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State Tax Efile

State tax efile 8. State tax efile   Dividends and Other Distributions Table of Contents Reminder Introduction Useful Items - You may want to see: General InformationDividends not reported on Form 1099-DIV. State tax efile Reporting tax withheld. State tax efile Nominees. State tax efile Ordinary DividendsQualified Dividends Dividends Used to Buy More Stock Money Market Funds Capital Gain DistributionsBasis adjustment. State tax efile Nondividend DistributionsLiquidating Distributions Distributions of Stock and Stock Rights Other DistributionsInformation reporting requirement. State tax efile Alternative minimum tax treatment. State tax efile How To Report Dividend IncomeInvestment interest deducted. State tax efile Reminder Foreign-source income. State tax efile  If you are a U. State tax efile S. State tax efile citizen with dividend income from sources outside the United States (foreign-source income), you must report that income on your tax return unless it is exempt by U. State tax efile S. State tax efile law. State tax efile This is true whether you reside inside or outside the United States and whether or not you receive a Form 1099 from the foreign payer. State tax efile Introduction This chapter discusses the tax treatment of: Ordinary dividends, Capital gain distributions, Nondividend distributions, and Other distributions you may receive from a corporation or a mutual fund. State tax efile This chapter also explains how to report dividend income on your tax return. State tax efile Dividends are distributions of money, stock, or other property paid to you by a corporation or by a mutual fund. State tax efile You also may receive dividends through a partnership, an estate, a trust, or an association that is taxed as a corporation. State tax efile However, some amounts you receive that are called dividends are actually interest income. State tax efile (See Dividends that are actually interest under Taxable Interest in chapter 7. State tax efile ) Most distributions are paid in cash (or check). State tax efile However, distributions can consist of more stock, stock rights, other property, or services. State tax efile Useful Items - You may want to see: Publication 514 Foreign Tax Credit for Individuals 550 Investment Income and Expenses Form (and Instructions) Schedule B (Form 1040A or 1040) Interest and Ordinary Dividends General Information This section discusses general rules for dividend income. State tax efile Tax on unearned income of certain children. State tax efile   Part of a child's 2013 unearned income may be taxed at the parent's tax rate. State tax efile If it is, Form 8615, Tax for Certain Children Who Have Unearned Income, must be completed and attached to the child's tax return. State tax efile If not, Form 8615 is not required and the child's income is taxed at his or her own tax rate. State tax efile    Some parents can choose to include the child's interest and dividends on the parent's return if certain requirements are met. State tax efile Use Form 8814, Parents' Election To Report Child's Interest and Dividends, for this purpose. State tax efile   For more information about the tax on unearned income of children and the parents' election, see chapter 31. State tax efile Beneficiary of an estate or trust. State tax efile    Dividends and other distributions you receive as a beneficiary of an estate or trust are generally taxable income. State tax efile You should receive a Schedule K-1 (Form 1041), Beneficiary's Share of Income, Deductions, Credits, etc. State tax efile , from the fiduciary. State tax efile Your copy of Schedule K-1 (Form 1041) and its instructions will tell you where to report the income on your Form 1040. State tax efile Social security number (SSN) or individual taxpayer identification number (ITIN). State tax efile    You must give your SSN or ITIN to any person required by federal tax law to make a return, statement, or other document that relates to you. State tax efile This includes payers of dividends. State tax efile If you do not give your SSN or ITIN to the payer of dividends, you may have to pay a penalty. State tax efile For more information on SSNs and ITINs, see Social Security Number (SSN) in chapter 1. State tax efile Backup withholding. State tax efile   Your dividend income is generally not subject to regular withholding. State tax efile However, it may be subject to backup withholding to ensure that income tax is collected on the income. State tax efile Under backup withholding, the payer of dividends must withhold, as income tax, on the amount you are paid, applying the appropriate withholding rate. State tax efile   Backup withholding may also be required if the IRS has determined that you underreported your interest or dividend income. State tax efile For more information, see Backup Withholding in chapter 4. State tax efile Stock certificate in two or more names. State tax efile   If two or more persons hold stock as joint tenants, tenants by the entirety, or tenants in common, each person's share of any dividends from the stock is determined by local law. State tax efile Form 1099-DIV. State tax efile   Most corporations and mutual funds use Form 1099-DIV, Dividends and Distributions, to show you the distributions you received from them during the year. State tax efile Keep this form with your records. State tax efile You do not have to attach it to your tax return. State tax efile Dividends not reported on Form 1099-DIV. State tax efile   Even if you do not receive Form 1099-DIV, you must still report all your taxable dividend income. State tax efile For example, you may receive distributive shares of dividends from partnerships or S corporations. State tax efile These dividends are reported to you on Schedule K-1 (Form 1065), Partner's Share of Income, Deductions, Credits, etc. State tax efile , and Schedule K-1 (Form 1120S), Shareholder's Share of Income, Deductions, Credits, etc. State tax efile Reporting tax withheld. State tax efile   If tax is withheld from your dividend income, the payer must give you a Form 1099-DIV that indicates the amount withheld. State tax efile Nominees. State tax efile   If someone receives distributions as a nominee for you, that person should give you a Form 1099-DIV, which will show distributions received on your behalf. State tax efile Form 1099-MISC. State tax efile   Certain substitute payments in lieu of dividends or tax-exempt interest received by a broker on your behalf must be reported to you on Form 1099-MISC, Miscellaneous Income, or a similar statement. State tax efile See Reporting Substitute Payments under Short Sales in chapter 4 of Publication 550 for more information about reporting these payments. State tax efile Incorrect amount shown on a Form 1099. State tax efile   If you receive a Form 1099 that shows an incorrect amount (or other incorrect information), you should ask the issuer for a corrected form. State tax efile The new Form 1099 you receive will be marked “Corrected. State tax efile ” Dividends on stock sold. State tax efile   If stock is sold, exchanged, or otherwise disposed of after a dividend is declared but before it is paid, the owner of record (usually the payee shown on the dividend check) must include the dividend in income. State tax efile Dividends received in January. State tax efile   If a mutual fund (or other regulated investment company) or real estate investment trust (REIT) declares a dividend (including any exempt-interest dividend or capital gain distribution) in October, November, or December, payable to shareholders of record on a date in one of those months but actually pays the dividend during January of the next calendar year, you are considered to have received the dividend on December 31. State tax efile You report the dividend in the year it was declared. State tax efile Ordinary Dividends Ordinary (taxable) dividends are the most common type of distribution from a corporation or a mutual fund. State tax efile They are paid out of earnings and profits and are ordinary income to you. State tax efile This means they are not capital gains. State tax efile You can assume that any dividend you receive on common or preferred stock is an ordinary dividend unless the paying corporation or mutual fund tells you otherwise. State tax efile Ordinary dividends will be shown in box 1a of the Form 1099-DIV you receive. State tax efile Qualified Dividends Qualified dividends are the ordinary dividends subject to the same 0%, 15%, or 20% maximum tax rate that applies to net capital gain. State tax efile They should be shown in box 1b of the Form 1099-DIV you receive. State tax efile The maximum rate of tax on qualified dividends is: 0% on any amount that otherwise would be taxed at a 10% or 15% rate. State tax efile 15% on any amount that otherwise would be taxed at rates