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State Taxes For Free

State taxes for free Index A Affiliated corporations, Aircraft used by affiliated corporations. State taxes for free Agri-biodiesel, defined, Agri-biodiesel. State taxes for free Air transportation taxes, Air Transportation Taxes 225-mile-zone rule, Taxable transportation. State taxes for free Alaska, Transportation between the continental U. State taxes for free S. State taxes for free and Alaska or Hawaii. State taxes for free , Transportation within Alaska or Hawaii. State taxes for free , Alaska and Hawaii. State taxes for free Baggage, Excess baggage. State taxes for free Bonus tickets, Bonus tickets. State taxes for free Credits or refunds, Credits or refunds. State taxes for free Exemptions, Exemptions. State taxes for free Export, Exportation. State taxes for free Fixed-wing aircraft, Fixed-wing aircraft uses. State taxes for free Hawaii, Transportation between the continental U. State taxes for free S. State taxes for free and Alaska or Hawaii. State taxes for free , Transportation within Alaska or Hawaii. State taxes for free , Alaska and Hawaii. State taxes for free Helicopters, Certain helicopter uses. State taxes for free , Transportation of Property by Air International air travel facilities, International Air Travel Facilities Military personnel, Military personnel on international trips. State taxes for free Package tours, Package tours. State taxes for free Persons by air, Transportation of Persons by Air Persons liable, Liability for tax. State taxes for free , Liability for tax. State taxes for free Property by air, Transportation of Property by Air Tax rates, Transportation of Persons by Air Taxable transportation, Taxable transportation. State taxes for free Travel agency, Liability for tax. State taxes for free Uninterrupted international, Uninterrupted international air transportation. State taxes for free Aircraft, Fixed-wing aircraft uses. State taxes for free Affiliated corporations, Aircraft used by affiliated corporations. State taxes for free Small planes, Small aircraft. State taxes for free Aircraft museum, In an aircraft or vehicle owned by an aircraft museum (No. State taxes for free 15). State taxes for free Alaska Air transportation taxes, Transportation between the continental U. State taxes for free S. State taxes for free and Alaska or Hawaii. State taxes for free Tax on diesel fuel or kerosene, Removal for sale or use in Alaska. State taxes for free Alcohol and tobacco taxes, Excise Taxes Not Covered Alternative fuel credit, Alternative fuel credit. State taxes for free Alternative fuel, defined, Other fuels. State taxes for free American Red Cross, International organizations and the American Red Cross. State taxes for free Answering service, Answering services. State taxes for free Appeal procedures, Examination and Appeal Procedures Approved refinery, defined, Approved terminal or refinery. State taxes for free Approved terminal, defined, Approved terminal or refinery. State taxes for free Arrow shafts, Arrow Shafts Assistance (see Tax help) Aviation gasoline, defined, Aviation gasoline. State taxes for free B Back-up tax, Back-up Tax Biodiesel, defined, Biodiesel. State taxes for free Blended taxable fuel, defined, Blended taxable fuel. State taxes for free Blender, defined, Blender. State taxes for free Blocked pump, Blocked pump. State taxes for free Blood collector organizations, qualified, Exclusive use by a qualified blood collector organization (No. State taxes for free 11). State taxes for free , Qualified blood collector organizations. State taxes for free Boats, In a boat engaged in commercial fishing (No. State taxes for free 4). State taxes for free Bonus tickets, Bonus tickets. State taxes for free Bows, Quivers, Broadheads, and Points, Bows, Quivers, Broadheads, and Points Bulk transfer, defined, Bulk transfer. State taxes for free Bulk transfer/terminal system, defined, Bulk transfer/terminal system. State taxes for free Buses, In certain intercity and local buses (No. State taxes for free 5). State taxes for free , In a qualified local bus (No. State taxes for free 6). State taxes for free , In a school bus (No. State taxes for free 7). State taxes for free Tire tax, Qualifying intercity or local bus. State taxes for free C Cellulosic biofuel, Cellulosic biofuel. State taxes for free Chemicals, ozone-depleting, Environmental Taxes Claims Claiming a credit, Claiming a Credit on Form 4136 Claiming a refund, Claiming A Refund Filing claims, Filing Claims Coal Blending, Blending. State taxes for free Exemptions, Exemption from tax. State taxes for free Producer, Coal Production, Coal production. State taxes for free Selling price, Determining tonnage or selling price. State taxes for free Tax rates, Tax rates. State taxes for free Coin-operated telephones, Coin-operated telephones. State taxes for free Comments, Comments and suggestions. State taxes for free Commercial aviation, In commercial aviation (other than foreign trade). State taxes for free Commercial fishing, In a boat engaged in commercial fishing (No. State taxes for free 4). State taxes for free Commercial waterway transportation, Commercial waterway transportation. State taxes for free Communications taxes Credits or refunds, Credits or Refunds Exemptions, Exemptions Figuring the tax, Figuring the tax. State taxes for free Local telephone service, Local telephone service. State taxes for free Local-only service, Local-only service. State taxes for free Private communication service, Private communication service. State taxes for free Teletypewriter exchange service, Teletypewriter exchange service. State taxes for free Credit card purchases Aviation gasoline, Credit card purchases. State taxes for free Gasoline, Credit card purchases. State taxes for free Kerosene for use in aviation, Credit card purchases. State taxes for free Undyed diesel fuel, Credit Card Purchases. State taxes for free Undyed kerosene, Credit Card Purchases. State taxes for free Credit or refund Gas guzzler tax, Credit or refund. State taxes for free Manufacturers taxes, Credits or Refunds Resale of tax-paid semitrailers, Tax on resale of tax-paid trailers and semitrailers. State taxes for free Retail tax, Credits or refunds. State taxes for free Tire tax, Credit or refund. State taxes for free Vaccines, Credit or refund. State taxes for free Credits, Claiming a Credit on Form 4136 D Deposits Net tax liability, Amount of Deposits Deposits, How to make, How To Make Deposits Diesel fuel Definitions, Diesel Fuel and Kerosene Exported, Diesel Fuel and Kerosene Diesel-water fuel emulsion, defined, Diesel-water fuel emulsion. State taxes for free Dyed diesel fuel, Dyed Diesel Fuel and Dyed Kerosene Dyed kerosene, Dyed Diesel Fuel and Dyed Kerosene E Electric outboard motors, Electric outboard boat motors. State taxes for free Enterer, defined, Enterer. State taxes for free Entry, defined, Entry. State taxes for free Environmental taxes Credit or refund, Credits or refunds. State taxes for free Exceptions, Exceptions. State taxes for free Ozone-depleting chemicals (ODCs), Environmental Taxes United States (defined), Environmental Taxes Examination procedures, Examination and Appeal Procedures Excluded liquid, Diesel Fuel and Kerosene Exempt articles, retail tax, Articles exempt from tax. State taxes for free Exempt communication services American Red Cross, International organizations and the American Red Cross. State taxes for free Answering service, Answering services. State taxes for free Coin-operated telephones, Coin-operated telephones. State taxes for free Installation charges, Installation charges. State taxes for free International organizations, International organizations and the American Red Cross. State taxes for free Mobile radio telephone service, Mobile radio telephone service. State taxes for free News services, News services. State taxes for free Nonprofit educational organizations, Nonprofit educational organizations. State taxes for free Nonprofit hospitals, Nonprofit hospitals. State taxes for free Private communication service, Private communication service. State taxes for free Qualified blood collector organizations, Qualified blood collector organizations. State taxes for free Radio broadcasts, News services. State taxes for free Security systems, Telephone-operated security systems. State taxes for free Exempt sales, heavy trucks, Sales exempt from tax. State taxes for free Exemptions Air transportation taxes, Exemptions. State taxes for free Bonus tickets, Bonus tickets. State taxes for free Coal, Exemption from tax. State taxes for free Communications taxes, Exemptions Federal government, Federal, state, and local government. State taxes for free Fixed-wing aircraft, Fixed-wing aircraft uses. State taxes for free For export, Exemptions Further manufacturing, Exemptions Helicopters, Certain helicopter uses. State taxes for free Indian handicrafts, Exemptions Indian tribal governments, Federal, state, and local government. State taxes for free Military personnel, Military personnel on international trips. State taxes for free Nonprofit educational organizations, Federal, state, and local government. State taxes for free , Exemptions Qualified blood collector organizations, Exemptions State and local governments, Federal, state, and local government. State taxes for free , Exemptions Taxable tires, Tires exempt from tax. State taxes for free Vessel supplies, Exemptions Export, Export (No. State taxes for free 3). State taxes for free Exported taxable fuel, Exported taxable fuel. State taxes for free F Farming, On a farm for farming purposes (No. State taxes for free 1). State taxes for free Federal government, Federal, state, and local government. State taxes for free Fishing, In a boat engaged in commercial fishing (No. State taxes for free 4). State taxes for free Fishing rods and fishing poles. State taxes for free , Fishing rods and fishing poles. State taxes for free Fishing tackle boxes, Fishing tackle boxes. State taxes for free Fixed-wing aircraft, Fixed-wing aircraft uses. State taxes for free Floor stocks tax Ozone-depleting chemicals, Floor Stocks Tax Floor stocks, ODCs, Environmental Taxes Foreign trade, In foreign trade (No. State taxes for free 9). State taxes for free Form 1363, Exportation. State taxes for free 4136, Claiming a Credit on Form 4136 6197, Gas Guzzler Tax, Form 6197. State taxes for free , Attachments to Form 720. State taxes for free 637, Reminders 6627, Environmental Taxes, Attachments to Form 720. State taxes for free 720, Claiming A Refund, Form 6197. State taxes for free , Filing Form 720 720X, Form 720X. State taxes for free 8849, Claiming A Refund 8864, Biodiesel Sold as But Not Used as Fuel Form 720 Attachments, Attachments to Form 720. State taxes for free Due dates, Due dates. State taxes for free Final return, Final return. State taxes for free Schedule A, Filing Form 720 Schedule C, Filing Form 720 Schedule T, Filing Form 720 Free tax services, How To Get Tax Help Fuels Alternative fuel, Other Fuels (Including Alternative Fuels) Diesel, Diesel Fuel and Kerosene Diesel-water fuel emulsion, Diesel-Water Fuel Emulsion For use in aviation, Kerosene for Use in Aviation Gasoline, Gasoline and Aviation Gasoline Kerosene, Diesel Fuel and Kerosene Other Fuels, Other Fuels (Including Alternative Fuels) Used on inland waterways, Fuels Used on Inland Waterways G Gambling, Taxable situations. State taxes for free Gas guzzler tax Automobiles, Automobiles. State taxes for free Credit or refund, Credit or refund. State taxes for free Limousines, Automobiles. State taxes for free Vehicles not subject to tax, Vehicles not subject to tax. State taxes for free Gasoline blendstocks, Gasoline Blendstocks Gasoline, defined, Gasoline. State taxes for free H Hawaii, air transportation taxes, Transportation between the continental U. State taxes for free S. State taxes for free and Alaska or Hawaii. State taxes for free Heavy Motor Vehicle User Fee, Excise Taxes Not Covered Heavy trucks First retail sale, defined, First retail sale defined. State taxes for free Further manufacture, Further manufacture. State taxes for free Installment sales, Installment sales. State taxes for free Parts or accessories, Parts or accessories. State taxes for free Presumptive retail sales price, Presumptive retail sales price. State taxes for free Related persons, Related person. State taxes for free Separate purchases, Separate purchase. State