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Irs Gov 1040 Ez

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Irs Gov 1040 Ez

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

Irs gov 1040 ez Internal Revenue Bulletin:  2009-17  April 27, 2009  Rev. Irs gov 1040 ez Proc. Irs gov 1040 ez 2009-24 Table of Contents SECTION 1. Irs gov 1040 ez PURPOSE SECTION 2. Irs gov 1040 ez BACKGROUND SECTION 3. Irs gov 1040 ez SCOPE SECTION 4. Irs gov 1040 ez APPLICATION. Irs gov 1040 ez 01 In General. Irs gov 1040 ez . Irs gov 1040 ez 02 Limitations on Depreciation Deductions for Certain Automobiles. Irs gov 1040 ez . Irs gov 1040 ez 03 Inclusions in Income of Lessees of Passenger Automobiles. Irs gov 1040 ez SECTION 5. Irs gov 1040 ez EFFECTIVE DATE SECTION 6. Irs gov 1040 ez DRAFTING INFORMATION SECTION 1. Irs gov 1040 ez PURPOSE . Irs gov 1040 ez 01 This revenue procedure provides: (1) limitations on depreciation deductions for owners of passenger automobiles first placed in service by the taxpayer during calendar year 2009, including a separate table of limitations on depreciation deductions for trucks and vans; and (2) the amounts to be included in income by lessees of passenger automobiles first leased by the taxpayer during calendar year 2009, including a separate table of inclusion amounts for lessees of trucks and vans. Irs gov 1040 ez . Irs gov 1040 ez 02 The tables detailing these depreciation limitations and lessee inclusion amounts reflect the automobile price inflation adjustments required by § 280F(d)(7) of the Internal Revenue Code. Irs gov 1040 ez SECTION 2. Irs gov 1040 ez BACKGROUND . Irs gov 1040 ez 01 For owners of passenger automobiles, § 280F(a) imposes dollar limitations on the depreciation deduction for the year that the passenger automobile is placed in service by the taxpayer and each succeeding year. Irs gov 1040 ez Section 280F(d)(7) requires the amounts allowable as depreciation deductions to be increased by a price inflation adjustment amount for passenger automobiles placed in service after 1988. Irs gov 1040 ez The method of calculating this price inflation amount for trucks and vans placed in service in or after calendar year 2003 uses a different CPI “automobile component” (the “new trucks” component) than that used in the price inflation amount calculation for other passenger automobiles (the “new cars” component), resulting in somewhat higher depreciation deductions for trucks and vans. Irs gov 1040 ez This change reflects the higher rate of price inflation that trucks and vans have been subject to since 1988. Irs gov 1040 ez . Irs gov 1040 ez 02 Section 168(k)(1)(A) provides a 50 percent additional first year depreciation deduction for certain new property acquired by a taxpayer after December 31, 2007, and before January 1, 2010, if no written binding contract for the acquisition of the property existed before January 1, 2008. Irs gov 1040 ez Section 168(k)(2)(F)(i) increases the first year depreciation allowed under § 280F(a)(1)(A) by $8,000 for passenger automobiles to which the 50 percent additional first year depreciation deduction applies. Irs gov 1040 ez . Irs gov 1040 ez 03 Section 168(k)(2)(D)(i) provides that the 50 percent additional first year depreciation deduction does not apply to any property required to be depreciated under the alternative depreciation system of § 168(g), including property described in § 280F(b)(1). Irs gov 1040 ez Section 168(k)(2)(D)(iii) permits a taxpayer