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Irs 1040 Ez Form 2012

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Irs 1040 Ez Form 2012

Irs 1040 ez form 2012 Publication 15 - Main Content Table of Contents 1. Irs 1040 ez form 2012 Employer Identification Number (EIN) 2. Irs 1040 ez form 2012 Who Are Employees?Relief provisions. Irs 1040 ez form 2012 Business Owned and Operated by Spouses 3. Irs 1040 ez form 2012 Family Employees 4. Irs 1040 ez form 2012 Employee's Social Security Number (SSN)Registering for SSNVS. Irs 1040 ez form 2012 5. Irs 1040 ez form 2012 Wages and Other CompensationAccountable plan. Irs 1040 ez form 2012 Nonaccountable plan. Irs 1040 ez form 2012 Per diem or other fixed allowance. Irs 1040 ez form 2012 50% test. Irs 1040 ez form 2012 Health Savings Accounts and medical savings accounts. Irs 1040 ez form 2012 Nontaxable fringe benefits. Irs 1040 ez form 2012 When fringe benefits are treated as paid. Irs 1040 ez form 2012 Valuation of fringe benefits. Irs 1040 ez form 2012 Withholding on fringe benefits. Irs 1040 ez form 2012 Depositing taxes on fringe benefits. Irs 1040 ez form 2012 6. Irs 1040 ez form 2012 TipsOrdering rule. Irs 1040 ez form 2012 7. Irs 1040 ez form 2012 Supplemental Wages 8. Irs 1040 ez form 2012 Payroll Period 9. Irs 1040 ez form 2012 Withholding From Employees' WagesIncome Tax Withholding Social Security and Medicare Taxes Part-Time Workers 10. Irs 1040 ez form 2012 Required Notice to Employees About the Earned Income Credit (EIC) 11. Irs 1040 ez form 2012 Depositing TaxesWhen To Deposit How To Deposit Deposit Penalties 12. Irs 1040 ez form 2012 Filing Form 941 or Form 944 13. Irs 1040 ez form 2012 Reporting Adjustments to Form 941 or Form 944Current Period Adjustments Prior Period Adjustments Wage Repayments 14. Irs 1040 ez form 2012 Federal Unemployment (FUTA) TaxSuccessor employer. Irs 1040 ez form 2012 Household employees. Irs 1040 ez form 2012 When to deposit. Irs 1040 ez form 2012 Household employees. Irs 1040 ez form 2012 Electronic filing by reporting agents. Irs 1040 ez form 2012 16. Irs 1040 ez form 2012 How To Use the Income Tax Withholding TablesWage Bracket Method Percentage Method Alternative Methods of Income Tax Withholding How To Get Tax Help 1. Irs 1040 ez form 2012 Employer Identification Number (EIN) If you are required to report employment taxes or give tax statements to employees or annuitants, you need an EIN. Irs 1040 ez form 2012 The EIN is a nine-digit number the IRS issues. Irs 1040 ez form 2012 The digits are arranged as follows: 00-0000000. Irs 1040 ez form 2012 It is used to identify the tax accounts of employers and certain others who have no employees. Irs 1040 ez form 2012 Use your EIN on all of the items you send to the IRS and SSA. Irs 1040 ez form 2012 For more information, see Publication 1635, Employer Identification Number: Understanding Your EIN. Irs 1040 ez form 2012 If you do not have an EIN, you may apply for one online. Irs 1040 ez form 2012 Go to the IRS. Irs 1040 ez form 2012 gov and click on the Apply for an EIN Online link under Tools. Irs 1040 ez form 2012 You may also apply for an EIN by calling 1-800-829-4933, or you can fax or mail Form SS-4, Application for Employer Identification Number, to the IRS. Irs 1040 ez form 2012 Do not use an SSN in place of an EIN. Irs 1040 ez form 2012 You should have only one EIN. Irs 1040 ez form 2012 If you have more than one and are not sure which one to use, call 1-800-829-4933 or 1-800-829-4059 (TDD/TTY for persons who are deaf, hard of hearing, or have a speech disability). Irs 1040 ez form 2012 Give the numbers you have, the name and address to which each was assigned, and the address of your main place of business. Irs 1040 ez form 2012 The IRS will tell you which number to use. Irs 1040 ez form 2012 If you took over another employer's business (see Successor employer in section 9), do not use that employer's EIN. Irs 1040 ez form 2012 If you have applied for an EIN but do not have your EIN by the time a return is due, file a paper return and write “Applied For” and the date you applied for it in the space shown for the number. Irs 1040 ez form 2012 2. Irs 1040 ez form 2012 Who Are Employees? Generally, employees are defined either under common law or under statutes for certain situations. Irs 1040 ez form 2012 See Publication 15-A for details on statutory employees and nonemployees. Irs 1040 ez form 2012 Employee status under common law. Irs 1040 ez form 2012   Generally, a worker who performs services for you is your employee if you have the right to control what will be done and how it will be done. Irs 1040 ez form 2012 This is so even when you give the employee freedom of action. Irs 1040 ez form 2012 What matters is that you have the right to control the details of how the services are performed. Irs 1040 ez form 2012 See Publication 15-A for more information on how to determine whether an individual providing services is an independent contractor or an employee. Irs 1040 ez form 2012   Generally, people in business for themselves are not employees. Irs 1040 ez form 2012 For example, doctors, lawyers, veterinarians, and others in an independent trade in which they offer their services to the public are usually not employees. Irs 1040 ez form 2012 However, if the business is incorporated, corporate officers who work in the business are employees of the corporation. Irs 1040 ez form 2012   If an employer-employee relationship exists, it does not matter what it is called. Irs 1040 ez form 2012 The employee may be called an agent or independent contractor. Irs 1040 ez form 2012 It also does not matter how payments are measured or paid, what they are called, or if the employee works full or part time. Irs 1040 ez form 2012 Statutory employees. Irs 1040 ez form 2012   If someone who works for you is not an employee under the common law rules discussed earlier, do not withhold federal income tax from his or her pay, unless backup withholding applies. Irs 1040 ez form 2012 Although the following persons may not be common law employees, they are considered employees by statute for social security, Medicare, and FUTA tax purposes under certain conditions. Irs 1040 ez form 2012 An agent (or commission) driver who delivers food, beverages (other than milk), laundry, or dry cleaning for someone else. Irs 1040 ez form 2012 A full-time life insurance salesperson who sells primarily for one company. Irs 1040 ez form 2012 A homeworker who works by guidelines of the person for whom the work is done, with materials furnished by and returned to that person or to someone that person designates. Irs 1040 ez form 2012 A traveling or city salesperson (other than an agent-driver or commission-driver) who works full time (except for sideline sales activities) for one firm or person getting orders from customers. Irs 1040 ez form 2012 The orders must be for merchandise for resale or supplies for use in the customer's business. Irs 1040 ez form 2012 The customers must be retailers, wholesalers, contractors, or operators of hotels, restaurants, or other businesses dealing with food or lodging. Irs 1040 ez form 2012    Statutory nonemployees. Irs 1040 ez form 2012   Direct sellers, qualified real estate agents, and certain companion sitters are, by law, considered nonemployees. Irs 1040 ez form 2012 They are generally treated as self-employed for all federal tax purposes, including income and employment taxes. Irs 1040 ez form 2012 H-2A agricultural workers. Irs 1040 ez form 2012   On Form W-2, do not check box 13 (Statutory employee), as H-2A workers are not statutory employees. Irs 1040 ez form 2012 Treating employees as nonemployees. Irs 1040 ez form 2012   You will generally be liable for social security and Medicare taxes and withheld income tax if you do not deduct and withhold these taxes because you treated an employee as a nonemployee. Irs 1040 ez form 2012 You may be able to calculate your liability using special section 3509 rates for the employee share of social security and Medicare taxes and the federal income tax withholding. Irs 1040 ez form 2012 The applicable rates depend on whether you filed required Forms 1099. Irs 1040 ez form 2012 You cannot recover the employee share of social security, or Medicare tax, or income tax withholding from the employee if the tax is paid under section 3509. Irs 1040 ez form 2012 You are liable for the income tax withholding regardless of whether the employee paid income tax on the wages. Irs 1040 ez form 2012 You continue to owe the full employer share of social security and Medicare taxes. Irs 1040 ez form 2012 The employee remains liable for the employee share of social security and Medicare taxes. Irs 1040 ez form 2012 See Internal Revenue Code section 3509 for details. Irs 1040 ez form 2012 Also see the Instructions for Form 941-X. Irs 1040 ez form 2012   Section 3509 rates are not available if you intentionally disregard the requirement to withhold taxes from the employee or if you withheld income taxes but not social security or Medicare taxes. Irs 1040 ez form 2012 Section 3509 is not available for reclassifying statutory employees. Irs 1040 ez form 2012 See Statutory employees , earlier in this section. Irs 1040 ez form 2012   If the employer issued required information returns, the section 3509 rates are: For social security taxes; employer rate of 6. Irs 1040 ez form 2012 2% plus 20% of the employee rate (see the Instructions for Form 941-X). Irs 1040 ez form 2012 For Medicare taxes; employer rate of 1. Irs 1040 ez form 2012 45% plus 20% of the employee rate of 1. Irs 1040 ez form 2012 45%, for a total rate of 1. Irs 1040 ez form 2012 74% of wages. Irs 1040 ez form 2012 For Additional Medicare Tax; 0. Irs 1040 ez form 2012 18% (20% of the employee rate of 0. Irs 1040 ez form 2012 9%) of wages subject to Additional Medicare Tax. Irs 1040 ez form 2012 For income tax withholding, the rate is 1. Irs 1040 ez form 2012 5% of wages. Irs 1040 ez form 2012   If the employer did not issue required information returns, the section 3509 rates are: For social security taxes; employer rate of 6. Irs 1040 ez form 2012 2% plus 40% of the employee rate (see the Instructions for Form 941-X). Irs 1040 ez form 2012 For Medicare taxes; employer rate of 1. Irs 1040 ez form 2012 45% plus 40% of the employee rate of 1. Irs 1040 ez form 2012 45%, for a total rate of 2. Irs 1040 ez form 2012 03% of wages. Irs 1040 ez form 2012 For Additional Medicare Tax; 0. Irs 1040 ez form 2012 36% (40% of the employee rate of 0. Irs 1040 ez form 2012 9%) of wages subject to Additional Medicare Tax. Irs 1040 ez form 2012 For income tax withholding, the rate is 3. Irs 1040 ez form 2012 0% of wages. Irs 1040 ez form 2012 Relief provisions. Irs 1040 ez form 2012   If you have a reasonable basis for not treating a worker as an employee, you may be relieved from having to pay employment taxes for that worker. Irs 1040 ez form 2012 To get this relief, you must file all required federal tax returns, including information returns, on a basis consistent with your treatment of the worker. Irs 1040 ez form 2012 You (or your predecessor) must not have treated any worker holding a substantially similar position as an employee for any periods beginning after 1977. Irs 1040 ez form 2012 See Publication 1976, Do You Qualify for Relief Under Section 530. Irs 1040 ez form 2012 IRS help. Irs 1040 ez form 2012   If you want the IRS to determine whether a worker is an employee, file Form SS-8, Determination of Worker Status for Purposes of Federal Employment Taxes and Income Tax Withholding. Irs 1040 ez form 2012 Voluntary Classification Settlement Program (VCSP). Irs 1040 ez form 2012   Employers who are currently treating their workers (or a class or group of workers) as independent contractors or other nonemployees and want to voluntarily reclassify their workers as employees for future tax periods may be eligible to participate in the VCSP if certain requirements are met. Irs 1040 ez form 2012 To apply, use Form 8952, Application for Voluntary Classification Settlement Program (VCSP). Irs 1040 ez form 2012 For more information visit IRS. Irs 1040 ez form 2012 gov and enter “VCSP” in the search box. Irs 1040 ez form 2012 Business Owned and Operated by Spouses If you and your spouse jointly own and operate a business and share in the profits and losses, you are partners in a partnership, whether or not you have a formal partnership agreement. Irs 1040 ez form 2012 See Publication 541, Partnerships, for more details. Irs 1040 ez form 2012 The partnership is considered the employer of any employees, and is liable for any employment taxes due on wages paid to its employees. Irs 1040 ez form 2012 Exception—Qualified joint venture. Irs 1040 ez form 2012   For tax years beginning after December 31, 2006, the Small Business and Work Opportunity Tax Act of 2007 (Public Law 110-28) provides that a “qualified joint venture,” whose only members are spouses filing a joint income tax return, can elect not to be treated as a partnership for federal tax purposes. Irs 1040 ez form 2012 A qualified joint venture conducts a trade or business where: The only members of the joint venture are spouses who file a joint income tax return, Both spouses materially participate (see Material participation in the Instructions for Schedule C (Form 1040), line G) in the trade or business (mere joint ownership of property is not enough), Both spouses elect to not be treated as a partnership, and The business is co-owned by both spouses and is not held in the name of a state law entity such as a partnership or limited liability company (LLC). Irs 1040 ez form 2012   To make the election, all items of income, gain, loss, deduction, and credit must be divided between the spouses, in accordance with each spouse's interest in the venture, and reported on separate Schedules C or F as sole proprietors. Irs 1040 ez form 2012 Each spouse must also file a separate Schedule SE to pay self-employment taxes, as applicable. Irs 1040 ez form 2012   Spouses using the qualified joint venture rules are treated as sole proprietors for federal tax purposes and generally do not need an EIN. Irs 1040 ez form 2012 If employment taxes are owed by the qualified joint venture, either spouse may report and pay the employment taxes due on the wages paid to the employees using the EIN of that spouse's sole proprietorship. Irs 1040 ez form 2012 Generally, filing as a qualified joint venture will not increase the spouses' total tax owed on the joint income tax return. Irs 1040 ez form 2012 However, it gives each spouse credit for social security earnings on which retirement benefits are based and for Medicare coverage without filing a partnership return. Irs 1040 ez form 2012    Note. Irs 1040 ez form 2012 If your spouse is your employee, not your partner, see One spouse employed by another in section 3. Irs 1040 ez form 2012   For more information on qualified joint ventures, visit IRS. Irs 1040 ez form 2012 gov and enter “qualified joint venture” in the search box. Irs 1040 ez form 2012 Exception—Community income. Irs 1040 ez form 2012   If you and your spouse wholly own an unincorporated business as community property under the community property laws of a state, foreign country, or U. Irs 1040 ez form 2012 S. Irs 1040 ez form 2012 possession, you can treat the business either as a sole proprietorship (of the spouse who carried on the business) or a partnership. Irs 1040 ez form 2012 You may still make an election to be taxed as a qualified joint venture instead of a partnership. Irs 1040 ez form 2012 See Exception—Qualified joint venture , earlier. Irs 1040 ez form 2012 3. Irs 1040 ez form 2012 Family Employees Child employed by