greater than 15% but less than 39. State tax efile 6%. State tax efile 20% on any amount that otherwise would be taxed at a 39. State tax efile 6% rate. State tax efile To qualify for the maximum rate, all of the following requirements must be met. State tax efile The dividends must have been paid by a U. State tax efile S. State tax efile corporation or a qualified foreign corporation. State tax efile (See Qualified foreign corporation , later. State tax efile ) The dividends are not of the type listed later under Dividends that are not qualified dividends . State tax efile You meet the holding period (discussed next). State tax efile Holding period. State tax efile   You must have held the stock for more than 60 days during the 121-day period that begins 60 days before the ex-dividend date. State tax efile The ex-dividend date is the first date following the declaration of a dividend on which the buyer of a stock is not entitled to receive the next dividend payment. State tax efile Instead, the seller will get the dividend. State tax efile   When counting the number of days you held the stock, include the day you disposed of the stock, but not the day you acquired it. State tax efile See the examples later. State tax efile Exception for preferred stock. State tax efile   In the case of preferred stock, you must have held the stock more than 90 days during the 181-day period that begins 90 days before the ex-dividend date if the dividends are due to periods totaling more than 366 days. State tax efile If the preferred dividends are due to periods totaling less than 367 days, the holding period in the previous paragraph applies. State tax efile Example 1. State tax efile You bought 5,000 shares of XYZ Corp. State tax efile common stock on July 9, 2013. State tax efile XYZ Corp. State tax efile paid a cash dividend of 10 cents per share. State tax efile The ex-dividend date was July 16, 2013. State tax efile Your Form 1099-DIV from XYZ Corp. State tax efile shows $500 in box 1a (ordinary dividends) and in box 1b (qualified dividends). State tax efile However, you sold the 5,000 shares on August 12, 2013. State tax efile You held your shares of XYZ Corp. State tax efile for only 34 days of the 121-day period (from July 10, 2013, through August 12, 2013). State tax efile The 121-day period began on May 17, 2013 (60 days before the ex-dividend date), and ended on September 14, 2013. State tax efile You have no qualified dividends from XYZ Corp. State tax efile because you held the XYZ stock for less than 61 days. State tax efile Example 2. State tax efile Assume the same facts as in Example 1 except that you bought the stock on July 15, 2013 (the day before the ex-dividend date), and you sold the stock on September 16, 2013. State tax efile You held the stock for 63 days (from July 16, 2013, through September 16, 2013). State tax efile The $500 of qualified dividends shown in box 1b of your Form 1099-DIV are all qualified dividends because you held the stock for 61 days of the 121-day period (from July 16, 2013, through September 14, 2013). State tax efile Example 3. State tax efile You bought 10,000 shares of ABC Mutual Fund common stock on July 9, 2013. State tax efile ABC Mutual Fund paid a cash dividend of 10 cents a share. State tax efile The ex-dividend date was July 16, 2013. State tax efile The ABC Mutual Fund advises you that the portion of the dividend eligible to be treated as qualified dividends equals 2 cents per share. State tax efile Your Form 1099-DIV from ABC Mutual Fund shows total ordinary dividends of $1,000 and qualified dividends of $200. State tax efile However, you sold the 10,000 shares on August 12, 2013. State tax efile You have no qualified dividends from ABC Mutual Fund because you held the ABC Mutual Fund stock for less than 61 days. State tax efile Holding period reduced where risk of loss is diminished. State tax efile   When determining whether you met the minimum holding period discussed earlier, you cannot count any day during which you meet any of the following conditions. State tax efile You had an option to sell, were under a contractual obligation to sell, or had made (and not closed) a short sale of substantially identical stock or securities. State tax efile You were grantor (writer) of an option to buy substantially identical stock or securities. State tax efile Your risk of loss is diminished by holding one or more other positions in substantially similar or related property. State tax efile   For information about how to apply condition (3), see Regulations section 1. State tax efile 246-5. State tax efile Qualified foreign corporation. State tax efile   A foreign corporation is a qualified foreign corporation if it meets any of the following conditions. State tax efile The corporation is incorporated in a U. State tax efile S. State tax efile possession. State tax efile The corporation is eligible for the benefits of a comprehensive income tax treaty with the United States that the Treasury Department determines is satisfactory for this purpose and that includes an exchange of information program. State tax efile For a list of those treaties, see Table 8-1. State tax efile The corporation does not meet (1) or (2) above, but the stock for which the dividend is paid is readily tradable on an established securities market in the United States. State tax efile See Readily tradable stock , later. State tax efile Exception. State tax efile   A corporation is not a qualified foreign corporation if it is a passive foreign investment company during its tax year in which the dividends are paid or during its previous tax year. State tax efile Readily tradable stock. State tax efile   Any stock (such as common, ordinary, or preferred) or an American depositary receipt in respect of that stock is considered to satisfy requirement (3) under Qualified foreign corporation , if it is listed on a national securities exchange that is registered under section 6 of the Securities Exchange Act of 1934 or on the Nasdaq Stock Market. State tax efile For a list of the exchanges that meet these requirements, see www. State tax efile sec. State tax efile gov/divisions/marketreg/mrexchanges. State tax efile shtml. State tax efile Dividends that are not qualified dividends. State tax efile   The following dividends are not qualified dividends. State tax efile They are not qualified dividends even if they are shown in box 1b of Form 1099-DIV. State tax efile Capital gain distributions. State tax efile Dividends paid on deposits with mutual savings banks, cooperative banks, credit unions, U. State tax efile S. State tax efile building and loan associations, U. State tax efile S. State tax efile savings and loan associations, federal savings and loan associations, and similar financial institutions. State tax efile (Report these amounts as interest income. State tax efile ) Dividends from a corporation that is a tax-exempt organization or farmer's cooperative during the corporation's tax year in which the dividends were paid or during the corporation's previous tax year. State tax efile Dividends paid by a corporation on employer securities held on the date of record by an employee stock ownership plan (ESOP) maintained by that corporation. State tax efile Dividends on any share of stock to the extent you are obligated (whether under a short sale or otherwise) to make related payments for positions in substantially similar or related property. State tax efile Payments in lieu of dividends, but only if you know or have reason to know the payments are not qualified dividends. State tax efile Payments shown in Form 1099-DIV, box 1b, from a foreign corporation to the extent you know or have reason to know the payments are not qualified dividends. State tax efile Table 8-1. State tax efile Income Tax Treaties Income tax treaties the United States has with the following countries satisfy requirement (2) under Qualified foreign corporation. State tax efile Australia Indonesia Romania Austria Ireland Russian Bangladesh Israel Federation Barbados Italy Slovak Belgium Jamaica Republic Bulgaria Japan Slovenia Canada Kazakhstan South Africa China Korea Spain Cyprus Latvia Sri Lanka Czech Lithuania Sweden Republic Luxembourg Switzerland Denmark Malta Thailand Egypt Mexico Trinidad and Estonia Morocco Tobago Finland Netherlands Tunisia France New Zealand Turkey Germany Norway Ukraine Greece Pakistan United Hungary Philippines Kingdom Iceland Poland Venezuela India Portugal     Dividends Used to Buy More Stock The corporation in which you own stock may have a dividend reinvestment plan. State tax efile This plan lets you choose to use your dividends to buy (through an agent) more shares of stock in the corporation instead of receiving the dividends in cash. State tax efile Most mutual funds also permit shareholders to automatically reinvest distributions in more shares in the fund, instead