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Myfreetax Internal Revenue Bulletin:  2009-17  April 27, 2009  Rev. Myfreetax Proc. Myfreetax 2009-24 Table of Contents SECTION 1. Myfreetax PURPOSE SECTION 2. Myfreetax BACKGROUND SECTION 3. Myfreetax SCOPE SECTION 4. Myfreetax APPLICATION. Myfreetax 01 In General. Myfreetax . Myfreetax 02 Limitations on Depreciation Deductions for Certain Automobiles. Myfreetax . Myfreetax 03 Inclusions in Income of Lessees of Passenger Automobiles. Myfreetax SECTION 5. Myfreetax EFFECTIVE DATE SECTION 6. Myfreetax DRAFTING INFORMATION SECTION 1. Myfreetax PURPOSE . Myfreetax 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. Myfreetax . Myfreetax 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. Myfreetax SECTION 2. Myfreetax BACKGROUND . Myfreetax 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. Myfreetax 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. Myfreetax 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. Myfreetax This change reflects the higher rate of price inflation that trucks and vans have been subject to since 1988. Myfreetax . Myfreetax 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. Myfreetax 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. Myfreetax . Myfreetax 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). Myfreetax 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. Myfreetax 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). Myfreetax 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. Myfreetax . Myfreetax 04 For leased passenger automobiles, § 280F(c) requires a reduction in the deduction allowed to the lessee of the passenger automobile. Myfreetax The reduction must be substantially equivalent to the limitations on the depreciation deductions imposed on owners of passenger automobiles. Myfreetax Under § 1. Myfreetax 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. Myfreetax One table applies to lessees of trucks and vans and another table applies to all other passenger automobiles. Myfreetax Each table shows inclusion amounts for a range of fair market values for each taxable year after the passenger automobile is first leased. Myfreetax SECTION 3. Myfreetax SCOPE . Myfreetax 01 The limitations on depreciation deductions in section 4. Myfreetax 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. Myfreetax . Myfreetax 02 The tables in section 4. Myfreetax 03 of this revenue procedure apply to leased passenger automobiles for which the lease term begins during calendar year 2009. Myfreetax 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. Myfreetax See Rev. Myfreetax Proc. Myfreetax 2002-14, 2002-1 C. Myfreetax B. Myfreetax 450, for passenger automobiles first leased before January 1, 2003, Rev. Myfreetax Proc. Myfreetax 2003-75, 2003-2 C. Myfreetax B. Myfreetax 1018, for passenger automobiles first leased during calendar year 2003, Rev. Myfreetax Proc. Myfreetax 2004-20, 2004-1 C. Myfreetax B. Myfreetax 642, for passenger automobiles first leased during calendar year 2004, Rev. Myfreetax Proc. Myfreetax 2005-13, 2005-1 C. Myfreetax B. Myfreetax 759, for passenger automobiles first leased during calendar year 2005, Rev. Myfreetax Proc. Myfreetax 2006-18, 2006-1 C. Myfreetax B. Myfreetax 645, for passenger automobiles first leased during calendar year 2006, Rev. Myfreetax Proc. Myfreetax 2007-30, 2007-1 C. Myfreetax B. Myfreetax 1104, for passenger automobiles first leased during calendar year 2007, and Rev. Myfreetax Proc. Myfreetax 2008-22, 2008-12 I. Myfreetax R. Myfreetax B. Myfreetax 658, for passenger automobiles first leased during calendar year 2008. Myfreetax SECTION 4. Myfreetax APPLICATION . Myfreetax 01 In General. Myfreetax (1) Limitations on depreciation deductions for certain automobiles. Myfreetax 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. Myfreetax 02(2) of this revenue procedure. Myfreetax (2) Inclusions in income of lessees of passenger automobiles. Myfreetax 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. Myfreetax 03 of this revenue procedure. Myfreetax In addition, the taxpayer must follow the procedures of § 1. Myfreetax 280F-7(a). Myfreetax . Myfreetax 02 Limitations on Depreciation Deductions for Certain Automobiles. Myfreetax (1) Amount of the inflation adjustment. Myfreetax (a) Passenger automobiles (other than trucks or vans). Myfreetax 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. Myfreetax 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. Myfreetax The new car component of the CPI was 115. Myfreetax 2 for October 1987 and 134. Myfreetax 837 for October 2008. Myfreetax The October 2008 index exceeded the October 1987 index by 19. Myfreetax 637. Myfreetax 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. Myfreetax 05 percent (19. Myfreetax 637/115. Myfreetax 2 x 100%). Myfreetax This adjustment is applicable to all passenger automobiles (other than trucks and vans) that are first placed in service in calendar year 2009. Myfreetax The dollar limitations in § 280F(a) therefore must be multiplied by a factor of 0. Myfreetax 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. Myfreetax (b) Trucks and vans. Myfreetax 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. Myfreetax The new truck component of the CPI was 112. Myfreetax 4 for October 1987 and 133. Myfreetax 640 for October 2008. Myfreetax The October 2008 index exceeded the October 1987 index by 21. Myfreetax 24. Myfreetax The Service has, therefore, determined that the automobile price inflation adjustment for 2009 for trucks and vans is 18. Myfreetax 90 percent (21. Myfreetax 24/112. Myfreetax 4 x 100%). Myfreetax This adjustment is applicable to all trucks and vans that are first placed in service in calendar year 2009. Myfreetax The dollar limitations in § 280F(a) therefore must be multiplied by a factor of 0. Myfreetax 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. Myfreetax (2) Amount of the limitation. Myfreetax 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. Myfreetax 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. Myfreetax 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. Myfreetax 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. Myfreetax 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. Myfreetax REV. Myfreetax PROC. Myfreetax 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. Myfreetax PROC. Myfreetax 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. Myfreetax PROC. Myfreetax 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. Myfreetax PROC. Myfreetax 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 . Myfreetax 03 Inclusions in Income of Lessees of Passenger Automobiles. Myfreetax The inclusion amounts for passenger automobiles first leased in calendar year 2009 are calculated under the procedures described in § 1. Myfreetax 280F-7(a). Myfreetax 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. Myfreetax REV. Myfreetax PROC. Myfreetax 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. Myfreetax PROC. Myfreetax 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. Myfreetax 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. Myfreetax SECTION 6. Myfreetax DRAFTING INFORMATION The principal author of this revenue procedure is Bernard P. Myfreetax Harvey of the Office of Associate Chief Counsel (Income Tax & Accounting). Myfreetax For further information regarding this revenue procedure, contact Mr. Myfreetax Harvey at (202) 622-4930 (not a toll-free call). Myfreetax Prev  Up  Next   Home   More Internal Revenue Bulletins
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Mission:

Our dedicated acquisition professionals deliver world class, customer-focused acquisition services with the highest degree of integrity and the cooperative effort of our partners.

