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Order 2012 Tax Forms From Irs

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Order 2012 Tax Forms From Irs

Order 2012 tax forms from irs 5. Order 2012 tax forms from irs   Excise Taxes Table of Contents Introduction Topics - This chapter discusses: Useful Items - You may want to see: Prohibited Tax Shelter TransactionsEntity Level Tax Excess Benefit TransactionsTax on Disqualified Persons Tax on Organization Managers Excess Benefit Transaction Excess Business Holdings Taxable Distributions of Sponsoring Organizations Exception. Order 2012 tax forms from irs A donor advised fund does not include: Taxes on Prohibited Benefits Resulting From Donor Advised Fund Distributions Excise Taxes on Private Foundations Excise Taxes on Black Lung Benefit Trusts Excise Tax on Failure to Meet the Community Health Needs Assessment Requirements Introduction An excise tax may be imposed on certain tax-exempt organizations. Order 2012 tax forms from irs Topics - This chapter discusses: Prohibited tax shelter transactions Excess benefit transactions Excess business holdings Taxable distributions of sponsoring organizations Taxes on prohibited benefits distributed from donor advised funds Excise taxes on private foundations Excise taxes on 501(c)(21) black lung benefit trusts Excise Tax on Failure to Meet the Community Health Needs Assessment Requirements of Hospitals Useful Items - You may want to see: Forms (and Instructions) 4720 Return of Certain Excise Taxes Under Chapters 41 and 42 of the Internal Revenue Code See chapter 6 for more information about getting Form 4720. Order 2012 tax forms from irs Prohibited Tax Shelter Transactions Section 4965 imposes an excise tax on: Certain tax-exempt entities that are party to prohibited tax shelter transactions, and Any entity manager who approves or otherwise causes the entity to be a party to a prohibited tax shelter transaction and knows or has reason to know that the transaction is a prohibited tax shelter transaction. Order 2012 tax forms from irs  Additionally, section 6033 provides new disclosure requirements on a tax-exempt entity that is a party to a prohibited tax shelter transaction. Order 2012 tax forms from irs Tax-exempt entities. Order 2012 tax forms from irs   Tax-exempt entities that are subject to section 4965 include: Entities described in section 501(c), including but not limited to the following common types of entities: Instrumentalities of the United States described in section 501(c)(1); Churches, hospitals, museums, schools, scientific research organizations, and other charities described in section 501(c)(3); Civic leagues, social welfare organizations, and local associations of employees described in section 501(c)(4); Labor, agricultural, or horticultural organizations described in section 501(c)(5); Business leagues, chambers of commerce, trade associations, and other organizations described in section 501(c)(6); Voluntary employees' beneficiary associations (VEBAs) described in section 501(c)(9); Credit unions described in section 501(c)(14); Insurance companies described in section 501(c)(15); and Veterans' organizations described in section 501(c)(19). Order 2012 tax forms from irs Religious or apostolic associations or corporations described in section 501(d). Order 2012 tax forms from irs Entities described in section 170(c), including states, possessions of the United States, the District of Columbia, political subdivisions of states and political subdivisions of possessions of the United States (but not including the United States). Order 2012 tax forms from irs Indian tribal governments within the meaning of section 7701(a)(40). Order 2012 tax forms from irs Entity manager. Order 2012 tax forms from irs    An entity manager is any person with authority or responsibility similar to that exercised by an officer, director, or trustee, and, for any act, the person that has authority or responsibility with respect to the prohibited transaction. Order 2012 tax forms from irs Prohibited tax shelter transaction. Order 2012 tax forms from irs   A prohibited tax shelter transaction is any listed transaction, within the meaning of section 6707A(c)(2), and any prohibited reportable transactions. Order 2012 tax forms from irs A prohibited reportable transaction is a confidential transaction within the meaning of Regulations section 1. Order 2012 tax forms from irs 6011-4(b)(3), and a transaction with contractual protection within the meaning of Regulations section 1. Order 2012 tax forms from irs 6011-4(b)(4). Order 2012 tax forms from irs See the Instructions for Form 8886 for more information on listed transactions and prohibited reportable transactions. Order 2012 tax forms from irs Subsequently listed transaction. Order 2012 tax forms from irs   Any transaction to which the tax-exempt entity is a party and is later determined to be a listed transaction after the entity has become a party to it, is a subsequently listed transaction. Order 2012 tax forms from irs Entity Level Tax Section 4965(a)(1) imposes an entity level excise tax on any tax-exempt entity described in 1, 2, 3, or 4 above that becomes a party to a prohibited tax shelter transaction or is a party to a subsequently listed transaction (defined earlier). Order 2012 tax forms from irs The excise tax imposed on a tax-exempt entity applies to tax years in which the entity becomes a party to the prohibited tax shelter transaction and any subsequent tax years. Order 2012 tax forms from irs The amount of the excise tax depends on whether the tax-exempt entity knew or had reason to know that the transaction was a prohibited tax shelter transaction at the time it became a party to the transaction. Order 2012 tax forms from irs To figure and report the excise tax imposed on a tax-exempt entity for being a party to a prohibited tax shelter transaction, file Form 4720. Order 2012 tax forms from irs For more information about this excise tax, including information about how it is figured, see the Instructions for Form 4720. Order 2012 tax forms from irs Manager Level Tax Section 4965(a)(2) imposes an excise tax on any tax-exempt entity manager who approves or otherwise causes the entity to be a party to a prohibited tax shelter transaction and knows (or has reason to know) that the transaction is a prohibited tax shelter transaction. Order 2012 tax forms from irs The excise tax, in the amount of $20,000, is assessed for each approval or other act causing the organization to be a party to the prohibited tax shelter transaction. Order 2012 tax forms from irs To report this tax, file Form 4720. Order 2012 tax forms from irs Excess Benefit Transactions Excise tax on excess benefit transactions. Order 2012 tax forms from irs   A disqualified person who benefits from an excess benefit transaction, such as compensation, fringe benefits, or contract payments from certain section 501(c)(3), 501(c)(4), or 501(c)(29) organizations, must correct the transaction and may have to pay an excise tax under section 4958. Order 2012 tax forms from irs A manager of the organization may also have to pay an excise tax under section 4958. Order 2012 tax forms from irs These taxes are reported on Form 4720. Order 2012 tax forms from irs   The excise taxes are imposed if an applicable tax-exempt organization provides an excess benefit to a disqualified person and that benefit exceeds the value of the benefit received in exchange. Order 2012 tax forms from irs   There are three taxes under section 4958. Order 2012 tax forms from irs Disqualified persons are liable for the first two taxes and certain organization managers are liable for the third tax. Order 2012 tax forms from irs    Taxes imposed on excess benefit transactions do not apply to a transaction under a written contract that was binding on September 13, 1995, and at all times thereafter before the transaction occurred. Order 2012 tax forms from irs Tax on Disqualified Persons An excise tax equal to 25% of the excess benefit is imposed on each excess benefit transaction between an applicable tax-exempt organization and a disqualified person. Order 2012 tax forms from irs The disqualified person who benefited from the transaction is liable for the tax. Order 2012 tax forms from irs See definition of Disqualified person, later at Disqualified person. Order 2012 tax forms from irs Additional tax on the disqualified person. Order 2012 tax forms from irs   If the 25% tax is imposed and the excess benefit transaction is not corrected within the taxable period, an additional excise tax equal to 200% of the excess benefit is imposed on any disqualified person involved. Order 2012 tax forms from irs   If a disqualified person makes a payment of less than the full correction amount, the 200% tax is imposed only on the unpaid portion of the correction amount. Order 2012 tax forms from irs If more than one disqualified person received an excess benefit from an excess benefit transaction, all such disqualified persons are jointly and severally liable for the taxes. Order 2012 