of receiving cash. State tax efile If you use your dividends to buy more stock at a price equal to its fair market value, you still must report the dividends as income. State tax efile If you are a member of a dividend reinvestment plan that lets you buy more stock at a price less than its fair market value, you must report as dividend income the fair market value of the additional stock on the dividend payment date. State tax efile You also must report as dividend income any service charge subtracted from your cash dividends before the dividends are used to buy the additional stock. State tax efile But you may be able to deduct the service charge. State tax efile See chapter 28 for more information about deducting expenses of producing income. State tax efile In some dividend reinvestment plans, you can invest more cash to buy shares of stock at a price less than fair market value. State tax efile If you choose to do this, you must report as dividend income the difference between the cash you invest and the fair market value of the stock you buy. State tax efile When figuring this amount, use the fair market value of the stock on the dividend payment date. State tax efile Money Market Funds Report amounts you receive from money market funds as dividend income. State tax efile Money market funds are a type of mutual fund and should not be confused with bank money market accounts that pay interest. State tax efile Capital Gain Distributions Capital gain distributions (also called capital gain dividends) are paid to you or credited to your account by mutual funds (or other regulated investment companies) and real estate investment trusts (REITs). State tax efile They will be shown in box 2a of the Form 1099-DIV you receive from the mutual fund or REIT. State tax efile Report capital gain distributions as long-term capital gains, regardless of how long you owned your shares in the mutual fund or REIT. State tax efile Undistributed capital gains of mutual funds and REITs. State tax efile    Some mutual funds and REITs keep their long-term capital gains and pay tax on them. State tax efile You must treat your share of these gains as distributions, even though you did not actually receive them. State tax efile However, they are not included on Form 1099-DIV. State tax efile Instead, they are reported to you in box 1a of Form 2439. State tax efile   Report undistributed capital gains (box 1a of Form 2439) as long-term capital gains on Schedule D (Form 1040), column (h), line 11. State tax efile   The tax paid on these gains by the mutual fund or REIT is shown in box 2 of Form 2439. State tax efile You take credit for this tax by including it on Form 1040, line 71, and checking box a on that line. State tax efile Attach Copy B of Form 2439 to your return, and keep Copy C for your records. State tax efile Basis adjustment. State tax efile   Increase your basis in your mutual fund, or your interest in a REIT, by the difference between the gain you report and the credit you claim for the tax paid. State tax efile Additional information. State tax efile   For more information on the treatment of distributions from mutual funds, see Publication 550. State tax efile Nondividend Distributions A nondividend distribution is a distribution that is not paid out of the earnings and profits of a corporation or a mutual fund. State tax efile You should receive a Form 1099-DIV or other statement showing the nondividend distribution. State tax efile On Form 1099-DIV, a nondividend distribution will be shown in box 3. State tax efile If you do not receive such a statement, you report the distribution as an ordinary dividend. State tax efile Basis adjustment. State tax efile   A nondividend distribution reduces the basis of your stock. State tax efile It is not taxed until your basis in the stock is fully recovered. State tax efile This nontaxable portion is also called a return of capital; it is a return of your investment in the stock of the company. State tax efile If you buy stock in a corporation in different lots at different times, and you cannot definitely identify the shares subject to the nondividend distribution, reduce the basis of your earliest purchases first. State tax efile   When the basis of your stock has been reduced to zero, report any additional nondividend distribution you receive as a capital gain. State tax efile Whether you report it as a long-term or short-term capital gain depends on how long you have held the stock. State tax efile See Holding Period in chapter 14. State tax efile Example. State tax efile You bought stock in 2000 for $100. State tax efile In 2003, you received a nondividend distribution of $80. State tax efile You did not include this amount in your income, but you reduced the basis of your stock to $20. State tax efile You received a nondividend distribution of $30 in 2013. State tax efile The first $20 of this amount reduced your basis to zero. State tax efile You report the other $10 as a long-term capital gain for 2013. State tax efile You must report as a long-term capital gain any nondividend distribution you receive on this stock in later years. State tax efile Liquidating Distributions Liquidating distributions, sometimes called liquidating dividends, are distributions you receive during a partial or complete liquidation of a corporation. State tax efile These distributions are, at least in part, one form of a return of capital. State tax efile They may be paid in one or more installments. State tax efile You will receive Form 1099-DIV from the corporation showing you the amount of the liquidating distribution in box 8 or 9. State tax efile For more information on liquidating distributions, see chapter 1 of Publication 550. State tax efile Distributions of Stock and Stock Rights Distributions by a corporation of its own stock are commonly known as stock dividends. State tax efile Stock rights (also known as “stock options”) are distributions by a corporation of rights to acquire the corporation's stock. State tax efile Generally, stock dividends and stock rights are not taxable to you, and you do not report them on your return. State tax efile Taxable stock dividends and stock rights. State tax efile   Distributions of stock dividends and stock rights are taxable to you if any of the following apply. State tax efile You or any other shareholder have the choice to receive cash or other property instead of stock or stock rights. State tax efile The distribution gives cash or other property to some shareholders and an increase in the percentage interest in the corporation's assets or earnings and profits to other shareholders. State tax efile The distribution is in convertible preferred stock and has the same result as in (2). State tax efile The distribution gives preferred stock to some common stock shareholders and common stock to other common stock shareholders. State tax efile The distribution is on preferred stock. State tax efile (The distribution, however, is not taxable if it is an increase in the conversion ratio of convertible preferred stock made solely to take into account a stock dividend, stock split, or similar event that would otherwise result in reducing the conversion right. State tax efile )   The term “stock” includes rights to acquire stock, and the term “shareholder” includes a holder of rights or of convertible securities. State tax efile If you receive taxable stock dividends or stock rights, include their fair market value at the time of distribution in your income. State tax efile Preferred stock redeemable at a premium. State tax efile   If you hold preferred stock having a redemption price higher than its issue price, the difference (the redemption premium) generally is taxable as a constructive distribution of additional stock on the preferred stock. State tax efile For more information, see chapter 1 of Publication 550. State tax efile Basis. State tax efile   Your basis in stock or stock rights received in a taxable distribution is their fair market value when distributed. State tax efile If you receive stock or stock rights that are not taxable to you, see Stocks and Bonds under Basis of Investment Property in chapter 4 of Publication 550 for information on how to figure their basis. State tax efile Fractional shares. State tax efile    You may not own enough stock in a corporation to receive a full share of stock if the corporation declares a stock dividend. State tax efile However, with the approval of the shareholders, the corporation may set up a plan in which fractional shares are not issued but instead are sold, and the cash proceeds are given to the shareholders. State tax efile Any cash you receive for fractional shares under such a plan is treated as an amount realized on the sale of the fractional shares. State tax efile Report this transaction on Form 8949, Sales and Other Dispositions of Capital Assets. State tax efile