Vision:

Our vision is to be the best acquisition organization in the Federal Government--best people, best practices, best performance.

Strategic Priorities:

  •  TO BE THE ACQUISITION SERVICES PROVIDER OF CHOICE for all of the IRS and Department of the Treasury to fulfill mission requirements. (Customer Perspective)
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  • TO HAVE THE BEST AND THEN CONTINUALLY IMPROVE OUR BUSINESS PROCESSES to enhance our employee's ability to provide world-class customer-focused acquisition services that fulfill mission requirements. (Business Process Perspective)
  • TO BE THE BEST ACQUISITION ORGANIZATION IN THE FEDERAL GOVERNMENT in providing world-class customer-focused acquisition services that fulfill mission requirements. (Business Results Perspective)

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Management Team:

Jake Hansen, Director, Procurement
Angie Sweitzer, Deputy Director, Procurement
       Mary Killion, Chief, Workforce Management & Support Services
Joe Gregory, Director, Office of Business Operations
      Cindy Lynn, Deputy Director, Office of Business Operations
      Anthony (Tony) McCoy, Chief, Field Operations Branch, Midstates Area
      Peter DiNicola, Chief, Field Operations Branch, Northeast Area
      Dotti Hunter, Chief, Field Operations Branch, Southeast Area
      Vacant, Chief, Field Operations Branch, Western Area
Michael Crawford, Director, Office of Electronic Procurement
Bobby McCane, Director, Office of Information Technology (IT) Acquisition
      Tyuana Bailey, Deputy Director, Office of Information Technology (IT) Acquisition
           IT Services and PRIME Contract Support
      Patrick Bergin, Deputy Director, Office of Information Technology (IT)
           Acquisition, Enterprise Networks and Tier Systems Support                            
Barry Kearns, Director, Office of Procurement Policy
Chris Rodgers, Director, Office of Strategic Acquisition Initiatives
Jeff Jackson, Director, Office of Treasury Procurement Services

 


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The Myfreetax

Myfreetax 13. Myfreetax   Employment Taxes Table of Contents What's New for 2013 What's New for 2014 Reminders Important Dates for 2014 Introduction Topics - This chapter discusses: Useful Items - You may want to see: Farm Employment Family Employees Crew Leaders Social Security and Medicare TaxesReligious exemption. Myfreetax Wage limit. Myfreetax Federal Income Tax WithholdingNew Form W-4 for 2014. Myfreetax Required Notice to Employees About Earned Income Credit (EIC) Reporting and Paying Social Security, Medicare, and Withheld Federal Income TaxesElectronic deposit requirement. Myfreetax Federal Unemployment (FUTA) TaxReporting and Paying FUTA Tax What's New for 2013 Social security and Medicare tax for 2013. Myfreetax  The employee tax rate for social security is 6. Myfreetax 2%. Myfreetax Previously, the employee tax rate for social security was 4. Myfreetax 2%. Myfreetax The employer tax rate for social security remains unchanged at 6. Myfreetax 2%. Myfreetax The social security wage base limit is $113,700. Myfreetax The Medicare tax rate is 1. Myfreetax 45% each for the employee and employer, unchanged from 2012. Myfreetax There is no wage base limit for Medicare tax. Myfreetax Additional Medicare Tax. Myfreetax  In addition to withholding Medicare tax at 1. Myfreetax 45%, you must withhold a 0. Myfreetax 9% Additional Medicare Tax from wages you pay to an employee in excess of $200,000 in a calendar year. Myfreetax You are required to begin withholding Additional Medicare Tax in the pay period in which you pay wages in excess of $200,000 to an employee and continue to withhold it each pay period until the end of the calendar year. Myfreetax Additional Medicare Tax is only imposed on the employee. Myfreetax There is no employer share of Additional Medicare Tax. Myfreetax All wages that are subject to Medicare tax are subject to Additional Medicare Tax withholding if paid in excess of the $200,000 threshold. Myfreetax For more information on what wages are subject to Medicare tax, see the chart, Special Rules for Various Types of Services and Payments, in section 15 of Publication 15 (Circular E), Employer's Tax Guide. Myfreetax For more information on Additional Medicare Tax, visit IRS. Myfreetax gov and enter “Additional Medicare Tax” in the search box. Myfreetax Leave-based donation programs to aid victims of Hurricane Sandy. Myfreetax  Under these programs, employees may donate their vacation, sick, or personal leave in exchange for employer cash payments made before January 1, 2014, to qualified tax-exempt organizations providing relief for the victims of Hurricane Sandy. Myfreetax The donated leave will not be included in the income or wages of the employee. Myfreetax The employer may deduct the cash payments as business expenses or charitable contributions. Myfreetax For more information, see Notice 2012-69, 2012-51 I. Myfreetax R. Myfreetax B. Myfreetax 712, available at www. Myfreetax irs. Myfreetax gov/irb/2012-51_IRB/ar09. Myfreetax html. Myfreetax Work opportunity tax credit for qualified tax-exempt organizations hiring qualified veterans extended. Myfreetax  The work opportunity tax credit is now available for eligible unemployed veterans who begin work before January 1, 2014. Myfreetax Previously, the credit was available for unemployed veterans who began work on or after November 22, 2011, and before January 1, 2013. Myfreetax Qualified tax-exempt organizations that hire eligible unemployed veterans can claim the work opportunity tax credit against their payroll tax liability using Form 5884-C, Work Opportunity Credit for Qualified Tax-Exempt Organizations Hiring Qualified Veterans. Myfreetax For more information, visit IRS. Myfreetax gov and enter “work opportunity credit” in the search box. Myfreetax What's New for 2014 Social security and Medicare tax for 2014. Myfreetax  The employee and employer tax rates for social security and the maximum amount of wages subject to social security tax for 2014 will be discussed in Publication 51 (Circular A), Agricultural Employer's Tax Guide (For use in 2014). Myfreetax The Medicare tax rate for 2014 will also be discussed in Publication 51 (Circular A) (For use in 2014). Myfreetax There is no limit on the amount of wages