taxes for free Tax base, Determination of tax base. State taxes for free Tax rate, Retail Tax on Heavy Trucks, Trailers, and Tractors Helicopter, Certain helicopter uses. State taxes for free Help (see Tax help) Highway vehicle, Highway vehicle. State taxes for free , In a highway vehicle owned by the United States that is not used on a highway (No. State taxes for free 12). State taxes for free Highway vehicle (Diesel-powered), Diesel-powered highway vehicle. State taxes for free I Identifying number, Taxpayer identification number. State taxes for free Imported taxable products (ODCs), Imported Taxable Products Income, include in, Including the Credit or Refund in Income Indoor tanning services, Indoor Tanning Services Tax Information returns, liquid products, Information Returns Inland waterways, Fuels Used on Inland Waterways Intercity and local buses, In certain intercity and local buses (No. State taxes for free 5). State taxes for free Interest and penalties, Penalties and Interest International air travel facilities, International Air Travel Facilities K Kerosene Definitions, Diesel Fuel and Kerosene Exported, Diesel Fuel and Kerosene For use in aviation, Kerosene for Use in Aviation L Liquid products, information returns, Information Returns Local telephone service, Local telephone service. State taxes for free Local-only service, Local-only service. State taxes for free M Manufacturer, defined, Manufacturer. State taxes for free Manufacturers taxes Arrow shafts, Arrow Shafts Bows, Quivers, Broadheads, and Points, Bows, Quivers, Broadheads, and Points Coal, Coal Credits or refunds, Credits or Refunds Exemptions, Exemptions Gas guzzler tax, Gas Guzzler Tax Lease, Lease considered sale. State taxes for free Lease payments, Partial payments. State taxes for free Partial payments, Partial payments. State taxes for free Registration, Registration requirements. State taxes for free Related person, Related person. State taxes for free Requirements for exempt sales, Requirements for Exempt Sales Sale, Sale. State taxes for free Sport fishing equipment, Sport Fishing Equipment Taxable Tires, Taxable Tires Vaccines, Vaccines Medical device tax, Taxable medical devices. State taxes for free Military aircraft, In military aircraft (No. State taxes for free 16). State taxes for free Mobile radio telephone service, Mobile radio telephone service. State taxes for free N News services, News services. State taxes for free Nonprofit educational organization, Exclusive use by a nonprofit educational organization (No. State taxes for free 13). State taxes for free Nonprofit educational organization use and state use, Nonprofit educational organization and state use. State taxes for free Nonprofit educational organizations, Nonprofit educational organizations. State taxes for free , Federal, state, and local government. State taxes for free Nontaxable uses, definitions, Definitions of Nontaxable Uses Nontaxable uses, type of use table, Definitions of Nontaxable Uses O Obligations not in registered form, Obligations Not in Registered Form Off-highway use, Off-highway business use (No. State taxes for free 2). State taxes for free Oil spill liability, Environmental Taxes Other Fuels (Including Alternative Fuels), Other Fuels (Including Alternative Fuels) Other fuels, defined, Other fuels. State taxes for free Ozone-depleting chemicals Floor stocks tax, Floor Stocks Tax Imported taxable products, Imported Taxable Products P Patient-centered outcomes research fee, Patient-Centered Outcomes Research Fee Payment of taxes, Payment of Taxes Penalties Dyed diesel fuel, Penalty. State taxes for free Dyed kerosene, Penalty. State taxes for free Pipeline operator, defined, Pipeline operator. State taxes for free Position holder, defined, Position holder. State taxes for free Publications (see Tax help) Q Qualified local bus, In a qualified local bus (No. State taxes for free 6). State taxes for free R Rack, defined, Rack. State taxes for free Radio broadcasts, News services. State taxes for free Records, Refiner, defined, Refiner. State taxes for free Refinery, defined, Refinery. State taxes for free Refunds, Claiming A Refund Refunds of second tax, Refunds of Second Tax Registered ultimate vendor, Sales by Registered Ultimate Vendors, Registered ultimate vendor. State taxes for free Registrant, Taxable fuel registrant. State taxes for free Registrant, defined, Registrant. State taxes for free Registration, Registration Requirements Form 637, Reminders Registration-required obligations, Obligations Not in Registered Form Related persons Heavy trucks, Related person. State taxes for free Sport fishing equipment, Related person. State taxes for free Removal, defined, Removal. State taxes for free Retail tax Credits or refunds, Credits or refunds. State taxes for free Heavy trucks, Retail Tax on Heavy Trucks, Trailers, and Tractors Rulings Program, Rulings Program Rural airports, Rural airports. State taxes for free S Sale, defined, Sale. State taxes for free Sales by registered ultimate vendors, gasoline, Sales by registered ultimate vendors. State taxes for free Sales by registered ultimate vendors, kerosene for use in aviation, Sales by Registered Ultimate Vendors Sales price Bonus goods, Bonus goods. State taxes for free Cost of transportation, Manufacturers taxes based on sale price. State taxes for free Delivery costs, Manufacturers taxes based on sale price. State taxes for free Discounts, Manufacturers taxes based on sale price. State taxes for free Installation costs, Manufacturers taxes based on sale price. State taxes for free Insurance costs, Manufacturers taxes based on sale price. State taxes for free Local advertising charges, Manufacturers taxes based on sale price. State taxes for free Manufacturers excise tax, Manufacturers taxes based on sale price. State taxes for free Rebates, Manufacturers taxes based on sale price. State taxes for free Retail dealer preparation costs, Manufacturers taxes based on sale price. State taxes for free Warranty charges, Manufacturers taxes based on sale price. State taxes for free School bus, In a school bus (No. State taxes for free 7). State taxes for free Second generation biofuel, Second generation biofuel. State taxes for free Security systems, Telephone-operated security systems. State taxes for free Ship passenger tax, Ship Passenger Tax Special September rule, When to deposit, Special rule for deposits of taxes in September. State taxes for free Sport fishing equipment List of equipment, Sport Fishing Equipment Resales, Certain equipment resale. State taxes for free State and local governments, Federal, state, and local government. State taxes for free State or local governments, Exclusive use by a state, political subdivision of a state, or the District of Columbia (No. State taxes for free 14). State taxes for free State or nonprofit educational organization use, Sales by registered ultimate vendors. State taxes for free State use, Registered ultimate vendor (state use). State taxes for free , State use. State taxes for free State, defined, State. State taxes for free Suggestions, Comments and suggestions. State taxes for free T Tanning tax, Indoor Tanning Services Tax Tax help, How To Get Tax Help Tax rate, Electric outboard boat motors. State taxes for free Air transportation of persons, Transportation of Persons by Air Air transportation of property, Transportation of Property by Air Arrow shafts, Arrow Shafts Bows, Quivers, Broadheads, and Points, Bows, Quivers, Broadheads, and Points Coal, Tax rates. State taxes for free Electric outboard motor, Electric outboard boat motors. State taxes for free International air travel facilities, International Air Travel Facilities Obligations not in registered form, Obligations Not in Registered Form Policies issued by foreign persons, Foreign Insurance Taxes Ship passenger tax, Ship Passenger Tax Sport fishing equipment, Sport Fishing Equipment Trucks, Retail Tax on Heavy Trucks, Trailers, and Tractors Taxable fuel registrant, Taxable fuel registrant. State taxes for free Taxable Tires Manufacturers taxes, Taxable Tires Taxable tires Exemptions, Tires exempt from tax. State taxes for free Taxes, Payment of, Payment of Taxes Taxpayer identification number, Taxpayer identification number. State taxes for free Teletypewriter exchange service, Teletypewriter exchange service. State taxes for free Terminal operator, defined, Terminal operator. State taxes for free Terminal, defined, Terminal. State taxes for free Throughputter, defined, Throughputter. State taxes for free Tires Credit against heavy truck tax, Tire credit. State taxes for free Credit or refund of tax, Credit or refund. State taxes for free Train, Use in a train. State taxes for free Train (Diesel-powered), Diesel-powered train. State taxes for free Transmix, Diesel Fuel and Kerosene Travel agency, Liability for tax. State taxes for free TTY/TDD information, How To Get Tax Help Two-party exchanges, Two-party exchanges. State taxes for free , Two-party exchanges. State taxes for free U Ultimate purchaser, Ultimate purchaser. State taxes for free Uninterrupted international air transportation, Uninterrupted international air transportation. State taxes for free , Military personnel on international trips. State taxes for free Used other than as a fuel Diesel fuel and kerosene, For diesel fuel and kerosene (other than kerosene used in aviation) used other than as a fuel (No. State taxes for free 8). State taxes for free Uses, nontaxable Alternative fuels, Other Fuels (Including Alternative Fuels) Aviation gasoline, Gasoline and Aviation Gasoline Diesel fuel, Undyed Diesel Fuel and Undyed Kerosene (Other Than Kerosene Used in Aviation) Diesel-water fuel emulsion, Diesel-Water Fuel Emulsion Gasoline, Gasoline and Aviation Gasoline Kerosene, Undyed Diesel Fuel and Undyed Kerosene (Other Than Kerosene Used in Aviation) Kerosene for use in aviation, Ultimate purchasers. State taxes for free Liquefied petroleum gas (LPG), Other Fuels (Including Alternative Fuels) Other Fuels, Other Fuels (Including Alternative Fuels) V Vaccines Credit or refund, Credit or refund. State taxes for free Manufacturers tax, What's New, Vaccines Vehicles Gas guzzler, Gas Guzzler Tax Imported, Imported automobiles. State taxes for free Law enforcement, Vehicles not subject to tax. State taxes for free Vendors, registered ultimate, Sales by Registered Ultimate Vendors, Registered ultimate vendor. State taxes for free Vessel operator, defined, Vessel operator. State taxes for free W Wagering and occupational wagering fee, Excise Taxes Not Covered When to deposit, When To Make Deposits Prev  Up     Home   More Online Publications
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The State Taxes For Free