parents. Irs 1040 ez form 2012   Payments for the services of a child under age 18 who works for his or her parent in a trade or business are not subject to social security and Medicare taxes if the trade or business is a sole proprietorship or a partnership in which each partner is a parent of the child. Irs 1040 ez form 2012 If these payments are for work other than in a trade or business, such as domestic work in the parent's private home, they are not subject to social security and Medicare taxes until the child reaches age 21. Irs 1040 ez form 2012 However, see Covered services of a child or spouse , later in this section. Irs 1040 ez form 2012 Payments for the services of a child under age 21 who works for his or her parent, whether or not in a trade or business, are not subject to FUTA tax. Irs 1040 ez form 2012 Payments for the services of a child of any age who works for his or her parent are generally subject to income tax withholding unless the payments are for domestic work in the parent's home, or unless the payments are for work other than in a trade or business and are less than $50 in the quarter or the child is not regularly employed to do such work. Irs 1040 ez form 2012 One spouse employed by another. Irs 1040 ez form 2012   The wages for the services of an individual who works for his or her spouse in a trade or business are subject to income tax withholding and social security and Medicare taxes, but not to FUTA tax. Irs 1040 ez form 2012 However, the payments for services of one spouse employed by another in other than a trade or business, such as domestic service in a private home, are not subject to social security, Medicare, and FUTA taxes. Irs 1040 ez form 2012 Covered services of a child or spouse. Irs 1040 ez form 2012   The wages for the services of a child or spouse are subject to income tax withholding as well as social security, Medicare, and FUTA taxes if he or she works for: A corporation, even if it is controlled by the child's parent or the individual's spouse; A partnership, even if the child's parent is a partner, unless each partner is a parent of the child; A partnership, even if the individual's spouse is a partner; or An estate, even if it is the estate of a deceased parent. Irs 1040 ez form 2012 Parent employed by son or daughter. Irs 1040 ez form 2012   When the employer is a son or daughter employing his or her parent the following rules apply. Irs 1040 ez form 2012 Payments for the services of a parent in the son’s or daughter’s (the employer’s) trade or business are subject to income tax withholding and social security and Medicare taxes. Irs 1040 ez form 2012 Payments for the services of a parent not in the son’s or daughter’s (the employer’s) trade or business are generally not subject to social security and Medicare taxes. Irs 1040 ez form 2012    Social security and Medicare taxes do apply to payments made to a parent for domestic services if all of the following apply: The parent is employed by his or her son or daughter; The son or daughter (the employer) has a child or stepchild living in the home; The son or daughter (the employer) is a widow or widower, divorced, or living with a spouse who, because of a mental or physical condition, cannot care for the child or stepchild for at least 4 continuous weeks in a calendar quarter; and The child or stepchild is either under age 18 or requires the personal care of an adult for at least 4 continuous weeks in a calendar quarter due to a mental or physical condition. Irs 1040 ez form 2012   Payments made to a parent employed by his or her child are not subject to FUTA tax, regardless of the type of services provided. Irs 1040 ez form 2012 4. Irs 1040 ez form 2012 Employee's Social Security Number (SSN) You are required to get each employee's name and SSN and to enter them on Form W-2. Irs 1040 ez form 2012 This requirement also applies to resident and nonresident alien employees. Irs 1040 ez form 2012 You should ask your employee to show you his or her social security card. Irs 1040 ez form 2012 The employee may show the card if it is available. Irs 1040 ez form 2012 Do not accept a social security card that says “Not valid for employment. Irs 1040 ez form 2012 ” A social security number issued with this legend does not permit employment. Irs 1040 ez form 2012 You may, but are not required to, photocopy the social security card if the employee provides it. Irs 1040 ez form 2012 If you do not provide the correct employee name and SSN on Form W-2, you may owe a penalty unless you have reasonable cause. Irs 1040 ez form 2012 See Publication 1586, Reasonable Cause Regulations & Requirements for Missing and Incorrect Name/TINs, for information on the requirement to solicit the employee's SSN. Irs 1040 ez form 2012 Applying for a social security card. Irs 1040 ez form 2012   Any employee who is legally eligible to work in the United States and does not have a social security card can get one by completing Form SS-5, Application for a Social Security Card, and submitting the necessary documentation. Irs 1040 ez form 2012 You can get Form SS-5 at SSA offices, by calling 1-800-772-1213, or from the SSA website at www. Irs 1040 ez form 2012 socialsecurity. Irs 1040 ez form 2012 gov/online/ss-5. Irs 1040 ez form 2012 html. Irs 1040 ez form 2012 The employee must complete and sign Form SS-5; it cannot be filed by the employer. Irs 1040 ez form 2012 You may be asked to supply a letter to accompany Form SS-5 if the employee has exceeded his or her yearly or lifetime limit for the number of replacement cards allowed. Irs 1040 ez form 2012 Applying for a social security number. Irs 1040 ez form 2012   If you file Form W-2 on paper and your employee applied for an SSN but does not have one when you must file Form W-2, enter “Applied For” on the form. Irs 1040 ez form 2012 If you are filing electronically, enter all zeros (000-00-000) in the social security number field. Irs 1040 ez form 2012 When the employee receives the SSN, file Copy A of Form W-2c, Corrected Wage and Tax Statement, with the SSA to show the employee's SSN. Irs 1040 ez form 2012 Furnish copies B, C, and 2 of Form W-2c to the employee. Irs 1040 ez form 2012 Up to 25 Forms W-2c for each Form W-3c, Transmittal of Corrected Wage and Tax Statements, may now be filed per session over the Internet, with no limit on the number of sessions. Irs 1040 ez form 2012 For more information, visit the SSA's Employer W-2 Filing Instructions & Information webpage at www. Irs 1040 ez form 2012 socialsecurity. Irs 1040 ez form 2012 gov/employer. Irs 1040 ez form 2012 Advise your employee to correct the SSN on his or her original Form W-2. Irs 1040 ez form 2012 Correctly record the employee's name and SSN. Irs 1040 ez form 2012   Record the name and number of each employee as they are shown on the employee's social security card. Irs 1040 ez form 2012 If the employee's name is not correct as shown on the card (for example, because of marriage or divorce), the employee should request a corrected card from the SSA. Irs 1040 ez form 2012 Continue to report the employee's wages under the old name until the employee shows you an updated social security card with the new name. Irs 1040 ez form 2012 If the SSA issues the employee a replacement card after a name change, or a new card with a different social security number after a change in alien work status, file a Form W-2c to correct the name/SSN reported for the most recently filed Form W-2. Irs 1040 ez form 2012 It is not necessary to correct other years if the previous name and number were used for years before the most recent Form W-2. Irs 1040 ez form 2012 IRS individual taxpayer identification numbers (ITINs) for aliens. Irs 1040 ez form 2012   Do not accept an ITIN in place of an SSN for employee identification or for work. Irs 1040 ez form 2012 An ITIN is only available to resident and nonresident aliens who are not eligible for U. Irs 1040 ez form 2012 S. Irs 1040 ez form 2012 employment and need identification for other tax purposes. Irs 1040 ez form 2012 You can identify an ITIN because it is a nine-digit number, beginning with the number “9” with either a “7” or “8” as the fourth digit and is formatted like an SSN (for example, 9NN-7N-NNNN). Irs 1040 ez form 2012    An individual with an ITIN who later becomes eligible to work in the United States must obtain an SSN. Irs 1040 ez form 2012 If the individual is currently eligible to work in the United States, instruct the individual to apply for an SSN and follow the instructions under Applying for a social security number, earlier. Irs 1040 ez form 2012 Do not use an ITIN in place of an SSN on Form W-2. Irs 1040 ez form 2012 Verification of social security numbers. Irs 1040 ez form 2012   Employers and authorized reporting agents can use the Social Security Number Verification Service (SSNVS) to instantly verify up to 10 names and SSNs (per screen) at a time, or submit an electronic file of up to 250,000 names and SSNs and usually receive the results the next business day. Irs 1040 ez form 2012 Visit www. Irs 1040 ez form 2012 socialsecurity. Irs 1040 ez form 2012 gov/employer/ssnv. Irs 1040 ez form 2012 htm for more information. Irs 1040 ez form 2012 Registering for SSNVS. Irs 1040 ez form 2012   You must register online and receive authorization from your employer to use SSNVS. Irs 1040 ez form 2012 To register, visit SSA's website at www. Irs 1040 ez form 2012 ssa. Irs 1040 ez form 2012 gov/employer and click on the Business Services Online link. Irs 1040 ez form 2012 Follow the registration instructions to obtain a user identification (ID) and password. Irs 1040 ez form 2012 You will need to provide the following information about yourself and your company. Irs 1040 ez form 2012 Name. Irs 1040 ez form 2012 SSN. Irs 1040 ez form 2012 Date of birth. Irs 1040 ez form 2012 Type of employer. Irs 1040 ez form 2012 EIN. Irs 1040 ez form 2012 Company name, address, and telephone number. Irs 1040 ez form 2012 Email address. Irs 1040 ez form 2012   When you have completed the online registration process, SSA will mail a one-time activation code to your employer. Irs 1040 ez form 2012 You must enter the activation code online to use SSNVS. Irs 1040 ez form 2012 5. Irs 1040 ez form 2012 Wages and Other Compensation Wages subject to federal employment taxes generally include all pay you give to an employee for services performed. Irs 1040 ez form 2012 The pay may be in cash or in other forms. Irs 1040 ez form 2012 It includes salaries, vacation allowances, bonuses, commissions, and fringe benefits. Irs 1040 ez form 2012 It does not matter how you measure or make the payments. Irs 1040 ez form 2012 Amounts an employer pays as a bonus for signing or ratifying a contract in connection with the establishment of an employer-employee relationship and an amount paid to an employee for cancellation of an employment contract and relinquishment of contract rights are wages subject to social security, Medicare, and FUTA taxes and income tax withholding. Irs 1040 ez form 2012 Also, compensation paid to a former employee for services performed while still employed is wages subject to employment taxes. Irs 1040 ez form 2012 More information. Irs 1040 ez form 2012   See section 6 for a discussion of tips and section 7 for a discussion of supplemental wages. Irs 1040 ez form 2012 Also, see section 15 for exceptions to the general rules for wages. Irs 1040 ez form 2012 Publication 15-A provides additional information on wages, including nonqualified deferred compensation, and other compensation. Irs 1040 ez form 2012 Publication 15-B provides information on other forms of compensation, including: Accident and health benefits, Achievement awards, Adoption assistance, Athletic facilities, De minimis (minimal) benefits, Dependent care assistance, Educational assistance, Employee discounts, Employee stock options, Employer-provided cell phones, Group-term life insurance coverage, Health Savings Accounts, Lodging on your business premises, Meals, Moving expense reimbursements, No-additional-cost services, Retirement planning services, Transportation (commuting) benefits, Tuition reduction, and Working condition benefits. Irs 1040 ez form 2012 Employee business expense reimbursements. Irs 1040 ez form 2012   A reimbursement or allowance arrangement is a system by which you pay the advances, reimbursements, and charges for your employees' business expenses. Irs 1040 ez form 2012 How you report a reimbursement or allowance amount depends on whether you have an accountable or a nonaccountable plan. Irs 1040 ez form 2012 If a single payment includes both wages and an expense reimbursement, you must specify the amount of the reimbursement. Irs 1040 ez form 2012   These rules apply to all ordinary and necessary employee business expenses that would otherwise qualify for a deduction by the employee. Irs 1040 ez form 2012 Accountable plan. Irs 1040 ez form 2012   To be an accountable plan, your reimbursement or allowance arrangement must require your employees to meet all three of the following rules. Irs 1040 ez form 2012 They must have paid or incurred deductible expenses while performing services as your employees. Irs 1040 ez form 2012 The reimbursement or advance must be paid for the expense and must not be an amount that would have otherwise been paid by the employee. Irs 1040 ez form 2012 They must substantiate these expenses to you within a reasonable period of time. Irs 1040 ez form 2012 They must return any amounts in excess of substantiated expenses within a reasonable period of time. Irs 1040 ez form 2012   Amounts paid under an accountable plan are not wages and are not subject to income, social security, Medicare, and FUTA taxes. Irs 1040 ez form 2012   If the expenses covered by this arrangement are not substantiated (or amounts in excess of substantiated expenses are not returned within a reasonable period of time), the amount paid under the arrangement in excess of the substantiated expenses is treated as paid under a nonaccountable plan. Irs 1040 ez form 2012 This amount is subject to income, social security, Medicare, and FUTA taxes for the first payroll period following the end of the reasonable period of time. Irs 1040 ez form 2012   A reasonable period of time depends on the facts and circumstances. Irs 1040 ez form 2012 Generally, it is considered reasonable if your employees receive their advance within 30 days of the time they incur the expenses, adequately account for the expenses within 60 days after the expenses were paid or incurred, and return any amounts in excess of expenses within 120 days after the expenses were paid or incurred. Irs 1040 ez form 2012 Also, it is considered reasonable if you give your employees a periodic statement (at least quarterly) that asks them to either return or adequately account for outstanding amounts and they do so within 120 days. Irs 1040 ez form 2012 Nonaccountable plan. Irs 1040 ez form 2012   Payments to your employee for travel and other necessary expenses of your business under a nonaccountable plan are wages and are treated as supplemental wages and subject to income, social security, Medicare, and FUTA taxes. Irs 1040 ez form 2012 Your payments are treated as paid under a nonaccountable plan if: Your employee is not required to or does not substantiate timely those expenses to you with receipts or other documentation, You advance an amount to your employee for business expenses and your employee is not required to or does not return timely any amount he or she does not use for business expenses, You advance or pay an amount to your employee regardless of whether you reasonably expect the employee to have business expenses related to your business, or