tax forms from irs   To avoid the 200% tax, a disqualified person must correct the excess benefit transaction during the taxable period. Order 2012 tax forms from irs The 200% tax is abated (refunded if collected) if the excess benefit transaction is corrected within a 90-day correction period beginning on the date a statutory notice of deficiency is issued. Order 2012 tax forms from irs Taxable period. Order 2012 tax forms from irs   The taxable period means the period beginning with the date on which the excess benefit transaction occurs and ending on the earlier of: The date a notice of deficiency was mailed to the disqualified person for the initial tax on the excess benefit transaction, or The date on which the initial tax on the excess benefit transaction for the disqualified person is assessed. Order 2012 tax forms from irs Tax on Organization Managers If tax is imposed on a disqualified person for any excess benefit transaction, an excise tax equal to 10% of the excess benefit is imposed on an organization manager who knowingly participated in an excess benefit transaction, unless such participation was not willful and was due to reasonable cause. Order 2012 tax forms from irs This tax cannot exceed $20,000 ($10,000 for transactions entered in a tax year beginning before August 18, 2006), for each transaction. Order 2012 tax forms from irs There is also joint and several liability for this tax. Order 2012 tax forms from irs A person can be liable for both the tax paid by the disqualified person and the organization manager tax for a particular excess benefit transaction. Order 2012 tax forms from irs Organization Manager. Order 2012 tax forms from irs   An organization manager is any officer, director, or trustee of an applicable tax-exempt organization, or any individual having powers or responsibilities similar to officers, directors, or trustees of the organization, regardless of title. Order 2012 tax forms from irs An organization manager is not considered to have participated in an excess benefit transaction where the manager has opposed the transaction in a manner consistent with the fulfillment of the manager's responsibilities to the organization. Order 2012 tax forms from irs For example, a director who votes against giving an excess benefit would ordinarily not be subject to the 10% tax. Order 2012 tax forms from irs A person participates in a transaction knowingly if the person: Has actual knowledge of sufficient facts so that, based solely upon those facts, such transaction would be an excess benefit transaction; Is aware that such a transaction under these circumstances may violate the provisions of federal tax law governing excess benefit transactions; and Negligently fails to make reasonable attempts to ascertain whether the transaction is an excess benefit transaction, or the manager is in fact aware that it is such a transaction. Order 2012 tax forms from irs Knowing does not mean having reason to know. Order 2012 tax forms from irs The organization manager ordinarily will not be considered knowing if, after full disclosure of the factual situation to an appropriate professional, the organization manager relied on the professional's reasoned written opinion on matters within the professional's expertise or if the manager relied on the fact that the requirements for the rebuttable presumption of reasonableness have been satisfied. Order 2012 tax forms from irs Participation by an organization manager is willful if it is voluntary, conscious, and intentional. Order 2012 tax forms from irs An organization manager's participation is due to reasonable cause if the manager has exercised responsibility on behalf of the organization with ordinary business care and prudence. Order 2012 tax forms from irs Excess Benefit Transaction An excess benefit transaction is a transaction in which an economic benefit is provided by an applicable tax-exempt organization, directly or indirectly, to or for the use of any disqualified person, and the value of the economic benefit provided by the organization exceeds the value of the consideration (including the performance of services) received for providing such benefit. Order 2012 tax forms from irs The excess benefit transaction rules apply to all transactions with disqualified persons, regardless of whether the amount of the benefit provided is determined in whole or in part by the revenues of one or more activities of the organization. Order 2012 tax forms from irs To determine whether an excess benefit transaction has occurred, all consideration and benefits exchanged between a disqualified person and the applicable tax-exempt organization, and all entities it controls, are taken into account. Order 2012 tax forms from irs For purposes of determining the value of economic benefits, the value of property, including the right to use property, is the fair market value. Order 2012 tax forms from irs Fair market value is the price at which property, or the right to use property, would change hands between a willing buyer and a willing seller, neither being under any compulsion to buy, sell, or transfer property or the right to use property, and both having reasonable knowledge of relevant facts. Order 2012 tax forms from irs Donor advised fund transactions occurring after August 17, 2006. Order 2012 tax forms from irs   For a donor advised fund, an excess benefit transaction includes a grant, loan, compensation, or other similar payment from the fund to a: Donor or donor advisor, Family member of a donor, or donor advisor, 35% controlled entity of a donor, or donor advisor, or 35% controlled entity of a family member of a donor, or donor advisor. Order 2012 tax forms from irs   The excess benefit in this transaction is the amount of the grant, loan, compensation, or other similar payment. Order 2012 tax forms from irs For additional information, see the Instructions for Form 4720. Order 2012 tax forms from irs Supporting organization transactions occurring after July 25, 2006. Order 2012 tax forms from irs   For any supporting organization, defined in section 509(a)(3), an excess benefit transaction includes grants, loans, compensation, or other similar payment provided by the supporting organization to a: Substantial contributor, Family member of a substantial contributor, 35% controlled entity of a substantial contributor, or 35% controlled entity of a family member of a substantial contributor. Order 2012 tax forms from irs   Additionally, an excess benefit transaction includes any loans provided by the supporting organization to a disqualified person (other than an organization described in section 509(a)(1), (2), or (4)). Order 2012 tax forms from irs   The excess benefit for substantial contributors and parties related to those contributors includes the amount of the grant, loan, compensation, or other similar payment. Order 2012 tax forms from irs For additional information, see the Instructions for Form 4720. Order 2012 tax forms from irs   Excess benefit transaction rules generally do not apply to transactions between a supporting organization and its supported organization described in section 501(c)(4), (5), or (6) in furtherance of charitable purposes. Order 2012 tax forms from irs Date of Occurrence An excess benefit transaction occurs on the date the disqualified person receives the economic benefit from the organization for federal income tax purposes. Order 2012 tax forms from irs However, when a single contractual arrangement provides for a series of compensation or other payments to or for the use of a disqualified person during the disqualified person's tax year, any excess benefit transaction with respect to these payments occurs on the last day of the taxpayer's tax year. Order 2012 tax forms from irs In the case of benefits provided to a qualified pension, profit-sharing, or stock bonus plan, the transaction occurs on the date the benefit is vested. Order 2012 tax forms from irs In the case of the transfer of property subject to a substantial risk of forfeiture, or in the case of rights to future compensation or property, the transaction occurs on the date the property, or the rights to future compensation or property, is not subject to a substantial risk of forfeiture. Order 2012 tax forms from irs Where the disqualified person elects to include an amount in gross income in the tax year of transfer under section 83(b), the excess benefit transaction occurs on the date the disqualified person receives the economic benefit for federal income tax purposes. Order 2012 tax forms from irs Correcting the excess benefit. Order 2012 tax forms from irs   An excess benefit transaction is corrected by undoing the excess benefit to the extent possible, and by taking any additional measures necessary to place the organization in a financial position not worse than what it would have been if the disqualified person were dealing under the highest fiduciary standards. Order 2012 tax forms from irs   A disqualified person corrects an excess benefit by making a payment in cash or cash equivalents, excluding