State taxes for free Publication 15-A - Main Content Table of Contents 1. State taxes for free Who Are Employees?Independent Contractors Common-Law Employees Statutory Employees Statutory Nonemployees Misclassification of Employees 2. State taxes for free Employee or Independent Contractor?Common-Law Rules Industry Examples 3. State taxes for free Employees of Exempt OrganizationsSocial security and Medicare taxes. State taxes for free FUTA tax. State taxes for free 4. State taxes for free Religious Exemptions and Special Rules for MinistersForm W-2. State taxes for free Self-employed. State taxes for free Employees. State taxes for free 5. State taxes for free Wages and Other CompensationRelocating for Temporary Work Assignments Employee Achievement Awards Scholarship and Fellowship Payments Outplacement Services Withholding for Idle Time Back Pay Supplemental Unemployment Benefits Golden Parachute Payments Interest-Free and Below-Market-Interest-Rate Loans Leave Sharing Plans Nonqualified Deferred Compensation Plans Tax-Sheltered Annuities Contributions to a Simplified Employee Pension (SEP) SIMPLE Retirement Plans 6. State taxes for free Sick Pay ReportingSick Pay Payments That Are Not Sick Pay Sick Pay Plan Third-Party Payers of Sick Pay Social Security, Medicare, and FUTA Taxes on Sick Pay Income Tax Withholding on Sick Pay Depositing and Reporting Example of Figuring and Reporting Sick Pay 7. State taxes for free Special Rules for Paying TaxesCommon Paymaster Agents Reporting Agents Employee's Portion of Taxes Paid by Employer International Social Security Agreements 8. State taxes for free Pensions and AnnuitiesFederal Income Tax Withholding 9. State taxes for free Alternative Methods for Figuring WithholdingTerm of continuous employment. State taxes for free Formula Tables for Percentage Method Withholding (for Automated Payroll Systems) Wage Bracket Percentage Method Tables (for Automated Payroll Systems) Combined Federal Income Tax, Employee Social Security Tax, and Employee Medicare Tax Withholding Tables 10. State taxes for free Tables for Withholding on Distributions of Indian Gaming Profits to Tribal MembersWithholding Tables How To Get Tax Help 1. State taxes for free Who Are Employees? Before you can know how to treat payments that you make to workers for services, you must first know the business relationship that exists between you and the person performing the services. State taxes for free The person performing the services may be: An independent contractor, A common-law employee, A statutory employee, or A statutory nonemployee. State taxes for free This discussion explains these four categories. State taxes for free A later discussion, Employee or Independent Contractor in section 2, points out the differences between an independent contractor and an employee and gives examples from various types of occupations. State taxes for free If an individual who works for you is not an employee under the common-law rules (see section 2), you generally do not have to withhold federal income tax from that individual's pay. State taxes for free However, in some cases you may be required to withhold under the backup withholding requirements on these payments. State taxes for free See Publication 15 (Circular E) for information on backup withholding. State taxes for free Independent Contractors People such as doctors, veterinarians, and auctioneers who follow an independent trade, business, or profession in which they offer their services to the public, are generally not employees. State taxes for free However, whether such people are employees or independent contractors depends on the facts in each case. State taxes for free The general rule is that an individual is an independent contractor if you, the person for whom the services are performed, have the right to control or direct only the result of the work and not the means and methods of accomplishing the result. State taxes for free Common-Law Employees Under common-law rules, anyone who performs services for you is generally your employee if you have the right to control what will be done and how it will be done. State taxes for free This is so even when you give the employee freedom of action. State taxes for free What matters is that you have the right to control the details of how the services are performed. State taxes for free For a discussion of facts that indicate whether an individual providing services is an independent contractor or employee, see section 2. State taxes for free If you have an employer-employee relationship, it makes no difference how it is labeled. State taxes for free The substance of the relationship, not the label, governs the worker's status. State taxes for free It does not matter whether the individual is employed full time or part time. State taxes for free For employment tax purposes, no distinction is made between classes of employees. State taxes for free Superintendents, managers, and other supervisory personnel are all employees. State taxes for free An officer of a corporation is generally an employee; however, an officer who performs no services or only minor services, and neither receives nor is entitled to receive any pay, is not considered an employee. State taxes for free A director of a corporation is not an employee with respect to services performed as a director. State taxes for free You generally have to withhold and pay income, social security, and Medicare taxes on wages that you pay to common-law employees. State taxes for free However, the wages of certain employees may be exempt from one or more of these taxes. State taxes for free See Employees of Exempt Organizations (section 3) and Religious Exemptions and Special Rules for Ministers (section 4). State taxes for free Leased employees. State taxes for free   Under certain circumstances, a firm that furnishes workers to other firms is the employer of those workers for employment tax purposes. State taxes for free For example, a temporary staffing service may provide the services of secretaries, nurses, and other similarly trained workers to its clients on a temporary basis. State taxes for free   The staffing service enters into contracts with the clients under which the clients specify the services to be provided and a fee is paid to the staffing service for each individual furnished. State taxes for free The staffing service has the right to control and direct the worker's services for the client, including the right to discharge or reassign the worker. State taxes for free The staffing service hires the workers, controls the payment of their wages, provides them with unemployment insurance and other benefits, and is the employer for employment tax purposes. State taxes for free For information on employee leasing as it relates to pension plan qualification requirements, see Leased employee in Publication 560, Retirement Plans for Small Business. State taxes for free Additional information. State taxes for free   For more information about the treatment of special types of employment, the treatment of special types of payments, and similar subjects, see Publication 15 (Circular E) or Publication 51 (Circular A), Agricultural Employer's Tax Guide. State taxes for free Statutory Employees If workers are independent contractors under the common law rules, such workers may nevertheless be treated as employees by statute, (also known as “statutory employees”) for certain employment tax purposes. State taxes for free This would happen if they fall within any one of the following four categories and meet the three conditions described next under Social security and Medicare taxes . State taxes for free A driver who distributes beverages (other than milk) or meat, vegetable, fruit, or bakery products; or who picks up and delivers laundry or dry cleaning, if the driver is your agent or is paid on commission. State taxes for free A full-time life insurance sales agent whose principal business activity is selling life insurance or annuity contracts, or both, primarily for one life insurance company. State taxes for free An individual who works at home on materials or goods that you supply and that must be returned to you or to a person you name, if you also furnish specifications for the work to be done. State taxes for free A full-time traveling or city salesperson who works on your behalf and turns in orders to you from wholesalers, retailers, contractors, or operators of hotels, restaurants, or other similar establishments. State taxes for free The goods sold must be merchandise for resale or supplies for use in the buyer's business operation. State taxes for free The work performed for you must be the salesperson's principal business activity. State taxes for free See Salesperson in section 2. State taxes for free Social security and Medicare taxes. State taxes for free   You must withhold social security and Medicare taxes from the wages of statutory employees if all three of the following conditions apply. State taxes for free The service contract states or implies that substantially all the services are to be performed personally by them. State taxes for free They do not have a substantial investment in the equipment and property used to perform the services (other than an investment in facilities for transportation, such as a car or truck). State taxes for free The services are performed on a continuing basis for the same payer. State taxes for free Federal unemployment (FUTA) tax. State taxes for free   For FUTA tax (the unemployment tax paid under the Federal Unemployment Tax Act), the term “employee” means the same as it does for social security and Medicare taxes, except that it does not include statutory employees defined above in categories 2 and 3. State taxes for free Any individual who is a statutory employee described above under category 1 or 4 is also an employee for FUTA tax purposes and subject to FUTA tax. State taxes for free Income tax. State taxes for free   Do not withhold federal income tax from the wages of statutory employees. State taxes for free Reporting payments to statutory employees. State taxes for free   Furnish Form W-2 to a statutory employee, and check “Statutory employee” in box 13. State taxes for free Show your payments to the employee as “other compensation” in box 1. State taxes for free Also, show social security wages in box 3, social security tax withheld in box 4, Medicare wages in box 5, and Medicare tax withheld in box 6. State taxes for free The statutory employee can deduct his or her trade or business expenses from the payments shown on Form W-2. State taxes for free He or she reports earnings as a statutory employee on line 1 of Schedule C (Form 1040), Profit or Loss From Business, or Schedule C-EZ (Form 1040), Net Profit From Business. State taxes for free A statutory employee's business expenses are deductible on Schedule C (Form 1040) or C-EZ (Form 1040) and are not subject to the reduction by 2% of his or her adjusted gross income that applies to common-law employees. State taxes for free H-2A agricultural workers. State taxes for free   On Form W-2, do not check box 13 (Statutory employee), as H-2A workers are not statutory employees. State taxes for free Statutory Nonemployees There are three categories of statutory nonemployees: direct sellers, licensed real estate agents, and certain companion sitters. State taxes for free Direct sellers and licensed real estate agents are treated as self-employed for all federal tax purposes, including income and employment taxes, if: Substantially all payments for their services as direct sellers or real estate agents are directly related to sales or other output, rather than to the number of hours worked, and Their services are performed under a written contract providing that they will not be treated as employees for federal tax purposes. State taxes for free Direct sellers. State taxes for free   Direct sellers include persons falling within any of the following three groups. State taxes for free Persons engaged in selling (or soliciting the sale of) consumer products in the home or place of business other than in a permanent retail establishment. State taxes for free Persons engaged in selling (or soliciting the sale of) consumer products to any buyer on a buy-sell basis, a deposit-commission basis, or any similar basis prescribed by regulations, for resale in the home or at a place of business other than in a permanent retail establishment. State taxes for free Persons engaged in the trade or business of delivering or distributing newspapers or shopping news (including any services directly related to such delivery or distribution). State taxes for free   Direct selling includes activities of individuals who attempt to increase direct sales activities of their direct sellers and who earn income based on the productivity of their direct sellers. State taxes for free Such activities include providing motivation and encouragement; imparting skills, knowledge, or experience; and recruiting. State taxes for free Licensed real estate agents. State taxes for free   This category includes individuals engaged in appraisal activities for real estate sales if they earn income based on sales or other output. State taxes for free Companion sitters. State taxes for free   Companion sitters are individuals who furnish personal attendance, companionship, or household care services to children or to individuals who are elderly or disabled. State taxes for free A person engaged in the trade or business of putting the sitters in touch with individuals who wish to employ them (that is, a companion sitting placement service) will not be treated as the employer of the sitters if that person does not receive or pay the salary or wages of the sitters and is compensated by the sitters or the persons who employ them on a fee basis. State taxes for free Companion sitters who are not employees of a companion sitting placement service are generally treated as self-employed for all federal tax purposes. State taxes for free Misclassification of Employees Consequences of treating an employee as an independent contractor. State taxes for free   If you classify an employee as an independent