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

1. Get Answers

Your online questions are customized to your unique tax situation.

2. Maximize your Refund

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

3. E-File for FREE

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

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

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

Irs 2012 Tax Forms 1040ez

Tax Form 20111040x CalculatorDoes Turbotax Do State TaxesHow To File An Amended Tax Return For 2009Back Tax HomeFederal 1040ezTax Act 20121040nr Form 2011Free 1040ez FormFile 2011 Taxes TurbotaxCan I File My State Taxes For FreeIrs Form 1040xCan I Efile My 2011 Tax ReturnFile State For FreePrepare 2011 TaxesHelp Me File 1040ez2012 Federal Tax Form10ez2010 Tax Return FormFile Form 1040ez1040 Ez Irs2012 Income Tax ReturnAmended Kansas Tax Return1040ez EfileIrs Income Tax Forms 2011Amended State Tax FormsFile My 2011 Taxes Online FreeAmending 2012 Tax Return1040ez Tax Form InstructionsHow To Fill Out A 1040x Step By StepFree Online Federal And State Tax FilingTax Forms 2011 1040BacktaxesHow To Amend 1040ez Tax FormInstructions For Filing An Amended Tax ReturnMypay Dfas MilHow Do I File An Amended Tax Return For 2011Form 1040aHow To Fill Out 1040xFile A Tax Extension Online