subject to Medicare tax. Myfreetax Reminders Additional employment tax information for farmers. Myfreetax  See Publication 51 (Circular A) for more detailed guidance on employment taxes. Myfreetax For the latest information about employment tax developments impacting farmers, go to www. Myfreetax irs. Myfreetax gov/pub51. Myfreetax Correcting a previously filed Form 943. Myfreetax  If you discover an error on a previously filed Form 943, Employer's Annual Federal Tax Return for Agricultural Employees, make the correction using Form 943-X, Adjusted Employer's Annual Federal Tax Return for Agricultural Employees or Claim for Refund. Myfreetax Form 943-X is filed separately from Form 943. Myfreetax For more information on correcting Form 943, see the Instructions for Form 943-X. Myfreetax Federal tax deposits must be made by electronic funds transfer. Myfreetax  You must use electronic funds transfer to make all federal tax deposits. Myfreetax Generally, electronic funds transfers are made using the Electronic Federal Tax Payment System (EFTPS). Myfreetax If you do not want to use EFTPS, you can arrange for your tax professional, financial institution, payroll service, or other trusted third party to make electronic deposits on your behalf. Myfreetax Also, you may arrange for your financial institution to initiate a same-day wire payment on your behalf. Myfreetax EFTPS is a free service provided by the Department of Treasury. Myfreetax Services provided by your tax professional, financial institution, payroll service, or other third party may have a fee. Myfreetax For more information on making federal tax deposits, see section 7 of Publication 51 (Circular A). Myfreetax To get more information about EFTPS or to enroll in EFTPS, visit www. Myfreetax eftps. Myfreetax gov or call 1-800-555-4477 or 1-800-733-4829 (TDD). Myfreetax Additional information about EFTPS is also available in Publication 966, Electronic Federal Tax Payment System: A Guide To Getting Started. Myfreetax Important Dates for 2014 You should take the action indicated by the dates listed. Myfreetax See By February 15 and On February 16 for Form W-4, Employee's Withholding Allowance Certificate, information. Myfreetax Due dates for deposits of withheld federal income taxes, social security taxes, and Medicare taxes are not listed here. Myfreetax For these dates, see Publication 509, Tax Calendars (For use in 2014). Myfreetax Note. Myfreetax  If any date shown below for filing a return, furnishing a form, or depositing taxes falls on a Saturday, Sunday, or legal holiday, the due date is the next business day. Myfreetax A statewide legal holiday delays a filing or furnishing due date only if the IRS office where you are required to file a return or furnish a form is located in that state. Myfreetax For any due date, you will meet the “file” or “furnish” date requirement if the envelope containing the tax return or form is properly addressed, contains sufficient postage, and is postmarked by the U. Myfreetax S. Myfreetax Postal Service by the due date, or sent by an IRS-designated delivery service by the due date. Myfreetax See Private delivery services in Publication 51 (Circular A). Myfreetax Federal tax deposits can only be made by electronic funds transfer and are governed by legal holidays in the District of Columbia. Myfreetax Statewide holidays no longer apply. Myfreetax For a list of legal holidays that delay the due date of a federal tax deposit, see section 7 of Publication 51 (Circular A). Myfreetax Fiscal year taxpayers. Myfreetax  The due dates listed below apply whether you use a calendar or a fiscal year. Myfreetax By January 31. Myfreetax   File Form 943 with the IRS. Myfreetax If you deposited all Form 943 taxes when due, you have 10 additional days to file. Myfreetax Furnish each employee with a completed Form W-2, Wage and Tax Statement. Myfreetax Furnish each recipient to whom you paid $600 or more in nonemployee compensation with a completed Form 1099 (for example, Form 1099-MISC). Myfreetax File Form 940, Employer's Annual Federal Unemployment (FUTA) Tax Return, with the IRS. Myfreetax If you deposited all the FUTA tax when due, you have 10 additional days to file. Myfreetax File Form 945, Annual Return of Withheld Federal Income Tax, with the IRS to report any nonpayroll income tax withheld during 2013. Myfreetax If you deposited all Form 945 taxes when due, you have 10 additional days to file. Myfreetax By February 15. Myfreetax  Ask for a new Form W-4 or Formulario W-4(SP), Certificado de Exención de Retenciones del Empleado, from each employee who claimed exemption from federal income tax withholding last year. Myfreetax On February 16. Myfreetax  Any Form W-4 claiming exemption from withholding for the previous year has now expired. Myfreetax Begin withholding for any employee who previously claimed exemption from withholding but has not given you a new Form W-4 for the current year. Myfreetax If the employee does not give you a new Form W-4, withhold taxes based on the last valid Form W-4 you have for the employee that does not claim exemption from withholding or, if one does not exist, as if he or she is single with zero withholding allowances. Myfreetax If the employee furnishes a new Form W-4 claiming exemption from withholding after February 15, you may apply the exemption to future wages, but do not refund taxes withheld while the exempt status was not in place. Myfreetax By February 28. Myfreetax   File paper Forms 1099 and 1096. Myfreetax File Copy A of all paper Forms 1099 with Form 1096, Annual Summary and Transmittal of U. Myfreetax S. Myfreetax Information Returns, with the IRS. Myfreetax For electronically filed returns, see By March 31 below. Myfreetax File paper Forms W-2 and W-3. Myfreetax File Copy A of all paper Forms W-2 with Form W-3, Transmittal of Wage and Tax Statements, with the Social Security Administration (SSA). Myfreetax For electronically filed returns, see By March 31 below. Myfreetax By March 31. Myfreetax   File electronic Forms W-2 and 1099. Myfreetax File electronic Forms W-2 with the SSA and Forms 1099 with the IRS. Myfreetax For more information on reporting Form W-2 information to the SSA electronically, visit the SSA's Employer W-2 Filing Instructions & Information webpage at www. Myfreetax socialsecurity. Myfreetax gov/employer. Myfreetax