You pay an amount as a reimbursement you would have otherwise paid as wages. Irs 1040 ez form 2012   See section 7 for more information on supplemental wages. Irs 1040 ez form 2012 Per diem or other fixed allowance. Irs 1040 ez form 2012   You may reimburse your employees by travel days, miles, or some other fixed allowance under the applicable revenue procedure. Irs 1040 ez form 2012 In these cases, your employee is considered to have accounted to you if your reimbursement does not exceed rates established by the Federal Government. Irs 1040 ez form 2012 The 2013 standard mileage rate for auto expenses was 56. Irs 1040 ez form 2012 5 cents per mile. Irs 1040 ez form 2012 The rate for 2014 is 56 cents per mile. Irs 1040 ez form 2012   The government per diem rates for meals and lodging in the continental United States are listed in Publication 1542, Per Diem Rates. Irs 1040 ez form 2012 Other than the amount of these expenses, your employees' business expenses must be substantiated (for example, the business purpose of the travel or the number of business miles driven). Irs 1040 ez form 2012   If the per diem or allowance paid exceeds the amounts substantiated, you must report the excess amount as wages. Irs 1040 ez form 2012 This excess amount is subject to income tax withholding and payment of social security, Medicare, and FUTA taxes. Irs 1040 ez form 2012 Show the amount equal to the substantiated amount (for example, the nontaxable portion) in box 12 of Form W-2 using code “L. Irs 1040 ez form 2012 ” Wages not paid in money. Irs 1040 ez form 2012   If in the course of your trade or business you pay your employees in a medium that is neither cash nor a readily negotiable instrument, such as a check, you are said to pay them “in kind. Irs 1040 ez form 2012 ” Payments in kind may be in the form of goods, lodging, food, clothing, or services. Irs 1040 ez form 2012 Generally, the fair market value of such payments at the time they are provided is subject to federal income tax withholding and social security, Medicare, and FUTA taxes. Irs 1040 ez form 2012   However, noncash payments for household work, agricultural labor, and service not in the employer's trade or business are exempt from social security, Medicare, and FUTA taxes. Irs 1040 ez form 2012 Withhold income tax on these payments only if you and the employee agree to do so. Irs 1040 ez form 2012 Nonetheless, noncash payments for agricultural labor, such as commodity wages, are treated as cash payments subject to employment taxes if the substance of the transaction is a cash payment. Irs 1040 ez form 2012 Moving expenses. Irs 1040 ez form 2012   Reimbursed and employer-paid qualified moving expenses (those that would otherwise be deductible by the employee) paid under an accountable plan are not includible in an employee's income unless you have knowledge the employee deducted the expenses in a prior year. Irs 1040 ez form 2012 Reimbursed and employer-paid nonqualified moving expenses are includible in income and are subject to employment taxes and income tax withholding. Irs 1040 ez form 2012 For more information on moving expenses, see Publication 521, Moving Expenses. Irs 1040 ez form 2012 Meals and lodging. Irs 1040 ez form 2012   The value of meals is not taxable income and is not subject to income tax withholding and social security, Medicare, and FUTA taxes if the meals are furnished for the employer's convenience and on the employer's premises. Irs 1040 ez form 2012 The value of lodging is not subject to income tax withholding and social security, Medicare, and FUTA taxes if the lodging is furnished for the employer's convenience, on the employer's premises, and as a condition of employment. Irs 1040 ez form 2012    “For the convenience of the employer” means you have a substantial business reason for providing the meals and lodging other than to provide additional compensation to the employee. Irs 1040 ez form 2012 For example, meals you provide at the place of work so that an employee is available for emergencies during his or her lunch period are generally considered to be for your convenience. Irs 1040 ez form 2012   However, whether meals or lodging are provided for the convenience of the employer depends on all of the facts and circumstances. Irs 1040 ez form 2012 A written statement that the meals or lodging are for your convenience is not sufficient. Irs 1040 ez form 2012 50% test. Irs 1040 ez form 2012   If over 50% of the employees who are provided meals on an employer's business premises receive these meals for the convenience of the employer, all meals provided on the premises are treated as furnished for the convenience of the employer. Irs 1040 ez form 2012 If this 50% test is met, the value of the meals is excludable from income for all employees and is not subject to federal income tax withholding or employment taxes. Irs 1040 ez form 2012 For more information, see Publication 15-B. Irs 1040 ez form 2012 Health insurance plans. Irs 1040 ez form 2012   If you pay the cost of an accident or health insurance plan for your employees, including an employee's spouse and dependents, your payments are not wages and are not subject to social security, Medicare, and FUTA taxes, or federal income tax withholding. Irs 1040 ez form 2012 Generally, this exclusion also applies to qualified long-term care insurance contracts. Irs 1040 ez form 2012 However, for income tax withholding, the value of health insurance benefits must be included in the wages of S corporation employees who own more than 2% of the S corporation (2% shareholders). Irs 1040 ez form 2012 For social security, Medicare, and FUTA taxes, the health insurance benefits are excluded from the wages only for employees and their dependents or for a class or classes of employees and their dependents. Irs 1040 ez form 2012 See Announcement 92-16 for more information. Irs 1040 ez form 2012 You can find Announcement 92-16 on page 53 of Internal Revenue Bulletin 1992-5. Irs 1040 ez form 2012 Health Savings Accounts and medical savings accounts. Irs 1040 ez form 2012   Your contributions to an employee's Health Savings Account (HSA) or Archer medical savings account (MSA) are not subject to social security, Medicare, or FUTA taxes, or federal income tax withholding if it is reasonable to believe at the time of payment of the contributions they will be excludable from the income of the employee. Irs 1040 ez form 2012 To the extent it is not reasonable to believe they will be excludable, your contributions are subject to these taxes. Irs 1040 ez form 2012 Employee contributions to their HSAs or MSAs through a payroll deduction plan must be included in wages and are subject to social security, Medicare, and FUTA taxes and income tax withholding. Irs 1040 ez form 2012 However, HSA contributions made under a salary reduction arrangement in a section 125 cafeteria plan are not wages and are not subject to employment taxes or withholding. Irs 1040 ez form 2012 For more information, see the Instructions for Form 8889, Health Savings Accounts (HSAs). Irs 1040 ez form 2012 Medical care reimbursements. Irs 1040 ez form 2012   Generally, medical care reimbursements paid for an employee under an employer's self-insured medical reimbursement plan are not wages and are not subject to social security, Medicare, and FUTA taxes, or income tax withholding. Irs 1040 ez form 2012 See Publication 15-B for an exception for highly compensated employees. Irs 1040 ez form 2012 Differential wage payments. Irs 1040 ez form 2012   Differential wage payments are any payments made by an employer to an individual for a period during which the individual is performing service in the uniformed services while on active duty for a period of more than 30 days and represent all or a portion of the wages the individual would have received from the employer if the individual were performing services for the employer. Irs 1040 ez form 2012   Differential wage payments are wages for income tax withholding, but are not subject to social security, Medicare, or FUTA taxes. Irs 1040 ez form 2012 Employers should report differential wage payments in box 1 of Form W-2. Irs 1040 ez form 2012 For more information about the tax treatment of differential wage payments, visit IRS. Irs 1040 ez form 2012 gov and enter “employees in a combat zone” in the search box. Irs 1040 ez form 2012 Fringe benefits. Irs 1040 ez form 2012   You generally must include fringe benefits in an employee's gross income (but see Nontaxable fringe benefits next). Irs 1040 ez form 2012 The benefits are subject to income tax withholding and employment taxes. Irs 1040 ez form 2012 Fringe benefits include cars you provide, flights on aircraft you provide, free or discounted commercial flights, vacations, discounts on property or services, memberships in country clubs or other social clubs, and tickets to entertainment or sporting events. Irs 1040 ez form 2012 In general, the amount you must include is the amount by which the fair market value of the benefits is more than the sum of what the employee paid for it plus any amount the law excludes. Irs 1040 ez form 2012 There are other special rules you and your employees may use to value certain fringe benefits. Irs 1040 ez form 2012 See Publication 15-B for more information. Irs 1040 ez form 2012 Nontaxable fringe benefits. Irs 1040 ez form 2012   Some fringe benefits are not taxable (or are minimally taxable) if certain conditions are met. Irs 1040 ez form 2012 See Publication 15-B for details. Irs 1040 ez form 2012 The following are some examples of nontaxable fringe benefits. Irs 1040 ez form 2012 Services provided to your employees at no additional cost to you. Irs 1040 ez form 2012 Qualified employee discounts. Irs 1040 ez form 2012 Working condition fringes that are property or services the employee could deduct as a business expense if he or she had paid for it. Irs 1040 ez form 2012 Examples include a company car for business use and subscriptions to business magazines. Irs 1040 ez form 2012 Certain minimal value fringes (including an occasional cab ride when an employee must work overtime and meals you provide at eating places you run for your employees if the meals are not furnished at below cost). Irs 1040 ez form 2012 Qualified transportation fringes subject to specified conditions and dollar limitations (including transportation in a commuter highway vehicle, any transit pass, and qualified parking). Irs 1040 ez form 2012 Qualified moving expense reimbursement. Irs 1040 ez form 2012 See Moving expenses , earlier in this section, for details. Irs 1040 ez form 2012 The use of on-premises athletic facilities, if substantially all of the use is by employees, their spouses, and their dependent children. Irs 1040 ez form 2012 Qualified tuition reduction an educational organization provides to its employees for education. Irs 1040 ez form 2012 For more information, see Publication 970, Tax Benefits for Education. Irs 1040 ez form 2012 Employer-provided cell phones provided primarily for a noncompensatory business reason. Irs 1040 ez form 2012   However, do not exclude the following fringe benefits from the income of highly compensated employees unless the benefit is available to other employees on a nondiscriminatory basis. Irs 1040 ez form 2012 No-additional-cost services. Irs 1040 ez form 2012 Qualified employee discounts. Irs 1040 ez form 2012 Meals provided at an employer operated eating facility. Irs 1040 ez form 2012 Reduced tuition for education. Irs 1040 ez form 2012  For more information, including the definition of a highly compensated employee, see Publication 15-B. Irs 1040 ez form 2012 When fringe benefits are treated as paid. Irs 1040 ez form 2012   You may choose to treat certain noncash fringe benefits as paid by the pay period, by the quarter, or on any other basis you choose as long as you treat the benefits as paid at least once a year. Irs 1040 ez form 2012 You do not have to make a formal choice of payment dates or notify the IRS of the dates you choose. Irs 1040 ez form 2012 You do not have to make this choice for all employees. Irs 1040 ez form 2012 You may change methods as often as you like, as long as you treat all benefits provided in a calendar year as paid by December 31 of the calendar year. Irs 1040 ez form 2012 See Publication 15-B for more information, including a discussion of the special accounting rule for fringe benefits provided during November and December. Irs 1040 ez form 2012 Valuation of fringe benefits. Irs 1040 ez form 2012   Generally, you must determine the value of fringe benefits no later than January 31 of the next year. Irs 1040 ez form 2012 Before January 31, you may reasonably estimate the value of the fringe benefits for purposes of withholding and depositing on time. Irs 1040 ez form 2012 Withholding on fringe benefits. Irs 1040 ez form 2012   You may add the value of fringe benefits to regular wages for a payroll period and figure withholding taxes on the total, or you may withhold federal income tax on the value of the fringe benefits at the optional flat 25% supplemental wage rate. Irs 1040 ez form 2012 However, see Withholding on supplemental wages when an employee receives more than $1 million of supplemental wages during the calendar year in section 7. Irs 1040 ez form 2012   You may choose not to withhold income tax on the value of an employee's personal use of a vehicle you provide. Irs 1040 ez form 2012 You must, however, withhold social security and Medicare taxes on the use of the vehicle. Irs 1040 ez form 2012 See Publication 15-B for more information on this election. Irs 1040 ez form 2012 Depositing taxes on fringe benefits. Irs 1040 ez form 2012   Once you choose when fringe benefits are paid, you must deposit taxes in the same deposit period you treat the fringe benefits as paid. Irs 1040 ez form 2012 To avoid a penalty, deposit the taxes following the general deposit rules for that deposit period. Irs 1040 ez form 2012   If you determine by January 31 you overestimated the value of a fringe benefit at the time you withheld and deposited for it, you may claim a refund for the overpayment or have it applied to your next employment tax return. Irs 1040 ez form 2012 See Valuation of fringe benefits , earlier. Irs 1040 ez form 2012 If you underestimated the value and deposited too little, you may be subject to a failure-to-deposit penalty. Irs 1040 ez form 2012 See section 11 for information on deposit penalties. Irs 1040 ez form 2012   If you deposited the required amount of taxes but withheld a lesser amount from the employee, you can recover from the employee the social security, Medicare, or income taxes you deposited on his or her behalf, and included in the employee's Form W-2. Irs 1040 ez form 2012 However, you must recover the income taxes before April 1 of the following year. Irs 1040 ez form 2012 Sick pay. Irs 1040 ez form 2012   In general, sick pay is any amount you pay under a plan to an employee who is unable to work because of sickness or injury. Irs 1040 ez form 2012 These amounts are sometimes paid by a third party, such as an insurance company or an employees' trust. Irs 1040 ez form 2012 In either case, these payments are subject to social security, Medicare, and FUTA taxes. Irs 1040 ez form 2012 Sick pay becomes exempt from these taxes after the end of 6 calendar months after the calendar month the employee last worked for the employer. Irs 1040 ez form 2012 The payments are always subject to federal income tax. Irs 1040 ez form 2012 See Publication 15-A for more information. Irs 1040 ez form 2012 6. Irs 1040 ez form 2012 Tips Tips your employee receives from customers are generally subject to withholding. Irs 1040 