Irs 2012 Tax Forms 1040ez

Irs 2012 tax forms 1040ez Publication 15-B - Main Content Table of Contents 1. Irs 2012 tax forms 1040ez Fringe Benefit OverviewAre Fringe Benefits Taxable? Cafeteria Plans Simple Cafeteria Plans 2. Irs 2012 tax forms 1040ez Fringe Benefit Exclusion RulesAccident and Health Benefits Achievement Awards Adoption Assistance Athletic Facilities De Minimis (Minimal) Benefits Dependent Care Assistance Educational Assistance Employee Discounts Employee Stock Options Employer-Provided Cell Phones Group-Term Life Insurance Coverage Health Savings Accounts Lodging on Your Business Premises Meals Moving Expense Reimbursements No-Additional-Cost Services Retirement Planning Services Transportation (Commuting) Benefits Tuition Reduction Working Condition Benefits 3. Irs 2012 tax forms 1040ez Fringe Benefit Valuation RulesGeneral Valuation Rule Cents-Per-Mile Rule Commuting Rule Lease Value Rule Unsafe Conditions Commuting Rule 4. Irs 2012 tax forms 1040ez Rules for Withholding, Depositing, and ReportingTransfer of property. Irs 2012 tax forms 1040ez Amount of deposit. Irs 2012 tax forms 1040ez Limitation. Irs 2012 tax forms 1040ez Conformity rules. Irs 2012 tax forms 1040ez Election not to withhold income tax. Irs 2012 tax forms 1040ez How To Get Tax Help 1. Irs 2012 tax forms 1040ez Fringe Benefit Overview A fringe benefit is a form of pay for the performance of services. Irs 2012 tax forms 1040ez For example, you provide an employee with a fringe benefit when you allow the employee to use a business vehicle to commute to and from work. Irs 2012 tax forms 1040ez Performance of services. Irs 2012 tax forms 1040ez   A person who performs services for you does not have to be your employee. Irs 2012 tax forms 1040ez A person may perform services for you as an independent contractor, partner, or director. Irs 2012 tax forms 1040ez Also, for fringe benefit purposes, treat a person who agrees not to perform services (such as under a covenant not to compete) as performing services. Irs 2012 tax forms 1040ez Provider of benefit. Irs 2012 tax forms 1040ez   You are the provider of a fringe benefit if it is provided for services performed for you. Irs 2012 tax forms 1040ez You are considered the provider of a fringe benefit even if a third party, such as your client or customer, provides the benefit to your employee for services the employee performs for you. Irs 2012 tax forms 1040ez For example, if, in exchange for goods or services, your customer provides day care services as a fringe benefit to your employees for services they provide for you as their employer, then you are the provider of this fringe benefit even though the customer is actually providing the day care. Irs 2012 tax forms 1040ez Recipient of benefit. Irs 2012 tax forms 1040ez   The person who performs services for you is considered the recipient of a fringe benefit provided for those services. Irs 2012 tax forms 1040ez That person may be considered the recipient even if the benefit is provided to someone who did not perform services for you. Irs 2012 tax forms 1040ez For example, your employee may be the recipient of a fringe benefit you provide to a member of the employee's family. Irs 2012 tax forms 1040ez Are Fringe Benefits Taxable? Any fringe benefit you provide is taxable and must be included in the recipient's pay unless the law specifically excludes it. Irs 2012 tax forms 1040ez Section 2 discusses the exclusions that apply to certain fringe benefits. Irs 2012 tax forms 1040ez Any benefit not excluded under the rules discussed in section 2 is taxable. Irs 2012 tax forms 1040ez Including taxable benefits in pay. Irs 2012 tax forms 1040ez   You must include in a recipient's pay the amount by which the value of a fringe benefit is more than the sum of the following amounts. Irs 2012 tax forms 1040ez Any amount the law excludes from pay. Irs 2012 tax forms 1040ez Any amount the recipient paid for the benefit. Irs 2012 tax forms 1040ez The rules used to determine the value of a fringe benefit are discussed in section 3. Irs 2012 tax forms 1040ez   If the recipient of a taxable fringe benefit is your employee, the benefit is subject to employment taxes and must be reported on Form W-2, Wage and Tax Statement. Irs 2012 tax forms 1040ez However, you can use special rules to withhold, deposit, and report the employment taxes. Irs 2012 tax forms 1040ez These rules are discussed in section 4. Irs 2012 tax forms 1040ez   If the recipient of a taxable fringe benefit is not your employee, the benefit is not subject to employment taxes. Irs 2012 tax forms 1040ez However, you may have to report the benefit on one of the following information returns. Irs 2012 tax forms 1040ez If the recipient receives the benefit as: Use: An independent contractor Form 1099-MISC, Miscellaneous Income A partner Schedule K-1 (Form 1065), Partner's Share of Income, Deductions, Credits, etc. Irs 2012 tax forms 1040ez For more information, see the instructions for the forms listed above. Irs 2012 tax forms 1040ez Cafeteria Plans A cafeteria plan, including a flexible spending arrangement, is a written plan that allows your employees to choose between receiving cash or taxable benefits instead of certain qualified benefits for which the law provides an exclusion from wages. Irs 2012 tax forms 1040ez If an employee chooses to receive a qualified benefit under the plan, the fact that the employee could have received cash or a taxable benefit instead will not make the qualified benefit taxable. Irs 2012 tax forms 1040ez Generally, a cafeteria plan does not include any plan that offers a benefit that defers pay. Irs 2012 tax forms 1040ez However, a cafeteria plan can include a qualified 401(k) plan as a benefit. Irs 2012 tax forms 1040ez Also, certain life insurance plans maintained by educational institutions can be offered as a benefit even though they defer pay. Irs 2012 tax forms 1040ez Qualified benefits. Irs 2012 tax forms 1040ez   A cafeteria plan can include the following benefits discussed in section 2. Irs 2012 tax forms 1040ez Accident and health benefits (but not Archer medical savings accounts (Archer MSAs) or long-term care insurance). Irs 2012 tax forms 1040ez Adoption assistance. Irs 2012 tax forms 1040ez Dependent care assistance. Irs 2012 tax forms 1040ez Group-term life insurance coverage (including costs that cannot be excluded from wages). Irs 2012 tax forms 1040ez Health savings accounts (HSAs). Irs 2012 tax forms 1040ez Distributions from an HSA may be used to pay eligible long-term care insurance premiums or qualified long-term care services. Irs 2012 tax forms 1040ez Benefits not allowed. Irs 2012 tax forms 1040ez   A cafeteria plan cannot include the following benefits discussed in section 2. Irs 2012 tax forms 1040ez Archer MSAs. Irs 2012 tax forms 1040ez See Accident and Health Benefits in section 2. Irs 2012 tax forms 1040ez Athletic facilities. Irs 2012 tax forms 1040ez De minimis (minimal) benefits. Irs 2012 tax forms 1040ez Educational assistance. Irs 2012 tax forms 1040ez Employee discounts. Irs 2012 tax forms 1040ez Employer-provided cell phones. Irs 2012 tax forms 1040ez Lodging on your business premises. Irs 2012 tax forms 1040ez Meals. Irs 2012 tax forms 1040ez Moving expense reimbursements. Irs 2012 tax forms 1040ez No-additional-cost services. Irs 2012 tax forms 1040ez Transportation (commuting) benefits. Irs 2012 tax forms 1040ez Tuition reduction. Irs 2012 tax forms 1040ez Working condition benefits. Irs 2012 tax forms 1040ez It also cannot include scholarships or fellowships (discussed in Publication 970, Tax Benefits for Education). Irs 2012 tax forms 1040ez $2,500 limit on a health flexible spending arrangement (FSA). Irs 2012 tax forms 1040ez   For plan years beginning after December 31, 2012, a cafeteria plan may not allow an employee to request salary reduction contributions for a health FSA in excess of $2,500. Irs 2012 tax forms 1040ez For plan years beginning after December 31, 2013, the limit is unchanged at $2,500. Irs 2012 tax forms 1040ez   A cafeteria plan offering a health FSA must be amended to specify the $2,500 limit (or any lower limit set by the employer). Irs 2012 tax forms 1040ez While cafeteria plans generally must be amended on a prospective basis, an amendment that is adopted on or before December 31, 2014, may be made effective retroactively, provided that in operation the cafeteria plan meets the limit for plan years beginning after December 31, 2012. Irs 2012 tax forms 1040ez A cafeteria plan that does not limit health FSA contributions to the dollar limit is not a cafeteria plan and all benefits offered under the plan are includible in the employee's gross income. Irs 2012 tax forms 1040ez   For more information, see Notice 2012-40, 2012-26 I. Irs 2012 tax forms 1040ez R. Irs 2012 tax forms 1040ez B. Irs 2012 tax forms 1040ez 1046, available at www. Irs 2012 tax forms 1040ez irs. Irs 2012 tax forms 1040ez gov/irb/2012-26_IRB/ar09. Irs 2012 tax forms 1040ez html. Irs 2012 tax forms 1040ez Employee. Irs 2012 tax forms 1040ez   For these plans, treat the following individuals as employees. Irs 2012 tax forms 1040ez A current common-law employee. Irs 2012 tax forms 1040ez See section 2 in Publication 15 (Circular E) for more information. Irs 2012 tax forms 1040ez A full-time life insurance agent who is a current statutory employee. Irs 2012 tax forms 1040ez A leased employee who has provided services to you on a substantially full-time basis for at least a year if the services are performed under your primary direction or control. Irs 2012 tax forms 1040ez Exception for S corporation shareholders. Irs 2012 tax forms 1040ez   Do not treat a 2% shareholder of an S corporation as an employee of the corporation for this purpose. Irs 2012 tax forms 1040ez A 2% shareholder for this purpose is someone who directly or indirectly owns (at any time during the year) more than 2% of the corporation's stock or stock with more than 2% of the voting power. Irs 2012 tax forms 1040ez Treat a 2% shareholder as you would a partner in a partnership for fringe benefit purposes, but do not treat the benefit as a reduction in distributions to the 2% shareholder. Irs 2012 tax forms 1040ez Plans that favor highly compensated employees. Irs 2012 tax forms 1040ez   If your plan favors highly compensated employees as to eligibility to participate, contributions, or benefits, you must include in their wages the value of taxable benefits they could have selected. Irs 2012 tax forms 1040ez A plan you maintain under a collective bargaining agreement does not favor highly compensated employees. Irs 2012 tax forms 1040ez   A highly compensated employee for this purpose is any of the following employees. Irs 2012 tax forms 1040ez An officer. Irs 2012 tax forms 1040ez A shareholder who owns more than 5% of the voting power or value of all classes of the employer's stock. Irs 2012 tax forms 1040ez An employee who is highly compensated based on the facts and circumstances. Irs 2012 tax forms 1040ez A spouse or dependent of a person described in (1), (2), or (3). Irs 2012 tax forms 1040ez Plans that favor key employees. Irs 2012 tax forms 1040ez   If your plan favors key employees, you must include in their wages the value of taxable benefits they could have selected. Irs 2012 tax forms 1040ez A plan favors key employees if more than 25% of the total of the nontaxable benefits you provide for all employees under the plan go to key employees. Irs 2012 tax forms 1040ez However, a plan you maintain under a collective bargaining agreement does not favor key employees. Irs 2012 tax forms 1040ez   A key employee during 2014 is generally an employee who is either of the following. Irs 2012 tax forms 1040ez An officer having annual pay of more than $170,000. Irs 2012 tax forms 1040ez An employee who for 2014 is either of the following. Irs 2012 tax forms 1040ez A 5% owner of your business. Irs 2012 tax forms 1040ez A 1% owner of your business whose annual pay was more than $150,000. Irs 2012 tax forms 1040ez Simple Cafeteria Plans Eligible employers meeting contribution requirements and eligibility and participation requirements can establish a simple cafeteria plan. Irs 2012 tax forms 1040ez Simple cafeteria plans are treated as meeting the nondiscrimination requirements of a cafeteria plan and certain benefits under a cafeteria plan. Irs 2012 tax forms 1040ez Eligible employer. Irs 2012 tax forms 1040ez   You are an eligible employer if you employ an average of 100 or fewer employees during either of the 2 preceding years. Irs 2012 tax forms 1040ez If your business was not in existence throughout the preceding year, you are eligible if you reasonably expect to employ an average of 100 or fewer employees in the current year. Irs 2012 tax forms 1040ez If you establish a simple cafeteria plan in a year that you employ an average of 100 or fewer employees, you are considered an eligible employer for any subsequent year as long as you do not employ an average of 200 or more employees in a subsequent year. Irs 2012 tax forms 1040ez Eligibility and participation requirements. Irs 2012 tax forms 1040ez   These requirements are met if all employees who had at least 1,000 hours of service for the preceding plan year are eligible to participate and each employee eligible to participate in the plan may elect any benefit available under the plan. Irs 2012 tax forms 1040ez You may elect to exclude from the plan employees who: Are under age 21 before the close of the plan year, Have less than 1 year of service with you as of any day during the plan year, Are covered under a collective bargaining agreement, or Are nonresident aliens working outside the United States whose income did not come from a U. Irs 2012 tax forms 1040ez S. Irs 2012 tax forms 1040ez source. Irs 2012 tax forms 1040ez Contribution requirements. Irs 2012 tax forms 1040ez   You must make a contribution to provide qualified benefits on behalf of each qualified employee in an amount equal to: A uniform percentage (not less than 2%) of the employee’s compensation for the plan year, or An amount which is at least 6% of the employee’s compensation for the plan year or twice the amount of the salary reduction contributions of each qualified employee, whichever is less. Irs 2012 tax forms 1040ez If the contribution requirements are met using option (2), the rate of contribution to any salary reduction contribution of a highly compensated or key employee can not be greater than the rate of contribution to any other employee. Irs 2012 tax forms 1040ez More information. Irs 2012 tax forms 1040ez   For more information about cafeteria plans, see section 125 of the Internal Revenue Code and its regulations. Irs 2012 tax forms 1040ez 2. Irs 2012 tax forms 1040ez Fringe Benefit Exclusion Rules This section discusses the exclusion rules that apply to fringe benefits. Irs 2012 tax forms 1040ez These rules exclude all or part of the value of certain benefits from the recipient's pay. Irs 2012 tax forms 1040ez The excluded benefits are not subject to federal income tax withholding. Irs 2012 tax forms 1040ez Also, in most cases, they are not subject to social security, Medicare, or federal unemployment (FUTA) tax and are not reported on Form W-2. Irs 2012 tax forms 1040ez This section discusses the exclusion rules for the following fringe benefits. Irs 2012 tax forms 1040ez Accident and health benefits. Irs 2012 tax forms 1040ez Achievement awards. Irs 2012 tax forms 1040ez Adoption assistance. Irs 2012 tax forms 1040ez Athletic facilities. Irs 2012 tax forms 1040ez De minimis (minimal) benefits. Irs 2012 tax forms 1040ez Dependent care assistance. Irs 2012 tax forms 1040ez Educational assistance. Irs 2012 tax forms 1040ez Employee discounts. Irs 2012 tax forms 1040ez Employee stock options. Irs 2012 tax forms 1040ez Employer-provided cell phones. Irs 2012 tax forms 1040ez Group-term life insurance coverage. Irs 2012 tax forms 1040ez Health savings accounts (HSAs). Irs 2012 tax forms 1040ez Lodging on your business premises. Irs 2012 tax forms 1040ez Meals. Irs 2012 tax forms 1040ez Moving expense reimbursements. Irs 2012 tax forms 1040ez No-additional-cost services. Irs 2012 tax forms 1040ez Retirement planning services. Irs 2012 tax forms 1040ez