contractor and you have no reasonable basis for doing so, you are liable for employment taxes for that worker and the relief provision, discussed next, will not apply. State taxes for free See section 2 in Publication 15 (Circular E) for more information. State taxes for free Relief provision. State taxes for free   If you have a reasonable basis for not treating a worker as an employee, you may be relieved from having to pay employment taxes for that worker. State taxes for free To get this relief, you must file all required federal information returns on a basis consistent with your treatment of the worker. State taxes for free You (or your predecessor) must not have treated any worker holding a substantially similar position as an employee for any periods beginning after 1977. State taxes for free Technical service specialists. State taxes for free   This relief provision does not apply for a technical services specialist you provide to another business under an arrangement between you and the other business. State taxes for free A technical service specialist is an engineer, designer, drafter, computer programmer, systems analyst, or other similarly skilled worker engaged in a similar line of work. State taxes for free   This limit on the application of the rule does not affect the determination of whether such workers are employees under the common-law rules. State taxes for free The common-law rules control whether the specialist is treated as an employee or an independent contractor. State taxes for free However, if you directly contract with a technical service specialist to provide services for your business and not for another business, you may still be entitled to the relief provision. State taxes for free Test proctors and room supervisors. State taxes for free   The consistent treatment requirement does not apply to services performed after December 31, 2006, by an individual as a test proctor or room supervisor assisting in the administration of college entrance or placement examinations if the individual: Is performing the services for a section 501(c) organization exempt from tax under section 501(a) of the code, and Is not otherwise treated as an employee of the organization for employment taxes. State taxes for free Voluntary Classification Settlement Program (VCSP). State taxes for free   Employers who are currently treating their workers (or a class or group of workers) as independent contractors or other nonemployees and want to voluntarily reclassify their workers as employees for future tax periods may be eligible to participate in the VCSP if certain requirements are met. State taxes for free To apply, use Form 8952, Application for Voluntary Classification Settlement Program (VCSP). State taxes for free For more information, visit IRS. State taxes for free gov and enter “VCSP” in the search box. State taxes for free 2. State taxes for free Employee or Independent Contractor? An employer must generally withhold federal income taxes, withhold and pay over social security and Medicare taxes, and pay unemployment tax on wages paid to an employee. State taxes for free An employer does not generally have to withhold or pay over any federal taxes on payments to independent contractors. State taxes for free Common-Law Rules To determine whether an individual is an employee or an independent contractor under the common law, the relationship of the worker and the business must be examined. State taxes for free In any employee-independent contractor determination, all information that provides evidence of the degree of control and the degree of independence must be considered. State taxes for free Facts that provide evidence of the degree of control and independence fall into three categories: behavioral control, financial control, and the type of relationship of the parties. State taxes for free These facts are discussed next. State taxes for free Behavioral control. State taxes for free   Facts that show whether the business has a right to direct and control how the worker does the task for which the worker is hired include the type and degree of: Instructions that the business gives to the worker. State taxes for free   An employee is generally subject to the business' instructions about when, where, and how to work. State taxes for free All of the following are examples of types of instructions about how to do work. State taxes for free When and where to do the work. State taxes for free What tools or equipment to use. State taxes for free What workers to hire or to assist with the work. State taxes for free Where to purchase supplies and services. State taxes for free What work must be performed by a specified  individual. State taxes for free What order or sequence to follow. State taxes for free   The amount of instruction needed varies among different jobs. State taxes for free Even if no instructions are given, sufficient behavioral control may exist if the employer has the right to control how the work results are achieved. State taxes for free A business may lack the knowledge to instruct some highly specialized professionals; in other cases, the task may require little or no instruction. State taxes for free The key consideration is whether the business has retained the right to control the details of a worker's performance or instead has given up that right. State taxes for free Training that the business gives to the worker. State taxes for free   An employee may be trained to perform services in a particular manner. State taxes for free Independent contractors ordinarily use their own methods. State taxes for free Financial control. State taxes for free   Facts that show whether the business has a right to control the business aspects of the worker's job include: The extent to which the worker has unreimbursed business expenses. State taxes for free   Independent contractors are more likely to have unreimbursed expenses than are employees. State taxes for free Fixed ongoing costs that are incurred regardless of whether work is currently being performed are especially important. State taxes for free However, employees may also incur unreimbursed expenses in connection with the services that they perform for their employer. State taxes for free The extent of the worker's investment. State taxes for free   An independent contractor often has a significant investment in the facilities or tools he or she uses in performing services for someone else. State taxes for free However, a significant investment is not necessary for independent contractor status. State taxes for free The extent to which the worker makes his or her services available to the relevant market. State taxes for free   An independent contractor is generally free to seek out business opportunities. State taxes for free Independent contractors often advertise, maintain a visible business location, and are available to work in the relevant market. State taxes for free How the business pays the worker. State taxes for free   An employee is generally guaranteed a regular wage amount for an hourly, weekly, or other period of time. State taxes for free This usually indicates that a worker is an employee, even when the wage or salary is supplemented by a commission. State taxes for free An independent contractor is often paid a flat fee or on a time and materials basis for the job. State taxes for free However, it is common in some professions, such as law, to pay independent contractors hourly. State taxes for free The extent to which the worker can realize a profit or loss. State taxes for free   An independent contractor can make a profit or loss. State taxes for free Type of relationship. State taxes for free   Facts that show the parties' type of relationship include: Written contracts describing the relationship the parties intended to create. State taxes for free Whether or not the business provides the worker with employee-type benefits, such as insurance, a pension plan, vacation pay, or sick pay. State taxes for free The permanency of the relationship. State taxes for free If you engage a worker with the expectation that the relationship will continue indefinitely, rather than for a specific project or period, this is generally considered evidence that your intent was to create an employer-employee relationship. State taxes for free The extent to which services performed by the worker are a key aspect of the regular business of the company. State taxes for free If a worker provides services that are a key aspect of your regular business activity, it is more likely that you will have the right to direct and control his or her activities. State taxes for free For example, if a law firm hires an attorney, it is likely that it will present the attorney's work as its own and would have the right to control or direct that work. State taxes for free This would indicate an employer-employee relationship. State taxes for free IRS help. State taxes for free   If you want the IRS to determine whether or not a worker is an employee, file Form SS-8, Determination of Worker Status for Purposes of Federal Employment Taxes and Income Tax Withholding, with the IRS. State taxes for free Industry Examples The following examples may help you properly classify your workers. State taxes for free Building and Construction Industry Example 1. State taxes for free Jerry Jones has an agreement with Wilma White to supervise the remodeling of her house. State taxes for free She did not advance funds to help him carry on the work. State taxes for free She makes direct payments to the suppliers for all necessary materials. State taxes for free She carries liability and workers' compensation insurance covering Jerry and others that he engaged to assist him. State taxes for free She pays them an hourly rate and exercises almost constant supervision over the work. State taxes for free Jerry is not free to transfer his assistants to other jobs. State taxes for free He may not work on other jobs while working for Wilma. State taxes for free He assumes no responsibility to complete the work and will incur no contractual liability if he fails to do so. State taxes for free He and his assistants perform personal services for hourly wages. State taxes for free Jerry Jones and his assistants are employees of Wilma White. State taxes for free Example 2. State taxes for free Milton Manning, an experienced tile setter, orally agreed with a corporation to perform full-time services at construction sites. State taxes for free He uses his own tools and performs services in the order designated by the corporation and according to its specifications. State taxes for free The corporation supplies all materials, makes frequent inspections of his work, pays him on a piecework basis, and carries workers' compensation insurance on him. State taxes for free He does not have a place of business or hold himself out to perform similar services for others. State taxes for free Either party can end the services at any time. State taxes for free Milton Manning is an employee of the corporation. State taxes for free Example 3. State taxes for free Wallace Black agreed with the Sawdust Co. State taxes for free to supply the construction labor for a group of houses. State taxes for free The company agreed to pay all construction costs. State taxes for free However, he supplies all the tools and equipment. State taxes for free He performs personal services as a carpenter and mechanic for an hourly wage. State taxes for free He also acts as superintendent and foreman and engages other individuals to assist him. State taxes for free The company has the right to select, approve, or discharge any helper. State taxes for free A company representative makes frequent inspections of the construction site. State taxes for free When a house is finished, Wallace is paid a certain percentage of its costs. State taxes for free He is not responsible for faults, defects of construction, or wasteful operation. State taxes for free At the end of each week, he presents the company with a statement of the amount that he has spent, including the payroll. State taxes for free The company gives him a check for that amount from which he pays the assistants, although he is not personally liable for their wages. State taxes for free Wallace Black and his assistants are employees of the Sawdust Co. State taxes for free Example 4. State taxes for free Bill Plum contracted with Elm Corporation to complete the roofing