to elect to not claim the 50 percent additional first year depreciation deduction for any class of property. Irs gov 1040 ez Section 168(k)(4) permits a corporation to elect to not claim the 50 percent additional first year depreciation deduction for all eligible qualified property (that is extension property or that is not extension property, as applicable) and instead to increase the business credit limitation under § 38(c) or the alternative minimum tax credit limitation under § 53(c). Irs gov 1040 ez Accordingly, this revenue procedure provides tables for passenger automobiles for which the 50 percent additional depreciation deduction applies and tables for passenger automobiles for which the 50 percent additional first year depreciation deduction does not apply, including passenger automobiles in a class of property for which the taxpayer “elects out” of the 50 percent additional first year depreciation deduction or passenger automobiles that are eligible qualified property to which the § 168(k)(4) election applies. Irs gov 1040 ez . Irs gov 1040 ez 04 For leased passenger automobiles, § 280F(c) requires a reduction in the deduction allowed to the lessee of the passenger automobile. Irs gov 1040 ez The reduction must be substantially equivalent to the limitations on the depreciation deductions imposed on owners of passenger automobiles. Irs gov 1040 ez Under § 1. Irs gov 1040 ez 280F-7(a) of the Income Tax Regulations, this reduction requires a lessee to include in gross income an inclusion amount determined by applying a formula to the amount obtained from a table. Irs gov 1040 ez One table applies to lessees of trucks and vans and another table applies to all other passenger automobiles. Irs gov 1040 ez Each table shows inclusion amounts for a range of fair market values for each taxable year after the passenger automobile is first leased. Irs gov 1040 ez SECTION 3. Irs gov 1040 ez SCOPE . Irs gov 1040 ez 01 The limitations on depreciation deductions in section 4. Irs gov 1040 ez 02(2) of this revenue procedure apply to passenger automobiles (other than leased passenger automobiles) that are placed in service by the taxpayer in calendar year 2009, and continue to apply for each taxable year that the passenger automobile remains in service. Irs gov 1040 ez . Irs gov 1040 ez 02 The tables in section 4. Irs gov 1040 ez 03 of this revenue procedure apply to leased passenger automobiles for which the lease term begins during calendar year 2009. Irs gov 1040 ez Lessees of these passenger automobiles must use these tables to determine the inclusion amount for each taxable year during which the passenger automobile is leased. Irs gov 1040 ez See Rev. Irs gov 1040 ez Proc. Irs gov 1040 ez 2002-14, 2002-1 C. Irs gov 1040 ez B. Irs gov 1040 ez 450, for passenger automobiles first leased before January 1, 2003, Rev. Irs gov 1040 ez Proc. Irs gov 1040 ez 2003-75, 2003-2 C. Irs gov 1040 ez B. Irs gov 1040 ez 1018, for passenger automobiles first leased during calendar year 2003, Rev. Irs gov 1040 ez Proc. Irs gov 1040 ez 2004-20, 2004-1 C. Irs gov 1040 ez B. Irs gov 1040 ez 642, for passenger automobiles first leased during calendar year 2004, Rev. Irs gov 1040 ez Proc. Irs gov 1040 ez 2005-13, 2005-1 C. Irs gov 1040 ez B. Irs gov 1040 ez 759, for passenger automobiles first leased during calendar year 2005, Rev. Irs gov 1040 ez Proc. Irs gov 1040 ez 2006-18, 2006-1 C. Irs gov 1040 ez B. Irs gov 1040 ez 645, for passenger automobiles first