Transportation (commuting) benefits. Irs 2012 tax forms 1040ez Tuition reduction. Irs 2012 tax forms 1040ez Working condition benefits. Irs 2012 tax forms 1040ez See Table 2-1, later, for an overview of the employment tax treatment of these benefits. Irs 2012 tax forms 1040ez Table 2-1. Irs 2012 tax forms 1040ez Special Rules for Various Types of Fringe Benefits (For more information, see the full discussion in this section. Irs 2012 tax forms 1040ez ) Treatment Under Employment Taxes Type of Fringe Benefit Income Tax Withholding Social Security and Medicare (including Additional Medicare Tax when wages are paid in excess of $200,000) Federal Unemployment (FUTA) Accident and health benefits Exempt1,2, except for long-term care benefits provided through a flexible spending or similar arrangement. Irs 2012 tax forms 1040ez Exempt, except for certain payments to S corporation employees who are 2% shareholders. Irs 2012 tax forms 1040ez Exempt Achievement awards Exempt1 up to $1,600 for qualified plan awards ($400 for nonqualified awards). Irs 2012 tax forms 1040ez Adoption assistance Exempt1,3 Taxable Taxable Athletic facilities Exempt if substantially all use during the calendar year is by employees, their spouses, and their dependent children and the facility is operated by the employer on premises owned or leased by the employer. Irs 2012 tax forms 1040ez De minimis (minimal) benefits Exempt Exempt Exempt Dependent care assistance Exempt3 up to certain limits, $5,000 ($2,500 for married employee filing separate return). Irs 2012 tax forms 1040ez Educational assistance Exempt up to $5,250 of benefits each year. Irs 2012 tax forms 1040ez (See Educational Assistance , later in this section. Irs 2012 tax forms 1040ez ) Employee discounts Exempt3 up to certain limits. Irs 2012 tax forms 1040ez (See Employee Discounts , later in this section. Irs 2012 tax forms 1040ez ) Employee stock options See Employee Stock Options , later in this section. Irs 2012 tax forms 1040ez Employer-provided cell phones Exempt if provided primarily for noncompensatory business purposes. Irs 2012 tax forms 1040ez Group-term life insurance coverage Exempt Exempt1,4, 7 up to cost of $50,000 of coverage. Irs 2012 tax forms 1040ez (Special rules apply to former employees. Irs 2012 tax forms 1040ez ) Exempt Health savings accounts (HSAs) Exempt for qualified individuals up to the HSA contribution limits. Irs 2012 tax forms 1040ez (See Health Savings Accounts , later in this section. Irs 2012 tax forms 1040ez ) Lodging on your business premises Exempt1 if furnished for your convenience as a condition of employment. Irs 2012 tax forms 1040ez Meals Exempt if furnished on your business premises for your convenience. Irs 2012 tax forms 1040ez Exempt if de minimis. Irs 2012 tax forms 1040ez Moving expense reimbursements Exempt1 if expenses would be deductible if the employee had paid them. Irs 2012 tax forms 1040ez No-additional-cost services Exempt3 Exempt3 Exempt3 Retirement planning services Exempt5 Exempt5 Exempt5 Transportation (commuting) benefits Exempt1 up to certain limits if for rides in a commuter highway vehicle and/or transit passes ($130), qualified parking ($250), or qualified bicycle commuting reimbursement6 ($20). Irs 2012 tax forms 1040ez (See Transportation (Commuting) Benefits , later in this section. Irs 2012 tax forms 1040ez ) Exempt if de minimis. Irs 2012 tax forms 1040ez Tuition reduction Exempt3 if for undergraduate education (or graduate education if the employee performs teaching or research activities). Irs 2012 tax forms 1040ez Working condition benefits Exempt Exempt Exempt 1 Exemption does not apply to S corporation employees who are 2% shareholders. Irs 2012 tax forms 1040ez 2 Exemption does not apply to certain highly compensated employees under a self-insured plan that favors those employees. Irs 2012 tax forms 1040ez 3 Exemption does not apply to certain highly compensated employees under a program that favors those employees. Irs 2012 tax forms 1040ez 4 Exemption does not apply to certain key employees under a plan that favors those employees. Irs 2012 tax forms 1040ez 5 Exemption does not apply to services for tax preparation, accounting, legal, or brokerage services. Irs 2012 tax forms 1040ez 6 If the employee receives a qualified bicycle commuting reimbursement in a qualified bicycle commuting month, the employee cannot receive commuter highway vehicle, transit pass, or qualified parking benefits in that same month. Irs 2012 tax forms 1040ez 7 You must include in your employee's wages the cost of group-term life insurance beyond $50,000 worth of coverage, reduced by the amount the employee paid toward the insurance. Irs 2012 tax forms 1040ez Report it as wages in boxes 1, 3, and 5 of the employee's Form W-2. Irs 2012 tax forms 1040ez Also, show it in box 12 with code “C. Irs 2012 tax forms 1040ez ” The amount is subject to social security and Medicare taxes, and you may, at your option, withhold federal income tax. Irs 2012 tax forms 1040ez Accident and Health Benefits This exclusion applies to contributions you make to an accident or health plan for an employee, including the following. Irs 2012 tax forms 1040ez Contributions to the cost of accident or health insurance including qualified long-term care insurance. Irs 2012 tax forms 1040ez Contributions to a separate trust or fund that directly or through insurance provides accident or health benefits. Irs 2012 tax forms 1040ez Contributions to Archer MSAs or health savings accounts (discussed in Publication 969, Health Savings Accounts and Other Tax-Favored Health Plans). Irs 2012 tax forms 1040ez This exclusion also applies to payments you directly or indirectly make to an employee under an accident or health plan for employees that are either of the following. Irs 2012 tax forms 1040ez Payments or reimbursements of medical expenses. Irs 2012 tax forms 1040ez Payments for specific injuries or illnesses (such as the loss of the use of an arm or leg). Irs 2012 tax forms 1040ez The payments must be figured without regard to any period of absence from work. Irs 2012 tax forms 1040ez Accident or health plan. Irs 2012 tax forms 1040ez   This is an arrangement that provides benefits for your employees, their spouses, their dependents, and their children (under age 27) in the event of personal injury or sickness. Irs 2012 tax forms 1040ez The plan may be insured or noninsured and does not need to be in writing. Irs 2012 tax forms 1040ez Employee. Irs 2012 tax forms 1040ez   For this exclusion, treat the following individuals as employees. Irs 2012 tax forms 1040ez A current common-law employee. Irs 2012 tax forms 1040ez A full-time life insurance agent who is a current statutory employee. Irs 2012 tax forms 1040ez A retired employee. Irs 2012 tax forms 1040ez A former employee you maintain coverage for based on the employment relationship. Irs 2012 tax forms 1040ez A widow or widower of an individual who died while an employee. Irs 2012 tax forms 1040ez A widow or widower of a retired employee. Irs 2012 tax forms 1040ez For the exclusion of contributions to an accident or health plan, a leased employee who has provided services to you on a substantially full-time basis for at least a year if the services are performed under your primary direction or control. Irs 2012 tax forms 1040ez Special rule for certain government plans. Irs 2012 tax forms 1040ez   For certain government accident and health plans, payments to a deceased plan participant's beneficiary may qualify for the exclusion from gross income if the other requirements for exclusion are met. Irs 2012 tax forms 1040ez See section 105(j) for details. Irs 2012 tax forms 1040ez Exception for S corporation shareholders. Irs 2012 tax forms 1040ez   Do not treat a 2% shareholder of an S corporation as an employee of the corporation for this purpose. Irs 2012 tax forms 1040ez A 2% shareholder is someone who directly or indirectly owns (at any time during the year) more than 2% of the corporation's stock or stock with more than 2% of the voting power. Irs 2012 tax forms 1040ez Treat a 2% shareholder as you would a partner in a partnership for fringe benefit purposes, but do not treat the benefit as a reduction in distributions to the 2% shareholder. Irs 2012 tax forms 1040ez Exclusion from wages. Irs 2012 tax forms 1040ez   You can generally exclude the value of accident or health benefits you provide to an employee from the employee's wages. Irs 2012 tax forms 1040ez Exception for certain long-term care benefits. Irs 2012 tax forms 1040ez   You cannot exclude contributions to the cost of long-term care insurance from an employee's wages subject to federal income tax withholding if the coverage is provided through a flexible spending or similar arrangement. Irs 2012 tax forms 1040ez This is a benefit program that reimburses specified expenses up to a maximum amount that is reasonably available to the employee and is less than five times the total cost of the insurance. Irs 2012 tax forms 1040ez However, you can exclude these contributions from the employee's wages subject to social security, Medicare, and federal unemployment (FUTA) taxes. Irs 2012 tax forms 1040ez S corporation shareholders. Irs 2012 tax forms 1040ez   Because you cannot treat a 2% shareholder of an S corporation as an employee for this exclusion, you must include the value of accident or health benefits you provide to the employee in the employee's wages subject to federal income tax withholding. Irs 2012 tax forms 1040ez However, you can exclude the value of these benefits (other than payments for specific injuries or illnesses) from the employee's wages subject to social security, Medicare, and FUTA taxes. Irs 2012 tax forms 1040ez Exception for highly compensated employees. Irs 2012 tax forms 1040ez   If your plan is a self-insured medical reimbursement plan that favors highly compensated employees, you must include all or part of the amounts you pay to these employees in their wages subject to federal income tax withholding. Irs 2012 tax forms 1040ez However, you can exclude these amounts (other than payments for specific injuries or illnesses) from the employee's wages subject to social security, Medicare, and FUTA taxes. Irs 2012 tax forms 1040ez   A self-insured plan is a plan that reimburses your employees for medical expenses not covered by an accident or health insurance policy. Irs 2012 tax forms 1040ez   A highly compensated employee for this exception is any of the following individuals. Irs 2012 tax forms 1040ez One of the five highest paid officers. Irs 2012 tax forms 1040ez An employee who owns (directly or indirectly) more than 10% in value of the employer's stock. Irs 2012 tax forms 1040ez An employee who is among the highest paid 25% of all employees (other than those who can be excluded from the plan). Irs 2012 tax forms 1040ez   For more information on this exception, see section 105(h) of the Internal Revenue Code and its regulations. Irs 2012 tax forms 1040ez COBRA premiums. Irs 2012 tax forms 1040ez   The exclusion for accident and health benefits applies to amounts you pay to maintain medical coverage for a current or former employee under the Combined Omnibus Budget Reconciliation Act of 1986 (COBRA). Irs 2012 tax forms 1040ez The exclusion applies regardless of the length of employment, whether you directly pay the premiums or reimburse the former employee for premiums paid, and whether the employee's separation is permanent or temporary. Irs 2012 tax forms 1040ez Achievement Awards This exclusion applies to the value of any tangible personal property you give to an employee as an award for either length of service or safety achievement. Irs 2012 tax forms 1040ez The exclusion does not apply to awards of cash, cash equivalents, gift certificates, or other intangible property such as vacations, meals, lodging, tickets to theater or sporting events, stocks, bonds, and other securities. Irs 2012 tax forms 1040ez The award must meet the requirements for employee achievement awards discussed in chapter 2 of Publication 535, Business Expenses. Irs 2012 tax forms 1040ez Employee. Irs 2012 tax forms 1040ez   For this exclusion, treat the following individuals as employees. Irs 2012 tax forms 1040ez A current employee. Irs 2012 tax forms 1040ez A former common-law employee you maintain coverage for in consideration of or based on an agreement relating to prior service as an employee. Irs 2012 tax forms 1040ez A leased employee who has provided services to you on a substantially full-time basis for at least a year if the services are performed under your primary direction or control. Irs 2012 tax forms 1040ez Exception for S corporation shareholders. Irs 2012 tax forms 1040ez   Do not treat a 2% shareholder of an S corporation as an employee of the corporation for this purpose. Irs 2012 tax forms 1040ez A 2% shareholder is someone who directly or indirectly owns (at any time during the year) more than 2% of the corporation's stock or stock with more than 2% of the voting power. Irs 2012 tax forms 1040ez Treat a 2% shareholder as you would a partner in a partnership for fringe benefit purposes, but do not treat the benefit as a reduction in distributions to the 2% shareholder. Irs 2012 tax forms 1040ez Exclusion from wages. Irs 2012 tax forms 1040ez   You can generally exclude the value of achievement awards you give to an employee from the employee's wages if their cost is not more than the amount you can deduct as a business expense for the year. Irs 2012 tax forms 1040ez The excludable annual amount is $1,600 ($400 for awards that are not “qualified plan awards”). Irs 2012 tax forms 1040ez See chapter 2 of Publication 535 for more information about the limit on deductions for employee achievement awards. Irs 2012 tax forms 1040ez    To determine for 2014 whether an achievement award is a “qualified plan award” under the deduction rules described in Publication 535, treat any employee who received more than $115,000 in pay for 2013 as a highly compensated employee. Irs 2012 tax forms 1040ez   If the cost of awards given to an employee is more than your allowable deduction, include in the employee's wages the larger of the following amounts. Irs 2012 tax forms 1040ez The part of the cost that is more than your allowable deduction (up to the value of the awards). Irs 2012 tax forms 1040ez The amount by which the value of the awards exceeds your allowable deduction. Irs 2012 tax forms 1040ez Exclude the remaining value of the awards from the employee's wages. Irs 2012 tax forms 1040ez Adoption Assistance An adoption assistance program is a separate written plan of an employer that meets all of the following requirements. Irs 2012 tax forms 1040ez It benefits employees who qualify under rules set up by you, which do not favor highly compensated employees or their dependents. Irs 2012 tax forms 1040ez To determine whether your plan meets this test, do not consider employees excluded from your plan who are covered by a collective bargaining agreement, if there is evidence that adoption assistance was a subject of good-faith bargaining. Irs 2012 tax forms 1040ez It does not pay more than 5% of its payments during the year for shareholders or owners (or their spouses or dependents). Irs 2012 tax forms 1040ez A shareholder or owner is someone who owns (on any day of the year) more than 5% of the stock or of the capital or profits interest of your business. Irs 2012 tax forms 1040ez You give reasonable notice of the plan to eligible employees. Irs 2012 tax forms 1040ez Employees provide reasonable substantiation that payments or reimbursements are for qualifying expenses. Irs 2012 tax forms 1040ez For this exclusion, a highly compensated employee for 2014 is an employee who meets either of the following tests. Irs 2012 tax forms 1040ez The employee was a 5% owner at any time during the year or the preceding year. Irs 2012 tax forms 1040ez The employee received more than $115,000 in pay for the preceding year. Irs 2012 tax forms 1040ez You can choose to ignore test (2) if the employee was not also in the top 20% of employees when ranked by pay for the preceding year. Irs 2012 tax forms 1040ez You must exclude all payments or reimbursements you make under an adoption assistance