ez form 2012 Your employee must report cash tips to you by the 10th of the month after the month the tips are received. Irs 1040 ez form 2012 The report should include tips you paid over to the employee for charge customers, tips the employee received directly from customers, and tips received from other employees under any tip-sharing arrangement. Irs 1040 ez form 2012 Both directly and indirectly tipped employees must report tips to you. Irs 1040 ez form 2012 No report is required for months when tips are less than $20. Irs 1040 ez form 2012 Your employee reports the tips on Form 4070, Employee's Report of Tips to Employer, or on a similar statement. Irs 1040 ez form 2012 The statement must be signed by the employee and must include: The employee's name, address, and SSN, Your name and address, The month or period the report covers, and The total of tips received during the month or period. Irs 1040 ez form 2012 Both Forms 4070 and 4070-A, Employee's Daily Record of Tips, are included in Publication 1244, Employee's Daily Record of Tips and Report to Employer. Irs 1040 ez form 2012 You are permitted to establish a system for electronic tip reporting by employees. Irs 1040 ez form 2012 See Regulations section 31. Irs 1040 ez form 2012 6053-1(d). Irs 1040 ez form 2012 Collecting taxes on tips. Irs 1040 ez form 2012   You must collect income tax, employee social security tax, and employee Medicare tax on the employee's tips. Irs 1040 ez form 2012 The withholding rules for withholding an employee's share of Medicare tax on tips also apply to withholding the Additional Medicare Tax once wages and tips exceed $200,000 in the calendar year. Irs 1040 ez form 2012 If an employee reports to you in writing $20 or more of tips in a month, the tips are also subject to FUTA tax. Irs 1040 ez form 2012   You can collect these taxes from the employee's wages or from other funds he or she makes available. Irs 1040 ez form 2012 See Tips treated as supplemental wages in section 7 for more information. Irs 1040 ez form 2012 Stop collecting the employee social security tax when his or her wages and tips for tax year 2014 reach $117,000; collect the income and employee Medicare taxes for the whole year on all wages and tips. Irs 1040 ez form 2012 You are responsible for the employer social security tax on wages and tips until the wages (including tips) reach the limit. Irs 1040 ez form 2012 You are responsible for the employer Medicare tax for the whole year on all wages and tips. Irs 1040 ez form 2012 File Form 941 or Form 944 to report withholding and employment taxes on tips. Irs 1040 ez form 2012 Ordering rule. Irs 1040 ez form 2012   If, by the 10th of the month after the month for which you received an employee's report on tips, you do not have enough employee funds available to deduct the employee tax, you no longer have to collect it. Irs 1040 ez form 2012 If there are not enough funds available, withhold taxes in the following order. Irs 1040 ez form 2012 Withhold on regular wages and other compensation. Irs 1040 ez form 2012 Withhold social security and Medicare taxes on tips. Irs 1040 ez form 2012 Withhold income tax on tips. Irs 1040 ez form 2012 Reporting tips. Irs 1040 ez form 2012   Report tips and any collected and uncollected social security and Medicare taxes on Form W-2 and on Form 941, lines 5b, 5c, and 5d (Form 944, lines 4b, 4c, and 4d). Irs 1040 ez form 2012 Report an adjustment on Form 941, line 9 (Form 944, line 6), for the uncollected social security and Medicare taxes. Irs 1040 ez form 2012 Enter the amount of uncollected social security tax and Medicare tax on Form W-2, box 12, with codes “A” and “B. Irs 1040 ez form 2012 ” Do not include any uncollected Additional Medicare Tax in box 12 of Form W-2. Irs 1040 ez form 2012 See section 13 and the General Instructions for Forms W-2 and W-3. Irs 1040 ez form 2012   Revenue Ruling 2012-18 provides guidance for employers regarding social security and Medicare taxes imposed on tips, including information on the reporting of the employer share of social security and Medicare taxes under section 3121(q), the difference between tips and service charges, and the section 45B credit. Irs 1040 ez form 2012 See Revenue Ruling 2012-18, 2012-26 I. Irs 1040 ez form 2012 R. Irs 1040 ez form 2012 B. Irs 1040 ez form 2012 1032, available at www. Irs 1040 ez form 2012 irs. Irs 1040 ez form 2012 gov/irb/2012-26_IRB/ar07. Irs 1040 ez form 2012 html. Irs 1040 ez form 2012 Allocated tips. Irs 1040 ez form 2012   If you operate a large food or beverage establishment, you must report allocated tips under certain circumstances. Irs 1040 ez form 2012 However, do not withhold income, social security, or Medicare taxes on allocated tips. Irs 1040 ez form 2012   A large food or beverage establishment is one that provides food or beverages for consumption on the premises, where tipping is customary, and where there were normally more than 10 employees on a typical business day during the preceding year. Irs 1040 ez form 2012   The tips may be allocated by one of three methods—hours worked, gross receipts, or good faith agreement. Irs 1040 ez form 2012 For information about these allocation methods, including the requirement to file Forms 8027 electronically if 250 or more forms are filed, see the Instructions for Form 8027. Irs 1040 ez form 2012 For information on filing Form 8027 electronically with the IRS, see Publication 1239. Irs 1040 ez form 2012 Tip Rate Determination and Education Program. Irs 1040 ez form 2012   Employers may participate in the Tip Rate Determination and Education Program. Irs 1040 ez form 2012 The program primarily consists of two voluntary agreements developed to improve tip income reporting by helping taxpayers to understand and meet their tip reporting responsibilities. Irs 1040 ez form 2012 The two agreements are the Tip Rate Determination Agreement (TRDA) and the Tip Reporting Alternative Commitment (TRAC). Irs 1040 ez form 2012 A tip agreement, the Gaming Industry Tip Compliance Agreement (GITCA), is available for the gaming (casino) industry. Irs 1040 ez form 2012 To get more information about TRDA and TRAC agreements, see Publication 3144, Tips on Tips. Irs 1040 ez form 2012 Additionally, visit IRS. Irs 1040 ez form 2012 gov and enter “MSU tips” in the search box to get more information about GITCA, TRDA, or TRAC agreements. Irs 1040 ez form 2012 7. Irs 1040 ez form 2012 Supplemental Wages Supplemental wages are wage payments to an employee that are not regular wages. Irs 1040 ez form 2012 They include, but are not limited to, bonuses, commissions, overtime pay, payments for accumulated sick leave, severance pay, awards, prizes, back pay, retroactive pay increases, and payments for nondeductible moving expenses. Irs 1040 ez form 2012 Other payments subject to the supplemental wage rules include taxable fringe benefits and expense allowances paid under a nonaccountable plan. Irs 1040 ez form 2012 How you withhold on supplemental wages depends on whether the supplemental payment is identified as a separate payment from regular wages. Irs 1040 ez form 2012 See Regulations section 31. Irs 1040 ez form 2012 3402(g)-1 for additional guidance for wages paid after January 1, 2007. Irs 1040 ez form 2012 Also see Revenue Ruling 2008-29, 2008-24 I. Irs 1040 ez form 2012 R. Irs 1040 ez form 2012 B. Irs 1040 ez form 2012 1149, available at www. Irs 1040 ez form 2012 irs. Irs 1040 ez form 2012 gov/irb/2008-24_IRB/ar08. Irs 1040 ez form 2012 html. Irs 1040 ez form 2012 Withholding on supplemental wages when an employee receives more than $1 million of supplemental wages from you during the calendar year. Irs 1040 ez form 2012   Special rules apply to the extent supplemental wages paid to any one employee during the calendar year exceed $1 million. Irs 1040 ez form 2012 If a supplemental wage payment, together with other supplemental wage payments made to the employee during the calendar year, exceeds $1 million, the excess is subject to withholding at 39. Irs 1040 ez form 2012 6% (or the highest rate of income tax for the year). Irs 1040 ez form 2012 Withhold using the 39. Irs 1040 ez form 2012 6% rate without regard to the employee's Form W-4. Irs 1040 ez form 2012 In determining supplemental wages paid to the employee during the year, include payments from all businesses under common control. Irs 1040 ez form 2012 For more information, see Treasury Decision 9276, 2006-37 I. Irs 1040 ez form 2012 R. Irs 1040 ez form 2012 B. Irs 1040 ez form 2012 423, available at www. Irs 1040 ez form 2012 irs. Irs 1040 ez form 2012 gov/irb/2006-37_IRB/ar09. Irs 1040 ez form 2012 html. Irs 1040 ez form 2012 Withholding on supplemental wage payments to an employee who does not receive $1 million of supplemental wages during the calendar year. Irs 1040 ez form 2012   If the supplemental wages paid to the employee during the calendar year are less than or equal to $1 million, the following rules apply in determining the amount of income tax to be withheld. Irs 1040 ez form 2012 Supplemental wages combined with regular wages. Irs 1040 ez form 2012   If you pay supplemental wages with regular wages but do not specify the amount of each, withhold federal income tax as if the total were a single payment for a regular payroll period. Irs 1040 ez form 2012 Supplemental wages identified separately from regular wages. Irs 1040 ez form 2012   If you pay supplemental wages separately (or combine them in a single payment and specify the amount of each), the federal income tax withholding method depends partly on whether you withhold income tax from your employee's regular wages. Irs 1040 ez form 2012 If you withheld income tax from an employee's regular wages in the current or immediately preceding calendar year, you can use one of the following methods for the supplemental wages. Irs 1040 ez form 2012 Withhold a flat 25% (no other percentage allowed). Irs 1040 ez form 2012 If the supplemental wages are paid concurrently with regular wages, add the supplemental wages to the concurrently paid regular wages. Irs 1040 ez form 2012 If there are no concurrently paid regular wages, add the supplemental wages to alternatively, either the regular wages paid or to be paid for the current payroll period or the regular wages paid for the preceding payroll period. Irs 1040 ez form 2012 Figure the income tax withholding as if the total of the regular wages and supplemental wages is a single payment. Irs 1040 ez form 2012 Subtract the tax withheld from the regular wages. Irs 1040 ez form 2012 Withhold the remaining tax from the supplemental wages. Irs 1040 ez form 2012 If there were other payments of supplemental wages paid during the payroll period made before the current payment of supplemental wages, aggregate all the payments of supplemental wages paid during the payroll period with the regular wages paid during the payroll period, calculate the tax on the total, subtract the tax already withheld from the regular wages and the previous supplemental wage payments, and withhold the remaining tax. Irs 1040 ez form 2012 If you did not withhold income tax from the employee's regular wages in the current or immediately preceding calendar year, use method 1-b. Irs 1040 ez form 2012 This would occur, for example, when the value of the employee's withholding allowances claimed on Form W-4 is more than the wages. Irs 1040 ez form 2012 Regardless of the method you use to withhold income tax on supplemental wages, they are subject to social security, Medicare, and FUTA taxes. Irs 1040 ez form 2012 Example 1. Irs 1040 ez form 2012 You pay John Peters a base salary on the 1st of each month. Irs 1040 ez form 2012 He is single and claims one withholding allowance. Irs 1040 ez form 2012 In January he is paid $1,000. Irs 1040 ez form 2012 Using the wage bracket tables, you withhold $50 from this amount. Irs 1040 ez form 2012 In February, he receives salary of $1,000 plus a commission of $2,000, which you combine with regular wages and do not separately identify. Irs 1040 ez form 2012 You figure the withholding based on the total of $3,000. Irs 1040 ez form 2012 The correct withholding from the tables is $338. Irs 1040 ez form 2012 Example 2. Irs 1040 ez form 2012 You pay Sharon Warren a base salary on the 1st of each month. Irs 1040 ez form 2012 She is single and claims one allowance. Irs 1040 ez form 2012 Her May 1 pay is $2,000. Irs 1040 ez form 2012 Using the wage bracket tables, you withhold $188. Irs 1040 ez form 2012 On May 14 she receives a bonus of $1,000. Irs 1040 ez form 2012 Electing to use supplemental wage withholding method 1-b, you: Add the bonus amount to the amount of wages from the most recent base salary pay date (May 1) ($2,000 + $1,000 = $3,000). Irs 1040 ez form 2012 Determine the amount of withholding on the combined $3,000 amount to be $338 using the wage bracket tables. Irs 1040 ez form 2012 Subtract the amount withheld from wages on the most recent base salary pay date (May 1) from the combined withholding amount ($338 – $188 = $150). Irs 1040 ez form 2012 Withhold $150 from the bonus payment. Irs 1040 ez form 2012 Example 3. Irs 1040 ez form 2012 The facts are the same as in Example 2, except you elect to use the flat rate method of withholding on the bonus. Irs 1040 ez form 2012 You withhold 25% of $1,000, or $250, from Sharon's bonus payment. Irs 1040 ez form 2012 Example 4. Irs 1040 ez form 2012 The facts are the same as in Example 2, except you elect to pay Sharon a second bonus of $2,000 on May 28. Irs 1040 ez form 2012 Using supplemental wage withholding method 1-b, you: Add the first and second bonus amounts to the amount of wages from the most recent base salary pay date (May 1) ($2,000 + $1,000 + $2,000 = $5,000). Irs 1040 ez form 2012 Determine the amount of withholding on the combined $5,000 amount to be $781 using the wage bracket tables. Irs 1040 ez form 2012 Subtract the amounts withheld from wages on the most recent base salary pay date (May 1) and the amounts withheld from the first bonus payment from the combined withholding amount ($781 – $188 – $150 = $443). Irs 1040 ez form 2012 Withhold $443 from the second bonus payment. Irs 1040 ez form 2012 Tips treated as supplemental wages. Irs 1040 ez form 2012   Withhold income tax on tips from wages earned by the employee or from other funds the employee makes available. Irs 1040 ez form 2012 If an employee receives regular wages and reports tips, figure income tax withholding as if the tips were supplemental wages. Irs 1040 ez form 2012 If you have not withheld income tax from the regular wages, add the tips to the regular wages. Irs 1040 ez form 2012 Then withhold income tax on the total. Irs 1040 ez form 2012 If you withheld income tax from the regular wages, you can withhold on the tips by method 1-a or 1-b discussed earlier in this section under Supplemental wages identified separately from regular wages. Irs 1040 ez form 2012 Vacation pay. Irs 1040 ez form 2012   Vacation pay is subject to withholding as if it were a regular wage payment. Irs 1040 ez form 2012 When vacation pay is in addition to regular wages for the vacation period, treat it as a supplemental wage payment. Irs 1040 ez form 2012 If the vacation pay is for a time longer than your usual payroll period, spread it over the pay periods for which you pay it. Irs 1040 ez form 2012 8. Irs 1040 ez form 2012 Payroll Period Your payroll period is a period of service for which you usually pay wages. Irs 1040 ez form 2012 When you have a regular payroll period, withhold income tax for that time period even if your employee does not work the full period. Irs 1040 ez form 2012 No regular payroll period. Irs 1040 ez form 2012   When you do not have a regular payroll