Enter your gain or loss, the difference between the cash you receive and the basis of the fractional shares sold, in column (h) of Schedule D (Form 1040) in Part I or Part II, whichever is appropriate. State tax efile    Report these transactions on Form 8949 with the correct box checked. State tax efile   For more information on Form 8949 and Schedule D (Form 1040), see chapter 4 of Publication 550. State tax efile Also see the Instructions for Form 8949 and the Instructions for Schedule D (Form 1040). State tax efile Example. State tax efile You own one share of common stock that you bought on January 3, 2004, for $100. State tax efile The corporation declared a common stock dividend of 5% on June 29, 2013. State tax efile The fair market value of the stock at the time the stock dividend was declared was $200. State tax efile You were paid $10 for the fractional-share stock dividend under a plan described in the discussion above. State tax efile You figure your gain or loss as follows: Fair market value of old stock $200. State tax efile 00 Fair market value of stock dividend (cash received) +10. State tax efile 00 Fair market value of old stock and stock dividend $210. State tax efile 00 Basis (cost) of old stock after the stock dividend (($200 ÷ $210) × $100) $95. State tax efile 24 Basis (cost) of stock dividend (($10 ÷ $210) × $100) + 4. State tax efile 76 Total $100. State tax efile 00 Cash received $10. State tax efile 00 Basis (cost) of stock dividend − 4. State tax efile 76 Gain $5. State tax efile 24 Because you had held the share of stock for more than 1 year at the time the stock dividend was declared, your gain on the stock dividend is a long-term capital gain. State tax efile Scrip dividends. State tax efile   A corporation that declares a stock dividend may issue you a scrip certificate that entitles you to a fractional share. State tax efile The certificate is generally nontaxable when you receive it. State tax efile If you choose to have the corporation sell the certificate for you and give you the proceeds, your gain or loss is the difference between the proceeds and the portion of your basis in the corporation's stock allocated to the certificate. State tax efile   However, if you receive a scrip certificate that you can choose to redeem for cash instead of stock, the certificate is taxable when you receive it. State tax efile You must include its fair market value in income on the date you receive it. State tax efile Other Distributions You may receive any of the following distributions during the year. State tax efile Exempt-interest dividends. State tax efile   Exempt-interest dividends you receive from a mutual fund or other regulated investment company, including those received from a qualified fund of funds in any tax year beginning after December 22, 2010, are not included in your taxable income. State tax efile Exempt-interest dividends should be shown in box 10 of Form 1099-DIV. State tax efile Information reporting requirement. State tax efile   Although exempt-interest dividends are not taxable, you must show them on your tax return if you have to file a return. State tax efile This is an information reporting requirement and does not change the exempt-interest dividends to taxable income. State tax efile Alternative minimum tax treatment. State tax efile   Exempt-interest dividends paid from specified private activity bonds may be subject to the alternative minimum tax. State tax efile See Alternative Minimum Tax (AMT) in chapter 30 for more information. State tax efile Dividends on insurance policies. State tax efile    Insurance policy dividends the insurer keeps and uses to pay your premiums are not taxable. State tax efile However, you must report as taxable interest income the interest that is paid or credited on dividends left with the insurance company. State tax efile    If dividends on an insurance contract (other than a modified endowment contract) are distributed to you, they are a partial return of the premiums you paid. State tax efile Do not include them in your gross income until they are more than the total of all net premiums you paid for the contract. State tax efile Report any taxable distributions on insurance policies on Form 1040, line 21. State tax efile Dividends on veterans' insurance. State tax efile   Dividends you receive on veterans' insurance policies are not taxable. State tax efile In addition, interest on dividends left with the Department of Veterans Affairs is not taxable. State tax efile Patronage dividends. State tax efile   Generally, patronage dividends you receive in money from a cooperative organization are included in your income. State tax efile   Do not include in your income patronage dividends you receive on: Property bought for your personal use, or Capital assets or depreciable property bought for use in your business. State tax efile But you must reduce the basis (cost) of the items bought. State tax efile If the dividend is more than the adjusted basis of the assets, you must report the excess as income. State tax efile   These rules are the same whether the cooperative paying the dividend is a taxable or tax-exempt cooperative. State tax efile Alaska Permanent Fund dividends. State tax efile    Do not report these amounts as dividends. State tax efile Instead, report these amounts on Form 1040, line 21; Form 1040A, line 13; or Form 1040EZ, line 3. State tax efile How To Report Dividend Income Generally, you can use either Form 1040 or Form 1040A to report your dividend income. State tax efile Report the total of your ordinary dividends on line 9a of Form 1040 or Form 1040A. State tax efile Report qualified dividends on line 9b of Form 1040 or Form 1040A. State tax efile If you receive capital gain distributions, you may be able to use Form 1040A or you may have to use Form 1040. State tax efile See Exceptions to filing Form 8949 and Schedule D (Form 1040) in chapter 16. State tax efile If you receive nondividend distributions required to be reported as capital gains, you must use Form 1040. State tax efile You cannot use Form 1040EZ if you receive any dividend income. State tax efile Form 1099-DIV. State tax efile   If you owned stock on which you received $10 or more in dividends and other distributions, you should receive a Form 1099-DIV. State tax efile Even if you do not receive Form 1099-DIV, you must report all your dividend income. State tax efile   See Form 1099-DIV for more information on how to report dividend income. State tax efile Form 1040A or 1040. State tax efile    You must complete Schedule B (Form 1040A or 1040), Part II, and attach it to your Form 1040A or 1040, if: Your ordinary dividends (Form 1099-DIV, box 1a) are more than $1,500, or You received, as a nominee, dividends that actually belong to someone else. State tax efile If your ordinary dividends are more than $1,500, you must also complete Schedule B (Form 1040A or 1040), Part III. State tax efile   List on Schedule B (Form 1040A or 1040), Part II, line 5, each payer's name and the ordinary dividends you received. State tax efile If your securities are held by a brokerage firm (in “street name”), list the name of the brokerage firm shown on Form 1099-DIV as the payer. State tax efile If your stock is held by a nominee who is the owner of record, and the nominee credited or paid you dividends on the stock, show the name of the nominee and the dividends you received or for which you were credited. State tax efile   Enter on line 6 the total of the amounts listed on line 5. State tax efile Also enter this total on line 9a of Form 1040A or 1040. State tax efile Qualified dividends. State tax efile   Report qualified dividends (Form 1099-DIV, box 1b) on line 9b of Form 1040 or Form 1040A. State tax efile The amount in box 1b is already included in box 1a. State tax efile Do not add the amount in box 1b to, or substract it from, the amount in box 1a. State tax efile   Do not include any of the following on line 9b. State tax efile Qualified dividends you received as a nominee. State tax efile See Nominees under How to Report Dividend Income in chapter 1 of Publication 550. State tax efile Dividends on stock for which you did not meet the holding period. State tax efile See Holding period , earlier under Qualified Dividends. State tax efile Dividends on any share of stock to the extent you are obligated (whether under a short sale or otherwise) to make related payments for positions in substantially similar or related property. State tax efile Payments in lieu of dividends, but only if you know or have reason to know the payments are not qualified dividends. State tax efile Payments shown in Form 1099-DIV, box 1b, from a foreign corporation to the extent you know or have reason to know the payments are not qualified dividends. State tax efile   If you have qualified dividends, you must figure your tax by completing the Qualified