program for an employee's qualified adoption expenses from the employee's wages subject to federal income tax withholding. Irs 2012 tax forms 1040ez However, you cannot exclude these payments from wages subject to social security, Medicare, and federal unemployment (FUTA) taxes. Irs 2012 tax forms 1040ez For more information, see the Instructions for Form 8839, Qualified Adoption Expenses. Irs 2012 tax forms 1040ez You must report all qualifying adoption expenses you paid or reimbursed under your adoption assistance program for each employee for the year in box 12 of the employee's Form W-2. Irs 2012 tax forms 1040ez Use code “T” to identify this amount. Irs 2012 tax forms 1040ez Exception for S corporation shareholders. Irs 2012 tax forms 1040ez   For this exclusion, do not treat a 2% shareholder of an S corporation as an employee of the corporation. Irs 2012 tax forms 1040ez A 2% shareholder is someone who directly or indirectly owns (at any time during the year) more than 2% of the corporation's stock or stock with more than 2% of the voting power. Irs 2012 tax forms 1040ez Treat a 2% shareholder as you would a partner in a partnership for fringe benefit purposes, including using the benefit as a reduction in distributions to the 2% shareholder. Irs 2012 tax forms 1040ez Athletic Facilities You can exclude the value of an employee's use of an on-premises gym or other athletic facility you operate from an employee's wages if substantially all use of the facility during the calendar year is by your employees, their spouses, and their dependent children. Irs 2012 tax forms 1040ez For this purpose, an employee's dependent child is a child or stepchild who is the employee's dependent or who, if both parents are deceased, has not attained the age of 25. Irs 2012 tax forms 1040ez On-premises facility. Irs 2012 tax forms 1040ez   The athletic facility must be located on premises you own or lease. Irs 2012 tax forms 1040ez It does not have to be located on your business premises. Irs 2012 tax forms 1040ez However, the exclusion does not apply to an athletic facility for residential use, such as athletic facilities that are part of a resort. Irs 2012 tax forms 1040ez Employee. Irs 2012 tax forms 1040ez   For this exclusion, treat the following individuals as employees. Irs 2012 tax forms 1040ez A current employee. Irs 2012 tax forms 1040ez A former employee who retired or left on disability. Irs 2012 tax forms 1040ez A widow or widower of an individual who died while an employee. Irs 2012 tax forms 1040ez A widow or widower of a former employee who retired or left on disability. Irs 2012 tax forms 1040ez A leased employee who has provided services to you on a substantially full-time basis for at least a year if the services are performed under your primary direction or control. Irs 2012 tax forms 1040ez A partner who performs services for a partnership. Irs 2012 tax forms 1040ez De Minimis (Minimal) Benefits You can exclude the value of a de minimis benefit you provide to an employee from the employee's wages. Irs 2012 tax forms 1040ez A de minimis benefit is any property or service you provide to an employee that has so little value (taking into account how frequently you provide similar benefits to your employees) that accounting for it would be unreasonable or administratively impracticable. Irs 2012 tax forms 1040ez Cash and cash equivalent fringe benefits (for example, use of gift card, charge card, or credit card), no matter how little, are never excludable as a de minimis benefit, except for occasional meal money or transportation fare. Irs 2012 tax forms 1040ez Examples of de minimis benefits include the following. Irs 2012 tax forms 1040ez Personal use of an employer-provided cell phone provided primarily for noncompensatory business purposes. Irs 2012 tax forms 1040ez See Employer-Provided Cell Phones , later in this section, for details. Irs 2012 tax forms 1040ez Occasional personal use of a company copying machine if you sufficiently control its use so that at least 85% of its use is for business purposes. Irs 2012 tax forms 1040ez Holiday gifts, other than cash, with a low fair market value. Irs 2012 tax forms 1040ez Group-term life insurance payable on the death of an employee's spouse or dependent if the face amount is not more than $2,000. Irs 2012 tax forms 1040ez Meals. Irs 2012 tax forms 1040ez See Meals , later in this section, for details. Irs 2012 tax forms 1040ez Occasional parties or picnics for employees and their guests. Irs 2012 tax forms 1040ez Occasional tickets for theater or sporting events. Irs 2012 tax forms 1040ez Transportation fare. Irs 2012 tax forms 1040ez See Transportation (Commuting) Benefits , later in this section, for details. Irs 2012 tax forms 1040ez Employee. Irs 2012 tax forms 1040ez   For this exclusion, treat any recipient of a de minimis benefit as an employee. Irs 2012 tax forms 1040ez Dependent Care Assistance This exclusion applies to household and dependent care services you directly or indirectly pay for or provide to an employee under a dependent care assistance program that covers only your employees. Irs 2012 tax forms 1040ez The services must be for a qualifying person's care and must be provided to allow the employee to work. Irs 2012 tax forms 1040ez These requirements are basically the same as the tests the employee would have to meet to claim the dependent care credit if the employee paid for the services. Irs 2012 tax forms 1040ez For more information, see Qualifying Person Test and Work-Related Expense Test in Publication 503, Child and Dependent Care Expenses. Irs 2012 tax forms 1040ez Employee. Irs 2012 tax forms 1040ez   For this exclusion, treat the following individuals as employees. Irs 2012 tax forms 1040ez A current employee. Irs 2012 tax forms 1040ez A leased employee who has provided services to you on a substantially full-time basis for at least a year if the services are performed under your primary direction or control. Irs 2012 tax forms 1040ez Yourself (if you are a sole proprietor). Irs 2012 tax forms 1040ez A partner who performs services for a partnership. Irs 2012 tax forms 1040ez Exclusion from wages. Irs 2012 tax forms 1040ez   You can exclude the value of benefits you provide to an employee under a dependent care assistance program from the employee's wages if you reasonably believe that the employee can exclude the benefits from gross income. Irs 2012 tax forms 1040ez   An employee can generally exclude from gross income up to $5,000 of benefits received under a dependent care assistance program each year. Irs 2012 tax forms 1040ez This limit is reduced to $2,500 for married employees filing separate returns. Irs 2012 tax forms 1040ez   However, the exclusion cannot be more than the smaller of the earned income of either the employee or employee's spouse. Irs 2012 tax forms 1040ez Special rules apply to determine the earned income of a spouse who is either a student or not able to care for himself or herself. Irs 2012 tax forms 1040ez For more information on the earned income limit, see Publication 503. Irs 2012 tax forms 1040ez Exception for highly compensated employees. Irs 2012 tax forms 1040ez   You cannot exclude dependent care assistance from the wages of a highly compensated employee unless the benefits provided under the program do not favor highly compensated employees and the program meets the requirements described in section 129(d) of the Internal Revenue Code. Irs 2012 tax forms 1040ez   For this exclusion, a highly compensated employee for 2014 is an employee who meets either of the following tests. Irs 2012 tax forms 1040ez The employee was a 5% owner at any time during the year or the preceding year. Irs 2012 tax forms 1040ez The employee received more than $115,000 in pay for the preceding year. Irs 2012 tax forms 1040ez You can choose to ignore test (2) if the employee was not also in the top 20% of employees when ranked by pay for the preceding year. Irs 2012 tax forms 1040ez Form W-2. Irs 2012 tax forms 1040ez   Report the value of all dependent care assistance you provide to an employee under a dependent care assistance program in box 10 of the employee's Form W-2. Irs 2012 tax forms 1040ez Include any amounts you cannot exclude from the employee's wages in boxes 1, 3, and 5. Irs 2012 tax forms 1040ez Report both the nontaxable portion of assistance (up to $5,000) and any assistance above the amount that is non-taxable to the employee. Irs 2012 tax forms 1040ez Example. Irs 2012 tax forms 1040ez   Company A provides a dependent care assistance flexible spending arrangement to its employees through a cafeteria plan. Irs 2012 tax forms 1040ez In addition, it provides occasional on-site dependent care to its employees at no cost. Irs 2012 tax forms 1040ez Emily, an employee of company A, had $4,500 deducted from her pay for the dependent care flexible spending arrangement. Irs 2012 tax forms 1040ez In addition, Emily used the on-site dependent care several times. Irs 2012 tax forms 1040ez The fair market value of the on-site care was $700. Irs 2012 tax forms 1040ez Emily's Form W-2 should report $5,200 of dependent care assistance in box 10 ($4,500 flexible spending arrangement plus $700 on-site dependent care). Irs 2012 tax forms 1040ez Boxes 1, 3, and 5 should include $200 (the amount in excess of the nontaxable assistance), and applicable taxes should be withheld on that amount. Irs 2012 tax forms 1040ez Educational Assistance This exclusion applies to educational assistance you provide to employees under an educational assistance program. Irs 2012 tax forms 1040ez The exclusion also applies to graduate level courses. Irs 2012 tax forms 1040ez Educational assistance means amounts you pay or incur for your employees' education expenses. Irs 2012 tax forms 1040ez These expenses generally include the cost of books, equipment, fees, supplies, and tuition. Irs 2012 tax forms 1040ez However, these expenses do not include the cost of a course or other education involving sports, games, or hobbies, unless the education: Has a reasonable relationship to your business, or Is required as part of a degree program. Irs 2012 tax forms 1040ez Education expenses do not include the cost of tools or supplies (other than textbooks) your employee is allowed to keep at the end of the course. Irs 2012 tax forms 1040ez Nor do they include the cost of lodging, meals, or transportation. Irs 2012 tax forms 1040ez Educational assistance program. Irs 2012 tax forms 1040ez   An educational assistance program is a separate written plan that provides educational assistance only to your employees. Irs 2012 tax forms 1040ez The program qualifies only if all of the following tests are met. Irs 2012 tax forms 1040ez The program benefits employees who qualify under rules set up by you that do not favor highly compensated employees. Irs 2012 tax forms 1040ez To determine whether your program meets this test, do not consider employees excluded from your program who are covered by a collective bargaining agreement if there is evidence that educational assistance was a subject of good-faith bargaining. Irs 2012 tax forms 1040ez The program does not provide more than 5% of its benefits during the year for shareholders or owners. Irs 2012 tax forms 1040ez A shareholder or owner is someone who owns (on any day of the year) more than 5% of the stock or of the capital or profits interest of your business. Irs 2012 tax forms 1040ez The program does not allow employees to choose to receive cash or other benefits that must be included in gross income instead of educational assistance. Irs 2012 tax forms 1040ez You give reasonable notice of the program to eligible employees. Irs 2012 tax forms 1040ez Your program can cover former employees if their employment is the reason for the coverage. Irs 2012 tax forms 1040ez   For this exclusion, a highly compensated employee for 2014 is an employee who meets either of the following tests. Irs 2012 tax forms 1040ez The employee was a 5% owner at any time during the year or the preceding year. Irs 2012 tax forms 1040ez The employee received more than $115,000 in pay for the preceding year. Irs 2012 tax forms 1040ez You can choose to ignore test (2) if the employee was not also in the top 20% of employees when ranked by pay for the preceding year. Irs 2012 tax forms 1040ez Employee. Irs 2012 tax forms 1040ez   For this exclusion, treat the following individuals as employees. Irs 2012 tax forms 1040ez A current employee. Irs 2012 tax forms 1040ez A former employee who retired, left on disability, or was laid off. Irs 2012 tax forms 1040ez A leased employee who has provided services to you on a substantially full-time basis for at least a year if the services are performed under your primary direction or control. Irs 2012 tax forms 1040ez Yourself (if you are a sole proprietor). Irs 2012 tax forms 1040ez A partner who performs services for a partnership. Irs 2012 tax forms 1040ez Exclusion from wages. Irs 2012 tax forms 1040ez   You can exclude up to $5,250 of educational assistance you provide to an employee under an educational assistance program from the employee's wages each year. Irs 2012 tax forms 1040ez Assistance over $5,250. Irs 2012 tax forms 1040ez   If you do not have an educational assistance plan, or you provide an employee with assistance exceeding $5,250, you must include the value of these benefits as wages, unless the benefits are working condition benefits. Irs 2012 tax forms 1040ez Working condition benefits may be excluded from wages. Irs 2012 tax forms 1040ez Property or a service provided is a working condition benefit to the extent that if the employee paid for it, the amount paid would have been deductible as a business or depreciation expense. Irs 2012 tax forms 1040ez See Working Condition Benefits , later, in this section. Irs 2012 tax forms 1040ez Employee Discounts This exclusion applies to a price reduction you give an employee on property or services you offer to customers in the ordinary course of the line of business in which the employee performs substantial services. Irs 2012 tax forms 1040ez However, it does not apply to discounts on real property or discounts on personal property of a kind commonly held for investment (such as stocks or bonds). Irs 2012 tax forms 1040ez Employee. Irs 2012 tax forms 1040ez   For this exclusion, treat the following individuals as employees. Irs 2012 tax forms 1040ez A current employee. Irs 2012 tax forms 1040ez A former employee who retired or left on disability. Irs 2012 tax forms 1040ez A widow or widower of an individual who died while an employee. Irs 2012 tax forms 1040ez A widow or widower of an employee who retired or left on disability. Irs 2012 tax forms 1040ez A leased employee who has provided services to you on a substantially full-time basis for at least a year if the services are performed under your primary direction or control. Irs 2012 tax forms 1040ez A partner who performs services for a partnership. Irs 2012 tax forms 1040ez Exclusion from wages. Irs 2012 tax forms 1040ez   You can generally exclude the value of an employee discount you provide an employee from the employee's wages, up to the following limits. Irs 2012 tax forms 1040ez For a discount on services, 20% of the price you charge nonemployee customers for the service. Irs 2012 tax forms 1040ez For a discount on merchandise or other property, your gross profit percentage times the price you charge nonemployee customers for the property. Irs 2012 tax forms 1040ez   Determine your gross profit percentage in the line of business based on all property you offer to customers (including employee customers) and your experience during the tax year immediately before the tax year in which the discount is available. Irs 2012 tax forms 1040ez To figure your gross profit percentage, subtract the total cost of the property from the total sales price of the property and divide the result by the total sales price of the property. Irs 2012 tax forms 1040ez Exception for highly compensated employees. Irs 2012 tax forms 1040ez   You cannot exclude from the wages of a highly compensated employee any part of the value of a discount that is not available on the same terms to one of the following groups. Irs 2012 tax forms 1040ez