period, withhold the tax as if you paid wages for a daily or miscellaneous payroll period. Irs 1040 ez form 2012 Figure the number of days (including Sundays and holidays) in the period covered by the wage payment. Irs 1040 ez form 2012 If the wages are unrelated to a specific length of time (for example, commissions paid on completion of a sale), count back the number of days from the payment period to the latest of: The last wage payment made during the same calendar year, The date employment began, if during the same calendar year, or January 1 of the same year. Irs 1040 ez form 2012 Employee paid for period less than 1 week. Irs 1040 ez form 2012   When you pay an employee for a period of less than one week, and the employee signs a statement under penalties of perjury indicating he or she is not working for any other employer during the same week for wages subject to withholding, figure withholding based on a weekly payroll period. Irs 1040 ez form 2012 If the employee later begins to work for another employer for wages subject to withholding, the employee must notify you within 10 days. Irs 1040 ez form 2012 You then figure withholding based on the daily or miscellaneous period. Irs 1040 ez form 2012 9. Irs 1040 ez form 2012 Withholding From Employees' Wages Income Tax Withholding Using Form W-4 to figure withholding. Irs 1040 ez form 2012   To know how much federal income tax to withhold from employees' wages, you should have a Form W-4 on file for each employee. Irs 1040 ez form 2012 Encourage your employees to file an updated Form W-4 for 2014, especially if they owed taxes or received a large refund when filing their 2013 tax return. Irs 1040 ez form 2012 Advise your employees to use the IRS Withholding Calculator on the IRS website at www. Irs 1040 ez form 2012 irs. Irs 1040 ez form 2012 gov/individuals for help in determining how many withholding allowances to claim on their Forms W-4. Irs 1040 ez form 2012   Ask all new employees to give you a signed Form W-4 when they start work. Irs 1040 ez form 2012 Make the form effective with the first wage payment. Irs 1040 ez form 2012 If a new employee does not give you a completed Form W-4, withhold income tax as if he or she is single, with no withholding allowances. Irs 1040 ez form 2012 Form in Spanish. Irs 1040 ez form 2012   You can provide Formulario W-4(SP), Certificado de Exención de Retenciones del Empleado, in place of Form W-4, to your Spanish-speaking employees. Irs 1040 ez form 2012 For more information, see Publicación 17(SP), El Impuesto Federal sobre los Ingresos (Para Personas Físicas). Irs 1040 ez form 2012 The rules discussed in this section that apply to Form W-4 also apply to Formulario W-4(SP). Irs 1040 ez form 2012 Electronic system to receive Form W-4. Irs 1040 ez form 2012   You may establish a system to electronically receive Forms W-4 from your employees. Irs 1040 ez form 2012 See Regulations section 31. Irs 1040 ez form 2012 3402(f)(5)-1(c) for more information. Irs 1040 ez form 2012 Effective date of Form W-4. Irs 1040 ez form 2012   A Form W-4 remains in effect until the employee gives you a new one. Irs 1040 ez form 2012 When you receive a new Form W-4 from an employee, do not adjust withholding for pay periods before the effective date of the new form. Irs 1040 ez form 2012 If an employee gives you a Form W-4 that replaces an existing Form W-4, begin withholding no later than the start of the first payroll period ending on or after the 30th day from the date when you received the replacement Form W-4. Irs 1040 ez form 2012 For exceptions, see Exemption from federal income tax withholding , IRS review of requested Forms W-4 , and Invalid Forms W-4 , later in this section. Irs 1040 ez form 2012 A Form W-4 that makes a change for the next calendar year will not take effect in the current calendar year. Irs 1040 ez form 2012 Successor employer. Irs 1040 ez form 2012   If you are a successor employer (see Successor employer , later in this section), secure new Forms W-4 from the transferred employees unless the “Alternative Procedure” in section 5 of Revenue Procedure 2004-53 applies. Irs 1040 ez form 2012 See Revenue Procedure 2004-53, 2004-34 I. Irs 1040 ez form 2012 R. Irs 1040 ez form 2012 B. Irs 1040 ez form 2012 320, available at www. Irs 1040 ez form 2012 irs. Irs 1040 ez form 2012 gov/irb/2004-34_IRB/ar13. Irs 1040 ez form 2012 html. Irs 1040 ez form 2012 Completing Form W-4. Irs 1040 ez form 2012   The amount of any federal income tax withholding must be based on marital status and withholding allowances. Irs 1040 ez form 2012 Your employees may not base their withholding amounts on a fixed dollar amount or percentage. Irs 1040 ez form 2012 However, an employee may specify a dollar amount to be withheld in addition to the amount of withholding based on filing status and withholding allowances claimed on Form W-4. Irs 1040 ez form 2012 Employees may claim fewer withholding allowances than they are entitled to claim. Irs 1040 ez form 2012 They may wish to claim fewer allowances to ensure they have enough withholding or to offset the tax on other sources of taxable income not subject to withholding. Irs 1040 ez form 2012 See Publication 505, Tax Withholding and Estimated Tax, for more information about completing Form W-4. Irs 1040 ez form 2012 Along with Form W-4, you may wish to order Publication 505 for use by your employees. Irs 1040 ez form 2012 Do not accept any withholding or estimated tax payments from your employees in addition to withholding based on their Form W-4. Irs 1040 ez form 2012 If they require additional withholding, they should submit a new Form W-4 and, if necessary, pay estimated tax by filing Form 1040-ES, Estimated Tax for Individuals, or by using the Electronic Federal Tax Payment System (EFTPS) to make estimated tax payments. Irs 1040 ez form 2012 Exemption from federal income tax withholding. Irs 1040 ez form 2012   Generally, an employee may claim exemption from federal income tax withholding because he or she had no income tax liability last year and expects none this year. Irs 1040 ez form 2012 See the Form W-4 instructions for more information. Irs 1040 ez form 2012 However, the wages are still subject to social security and Medicare taxes. Irs 1040 ez form 2012 See also Invalid Forms W-4 , later in this section. Irs 1040 ez form 2012   A Form W-4 claiming exemption from withholding is effective when it is filed with the employer and only for that calendar year. Irs 1040 ez form 2012 To continue to be exempt from withholding in the next calendar year, an employee must give you a new Form W-4 by February 15. Irs 1040 ez form 2012 If the employee does not give you a new Form W-4 by February 15, begin withholding based on the last Form W-4 for the employee that did not claim an exemption from withholding or, if one was not filed, then withhold tax as if he or she is single with zero withholding allowances. Irs 1040 ez form 2012 If the employee provides a new Form W-4 claiming exemption from withholding on February 16 or later, you may apply it to future wages but do not refund any taxes already withheld. Irs 1040 ez form 2012 Withholding income taxes on the wages of nonresident alien employees. Irs 1040 ez form 2012   In general, you must withhold federal income taxes on the wages of nonresident alien employees. Irs 1040 ez form 2012 However, see Publication 515, Withholding of Tax on Nonresident Aliens and Foreign Entities, for exceptions to this general rule. Irs 1040 ez form 2012 Also see section 3 of Publication 51 (Circular A), Agricultural Employer's Tax Guide, for guidance on H-2A visa workers. Irs 1040 ez form 2012 Withholding adjustment for nonresident alien employees. Irs 1040 ez form 2012   For 2014, apply the procedure discussed next to figure the amount of income tax to withhold from the wages of nonresident alien employees performing services within the United States. Irs 1040 ez form 2012 Nonresident alien students from India and business apprentices from India are not subject to this procedure. Irs 1040 ez form 2012 Instructions. Irs 1040 ez form 2012   To figure how much income tax to withhold from the wages paid to a nonresident alien employee performing services in the United States, use the following steps. Irs 1040 ez form 2012 Step 1. Irs 1040 ez form 2012   Add to the wages paid to the nonresident alien employee for the payroll period the amount shown in the chart below for the applicable payroll period. Irs 1040 ez form 2012    Amount to Add to Nonresident Alien Employee's Wages for Calculating Income Tax Withholding Only   Payroll Period Add Additional     Weekly $ 43. Irs 1040 ez form 2012 30     Biweekly 86. Irs 1040 ez form 2012 50     Semimonthly 93. Irs 1040 ez form 2012 80     Monthly 187. Irs 1040 ez form 2012 50     Quarterly 562. Irs 1040 ez form 2012 50     Semiannually 1,125. Irs 1040 ez form 2012 00     Annually 2,250. Irs 1040 ez form 2012 00     Daily or Miscellaneous (each day of the payroll period) 8. Irs 1040 ez form 2012 70   Step 2. Irs 1040 ez form 2012   Use the amount figured in Step 1 and the number of withholding allowances claimed (generally limited to one allowance) to figure income tax withholding. Irs 1040 ez form 2012 Determine the value of withholding allowances by multiplying the number of withholding allowances claimed by the appropriate amount from Table 5. Irs 1040 ez form 2012 Percentage Method—2014 Amount for One Withholding Allowance shown on page 41. Irs 1040 ez form 2012 If you are using the Percentage Method Tables for Income Tax Withholding, provided on pages 43–44, reduce the amount figured in Step 1 by the value of withholding allowances and use that reduced amount to figure the income tax withholding. Irs 1040 ez form 2012 If you are using the Wage Bracket Method for Income Tax Withholding, provided on pages 45–64, use the amount figured in Step 1 and the number of withholding allowances to figure income tax withholding. Irs 1040 ez form 2012 The amounts from the chart above are added to wages solely for calculating income tax withholding on the wages of the nonresident alien employee. Irs 1040 ez form 2012 The amounts from the chart should not be included in any box on the employee's Form W-2 and do not increase the income tax liability of the employee. Irs 1040 ez form 2012 Also, the amounts from the chart do not increase the social security tax or Medicare tax liability of the employer or the employee, or the FUTA tax liability of the employer. Irs 1040 ez form 2012 This procedure only applies to nonresident alien employees who have wages subject to income tax withholding. Irs 1040 ez form 2012 Example. Irs 1040 ez form 2012 An employer using the percentage method of withholding pays wages of $500 for a biweekly payroll period to a married nonresident alien employee. Irs 1040 ez form 2012 The nonresident alien has properly completed Form W-4, entering marital status as “single” with one withholding allowance and indicating status as a nonresident alien on Form W-4, line 6 (see Nonresident alien employee's Form W-4 , later in this section). Irs 1040 ez form 2012 The employer determines the wages to be used in the withholding tables by adding to the $500 amount of wages paid the amount of $86. Irs 1040 ez form 2012 50 from the chart under Step 1 ($586. Irs 1040 ez form 2012 50 total). Irs 1040 ez form 2012 The employer then applies the applicable tables to determine the income tax withholding for nonresident aliens (see Step 2 ). Irs 1040 ez form 2012 Reminder: If you use the Percentage Method Tables for Income Tax Withholding, reduce the amount figured in Step 1 by the value of withholding allowances and use that reduced amount to figure income tax withholding. Irs 1040 ez form 2012 The $86. Irs 1040 ez form 2012 50 added to wages for calculating income tax withholding is not reported on Form W-2, and does not increase the income tax liability of the employee. Irs 1040 ez form 2012 Also, the $86. Irs 1040 ez form 2012 50 added to wages does not affect the social security tax or Medicare tax liability of the employer or the employee, or the FUTA tax liability of the employer. Irs 1040 ez form 2012 Supplemental wage payment. Irs 1040 ez form 2012   This procedure for determining the amount of income tax withholding does not apply to a supplemental wage payment (see section 7) if the 39. Irs 1040 ez form 2012 6% mandatory flat rate withholding applies or if the 25% optional flat rate withholding is being used to calculate income tax withholding on the supplemental wage payment. Irs 1040 ez form 2012 Nonresident alien employee's Form W-4. Irs 1040 ez form 2012   When completing Forms W-4, nonresident aliens are required to: Not claim exemption from income tax withholding, Request withholding as if they are single, regardless of their actual marital status, Claim only one allowance (if the nonresident alien is a resident of Canada, Mexico, or South Korea, or a student or business apprentice from India, he or she may claim more than one allowance), and Write “Nonresident Alien” or “NRA” above the dotted line on line 6 of Form W-4. Irs 1040 ez form 2012   If you maintain an electronic Form W-4 system, you should provide a field for nonresident aliens to enter nonresident alien status in lieu of writing “Nonresident Alien” or “NRA” above the dotted line on line 6. Irs 1040 ez form 2012 A nonresident alien employee may request additional withholding at his or her option for other purposes, although such additions should not be necessary for withholding to cover federal income tax liability related to employment. Irs 1040 ez form 2012 Form 8233. Irs 1040 ez form 2012   If a nonresident alien employee claims a tax treaty exemption from withholding, the employee must submit Form 8233, Exemption From Withholding on Compensation for Independent (and Certain Dependent) Personal Services of a Nonresident Alien Individual, with respect to the income exempt under the treaty, instead of Form W-4. Irs 1040 ez form 2012 See Publication 515 for details. Irs 1040 ez form 2012 IRS review of requested Forms W-4. Irs 1040 ez form 2012   When requested by the IRS, you must make original Forms W-4 available for inspection by an IRS employee. Irs 1040 ez form 2012 You may also be directed to send certain Forms W-4 to the IRS. Irs 1040 ez form 2012 You may receive a notice from the IRS requiring you to submit a copy of Form W-4 for one or more of your named employees. Irs 1040 ez form 2012 Send the requested copy or copies of Form W-4 to the IRS at the address provided and in the manner directed by the notice. Irs 1040 ez form 2012 The IRS may also require you to submit copies of Form W-4 to the IRS as directed by Treasury Decision 9337, 2007-35 I. Irs 1040 ez form 2012 R. Irs 1040 ez form 2012 B. Irs 1040 ez form 2012 455, which is available at www. Irs 1040 ez form 2012 irs. Irs 1040 ez form 2012 gov/irb/2007-35_IRB/ar10. Irs 1040 ez form 2012 html. Irs 1040 ez form 2012 When we refer to Form W-4, the same rules apply to Formulario W-4(SP), its Spanish translation. Irs 1040 ez form 2012 After submitting a copy of a requested Form W-4 to the IRS, continue to withhold federal income tax based on that Form W-4 if it is valid (see Invalid Forms W-4 , later in this section). Irs 1040 ez form 2012 However, if the IRS later notifies you in writing the employee is not entitled to claim exemption from withholding or a claimed number of withholding allowances, withhold federal income tax based on the effective date, marital status, and maximum number of withholding allowances specified in the IRS notice (commonly referred to as a "lock-in letter
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Tax Relief for Victims of Hurricane Irene in Pennsylvania