leased during calendar year 2006, Rev. Irs gov 1040 ez Proc. Irs gov 1040 ez 2007-30, 2007-1 C. Irs gov 1040 ez B. Irs gov 1040 ez 1104, for passenger automobiles first leased during calendar year 2007, and Rev. Irs gov 1040 ez Proc. Irs gov 1040 ez 2008-22, 2008-12 I. Irs gov 1040 ez R. Irs gov 1040 ez B. Irs gov 1040 ez 658, for passenger automobiles first leased during calendar year 2008. Irs gov 1040 ez SECTION 4. Irs gov 1040 ez APPLICATION . Irs gov 1040 ez 01 In General. Irs gov 1040 ez (1) Limitations on depreciation deductions for certain automobiles. Irs gov 1040 ez The limitations on depreciation deductions for passenger automobiles placed in service by the taxpayer for the first time during calendar year 2009 are in Tables 1 through 4 in section 4. Irs gov 1040 ez 02(2) of this revenue procedure. Irs gov 1040 ez (2) Inclusions in income of lessees of passenger automobiles. Irs gov 1040 ez A taxpayer first leasing a passenger automobile during calendar year 2009 must determine the inclusion amount that is added to gross income using Tables 5 and 6 in section 4. Irs gov 1040 ez 03 of this revenue procedure. Irs gov 1040 ez In addition, the taxpayer must follow the procedures of § 1. Irs gov 1040 ez 280F-7(a). Irs gov 1040 ez . Irs gov 1040 ez 02 Limitations on Depreciation Deductions for Certain Automobiles. Irs gov 1040 ez (1) Amount of the inflation adjustment. Irs gov 1040 ez (a) Passenger automobiles (other than trucks or vans). Irs gov 1040 ez Under § 280F(d)(7)(B)(i), the automobile price inflation adjustment for any calendar year is the percentage (if any) by which the CPI automobile component for October of the preceding calendar year exceeds the CPI automobile component for October 1987. Irs gov 1040 ez The term “CPI automobile component” is defined in § 280F(d)(7)(B)(ii) as the “automobile component” of the Consumer Price Index for all Urban Consumers published by the Department of Labor. Irs gov 1040 ez The new car component of the CPI was 115. Irs gov 1040 ez 2 for October 1987 and 134. Irs gov 1040 ez 837 for October 2008. Irs gov 1040 ez The October 2008 index exceeded the October 1987 index by 19. Irs gov 1040 ez 637. Irs gov 1040 ez The Internal Revenue Service has, therefore, determined that the automobile price inflation adjustment for 2009 for passenger automobiles (other than trucks and vans) is 17. Irs gov 1040 ez 05 percent (19. Irs gov 1040 ez 637/115. Irs gov 1040 ez 2 x 100%). Irs gov 1040 ez This adjustment is applicable to all passenger automobiles (other than trucks and vans) that are first placed in service in calendar year 2009. Irs gov 1040 ez The dollar limitations in § 280F(a) therefore must be multiplied by a factor of 0. Irs gov 1040 ez 1705, and the resulting increases, after rounding to the nearest $100, are added to the 1988 limitations to give the depreciation limitations applicable to passenger automobiles (other than trucks and vans) for calendar year 2009. Irs gov 1040 ez (b) Trucks and vans. Irs gov 1040 ez To determine the dollar limitations applicable to trucks and vans first placed in service during calendar year 2009, the new truck component of the CPI is used instead of the new car component. Irs gov 1040 ez The new truck component of the CPI was 112. Irs gov 1040 ez 4 for October 1987 and 133. Irs gov 1040 ez 640 for October 2008. Irs gov 1040 ez The October 2008 index exceeded the October 1987 index by 21. Irs gov 1040 ez 24. Irs gov 1040 ez The Service has, therefore, determined