on a housing complex. State taxes for free A signed contract established a flat amount for the services rendered by Bill Plum. State taxes for free Bill is a licensed roofer and carries workers' compensation and liability insurance under the business name, Plum Roofing. State taxes for free He hires his own roofers who are treated as employees for federal employment tax purposes. State taxes for free If there is a problem with the roofing work, Plum Roofing is responsible for paying for any repairs. State taxes for free Bill Plum, doing business as Plum Roofing, is an independent contractor. State taxes for free Example 5. State taxes for free Vera Elm, an electrician, submitted a job estimate to a housing complex for electrical work at $16 per hour for 400 hours. State taxes for free She is to receive $1,280 every 2 weeks for the next 10 weeks. State taxes for free This is not considered payment by the hour. State taxes for free Even if she works more or less than 400 hours to complete the work, Vera Elm will receive $6,400. State taxes for free She also performs additional electrical installations under contracts with other companies, that she obtained through advertisements. State taxes for free Vera is an independent contractor. State taxes for free Trucking Industry Example. State taxes for free Rose Trucking contracts to deliver material for Forest, Inc. State taxes for free , at $140 per ton. State taxes for free Rose Trucking is not paid for any articles that are not delivered. State taxes for free At times, Jan Rose, who operates as Rose Trucking, may also lease another truck and engage a driver to complete the contract. State taxes for free All operating expenses, including insurance coverage, are paid by Jan Rose. State taxes for free All equipment is owned or rented by Jan and she is responsible for all maintenance. State taxes for free None of the drivers are provided by Forest, Inc. State taxes for free Jan Rose, operating as Rose Trucking, is an independent contractor. State taxes for free Computer Industry Example. State taxes for free Steve Smith, a computer programmer, is laid off when Megabyte, Inc. State taxes for free , downsizes. State taxes for free Megabyte agrees to pay Steve a flat amount to complete a one-time project to create a certain product. State taxes for free It is not clear how long that it will take to complete the project, and Steve is not guaranteed any minimum payment for the hours spent on the program. State taxes for free Megabyte provides Steve with no instructions beyond the specifications for the product itself. State taxes for free Steve and Megabyte have a written contract, which provides that Steve is considered to be an independent contractor, is required to pay federal and state taxes, and receives no benefits from Megabyte. State taxes for free Megabyte will file Form 1099-MISC, Miscellaneous Income, to report the amount paid to Steve. State taxes for free Steve works at home and is not expected or allowed to attend meetings of the software development group. State taxes for free Steve is an independent contractor. State taxes for free Automobile Industry Example 1. State taxes for free Donna Lee is a salesperson employed on a full-time basis by Bob Blue, an auto dealer. State taxes for free She works six days a week and is on duty in Bob's showroom on certain assigned days and times. State taxes for free She appraises trade-ins, but her appraisals are subject to the sales manager's approval. State taxes for free Lists of prospective customers belong to the dealer. State taxes for free She is required to develop leads and report results to the sales manager. State taxes for free Because of her experience, she requires only minimal assistance in closing and financing sales and in other phases of her work. State taxes for free She is paid a commission and is eligible for prizes and bonuses offered by Bob. State taxes for free Bob also pays the cost of health insurance and group-term life insurance for Donna. State taxes for free Donna is an employee of Bob Blue. State taxes for free Example 2. State taxes for free Sam Sparks performs auto repair services in the repair department of an auto sales company. State taxes for free He works regular hours and is paid on a percentage basis. State taxes for free He has no investment in the repair department. State taxes for free The sales company supplies all facilities, repair parts, and supplies; issues instructions on the amounts to be charged, parts to be used, and the time for completion of each job; and checks all estimates and repair orders. State taxes for free Sam is an employee of the sales company. State taxes for free Example 3. State taxes for free An auto sales agency furnishes space for Helen Bach to perform auto repair services. State taxes for free She provides her own tools, equipment, and supplies. State taxes for free She seeks out business from insurance adjusters and other individuals and does all of the body and paint work that comes to the agency. State taxes for free She hires and discharges her own helpers, determines her own and her helpers' working hours, quotes prices for repair work, makes all necessary adjustments, assumes all losses from uncollectible accounts, and receives, as compensation for her services, a large percentage of the gross collections from the auto repair shop. State taxes for free Helen is an independent contractor and the helpers are her employees. State taxes for free Attorney Example. State taxes for free Donna Yuma is a sole practitioner who rents office space and pays for the following items: telephone, computer, on-line legal research linkup, fax machine, and photocopier. State taxes for free Donna buys office supplies and pays bar dues and membership dues for three other professional organizations. State taxes for free Donna has a part-time receptionist who also does the bookkeeping. State taxes for free She pays the receptionist, withholds and pays federal and state employment taxes, and files a Form W-2 each year. State taxes for free For the past 2 years, Donna has had only three clients, corporations with which there have been long-standing relationships. State taxes for free Donna charges the corporations an hourly rate for her services, sending monthly bills detailing the work performed for the prior month. State taxes for free The bills include charges for long distance calls, on-line research time, fax charges, photocopies, postage, and travel, costs for which the corporations have agreed to reimburse her. State taxes for free Donna is an independent contractor. State taxes for free Taxicab Driver Example. State taxes for free Tom Spruce rents a cab from Taft Cab Co. State taxes for free for $150 per day. State taxes for free He pays the costs of maintaining and operating the cab. State taxes for free Tom Spruce keeps all fares that he receives from customers. State taxes for free Although he receives the benefit of Taft's two-way radio communication equipment, dispatcher, and advertising, these items benefit both Taft and Tom Spruce. State taxes for free Tom Spruce is an independent contractor. State taxes for free Salesperson To determine whether salespersons are employees under the usual common-law rules, you must evaluate each individual case. State taxes for free If a salesperson who works for you does not meet the tests for a common-law employee, discussed earlier in this section, you do not have to withhold federal income tax from his or her pay (see Statutory Employees in section 1). State taxes for free However, even if a salesperson is not an employee under the usual common-law rules for income tax withholding, his or her pay may still be subject to social security, Medicare, and FUTA taxes as a statutory employee. State taxes for free To determine whether a salesperson is an employee for social security, Medicare, and FUTA tax purposes, the salesperson must meet all eight elements of the statutory employee test. State taxes for free A salesperson is a statutory employee for social security, Medicare, and FUTA tax purposes if he or she: Works full time for one person or company except, possibly, for sideline sales activities on behalf of some other person, Sells on behalf of, and turns his or her orders over to, the person or company for which he or she works, Sells to wholesalers, retailers, contractors, or operators of hotels, restaurants, or similar establishments, Sells merchandise for resale, or supplies for use in the customer's business, Agrees to do substantially all of this work personally, Has no substantial investment in the facilities used to do the work, other than in facilities for transportation, Maintains a continuing relationship with the person or company for which he or she works, and Is not an employee under common-law rules. State taxes for free 3. State taxes for free Employees of Exempt Organizations Many nonprofit organizations are exempt from federal income tax. State taxes for free Although they do not have to pay federal income tax themselves, they must still withhold federal income tax from the pay of their employees. State taxes for free However, there are special social security, Medicare, and FUTA tax rules that apply to the wages that they pay their employees. State taxes for free Section 501(c)(3) organizations. State taxes for free   Nonprofit organizations that are exempt from federal income tax under section 501(c)(3) of the Internal Revenue Code include any community chest, fund, or foundation organized and operated exclusively for religious, charitable, scientific, testing for public safety, literary or educational purposes, fostering national or international amateur sports competition, or for the prevention of cruelty to children or animals. State taxes for free These organizations are usually corporations and are exempt from federal income tax under section 501(a). State taxes for free Social security and Medicare taxes. State taxes for free   Wages paid to employees of section 501(c)(3) organizations are subject to social security and Medicare taxes unless one of the following situations applies. State taxes for free The organization pays an employee less than $100 in a calendar year. State taxes for free The organization is a church or church-controlled organization opposed for religious reasons to the payment of social security and Medicare taxes and has filed Form 8274, Certification by Churches and Qualified Church-Controlled Organizations Electing Exemption From Employer Social Security and Medicare Taxes, to elect exemption from social security and Medicare taxes. State taxes for free The organization must have filed for exemption before the first date on which a quarterly employment tax return (Form 941) or annual employment tax return (Form 944) would otherwise be due. State taxes for free   An employee of a church or church-controlled organization that is exempt from social security and Medicare taxes must pay self-employment tax if the employee is paid $108. State taxes for free 28 or more in a year. State taxes for free However, an employee who is a member of a qualified religious sect can apply for an exemption from the self-employment tax by filing Form 4029, Application for Exemption From Social Security and Medicare Taxes and Waiver of Benefits. State taxes for free See Members of recognized religious sects opposed to insurance in section 4. State taxes for free FUTA tax. State taxes for free   An organization that is exempt from federal income tax under section 501(c)(3) of the Internal Revenue Code is also exempt from FUTA tax. State taxes for free This exemption cannot be waived. State taxes for free Do not file Form 940 to report wages paid by these organizations or pay the tax. State taxes for free Note. State taxes for free An organization wholly owned by a state or its political subdivision should contact the appropriate state official for information about reporting and getting social security and Medicare coverage for its employees. State taxes for free Other than section 501(c)(3) organizations. State taxes for free   Nonprofit organizations that are not section 501(c)(3) organizations may also be exempt from federal income tax under section 501(a) or section 521. State taxes for free However, these organizations are not exempt from withholding federal income, social security, or Medicare tax from their employees' pay, or from paying FUTA tax. State taxes for free Two special rules for