payment by a promissory note, equal to the correction amount to the applicable tax-exempt organization. Order 2012 tax forms from irs The correction amount equals the excess benefit plus the interest on the excess benefit. Order 2012 tax forms from irs The interest rate can be no lower than the applicable federal rate, compounded annually, for the month the transaction occurred. Order 2012 tax forms from irs   A disqualified person can, with the agreement of the applicable tax-exempt organization, make a payment by returning the specific property previously transferred in the excess transaction. Order 2012 tax forms from irs In this case, the disqualified person is treated as making a payment equal to the lesser of: The fair market value of the property on the date the property is returned to the organization, or The fair market value of the property on the date the excess benefit transaction occurred. Order 2012 tax forms from irs   If the payment resulting from the return of property is less than the correction amount, the disqualified person must make an additional cash payment to the organization equal to the difference. Order 2012 tax forms from irs   If the payment resulting from the return of the property exceeds the correction amount described above, the organization can make a cash payment to the disqualified person equal to the difference. Order 2012 tax forms from irs Exception. Order 2012 tax forms from irs   For a correction of an excess benefit transaction (discussed earlier), no amount repaid in a manner prescribed by the Secretary can be held in a donor advised fund. Order 2012 tax forms from irs Applicable Tax-Exempt Organization An applicable tax-exempt organization is a section 501(c)(3), 501(c)(4), or 501(c)(29) organization that is tax-exempt under section 501(a), or was such an organization at any time during a 5-year period ending on the day of the excess benefit transaction. Order 2012 tax forms from irs An applicable tax-exempt organization does not include: A private foundation as defined in section 509(a), A governmental entity that is: Exempt from (or not subject to) taxation without regard to section 501(a), or Not required to file an annual return, or A foreign organization, recognized by the IRS or by treaty, that receives substantially all of its support (other than gross investment income) from sources outside the United States. Order 2012 tax forms from irs An organization is not treated as a section 501(c)(3), 501(c)(4), or 501(c)(29) organization for any period covered by a final determination that the organization was not tax-exempt under section 501(a), but only if the determination was not based on private inurement or one or more excess benefit transactions. Order 2012 tax forms from irs Disqualified Person A disqualified person is: Any person (at any time during the 5-year period ending on the date of the transaction) in a position to exercise substantial influence over the affairs of the organization, A family member of an individual described in 1, and A 35% controlled entity. Order 2012 tax forms from irs For donor advised funds, sponsoring organizations, and certain supporting organizations occurring after August 17, 2006. Order 2012 tax forms from irs   The following persons will be considered disqualified persons along with certain family members and 35% controlled entities associated with them. Order 2012 tax forms from irs Donors of donor advised funds, Investment advisors of sponsoring organizations, and Disqualified persons of a section 509(a)(3) supporting organization that supports the applicable tax-exempt organization. Order 2012 tax forms from irs For certain supporting organization transactions occurring after July 25, 2006. Order 2012 tax forms from irs   Substantial contributors to supporting organizations will also be considered disqualified persons with respect to the supporting organizations, along with their family members and 35% controlled entities. Order 2012 tax forms from irs Investment advisor. Order 2012 tax forms from irs   Investment advisor means for any sponsoring organization, any person compensated by such organization (but not an employee of such organization) for managing the investment of, or providing investment advice for, assets maintained in donor advised funds owned by such sponsoring organization. Order 2012 tax forms from irs Substantial contributor. Order 2012 tax forms from irs   In general, a substantial contributor means any person who contributed or bequeathed an aggregate of more than $5,000 to the organization, if that amount is more than 2% of the total contributions and bequests received by the end of the organization's tax year in which the contribution or bequest is received. Order 2012 tax forms from irs A substantial contributor includes the grantor of a trust. Order 2012 tax forms from irs Family members. Order 2012 tax forms from irs   Family members of a disqualified person include a disqualified person's spouse, brothers or sisters (whether by whole or half-blood), spouses of brothers or sisters (whether by whole or half-blood), ancestors, children (including a legally adopted child), grandchildren, great grandchildren, and spouses of children, grandchildren, and great grandchildren (whether by whole or half-blood). Order 2012 tax forms from irs 35% controlled entity. Order 2012 tax forms from irs   A 35% controlled entity is: A corporation in which disqualified persons own more than 35% of the total combined voting power, A partnership in which such persons own more than 35% of the profits interest, or A trust or estate in which such persons own more than 35% of the beneficial interest. Order 2012 tax forms from irs   In determining the holdings of a business enterprise, any stock or other interest owned directly or indirectly shall apply. Order 2012 tax forms from irs Persons having substantial influence. Order 2012 tax forms from irs   Among those who are in a position to exercise substantial influence over the affairs of the organization are, for example, voting members of the governing body, and persons holding the power of: Presidents, chief executives, or chief operating officers. Order 2012 tax forms from irs Treasurers and chief financial officers. Order 2012 tax forms from irs Persons with a material financial interest in a provider-sponsored organization. Order 2012 tax forms from irs Persons not considered to have substantial influence. Order 2012 tax forms from irs   Persons who are not considered to be in a position to exercise substantial influence over the affairs of an organization include: An employee who receives benefits that total less than the highly compensated amount in section 414(q)(1)(B)(i) and who does not hold the executive or voting powers mentioned earlier in the discussion on Disqualified Person, is not a family member of a disqualified person, and is not a substantial contributor, Tax-exempt organizations described in section 501(c)(3), and Section 501(c)(4) organizations with respect to transactions engaged in with other section 501(c)(4) organizations. Order 2012 tax forms from irs Facts and circumstances. Order 2012 tax forms from irs   The determination of whether a person has substantial influence over the affairs of an organization is based on all the facts and circumstances. Order 2012 tax forms from irs Facts and circumstances that tend to show a person has substantial influence over the affairs of an organization include, but are not limited to, the following. Order 2012 tax forms from irs The person founded the organization. Order 2012 tax forms from irs The person is a substantial contributor to the organization under the section 507(d)(2)(A) definition, only taking into account contributions to the organization for the past 5 years. Order 2012 tax forms from irs The person's compensation is primarily based on revenues derived from activities of the organization that the person controls. Order 2012 tax forms from irs The person has or shares authority to control or determine a substantial portion of the organization's capital expenditures, operating budget, or compensation for employees. Order 2012 tax forms from irs The person manages a discrete segment or activity of the organization that represents a substantial portion of the activities, assets, income, or expenses of the organization, as compared to the organization as a whole. Order 2012 tax forms from irs The person owns a controlling interest (measured by either vote or value) in a corporation, partnership, or trust that is a disqualified person. Order 2012 tax forms from irs The person is a nonstock organization controlled directly or indirectly by one or more disqualified persons. Order 2012 tax forms from irs   Facts and circumstances tending to show that a person does not have substantial influence over the affairs of an organization include, but are not limited to, the following. Order 2012 tax forms from irs The person has taken a bona fide vow of poverty as an employee or agent of a religious organization or on its behalf. Order 2012 tax forms