All of your employees. Irs 2012 tax forms 1040ez A group of employees defined under a reasonable classification you set up that does not favor highly compensated employees. Irs 2012 tax forms 1040ez   For this exclusion, a highly compensated employee for 2014 is an employee who meets either of the following tests. Irs 2012 tax forms 1040ez The employee was a 5% owner at any time during the year or the preceding year. Irs 2012 tax forms 1040ez The employee received more than $115,000 in pay for the preceding year. Irs 2012 tax forms 1040ez You can choose to ignore test (2) if the employee was not also in the top 20% of employees when ranked by pay for the preceding year. Irs 2012 tax forms 1040ez Employee Stock Options There are three kinds of stock options—incentive stock options, employee stock purchase plan options, and nonstatutory (nonqualified) stock options. Irs 2012 tax forms 1040ez Wages for social security, Medicare, and federal unemployment (FUTA) taxes do not include remuneration resulting from the exercise, after October 22, 2004, of an incentive stock option or under an employee stock purchase plan option, or from any disposition of stock acquired by exercising such an option. Irs 2012 tax forms 1040ez The IRS will not apply these taxes to an exercise before October 23, 2004, of an incentive stock option or an employee stock purchase plan option or to a disposition of stock acquired by such exercise. Irs 2012 tax forms 1040ez Additionally, federal income tax withholding is not required on the income resulting from a disqualifying disposition of stock acquired by the exercise after October 22, 2004, of an incentive stock option or under an employee stock purchase plan option, or on income equal to the discount portion of stock acquired by the exercise, after October 22, 2004, of an employee stock purchase plan option resulting from any disposition of the stock. Irs 2012 tax forms 1040ez The IRS will not apply federal income tax withholding upon the disposition of stock acquired by the exercise, before October 23, 2004, of an incentive stock option or an employee stock purchase plan option. Irs 2012 tax forms 1040ez However, the employer must report as income in box 1 of Form W-2, (a) the discount portion of stock acquired by the exercise of an employee stock purchase plan option upon disposition of the stock, and (b) the spread (between the exercise price and the fair market value of the stock at the time of exercise) upon a disqualifying disposition of stock acquired by the exercise of an incentive stock option or an employee stock purchase plan option. Irs 2012 tax forms 1040ez An employer must report the excess of the fair market value of stock received upon exercise of a nonstatutory stock option over the amount paid for the stock option on Form W-2 in boxes 1, 3 (up to the social security wage base), 5, and in box 12 using the code “V. Irs 2012 tax forms 1040ez ” See Regulations section 1. Irs 2012 tax forms 1040ez 83-7. Irs 2012 tax forms 1040ez An employee who transfers his or her interest in nonstatutory stock options to the employee's former spouse incident to a divorce is not required to include an amount in gross income upon the transfer. Irs 2012 tax forms 1040ez The former spouse, rather than the employee, is required to include an amount in gross income when the former spouse exercises the stock options. Irs 2012 tax forms 1040ez See Revenue Ruling 2002-22 and Revenue Ruling 2004-60 for details. Irs 2012 tax forms 1040ez You can find Revenue Ruling 2002-22 on page 849 of Internal Revenue Bulletin 2002-19 at www. Irs 2012 tax forms 1040ez irs. Irs 2012 tax forms 1040ez gov/pub/irs-irbs/irb02-19. Irs 2012 tax forms 1040ez pdf. Irs 2012 tax forms 1040ez See Revenue Ruling 2004-60, 2004-24 I. Irs 2012 tax forms 1040ez R. Irs 2012 tax forms 1040ez B. Irs 2012 tax forms 1040ez 1051, available at www. Irs 2012 tax forms 1040ez irs. Irs 2012 tax forms 1040ez gov/irb/2004-24_IRB/ar13. Irs 2012 tax forms 1040ez html. Irs 2012 tax forms 1040ez For more information about employee stock options, see sections 421, 422, and 423 of the Internal Revenue Code and their related regulations. Irs 2012 tax forms 1040ez Employer-Provided Cell Phones The value of an employer-provided cell phone, provided primarily for noncompensatory business reasons, is excludable from an employee's income as a working condition fringe benefit. Irs 2012 tax forms 1040ez Personal use of an employer-provided cell phone, provided primarily for noncompensatory business reasons, is excludable from an employee's income as a de minimis fringe benefit. Irs 2012 tax forms 1040ez For the rules relating to these types of benefits, see De Minimis (Minimal) Benefits , earlier in this section, and Working Condition Benefits , later in this section. Irs 2012 tax forms 1040ez Noncompensatory business purposes. Irs 2012 tax forms 1040ez   You provide a cell phone primarily for noncompensatory business purposes if there are substantial business reasons for providing the cell phone. Irs 2012 tax forms 1040ez Examples of substantial business reasons include the employer's: Need to contact the employee at all times for work-related emergencies, Requirement that the employee be available to speak with clients at times when the employee is away from the office, and Need to speak with clients located in other time zones at times outside the employee's normal workday. Irs 2012 tax forms 1040ez Cell phones provided to promote goodwill, boost morale, or attract prospective employees. Irs 2012 tax forms 1040ez   You cannot exclude from an employee's wages the value of a cell phone provided to promote goodwill of an employee, to attract a prospective employee, or as a means of providing additional compensation to an employee. Irs 2012 tax forms 1040ez Additional information. Irs 2012 tax forms 1040ez   For additional information on the tax treatment of employer-provided cell phones, see Notice 2011-72, 2011-38 I. Irs 2012 tax forms 1040ez R. Irs 2012 tax forms 1040ez B. Irs 2012 tax forms 1040ez 407, available at  www. Irs 2012 tax forms 1040ez irs. Irs 2012 tax forms 1040ez gov/irb/2011-38_IRB/ar07. Irs 2012 tax forms 1040ez html. Irs 2012 tax forms 1040ez Group-Term Life Insurance Coverage This exclusion applies to life insurance coverage that meets all the following conditions. Irs 2012 tax forms 1040ez It provides a general death benefit that is not included in income. Irs 2012 tax forms 1040ez You provide it to a group of employees. Irs 2012 tax forms 1040ez See The 10-employee rule , later. Irs 2012 tax forms 1040ez It provides an amount of insurance to each employee based on a formula that prevents individual selection. Irs 2012 tax forms 1040ez This formula must use factors such as the employee's age, years of service, pay, or position. Irs 2012 tax forms 1040ez You provide it under a policy you directly or indirectly carry. Irs 2012 tax forms 1040ez Even if you do not pay any of the policy's cost, you are considered to carry it if you arrange for payment of its cost by your employees and charge at least one employee less than, and at least one other employee more than, the cost of his or her insurance. Irs 2012 tax forms 1040ez Determine the cost of the insurance, for this purpose, as explained under Coverage over the limit , later. Irs 2012 tax forms 1040ez Group-term life insurance does not include the following insurance. Irs 2012 tax forms 1040ez Insurance that does not provide general death benefits, such as travel insurance or a policy providing only accidental death benefits. Irs 2012 tax forms 1040ez Life insurance on the life of your employee's spouse or dependent. Irs 2012 tax forms 1040ez However, you may be able to exclude the cost of this insurance from the employee's wages as a de minimis benefit. Irs 2012 tax forms 1040ez See De Minimis (Minimal) Benefits , earlier in this section. Irs 2012 tax forms 1040ez Insurance provided under a policy that provides a permanent benefit (an economic value that extends beyond 1 policy year, such as paid-up or cash surrender value), unless certain requirements are met. Irs 2012 tax forms 1040ez See Regulations section 1. Irs 2012 tax forms 1040ez 79-1 for details. Irs 2012 tax forms 1040ez Employee. Irs 2012 tax forms 1040ez   For this exclusion, treat the following individuals as employees. Irs 2012 tax forms 1040ez A current common-law employee. Irs 2012 tax forms 1040ez A full-time life insurance agent who is a current statutory employee. Irs 2012 tax forms 1040ez An individual who was formerly your employee under (1) or (2). Irs 2012 tax forms 1040ez A leased employee who has provided services to you on a substantially full-time basis for at least a year if the services are performed under your primary direction and control. Irs 2012 tax forms 1040ez Exception for S corporation shareholders. Irs 2012 tax forms 1040ez   Do not treat a 2% shareholder of an S corporation as an employee of the corporation for this purpose. Irs 2012 tax forms 1040ez A 2% shareholder is someone who directly or indirectly owns (at any time during the year) more than 2% of the corporation's stock or stock with more than 2% of the voting power. Irs 2012 tax forms 1040ez Treat a 2% shareholder as you would a partner in a partnership for fringe benefit purposes, but do not treat the benefit as a reduction in distributions to the 2% shareholder. Irs 2012 tax forms 1040ez The 10-employee rule. Irs 2012 tax forms 1040ez   Generally, life insurance is not group-term life insurance unless you provide it to at least 10 full-time employees at some time during the year. Irs 2012 tax forms 1040ez   For this rule, count employees who choose not to receive the insurance unless, to receive it, they must contribute to the cost of benefits other than the group-term life insurance. Irs 2012 tax forms 1040ez For example, count an employee who could receive insurance by paying part of the cost, even if that employee chooses not to receive it. Irs 2012 tax forms 1040ez However, do not count an employee who must pay part or all of the cost of permanent benefits to get insurance, unless that employee chooses to receive it. Irs 2012 tax forms 1040ez A permanent benefit is an economic value extending beyond one policy year (for example, a paid-up or cash-surrender value) that is provided under a life insurance policy. Irs 2012 tax forms 1040ez Exceptions. Irs 2012 tax forms 1040ez   Even if you do not meet the 10-employee rule, two exceptions allow you to treat insurance as group-term life insurance. Irs 2012 tax forms 1040ez   Under the first exception, you do not have to meet the 10-employee rule if all the following conditions are met. Irs 2012 tax forms 1040ez If evidence that the employee is insurable is required, it is limited to a medical questionnaire (completed by the employee) that does not require a physical. Irs 2012 tax forms 1040ez You provide the insurance to all your full-time employees or, if the insurer requires the evidence mentioned in (1), to all full-time employees who provide evidence the insurer accepts. Irs 2012 tax forms 1040ez You figure the coverage based on either a uniform percentage of pay or the insurer's coverage brackets that meet certain requirements. Irs 2012 tax forms 1040ez See Regulations section 1. Irs 2012 tax forms 1040ez 79-1 for details. Irs 2012 tax forms 1040ez   Under the second exception, you do not have to meet the 10-employee rule if all the following conditions are met. Irs 2012 tax forms 1040ez You provide the insurance under a common plan covering your employees and the employees of at least one other employer who is not related to you. Irs 2012 tax forms 1040ez The insurance is restricted to, but mandatory for, all your employees who belong to, or are represented by, an organization (such as a union) that carries on substantial activities besides obtaining insurance. Irs 2012 tax forms 1040ez Evidence of whether an employee is insurable does not affect an employee's eligibility for insurance or the amount of insurance that employee gets. Irs 2012 tax forms 1040ez   To apply either exception, do not consider employees who were denied insurance for any of the following reasons. Irs 2012 tax forms 1040ez They were 65 or older. Irs 2012 tax forms 1040ez They customarily work 20 hours or less a week or 5 months or less in a calendar year. Irs 2012 tax forms 1040ez They have not been employed for the waiting period given in the policy. Irs 2012 tax forms 1040ez This waiting period cannot be more than 6 months. Irs 2012 tax forms 1040ez Exclusion from wages. Irs 2012 tax forms 1040ez   You can generally exclude the cost of up to $50,000 of group-term life insurance from the wages of an insured employee. Irs 2012 tax forms 1040ez You can exclude the same amount from the employee's wages when figuring social security and Medicare taxes. Irs 2012 tax forms 1040ez In addition, you do not have to withhold federal income tax or pay FUTA tax on any group-term life insurance you provide to an employee. Irs 2012 tax forms 1040ez Coverage over the limit. Irs 2012 tax forms 1040ez   You must include in your employee's wages the cost of group-term life insurance beyond $50,000 worth of coverage, reduced by the amount the employee paid toward the insurance. Irs 2012 tax forms 1040ez Report it as wages in boxes 1, 3, and 5 of the employee's Form W-2. Irs 2012 tax forms 1040ez Also, show it in box 12 with code “C. Irs 2012 tax forms 1040ez ” The amount is subject to social security and Medicare taxes, and you may, at your option, withhold federal income tax. Irs 2012 tax forms 1040ez   Figure the monthly cost of the insurance to include in the employee's wages by multiplying the number of thousands of dollars of all insurance coverage over $50,000 (figured to the nearest $100) by the cost shown in Table 2-2. Irs 2012 tax forms 1040ez For all coverage provided within the calendar year, use the employee's age on the last day of the employee's tax year. Irs 2012 tax forms 1040ez You must prorate the cost from the table if less than a full month of coverage is involved. Irs 2012 tax forms 1040ez Table 2-2. Irs 2012 tax forms 1040ez Cost Per $1,000 of Protection For 1 Month Age Cost Under 25 $ . Irs 2012 tax forms 1040ez 05 25 through 29 . Irs 2012 tax forms 1040ez 06 30 through 34 . Irs 2012 tax forms 1040ez 08 35 through 39 . Irs 2012 tax forms 1040ez 09 40 through 44 . Irs 2012 tax forms 1040ez 10 45 through 49 . Irs 2012 tax forms 1040ez 15 50 through 54 . Irs 2012 tax forms 1040ez 23 55 through 59 . Irs 2012 tax forms 1040ez 43 60 through 64 . Irs 2012 tax forms 1040ez 66 65 through 69 1. Irs 2012 tax forms 1040ez 27 70 and older 2. Irs 2012 tax forms 1040ez 06 You figure the total cost to include in the employee's wages by multiplying the monthly cost by the number of full months' coverage at that cost. Irs 2012 tax forms 1040ez Example. Irs 2012 tax forms 1040ez Tom's employer provides him with group-term life insurance coverage of $200,000. Irs 2012 tax forms 1040ez Tom is 45 years old, is not a key employee, and pays $100 per year toward the cost of the insurance. Irs 2012 tax forms 1040ez Tom's employer must include $170 in his wages. Irs 2012 tax forms 1040ez The $200,000 of insurance coverage is reduced by $50,000. Irs 2012 tax forms 1040ez The yearly cost of $150,000 of coverage is $270 ($. Irs 2012 tax forms 1040ez 15 x 150 x 12), and is reduced by the $100 Tom pays for the insurance. Irs 2012 tax forms 1040ez The employer includes $170 in boxes 1, 3, and 5 of Tom's Form W-2. Irs 2012 tax forms 1040ez The employer also enters $170 in box 12 with code “C. Irs 2012 tax forms 1040ez ” Coverage for dependents. Irs 2012 tax forms 1040ez   Group-term life insurance coverage paid by the employer for the spouse or dependents of an employee may be excludable from income as a de minimis fringe benefit if the face amount is not more than $2,000. Irs 2012 tax forms 1040ez If the face amount is greater than $2,000, the entire cost of the dependent coverage must be included in income unless the amount over $2,000 is purchased with employee contributions on an after-tax basis. Irs 2012 tax forms 1040ez The cost of the insurance is determined by using Table 2-2. Irs 2012 tax forms 1040ez Former employees. Irs 2012 tax forms 1040ez   When group-term