social security, Medicare, and FUTA taxes apply. State taxes for free If an employee is paid less than $100 during a calendar year, his or her wages are not subject to social security and Medicare taxes. State taxes for free If an employee is paid less than $50 in a calendar quarter, his or her wages are not subject to FUTA tax for the quarter. State taxes for free The above rules do not apply to employees who work for pension plans and other similar organizations described in section 401(a). State taxes for free 4. State taxes for free Religious Exemptions and Special Rules for Ministers Special rules apply to the treatment of ministers for social security and Medicare tax purposes. State taxes for free An exemption from social security and Medicare taxes is available for ministers and certain other religious workers and members of certain recognized religious sects. State taxes for free For more information on getting an exemption, see Publication 517, Social Security and Other Information for Members of the Clergy and Religious Workers. State taxes for free Ministers. State taxes for free   Ministers are individuals who are duly ordained, commissioned, or licensed by a religious body constituting a church or church denomination. State taxes for free They are given the authority to conduct religious worship, perform sacerdotal functions, and administer ordinances and sacraments according to the prescribed tenets and practices of that religious organization. State taxes for free   Ministers are employees if they perform services in the exercise of ministry and are subject to your will and control. State taxes for free The common-law rules discussed in section 1 and section 2 should be applied to determine whether a minister is your employee or is self-employed. State taxes for free Whether the minister is an employee or self-employed, the earnings of a minister are not subject to federal income, social security, and Medicare tax withholding. State taxes for free However, even if the minister is a common law employee, the earnings as reported on the minister's Form 1040 are subject to self-employment tax and federal income tax. State taxes for free You do not withhold these taxes from wages earned by a minister, but if the minister is your employee, you may agree with the minister to voluntarily withhold tax to cover the minister's liability for self-employment tax and federal income tax. State taxes for free For more information, see Publication 517. State taxes for free Form W-2. State taxes for free   If your minister is an employee, report all taxable compensation as wages in box 1 on Form W-2. State taxes for free Include in this amount expense allowances or reimbursements paid under a nonaccountable plan, discussed in section 5 of Publication 15 (Circular E). State taxes for free Do not include a parsonage allowance (excludable housing allowance) in this amount. State taxes for free You may report a designated parsonage or rental allowance (housing allowance) and a utilities allowance, or the rental value of housing provided in a separate statement or in box 14 on Form W-2. State taxes for free Do not show on Form W-2, Form 941, or Form 944 any amount as social security or Medicare wages, or any withholding for social security or Medicare taxes. State taxes for free If you withheld federal income tax from the minister under a voluntary agreement, this amount should be shown in box 2 on Form W-2 as federal income tax withheld. State taxes for free For more information on ministers, see Publication 517. State taxes for free Exemptions for ministers and others. State taxes for free   Certain ordained ministers, Christian Science practitioners, and members of religious orders who have not taken a vow of poverty may apply to exempt their earnings from self-employment tax on religious grounds. State taxes for free The application must be based on conscientious opposition because of personal considerations to public insurance that makes payments in the event of death, disability, old age, or retirement, or that makes payments toward the cost of, or provides services for, medical care, including social security and Medicare benefits. State taxes for free The exemption applies only to qualified services performed for the religious organization. State taxes for free See Revenue Procedure 91-20, 1991-1 C. State taxes for free B. State taxes for free 524, for guidelines to determine whether an organization is a religious order or whether an individual is a member of a religious order. State taxes for free   To apply for the exemption, the employee should file Form 4361, Application for Exemption From Self-Employment Tax for Use by Ministers, Members of Religious Orders and Christian Science Practitioners. State taxes for free See Publication 517 for more information about claiming an exemption from self-employment tax using Form 4361. State taxes for free Members of recognized religious sects opposed to insurance. State taxes for free   If you belong to a recognized religious sect or to a division of such sect that is opposed to insurance, you may qualify for an exemption from the self-employment tax. State taxes for free To qualify, you must be conscientiously opposed to accepting the benefits of any public or private insurance that makes payments because of death, disability, old age, or retirement, or makes payments toward the cost of, or provides services for, medical care (including social security and Medicare benefits). State taxes for free If you buy a retirement annuity from an insurance company, you will not be eligible for this exemption. State taxes for free Religious opposition based on the teachings of the sect is the only legal basis for the exemption. State taxes for free In addition, your religious sect (or division) must have existed since December 31, 1950. State taxes for free Self-employed. State taxes for free   If you are self-employed and a member of a recognized religious sect opposed to insurance, you can apply for exemption by filing Form 4029 to waive all social security and Medicare benefits. State taxes for free Employees. State taxes for free   The social security and Medicare tax exemption available to the self-employed who are members of a recognized religious sect opposed to insurance is also available to their employees who are members of such a sect. State taxes for free This applies to partnerships only if each partner is a member of the sect. State taxes for free This exemption for employees applies only if both the employee and the employer are members of such a sect, and the employer has an exemption. State taxes for free To get the exemption, the employee must file Form 4029. State taxes for free   An employee of a church or church-controlled organization that is exempt from social security and Medicare taxes can also apply for an exemption on Form 4029. State taxes for free 5. State taxes for free Wages and Other Compensation Publication 15 (Circular E) provides a general discussion of taxable wages. State taxes for free Publication 15-B discusses fringe benefits. State taxes for free The following topics supplement those discussions. State taxes for free Relocating for Temporary Work Assignments If an employee is given a temporary work assignment away from his or her regular place of work, certain travel expenses reimbursed or paid directly by the employer in accordance with an accountable plan (see section 5 in Publication 15 (Circular E)) may be excludable from the employee's wages. State taxes for free Generally, a temporary work assignment in a single location is one that is realistically expected to last (and does in fact last) for 1 year or less. State taxes for free If the employee's new work assignment is indefinite, any living expenses reimbursed or paid by the employer (other than qualified moving expenses) must be included in the employee's wages as compensation. State taxes for free For the travel expenses to be excludable: The new work location must be outside of the city or general area of the employee's regular work place or post of duty, The travel expenses must otherwise qualify as deductible by the employee, and The expenses must be for the period during which the employee is at the temporary work location. State taxes for free If you reimburse or pay any personal expenses of an employee during his or her temporary work assignment, such as expenses for home leave for family members or for vacations, these amounts must be included in the employee's wages. State taxes for free See chapter 1 of Publication 463, Travel, Entertainment, Gift, and Car Expenses, and section 5 of Publication 15 (Circular E), for more information. State taxes for free These rules generally apply to temporary work assignments both inside and outside the U. State taxes for free S. State taxes for free Employee Achievement Awards Do not withhold federal income, social security, or Medicare taxes on the fair market value of an employee achievement award if it is excludable from your employee's gross income. State taxes for free To be excludable from your employee's gross income, the award must be tangible personal property (not cash, gift certificates, or securities) given to an employee for length of service or safety achievement, awarded as part of a meaningful presentation, and awarded under circumstances that do not indicate that the payment is disguised compensation. State taxes for free Excludable employee achievement awards also are not subject to FUTA tax. State taxes for free Limits. State taxes for free   The most that you can exclude for the cost of all employee achievement awards to the same employee for the year is $400. State taxes for free A higher limit of $1,600 applies to qualified plan awards. State taxes for free Qualified plan awards are employee achievement awards under a written plan that does not discriminate in favor of highly compensated employees. State taxes for free An award cannot be treated as a qualified plan award if the average cost per recipient of all awards under all of your qualified plans is more than $400. State taxes for free   If during the year an employee receives awards not made under a qualified plan and also receives awards under a qualified plan, the exclusion for the total cost of all awards to that employee cannot be more than $1,600. State taxes for free The $400 and $1,600 limits cannot be added together to exclude more than $1,600 for the cost of awards to any one employee during the year. State taxes for free Scholarship and Fellowship Payments Only amounts that you pay as a qualified scholarship to a candidate for a degree may be excluded from the recipient's gross income. State taxes for free A qualified scholarship is any amount granted as a scholarship or fellowship that is used for: Tuition and fees required to enroll in, or to attend, an educational institution, or Fees, books, supplies, and equipment that are required for courses at the educational institution. State taxes for free The exclusion from income does not apply to the portion of any amount received that represents payment for teaching, research, or other services required as a condition of receiving the scholarship or tuition reduction. State taxes for free These amounts are reportable on Form W-2. State taxes for free However, the exclusion will still apply for any amount received under two specific programs—the National Health Service Corps Scholarship Program and the Armed Forces Health Professions Scholarship and Financial Assistance Program—despite any service condition attached to those amounts. State taxes for free Any amounts that you pay for room and board are not excludable from the recipient's gross income. State taxes for free A qualified scholarship is not subject to social security, Medicare, and FUTA taxes, or federal income tax withholding. State taxes for free For more information, see Publication 970, Tax Benefits for Education. State taxes for free Outplacement Services If you provide outplacement services to your employees to help them find new employment (such as career counseling, resume assistance, or skills assessment), the value of these benefits may be income to them and subject to all withholding taxes. State taxes for free However, the value of these services will not be subject to any employment taxes if: You derive a substantial business benefit from providing the services (such as improved employee morale or business image) separate from the