from irs The person is an independent contractor whose sole relationship to the organization is providing professional advice (without having decision-making authority) with respect to transactions from which the independent contractor will not economically benefit either directly or indirectly aside from customary fees received for the professional advice rendered. Order 2012 tax forms from irs Any preferential treatment the person receives based on the size of the person's donation is also offered to others making comparable widely solicited donations. Order 2012 tax forms from irs The direct supervisor of the person is not a disqualified person. Order 2012 tax forms from irs The person does not participate in any management decisions affecting the organization as a whole or a discrete segment of the organization that represents a substantial portion of the activities, assets, income, or expenses of the organization, as compared to the organization as a whole. Order 2012 tax forms from irs   In the case of multiple organizations affiliated by common control or governing documents, the determination of whether a person does or does not have substantial influence is made separately for each applicable tax-exempt organization. Order 2012 tax forms from irs A person may be a disqualified person with respect to transactions with more than one organization. Order 2012 tax forms from irs Reasonable Compensation. Order 2012 tax forms from irs    Reasonable compensation is the value that would ordinarily be paid for like services by like enterprises under like circumstances. Order 2012 tax forms from irs The section 162 standard will apply in determining the reasonableness of compensation. Order 2012 tax forms from irs The fact that a bonus or revenue-sharing arrangement is subject to a cap is a relevant factor in determining reasonableness of compensation. Order 2012 tax forms from irs   To determine the reasonableness of compensation, all items of compensation provided by an applicable tax-exempt organization in exchange for performance of services are taken into account in determining the value of compensation (except for economic benefits that are disregarded under the discussion Disregarded benefits , later). Order 2012 tax forms from irs Items of compensation include: All forms of cash and noncash compensation, including salary, fees, bonuses, severance payments, and deferred noncash compensation, The payment of liability insurance premiums for, or the payment or reimbursement by the organization of penalties, taxes, or certain expenses under section 4958, unless excludable from income as a de minimis fringe benefit under section 132(a)(4), All other compensatory benefits, whether or not included in gross income for income tax purposes, Taxable and nontaxable fringe benefits, except fringe benefits described in section 132, and Foregone interest on loans. Order 2012 tax forms from irs    Intent to treat benefits as compensation. Order 2012 tax forms from irs An economic benefit is not treated as consideration for the performance of services unless the organization providing the benefit clearly indicates its intent to treat the benefit as compensation when the benefit is paid. Order 2012 tax forms from irs   An applicable tax-exempt organization (or entity that it controls) is treated as clearly indicating its intent to provide an economic benefit as compensation for services only if the organization provides written substantiation that is contemporaneous with the transfer of the economic benefits under consideration. Order 2012 tax forms from irs Ways to provide contemporaneous written substantiation of its intent to provide an economic benefit as compensation include: The organization produces a signed written employment contract, The organization reports the benefit as compensation on an original Form W-2, Form 1099, or Form 990, or on an amended form filed before starting an IRS examination, or The disqualified person reports the benefit as income on the person's original Form 1040, or on an amended form filed before starting an IRS examination. Order 2012 tax forms from irs Exception. Order 2012 tax forms from irs   If the economic benefit is excluded from the disqualified person's gross income for income tax purposes, the applicable tax-exempt organization is not required to indicate its intent to provide an economic benefit as compensation for services. Order 2012 tax forms from irs Rebuttable presumption that a transaction is not an excess benefit transaction. Order 2012 tax forms from irs   Payments under a compensation arrangement are presumed to be reasonable and the transfer of property (or right to use property) is presumed to be at fair market value, if the following three conditions are met. Order 2012 tax forms from irs The transaction is approved in advance by an authorized body of the organization (or an entity it controls) which is composed of individuals who do not have a conflict of interest concerning the transaction. Order 2012 tax forms from irs Before making its determination, the authorized body obtained and relied upon appropriate data as to comparability. Order 2012 tax forms from irs (There is a special safe harbor for small organizations. Order 2012 tax forms from irs If the organization has gross receipts of less than $1 million, appropriate comparability data includes data on compensation paid by three comparable organizations in the same or similar communities for similar services. Order 2012 tax forms from irs ) The authorized body adequately documents the basis for its determination concurrently with making that determination. Order 2012 tax forms from irs The documentation should include: The terms of the approved transaction and the date approved, The members of the authorized body who were present during debate on the transaction that was approved and those who voted on it, The comparability data obtained and relied upon by the authorized body and how the data was obtained, Any actions by a member of the authorized body having conflict of interest, and Documentation of the basis of the determination before the later of the next meeting of the authorized body or 60 days after the final actions of the authorized body are taken, and approval of records as reasonable, accurate, and complete within a reasonable time thereafter. Order 2012 tax forms from irs Disregarded benefits. Order 2012 tax forms from irs   The following economic benefits are disregarded for section 4958 purposes. Order 2012 tax forms from irs Nontaxable fringe benefits that are excluded from income under section 132. Order 2012 tax forms from irs Benefits provided to a volunteer for the organization if the benefit is provided to the general public in exchange for a membership fee or contribution of $75 or less. Order 2012 tax forms from irs Benefits provided to a member of an organization due to the payment of a membership fee or to a donor as a result of a deductible contribution, if a significant number of disqualified persons make similar payments or contributions and are offered a similar economic benefit. Order 2012 tax forms from irs Benefits provided to a person solely as a member of a charitable class that the applicable tax-exempt organization intends to benefit as part of the accomplishment of its exempt purpose. Order 2012 tax forms from irs A transfer of an economic benefit to or for the use of a governmental unit, as defined in section 170(c)(1), if exclusively for public purposes. Order 2012 tax forms from irs Special Exception for Initial Contracts      Section 4958 does not apply to any fixed payment made to a person under an initial contract. Order 2012 tax forms from irs   A fixed payment is an amount of cash or other property specified in the contract, or determined by a fixed formula that is specified in the contract, which is to be paid or transferred in exchange for the provision of specified services or property. Order 2012 tax forms from irs   A fixed formula can, generally, incorporate an amount that depends upon future specified events or contingencies, as long as no one has discretion when calculating the amount of a payment or deciding whether to make a payment (such as a bonus). Order 2012 tax forms from irs   An initial contract is a binding written contract between an applicable tax-exempt organization and a person who was not a disqualified person immediately before entering into the contract. Order 2012 tax forms from irs   A binding written contract, providing it can be terminated or canceled by the applicable tax-exempt organization without the other party's consent (except as a result of substantial nonperformance) and without substantial penalty, is treated as a new contract, as of the earliest date any termination or cancellation would be effective. Order 2012 tax forms from irs Also, if the parties make a material change to a contract, which includes an extension or renewal of the contract (except for an extension or renewal resulting from the exercise of an option by the disqualified person), or a more than incidental