For information on filing information returns electronically with the IRS, see Publication 1220, Specifications for Filing Forms 1097, 1098, 1099, 3921, 3922, 5498, 8935, and W-2G Electronically. Myfreetax By April 30, July 31, October 31, and January 31. Myfreetax   Deposit FUTA taxes. Myfreetax Deposit FUTA tax due if it is more than $500. Myfreetax Before December 1. Myfreetax  Remind employees to submit a new Form W-4 if their withholding allowances have changed or will change for the next year. Myfreetax Introduction You are generally required to withhold federal income tax from the wages of your employees. Myfreetax You may also be subject to social security and Medicare taxes under the Federal Insurance Contributions Act (FICA) and federal unemployment tax under the Federal Unemployment Tax Act (FUTA). Myfreetax You must also withhold Additional Medicare Tax from wages you pay to an employee in excess of $200,000 in a calendar year. Myfreetax This chapter includes information about these taxes. Myfreetax You must also pay self-employment tax on your net earnings from farming. Myfreetax See chapter 12 for information on self-employment tax. Myfreetax Topics - This chapter discusses: Farm employment, Family employees, Crew leaders, Social security and Medicare taxes, Additional Medicare Tax withholding, Federal income tax withholding, Reporting and paying social security, Medicare, and withheld federal income taxes, and FUTA tax. Myfreetax Useful Items - You may want to see: Publication 15 (Circular E), Employer's Tax Guide 15-A Employer's Supplemental Tax Guide 15-B Employer's Tax Guide to Fringe Benefits 51 (Circular A), Agricultural Employer's Tax Guide 926 Household Employer's Tax Guide Form (and Instructions) W-2 Wage and Tax Statement W-4 Employee's Withholding Allowance Certificate W-9 Request for Taxpayer Identification Number and Certification 940 Employer's Annual Federal Unemployment (FUTA) Tax Return 943 Employer's Annual Federal Tax Return for Agricultural Employees 943-X Adjusted Employer's Annual Federal Tax Return for Agricultural Employees or Claim for Refund See chapter 16 for information about getting publications and forms. Myfreetax Farm Employment In general, you are an employer of farmworkers if your employees do any of the following types of work. Myfreetax Raising or harvesting agricultural or horticultural products on a farm, including raising and feeding of livestock. Myfreetax Operating, managing, conserving, improving, or maintaining your farm and its tools and equipment. Myfreetax Services performed in salvaging timber, or clearing land of brush and other debris, left by a hurricane (also known as hurricane labor). Myfreetax Handling, processing, or packaging any agricultural or horticultural commodity if you produced more than half of the commodity (for a group of up to 20 unincorporated operators, all of the commodity). Myfreetax Work related to cotton ginning, turpentine, gum resin products, or the operation and maintenance of irrigation facilities. Myfreetax For more information, see Publication 51 (Circular A). Myfreetax 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. Myfreetax This is so even when you give the employee freedom of action. Myfreetax What matters is that you have the right to control the details of how the services are performed. Myfreetax You are responsible for withholding and paying employment taxes for your employees. Myfreetax You are also required to file employment tax returns. Myfreetax These requirements do not apply to amounts that you pay to independent contractors. Myfreetax See Publication 15-A for more information on how to determine whether an individual providing services is an independent contractor or an employee. Myfreetax If you employ a family of workers, each worker subject to your control (not just the head of the family) is an employee. Myfreetax Special rules apply to crew leaders. Myfreetax See Crew Leaders , later. Myfreetax Employer identification number (EIN). Myfreetax   If you have employees, you must have an EIN. Myfreetax If you do not have an EIN, you may apply for one online. Myfreetax Go to IRS. Myfreetax gov and click on the Apply for an EIN Online link under Tools. Myfreetax You may also apply for an EIN by calling 1-800-829-4933 or 1-800-829-4059 (TDD/TTY for persons who are deaf, hard of hearing, or have a speech disability). Myfreetax The hours of operation for both numbers are Monday–Friday form 7:00 a. Myfreetax m. Myfreetax –7:00 p. Myfreetax m. Myfreetax local time (Alaska and Hawaii follow Pacific time). Myfreetax You can also fax or mail Form SS-4, Application for Employer Identification Number, to the IRS. Myfreetax Employee's social security number (SSN). Myfreetax   An employee who does not have an SSN should submit Form SS-5, Application for a Social Security Card, to the Social Security Administration (SSA). Myfreetax Form SS-5 is available from any SSA office or by calling 1-800-772-1213 (operates 24 hours per day). Myfreetax It is also available from the SSA's website at www. Myfreetax socialsecurity. Myfreetax gov. Myfreetax   The employee must furnish evidence of age, identity, and U. Myfreetax S. Myfreetax citizenship or lawful immigration status permitting employment with the Form SS-5. Myfreetax An employee who is age 18 or older must appear in person with this evidence at an SSA office. Myfreetax Form I-9. Myfreetax    You must verify that each new employee is legally eligible to work in the United States. Myfreetax This includes completing the Form I-9, Employment Eligibility Verification. Myfreetax Form I-9 is available from the U. Myfreetax S. Myfreetax Citizenship and Immigration Services (USCIS) offices or by calling the Bureau of Citizenship and Immigration Services Forms Request Line at 1-800-870-3676. Myfreetax Form I-9 is also available from the USCIS website at www. Myfreetax uscis. Myfreetax gov. Myfreetax You can also contact the USCIS at 1-800-375-5283 for more information. Myfreetax New hire reporting. Myfreetax   You are required to report any new employee to a designated state new hire registry. Myfreetax Many states accept a copy of Form W-4 with employer information added. Myfreetax Visit the Office of Child Support Enforcement website at www. Myfreetax acf. Myfreetax hhs. Myfreetax gov/programs/cse/newhire for more