benefit that you would receive from the mere payment of additional compensation, and The employee would be able to deduct the cost of the services as employee business expenses if he or she had paid for them. State taxes for free However, if you receive no additional benefit from providing the services, or if the services are not provided on the basis of employee need, then the value of the services is treated as wages and is subject to federal income tax withholding and social security and Medicare taxes. State taxes for free Similarly, if an employee receives the outplacement services in exchange for reduced severance pay (or other taxable compensation), then the amount the severance pay is reduced is treated as wages for employment tax purposes. State taxes for free Withholding for Idle Time Payments made under a voluntary guarantee to employees for idle time (any time during which an employee performs no services) are wages for the purposes of social security, Medicare, and FUTA taxes, and federal income tax withholding. State taxes for free Back Pay Treat back pay as wages in the year paid and withhold and pay employment taxes as required. State taxes for free If back pay was awarded by a court or government agency to enforce a federal or state statute protecting an employee's right to employment or wages, special rules apply for reporting those wages to the Social Security Administration. State taxes for free These rules also apply to litigation actions and settlement agreements or agency directives that are resolved out of court and not under a court decree or order. State taxes for free Examples of pertinent statutes include, but are not limited to, the National Labor Relations Act, Fair Labor Standards Act, Equal Pay Act, and Age Discrimination in Employment Act. State taxes for free See Publication 957, Reporting Back Pay and Special Wage Payments to the Social Security Administration, and Form SSA-131, Employer Report of Special Wage Payments, for details. State taxes for free Supplemental Unemployment Benefits If you pay, under a plan, supplemental unemployment benefits to a former employee, all or part of the payments may be taxable and subject to federal income tax withholding, depending on how the plan is funded. State taxes for free Amounts that represent a return to the employee of amounts previously subject to tax are not taxable and are not subject to withholding. State taxes for free You should withhold federal income tax on the taxable part of the payments made, under a plan, to an employee who is involuntarily separated because of a reduction in force, discontinuance of a plant or operation, or other similar condition. State taxes for free It does not matter whether the separation is temporary or permanent. State taxes for free There are special rules that apply in determining whether benefits qualify as supplemental unemployment benefits that are excluded from wages for social security, Medicare, and FUTA tax purposes. State taxes for free To qualify as supplemental unemployment benefits for these purposes, the benefits must meet the following requirements. State taxes for free Benefits are paid only to unemployed former employees who are laid off by the employer. State taxes for free Eligibility for benefits depends on meeting prescribed conditions after termination. State taxes for free The amount of weekly benefits payable is based upon state unemployment benefits, other compensation allowable under state law, and the amount of regular weekly pay. State taxes for free The right to benefits does not accrue until a prescribed period after termination. State taxes for free Benefits are not attributable to the performance of particular services. State taxes for free No employee has any right to the benefits until qualified and eligible to receive benefits. State taxes for free Benefits may not be paid in a lump sum. State taxes for free Withholding on taxable supplemental unemployment benefits must be based on the withholding certificate (Form W-4) that the employee gave to you. State taxes for free Golden Parachute Payments A golden parachute payment, in general, is a payment made under a contract entered into by a corporation and key personnel. State taxes for free Under the agreement, the corporation agrees to pay certain amounts to its key personnel in the event of a change in ownership or control of the corporation. State taxes for free Payments to employees under golden parachute contracts are subject to social security, Medicare, and FUTA taxes, and federal income tax withholding. State taxes for free See Regulations section 1. State taxes for free 280G-1 for more information. State taxes for free No deduction is allowed to the corporation for any excess parachute payment. State taxes for free To determine the amount of the excess parachute payment, you must first determine if there is a parachute payment for purposes of section 280G. State taxes for free A parachute payment for purposes of section 280G is any payment that meets all of the following. State taxes for free The payment is in the nature of compensation. State taxes for free The payment is to, or for the benefit of, a disqualified individual. State taxes for free A disqualified individual is anyone who at any time during the 12-month period prior to and ending on the date of the change in ownership or control of the corporation (the disqualified individual determination period) was an employee or independent contractor and was, in regard to that corporation, a shareholder, an officer, or highly compensated individual. State taxes for free The payment is contingent on a change in ownership of the corporation, the effective control of the corporation, or the ownership of a substantial portion of the assets of the corporation. State taxes for free The payment has an aggregate present value of at least three times the individual's base amount. State taxes for free The base amount is the average annual compensation for service includible in the individual's gross income over the most recent 5 taxable years. State taxes for free An excess parachute payment amount is the excess of any parachute payment over the base amount. State taxes for free For more information, see Regulations section 1. State taxes for free 280G-1. State taxes for free The recipient of an excess parachute payment is subject to a 20% nondeductible excise tax. State taxes for free If the recipient is an employee, the 20% excise tax is to be withheld by the corporation. State taxes for free Example. State taxes for free An officer of a corporation receives a golden parachute payment of $400,000. State taxes for free This is more than three times greater than his or her average compensation of $100,000 over the previous 5-year period. State taxes for free The excess parachute payment is $300,000 ($400,000 minus $100,000). State taxes for free The corporation cannot deduct the $300,000 and must withhold the excise tax of $60,000 (20% of $300,000). State taxes for free Reporting golden parachute payments. State taxes for free   Golden parachute payments to employees must be reported on Form W-2. State taxes for free See the General Instructions for Forms W-2 and W-3 for details. State taxes for free For nonemployee reporting of these payments, see Box 7. State taxes for free Nonemployee Compensation in the Instructions for Form 1099-MISC. State taxes for free Exempt payments. State taxes for free   Payments by most small business corporations and payments under certain qualified plans are exempt from the golden parachute rules. State taxes for free See section 280G(b)(5) and (6) for more information. State taxes for free Interest-Free and Below-Market-Interest-Rate Loans In general, if an employer lends an employee more than $10,000 at an interest rate less than the current applicable federal rate (AFR), the difference between the interest paid and the interest that would be paid under the AFR is considered additional compensation to the employee. State taxes for free This rule applies to a loan of $10,000 or less if one of its principal purposes is the avoidance of federal tax. State taxes for free This additional compensation to the employee is subject to social security, Medicare, and FUTA taxes, but not to federal income tax withholding. State taxes for free Include it in compensation on Form W-2 (or Form 1099-MISC for an independent contractor). State taxes for free The AFR is established monthly and published by the IRS each month in the Internal Revenue Bulletin. State taxes for free You can get these rates by calling 1-800-829-4933 or by visiting IRS. State taxes for free gov. State taxes for free For more information, see section 7872 and its related regulations. State taxes for free Leave Sharing Plans If you establish a leave sharing plan for your employees that allows them to transfer leave to other employees for medical emergencies, the amounts paid to the recipients of the leave are considered wages. State taxes for free These amounts are includible in the gross income of the recipients and are subject to social security, Medicare, and FUTA taxes, and federal income tax withholding. State taxes for free Do not include these amounts in the income of the transferors. State taxes for free These rules apply only to leave sharing plans that permit employees to transfer leave to other employees for medical emergencies. State taxes for free Nonqualified Deferred Compensation Plans Income Tax and Reporting Section 409A provides that all amounts deferred under a nonqualified deferred compensation (NQDC) plan for all tax years are currently includible in gross income (to the extent not subject to a substantial risk of forfeiture and not previously included in gross income) and subject to additional taxes, unless certain requirements are met pertaining to, among other things, elections to defer compensation and distributions under a NQDC plan. State taxes for free Section 409A also includes rules that apply to certain trusts or similar arrangements associated with NQDC plans if the trusts or arrangements are located outside of the United States, are restricted to the provision of benefits in connection with a decline in the financial health of the plan sponsor, or contributions are made to the trust during certain periods such as when a qualified plan of the service recipient is underfunded. State taxes for free Employers must withhold federal income tax (but not the additional Section 409A taxes) on any amount includible in gross income under section 409A. State taxes for free Other changes to the Internal Revenue Code provide that the deferrals under a NQDC plan must be reported separately on Form W-2 or Form 1099-MISC, whichever applies. State taxes for free Specific rules for reporting are provided in the instructions to the forms. State taxes for free The provisions do not affect the application or reporting of social security, Medicare, or FUTA taxes. State taxes for free The provisions do not prevent the inclusion of amounts in income or wages under other provisions of the Internal Revenue Code or common law principles, such as when amounts are actually or constructively received or irrevocably contributed to a separate fund. State taxes for free For more information about nonqualified deferred compensation plans, see Regulations sections 1. State taxes for free 409A-1 through 1. State taxes for free 409A-6. State taxes for free Notice 2008-113 provides guidance on the correction of certain operation failures of a NQDC plan. State taxes for free Notice 2008-113, 2008-51 I. State taxes for free R. State taxes for free B. State taxes for free 1305, is available at www. State taxes for free irs. State taxes for free gov/irb/2008-51_IRB/ar12. State taxes for free html. State taxes for free Also see Notice 2010-6, 2010-3 I. State taxes for free R. State taxes for free B. State taxes for free 275, available at www. State taxes for free irs. State taxes for free gov/irb/2010-03_IRB/ar08. State taxes for free html and Notice 2010-80, 2010-51 I. State taxes for free R. State taxes for free B. State taxes for free 853, available at www. State taxes for free irs. State taxes for free gov/irb/2010-51_IRB/ar08. State taxes for free html. State taxes for free Social security, Medicare, and FUTA taxes. State taxes for free   Employer contributions to nonqualified deferred compensation (NQDC) plans, as defined in the applicable regulations, are treated as wages subject to