hrblock login Group-Term Life Insurance Coverage This exclusion applies to life insurance coverage that meets all the following conditions. Hrblock login It provides a general death benefit that is not included in income. Hrblock login You provide it to a group of employees. Hrblock login See The 10-employee rule , later. Hrblock login It provides an amount of insurance to each employee based on a formula that prevents individual selection. Hrblock login This formula must use factors such as the employee's age, years of service, pay, or position. Hrblock login You provide it under a policy you directly or indirectly carry. Hrblock login 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. Hrblock login Determine the cost of the insurance, for this purpose, as explained under Coverage over the limit , later. Hrblock login Group-term life insurance does not include the following insurance. Hrblock login Insurance that does not provide general death benefits, such as travel insurance or a policy providing only accidental death benefits. Hrblock login Life insurance on the life of your employee's spouse or dependent. Hrblock login However, you may be able to exclude the cost of this insurance from the employee's wages as a de minimis benefit. Hrblock login See De Minimis (Minimal) Benefits , earlier in this section. Hrblock login 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. Hrblock login See Regulations section 1. Hrblock login 79-1 for details. Hrblock login Employee. Hrblock login   For this exclusion, treat the following individuals as employees. Hrblock login A current common-law employee. Hrblock login A full-time life insurance agent who is a current statutory employee. Hrblock login An individual who was formerly your employee under (1) or (2). Hrblock login 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. Hrblock login Exception for S corporation shareholders. Hrblock login   Do not treat a 2% shareholder of an S corporation as an employee of the corporation for this purpose. Hrblock login 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. Hrblock login 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. Hrblock login The 10-employee rule. Hrblock login   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. Hrblock login   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. Hrblock login For example, count an employee who could receive insurance by paying part of the cost, even if that employee chooses not to receive it. Hrblock login 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. Hrblock login 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. Hrblock login Exceptions. Hrblock login   Even if you do not meet the 10-employee rule, two exceptions allow you to treat insurance as group-term life insurance. Hrblock login   Under the first exception, you do not have to meet the 10-employee rule if all the following conditions are met. Hrblock login 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. Hrblock login 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. Hrblock login You figure the coverage based on either a uniform percentage of pay or the insurer's coverage brackets that meet certain requirements. Hrblock login See Regulations section 1. Hrblock login 79-1 for details. Hrblock login   Under the second exception, you do not have to meet the 10-employee rule if all the following conditions are met. Hrblock login 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. Hrblock login 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. Hrblock login Evidence of whether an employee is insurable does not affect an employee's eligibility for insurance or the amount of insurance that employee gets. Hrblock login   To apply either exception, do not consider employees who were denied insurance for any of the following reasons. Hrblock login They were 65 or older. Hrblock login They customarily work 20 hours or less a week or 5 months or less in a calendar year. Hrblock login They have not been employed for the waiting period given in the policy. Hrblock login This waiting period cannot be more than 6 months. Hrblock login Exclusion from wages. Hrblock login   You can generally exclude the cost of up to $50,000 of group-term life insurance from the wages of an insured employee. Hrblock login You can exclude the same amount from the employee's wages when figuring social security and Medicare taxes. Hrblock login 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. Hrblock login Coverage over the limit. Hrblock login   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. Hrblock login Report it as wages in boxes 1, 3, and 5 of the employee's Form W-2. Hrblock login Also, show it in box 12 with code “C. Hrblock login ” The amount is subject to social security and Medicare taxes, and you may, at your option, withhold federal income tax. Hrblock login   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. Hrblock login For all coverage provided within the calendar year, use the employee's age on the last day of the employee's tax year. Hrblock login You must prorate the cost from the table if less than a full month of coverage is involved. Hrblock login Table 2-2. Hrblock login Cost Per $1,000 of Protection For 1 Month Age Cost Under 25 $ . Hrblock login 05 25 through 29 . Hrblock login 06 30 through 34 . Hrblock login 08 35 through 39 . Hrblock login 09 40 through 44 . Hrblock