Dividends and Capital Gain Tax Worksheet in the Form 1040 or 1040A instructions or the Schedule D Tax Worksheet in the Schedule D (Form 1040) instructions, whichever applies. State tax efile Enter qualified dividends on line 2 of the worksheet. State tax efile Investment interest deducted. State tax efile   If you claim a deduction for investment interest, you may have to reduce the amount of your qualified dividends that are eligible for the 0%, 15%, or 20% tax rate. State tax efile Reduce it by the qualified dividends you choose to include in investment income when figuring the limit on your investment interest deduction. State tax efile This is done on the Qualified Dividends and Capital Gain Tax Worksheet or the Schedule D Tax Worksheet. State tax efile For more information about the limit on investment interest, see Investment expenses in chapter 23. State tax efile Expenses related to dividend income. State tax efile   You may be able to deduct expenses related to dividend income if you itemize your deductions on Schedule A (Form 1040). State tax efile See chapter 28 for general information about deducting expenses of producing income. State tax efile More information. State tax efile    For more information about how to report dividend income, see chapter 1 of Publication 550 or the instructions for the form you must file. State tax efile Prev  Up  Next   Home   More Online Publications
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The State Tax Efile

State tax efile 13. State tax efile   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. State tax efile Wage limit. State tax efile Federal Income Tax WithholdingNew Form W-4 for 2014. State tax efile Required Notice to Employees About Earned Income Credit (EIC) Reporting and Paying Social Security, Medicare, and Withheld Federal Income TaxesElectronic deposit requirement. State tax efile Federal Unemployment (FUTA) TaxReporting and Paying FUTA Tax What's New for 2013 Social security and Medicare tax for 2013. State tax efile  The employee tax rate for social security is 6. State tax efile 2%. State tax efile Previously, the employee tax rate for social security was 4. State tax efile 2%. State tax efile The employer tax rate for social security remains unchanged at 6. State tax efile 2%. State tax efile The social security wage base limit is $113,700. State tax efile The Medicare tax rate is 1. State tax efile 45% each for the employee and employer, unchanged from 2012. State tax efile There is no wage base limit for Medicare tax. State tax efile Additional Medicare Tax. State tax efile  In addition to withholding Medicare tax at 1. State tax efile 45%, you must withhold a 0. State tax efile 9% Additional Medicare Tax from wages you pay to an employee in excess of $200,000 in a calendar year. State tax efile 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. State tax efile Additional Medicare Tax is only imposed on the employee. State tax efile There is no employer share of Additional Medicare Tax. State tax efile All wages that are subject to Medicare tax are subject to Additional Medicare Tax withholding if paid in excess of the $200,000 threshold. State tax efile 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. State tax efile For more information on Additional Medicare Tax, visit IRS. State tax efile gov and enter “Additional Medicare Tax” in the search box. State tax efile Leave-based donation programs to aid victims of Hurricane Sandy. State tax efile  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. State tax efile The donated leave will not be included in the income or wages of the employee. State tax efile The employer may deduct the cash payments as business expenses or charitable contributions. State tax efile For more information, see Notice 2012-69, 2012-51 I. State tax efile R. State tax efile B. State tax efile 712, available at www. State tax efile irs. State tax efile gov/irb/2012-51_IRB/ar09. State tax efile html. State tax efile Work opportunity tax credit for qualified tax-exempt organizations hiring qualified veterans extended. State tax efile  The work opportunity tax credit is now available for eligible unemployed veterans who begin work before January 1, 2014. State tax efile Previously, the credit was available for unemployed veterans who began work on or after November 22, 2011, and before January 1, 2013. State tax efile 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. State tax efile For more information, visit IRS. State tax efile gov and enter “work opportunity credit” in the search box. State tax efile What's New for 2014 Social security and Medicare tax for 2014. State tax efile  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). State tax efile The Medicare tax rate for 2014 will also be discussed in Publication 51 (Circular A) (For use in 2014). State tax efile There is no limit on the amount of wages subject to Medicare tax. State tax efile Reminders Additional employment tax information for farmers. State tax efile  See Publication 51 (Circular A) for more detailed guidance on employment taxes. State tax efile For the latest information about employment tax developments impacting farmers, go to www. State tax efile irs. State tax efile gov/pub51. State tax efile Correcting a previously filed Form 943. State tax efile  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. State tax efile Form 943-X is filed separately from Form 943. State tax efile For more information on correcting Form 943, see the Instructions for Form 943-X. State tax efile Federal tax deposits must be made by electronic funds transfer. State tax efile  You must use electronic funds transfer to make all federal tax deposits. State tax efile Generally, electronic funds transfers are made using the Electronic Federal Tax Payment System (EFTPS). State tax efile 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. State tax efile Also, you may arrange for your financial institution to initiate a same-day wire payment on your behalf. State tax efile EFTPS is a free service provided by the Department of Treasury. State tax efile Services provided by your tax professional, financial institution, payroll service, or other third party may have a fee. State tax efile For more information on making federal tax deposits, see section 7 of Publication 51 (Circular A). State tax efile To get more information about EFTPS or to enroll in EFTPS, visit www. State tax efile eftps. State tax efile gov or call 1-800-555-4477 or 1-800-733-4829 (TDD). State tax efile Additional information about EFTPS is also available in Publication 966, Electronic Federal Tax Payment System: A Guide To Getting Started. State tax efile Important Dates for 2014 You should take the action indicated by the dates listed. State tax efile See By February 15 and On February 16 for Form W-4, Employee's Withholding Allowance Certificate, information. State tax efile Due dates for deposits of withheld federal income taxes, social security taxes, and Medicare taxes are not listed here. State tax efile For these dates, see Publication 509, Tax Calendars (For use in 2014). State tax efile Note. State tax efile  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. State tax efile 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. State tax efile 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. State tax efile S. State tax efile Postal Service by the due date, or sent by an IRS-designated delivery service by the due date. State tax efile See Private delivery services in Publication 51 (Circular A). State tax efile Federal tax deposits can only be made by electronic funds transfer and are governed by legal holidays in the District of Columbia. State tax efile Statewide holidays no longer apply. State tax efile For a list of legal holidays that delay the due date of a federal tax deposit, see section 7 of Publication 51 (Circular A). State tax efile Fiscal year taxpayers. State tax efile  The due dates listed below apply whether you use a calendar or a fiscal year. State tax efile By January 31. State tax efile   File Form 943 with the IRS. State tax efile If you deposited all Form 943 taxes when due, you have 10 additional days to file. State tax efile Furnish each employee with a completed Form W-2, Wage and Tax Statement. State tax efile Furnish each recipient to whom you paid $600 or more in nonemployee compensation with a completed Form 1099 (for example, Form 1099-MISC). State tax efile File Form 940, Employer's Annual Federal Unemployment (FUTA) Tax Return, with the IRS. State tax efile If you deposited all the FUTA tax when due, you have 10 additional days to file. State tax efile File Form 945, Annual Return of Withheld Federal Income Tax, with the IRS to report any nonpayroll income tax withheld during 2013. State tax efile If you deposited all Form 945 taxes when due, you have 10 additional days to file. State tax