that the automobile price inflation adjustment for 2009 for trucks and vans is 18. Irs gov 1040 ez 90 percent (21. Irs gov 1040 ez 24/112. Irs gov 1040 ez 4 x 100%). Irs gov 1040 ez This adjustment is applicable to all trucks and vans that are first placed in service in calendar year 2009. Irs gov 1040 ez The dollar limitations in § 280F(a) therefore must be multiplied by a factor of 0. Irs gov 1040 ez 1890, and the resulting increases, after rounding to the nearest $100, are added to the 1988 limitations to give the depreciation limitations applicable to trucks and vans. Irs gov 1040 ez (2) Amount of the limitation. Irs gov 1040 ez For passenger automobiles placed in service by the taxpayer in calendar year 2009, Tables 1 through 4 contain the dollar amount of the depreciation limitation for each taxable year. Irs gov 1040 ez Use Table 1 for a passenger automobile (other than a truck or van) placed in service by the taxpayer in calendar year 2009, for which the 50 percent additional first year depreciation deduction does not apply, including a passenger automobile (other than a truck or van) in a class of property for which the taxpayer elects out of the 50 percent additional first year depreciation deduction or a passenger automobile that is eligible qualified property to which the § 168(k)(4) election applies. Irs gov 1040 ez Use Table 2 for a passenger automobile (other than a truck or van) placed in service by the taxpayer in calendar year 2009, for which the 50 percent additional first year depreciation deduction applies. Irs gov 1040 ez Use Table 3 for a truck or van placed in service by the taxpayer in calendar year 2009, for which the 50 percent additional first year depreciation deduction does not apply, including a truck or van in a class of property for which the taxpayer elects out of the 50 percent additional first year depreciation deduction or a truck or van that is eligible qualified property to which the § 168(k)(4) election applies. Irs gov 1040 ez Use Table 4 for a truck or van placed in service by the taxpayer in calendar year 2009, for which the 50 percent additional first year depreciation deduction applies. Irs gov 1040 ez REV. Irs gov 1040 ez PROC. Irs gov 1040 ez 2009-24 TABLE 1 DEPRECIATION LIMITATIONS FOR PASSENGER AUTOMOBILES (THAT ARE NOT TRUCKS OR VANS) PLACED IN SERVICE BY THE TAXPAYER IN CALENDAR YEAR 2009, FOR WHICH THE 50 PERCENT ADDITIONAL FIRST YEAR DEPRECIATION DEDUCTION DOES NOT APPLY Tax Year Amount 1st Tax Year $2,960 2nd Tax Year $4,800 3rd Tax Year $2,850 Each Succeeding Year $1,775 REV. Irs gov 1040 ez PROC. Irs gov 1040 ez 2009-24 TABLE 2 DEPRECIATION LIMITATIONS FOR PASSENGER AUTOMOBILES (THAT ARE NOT TRUCKS OR VANS) PLACED IN SERVICE BY THE TAXPAYER IN CALENDAR YEAR 2009, FOR WHICH THE 50 PERCENT ADDITIONAL FIRST YEAR DEPRECIATION DEDUCTION APPLIES Tax Year Amount 1st Tax Year $10,960 2nd Tax Year $4,800 3rd Tax Year $2,850 Each Succeeding Year $1,775 REV. Irs gov 1040 ez PROC. Irs gov 1040 ez 2009-24 TABLE 3 DEPRECIATION LIMITATIONS FOR TRUCKS AND VANS PLACED IN SERVICE BY THE TAXPAYER IN CALENDAR YEAR 2009, FOR WHICH THE 50 PERCENT ADDITIONAL FIRST YEAR DEPRECIATION DEDUCTION DOES NOT APPLY Tax Year Amount 1st Tax Year $3,060 2nd Tax Year $4,900 3rd Tax Year $2,950 Each Succeeding Year $1,775 REV. Irs gov 1040 ez PROC. Irs gov 1040 ez 2009-24 TABLE 4 DEPRECIATION LIMITATIONS FOR TRUCKS AND VANS PLACED IN SERVICE BY THE TAXPAYER IN CALENDAR YEAR 2009, FOR WHICH THE 50 PERCENT ADDITIONAL