social security, Medicare, and FUTA taxes when the services are performed or the employee no longer has a substantial risk of forfeiting the right to the deferred compensation, whichever is later. State taxes for free   Amounts deferred are subject to social security, Medicare, and FUTA taxes at that time unless the amount that is deferred cannot be reasonably ascertained; for example, if benefits are based on final pay. State taxes for free If the value of the future benefit is based on any factors that are not yet reasonably ascertainable, you may choose to estimate the value of the future benefit and withhold and pay social security, Medicare, and FUTA taxes on that amount. State taxes for free You will have to determine later, when the amount is reasonably ascertainable, whether any additional taxes are required. State taxes for free If taxes are not paid before the amounts become reasonably ascertainable, when the amounts become reasonably ascertainable they are subject to social security, Medicare, and FUTA taxes on the amounts deferred plus the income attributable to those amounts deferred. State taxes for free For more information, see Regulations sections 31. State taxes for free 3121(v)(2)-1 and 31. State taxes for free 3306(r)(2)-1. State taxes for free Tax-Sheltered Annuities Employer payments made by a public educational institution or a tax-exempt organization to purchase a tax-sheltered annuity for an employee (annual deferrals) are included in the employee's social security and Medicare wages, if the payments are made because of a salary reduction agreement. State taxes for free However, they are not included in box 1 on Form W-2 in the year the deferrals are made and are not subject to federal income tax withholding. State taxes for free See Regulations section 31. State taxes for free 3121(a)(5)-2 for the definition of a salary reduction agreement. State taxes for free Contributions to a Simplified Employee Pension (SEP) An employer's SEP contributions to an employee's individual retirement arrangement (IRA) are excluded from the employee's gross income. State taxes for free These excluded amounts are not subject to social security, Medicare, or FUTA taxes, or federal income tax withholding. State taxes for free However, any SEP contributions paid under a salary reduction agreement (SARSEP) are included in wages for purposes of social security, Medicare, and FUTA taxes. State taxes for free See Publication 560 for more information about SEPs. State taxes for free Salary reduction simplified employee pensions (SARSEP) repealed. State taxes for free   You may not establish a SARSEP after 1996. State taxes for free However, SARSEPs established before January 1, 1997, may continue to receive contributions. State taxes for free SIMPLE Retirement Plans Employer and employee contributions to a savings incentive match plan for employees (SIMPLE) retirement account (subject to limitations) are excludable from the employee's income and are exempt from federal income tax withholding. State taxes for free An employer's nonelective (2%) or matching contributions are exempt from social security, Medicare, and FUTA taxes. State taxes for free However, an employee's salary reduction contributions to a SIMPLE are subject to social security, Medicare, and FUTA taxes. State taxes for free For more information about SIMPLE retirement plans, see Publication 560. State taxes for free 6. State taxes for free Sick Pay Reporting The IRS expects to change the third-party sick pay recap reporting and filing requirements for wages paid in 2014. State taxes for free Information about this change will be included in the revision of Publication 15-A that is expected to post to IRS. State taxes for free gov in December 2014. State taxes for free Special rules apply to the reporting of sick pay payments to employees. State taxes for free How these payments are reported depends on whether the payments are made by the employer or a third party, such as an insurance company. State taxes for free Sick pay is usually subject to social security, Medicare, and FUTA taxes. State taxes for free For exceptions, see Social Security, Medicare, and FUTA Taxes on Sick Pay , later in this section. State taxes for free Sick pay may also be subject to either mandatory or voluntary federal income tax withholding, depending on who pays it. State taxes for free Sick Pay Sick pay generally means any amount paid under a plan because of an employee's temporary absence from work due to injury, sickness, or disability. State taxes for free It may be paid by either the employer or a third party, such as an insurance company. State taxes for free Sick pay includes both short- and long-term benefits. State taxes for free It is often expressed as a percentage of the employee's regular wages. State taxes for free Payments That Are Not Sick Pay Sick pay does not include the following payments. State taxes for free Disability retirement payments. State taxes for free Disability retirement payments are not sick pay and are not discussed in this section. State taxes for free Those payments are subject to the rules for federal income tax withholding from pensions and annuities. State taxes for free See section 8. State taxes for free Workers' compensation. State taxes for free Payments because of a work-related injury or sickness that are made under a workers' compensation law are not sick pay and are not subject to employment taxes. State taxes for free But see Payments in the nature of workers' compensation—public employees next. State taxes for free Payments in the nature of workers' compensation—public employees. State taxes for free State and local government employees, such as police officers and firefighters, sometimes receive payments due to an injury in the line of duty under a statute that is not the general workers' compensation law of a state. State taxes for free If the statute limits benefits to work-related injuries or sickness and does not base payments on the employee's age, length of service, or prior contributions, the statute is “in the nature of” a workers' compensation law. State taxes for free Payments under a statute in the nature of a workers' compensation law are not sick pay and are not subject to employment taxes. State taxes for free For more information, see Regulations section 31. State taxes for free 3121(a)(2)-1. State taxes for free Medical expense payments. State taxes for free Payments under a definite plan or system for medical and hospitalization expenses, or for insurance covering these expenses, are not sick pay and are not subject to employment taxes. State taxes for free Payments unrelated to absence from work. State taxes for free Accident or health insurance payments unrelated to absence from work are not sick pay and are not subject to employment taxes. State taxes for free These include payments for: Permanent loss of a member or function of the body, Permanent loss of the use of a member or function of the body, or Permanent disfigurement of the body. State taxes for free Example. State taxes for free Donald was injured in a car accident and lost an eye. State taxes for free Under a policy paid for by Donald's employer, Delta Insurance Co. State taxes for free paid Donald $20,000 as compensation for the loss of his eye. State taxes for free Because the payment was determined by the type of injury and was unrelated to Donald's absence from work, it is not sick pay and is not subject to federal employment taxes. State taxes for free Sick Pay Plan A sick pay plan is a plan or system established by an employer under which sick pay is available to employees generally or to a class or classes of employees. State taxes for free This does not include a situation in which benefits are provided on a discretionary or occasional basis with merely an intention to aid particular employees in time of need. State taxes for free You have a sick pay plan or system if the plan is in writing or is otherwise made known to employees, such as by a bulletin board notice or your long and established practice. State taxes for free Some indications that you have a sick pay plan or system include references to the plan or system in the contract of employment, employer contributions to a plan, or segregated accounts for the payment of benefits. State taxes for free Definition of employer. State taxes for free   The employer for whom the employee normally works, a term used in the following discussion, is either the employer for whom the employee was working at the time that the employee became sick or disabled or the last employer for whom the employee worked before becoming sick or disabled, if that employer made contributions to the sick pay plan on behalf of the sick or disabled employee. State taxes for free Note. State taxes for free Contributions to a sick pay plan through a cafeteria plan (by direct employer contributions or salary reduction) are employer contributions unless they are after-tax employee contributions (that is, included in taxable wages). State taxes for free Third-Party Payers of Sick Pay Employer's agent. State taxes for free   An employer's agent is a third party that bears no insurance risk and is reimbursed on a cost-plus-fee basis for payment of sick pay and similar amounts. State taxes for free A third party may be your agent even if the third party is responsible for determining which employees are eligible to receive payments. State taxes for free For example, if a third party provides administrative services only, the third party is your agent. State taxes for free If the third party is paid an insurance premium and is not reimbursed on a cost-plus-fee basis, the third party is not your agent. State taxes for free Whether an insurance company or other third party is your agent depends on the terms of their agreement with you. State taxes for free   A third party that makes payments of sick pay as your agent is not considered the employer and generally has no responsibility for employment taxes. State taxes for free This responsibility remains with you. State taxes for free However, under an exception to this rule, the parties may enter into an agreement that makes the third-party agent responsible for employment taxes. State taxes for free In this situation, the third-party agent should use its own name and EIN (rather than your name and EIN) for the responsibilities that it has assumed. State taxes for free Third party not employer's agent. State taxes for free   A third party that makes payments of sick pay other than as an agent of the employer is liable for federal income tax withholding (if requested by the employee) and the employee part of the social security and Medicare taxes. State taxes for free   The third party is also liable for the employer part of the social security and Medicare taxes, and the FUTA tax, unless the third party transfers this liability to the employer for whom the employee normally works. State taxes for free This liability is transferred if the third party takes the following steps. State taxes for free Withholds the employee social security and Medicare taxes from the sick pay payments. State taxes for free Makes timely deposits of the employee social security and Medicare taxes. State taxes for free Notifies the employer for whom the employee normally works of the payments on which employee taxes were withheld and deposited. State taxes for free The third party must notify the employer within the time required for the third party's deposit of the employee part of the social security and Medicare taxes. State taxes for free For instance, if the third party is a monthly schedule depositor, it must notify the employer by the 15th day of the month following the month in which the sick pay payment is made because that is the day by which the deposit is required to be made. State taxes for free The third party should notify the employer as soon as information on payments is available so that an employer required to make electronic deposits can make them timely. State taxes for free For multi-employer plans, see the special rule discussed next. State taxes for free Multi-employer plan timing rule. State taxes for free   A special rule applies to sick pay payments made to employees by a third-party insurer under an insurance contract with a multi-employer plan established under a collectively bargained agreement. State taxes for free If the third-party insurer making the payments complies wi