change to the amount payable under the contract, it is treated as a new contract as of the effective date of the material change. Order 2012 tax forms from irs More information. Order 2012 tax forms from irs   For more information, see the Instructions to Forms 990 and 4720. Order 2012 tax forms from irs Excess Business Holdings Private foundations are generally not permitted to hold more than a 20% interest in an unrelated business enterprise. Order 2012 tax forms from irs They may be subject to an excise tax on the amount of any excess business holdings. Order 2012 tax forms from irs For purposes of section 4943, for tax years beginning after August 17, 2006, donor advised funds and certain supporting organizations are considered private foundations. Order 2012 tax forms from irs Donor advised fund. Order 2012 tax forms from irs   In general, a donor advised fund is a fund or account separately identified by reference to contributions of a donor or donors that is owned and controlled by a sponsoring organization and for which the donor has or expects to have advisory privileges concerning the distribution or investment of the funds. Order 2012 tax forms from irs Supporting organizations. Order 2012 tax forms from irs   Only certain supporting organizations are subject to the excess business holdings tax under section 4943. Order 2012 tax forms from irs These include (1) Type III supporting organizations that are not functionally integrated and (2) Type II supporting organizations that accept any gift or contribution from a person who by himself or in connection with a related party controls the supported organization that the Type II supporting organization supports. Order 2012 tax forms from irs Taxes. Order 2012 tax forms from irs   A private foundation that has excess holdings in a business enterprise may become liable for an excise tax based on the amount of holdings. Order 2012 tax forms from irs The initial tax is 10% (5% for tax years beginning before August 18, 2006) of the value of the excess holdings and is imposed on the last day of each tax year that ends during the taxable period. Order 2012 tax forms from irs The excess holdings are determined on the day during the tax year when they were the largest. Order 2012 tax forms from irs   A foundation that fails to correct the excess business holdings becomes liable for an additional tax of 200% of the remaining excess business holdings as of the earlier of tax assessment or mailing of a notice of deficiency. Order 2012 tax forms from irs   For more information on the tax on excess business holdings, see the Instructions for Form 4720. Order 2012 tax forms from irs Taxable Distributions of Sponsoring Organizations An excise tax is imposed on a sponsoring organization for each taxable distribution it makes from a donor advised fund. Order 2012 tax forms from irs An excise tax is also imposed on any fund manager of the sponsoring organization who agreed to the making of a distribution, knowing that it is a taxable distribution. Order 2012 tax forms from irs Taxable distribution. Order 2012 tax forms from irs   A taxable distribution is any distribution from a donor advised fund to any natural person or to any other person if: The distribution is for any purpose other than one specified in section 170(c)(2)(B), or The sponsoring organization maintaining the donor advised fund does not exercise expenditure responsibility with respect to the distribution in accordance with section 4945(h). Order 2012 tax forms from irs    However, a taxable distribution does not include a distribution from a donor advised fund to: Any organization described in section 170(b)(1)(A) (other than a disqualified supporting organization), The sponsoring organization of the donor advised fund, or Any other donor advised fund. Order 2012 tax forms from irs The tax on taxable distributions applies to distributions occurring in tax years beginning after August 17, 2006. Order 2012 tax forms from irs Sponsoring organization. Order 2012 tax forms from irs   A sponsoring organization is a section 170(c) organization that is neither a government organization (as referred to in section 170(c)(1) and (2)(A)) nor a private foundation. Order 2012 tax forms from irs Donor advised fund. Order 2012 tax forms from irs    A donor advised fund is a fund or account: Which is separately identified by reference to contributions of a donor or donors, Which is owned and controlled by a sponsoring organization, and For which the donor (or any person appointed or designated by the donor) has or expects to have advisory privileges concerning the distribution or investment of the funds held in the donor advised funds or accounts because of the donor's status as a donor. Order 2012 tax forms from irs Exception. Order 2012 tax forms from irs A donor advised fund does not include:    A fund or account that makes distributions only to a single identified organization or governmental entity, or Any fund or account for a person described in 3 above that gives advice about which individuals receive grants for travel, study, or similar purposes, if the following three requirements are met: The person's advisory privileges are performed exclusively by such person in their capacity as a committee member of which all the committee members are appointed by the sponsoring organization, No combination of persons with advisory privileges, described in 3 above, or persons related to those in 3 above directly or indirectly control the committee, and All grants from the fund or account are awarded on an objective and nondiscriminatory basis according to a procedure approved in advance by the board of directors of the sponsoring organization. Order 2012 tax forms from irs The procedure must be designed to ensure that all grants meet the requirements of section 4945(g)(1), (2), or (3). Order 2012 tax forms from irs Disqualified supporting organization. Order 2012 tax forms from irs   A disqualified supporting organization includes (1) a Type III supporting organization that is not functionally integrated and (2) any supporting organization where the donor or donor advisor (and any related parties) directly or indirectly controls a supported organization of the supporting organization. Order 2012 tax forms from irs Tax on sponsoring organization. Order 2012 tax forms from irs   A tax of 20% of the amount of each taxable distribution is imposed on the sponsoring organization. Order 2012 tax forms from irs Tax on fund manager. Order 2012 tax forms from irs   If a tax is imposed on a taxable distribution of the sponsoring organization, a tax of 5% of the distribution will be imposed on any fund manager who agreed to the distribution knowing that it was a taxable distribution. Order 2012 tax forms from irs Any fund manager who took part in the distribution and is liable for the tax must pay the tax. Order 2012 tax forms from irs The maximum amount of tax on all fund managers for any one taxable distribution is $10,000. Order 2012 tax forms from irs If more than one fund manager is liable for tax on a taxable distribution, all such managers are jointly and severally liable for the tax. Order 2012 tax forms from irs   For more information on the tax on taxable distributions of sponsoring organizations, see the Instructions for Form 4720. Order 2012 tax forms from irs Taxes on Prohibited Benefits Resulting From Donor Advised Fund Distributions Prohibited benefit. Order 2012 tax forms from irs   If any donor, donor advisor, or related party advises the sponsoring organization about making a distribution which results in a donor, donor advisor, or related party receiving (either directly or indirectly) a more than incidental benefit, then such benefit is a prohibited benefit. Order 2012 tax forms from irs The tax on prohibited benefits applies to distributions occurring in tax years beginning after August 17, 2006. Order 2012 tax forms from irs Donor advisor. Order 2012 tax forms from irs   A donor advisor is any person appointed or designated by a donor to advise a sponsoring organization on the distribution or investment of amounts held in the donor's fund or account. Order 2012 tax forms from irs Related party. Order 2012 tax forms from irs   A related party includes any family member or 35% controlled entity. Order 2012 tax forms from irs See the definition of those terms under Disqualified Person , earlier. Order 2012 tax forms from irs Tax on donor, donor advisor, or related person. Order 2012 tax forms from irs    A tax of 125% of the benefit resulting from the distribution is imposed on both the party who advised as to the distribution (which might be a donor, donor advisor, or related party) and the party who received such benefit (which might be a donor, donor advisor, or related party). Order 2012 tax forms from irs The advisor and the party who received the benefit are jointly and severally liable for the tax. Order 2012 tax forms from irs Tax on fund managers. Order 2012 tax forms from irs   If a tax is imposed on a prohibited benefit received by a donor, donor