efile By February 15. State tax efile  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. State tax efile On February 16. State tax efile  Any Form W-4 claiming exemption from withholding for the previous year has now expired. State tax efile 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. State tax efile 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. State tax efile 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. State tax efile By February 28. State tax efile   File paper Forms 1099 and 1096. State tax efile File Copy A of all paper Forms 1099 with Form 1096, Annual Summary and Transmittal of U. State tax efile S. State tax efile Information Returns, with the IRS. State tax efile For electronically filed returns, see By March 31 below. State tax efile File paper Forms W-2 and W-3. State tax efile 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). State tax efile For electronically filed returns, see By March 31 below. State tax efile By March 31. State tax efile   File electronic Forms W-2 and 1099. State tax efile File electronic Forms W-2 with the SSA and Forms 1099 with the IRS. State tax efile 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. State tax efile socialsecurity. State tax efile gov/employer. State tax efile 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. State tax efile By April 30, July 31, October 31, and January 31. State tax efile   Deposit FUTA taxes. State tax efile Deposit FUTA tax due if it is more than $500. State tax efile Before December 1. State tax efile  Remind employees to submit a new Form W-4 if their withholding allowances have changed or will change for the next year. State tax efile Introduction You are generally required to withhold federal income tax from the wages of your employees. State tax efile 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). State tax efile You must also withhold Additional Medicare Tax from wages you pay to an employee in excess of $200,000 in a calendar year. State tax efile This chapter includes information about these taxes. State tax efile You must also pay self-employment tax on your net earnings from farming. State tax efile See chapter 12 for information on self-employment tax. State tax efile 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. State tax efile 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. State tax efile Farm Employment In general, you are an employer of farmworkers if your employees do any of the following types of work. State tax efile Raising or harvesting agricultural or horticultural products on a farm, including raising and feeding of livestock. State tax efile Operating, managing, conserving, improving, or maintaining your farm and its tools and equipment. State tax efile Services performed in salvaging timber, or clearing land of brush and other debris, left by a hurricane (also known as hurricane labor). State tax efile 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). State tax efile Work related to cotton ginning, turpentine, gum resin products, or the operation and maintenance of irrigation facilities. State tax efile For more information, see Publication 51 (Circular A). State tax efile 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. State tax efile This is so even when you give the employee freedom of action. State tax efile What matters is that you have the right to control the details of how the services are performed. State tax efile You are responsible for withholding and paying employment taxes for your employees. State tax efile You are also required to file employment tax returns. State tax efile These requirements do not apply to amounts that you pay to independent contractors. State tax efile See Publication 15-A for more information on how to determine whether an individual providing services is an independent contractor or an employee. State tax efile If you employ a family of workers, each worker subject to your control (not just the head of the family) is an employee. State tax efile Special rules apply to crew leaders. State tax efile See Crew Leaders , later. State tax efile Employer identification number (EIN). State tax efile   If you have employees, you must have an EIN. State tax efile If you do not have an EIN, you may apply for one online. State tax efile Go to IRS. State tax efile gov and click on the Apply for an EIN Online link under Tools. State tax efile 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). State tax efile The hours of operation for both numbers are Monday–Friday form 7:00 a. State tax efile m. State tax efile –7:00 p. State tax efile m. State tax efile local time (Alaska and Hawaii follow Pacific time). State tax efile You can also fax or mail Form SS-4, Application for Employer Identification Number, to the IRS. State tax efile Employee's social security number (SSN). State tax efile   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). State tax efile Form SS-5 is available from any SSA office or by calling 1-800-772-1213 (operates 24 hours per day). State tax efile It is also available from the SSA's website at www. State tax efile socialsecurity. State tax efile gov. State tax efile   The employee must furnish evidence of age, identity, and U. State tax efile S. State tax efile citizenship or lawful immigration status permitting employment with the Form SS-5. State tax efile An employee who is age 18 or older must appear in person with this evidence at an SSA office. State tax efile Form I-9. State tax efile    You must verify that each new employee is legally eligible to work in the United States. State tax efile This includes completing the Form I-9, Employment Eligibility Verification. State tax efile Form I-9 is available from the U. State tax efile S. State tax efile Citizenship and Immigration Services (USCIS) offices or by calling the Bureau of Citizenship and Immigration Services Forms Request Line at 1-800-870-3676. State tax efile Form I-9 is also available from the USCIS website at www. State tax efile uscis. State tax efile gov. State tax efile You can also contact the USCIS at 1-800-375-5283 for more information. State tax efile New hire reporting. State tax efile   You are required to report any new employee to a designated state new hire registry. State tax efile Many states accept a copy of Form W-4 with employer information added. State tax efile Visit the Office of Child Support Enforcement website at www. State tax efile acf. State tax efile hhs. State tax efile gov/programs/cse/newhire for more information. State tax efile Family Employees Generally, the wages you pay to family members who are your employees are subject to employment taxes. State tax efile However, certain exemptions may apply to wages paid to your child, spouse, or parent. State tax efile Exemptions for your child. State tax efile   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. State tax efile However, see Nonexempt services of a child or spouse , later. State tax efile 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. State tax efile 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. State tax efile Although not subject to social security, Medicare, or FUTA tax, the child's wages still may be subject to federal income tax withholding. State tax efile Exemptions for your spouse. State tax efile   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. State tax efile   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. State tax efile Nonexempt services of a child or spouse. State tax efile   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. State tax efile A corporation, even if it is controlled by you. State tax efile A partnership, even if you are a partner. State tax efile This does not apply to wages paid to your child if each partner is a parent of the child. State tax efile An estate or trust, even if it is the estate of a deceased parent. State tax efile In these situations, the child or spouse is considered to work for the corporation, partnership, or estate, not you. State tax efile Exemptions for your parent. State tax efile   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. State tax efile 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. State tax efile 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. State tax efile 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. State tax efile   Wages you pay to your parent are not subject to FUTA tax, regardless of the type of services provided. State tax efile Qualified joint venture. State tax efile   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. State tax efile For more information about qualified joint ventures, see chapter 12. State tax efile Crew Leaders If farmworkers are provided by a crew leader, the crew leader may be the employer of the workers. State tax efile Social security and Medicare taxes. State tax efile   For social security and Medicare tax