information. Myfreetax Family Employees Generally, the wages you pay to family members who are your employees are subject to employment taxes. Myfreetax However, certain exemptions may apply to wages paid to your child, spouse, or parent. Myfreetax Exemptions for your child. Myfreetax   Payments for the services of your child under age 18 who works for you in your trade or business (including a farm) are not subject to social security and Medicare taxes. Myfreetax However, see Nonexempt services of a child or spouse , later. Myfreetax Payments for the services of your child under age 21 employed by you in other than a trade or business, such as payments for household services in your home, are also not subject to social security or Medicare taxes. Myfreetax Payments for the services of your child under age 21 employed by you, whether or not in your trade or business, are not subject to FUTA tax. Myfreetax Although not subject to social security, Medicare, or FUTA tax, the child's wages still may be subject to federal income tax withholding. Myfreetax Exemptions for your spouse. Myfreetax   Payments for the services of your spouse who works for you in your trade or business are subject to federal income tax withholding and social security and Medicare taxes, but not FUTA tax. Myfreetax   Payments for the services of your spouse employed by you in other than a trade or business, such as payments for household services in your home, are not subject to social security, Medicare, or FUTA taxes. Myfreetax Nonexempt services of a child or spouse. Myfreetax   Payments for the services of your child or spouse are subject to federal income tax withholding as well as social security, Medicare, and FUTA taxes if he or she works for any of the following entities. Myfreetax A corporation, even if it is controlled by you. Myfreetax A partnership, even if you are a partner. Myfreetax This does not apply to wages paid to your child if each partner is a parent of the child. Myfreetax An estate or trust, even if it is the estate of a deceased parent. Myfreetax In these situations, the child or spouse is considered to work for the corporation, partnership, or estate, not you. Myfreetax Exemptions for your parent. Myfreetax   Payments for the services of your parent employed by you in your trade or business are subject to federal income tax withholding and social security and Medicare taxes. Myfreetax Social security and Medicare taxes do not apply to wages paid to your parent for services not in your trade or business, but they do apply to payments for household services in your home if both the following conditions are satisfied. Myfreetax You have a child living in your home who is under age 18 or has a physical or mental condition that requires care by an adult for at least 4 continuous weeks in a calendar quarter. Myfreetax You are a widow or widower; or divorced and not remarried; or have a spouse in the home who, because of a physical or mental condition, cannot care for your child for at least 4 continuous weeks in the quarter. Myfreetax   Wages you pay to your parent are not subject to FUTA tax, regardless of the type of services provided. Myfreetax Qualified joint venture. Myfreetax   If spouses elect to be treated as a qualified joint venture instead of a partnership, either spouse may report and pay the employment taxes due on the wages paid to employees using the EIN of that spouse's sole proprietorship. Myfreetax For more information about qualified joint ventures, see chapter 12. Myfreetax Crew Leaders If farmworkers are provided by a crew leader, the crew leader may be the employer of the workers. Myfreetax Social security and Medicare taxes. Myfreetax   For social security and Medicare tax purposes, the crew leader is the employer of the workers if both of the following requirements are met. Myfreetax The crew leader pays (either on his or her own behalf or on behalf of the farmer) the workers for their farm labor. Myfreetax The crew leader has not entered into a written agreement with the farmer under which the crew leader is designated as an employee of the farmer. Myfreetax Federal income tax withholding. Myfreetax   If the crew leader is the employer for social security and Medicare tax purposes, the crew leader is the employer for federal income tax withholding purposes. Myfreetax Federal unemployment (FUTA) tax. Myfreetax   For FUTA tax purposes, the crew leader is the employer of the workers if, in addition to the earlier requirements, either of the following requirements are met. Myfreetax The crew leader is registered under the Migrant and Seasonal Agricultural Worker Protection Act. Myfreetax Substantially all crew members operate or maintain mechanized equipment provided by the crew leader as part of the service to the farmer. Myfreetax   The farmer is the employer of workers furnished by a crew leader in all other situations. Myfreetax In addition, the farmer is the employer of workers furnished by a registered crew leader if the workers are the employees of the farmer under the common-law test. Myfreetax For example, some farmers employ individuals to recruit farmworkers exclusively for them. Myfreetax Although these individuals may be required to register under the Migrant and Seasonal Agricultural Worker Protection Act, the workers are employed directly by the farmer. Myfreetax The farmer is the employer in these cases. Myfreetax For information about common-law employees, see section 1 of Publication 15-A. Myfreetax For information about crew leaders, see the Department of Labor website at www. Myfreetax dol. Myfreetax gov/whd/regs/compliance/whdfs49. Myfreetax htm. Myfreetax Social Security and Medicare Taxes All cash wages you pay to an employee during the year for farmwork are subject to social security and Medicare taxes if you meet either of the following tests. Myfreetax You pay the employee $150 or more in cash wages (count all wages paid on a time, piecework, or other basis) during the year for farmwork (the $150 test). Myfreetax The $150 test applies separately to each farmworker that you employ. Myfreetax If you employ a family of workers, each member is treated separately. Myfreetax Do not count wages paid by other employers. Myfreetax You pay cash and noncash wages of $2,500 or more during the year to all your employees for farmwork (the $2,500 