advisor, or related person, a tax of 10% of the amount of the prohibited benefit is imposed on any fund manager who agreed to the distribution knowing that it would confer a prohibited benefit. Order 2012 tax forms from irs Any fund manager who took part in the distribution and is liable for the tax must pay the tax. Order 2012 tax forms from irs The maximum amount of tax on all fund managers for any one taxable distribution is $10,000. Order 2012 tax forms from irs If more than one fund manager is liable for tax on a taxable distribution, all such managers are jointly and severally liable for the tax. Order 2012 tax forms from irs Exception. Order 2012 tax forms from irs   If a person engaged in an excess benefit transaction and received a prohibited benefit for the same transaction, the person is taxed under section 4958, and no tax is imposed under section 4967 for a prohibited benefit. Order 2012 tax forms from irs   For more information on taxes on prohibited benefits distributed from donor advised funds, see the Instructions for Form 4720. Order 2012 tax forms from irs Excise Taxes on Private Foundations There is an excise tax on the net investment income of most domestic private foundations. Order 2012 tax forms from irs Capital gains from appreciation are included in the tax base on private foundation net investment income. Order 2012 tax forms from irs This tax must be reported on Form 990-PF and must be paid annually at the time for filing that return or in quarterly estimated tax payments if the total tax for the year (section 4940 tax minus credits) is $500 or more. Order 2012 tax forms from irs Form 990-W is used to calculate the estimated tax. Order 2012 tax forms from irs In addition, there are several other rules that apply to excise taxes on private foundations. Order 2012 tax forms from irs These include: Restrictions on self-dealing between private foundations and their substantial contributors and other disqualified persons, Requirements that the foundation annually distribute income for charitable purposes, Limits on their holdings in any business enterprise (see Excess Business Holdings, earlier), Provisions that investments must not jeopardize the carrying out of exempt purposes, and Provisions to assure that expenditures further the organization's exempt purposes. Order 2012 tax forms from irs Violations of these provisions give rise to taxes and penalties against the private foundation and, in some cases, its managers, its substantial contributors, and certain related persons. Order 2012 tax forms from irs For more information on the excise taxes imposed on private foundations, see the Instructions for Form 4720 and the Instructions for Form 990-PF. Order 2012 tax forms from irs Excise Taxes on Black Lung Benefit Trusts A black lung benefit trust that makes any expenditures, payments, or investments other than those described in chapter 4 under 501(c)(21) - Black Lung Benefit Trusts must pay a tax equal to 10% of the amount of such expenditures. Order 2012 tax forms from irs If there are any acts of self-dealing between the trust and a disqualified person, a tax equal to 10% of the amount involved is imposed on the disqualified person. Order 2012 tax forms from irs Both of these excise taxes are reported on Schedule A (Form 990-BL). Order 2012 tax forms from irs See the Form 990-BL instructions for more information on these taxes and what has to be filed, even if the trust is excepted from filing. Order 2012 tax forms from irs Excise Tax on Failure to Meet the Community Health Needs Assessment Requirements For tax years beginning after March 23, 2012, new section 4959 imposes an excise tax on hospital organizations which fail to meet certain section 501(r) requirements for each of their hospital facilities. Order 2012 tax forms from irs These entities must meet section 501(r)(3) requirements at all times during their tax year. Order 2012 tax forms from irs Section 501(r)(3) requirements pertain to a hospital organization preparing a community health needs assessment (CHNA). Order 2012 tax forms from irs See Schedule H, Hospitals (Form 990), for details. Order 2012 tax forms from irs Prev  Up  Next   Home   More Online Publications
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The Order 2012 Tax Forms From Irs

Order 2012 tax forms from irs 4. Order 2012 tax forms from irs   Limit on Elective Deferrals Table of Contents Excess elective deferrals. Order 2012 tax forms from irs General Limit 15-Year RuleYears of Service Figuring the Limit on Elective DeferralsExample The second and final component of MAC is the limit on elective deferrals. Order 2012 tax forms from irs This is a limit on the amount of contributions that can be made to your account through a salary reduction agreement. Order 2012 tax forms from irs A salary reduction agreement is an agreement between you and your employer that allows for a portion of your compensation to be directly invested in a 403(b) account on your behalf. Order 2012 tax forms from irs You can enter into more than one salary reduction agreement during a year. Order 2012 tax forms from irs More than one 403(b) account. Order 2012 tax forms from irs If, for any year, elective deferrals are contributed to more than one 403(b) account for you (whether or not with the same employer), you must combine all the elective deferrals to determine whether the total is more than the limit for that year. Order 2012 tax forms from irs 403(b) plan and another retirement plan. Order 2012 tax forms from irs If, during the year, contributions in the form of elective deferrals are made to other retirement plans on your behalf, you must combine all of the elective deferrals to determine if they are more than your limit on elective deferrals. Order 2012 tax forms from irs The limit on elective deferrals applies to amounts contributed to: 401(k) plans, to the extent excluded from income, Roth contribution programs, Section 501(c)(18) plans, to the extent excluded from income, Savings incentive match plan for employees (SIMPLE plans), Simplified employee pension (SEP) plans, and All 403(b) plans. Order 2012 tax forms from irs Roth contribution program. Order 2012 tax forms from irs   Your 403(b) plan may allow you to designate all or a portion of your elective deferrals as Roth contributions. Order 2012 tax forms from irs Elective deferrals designated as Roth contributions must be maintained in a separate Roth account and are not excludable from your gross income. Order 2012 tax forms from irs   The maximum amount of contributions allowed under a Roth contribution program is your limit on elective deferrals, less your elective deferrals not designated as Roth contributions. Order 2012 tax forms from irs For more information on the Roth contribution program, see Publication 560, Retirement Plans for Small Business. Order 2012 tax forms from irs Excess elective deferrals. Order 2012 tax forms from irs   If the amount contributed is more than the allowable limit, you must include the excess that is not a Roth contribution in your gross income for the year contributed. Order 2012 tax forms from irs General Limit Under the general limit on elective deferrals, the most that can be contributed to your 403(b) account through a salary reduction agreement is $17,500 for 2013 and 2014. Order 2012 tax forms from irs This limit applies without regard to community property laws. Order 2012 tax forms from irs 15-Year Rule If you have at least 15 years of service with an educational organization (such as a public or private school), hospital, home health service agency, health and welfare service agency, church, or convention or association of churches (or associated organization), the limit on elective deferrals to your 403(b) account is increased by the least of: $3,000, $15,000, reduced by the sum of: The additional pre-tax elective deferrals made in prior years because of this rule, plus The aggregate amount of designated Roth contributions permitted for prior years because of this rule, or $5,000 times the number of your years of service for the organization, minus the total elective deferrals made by your employer on your behalf for earlier years. Order 2012 tax forms from irs If you qualify for the 15-year rule, your elective deferrals under this limit can be as high as $20,500 for 2013 and 2014. Order 2012 tax forms from irs To determine whether you have 15 years of service with your employer, see Years of Service , next. Order 2012 tax forms from irs Years of Service To determine if you are eligible for the increased limit on elective deferrals, you will first need to figure your years of service. Order 2012 tax forms from irs How you figure your years of service depends on whether you were a full-time or a part-time employee, whether you worked for the full year or only part of the year, and whether you have worked for your employer for an entire year. Order 2012 tax forms from irs You must figure years of service for each year during which you worked for the employer who is maintaining your 403(b) account. Order 2012 tax forms