login 10 45 through 49 . Hrblock login 15 50 through 54 . Hrblock login 23 55 through 59 . Hrblock login 43 60 through 64 . Hrblock login 66 65 through 69 1. Hrblock login 27 70 and older 2. Hrblock login 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. Hrblock login Example. Hrblock login Tom's employer provides him with group-term life insurance coverage of $200,000. Hrblock login Tom is 45 years old, is not a key employee, and pays $100 per year toward the cost of the insurance. Hrblock login Tom's employer must include $170 in his wages. Hrblock login The $200,000 of insurance coverage is reduced by $50,000. Hrblock login The yearly cost of $150,000 of coverage is $270 ($. Hrblock login 15 x 150 x 12), and is reduced by the $100 Tom pays for the insurance. Hrblock login The employer includes $170 in boxes 1, 3, and 5 of Tom's Form W-2. Hrblock login The employer also enters $170 in box 12 with code “C. Hrblock login ” Coverage for dependents. Hrblock login   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. Hrblock login 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. Hrblock login The cost of the insurance is determined by using Table 2-2. Hrblock login Former employees. Hrblock login   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. Hrblock login You are not required to collect those taxes. Hrblock login 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. Hrblock login Report those uncollected amounts separately in box 12 of Form W-2 using codes “M” and “N. Hrblock login ” See the General Instructions for Forms W-2 and W-3 and the Instructions for Form 941. Hrblock login Exception for key employees. Hrblock login   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. Hrblock login This exception generally does not apply to church plans. Hrblock login When figuring social security and Medicare taxes, you must also include the entire cost in the employees' wages. Hrblock login Include the cost in boxes 1, 3, and 5 of Form W-2. Hrblock login 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. Hrblock login   For this purpose, the cost of the insurance is the greater of the following amounts. Hrblock login The premiums you pay for the employee's insurance. Hrblock login See Regulations section 1. Hrblock login 79-4T(Q&A 6) for more information. Hrblock login The cost you figure using Table 2-2. Hrblock login   For this exclusion, a key employee during 2014 is an employee or former employee who is one of the following individuals. Hrblock login See section 416(i) of the Internal Revenue Code for more information. Hrblock login An officer having annual pay of more than $170,000. Hrblock login An individual who for 2014 was either of the following. Hrblock login A 5% owner of your business. Hrblock login A 1% owner of your business whose annual pay was more than $150,000. Hrblock login   A former employee who was a key employee upon retirement or separation from service is also a key employee. Hrblock login   Your plan does not favor key employees as to participation if at least one of the following is true. Hrblock login It benefits at least 70% of your employees. Hrblock login At least 85% of the participating employees are not key employees. Hrblock login It benefits employees who qualify under a set of rules you set up that do not favor key employees. Hrblock login   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. Hrblock login   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. Hrblock login S. Hrblock login 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. Hrblock login   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. Hrblock login Your plan does not favor key employees just because the amount of insurance you provide to your employees is uniformly related to their pay. Hrblock login S corporation shareholders. Hrblock login   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. Hrblock login When figuring social security and Medicare taxes, you must also include the cost of this coverage in the 2% shareholder's wages. Hrblock login Include the cost in boxes 1, 3, and 5 of Form W-2. Hrblock login 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. Hrblock login Health Savings Accounts A Health Savings Account (HSA) is an account owned by a qualified individual who is generally your employee or former employee. Hrblock login Any contributions that you make to an HSA become the employee's property and cannot be withdrawn by you. Hrblock login 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. Hrblock login 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. Hrblock login For more information about HSAs, visit the Department of Treasury's website at www. Hrblock login treasury. Hrblock login gov and enter “HSA” in the search box. Hrblock login Eligibility. Hrblock login   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. Hrblock login 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. Hrblock login   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. Hrblock login Exceptions. Hrblock login   An individual is not a qualified individual if he or she can be claimed as a dependent on another person's tax return. Hrblock login 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. Hrblock login 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. Hrblock login For more information, see Other employee health plans in Publication 969. Hrblock login