E-file to Remain Open through Oct. 31 for Victims of Hurricane Irene

PA-33-2011, Sept. 13, 2011

PHILADELPHIA — Victims of Hurricane Irene that began on Aug. 26, 2011 in parts of Pennsylvania may qualify for tax relief from the Internal Revenue Service.

The President has declared the following counties a federal disaster area: Bucks, Chester, Delaware, Lehigh, Luzerne, Monroe, Montgomery, Northampton, Philadelphia, Sullivan, and Wyoming. Individuals who reside or have a business in these counties may qualify for tax relief.

The declaration permits the IRS to postpone certain deadlines for taxpayers who reside or have a business in the disaster area. For instance, certain deadlines falling on or after Aug. 26, and on or before Oct. 31, have been postponed to Oct. 31, 2011. This includes corporations and other businesses that previously obtained an extension until Sept. 15 to file their 2010 returns, and individuals and businesses that received a similar extension until Oct. 17. It also includes the estimated tax payment for the third quarter, normally due Sept. 15.

In addition, the IRS is waiving the failure-to-deposit penalties for employment and excise tax deposits due on or after Aug. 26, and on or before Sept. 12, as long as the deposits are made by Sept. 12, 2011.

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

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

Covered Disaster Area

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

Affected Taxpayers

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

Grant of Relief

Under section 7508A, the IRS gives affected taxpayers until Oct. 31 to file most tax returns (including individual, corporate, and estate and trust income tax returns; partnership returns, S corporation returns, and trust returns; estate, gift, and generation-skipping transfer tax returns; and employment and certain excise tax returns), or to make tax payments, including estimated tax payments, that have either an original or extended due date occurring on or after Aug. 26 and on or before Oct. 31.

The IRS also gives affected taxpayers until Oct. 31 to perform other time-sensitive actions described in Treas. Reg. § 301.7508A-1(c)(1) and Rev. Proc. 2007-56, 2007-34 I.R.B. 388 (Aug. 20, 2007), that are due to be performed on or after Aug. 26 and on or before Oct. 31.

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

The postponement of time to file and pay does not apply to information returns in the W-2, 1098, 1099 series, or to Forms 1042-S or 8027. Penalties for failure to timely file information returns can be waived under existing procedures for reasonable cause. Likewise, the postponement does not apply to employment and excise tax deposits. The IRS, however, will abate penalties for failure to make timely employment and excise tax deposits due on or after Aug. 26 and on or before Sept. 12 provided the taxpayer makes these deposits by Sept. 12.

Casualty Losses

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

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

Affected taxpayers claiming the disaster loss on last year’s return should put the Disaster Designation “Pennsylvania/Hurricane Irene” at the top of the form so that the IRS can expedite the processing of the refund.

Other Relief

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

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

Taxpayers may download forms and publications from the official IRS website, irs.gov, or order them by calling 1-800-TAX-FORM (1-800-829-3676). The IRS toll-free number for general tax questions is 1-800-829-1040.