from irs If more than one employer maintains a 403(b) account for you in the same year, you must figure years of service separately for each employer. Order 2012 tax forms from irs Definition Your years of service are the total number of years you have worked as a full time employee for the employer maintaining your 403(b) account as of the end of the year. Order 2012 tax forms from irs Figuring Your Years of Service Take the following rules into account when figuring your years of service. Order 2012 tax forms from irs Status of employer. Order 2012 tax forms from irs   Your years of service include only periods during which your employer was a qualified employer. Order 2012 tax forms from irs Your plan administrator can tell you whether or not your employer was qualified during all your periods of service. Order 2012 tax forms from irs Service with one employer. Order 2012 tax forms from irs   Generally, you cannot count service for any employer other than the one who maintains your 403(b) account. Order 2012 tax forms from irs Church employee. Order 2012 tax forms from irs   If you are a church employee, treat all of your years of service with related church organizations as years of service with the same employer. Order 2012 tax forms from irs For more information about church employees, see chapter 5. Order 2012 tax forms from irs Self-employed ministers. Order 2012 tax forms from irs   If you are a self-employed minister, your years of service include full and part years in which you have been treated as employed by a tax-exempt organization that is a qualified employer. Order 2012 tax forms from irs Total years of service. Order 2012 tax forms from irs   When figuring prior years of service, figure each year individually and then add the individual years of service to determine your total years of service. Order 2012 tax forms from irs Example. Order 2012 tax forms from irs The annual work period for full-time teachers employed by ABC Public Schools is September through December and February through May. Order 2012 tax forms from irs Marsha began working with ABC schools in September 2009. Order 2012 tax forms from irs She has always worked full-time for each annual work period. Order 2012 tax forms from irs At the end of 2013, Marsha had 4. Order 2012 tax forms from irs 5 years of service with ABC Public Schools, as shown in Table 4-1. Order 2012 tax forms from irs Table 4-1. Order 2012 tax forms from irs Marsha's Years of Service Note. Order 2012 tax forms from irs This table shows how Marsha figures her years of service, as explained in the previous example. Order 2012 tax forms from irs Year Period Worked Portion of Work Period Years of Service 2009 Sept. Order 2012 tax forms from irs –Dec. Order 2012 tax forms from irs . Order 2012 tax forms from irs 5 year . Order 2012 tax forms from irs 5 year 2010 Feb. Order 2012 tax forms from irs –May . Order 2012 tax forms from irs 5 year 1 year Sept. Order 2012 tax forms from irs –Dec. Order 2012 tax forms from irs . Order 2012 tax forms from irs 5 year 2011 Feb. Order 2012 tax forms from irs –May . Order 2012 tax forms from irs 5 year 1 year Sept. Order 2012 tax forms from irs –Dec. Order 2012 tax forms from irs . Order 2012 tax forms from irs 5 year 2012 Feb. Order 2012 tax forms from irs –May . Order 2012 tax forms from irs 5 year 1 year Sept. Order 2012 tax forms from irs –Dec. Order 2012 tax forms from irs . Order 2012 tax forms from irs 5 year 2013 Feb. Order 2012 tax forms from irs –May . Order 2012 tax forms from irs 5 year 1 year Sept. Order 2012 tax forms from irs –Dec. Order 2012 tax forms from irs . Order 2012 tax forms from irs 5 year Total years of service 4. Order 2012 tax forms from irs 5 years Full-time or part-time. Order 2012 tax forms from irs   To figure your years of service, you must analyze each year individually and determine whether you worked full-time for the full year or something other than full-time. Order 2012 tax forms from irs When determining whether you worked full-time or something other than full-time, use your employer's annual work period as the standard. Order 2012 tax forms from irs Employer's annual work period. Order 2012 tax forms from irs   Your employer's annual work period is the usual amount of time an individual working full-time in a specific position is required to work. Order 2012 tax forms from irs Generally, this period of time is expressed in days, weeks, months, or semesters, and can span 2 calendar years. Order 2012 tax forms from irs Note. Order 2012 tax forms from irs You cannot accumulate more than 1 year of service in a 12-month period. Order 2012 tax forms from irs Example. Order 2012 tax forms from irs All full-time teachers at ABC Public Schools are required to work both the September through December semester and the February through May semester. Order 2012 tax forms from irs Therefore, the annual work period for full-time teachers employed by ABC Public Schools is September through December and February through May. Order 2012 tax forms from irs Teachers at ABC Public Schools who work both semesters in the same calendar year are considered working a full year of service in that calendar year. Order 2012 tax forms from irs Full-Time Employee for the Full Year Count each full year during which you were employed full-time as 1 year of service. Order 2012 tax forms from irs In determining whether you were employed full-time, compare the amount of work you were required to perform with the amount of work normally required of others who held the same position with the same employer and who generally received most of their pay from the position. Order 2012 tax forms from irs How to compare. Order 2012 tax forms from irs   You can use any method that reasonably and accurately reflects the amount of work required. Order 2012 tax forms from irs For example, if you are a teacher, you can use the number of hours of classroom instruction as a measure of the amount of work required. Order 2012 tax forms from irs   In determining whether positions with the same employer are the same, consider all of the facts and circumstances concerning the positions, including the work performed, the methods by which pay is determined, and the descriptions (or titles) of the positions. Order 2012 tax forms from irs Example. Order 2012 tax forms from irs An assistant professor employed in the English department of a university will be considered a full-time employee if the amount of work that he or she is required to perform is the same as the amount of work normally required of assistant professors of English at that university who get most of their pay from that position. Order 2012 tax forms from irs   If no one else works for your employer in the same position, compare your work with the work normally required of others who held the same position with similar employers or similar positions with your employer. Order 2012 tax forms from irs Full year of service. Order 2012 tax forms from irs   A full year of service for a particular position means the usual annual work period of anyone employed full-time in that general type of work at that place of employment. Order 2012 tax forms from irs Example. Order 2012 tax forms from irs If a doctor works for a hospital 12 months of a year except for a 1-month vacation, the doctor will be considered as employed for a full year if the other doctors at that hospital also work 11 months of the year with a 1-month vacation. Order 2012 tax forms from irs Similarly, if the usual annual work period at a university consists of the fall and spring semesters, an instructor at that university who teaches these semesters will be considered as working a full year. Order 2012 tax forms from irs Other Than Full-Time for the Full Year If, during any year, you were employed full-time for only part of your employer's annual work period, part-time for the entire annual work period, or part-time for only part of the work period, your year of service for that year is a fraction of your employer's annual work period. Order 2012 tax forms from irs Full-time for part of the year. Order 2012 tax forms from irs   If, during a year, you were employed full-time for only part of your employer's annual work period, figure the fraction for that year as follows: The numerator (top number) is the number of weeks, months, or semesters you were a full-time employee. Order 2012 tax forms from irs The denominator (bottom number) is the number of weeks, months, or semesters considered the normal annual work period for the position. Order 2012 tax forms from irs Example. Order 2012 tax forms from irs Jason was employed as a full-time instructor by a local college for the 4 months of the 2013 spring semester (February 2013 through May 2013). Order 2012 tax forms from irs The annual work period for the college is 8 months (February through May and July through October). Order 2012 tax forms from irs Given these facts, Jason was employed full-time for part of the annual work period and provided ½ of a year of service. Order 2012 tax forms from irs Jason's years of