purposes, the crew leader is the employer of the workers if both of the following requirements are met. State tax efile The crew leader pays (either on his or her own behalf or on behalf of the farmer) the workers for their farm labor. State tax efile 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. State tax efile Federal income tax withholding. State tax efile   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. State tax efile Federal unemployment (FUTA) tax. State tax efile   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. State tax efile The crew leader is registered under the Migrant and Seasonal Agricultural Worker Protection Act. State tax efile Substantially all crew members operate or maintain mechanized equipment provided by the crew leader as part of the service to the farmer. State tax efile   The farmer is the employer of workers furnished by a crew leader in all other situations. State tax efile 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. State tax efile For example, some farmers employ individuals to recruit farmworkers exclusively for them. State tax efile 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. State tax efile The farmer is the employer in these cases. State tax efile For information about common-law employees, see section 1 of Publication 15-A. State tax efile For information about crew leaders, see the Department of Labor website at www. State tax efile dol. State tax efile gov/whd/regs/compliance/whdfs49. State tax efile htm. State tax efile 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. State tax efile 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). State tax efile The $150 test applies separately to each farmworker that you employ. State tax efile If you employ a family of workers, each member is treated separately. State tax efile Do not count wages paid by other employers. State tax efile You pay cash and noncash wages of $2,500 or more during the year to all your employees for farmwork (the $2,500 test). State tax efile If the $2,500 test for the group is not met, the $150 test for an employee still applies. State tax efile Exceptions. State tax efile   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. State tax efile However, these wages count toward the $2,500 test for determining whether other farmworkers' wages are subject to social security and Medicare taxes. State tax efile   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. State tax efile   See Family Employees , earlier, for certain exemptions from social security and Medicare taxes that apply to your child, spouse, and parent. State tax efile Religious exemption. State tax efile   An exemption from social security and Medicare taxes is available to members of a recognized religious group or division opposed to public insurance. State tax efile This exemption is available only if both the employee and the employer are members of the group or division. State tax efile   For more information, see Publication 517, Social Security and Other Information for Members of the Clergy and Religious Workers. State tax efile Cash wages. State tax efile   Only cash wages paid to farmworkers are subject to social security and Medicare taxes. State tax efile Cash wages include checks, money orders, and any kind of money or cash. State tax efile   Only cash wages subject to social security and Medicare taxes are credited to your employees for social security benefit purposes. State tax efile Payments not subject to these taxes, such as commodity wages, do not contribute to your employees' social security coverage. State tax efile For information about social security benefits, contact the SSA at 1-800-772-1213 or online at www. State tax efile socialsecurity. State tax efile gov. State tax efile Noncash wages. State tax efile    Noncash wages include food, lodging, clothing, transportation passes, and other goods and services. State tax efile Noncash wages paid to farmworkers, including commodity wages, are not subject to social security and Medicare taxes. State tax efile However, they are subject to these taxes if the substance of the transaction is a cash payment. State tax efile For information on lodging provided as a condition of employment, see Publication 15-B. State tax efile   Report the value of noncash wages in box 1 of Form W-2 together with cash wages. State tax efile Do not show noncash wages in box 3 or in box 5, (unless the substance of the transaction is a cash payment). State tax efile Tax rates and social security wage limit. State tax efile   For 2013, the employer and the employee will pay the following taxes. State tax efile The employer and employee each pay 6. State tax efile 2% of cash wages for social security tax (old-age, survivors, and disability insurance). State tax efile The employer and employee each pay 1. State tax efile 45% of cash wages for Medicare tax (hospital insurance). State tax efile The employee pays 0. State tax efile 9% of cash wages in excess of $200,000 for Additional Medicare Tax. State tax efile Wage limit. State tax efile   The limit on wages subject to the social security tax for 2013 is $113,700. State tax efile There is no limit on wages subject to the Medicare tax. State tax efile All covered wages are subject to the Medicare tax. State tax efile Additionally, all wages in excess of $200,000 are subject to Additional Medicare Tax withholding. State tax efile Paying employee's share. State tax efile   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. State tax efile It is additional income to the employee. State tax efile 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. State tax efile Example. State tax efile Jane operates a small family fruit farm. State tax efile She employs day laborers in the picking season to enable her to timely get her crop to market. State tax efile She does not deduct the employees' share of social security and Medicare taxes from their pay; instead, she pays it on their behalf. State tax efile 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). State tax efile For 2013, Jane paid Mary $1,000 during the year. State tax efile Susan enters $1,076. State tax efile 50 in box 1 of Mary's Form W-2 ($1,000 wages plus $76. State tax efile 50 social security and Medicare taxes paid for Mary). State tax efile She enters $1,000 in boxes 3 and 5 of Mary's Form W-2. State tax efile Additional Medicare Tax. State tax efile   In addition to withholding Medicare tax at 1. State tax efile 45%, you must withhold a 0. State tax efile 9% Additional Medicare Tax from wages you pay to an employee in excess of $200,000 in a calendar year. State tax efile 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. State tax efile Additional Medicare Tax is only imposed on the employee. State tax efile There is no employer share of Additional Medicare Tax. State tax efile All wages that are subject to Medicare tax are subject to Additional Medicare Tax withholding if paid in excess of the $200,000 threshold. State tax efile   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). State tax efile For more information on Additional Medicare Tax, visit IRS. State tax efile gov and enter “Additional Medicare Tax” in the search box. State tax efile 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. State tax efile Although noncash wages are subject to federal income tax, withhold income tax only if you and the employee agree to do so. State tax efile The amount to withhold is figured on gross wages without taking out social security and Medicare taxes, union dues, insurance, etc. State tax efile Form W-4. State tax efile   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. State tax efile 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. State tax efile An employee may also be able to claim a special withholding allowance and allowances for estimated deductions and credits. State tax efile   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. State tax efile   You should give each new employee a Form W-4 as soon as you hire the employee. State tax efile For Spanish-speaking employees, you may use Formulario W-4(SP) which is the Spanish translation of Form W-4. State tax efile Have the employee complete and return the form to you before the first payday. State tax efile 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. State tax efile New Form W-4 for 2014. State tax efile   You should make the 2014 Form W-4 available to your employees and encourage them to check their income tax withholding for 2014. State tax efile 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. State tax efile You cannot accept substitute Forms W-4 developed by employees. State tax efile How to figure withholding. State tax efile   You can use one of several methods to determine the amount to withhold. State tax efile The methods are described in Publication 51 (Circular A), which contains