Related Information

Page Last Reviewed or Updated: 24-Mar-2014

The Irs 1040 Ez Form 2012

Irs 1040 ez form 2012 2. Irs 1040 ez form 2012   Possession Source Income Table of Contents Types of IncomeCompensation for Labor or Personal Services Investment Income Sales or Other Dispositions of Property Scholarships, Fellowships, Grants, Prizes, and Awards Effectively Connected Income In order to determine where to file your return and which form(s) you need to complete, you must determine the source of each item of income you received during the tax year. Irs 1040 ez form 2012 Income you received from sources within, or that was effectively connected with the conduct of a trade or business within, the relevant possession must be identified separately from U. Irs 1040 ez form 2012 S. Irs 1040 ez form 2012 or foreign source income. Irs 1040 ez form 2012 This chapter discusses the rules for determining if the source of your income is from: American Samoa, The Commonwealth of the Northern Mariana Islands (CNMI), The Commonwealth of Puerto Rico (Puerto Rico), Guam, or The U. Irs 1040 ez form 2012 S. Irs 1040 ez form 2012 Virgin Islands (USVI). Irs 1040 ez form 2012 Generally, the same rules that apply for determining U. Irs 1040 ez form 2012 S. Irs 1040 ez form 2012 source income also apply for determining possession source income. Irs 1040 ez form 2012 However, there are some important exceptions to these rules. Irs 1040 ez form 2012 Both the general rules and the exceptions are discussed in this chapter. Irs 1040 ez form 2012 U. Irs 1040 ez form 2012 S. Irs 1040 ez form 2012 income rule. Irs 1040 ez form 2012   This rule states that income is not possession source income if, under the rules of Internal Revenue Code sections 861–865, it is treated as income: From sources within the United States, or Effectively connected with the conduct of a trade or business within the United States. Irs 1040 ez form 2012 Table 2-1 shows the general rules for determining whether income is from sources within the United States. Irs 1040 ez form 2012 Table 2-1. Irs 1040 ez form 2012 General Rules for Determining U. Irs 1040 ez form 2012 S. Irs 1040 ez form 2012 Source of Income Item of Income Factor Determining Source Salaries, wages, and other compensation for labor or personal services Where labor or services performed Pensions Contributions: Where services were performed that earned the pension Investment earnings: Where pension trust is located Interest Residence of payer Dividends Where corporation created or organized Rents Location of property Royalties:   Natural resources Location of property Patents, copyrights, etc. Irs 1040 ez form 2012 Where property is used Sale of business inventory—purchased Where sold Sale of business inventory—produced Allocation if produced and sold in different locations Sale of real property Location of property Sale of personal property Seller's tax home (but see Special Rules for Gains From Dispositions of Certain Property , later, for exceptions) Sale of natural resources Allocation based on fair market value of product at export terminal. Irs 1040 ez form 2012 For more information, see Regulations section 1. Irs 1040 ez form 2012 863-1(b). Irs 1040 ez form 2012 Types of Income This section looks at the most common types of income received by individuals, and the rules for determining the source of the income. Irs 1040 ez form 2012 Generally, the same rules shown in Table 2-1 are used to determine if you have possession source income. Irs 1040 ez form 2012 Compensation for Labor or Personal Services Income from labor or personal services includes wages, salaries, commissions, fees, per diem allowances, employee allowances and bonuses, and fringe benefits. Irs 1040 ez form 2012 It also includes income earned by sole proprietors and general partners from providing personal services in the course of their trade or business. Irs 1040 ez form 2012 Services performed wholly within a relevant possession. Irs 1040 ez form 2012   Generally, all pay you receive for services performed in a relevant possession is considered to be from sources within that possession. Irs 1040 ez form 2012 However, there is an exception for income earned as a member of the U. Irs 1040 ez form 2012 S. Irs 1040 ez form 2012 Armed Forces or a civilian spouse. Irs 1040 ez form 2012 U. Irs 1040 ez form 2012 S. Irs 1040 ez form 2012 Armed Forces. Irs 1040 ez form 2012   If you are a bona fide resident of a relevant possession, your military service pay will be sourced in that possession even if you perform the services in the United States or another possession. Irs 1040 ez form 2012 However, if you are not a bona fide resident of a possession, your military service pay will be income from the  United States even if you perform services in a possession. Irs 1040 ez form 2012 Civilian spouse of active duty member of the U. Irs 1040 ez form 2012 S. Irs 1040 ez form 2012 Armed Forces. Irs 1040 ez form 2012   If you are a bona fide resident of a U. Irs 1040 ez form 2012 S. Irs 1040 ez form 2012 possession and choose to keep that possession as your tax residence under MSRRA when relocating with your servicemember spouse under military orders, the source of income for your labor or personal services is considered to be that possession. Irs 1040 ez form 2012 Likewise, if your tax residence is in one of the 50 states or the District of Columbia before relocating and you choose to keep it as your tax residence, the source of income for services performed in any of the U. Irs 1040 ez form 2012 S. Irs 1040 ez form 2012 possessions is considered to be the United States and, specifically, your state of residence or the District of Columbia. Irs 1040 ez form 2012 Services performed partly inside and partly outside a relevant possession. Irs 1040 ez form 2012   If you are an employee and receive compensation for labor or personal services performed both inside and outside the relevant possession, special rules apply in determining the source of the compensation. Irs 1040 ez form 2012 Compensation (other than certain fringe benefits) is sourced on a time basis. Irs 1040 ez form 2012 Certain fringe benefits (such as housing and education) are sourced on a geographical basis. Irs 1040 ez form 2012   Or, you may be permitted to use an alternative basis to determine the source of compensation. Irs 1040 ez form 2012 See Alternative basis , later. Irs 1040 ez form 2012   If you are self-employed, determine the source of your income for labor or personal services from self-employment on the basis that most correctly reflects the proper source of that income under the facts and circumstances of your particular case. Irs 1040 ez form 2012 In many cases, the facts and circumstances will call for an apportionment on a time basis as explained next. Irs 1040 ez form 2012 Time basis. Irs 1040 ez form 2012   Use a time basis to figure your compensation for labor or personal services from the relevant possession (other than the fringe benefits discussed later). Irs 1040 ez form 2012 Do this by multiplying your total compensation (other than the fringe benefits discussed later) by the following fraction:   Number of days you performed  services in the relevant  possession during the year     Total number of days you  performed services during the year           You can use a unit of time less than a day in the above fraction, if appropriate. Irs 1040 ez form 2012 The time period for which the income is made does not have to be a year. Irs 1040 ez form 2012 Instead, you can use another distinct, separate, and continuous time period if you can establish to the satisfaction of the IRS that this other period is more appropriate. Irs 1040 ez form 2012 Example. Irs 1040 ez form 2012 In 2013, you worked in your employer's office in the United States for 60 days and in the Puerto Rico office for 180 days, earning a total of $80,000 for the year. Irs 1040 ez form 2012 Your Puerto Rico source income is $60,000, figured as follows. Irs 1040 ez form 2012       180 days 240 days × $80,000 = $60,000                 Multi-year compensation. Irs 1040 ez form 2012   The source of multi-year compensation is generally determined on a time basis over the period to which the compensation is attributable. Irs 1040 ez form 2012 Multi-year compensation is compensation that is included in your income in 1 tax year but is attributable to a period that includes 2 or more tax years. Irs 1040 ez form 2012 You determine the period to which the income is attributable based on the facts and circumstances of your case. Irs 1040 ez form 2012 For more information on multi-year compensation, see Treasury Decision (T. Irs 1040 ez form 2012 D. Irs 1040 ez form 2012 ) 9212 and Regulations section 1. Irs 1040 ez form 2012 861-4, 2005-35 I. Irs 1040 ez form 2012 R. Irs 1040 ez form 2012 B. Irs 1040 ez form 2012 429, available at www. Irs 1040 ez form 2012 irs. Irs 1040 ez form 2012 gov/irb/2005-35_IRB/ar14. Irs 1040 ez form 2012 html. Irs 1040 ez form 2012 Certain fringe benefits sourced on a geographical basis. Irs 1040 ez form 2012   If you received any of the following fringe benefits as compensation for labor or services performed as an employee partly inside and partly outside a relevant possession, you must source that income on a geographical basis. Irs 1040 ez form 2012 Housing. Irs 1040 ez form 2012 Education. Irs 1040 ez form 2012 Local transportation. Irs 1040 ez form 2012 Tax reimbursement. Irs 1040 ez form 2012 Hazardous or hardship duty pay. Irs 1040 ez form 2012 Moving expense reimbursement. Irs 1040 ez form 2012 For information on determining the source of the fringe benefits listed above, see Regulations section 1. Irs 1040 ez form 2012 861-4. Irs 1040 ez form 2012 Alternative basis. Irs 1040 ez form 2012   You can determine the source of your compensation under an alternative basis if you establish to the satisfaction of the IRS that, under the facts and circumstances of your case, the alternative basis more properly determines the source of your income than the time or geographical basis. Irs 1040 ez form 2012 If you use an alternative basis, you must keep (and have available for inspection) records to document why the alternative basis more properly determines the source of your income. Irs 1040 ez form 2012 De minimis exception. Irs 1040 ez form 2012   There is an exception to the rule for determining the source of income earned in a possession. Irs 1040 ez form 2012 Generally, you will not have income from a possession if during a tax year you: Are a U. Irs 1040 ez form 2012 S. Irs 1040 ez form 2012 citizen or resident, Are not a bona fide resident of that possession, Are not employed by or under contract with an individual, partnership, or corporation that is engaged in a trade or business in that possession, Temporarily perform services in that possession for 90 days or less, and Earned $3,000 or less from such services. Irs 1040 ez form 2012 This exception began with income earned during your 2008 tax year. Irs 1040 ez form 2012 Pensions. Irs 1040 ez form 2012   Generally, pension income has two components: contributions to the pension plan and the earnings accrued from investing those contributions. Irs 1040 ez form 2012 The contribution portion is sourced according to where services were performed that earned the pension. Irs 1040 ez form 2012 The investment earnings portion is sourced according to the location of the pension trust. Irs 1040 ez form 2012 Example. Irs 1040 ez form 2012 You are a U. Irs 1040 ez form 2012 S. Irs 1040 ez form 2012 citizen who worked in Puerto Rico for a U. Irs 1040 ez form 2012 S. Irs 1040 ez form 2012 company. Irs 1040 ez form 2012 All services were performed in Puerto Rico. Irs 1040 ez form 2012 Upon retirement you remained in Puerto Rico and began receiving your pension from the U. Irs 1040 ez form 2012 S. Irs 1040 ez form 2012 pension trust of your employer. Irs 1040 ez form 2012 Distributions from the U. Irs 1040 ez form 2012 S. Irs 1040 ez form 2012 pension trust must be allocated between (1) contributions, which are Puerto Rico source income, and (2) investment earnings, which are U. Irs 1040 ez form 2012 S. Irs 1040 ez form 2012 source income. Irs 1040 ez form 2012 Investment Income This category includes such income as interest, dividends, rents, and royalties. Irs 1040 ez form 2012 Interest income. Irs 1040 ez form 2012   The source of interest income is generally determined by the residence of the payer. Irs 1040 ez form 2012 Interest paid by corporations created or organized in a relevant possession (possession corporation) or by individuals who are bona fide residents of a relevant possession is considered income from sources within that possession. Irs 1040 ez form 2012   However, there is an exception to this rule if you are a bona fide resident of a relevant possession, receive interest from a corporation created or organized in that possession, and are a shareholder of that corporation who owns, directly or indirectly, at least 10% of the total voting stock of the corporation. Irs 1040 ez form 2012 See Regulations section 1. Irs 1040 ez form 2012 937-2(i) for more information. Irs 1040 ez form 2012 Dividends. Irs 1040 ez form 2012   Generally, dividends paid by a corporation created or organized in a relevant possession will be considered income from sources within that possession. Irs 1040 ez form 2012 There are additional rules for bona fide residents of a relevant possession who receive dividend income from possession corporations, and who own, directly or indirectly, at least 10% of the voting stock of the corporation. Irs 1040 ez form 2012 For more information, see Regulations section 1. Irs 1040 ez form 2012 937-2(g). Irs 1040 ez form 2012 Rental income. Irs 1040 ez form 2012   Rents from property located in a relevant possession are treated as income from sources within that possession. Irs 1040 ez form 2012 Royalties. Irs 1040 ez form 2012   Royalties from natural resources located in a relevant possession are considered income from sources within that possession. Irs 1040 ez form 2012   Also considered possession source income are royalties received for the use of, or for the privilege of using, in a relevant possession, patents, copyrights, secret processes and formulas, goodwill, trademarks, trade brands, franchises, and other like property. Irs 1040 ez form 2012 Sales or Other Dispositions of Property The source rules for sales or other dispositions of property are varied. Irs 1040 ez form 2012 The most common situations are discussed below. Irs 1040 ez form 2012 Real property. Irs 1040 ez form 2012   Real property includes land and buildings, and generally anything built on, growing on, or attached to land. Irs 1040 ez form 2012 The location of the