service computation for 2013 is as follows: Number of months Jason worked = 4 = 1 Number of months in annual work period 8 2 Part-time for the full year. Order 2012 tax forms from irs   If, during a year, you were employed part-time for the employer's entire annual work period, you figure the fraction for that year as follows: The numerator (top number) is the number of hours or days you worked. Order 2012 tax forms from irs The denominator (bottom number) is the number of hours or days normally required of someone holding the same position who works full-time. Order 2012 tax forms from irs Example. Order 2012 tax forms from irs Vance teaches one course at a local medical school. Order 2012 tax forms from irs He teaches 3 hours per week for two semesters. Order 2012 tax forms from irs Other faculty members at the same school teach 9 hours per week for two semesters. Order 2012 tax forms from irs The annual work period of the medical school is two semesters. Order 2012 tax forms from irs An instructor teaching 9 hours a week for two semesters is considered a full-time employee. Order 2012 tax forms from irs Given these facts, Vance has worked part-time for a full annual work period. Order 2012 tax forms from irs Vance has completed 1/3 of a year of service, figured as shown below. Order 2012 tax forms from irs Number of hours per week Vance worked = 3 = 1 Number of hours per week considered full-time 9 3 Part-time for part of the year. Order 2012 tax forms from irs   If, during any year, you were employed part-time for only part of your employer's annual work period, you figure your fraction for that year by multiplying two fractions. Order 2012 tax forms from irs   Figure the first fraction as though you had worked full-time for part of the annual work period. Order 2012 tax forms from irs The fraction is as follows: The numerator (top number) is the number of weeks, months, or semesters you were a full-time employee. Order 2012 tax forms from irs The denominator (bottom number) is the number of weeks, months, or semesters considered the normal annual work period for the position. Order 2012 tax forms from irs   Figure the second fraction as though you had worked part-time for the entire annual work period. Order 2012 tax forms from irs The fraction is as follows: The numerator (top number) is the number of hours or days you worked. Order 2012 tax forms from irs The denominator (bottom number) is the number of hours or days normally required of someone holding the same position who works full-time. Order 2012 tax forms from irs   Once you have figured these two fractions, multiply them together to determine the fraction representing your partial year of service for the year. Order 2012 tax forms from irs Example. Order 2012 tax forms from irs Maria, an attorney, teaches a course for one semester at a law school. Order 2012 tax forms from irs She teaches 3 hours per week. Order 2012 tax forms from irs The annual work period for teachers at the school is two semesters. Order 2012 tax forms from irs All full-time instructors at the school are required to teach 12 hours per week. Order 2012 tax forms from irs Based on these facts, Maria is employed part-time for part of the annual work period. Order 2012 tax forms from irs Her year of service for this year is determined by multiplying two fractions. Order 2012 tax forms from irs Her computation is as follows: Maria's first fraction Number of semesters Maria worked = 1 Number of semesters in annual work period 2 Maria's second fraction Number of hours Maria worked per week = 3 = 1 Number of hours per week considered full-time 12 4 Maria would multiply these fractions to obtain the fractional year of service: 1 x 1 = 1         2 4 8         Figuring the Limit on Elective Deferrals You can use Part II of Worksheet 1 in chapter 9 to figure the limit on elective deferrals. Order 2012 tax forms from irs Example Floyd has figured his limit on annual additions. Order 2012 tax forms from irs The only other component needed before he can determine his MAC for 2014 is his limit on elective deferrals. Order 2012 tax forms from irs Figuring Floyd's limit on elective deferrals. Order 2012 tax forms from irs   Floyd has been employed with his current employer for less than 15 years. Order 2012 tax forms from irs He is not eligible for the special 15-year increase. Order 2012 tax forms from irs Therefore, his limit on elective deferrals for 2014 is $17,500 as shown in Table 4-2. Order 2012 tax forms from irs Floyd's employer will not make any nonelective contributions to his 403(b) account and Floyd will not make any after-tax contributions. Order 2012 tax forms from irs Additionally, Floyd's employer does not offer a Roth contribution program. Order 2012 tax forms from irs Figuring Floyd's MAC Floyd has determined that his limit on annual additions for 2014 is $52,000 and his limit on elective deferrals is $17,500. Order 2012 tax forms from irs Because elective deferrals are the only contributions made to Floyd's account, the maximum amount that can be contributed to a 403(b) account on Floyd's behalf in 2014 is $17,500, the lesser of both limits. Order 2012 tax forms from irs Table 4-2. Order 2012 tax forms from irs Worksheet 1. Order 2012 tax forms from irs Maximum Amount Contributable (MAC) Note. Order 2012 tax forms from irs Use this worksheet to figure your MAC. Order 2012 tax forms from irs Part I. Order 2012 tax forms from irs Limit on Annual Additions     1. Order 2012 tax forms from irs Enter your includible compensation for your most recent year of service 1. Order 2012 tax forms from irs $70,475 2. Order 2012 tax forms from irs Maximum: For 2013 enter $51,000 For 2014 enter $52,000 2. Order 2012 tax forms from irs 52,000 3. Order 2012 tax forms from irs Enter the lesser of line 1 or line 2. Order 2012 tax forms from irs This is your limit on annual additions 3. Order 2012 tax forms from irs 52,000   Caution: If you had only nonelective contributions, skip Part II and enter the amount from line 3 on line 18. Order 2012 tax forms from irs     Part II. Order 2012 tax forms from irs Limit on Elective Deferrals     4. Order 2012 tax forms from irs Maximum contribution: For 2013, enter $17,500 For 2014, enter $17,500 4. Order 2012 tax forms from irs 17,500   Note. Order 2012 tax forms from irs If you have at least 15 years of service with a qualifying organization, complete lines 5 through 17. Order 2012 tax forms from irs If not, enter zero (-0-) on line 16 and go to line 17. Order 2012 tax forms from irs     5. Order 2012 tax forms from irs Amount per year of service 5. Order 2012 tax forms from irs 5,000 6. Order 2012 tax forms from irs Enter your years of service 6. Order 2012 tax forms from irs   7. Order 2012 tax forms from irs Multiply line 5 by line 6 7. Order 2012 tax forms from irs   8. Order 2012 tax forms from irs Enter the total of all elective deferrals made for you by the qualifying organization for prior years 8. Order 2012 tax forms from irs   9. Order 2012 tax forms from irs Subtract line 8 from line 7. Order 2012 tax forms from irs If zero or less, enter zero (-0-) 9. Order 2012 tax forms from irs   10. Order 2012 tax forms from irs Maximum increase in limit for long service 10. Order 2012 tax forms from irs 15,000 11. Order 2012 tax forms from irs Enter the total of additional pre-tax elective deferrals made in prior years under the 15-year rule 11. Order 2012 tax forms from irs   12. Order 2012 tax forms from irs Enter the aggregate amount of all designated Roth contributions permitted for prior years under the 15-year rule 12. Order 2012 tax forms from irs   13. Order 2012 tax forms from irs Add lines 11 and 12 13. Order 2012 tax forms from irs   14. Order 2012 tax forms from irs Subtract line 13 from line 10 14. Order 2012 tax forms from irs   15. Order 2012 tax forms from irs Maximum additional contributions 15. Order 2012 tax forms from irs 3,000 16. Order 2012 tax forms from irs Enter the least of lines 9, 14, or 15. Order 2012 tax forms from irs This is your increase in the limit for long service 16. Order 2012 tax forms from irs -0- 17. Order 2012 tax forms from irs Add lines 4 and 16. Order 2012 tax forms from irs This is your limit on elective deferrals 17. Order 2012 tax forms from irs 17,500   Part III. Order 2012 tax forms from irs Maximum Amount Contributable     18. Order 2012 tax forms from irs If you had only nonelective contributions, enter the amount from line 3. Order 2012 tax forms from irs This is your MAC. Order 2012 tax forms from irs    If you had only elective deferrals, enter the lesser of lines 3 or 17. Order 2012 tax forms from irs This is your MAC. Order 2012 tax forms from irs    If you had both elective deferrals and nonelective contributions, enter the amount from line 3. Order 2012 tax forms from irs This is your MAC. Order 2012 tax forms from irs (Use the amount on line 17 to determine if you have excess elective deferrals as explained in chapter 7. Order 2012 tax forms from irs ) 18. Order 2012 tax forms from irs $17,500 Prev  Up  Next   Home   More Online Publications