life insurance over $50,000 is provided to an employee (including retirees) after his or her termination, the employee share of social security and Medicare taxes on that period of coverage is paid by the former employee with his or her tax return and is not collected by the employer. Irs 2012 tax forms 1040ez You are not required to collect those taxes. Irs 2012 tax forms 1040ez Use the table above to determine the amount of social security and Medicare taxes owed by the former employee for coverage provided after separation from service. Irs 2012 tax forms 1040ez Report those uncollected amounts separately in box 12 of Form W-2 using codes “M” and “N. Irs 2012 tax forms 1040ez ” See the General Instructions for Forms W-2 and W-3 and the Instructions for Form 941. Irs 2012 tax forms 1040ez Exception for key employees. Irs 2012 tax forms 1040ez   Generally, if your group-term life insurance plan favors key employees as to participation or benefits, you must include the entire cost of the insurance in your key employees' wages. Irs 2012 tax forms 1040ez This exception generally does not apply to church plans. Irs 2012 tax forms 1040ez When figuring social security and Medicare taxes, you must also include the entire cost in the employees' wages. Irs 2012 tax forms 1040ez Include the cost in boxes 1, 3, and 5 of Form W-2. Irs 2012 tax forms 1040ez However, you do not have to withhold federal income tax or pay FUTA tax on the cost of any group-term life insurance you provide to an employee. Irs 2012 tax forms 1040ez   For this purpose, the cost of the insurance is the greater of the following amounts. Irs 2012 tax forms 1040ez The premiums you pay for the employee's insurance. Irs 2012 tax forms 1040ez See Regulations section 1. Irs 2012 tax forms 1040ez 79-4T(Q&A 6) for more information. Irs 2012 tax forms 1040ez The cost you figure using Table 2-2. Irs 2012 tax forms 1040ez   For this exclusion, a key employee during 2014 is an employee or former employee who is one of the following individuals. Irs 2012 tax forms 1040ez See section 416(i) of the Internal Revenue Code for more information. Irs 2012 tax forms 1040ez An officer having annual pay of more than $170,000. Irs 2012 tax forms 1040ez An individual who for 2014 was either of the following. Irs 2012 tax forms 1040ez A 5% owner of your business. Irs 2012 tax forms 1040ez A 1% owner of your business whose annual pay was more than $150,000. Irs 2012 tax forms 1040ez   A former employee who was a key employee upon retirement or separation from service is also a key employee. Irs 2012 tax forms 1040ez   Your plan does not favor key employees as to participation if at least one of the following is true. Irs 2012 tax forms 1040ez It benefits at least 70% of your employees. Irs 2012 tax forms 1040ez At least 85% of the participating employees are not key employees. Irs 2012 tax forms 1040ez It benefits employees who qualify under a set of rules you set up that do not favor key employees. Irs 2012 tax forms 1040ez   Your plan meets this participation test if it is part of a cafeteria plan (discussed in section 1) and it meets the participation test for those plans. Irs 2012 tax forms 1040ez   When applying this test, do not consider employees who: Have not completed 3 years of service, Are part-time or seasonal, Are nonresident aliens who receive no U. Irs 2012 tax forms 1040ez S. Irs 2012 tax forms 1040ez source earned income from you, or Are not included in the plan but are in a unit of employees covered by a collective bargaining agreement, if the benefits provided under the plan were the subject of good-faith bargaining between you and employee representatives. Irs 2012 tax forms 1040ez   Your plan does not favor key employees as to benefits if all benefits available to participating key employees are also available to all other participating employees. Irs 2012 tax forms 1040ez Your plan does not favor key employees just because the amount of insurance you provide to your employees is uniformly related to their pay. Irs 2012 tax forms 1040ez S corporation shareholders. Irs 2012 tax forms 1040ez   Because you cannot treat a 2% shareholder of an S corporation as an employee for this exclusion, you must include the cost of all group-term life insurance coverage you provide the 2% shareholder in his or her wages. Irs 2012 tax forms 1040ez When figuring social security and Medicare taxes, you must also include the cost of this coverage in the 2% shareholder's wages. Irs 2012 tax forms 1040ez Include the cost in boxes 1, 3, and 5 of Form W-2. Irs 2012 tax forms 1040ez However, you do not have to withhold federal income tax or pay federal unemployment tax on the cost of any group-term life insurance coverage you provide to the 2% shareholder. Irs 2012 tax forms 1040ez Health Savings Accounts A Health Savings Account (HSA) is an account owned by a qualified individual who is generally your employee or former employee. Irs 2012 tax forms 1040ez Any contributions that you make to an HSA become the employee's property and cannot be withdrawn by you. Irs 2012 tax forms 1040ez Contributions to the account are used to pay current or future medical expenses of the account owner, his or her spouse, and any qualified dependent. Irs 2012 tax forms 1040ez The medical expenses must not be reimbursable by insurance or other sources and their payment from HSA funds (distribution) will not give rise to a medical expense deduction on the individual's federal income tax return. Irs 2012 tax forms 1040ez For more information about HSAs, visit the Department of Treasury's website at www. Irs 2012 tax forms 1040ez treasury. Irs 2012 tax forms 1040ez gov and enter “HSA” in the search box. Irs 2012 tax forms 1040ez Eligibility. Irs 2012 tax forms 1040ez   A qualified individual must be covered by a High Deductible Health Plan (HDHP) and not be covered by other health insurance except for permitted insurance listed under section 223(c)(3) or insurance for accidents, disability, dental care, vision care, or long-term care. Irs 2012 tax forms 1040ez For calendar year 2014, a qualifying HDHP must have a deductible of at least $1,250 for self-only coverage or $2,500 for family coverage and must limit annual out-of-pocket expenses of the beneficiary to $6,350 for self-only coverage and $12,700 for family coverage. Irs 2012 tax forms 1040ez   There are no income limits that restrict an individual's eligibility to contribute to an HSA nor is there a requirement that the account owner have earned income to make a contribution. Irs 2012 tax forms 1040ez Exceptions. Irs 2012 tax forms 1040ez   An individual is not a qualified individual if he or she can be claimed as a dependent on another person's tax return. Irs 2012 tax forms 1040ez Also, an employee's participation in a health flexible spending arrangement (FSA) or health reimbursement arrangement (HRA) generally disqualifies the individual (and employer) from making contributions to his or her HSA. Irs 2012 tax forms 1040ez However, an individual may qualify to participate in an HSA if he or she is participating in only a limited-purpose FSA or HRA or a post-deductible FSA. Irs 2012 tax forms 1040ez For more information, see Other employee health plans in Publication 969. Irs 2012 tax forms 1040ez Employer contributions. Irs 2012 tax forms 1040ez   Up to specified dollar limits, cash contributions to the HSA of a qualified individual (determined monthly) are exempt from federal income tax withholding, social security tax, Medicare tax, and FUTA tax. Irs 2012 tax forms 1040ez For 2014, you can contribute up to $3,300 for self-only coverage or $6,550 for family coverage to a qualified individual's HSA. Irs 2012 tax forms 1040ez   The contribution amounts listed above are increased by $1,000 for a qualified individual who is age 55 or older at any time during the year. Irs 2012 tax forms 1040ez For two qualified individuals who are married to each other and who each are age 55 or older at any time during the year, each spouse's contribution limit is increased by $1,000 provided each spouse has a separate HSA. Irs 2012 tax forms 1040ez No contributions can be made to an individual's HSA after he or she becomes enrolled in Medicare Part A or Part B. Irs 2012 tax forms 1040ez Nondiscrimination rules. Irs 2012 tax forms 1040ez    Your contribution amount to an employee's HSA must be comparable for all employees who have comparable coverage during the same period. Irs 2012 tax forms 1040ez Otherwise, there will be an excise tax equal to 35% of the amount you contributed to all employees' HSAs. Irs 2012 tax forms 1040ez   For guidance on employer comparable contributions to HSAs under section 4980G in instances where an employee has not established an HSA by December 31 and in instances where an employer accelerates contributions for the calendar year for employees who have incurred qualified medical expenses, see Regulations section 54. Irs 2012 tax forms 1040ez 4980G-4. Irs 2012 tax forms 1040ez Exception. Irs 2012 tax forms 1040ez   The Tax Relief and Health Care Act of 2006 allows employers to make larger HSA contributions for a nonhighly compensated employee than for a highly compensated employee. Irs 2012 tax forms 1040ez A highly compensated employee for 2014 is an employee who meets either of the following tests. Irs 2012 tax forms 1040ez The employee was a 5% owner at any time during the year or the preceding year. Irs 2012 tax forms 1040ez The employee received more than $115,000 in pay for the preceding year. Irs 2012 tax forms 1040ez You can choose to ignore test (2) if the employee was not also in the top 20% of employees when ranked by pay for the preceding year. Irs 2012 tax forms 1040ez Partnerships and S corporations. Irs 2012 tax forms 1040ez   Partners and 2% shareholders of an S corporation are not eligible for salary reduction (pre-tax) contributions to an HSA. Irs 2012 tax forms 1040ez Employer contributions to the HSA of a bona fide partner or 2% shareholder are treated as distributions or guaranteed payments as determined by the facts and circumstances. Irs 2012 tax forms 1040ez Cafeteria plans. Irs 2012 tax forms 1040ez   You may contribute to an employee's HSA using a cafeteria plan and your contributions are not subject to the statutory comparability rules. Irs 2012 tax forms 1040ez However, cafeteria plan nondiscrimination rules still apply. Irs 2012 tax forms 1040ez For example, contributions under a cafeteria plan to employee HSAs cannot be greater for higher-paid employees than they are for lower-paid employees. Irs 2012 tax forms 1040ez Contributions that favor lower-paid employees are not prohibited. Irs 2012 tax forms 1040ez Reporting requirements. Irs 2012 tax forms 1040ez   You must report your contributions to an employee's HSA in box 12 of Form W-2 using code “W. Irs 2012 tax forms 1040ez ” The trustee or custodian of the HSA, generally a bank or insurance company, reports distributions from the HSA using Form 1099-SA, Distributions From an HSA, Archer MSA, or Medicare Advantage MSA. Irs 2012 tax forms 1040ez Lodging on Your Business Premises You can exclude the value of lodging you furnish to an employee from the employee's wages if it meets the following tests. Irs 2012 tax forms 1040ez It is furnished on your business premises. Irs 2012 tax forms 1040ez It is furnished for your convenience. Irs 2012 tax forms 1040ez The employee must accept it as a condition of employment. Irs 2012 tax forms 1040ez Different tests may apply to lodging furnished by educational institutions. Irs 2012 tax forms 1040ez See section 119(d) of the Internal Revenue Code for details. Irs 2012 tax forms 1040ez The exclusion does not apply if you allow your employee to choose to receive additional pay instead of lodging. Irs 2012 tax forms 1040ez On your business premises. Irs 2012 tax forms 1040ez   For this exclusion, your business premises is generally your employee's place of work. Irs 2012 tax forms 1040ez For special rules that apply to lodging furnished in a camp located in a foreign country, see section 119(c) of the Internal Revenue Code and its regulations. Irs 2012 tax forms 1040ez For your convenience. Irs 2012 tax forms 1040ez   Whether or not you furnish lodging for your convenience as an employer depends on all the facts and circumstances. Irs 2012 tax forms 1040ez You furnish the lodging to your employee for your convenience if you do this for a substantial business reason other than to provide the employee with additional pay. Irs 2012 tax forms 1040ez This is true even if a law or an employment contract provides that the lodging is furnished as pay. Irs 2012 tax forms 1040ez However, a written statement that the lodging is furnished for your convenience is not sufficient. Irs 2012 tax forms 1040ez Condition of employment. Irs 2012 tax forms 1040ez   Lodging meets this test if you require your employees to accept the lodging because they need to live on your business premises to be able to properly perform their duties. Irs 2012 tax forms 1040ez Examples include employees who must be available at all times and employees who could not perform their required duties without being furnished the lodging. Irs 2012 tax forms 1040ez   It does not matter whether you must furnish the lodging as pay under the terms of an employment contract or a law fixing the terms of employment. Irs 2012 tax forms 1040ez Example. Irs 2012 tax forms 1040ez A hospital gives Joan, an employee of the hospital, the choice of living at the hospital free of charge or living elsewhere and receiving a cash allowance in addition to her regular salary. Irs 2012 tax forms 1040ez If Joan chooses to live at the hospital, the hospital cannot exclude the value of the lodging from her wages because she is not required to live at the hospital to properly perform the duties of her employment. Irs 2012 tax forms 1040ez S corporation shareholders. Irs 2012 tax forms 1040ez   For this exclusion, do not treat a 2% shareholder of an S corporation as an employee of the corporation. Irs 2012 tax forms 1040ez A 2% shareholder is someone who directly or indirectly owns (at any time during the year) more than 2% of the corporation's stock or stock with more than 2% of the voting power. Irs 2012 tax forms 1040ez Treat a 2% shareholder as you would a partner in a partnership for fringe benefit purposes, but do not treat the benefit as a reduction in distributions to the 2% shareholder. Irs 2012 tax forms 1040ez Meals This section discusses the exclusion rules that apply to de minimis meals and meals on your business premises. Irs 2012 tax forms 1040ez De Minimis Meals You can exclude any occasional meal or meal money you provide to an employee if it has so little value (taking into account how frequently you provide meals to your employees) that accounting for it would be unreasonable or administratively impracticable. Irs 2012 tax forms 1040ez The exclusion applies, for example, to the following items. Irs 2012 tax forms 1040ez Coffee, doughnuts, or soft drinks. Irs 2012 tax forms 1040ez Occasional meals or meal money provided to enable an employee to work overtime. Irs 2012 tax forms 1040ez However, the exclusion does not apply to meal money figured on the basis of hours worked. Irs 2012 tax forms 1040ez Occasional parties or picnics for employees and their guests. Irs 2012 tax forms 1040ez This exclusion also applies to meals you provide at an employer-operated eating facility for employees if the annual revenue from the facility equals or exceeds the direct costs of the facility. Irs 2012 tax forms 1040ez For this purpose, your revenue from providing a meal is considered equal to the facility's direct operating costs to provide that meal if its value can be excluded from an employee's wages as explained under Meals on Your Business Premises , later. Irs 2012 tax forms 1040ez If food or beverages you furnish to employees qualify as a de minimis benefit, you can deduct their full cost. Irs 2012 tax forms 1040ez The 50% limit on deductions for the cost of meals does not apply. Irs 2012 tax forms 1040ez The deduction limit on meals is discussed in chapter 2 of Publication 535. Irs 2012 tax forms 1040ez Employee. Irs 2012 tax forms 1040ez   For this exclusion, treat any recipient of a de minimis meal as
Español