FIRST YEAR DEPRECIATION DEDUCTION APPLIES Tax Year Amount 1st Tax Year $11,060 2nd Tax Year $4,900 3rd Tax Year $2,950 Each Succeeding Year $1,775 . Irs gov 1040 ez 03 Inclusions in Income of Lessees of Passenger Automobiles. Irs gov 1040 ez The inclusion amounts for passenger automobiles first leased in calendar year 2009 are calculated under the procedures described in § 1. Irs gov 1040 ez 280F-7(a). Irs gov 1040 ez Lessees of passenger automobiles other than trucks and vans should use Table 5 of this revenue procedure in applying these procedures, while lessees of trucks and vans should use Table 6 of this revenue procedure. Irs gov 1040 ez REV. Irs gov 1040 ez PROC. Irs gov 1040 ez 2009-24 TABLE 5 DOLLAR AMOUNTS FOR PASSENGER AUTOMOBILES (THAT ARE NOT TRUCKS OR VANS) WITH A LEASE TERM BEGINNING IN CALENDAR YEAR 2009 Fair Market Value of Passenger Automobile Tax Year During Lease Over Not Over 1st 2nd 3rd 4th 5th & Later $18,500 $19,000 9 19 28 34 38 19,000 19,500 10 21 32 38 43 19,500 20,000 11 24 36 42 48 20,000 20,500 12 27 39 46 54 20,500 21,000 13 29 43 51 58 21,000 21,500 15 31 47 55 64 21,500 22,000 16 34 50 60 68 22,000 23,000 17 38 56 66 76 23,000 24,000 20 42 64 75 86 24,000 25,000 22 47 71 84 96 25,000 26,000 24 52 78 93 107 26,000 27,000 26 58 85 101 117 27,000 28,000 29 62 93 110 127 28,000 29,000 31 67 100 119 138 29,000 30,000 33 72 108 128 147 30,000 31,000 35 77 115 137 157 31,000 32,000 38 82 122 146 167 32,000 33,000 40 87 129 155 178 33,000 34,000 42 92 137 163 188 34,000 35,000 44 97 144 172 199 35,000 36,000 47 102 151 181 208 36,000 37,000 49 107 159 189 219 37,000 38,000 51 112 166 199 228 38,000 39,000 53 117 173 208 239 39,000 40,000 56 122 180 216 250 40,000 41,000 58 127 188 225 259 41,000 42,000 60 132 195 234 269 42,000 43,000 62 137 203 242 280 43,000 44,000 65 141 210 252 290 44,000 45,000 67 146 218 260 300 45,000 46,000 69 151 225 269 311 46,000 47,000 71 157 232 278 320 47,000 48,000 74 161 240 286 331 48,000 49,000 76 166 247 296 340 49,000 50,000 78 171 255 304 351 50,000 51,000 80 176 262 313 361 51,000 52,000 83 181 269 322 371 52,000 53,000 85 186 276 331 381 53,000 54,000 87 191 284 339 392 54,000 55,000 89 196 291 349 401 55,000 56,000 92 201 298 357 412 56,000 57,000 94 206 306 365 423 57,000 58,000 96 211 313 375 432 58,000 59,000 98 216 320 384 442 59,000 60,000 101 221 327 393 452 60,000 62,000 104 228 339 406 467 62,000 64,000 109 238 353 424 488 64,000 66,000 113 248 368 441 509 66,000 68,000 118 258 382 459 529 68,000 70,000 122 268 397 476 550 70,000 72,000 127 277 413 493 570 72,000 74,000 131 288 427 511 590 74,000 76,000 136 297 442 529 610 76,000 78,000 140 307 457 546 631 78,000 80,000 145 317 471 564 651 80,000 85,000 152 335 497 595 686 85,000 90,000 164 359 534 639 737 90,000 95,000 175 384 570 683 789 95,000 100,000 186 409 607 727 839 100,000 110,000 203 446 662 793 916 110,000 120,000 226 495 736 881 1,018 120,000 130,000 248 545 809 970 1,119 130,000 140,000 271 594 883 1,058 1,220 140,000 150,000 293 644 956 1,146 1,322 150,000 160,000 316 693 1,030 1,234 1,424 160,000 170,000 338 743 1,103 1,322 1,526 170,000 180,000 361 792 1,177 1,410 1,628 180,000 190,000 383 842 1,250 1,498 1,730 190,000 200,000 406 891 1,324 1,586 1,831 200,000 210,000 428 941 1,397 1,675 1,932 210,000 220,000 451 990 1,471 1,762 2,035 220,000 230,000 473 1,040 1,544 1,851 2,136 230,000 240,000 496 1,089 1,618 1,939 2,238 240,000 And up 518 1,139 1,691 2,027 2,340 REV. Irs gov 1040 ez PROC. Irs