test). Myfreetax If the $2,500 test for the group is not met, the $150 test for an employee still applies. Myfreetax Exceptions. Myfreetax   Annual cash wages of less than $150 you pay to a seasonal farmworker are not subject to social security and Medicare taxes, even if you pay $2,500 or more to all your farmworkers. Myfreetax However, these wages count toward the $2,500 test for determining whether other farmworkers' wages are subject to social security and Medicare taxes. Myfreetax   A seasonal farmworker is a worker who: Works as a hand-harvest laborer, Is paid piece rates in an operation usually paid on this basis in the region of employment, Commutes daily from his or her permanent home to the farm, and Worked in agriculture less than 13 weeks in the preceding calendar year. Myfreetax   See Family Employees , earlier, for certain exemptions from social security and Medicare taxes that apply to your child, spouse, and parent. Myfreetax Religious exemption. Myfreetax   An exemption from social security and Medicare taxes is available to members of a recognized religious group or division opposed to public insurance. Myfreetax This exemption is available only if both the employee and the employer are members of the group or division. Myfreetax   For more information, see Publication 517, Social Security and Other Information for Members of the Clergy and Religious Workers. Myfreetax Cash wages. Myfreetax   Only cash wages paid to farmworkers are subject to social security and Medicare taxes. Myfreetax Cash wages include checks, money orders, and any kind of money or cash. Myfreetax   Only cash wages subject to social security and Medicare taxes are credited to your employees for social security benefit purposes. Myfreetax Payments not subject to these taxes, such as commodity wages, do not contribute to your employees' social security coverage. Myfreetax For information about social security benefits, contact the SSA at 1-800-772-1213 or online at www. Myfreetax socialsecurity. Myfreetax gov. Myfreetax Noncash wages. Myfreetax    Noncash wages include food, lodging, clothing, transportation passes, and other goods and services. Myfreetax Noncash wages paid to farmworkers, including commodity wages, are not subject to social security and Medicare taxes. Myfreetax However, they are subject to these taxes if the substance of the transaction is a cash payment. Myfreetax For information on lodging provided as a condition of employment, see Publication 15-B. Myfreetax   Report the value of noncash wages in box 1 of Form W-2 together with cash wages. Myfreetax Do not show noncash wages in box 3 or in box 5, (unless the substance of the transaction is a cash payment). Myfreetax Tax rates and social security wage limit. Myfreetax   For 2013, the employer and the employee will pay the following taxes. Myfreetax The employer and employee each pay 6. Myfreetax 2% of cash wages for social security tax (old-age, survivors, and disability insurance). Myfreetax The employer and employee each pay 1. Myfreetax 45% of cash wages for Medicare tax (hospital insurance). Myfreetax The employee pays 0. Myfreetax 9% of cash wages in excess of $200,000 for Additional Medicare Tax. Myfreetax Wage limit. Myfreetax   The limit on wages subject to the social security tax for 2013 is $113,700. Myfreetax There is no limit on wages subject to the Medicare tax. Myfreetax All covered wages are subject to the Medicare tax. Myfreetax Additionally, all wages in excess of $200,000 are subject to Additional Medicare Tax withholding. Myfreetax Paying employee's share. Myfreetax   If you would rather pay the employee's share of social security and Medicare taxes without deducting it from his or her wages, you may do so. Myfreetax It is additional income to the employee. Myfreetax You must include it in box 1 of the employee's Form W-2, but do not count it as social security and Medicare wages (boxes 3 and 5 on Form W-2) or as wages for federal unemployment (FUTA) tax purposes. Myfreetax Example. Myfreetax Jane operates a small family fruit farm. Myfreetax She employs day laborers in the picking season to enable her to timely get her crop to market. Myfreetax She does not deduct the employees' share of social security and Medicare taxes from their pay; instead, she pays it on their behalf. Myfreetax When her accountant, Susan, prepares the employees' Forms W-2, she adds each employee's share of social security and Medicare taxes paid by Jane to the employee's wage income (box 1 of Form W-2), but does not include it in box 3 (social security wages) or box 5 (Medicare wages and tips). Myfreetax For 2013, Jane paid Mary $1,000 during the year. Myfreetax Susan enters $1,076. Myfreetax 50 in box 1 of Mary's Form W-2 ($1,000 wages plus $76. Myfreetax 50 social security and Medicare taxes paid for Mary). Myfreetax She enters $1,000 in boxes 3 and 5 of Mary's Form W-2. Myfreetax Additional Medicare Tax. Myfreetax   In addition to withholding Medicare tax at 1. Myfreetax 45%, you must withhold a 0. Myfreetax 9% Additional Medicare Tax from wages you pay to an employee in excess of $200,000 in a calendar year. Myfreetax You are required to begin withholding Additional Medicare Tax in the pay period in which you pay wages in excess of $200,000 to an employee and continue to withhold it each pay period until the end of the calendar year. Myfreetax Additional Medicare Tax is only imposed on the employee. Myfreetax There is no employer share of Additional Medicare Tax. Myfreetax All wages that are subject to Medicare tax are subject to Additional Medicare Tax withholding if paid in excess of the $200,000 threshold. Myfreetax   For more information on what wages are subject to Medicare tax, see the chart, Special Rules for Various Types of Services and Payments, in section 15 of Publication 15 (Circular E). Myfreetax For more information on Additional Medicare Tax, visit IRS. Myfreetax gov and enter “Additional Medicare Tax” in the search box. Myfreetax Federal Income Tax Withholding If the cash wages you pay to farmworkers are subject to social security and Medicare taxes, they are also subject to federal income tax withholding. Myfreetax Although noncash wages are subject to federal income tax, withhold income tax only if you and the employee agree to do so. Myfreetax The amount to withhold is figured on gross wages without