Tips for Leasing a Car

When you lease, you pay to drive someone else's vehicle. Monthly lease payments may be lower than loan payments, but at the end of the lease you have no ownership or equity in the car. To get the best deal, follow the advice below in addition to the general suggestions for buying a car.

  • To help you compare leasing versus owning, the Consumer Leasing Act requires leasing companies to give you information on monthly payments and other charges. Check out Leaseguide.com, and Leasecompare.com for online information on leases including current lease deals.
  • Consider using an independent agent rather than the dealer. You might find a better deal. Most financial institutions that offer auto financing also offer leasing options.
  • Ask for details on wear and tear standards. Dings that you regard as normal wear and tear could be billed as significant damage at the end of your lease.
  • Find out how many miles you can drive in a year. Most leases allow 12,000 to 15,000 miles a year. Expect a charge of 10 to 25 cents for each additional mile.
  • Check the manufacturer's warranty. It should cover the entire lease term and the number of miles you are likely to drive.
  • Ask the dealer what happens if you give up the car before the end of your lease. There may be extra fees for doing so.
  • Ask what happens if the car is involved in an accident.
  • Get all the terms in writing. Everything included with the car should be listed on the lease to avoid being charged for "missing" equipment later.

The Federal Reserve Board of Governors offers a consumer guide to auto leasing.

Financing

Most car buyers today need some form of financing to purchase a new vehicle. Many use direct lending, that is, a loan from a finance company, bank, or credit union. In direct lending, a buyer agrees to pay the amount financed, plus an agreed-upon finance charge, over a specified period. Once a buyer and a vehicle dealership enter into a contract to purchase a vehicle, the buyer uses the loan proceeds from the direct lender to pay the dealership for the vehicle. Another common form is dealership financing, which offers convenience, financing options, and sometimes special, manufacturer-sponsored, low-rate deals. Before you make a financing decision, it's important to do your research:

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

Credit and Sublease Brokers

Con artists often prey on people who have bad credit and who cannot get car loans. "Credit brokers" promise to get a loan for you in exchange for a high fee. In many cases, the "broker" takes the fee and disappears. "Sublease brokers" charge a fee to arrange for you to "sublease" or "take over" someone else's car lease or loan. Such deals usually violate the original loan or lease agreement. Your car can be repossessed even if you've made all of your payments. You also might have trouble insuring your car.