gov 1040 ez 2009-24 TABLE 6 DOLLAR AMOUNTS FOR TRUCKS AND VANS WITH A LEASE TERM BEGINNING IN CALENDAR YEAR 2009 Fair Market Value of Electric Automobile Tax Year During Lease Over Not Over 1st 2nd 3rd 4th 5th and Later $18,500 $19,000 8 17 25 30 35 19,000 19,500 9 19 29 35 40 19,500 20,000 10 22 33 38 45 20,000 20,500 11 25 36 43 50 20,500 21,000 12 27 40 48 55 21,000 21,500 13 30 43 52 60 21,500 22,000 15 32 47 56 66 22,000 23,000 16 36 52 64 72 23,000 24,000 18 41 60 72 83 24,000 25,000 21 45 68 81 93 25,000 26,000 23 50 75 90 103 26,000 27,000 25 56 82 98 114 27,000 28,000 27 61 89 107 124 28,000 29,000 30 65 97 116 134 29,000 30,000 32 70 104 125 144 30,000 31,000 34 75 112 134 154 31,000 32,000 36 80 119 143 164 32,000 33,000 39 85 126 151 175 33,000 34,000 41 90 134 160 184 34,000 35,000 43 95 141 169 195 35,000 36,000 45 100 148 178 205 36,000 37,000 48 105 155 187 215 37,000 38,000 50 110 163 195 226 38,000 39,000 52 115 170 204 236 39,000 40,000 55 120 177 213 246 40,000 41,000 57 125 185 221 256 41,000 42,000 59 130 192 231 266 42,000 43,000 61 135 199 240 276 43,000 44,000 64 139 207 249 286 44,000 45,000 66 144 215 257 296 45,000 46,000 68 149 222 266 307 46,000 47,000 70 155 229 274 317 47,000 48,000 73 159 237 283 327 48,000 49,000 75 164 244 292 338 49,000 50,000 77 169 251 301 348 50,000 51,000 79 174 259 310 357 51,000 52,000 82 179 266 318 368 52,000 53,000 84 184 273 328 378 53,000 54,000 86 189 281 336 388 54,000 55,000 88 194 288 345 399 55,000 56,000 91 199 295 354 408 56,000 57,000 93 204 302 363 419 57,000 58,000 95 209 310 371 429 58,000 59,000 97 214 317 381 439 59,000 60,000 100 219 324 389 450 60,000 62,000 103 226 336 402 465 62,000 64,000 107 236 351 420 485 64,000 66,000 112 246 365 438 505 66,000 68,000 116 256 380 455 526 68,000 70,000 121 266 394 473 546 70,000 72,000 125 276 409 491 566 72,000 74,000 130 286 423 509 586 74,000 76,000 134 296 438 526 607 76,000 78,000 139 305 454 543 627 78,000 80,000 143 316 467 561 648 80,000 85,000 151 333 493 592 684 85,000 90,000 163 357 531 635 735 90,000 95,000 174 382 567 680 785 95,000 100,000 185 407 604 724 836 100,000 110,000 202 444 659 790 912 110,000 120,000 225 493 733 878 1,014 120,000 130,000 247 543 806 966 1,116 130,000 140,000 270 592 880 1,054 1,218 140,000 150,000 292 642 953 1,143 1,319 150,000 160,000 315 691 1,027 1,230 1,421 160,000 170,000 337 741 1,100 1,319 1,522 170,000 180,000 360 790 1,174 1,407 1,624 180,000 190,000 382 840 1,247 1,495 1,726 190,000 200,000 405 889 1,321 1,583 1,828 200,000 210,000 427 939 1,394 1,671 1,930 210,000 220,000 450 988 1,468 1,759 2,031 220,000 230,000 472 1,038 1,541 1,847 2,134 230,000 240,000 495 1,087 1,615 1,935 2,235 240,000 and up 517 1,137 1,688 2,024 2,336 SECTION 5. Irs gov 1040 ez EFFECTIVE DATE This revenue procedure applies to passenger automobiles (other than leased passenger automobiles) that are first placed in service by a taxpayer during calendar year 2009, and to leased passenger automobiles that are first leased by a taxpayer during calendar year 2009. Irs gov 1040 ez SECTION 6. Irs gov 1040 ez DRAFTING INFORMATION The principal author of this revenue procedure is Bernard P. Irs gov 1040 ez Harvey of the Office of Associate Chief Counsel (Income Tax & Accounting). Irs gov 1040 ez For further information regarding this revenue procedure, contact Mr. Irs gov 1040 ez Harvey at (202) 622-4930 (not a toll-free call). Irs gov 1040 ez Prev  Up  Next   Home   More Internal Revenue Bulletins