taking out social security and Medicare taxes, union dues, insurance, etc. Myfreetax Form W-4. Myfreetax   Generally, the amount of federal income tax you withhold is based on the employee's marital status and withholding allowances claimed on the employee's Form W-4. Myfreetax In general, an employee can claim withholding allowances on Form W-4 equal to the number of exemptions the employee will be entitled to claim on his or her tax return. Myfreetax An employee may also be able to claim a special withholding allowance and allowances for estimated deductions and credits. Myfreetax   Do not withhold federal income tax from the wages of an employee who, by filing Form W-4, certifies that he or she had no federal income tax liability last year and anticipates no liability for the current year. Myfreetax   You should give each new employee a Form W-4 as soon as you hire the employee. Myfreetax For Spanish-speaking employees, you may use Formulario W-4(SP) which is the Spanish translation of Form W-4. Myfreetax Have the employee complete and return the form to you before the first payday. Myfreetax If the employee does not return the completed form, you must withhold federal income tax as if the employee is single and claims no withholding allowances. Myfreetax New Form W-4 for 2014. Myfreetax   You should make the 2014 Form W-4 available to your employees and encourage them to check their income tax withholding for 2014. Myfreetax Those employees who owed a large amount of tax or received a large refund for 2013 may want to submit a new Form W-4. Myfreetax You cannot accept substitute Forms W-4 developed by employees. Myfreetax How to figure withholding. Myfreetax   You can use one of several methods to determine the amount to withhold. Myfreetax The methods are described in Publication 51 (Circular A), which contains tables showing the correct amount of federal income tax you should withhold. Myfreetax Publication 51 (Circular A) also contains additional information about federal income tax withholding. Myfreetax Nonemployee compensation. Myfreetax   Generally, you do not have to withhold federal income tax on payments for services to individuals who are not your employees. Myfreetax However, you may be required to report these payments on Form 1099-MISC, Miscellaneous Income, and to withhold under the backup withholding rules. Myfreetax For more information, see the Instructions for Form 1099-MISC. Myfreetax Required Notice to Employees About Earned Income Credit (EIC) You must provide notification about EIC to each employee who worked for you at any time during the year and from whom you did not withhold any federal income tax. Myfreetax However, you do not have to notify employees who claim exemption from federal income tax withholding on Form W-4. Myfreetax You meet the notification requirement by giving each employee any of the following. Myfreetax Form W-2, which contains EIC notification on the back of Copy B. Myfreetax A substitute Form W-2 with the exact EIC wording shown on the back of copy B of Form W-2. Myfreetax Notice 797, Possible Federal Tax Refund Due to the Earned Income Credit (EIC). Myfreetax Your own written statement with the exact wording of Notice 797. Myfreetax For more information, see Publication 51 (Circular A). Myfreetax Reporting and Paying Social Security, Medicare, and Withheld Federal Income Taxes You must withhold federal income, social security, and Medicare taxes required to be withheld from the salaries and wages of your employees. Myfreetax You are liable for the payment of these taxes to the federal government whether or not you collect them from your employees. Myfreetax If, for example, you withhold less than the correct tax from an employee's wages, you are still liable for the full amount. Myfreetax You must also pay the employer's share of social security and Medicare taxes. Myfreetax There is no employer share of Additional Medicare Tax. Myfreetax Form 943. Myfreetax   Report withheld federal income tax, social security tax, and Medicare tax on Form 943. Myfreetax Your 2013 Form 943 is due by January 31, 2014 (or February 10, 2014, if you made deposits on time in full payment of the taxes due for the year). Myfreetax Deposits. Myfreetax   Generally, you must deposit both the employer and employee shares of social security and Medicare taxes and federal income tax withheld during the year. Myfreetax However, you may make payments with Form 943 instead of depositing them if you accumulate less than a $2,500 tax liability (“Total taxes after adjustments” line on Form 943) during the year and you pay in full with a timely filed return. Myfreetax   For more information on deposit rules, see Publication 51 (Circular A). Myfreetax Electronic deposit requirement. Myfreetax   You must use electronic funds transfer to make all federal tax deposits. Myfreetax Generally, electronic funds transfers are made using EFTPS. Myfreetax If you do not want to use EFTPS, you can arrange for your tax professional, financial institution, payroll service, or other trusted third party to make electronic deposits on your behalf. Myfreetax Also, you may arrange for your financial institution to initiate a same-day wire payment on your behalf. Myfreetax EFTPS is a free service provided by the Department of Treasury. Myfreetax Services provided by your tax professional, financial institution, payroll service, or other third party may have a fee. Myfreetax   For more information on making federal tax deposits, see section 7 of Publication 51 (Circular A). Myfreetax To get more information about EFTPS or to enroll in EFTPS, visit www. Myfreetax eftps. Myfreetax gov or call 1-800-555-4477 or 1-800-733-4829 (TDD). Myfreetax Additional information about EFTPS is also available in Publication 966. Myfreetax Form W-2. Myfreetax   By January 31, you must furnish each employee a Form W-2 showing total wages for the previous year and total federal income tax, social security tax, and Medicare tax withheld. Myfreetax However, if an employee stops working for you and requests the form earlier, you must give it to the employee within 30 days of the later of the following dates. Myfreetax The date the employee requests the form. Myfreetax The date you make your final payment of wages to the employee. Myfreetax Compensation paid to H-2A visa holders. Myfreetax   