Employer contributions. Hrblock login   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. Hrblock login 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. Hrblock login   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. Hrblock login 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. Hrblock login No contributions can be made to an individual's HSA after he or she becomes enrolled in Medicare Part A or Part B. Hrblock login Nondiscrimination rules. Hrblock login    Your contribution amount to an employee's HSA must be comparable for all employees who have comparable coverage during the same period. Hrblock login Otherwise, there will be an excise tax equal to 35% of the amount you contributed to all employees' HSAs. Hrblock login   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. Hrblock login 4980G-4. Hrblock login Exception. Hrblock login   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. Hrblock login A highly compensated employee for 2014 is an employee who meets either of the following tests. Hrblock login The employee was a 5% owner at any time during the year or the preceding year. Hrblock login The employee received more than $115,000 in pay for the preceding year. Hrblock login 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. Hrblock login Partnerships and S corporations. Hrblock login   Partners and 2% shareholders of an S corporation are not eligible for salary reduction (pre-tax) contributions to an HSA. Hrblock login 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. Hrblock login Cafeteria plans. Hrblock login   You may contribute to an employee's HSA using a cafeteria plan and your contributions are not subject to the statutory comparability rules. Hrblock login However, cafeteria plan nondiscrimination rules still apply. Hrblock login For example, contributions under a cafeteria plan to employee HSAs cannot be greater for higher-paid employees than they are for lower-paid employees. Hrblock login Contributions that favor lower-paid employees are not prohibited. Hrblock login Reporting requirements. Hrblock login   You must report your contributions to an employee's HSA in box 12 of Form W-2 using code “W. Hrblock login ” 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. Hrblock login 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. Hrblock login It is furnished on your business premises. Hrblock login It is furnished for your convenience. Hrblock login The employee must accept it as a condition of employment. Hrblock login Different tests may apply to lodging furnished by educational institutions. Hrblock login See section 119(d) of the Internal Revenue Code for details. Hrblock login The exclusion does not apply if you allow your employee to choose to receive additional pay instead of lodging. Hrblock login On your business premises. Hrblock login   For this exclusion, your business premises is generally your employee's place of work. Hrblock login 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. Hrblock login For your convenience. Hrblock login   Whether or not you furnish lodging for your convenience as an employer depends on all the facts and circumstances. Hrblock login 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. Hrblock login This is true even if a law or an employment contract provides that the lodging is furnished as pay. Hrblock login However, a written statement that the lodging is furnished for your convenience is not sufficient. Hrblock login Condition of employment. Hrblock login   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. Hrblock login Examples include employees who must be available at all times and employees who could not perform their required duties without being furnished the lodging. Hrblock login   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. Hrblock login Example. Hrblock login 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. Hrblock login 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. Hrblock login S corporation shareholders. Hrblock login   For this exclusion, do not treat a 2% shareholder of an S corporation as an employee of the corporation. Hrblock login 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. Hrblock login 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. Hrblock login Meals This section discusses the exclusion rules that apply to de minimis meals and meals on your business premises. Hrblock login 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. Hrblock login The exclusion applies, for example, to the following items. Hrblock login Coffee, doughnuts, or soft drinks. Hrblock login Occasional meals or meal money provided to enable an employee to work overtime. Hrblock login However, the exclusion does not apply to meal money figured on the basis of hours worked. Hrblock login Occasional parties or picnics for employees and their guests. Hrblock login 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. Hrblock login 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. Hrblock login If food or beverages you furnish to employees qualify as a de minimis benefit, you can deduct their full cost. Hrblock login The 50% limit on deductions for the cost of meals does not apply. Hrblock login The deduction limit on meals is discussed in chapter 2 of Publication 535. Hrblock login Employee. Hrblock login   For this exclusion, treat any recipient of a de minimis meal as