tables showing the correct amount of federal income tax you should withhold. State tax efile Publication 51 (Circular A) also contains additional information about federal income tax withholding. State tax efile Nonemployee compensation. State tax efile   Generally, you do not have to withhold federal income tax on payments for services to individuals who are not your employees. State tax efile However, you may be required to report these payments on Form 1099-MISC, Miscellaneous Income, and to withhold under the backup withholding rules. State tax efile For more information, see the Instructions for Form 1099-MISC. State tax efile 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. State tax efile However, you do not have to notify employees who claim exemption from federal income tax withholding on Form W-4. State tax efile You meet the notification requirement by giving each employee any of the following. State tax efile Form W-2, which contains EIC notification on the back of Copy B. State tax efile A substitute Form W-2 with the exact EIC wording shown on the back of copy B of Form W-2. State tax efile Notice 797, Possible Federal Tax Refund Due to the Earned Income Credit (EIC). State tax efile Your own written statement with the exact wording of Notice 797. State tax efile For more information, see Publication 51 (Circular A). State tax efile 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. State tax efile You are liable for the payment of these taxes to the federal government whether or not you collect them from your employees. State tax efile If, for example, you withhold less than the correct tax from an employee's wages, you are still liable for the full amount. State tax efile You must also pay the employer's share of social security and Medicare taxes. State tax efile There is no employer share of Additional Medicare Tax. State tax efile Form 943. State tax efile   Report withheld federal income tax, social security tax, and Medicare tax on Form 943. State tax efile 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). State tax efile Deposits. State tax efile   Generally, you must deposit both the employer and employee shares of social security and Medicare taxes and federal income tax withheld during the year. State tax efile 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. State tax efile   For more information on deposit rules, see Publication 51 (Circular A). State tax efile Electronic deposit requirement. State tax efile   You must use electronic funds transfer to make all federal tax deposits. State tax efile Generally, electronic funds transfers are made using EFTPS. State tax efile 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. State tax efile Also, you may arrange for your financial institution to initiate a same-day wire payment on your behalf. State tax efile EFTPS is a free service provided by the Department of Treasury. State tax efile Services provided by your tax professional, financial institution, payroll service, or other third party may have a fee. State tax efile   For more information on making federal tax deposits, see section 7 of Publication 51 (Circular A). State tax efile To get more information about EFTPS or to enroll in EFTPS, visit www. State tax efile eftps. State tax efile gov or call 1-800-555-4477 or 1-800-733-4829 (TDD). State tax efile Additional information about EFTPS is also available in Publication 966. State tax efile Form W-2. State tax efile   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. State tax efile 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. State tax efile The date the employee requests the form. State tax efile The date you make your final payment of wages to the employee. State tax efile Compensation paid to H-2A visa holders. State tax efile   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. State tax efile 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. State tax efile   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. State tax efile In this case, the worker must give the employer a completed Form W-4. State tax efile Federal income tax withheld should be reported on Form 943, line 8, and in box 2 of Form W-2. State tax efile   These reporting rules apply when the H-2A worker provides his or her taxpayer identification number (TIN) to the employer. State tax efile 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. State tax efile Trust fund recovery penalty. State tax efile   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. State tax efile A responsible person can be an officer of a corporation, a partner, a sole proprietor, or an employee of any form of business. State tax efile A trustee or agent with authority over the funds of the business can also be held responsible for the penalty. State tax efile   Willfully means voluntarily, consciously, and intentionally. State tax efile Paying other expenses of the business instead of the taxes due is acting willfully. State tax efile Consequences of treating an employee as an independent contractor. State tax efile   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. State tax efile See Publication 15-A for more information. State tax efile Federal Unemployment (FUTA) Tax You must pay FUTA tax if you meet either of the following tests. State tax efile You paid cash wages of $20,000 or more to farmworkers in any calendar quarter during the current or preceding calendar year. State tax efile 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. State tax efile These rules do not apply to exempt services of your spouse, your parents, or your children under age 21. State tax efile See Family Employees , earlier. State tax efile Alien farmworkers. State tax efile   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. State tax efile However, include your employment of these workers and the wages you paid them to determine whether you meet either of the above tests. State tax efile Commodity wages. State tax efile   Payments in kind for farm labor are not cash wages. State tax efile Do not count them to figure whether you are subject to FUTA tax or to figure how much tax you owe. State tax efile Tax rate and credit. State tax efile   The gross FUTA tax rate is 6. State tax efile 0% of the first $7,000 cash wages you pay to each employee during the year. State tax efile However, you are given a credit of up to 5. State tax efile 4% of the first $7,000 cash wages you pay to each employee for the state unemployment tax you pay. State tax efile If your state tax rate (experience rate) is less than 5. State tax efile 4%, you may still be allowed the full 5. State tax efile 4% credit. State tax efile   If you do not pay the state tax, you cannot take the credit. State tax efile If you are exempt from state unemployment tax for any reason, the full 6. State tax efile 0% rate applies. State tax efile See the Instructions for Form 940 for additional information. State tax efile More information. State tax efile   For more information on FUTA tax, see Publication 51 (Circular A). State tax efile Reporting and Paying FUTA Tax The FUTA tax is imposed on you as the employer. State tax efile It must not be collected or deducted from the wages of your employees. State tax efile Form 940. State tax efile   Report FUTA tax on Form 940. State tax efile 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). State tax efile Deposits. State tax efile   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. State tax efile If the undeposited tax is $500 or less at the end of a quarter, you do not have to deposit it. State tax efile You can add it to the tax for the next quarter. State tax efile If the total undeposited tax is more than $500 at the end of the next quarter, a deposit will be required. State tax efile 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. State tax efile Electronic deposit requirement. State tax efile   You must use electronic funds transfer to make all federal tax deposits. State tax efile Generally, electronic funds transfers are made using EFTPS. State tax efile 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. State tax efile Also, you may arrange for your financial institution to initiate a same-day wire payment on your behalf. State tax efile EFTPS is a free service provided by the Department of Treasury. State tax efile Services provided by your tax professional, financial institution, payroll service, or other third party may have a fee. State tax efile   For more information on making federal tax deposits, see section 7 of Publication 51 (Circular A). State tax efile To get more information about EFTPS or to enroll in EFTPS, visit www. State tax efile eftps. State tax efile gov or call 1-800-555-4477 or 1-800-733-4829 (TDD). State tax efile Additional information about EFTPS is also available in Publication 966. State tax efile Prev  Up  Next   Home   More Online Publications