property generally determines the source of income from the sale. Irs 1040 ez form 2012 For example, if you are a bona fide resident of Guam and sell your home that is located in Guam, the gain on the sale is sourced in Guam. Irs 1040 ez form 2012 If, however, the home you sold was located in the United States, the gain is U. Irs 1040 ez form 2012 S. Irs 1040 ez form 2012 source income. Irs 1040 ez form 2012 Personal property. Irs 1040 ez form 2012   The term “personal property” refers to property (such as machinery, equipment, or furniture) that is not real property. Irs 1040 ez form 2012 Generally, gain (or loss) from the sale or other disposition is sourced according to the seller's tax home. Irs 1040 ez form 2012 If personal property is sold by a bona fide resident of a relevant possession, the gain (or loss) from the sale is treated as sourced within that possession. Irs 1040 ez form 2012   This rule does not apply to the sale of inventory, intangible property, depreciable personal property, or property sold through a foreign office or fixed place of business. Irs 1040 ez form 2012 The rules applying to sales of inventory are discussed below. Irs 1040 ez form 2012 For information on sales of the other types of property mentioned, see Internal Revenue Code section 865. Irs 1040 ez form 2012 Inventory. Irs 1040 ez form 2012   Your inventory is personal property that is stock in trade or that is held primarily for sale to customers in the ordinary course of your trade or business. Irs 1040 ez form 2012 The source of income from the sale of inventory depends on whether the inventory was purchased or produced. Irs 1040 ez form 2012 Purchased. Irs 1040 ez form 2012   Income from the sale of inventory that you purchased is sourced where you sell the property. Irs 1040 ez form 2012 Generally, this is where title to the property passes to the buyer. Irs 1040 ez form 2012 Produced. Irs 1040 ez form 2012   Income from the sale of inventory that you produced in a relevant possession and sold outside that possession (or vice versa) is sourced based on an allocation. Irs 1040 ez form 2012 For information on making the allocation, see Regulations section 1. Irs 1040 ez form 2012 863-3(f). Irs 1040 ez form 2012 Special Rules for Gains From Dispositions of Certain Property There are special rules for gains from dispositions of certain investment property (for example, stocks, bonds, debt instruments, diamonds, and gold) owned by a U. Irs 1040 ez form 2012 S. Irs 1040 ez form 2012 citizen or resident alien prior to becoming a bona fide resident of a possession. Irs 1040 ez form 2012 You are subject to these special rules if you meet both of the following conditions. Irs 1040 ez form 2012 For the tax year for which the source of the gain must be determined, you are a bona fide resident of the relevant possession. Irs 1040 ez form 2012 For any of the 10 years preceding that year, you were a citizen or resident alien of the United States (other than a bona fide resident of the relevant possession). Irs 1040 ez form 2012 If you meet these conditions, gains from the disposition of this property will not be treated as income from sources within the relevant possession for purposes of the Internal Revenue Code. Irs 1040 ez form 2012 Accordingly, bona fide residents of American Samoa and Puerto Rico, for example, may not exclude the gain on their U. Irs 1040 ez form 2012 S. Irs 1040 ez form 2012 tax return. Irs 1040 ez form 2012 (See chapter 3 for additional filing information. Irs 1040 ez form 2012 ) With respect to the CNMI, Guam, and the USVI, the gain from the disposition of this property will not meet the requirements for certain tax rules that may allow bona fide residents of those possessions to reduce or obtain a rebate of taxes on income from sources within the relevant possessions. Irs 1040 ez form 2012 These rules apply to dispositions after April 11, 2005. Irs 1040 ez form 2012 For details, see Regulations section 1. Irs 1040 ez form 2012 937-2(f)(1) and Examples 1 and 2 of section 1. Irs 1040 ez form 2012 937-2(k). Irs 1040 ez form 2012 Example 1. Irs 1040 ez form 2012 In 2007, Cheryl Jones, a U. Irs 1040 ez form 2012 S. Irs 1040 ez form 2012 citizen, lived in the United States and paid $1,000 for 100 shares of stock in the Rose Corporation, a U. Irs 1040 ez form 2012 S. Irs 1040 ez form 2012 corporation listed on the New York Stock Exchange. Irs 1040 ez form 2012 On March 1, 2010, she moved to Puerto Rico and changed her tax home to Puerto Rico on the same date. Irs 1040 ez form 2012 Cheryl satisfied the presence test in 2010 and, under the year-of-move exception, she was considered a bona fide resident of Puerto Rico for the rest of 2010. Irs 1040 ez form 2012 On March 1, 2010, the closing value of Cheryl's stock in the Rose Corporation was $2,000. Irs 1040 ez form 2012 On January 5, 2013, while still a bona fide resident of Puerto Rico, Cheryl sold all her Rose Corporation stock for $7,000. Irs 1040 ez form 2012 Under the earlier rules, none of Cheryl's $6,000 gain will be treated as income from sources within Puerto Rico. Irs 1040 ez form 2012 The source rules discussed in the preceding paragraphs supplement, and may apply in conjunction with, an existing special rule. Irs 1040 ez form 2012 This existing special rule applies if you are a U. Irs 1040 ez form 2012 S. Irs 1040 ez form 2012 citizen or resident alien who becomes a bona fide resident of American Samoa, the CNMI, or Guam, and who has gain from the disposition of certain U. Irs 1040 ez form 2012 S. Irs 1040 ez form 2012 assets during the 10-year period beginning when you became a bona fide resident. Irs 1040 ez form 2012 The gain is U. Irs 1040 ez form 2012 S. Irs 1040 ez form 2012 source income that generally is subject to U. Irs 1040 ez form 2012 S. Irs 1040 ez form 2012 tax if the property is either (1) located in the United States; (2) stock issued by a U. Irs 1040 ez form 2012 S. Irs 1040 ez form 2012 corporation or a debt obligation of a U. Irs 1040 ez form 2012 S. Irs 1040 ez form 2012 person or of the United States, a state (or political subdivision), or the District of Columbia; or (3) property that has a basis in whole or in part by reference to property described in (1) or (2). Irs 1040 ez form 2012 See chapter 3 for filing information. Irs 1040 ez form 2012 Special election. Irs 1040 ez form 2012   For dispositions after April 11, 2005, you can choose to treat the part of gain (or loss) attributable to the time you held the property while a bona fide resident of the relevant possession (the possession holding period) as gain (or loss) from sources within that possession. Irs 1040 ez form 2012 Make the election by reporting the gain attributable to the possession holding period on your income tax return for the year of disposition. Irs 1040 ez form 2012 This election overrides both of the special rules discussed earlier. Irs 1040 ez form 2012   There are two methods for figuring the gain for the possession holding period, one for marketable securities and another for other types of investment property. Irs 1040 ez form 2012 Marketable securities. Irs 1040 ez form 2012   Marketable securities are those actively traded on an established financial market, such as stock in a publicly held corporation. Irs 1040 ez form 2012 Under the special election, allocate the gain (or loss) by figuring the appreciation separately for your possession and U. Irs 1040 ez form 2012 S. Irs 1040 ez form 2012 holding periods. Irs 1040 ez form 2012   Your possession holding period begins on the first day you do not have a tax home outside the relevant possession. Irs 1040 ez form 2012 The gain (or loss) attributable to the possession holding period is the difference in fair market value of the security at the close of the market on the first and last days of this holding period. Irs 1040 ez form 2012 This is your gain (or loss) that is treated as being from sources within the relevant possession. Irs 1040 ez form 2012 If you were a bona fide resident of the relevant possession for more than one continuous period, combine the gains (or losses) from each possession holding period. Irs 1040 ez form 2012 Example 2. Irs 1040 ez form 2012 Assume the same facts as in Example 1, except that Cheryl makes the special election to allocate the gain between her U. Irs 1040 ez form 2012 S. Irs 1040 ez form 2012 and possession holding periods. Irs 1040 ez form 2012 Cheryl's possession holding period began March 1, 2010, the date her tax home changed to Puerto Rico. Irs 1040 ez form 2012 Therefore, the portion of gain attributable to her possession holding period is $5,000 ($7,000 sale price – $2,000 closing value on first day of the possession holding period). Irs 1040 ez form 2012 By reporting $5,000 of her $6,000 gain as Puerto Rico source income on her 2013 Puerto Rico tax return (and the remainder as non-Puerto Rico source income), Cheryl elects to treat that amount as Puerto Rico source income. Irs 1040 ez form 2012 Other personal property. Irs 1040 ez form 2012   For personal property other than marketable securities, use a time-based allocation. Irs 1040 ez form 2012 Figure the gain (or loss) attributable to the possession holding period by multiplying your total gain (or loss) by the following fraction. Irs 1040 ez form 2012      Number of days in the  possession holding period     Total number of days  in your holding period         The result is your gain (or loss) that is treated as being from sources within the relevant possession. Irs 1040 ez form 2012 Example 3. Irs 1040 ez form 2012 In addition to the stock in Rose Corporation, Cheryl acquired a 5% interest in the Alder Partnership on January 1, 2009. Irs 1040 ez form 2012 On March 1, 2010, when she established bona fide residency in Puerto Rico, her partnership interest was not considered a marketable security. Irs 1040 ez form 2012 On September 16, 2013, while still a bona fide resident of Puerto Rico, Cheryl sold her interest in Alder Partnership for a $100,000 gain. Irs 1040 ez form 2012 She had owned the interest for a total of 1,720 days. Irs 1040 ez form 2012 Cheryl's possession holding period (from March 1, 2010, through September 16, 2013) is 1,296 days. Irs 1040 ez form 2012 The portion of her gain attributable to Puerto Rico is $75,349 ($100,000 x (1,296 Puerto Rico days ÷ 1,720 total days)). Irs 1040 ez form 2012 By reporting $75,349 of her $100,000 gain as Puerto Rico source income on her 2013 Puerto Rico tax return (and the remainder as non-Puerto Rico source income), Cheryl elects to treat that amount as Puerto Rico source income. Irs 1040 ez form 2012 Scholarships, Fellowships, Grants, Prizes, and Awards The source of these types of income is generally the residence of the payer, regardless of who actually disburses the funds. Irs 1040 ez form 2012 Therefore, in order to be possession source income, the payer must be a resident of the relevant possession, such as an individual who is a bona fide resident or a corporation created or organized in that possession. Irs 1040 ez form 2012 These rules do not apply to amounts paid as salary or other compensation for services. Irs 1040 ez form 2012 See Compensation for Labor or Personal Services, earlier in this chapter, for the source rules that apply. Irs 1040 ez form 2012 Effectively Connected Income In limited circumstances, some kinds of income from sources outside the relevant possession must be treated as effectively connected with a trade or business in that possession. Irs 1040 ez form 2012 These circumstances are listed below. Irs 1040 ez form 2012 You have an office or other fixed place of business in the relevant possession to which the income can be attributed. Irs 1040 ez form 2012 That office or place of business is a material factor in producing the income. Irs 1040 ez form 2012 The income is produced in the ordinary course of the trade or business carried on through that office or other fixed place of business. Irs 1040 ez form 2012 An office or other fixed place of business is a material factor if it significantly contributes to, and is an essential economic element in, the earning of the income. Irs 1040 ez form 2012 The three kinds of income from sources outside the relevant possession to which these rules apply are the following. Irs 1040 ez form 2012 Rents and royalties for the use of, or for the privilege of using, intangible personal property located outside the relevant possession or from any interest in such property. Irs 1040 ez form 2012 Included are rents or royalties for the use of, or for the privilege of using, outside the relevant possession, patents, copyrights, secret processes and formulas, goodwill, trademarks, trade brands, franchises, and similar properties if the rents or royalties are from the active conduct of a trade or business in the relevant possession. Irs 1040 ez form 2012 Dividends or interest from the active conduct of a banking, financing, or similar business in the relevant possession. Irs 1040 ez form 2012 Income, gain, or loss from the sale or exchange outside the relevant possession, through the office or other fixed place of business in the relevant possession, of: Stock in trade, Property that would be included in inventory if on hand at the end of the tax year, or Property held primarily for sale to customers in the ordinary course of business. Irs 1040 ez form 2012 Item (3) will not apply if you sold the property for use, consumption, or disposition outside the relevant possession and an office or other fixed place of business in a foreign country was a material factor in the sale. Irs 1040 ez form 2012 Example. Irs 1040 ez form 2012 Marcy Jackson is a bona fide resident of American Samoa. Irs 1040 ez form 2012 Her business, which she conducts from an office in American Samoa, is developing and selling specialized computer software. Irs 1040 ez form 2012 A software purchaser will frequently pay Marcy an additional amount to install the software on the purchaser's operating system and to ensure that the software is functioning properly. Irs 1040 ez form 2012 Marcy installs the software at the purchaser's place of business, which may be in American Samoa, in the United States, or in another country. Irs 1040 ez form 2012 The income from selling the software is effectively connected with the conduct of Marcy's business in American Samoa, even though the product's destination may be outside the possession. Irs 1040 ez form 2012 However, the compensation she receives for installing the software (personal services) outside of American Samoa is not effectively connected with the conduct of her business in the possession—the income is sourced where she performs the services. Irs 1040 ez form 2012 Prev  Up  Next   Home   More Online Publications