The Irs 2012 Tax Forms 1040ez

Irs 2012 tax forms 1040ez 2. Irs 2012 tax forms 1040ez   Tax Shelters and Other Reportable Transactions Table of Contents Introduction Topics - This chapter discusses: Useful Items - You may want to see: Abusive Tax SheltersRules To Curb Abusive Tax Shelters Investor Reporting Penalties Whether To Invest Introduction Investments that yield tax benefits are sometimes called “tax shelters. Irs 2012 tax forms 1040ez ” In some cases, Congress has concluded that the loss of revenue is an acceptable side effect of special tax provisions designed to encourage taxpayers to make certain types of investments. Irs 2012 tax forms 1040ez In many cases, however, losses from tax shelters produce little or no benefit to society, or the tax benefits are exaggerated beyond those intended. Irs 2012 tax forms 1040ez Those cases are called “abusive tax shelters. Irs 2012 tax forms 1040ez ” An investment that is considered a tax shelter is subject to restrictions, including the requirement that it be disclosed, as discussed later. Irs 2012 tax forms 1040ez Topics - This chapter discusses: Abusive Tax Shelters , Rules To Curb Abusive Tax Shelters , Investor Reporting , Penalties , and Whether To Invest . Irs 2012 tax forms 1040ez Useful Items - You may want to see: Publication 538 Accounting Periods and Methods 556 Examination of Returns, Appeal Rights, and Claims for Refund 561 Determining the Value of Donated Property 925 Passive Activity and At-Risk Rules Form (and Instructions) 8275 Disclosure Statement 8275-R Regulation Disclosure Statement 8283 Noncash Charitable Contributions 8886 Reportable Transaction Disclosure Statement See chapter 5, How To Get Tax Help , for information about getting these publications and forms. Irs 2012 tax forms 1040ez Abusive Tax Shelters Abusive tax shelters are marketing schemes involving artificial transactions with little or no economic reality. Irs 2012 tax forms 1040ez They often make use of unrealistic allocations, inflated appraisals, losses in connection with nonrecourse loans, mismatching of income and deductions, financing techniques that do not conform to standard commercial business practices, or mischaracterization of the substance of the transaction. Irs 2012 tax forms 1040ez Despite appearances to the contrary, the taxpayer generally risks little. Irs 2012 tax forms 1040ez Abusive tax shelters commonly involve package deals designed from the start to generate losses, deductions, or credits that will be far more than present or future investment. Irs 2012 tax forms 1040ez Or, they may promise investors from the start that future inflated appraisals will enable them, for example, to reap charitable contribution deductions based on those appraisals. Irs 2012 tax forms 1040ez (But see the appraisal requirements discussed under Rules To Curb Abusive Tax Shelters , later. Irs 2012 tax forms 1040ez ) They are commonly marketed in terms of the ratio of tax deductions allegedly available to each dollar invested. Irs 2012 tax forms 1040ez This ratio (or “write-off”) is frequently said to be several times greater than one-to-one. Irs 2012 tax forms 1040ez Because there are many abusive tax shelters, it is not possible to list all the factors you should consider in determining whether an offering is an abusive tax shelter. Irs 2012 tax forms 1040ez However, you should ask the following questions, which might provide a clue to the abusive nature of the plan. Irs 2012 tax forms 1040ez Do the tax benefits far outweigh the economic benefits? Is this a transaction you would seriously consider, apart from the tax benefits, if you hoped to make a profit? Do shelter assets really exist and, if so, are they insured for less than their purchase price? Is there a nontax justification for the way profits and losses are allocated to partners? Do the facts and supporting documents make economic sense? In that connection, are there sales and resales of the tax shelter property at ever increasing prices? Does the investment plan involve a gimmick, device, or sham to hide the economic reality of the transaction? Does the promoter offer to backdate documents after the close of the year? Are you instructed to backdate checks covering your investment? Is your debt a real debt or are you assured by the promoter that you will never have to pay it? Does this transaction involve laundering United States source income through foreign corporations incorporated in a tax haven and owned by United States shareholders? Rules To Curb Abusive Tax Shelters Congress has enacted a series of income tax laws designed to halt the growth of abusive tax shelters. Irs 2012 tax forms 1040ez These provisions include the following. Irs 2012 tax forms 1040ez Disclosure of reportable transactions. Irs 2012 tax forms 1040ez   You must disclose information for each reportable transaction in which you participate. Irs 2012 tax forms 1040ez See Reportable Transaction Disclosure Statement , later. Irs 2012 tax forms 1040ez   Material advisors with respect to any reportable transaction must disclose information about the transaction on Form 8918, Material Advisor Disclosure Statement. Irs 2012 tax forms 1040ez To determine whether you are a material advisor to a transaction, see the Instructions for Form 8918. Irs 2012 tax forms 1040ez   Material advisors will receive a reportable transaction number for the disclosed reportable transaction. Irs 2012 tax forms 1040ez They must provide this number to all persons to whom they acted as a material advisor. Irs 2012 tax forms 1040ez They must provide the number at the time the transaction is entered into. Irs 2012 tax forms 1040ez If they do not have the number at that time, they must provide it within 60 days from the date the number is mailed to them. Irs 2012 tax forms 1040ez For information on penalties for failure to disclose and failure to maintain lists, see Internal Revenue Code sections 6707, 6707A, and 6708. Irs 2012 tax forms 1040ez Requirement to maintain list. Irs 2012 tax forms 1040ez   Material advisors must maintain a list of persons to whom they provide material aid, assistance, or advice on any reportable transaction. Irs 2012 tax forms 1040ez The list must be available for inspection by the IRS, and the information required to be included on the list generally must be kept for 7 years. Irs 2012 tax forms 1040ez See Regulations section 301. Irs 2012 tax forms 1040ez 6112-1 for more information (including what information is required to be included on the list). Irs 2012 tax forms 1040ez Confidentiality privilege. Irs 2012 tax forms 1040ez   The confidentiality privilege between you and a federally authorized tax practitioner does not apply to written communications made after October 21, 2004, regarding the promotion of your direct or indirect participation in any tax shelter. Irs 2012 tax forms 1040ez Appraisal requirement for donated property. Irs 2012 tax forms 1040ez   If you claim a deduction of more than $5,000 for an item or group of similar items of donated property, you generally must get a qualified appraisal from a qualified appraiser and complete and attach section B of Form 8283 to your return. Irs 2012 tax forms 1040ez If you claim a deduction of more than $500,000 for the donated property, you generally must attach the qualified appraisal to your return. Irs 2012 tax forms 1040ez If you file electronically, see Form 8453, U. Irs 2012 tax forms 1040ez S. Irs 2012 tax forms 1040ez Individual Income Tax Transmittal for an IRS e-file Return, and its instructions. Irs 2012 tax forms 1040ez For more information about appraisals, including exceptions, see Publication 561. Irs 2012 tax forms 1040ez Passive activity loss and credit limits. Irs 2012 tax forms 1040ez   The passive activity loss and credit rules limit the amount of losses and credits that can be claimed from passive activities and limit the amount that can offset nonpassive income, such as certain portfolio income from investments. Irs 2012 tax forms 1040ez For more detailed information about determining and reporting income, losses, and credits from passive activities, see Publication 925. Irs 2012 tax forms 1040ez Interest on penalties. Irs 2012 tax forms 1040ez   If you are assessed an accuracy-related or civil fraud penalty (as discussed under Penalties , later), interest will be imposed on the amount of the penalty from the due date of the return (including any extensions) to the date you pay the penalty. Irs 2012 tax forms 1040ez Accounting method restriction. Irs 2012 tax forms 1040ez   Tax shelters generally cannot use the cash method of accounting. Irs 2012 tax forms 1040ez Uniform capitalization rules. Irs 2012 tax forms 1040ez   The uniform capitalization rules generally apply to producing property or acquiring it for resale. Irs 2012 tax forms 1040ez Under those rules, the direct cost and part of the indirect cost of the property must be capitalized or included in inventory. Irs 2012 tax forms 1040ez For more information, see Publication 538. Irs 2012 tax forms 1040ez Denial of deduction for interest on an underpayment due to a reportable transaction. Irs 2012 tax forms 1040ez   You cannot deduct any interest you paid or accrued on any part of an underpayment of tax due to an understatement arising from a reportable transaction (discussed later) if the relevant facts affecting the tax treatment of the item are not adequately disclosed. Irs 2012 tax forms 1040ez This rule applies to reportable transactions entered into in tax years beginning after October 22, 2004. Irs 2012 tax forms 1040ez Authority for Disallowance of Tax Benefits The IRS has published guidance concluding that the claimed tax benefits of various abusive tax shelters should be disallowed. Irs 2012 tax forms 1040ez The guidance is the conclusion of the IRS on how the law is applied to a particular set of facts. Irs 2012 tax forms 1040ez Guidance is published in the Internal Revenue Bulletin for taxpayers' information and also for use by IRS officials. Irs 2012 tax forms 1040ez So, if your return is examined and an abusive tax shelter is identified and challenged, published guidance dealing with that type of shelter, which disallows certain claimed tax shelter benefits, could serve as the basis for the examining official's challenge of the tax benefits you claimed. Irs 2012 tax forms 1040ez In such a case, the examiner will not compromise even if you or your representative believes you have authority for the positions taken on your tax return. Irs 2012 tax forms 1040ez The courts have generally been unsympathetic to taxpayers involved in abusive tax shelter schemes and have ruled in favor of the IRS in the majority of the cases in which these shelters have been challenged. Irs 2012 tax forms 1040ez Investor Reporting You may be required to file a reportable transaction disclosure statement. Irs 2012 tax forms 1040ez Reportable Transaction Disclosure Statement Use Form 8886 to disclose information for each reportable transaction (discussed later) in which you participated. Irs 2012 tax forms 1040ez Generally, you must attach Form 8886 to your return for each tax year in which you participated in the transaction. Irs 2012 tax forms 1040ez Under certain circumstances, a transaction must be disclosed within 90 days of the transaction being identified as a listed transaction or a transaction of interest (discussed later). Irs 2012 tax forms 1040ez In addition, for the first year Form 8886 is attached to your return, you must send a copy of the form to: Internal Revenue Service OTSA Mail Stop 4915 1973 North Rulon White Blvd. Irs 2012 tax forms 1040ez  Ogden, UT 84404 If you file your return electronically, the copy sent to OTSA must show exactly the same information, word for word, provided with the electronically filed return and it must be provided on the official IRS Form 8886 or an exact copy of the form. Irs 2012 tax forms 1040ez If you use a computer-generated or substitute Form 8886, it must be an exact copy of the official IRS form. Irs 2012 tax forms 1040ez If you fail to file Form 8886 as required or fail to include any required information on the form, you may have to pay a penalty. Irs 2012 tax forms 1040ez See Penalty for failure to disclose a reportable transaction , later under Penalties. Irs 2012 tax forms 1040ez The following discussion briefly describes reportable transactions. Irs 2012 tax forms 1040ez For more details, see the Instructions for Form 8886. Irs 2012 tax forms 1040ez Reportable transaction. Irs 2012 tax forms 1040ez   A reportable transaction is any of the following. Irs 2012 tax forms 1040ez A listed transaction. Irs 2012 tax forms 1040ez A confidential transaction. Irs 2012 tax forms 1040ez A transaction with contractual protection. Irs 2012 tax forms 1040ez A loss transaction. Irs 2012 tax forms 1040ez A transaction of interest entered into after November 1, 2006. Irs 2012 tax forms 1040ez Note. Irs 2012 tax forms 1040ez Transactions with a brief asset holding period were removed from the definition of reportable transaction for transactions entered into after August 2, 2007. Irs 2012 tax forms 1040ez Listed transaction. Irs 2012 tax forms 1040ez   A listed transaction is the same as, or substantially similar to, one of the types of transactions the IRS has determined to be a tax-avoidance transaction. Irs 2012 tax forms 1040ez These transactions have been identified in notices, regulations, and other published guidance issued by the IRS. Irs 2012 tax forms 1040ez For a list of existing guidance, see Notice 2009-59 in Internal Revenue Bulletin 2009-31, available at www. Irs 2012 tax forms 1040ez irs. Irs 2012 tax forms 1040ez gov/irb/2009-31_IRB/ar07. Irs 2012 tax forms 1040ez html. Irs 2012 tax forms 1040ez Confidential transaction. Irs 2012 tax forms 1040ez   A confidential transaction is offered to you under conditions of confidentiality and for which you have paid an advisor a minimum fee. Irs 2012 tax forms 1040ez A transaction is offered under conditions of confidentiality if the advisor who is paid the fee places a limit on your disclosure of the tax treatment or tax structure of the transaction and the limit protects the confidentiality of the advisor's tax strategies. Irs 2012 tax forms 1040ez The transaction is treated as confidential even if the conditions of confidentiality are not legally binding on you. Irs 2012 tax forms 1040ez Transaction with contractual protection. Irs 2012 tax forms 1040ez   Generally, a transaction with contractual protection is one in which you or a related party has the right to a full or partial refund of fees if all or part of the intended tax consequences of the transaction are not sustained, or a transaction for which the fees are contingent on your realizing the tax benefits from the transaction. Irs 2012 tax forms 1040ez For information on exceptions, see Revenue Procedure 2007-20 in Internal Revenue Bulletin 2007-7, available at www. Irs 2012 tax forms 1040ez irs. Irs 2012 tax forms 1040ez gov/irb/2007-07_IRB/ar15. Irs 2012 tax forms 1040ez html. Irs 2012 tax forms 1040ez Loss transaction. Irs 2012 tax forms 1040ez   For individuals, a loss transaction is one that results in a deductible loss if the gross amount of the loss is at least $2 million in a single tax year or $4 million in any combination of tax years. Irs 2012 tax forms 1040ez A loss from a foreign currency transaction under Internal Revenue Code section 988 is a loss transaction if the gross amount of the loss is at least $50,000 in a single tax year, whether or not the loss flows through from an S corporation or partnership. Irs 2012 tax forms 1040ez   Certain losses (such as losses from casualties, thefts, and condemnations) are excepted from this category and do not have to be reported on Form 8886. Irs 2012 tax forms 1040ez For information on other exceptions, see Revenue Procedure 2004-66 in Internal Revenue Bulletin 2004-50, as modified and superseded by Revenue Procedure 2013-11, (or future published guidance) available at www. Irs 2012 tax forms 1040ez irs. Irs 2012 tax forms 1040ez gov/irb/2004-50_IRB/ar11. Irs 2012 tax forms 1040ez html. Irs 2012 tax forms 1040ez Transaction of interest. Irs 2012 tax forms 1040ez   A transaction of interest is a transaction entered into after November 1, 2006, that is the same as, or substantially similar to, one of the types of transactions that the IRS has identified by notice, regulation, or other form of published guidance as a transaction of interest. Irs 2012 tax forms 1040ez The IRS has identified the following transactions of interest. Irs 2012 tax forms 1040ez “Toggling” grantor trusts as described in Notice 2007-73, 2007-36 I. Irs 2012 tax forms 1040ez R. Irs 2012 tax forms 1040ez B. Irs 2012 tax forms 1040ez 545, available at www. Irs 2012 tax forms 1040ez irs. Irs 2012 tax forms 1040ez gov/irb/2007-36_IRB/ar20. Irs 2012 tax forms 1040ez html. Irs 2012 tax forms 1040ez Certain transactions involving contributions of a successor member interest in a limited liability company as described in Notice 2007-72, 2007-36 I. Irs 2012 tax forms 1040ez R. Irs 2012 tax forms 1040ez B. Irs 2012 tax forms 1040ez 544, available at www. Irs 2012 tax forms 1040ez irs. Irs 2012 tax forms 1040ez gov/irb/2007-36_IRB/ar19. Irs 2012 tax forms 1040ez html. Irs 2012 tax forms 1040ez Certain transactions involving the sale or other disposition of all interests in a charitable remainder trust and claiming little or no taxable gain as described in Notice 2008-99, 2008-47 I. Irs 2012 tax forms 1040ez R. Irs 2012 tax forms 1040ez B. Irs 2012 tax forms 1040ez 1194, available at www. Irs 2012 tax forms 1040ez irs. Irs 2012 tax forms 1040ez gov/irb/2008-47_IRB/ar11. Irs 2012 tax forms 1040ez html. Irs 2012 tax forms 1040ez Certain transactions involving a U. Irs 2012 tax forms 1040ez S. Irs 2012 tax forms 1040ez taxpayer owning controlled foreign corporations (CFCs) that hold stock of a lower-tier CFC through a domestic partnership to avoid reporting income as described in Notice 2009-7, 2009-3 I. Irs 2012 tax forms 1040ez R. Irs 2012 tax forms 1040ez B. Irs 2012 tax forms 1040ez 312, available at www. Irs 2012 tax forms 1040ez irs. Irs 2012 tax forms 1040ez gov/irb/2009-03_IRB/ar10. Irs 2012 tax forms 1040ez html. Irs 2012 tax forms 1040ez   For updates to this list, go to www. Irs 2012 tax forms 1040ez irs. Irs 2012 tax forms 1040ez gov/Businesses/Corporations/Abusive-Tax-Shelters-and-Transactions. Irs 2012 tax forms 1040ez Penalties Investing in an abusive tax shelter may lead to substantial expenses. Irs 2012 tax forms 1040ez First, the promoter generally charges a substantial fee. Irs 2012 tax forms 1040ez If your return is examined by the IRS and a tax deficiency is determined, you will be faced with payment of more tax, interest on the underpayment, possibly a 20%, 30%, or even 40% accuracy-related penalty, or a 75% civil fraud penalty. Irs 2012 tax forms 1040ez You may also be subject to the penalty for failure to pay tax. Irs 2012 tax forms 1040ez These penalties are explained in the following paragraphs. Irs 2012 tax forms 1040ez Accuracy-related penalties. Irs 2012 tax forms 1040ez   An accuracy-related penalty of 20% can be imposed for underpayments of tax due to: Negligence or disregard of rules or regulations, Substantial understatement of tax, Substantial valuation misstatement (increased to 40% for gross valuation misstatement), Transaction lacking economic substance (increased to 40% for undisclosed transaction lacking economic substance), or Undisclosed foreign financial asset understatement (40% in all cases). Irs 2012 tax forms 1040ez Except for a transaction lacking economic substance, this penalty will not be imposed if you can show you had reasonable cause for any understatement of tax and that you acted in good faith. Irs 2012 tax forms 1040ez Your failure to disclose a reportable transaction is a strong indication that you failed to act in good faith. Irs 2012 tax forms 1040ez   If you are charged an accuracy-related penalty, interest will be imposed on the amount of the penalty from the due date of the return (including extensions) to the date you pay the penalty. Irs 2012 tax forms 1040ez   The 20% penalties do not apply to any underpayment attributable to a reportable transaction understatement subject to an accuracy-related penalty (discussed later). Irs 2012 tax forms 1040ez Negligence or disregard of rules or regulations. Irs 2012 tax forms 1040ez   The penalty for negligence or disregard of rules or regulations is imposed only on the part of the underpayment due to negligence or disregard of rules or regulations. Irs 2012 tax forms 1040ez The penalty will not be charged if you can show you had reasonable cause for understating your tax and that you acted in good faith. Irs 2012 tax forms 1040ez    Negligence includes any failure to make a reasonable attempt to comply with the provisions of the Internal Revenue Code. Irs 2012 tax forms 1040ez It also includes any failure to keep adequate books and records. Irs 2012 tax forms 1040ez A return position that has a reasonable basis is not negligence. Irs 2012 tax forms 1040ez   Disregard includes any careless, reckless, or intentional disregard of rules or regulations. Irs 2012 tax forms 1040ez   The penalty for disregard of rules and regulations can be avoided if all the following are true. Irs 2012 tax forms 1040ez You keep adequate books and records. Irs 2012 tax forms 1040ez You have a reasonable basis for your position on the tax issue. Irs 2012 tax forms 1040ez You make an adequate disclosure of your position. Irs 2012 tax forms 1040ez Use Form 8275 to make your disclosure and attach it to your return. Irs 2012 tax forms 1040ez To disclose a position contrary to a regulation, use Form 8275-R. Irs 2012 tax forms 1040ez Use Form 8886 to disclose a reportable transaction (discussed earlier). Irs 2012 tax forms 1040ez Substantial understatement of tax. Irs 2012 tax forms 1040ez   An understatement is considered to be substantial if it is more than the greater of: 10% of the tax required to be shown on the return, or $5,000. Irs 2012 tax forms 1040ez An “understatement” is the amount of tax required to be shown on your return for a tax year minus the amount of tax shown on the return, reduced by any rebates. Irs 2012 tax forms 1040ez The term “rebate” generally means a decrease in the tax shown on your original return as the result of your filing an amended return or claim for refund. Irs 2012 tax forms 1040ez   For items other than tax shelters, you can file Form 8275 or Form 8275-R to disclose items that could cause a substantial understatement of income tax. Irs 2012 tax forms 1040ez In that way, you can avoid the substantial understatement penalty if you have a reasonable basis for your position on the tax issue. Irs 2012 tax forms 1040ez Disclosure of the tax shelter item on a tax return does not reduce the amount of the understatement. Irs 2012 tax forms 1040ez   Also, the understatement penalty will not be imposed if you can show there was reasonable cause for the underpayment caused by the understatement and that you acted in good faith. Irs 2012 tax forms 1040ez An important factor in establishing reasonable cause and good faith will be the extent of your effort to determine your proper tax liability under the law. Irs 2012 tax forms 1040ez Substantial valuation misstatement. Irs 2012 tax forms 1040ez   In general, you are liable for a 20% penalty for a substantial valuation misstatement if all the following are true. Irs 2012 tax forms 1040ez The value or adjusted basis of any property claimed on the return is 150% or more of the correct amount. Irs 2012 tax forms 1040ez You underpaid your tax by more than $5,000 because of the misstatement. Irs 2012 tax forms 1040ez You cannot establish that you had reasonable cause for the underpayment and that you acted in good faith. Irs 2012 tax forms 1040ez   You may be assessed a penalty of 40% for a gross valuation misstatement. Irs 2012 tax forms 1040ez If you misstate the value or the adjusted basis of property by 200% or more of the amount determined to be correct, you will be assessed a penalty of 40%, instead of 20%, of the amount you underpaid because of the gross valuation misstatement. Irs 2012 tax forms 1040ez The penalty rate is also 40% if the property's correct value or adjusted basis is zero. Irs 2012 tax forms 1040ez Transaction lacking economic substance. Irs 2012 tax forms 1040ez   The economic substance doctrine only applies to an individual that entered into a transaction in connection with a trade or business or an activity engaged in for the production of income. Irs 2012 tax forms 1040ez For transactions entered into after March 30, 2010, a transaction has economic substance for you as an individual taxpayer only if: The transaction changes your economic position in a meaningful way (apart from federal income tax effects), or You have a substantial purpose (apart from federal income tax effects) for entering into the transaction. Irs 2012 tax forms 1040ez   For purposes of determining whether economic substance exists, a transaction's profit potential will only be taken into account if the present value of the reasonably expected pre-tax profit from the transaction is substantial compared to the present value of the expected net tax benefits that would be allowed if the transaction were respected. Irs 2012 tax forms 1040ez   If any part of your underpayment is due to any disallowance of claimed tax benefits by reason of a transaction lacking economic substance or failing to meet the requirements of any similar rule of law, that part of your underpayment will be subject to the 20% accuracy-related penalty even if you had a reasonable cause and acted in good faith concerning that part. Irs 2012 tax forms 1040ez   Additionally, the penalty increases to 40% if you do not adequately disclose on your return or in a statement attached to your return the relevant facts affecting the tax treatment of a transaction that lacks economic substance. Irs 2012 tax forms 1040ez Relevant facts include any facts affecting the tax treatment of the transaction. Irs 2012 tax forms 1040ez    Any excessive amount of an erroneous claim for an income tax refund or credit (other than a refund or credit related to the earned income credit) that results from a transaction found to be lacking economic substance will not be treated as having a reasonable basis and could be subject to a 20% penalty. Irs 2012 tax forms 1040ez Undisclosed foreign financial asset understatement. Irs 2012 tax forms 1040ez   For tax years beginning after March 18, 2010, you may be liable for a 40% penalty for an understatement of your tax liability due to an undisclosed foreign financial asset. Irs 2012 tax forms 1040ez An undisclosed foreign financial asset is any asset for which an information return, required to be provided under Internal Revenue Code section 6038, 6038B, 6038D, 6046A, or 6048 for any taxable year, is not provided. Irs 2012 tax forms 1040ez The penalty applies to any part of an underpayment related to the following undisclosed foreign financial assets. Irs 2012 tax forms 1040ez Any foreign business you control, reportable on Form 5471, Information Return of U. Irs 2012 tax forms 1040ez S. Irs 2012 tax forms 1040ez Persons With Respect To Certain Foreign Corporations, or Form 8865, Return of U. Irs 2012 tax forms 1040ez S. Irs 2012 tax forms 1040ez Persons With Respect to Certain Foreign Partnerships. Irs 2012 tax forms 1040ez Certain transfers of property to a foreign corporation or partnership, reportable on Form 926, Return by a U. Irs 2012 tax forms 1040ez S. Irs 2012 tax forms 1040ez Transferor of Property to a Foreign Corporation, or certain distributions to a foreign person, reportable on Form 8865. Irs 2012 tax forms 1040ez Your ownership interest in certain foreign financial assets, temporarily reportable on Form 8275 or 8275-R. Irs 2012 tax forms 1040ez    Instead of, or in addition to, Form 8275 or 8275-R, you may have to file Form 8938, Statement of Specified Foreign Financial Assets, with your tax return. Irs 2012 tax forms 1040ez See the Instructions for Form 8938 for details. Irs 2012 tax forms 1040ez    Your acquisition, disposition, or substantial change in ownership interest in a foreign partnership, reportable on Form 8865. Irs 2012 tax forms 1040ez Creation or transfer of money or property to certain foreign trusts, reportable on Form 3520, Annual Return To Report Transactions With Foreign Trusts and Receipt of Certain Foreign Gifts. Irs 2012 tax forms 1040ez Penalty for incorrect appraisals. Irs 2012 tax forms 1040ez   The person who prepares an appraisal of the value of property may have to pay a penalty if: He or she knows, or reasonably should have known, that the appraisal would be used in connection with a return or claim for refund; and The claimed value of the property on a return or claim for refund based on that appraisal results in a substantial valuation misstatement or a gross valuation misstatement as discussed earlier. Irs 2012 tax forms 1040ez For details on the penalty amount and exceptions, see Publication 561. Irs 2012 tax forms 1040ez Penalty for failure to disclose a reportable transaction. Irs 2012 tax forms 1040ez   If you fail to include any required information regarding a reportable transaction (discussed earlier) on a return or statement, you may have to pay a penalty of 75% of the decrease in tax shown on your return as a result of such transaction (or that would have resulted if the transaction were respected for federal tax purposes). Irs 2012 tax forms 1040ez For an individual, the minimum penalty is $5,000 and the maximum is $10,000 (or $100,000 for a listed transaction). Irs 2012 tax forms 1040ez This penalty is in addition to any other penalty that may be imposed. Irs 2012 tax forms 1040ez   The IRS may rescind or abate the penalty for failing to disclose a reportable transaction under certain limited circumstances but cannot rescind the penalty for failing to disclose a listed transaction. Irs 2012 tax forms 1040ez For information on rescission, see Revenue Procedure 2007-21 in Internal Revenue Bulletin 2007-9 available at www. Irs 2012 tax forms 1040ez irs. Irs 2012 tax forms 1040ez gov/irb/2007-09_IRB/ar12. Irs 2012 tax forms 1040ez html. Irs 2012 tax forms 1040ez Accuracy-related penalty for a reportable transaction understatement. Irs 2012 tax forms 1040ez   If you have a reportable transaction understatement, you may have to pay a penalty equal to 20% of the amount of that understatement. Irs 2012 tax forms 1040ez This applies to any item due to a listed transaction or other reportable transaction with a significant purpose of avoiding or evading federal income tax. Irs 2012 tax forms 1040ez The penalty is 30% rather than 20% for the part of any reportable transaction understatement if the transaction was not properly disclosed. Irs 2012 tax forms 1040ez You may not have to pay the 20% penalty if you meet the strengthened reasonable cause and good faith exception. Irs 2012 tax forms 1040ez The reasonable cause and good faith exception does not apply to any part of a reportable transaction understatement attributable to one or more transactions that lack economic substance. Irs 2012 tax forms 1040ez   This penalty does not apply to the part of an understatement on which the fraud penalty, gross valuation misstatement penalty, or penalty for nondisclosure of noneconomic substance transactions is imposed. Irs 2012 tax forms 1040ez Civil fraud penalty. Irs 2012 tax forms 1040ez   If any underpayment of tax on your return is due to fraud, a penalty of 75% of the underpayment will be added to your tax. Irs 2012 tax forms 1040ez Joint return. Irs 2012 tax forms 1040ez   The fraud penalty on a joint return applies to a spouse only if some part of the underpayment is due to the fraud of that spouse. Irs 2012 tax forms 1040ez Failure to pay tax. Irs 2012 tax forms 1040ez   If a deficiency is assessed and is not paid within 10 days of the demand for payment, an investor can be penalized with up to a 25% addition to tax if the failure to pay continues. Irs 2012 tax forms 1040ez Whether To Invest In light of the adverse tax consequences and the substantial amount of penalties and interest that will result if the claimed tax benefits are disallowed, you should consider tax shelter investments carefully and seek competent legal and financial advice. Irs 2012 tax forms 1040ez Prev  Up  Next   Home   More Online Publications