Report compensation of $600 or more paid to foreign agricultural workers who entered the country on H-2A visas in box 1 of Form W-2. Myfreetax Compensation paid to H-2A workers for agricultural labor performed in connection with this visa is not subject to social security and Medicare taxes, and therefore should not be reported as wages subject to social security tax (line 2), Medicare tax (line 4), or Additional Medicare Tax (line 6) on Form 943, and should not be reported as social security wages (box 3) or Medicare wages (box 5) on Form W-2. Myfreetax   An employer is not required to withhold federal income tax from compensation it pays to an H-2A worker for agricultural labor performed in connection with this visa unless the worker asks for withholding and the employer agrees. Myfreetax In this case, the worker must give the employer a completed Form W-4. Myfreetax Federal income tax withheld should be reported on Form 943, line 8, and in box 2 of Form W-2. Myfreetax   These reporting rules apply when the H-2A worker provides his or her taxpayer identification number (TIN) to the employer. Myfreetax For the rules relating to backup withholding and reporting when the H-2A worker does not provide a TIN, see the Instructions for Form 1099-MISC and the Instructions for Form 945. Myfreetax Trust fund recovery penalty. Myfreetax   If you are responsible for withholding, accounting for, depositing, or paying federal withholding taxes and willfully fail to do so, you can be held liable for a penalty equal to the withheld tax not paid. Myfreetax A responsible person can be an officer of a corporation, a partner, a sole proprietor, or an employee of any form of business. Myfreetax A trustee or agent with authority over the funds of the business can also be held responsible for the penalty. Myfreetax   Willfully means voluntarily, consciously, and intentionally. Myfreetax Paying other expenses of the business instead of the taxes due is acting willfully. Myfreetax Consequences of treating an employee as an independent contractor. Myfreetax   If you classify an employee as an independent contractor and you have no reasonable basis for doing so, you may be held liable for employment taxes for that worker. Myfreetax See Publication 15-A for more information. Myfreetax Federal Unemployment (FUTA) Tax You must pay FUTA tax if you meet either of the following tests. Myfreetax You paid cash wages of $20,000 or more to farmworkers in any calendar quarter during the current or preceding calendar year. Myfreetax You employed 10 or more farmworkers for some part of at least 1 day during any 20 or more different calendar weeks during the current or preceding calendar year. Myfreetax These rules do not apply to exempt services of your spouse, your parents, or your children under age 21. Myfreetax See Family Employees , earlier. Myfreetax Alien farmworkers. Myfreetax   Wages paid to aliens admitted on a temporary basis to the United States to perform farmwork (also known as “H-2A visa workers”) are exempt from FUTA tax. Myfreetax However, include your employment of these workers and the wages you paid them to determine whether you meet either of the above tests. Myfreetax Commodity wages. Myfreetax   Payments in kind for farm labor are not cash wages. Myfreetax Do not count them to figure whether you are subject to FUTA tax or to figure how much tax you owe. Myfreetax Tax rate and credit. Myfreetax   The gross FUTA tax rate is 6. Myfreetax 0% of the first $7,000 cash wages you pay to each employee during the year. Myfreetax However, you are given a credit of up to 5. Myfreetax 4% of the first $7,000 cash wages you pay to each employee for the state unemployment tax you pay. Myfreetax If your state tax rate (experience rate) is less than 5. Myfreetax 4%, you may still be allowed the full 5. Myfreetax 4% credit. Myfreetax   If you do not pay the state tax, you cannot take the credit. Myfreetax If you are exempt from state unemployment tax for any reason, the full 6. Myfreetax 0% rate applies. Myfreetax See the Instructions for Form 940 for additional information. Myfreetax More information. Myfreetax   For more information on FUTA tax, see Publication 51 (Circular A). Myfreetax Reporting and Paying FUTA Tax The FUTA tax is imposed on you as the employer. Myfreetax It must not be collected or deducted from the wages of your employees. Myfreetax Form 940. Myfreetax   Report FUTA tax on Form 940. Myfreetax The 2013 Form 940 is due January 31, 2014 (or February 10, 2014, if you timely deposited the full amount of your 2013 FUTA tax). Myfreetax Deposits. Myfreetax   If at the end of any calendar quarter you owe, but have not yet deposited, more than $500 in FUTA tax for the year, you must make a deposit by the end of the following month. Myfreetax If the undeposited tax is $500 or less at the end of a quarter, you do not have to deposit it. Myfreetax You can add it to the tax for the next quarter. Myfreetax If the total undeposited tax is more than $500 at the end of the next quarter, a deposit will be required. Myfreetax If the total undeposited tax at the end of the 4th quarter is $500 or less, you can either make a deposit or pay it with your return by the January 31, 2014, due date. Myfreetax Electronic deposit requirement. Myfreetax   You must use electronic funds transfer to make all federal tax deposits. Myfreetax Generally, electronic funds transfers are made using EFTPS. Myfreetax If you do not want to use EFTPS, you can arrange for your tax professional, financial institution, payroll service, or other trusted third party to make electronic deposits on your behalf. Myfreetax Also, you may arrange for your financial institution to initiate a same-day wire payment on your behalf. Myfreetax EFTPS is a free service provided by the Department of Treasury. Myfreetax Services provided by your tax professional, financial institution, payroll service, or other third party may have a fee. Myfreetax   For more information on making federal tax deposits, see section 7 of Publication 51 (Circular A). Myfreetax To get more information about EFTPS or to enroll in EFTPS, visit www. Myfreetax eftps. Myfreetax gov or call 1-800-555-4477 or 1-800-733-4829 (TDD). Myfreetax Additional information about EFTPS is also available in Publication 966. Myfreetax Prev  Up  Next   Home   More Online Publications