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Tax Software 2012

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Tax Software 2012

Tax software 2012 5. Tax software 2012   Figuring Your Tax Table of Contents Introduction Topics - This chapter discusses: Useful Items - You may want to see: Tax Year Identification NumberF-1 and M-1 visa holders. Tax software 2012 J-1 visa holders. Tax software 2012 Filing StatusResident Aliens Nonresident Aliens Reporting Your Income DeductionsResident Aliens Nonresident Aliens ExemptionsResident Aliens Nonresident Aliens Itemized DeductionsResident Aliens Nonresident Aliens Tax Credits and PaymentsResident Aliens Nonresident Aliens Bona Fide Residents of American Samoa or Puerto Rico Introduction After you have determined your alien status, the source of your income, and if and how that income is taxed in the United States, your next step is to figure your tax. Tax software 2012 The information in this chapter is not as comprehensive for resident aliens as it is for nonresident aliens. Tax software 2012 Resident aliens should get publications, forms, and instructions for U. Tax software 2012 S. Tax software 2012 citizens, because the information for filing returns for resident aliens is generally the same as for U. Tax software 2012 S. Tax software 2012 citizens. Tax software 2012 If you are both a nonresident alien and a resident alien in the same tax year, see chapter 6 for a discussion of dual-status aliens. Tax software 2012 Topics - This chapter discusses: Identification numbers, Filing status, Deductions, Exemptions, Tax credits and payments, and Special rules for bona fide residents of American Samoa and Puerto Rico. Tax software 2012 Useful Items - You may want to see: Publication 463 Travel, Entertainment, Gift, and Car Expenses 501 Exemptions, Standard Deduction, and Filing Information 521 Moving Expenses 526 Charitable Contributions 535 Business Expenses 597 Information on the United States–Canada Income Tax Treaty Form (and Instructions) W-7 Application for IRS Individual Taxpayer Identification Number 1040 U. Tax software 2012 S. Tax software 2012 Individual Income Tax Return 1040NR U. Tax software 2012 S. Tax software 2012 Nonresident Alien Income Tax Return 1040NR-EZ U. Tax software 2012 S. Tax software 2012 Income Tax Return for Certain Nonresident Aliens With No Dependents 2106 Employee Business Expenses 2106-EZ Unreimbursed Employee Business Expenses 3903 Moving Expenses 4563 Exclusion of Income for Bona Fide Residents of American Samoa 8959 Additional Medicare Tax See chapter 12 for information about getting these publications and forms. Tax software 2012 Tax Year You must figure your income and file a tax return on the basis of an annual accounting period called a tax year. Tax software 2012 If you have not previously established a fiscal tax year, your tax year is the calendar year. Tax software 2012 A calendar year is 12 consecutive months ending on December 31. Tax software 2012 If you have previously established a regular fiscal year (12 consecutive months ending on the last day of a month other than December or a 52–53 week year) and are considered to be a U. Tax software 2012 S. Tax software 2012 resident for any calendar year, you will be treated as a U. Tax software 2012 S. Tax software 2012 resident for any part of your fiscal year that falls within that calendar year. Tax software 2012 Identification Number A taxpayer identification number must be furnished on returns, statements, and other tax-related documents. Tax software 2012 For an individual, this is a social security number (SSN). Tax software 2012 If you do not have and are not eligible to get an SSN, you must apply for an individual taxpayer identification number (ITIN). Tax software 2012 An employer identification number (EIN) is required if you are engaged in a trade or business as a sole proprietor and have employees or a qualified retirement plan. Tax software 2012 You must furnish a taxpayer identification number if you are: An alien who has income effectively connected with the conduct of a U. Tax software 2012 S. Tax software 2012 trade or business at any time during the year, An alien who has a U. Tax software 2012 S. Tax software 2012 office or place of business at any time during the year, A nonresident alien spouse treated as a resident, as discussed in chapter 1, or Any other alien who files a tax return, an amended return, or a refund claim (but not information returns). Tax software 2012 Social security number (SSN). Tax software 2012   Generally, you can get an SSN if you have been lawfully admitted to the United States for permanent residence or under other immigration categories that authorize U. Tax software 2012 S. Tax software 2012 employment. Tax software 2012   To apply for this number, get Form SS-5, Application for a Social Security Card, from your local Social Security Administration (SSA) office or call the SSA at 1-800-772-1213. Tax software 2012 You can also download Form SS-5 from the SSA's website at www. Tax software 2012 socialsecurity. Tax software 2012 gov/ssnumber/ss5. Tax software 2012 htm. Tax software 2012 You must visit an SSA office in person and submit your Form SS-5 along with original documentation showing your age, identity, immigration status, and authority to work in the United States. Tax software 2012 Generally, you will receive your card about 2 weeks after the SSA has all of the necessary information. Tax software 2012 F-1 and M-1 visa holders. Tax software 2012    If you are an F-1 or M-1 student, you must also show your Form I-20. Tax software 2012 For more information, see SSA Publication 05-10181, International Students and Social Security Numbers, available online at www. Tax software 2012 socialsecurity. Tax software 2012 gov/pubs/10181. Tax software 2012 html. Tax software 2012 J-1 visa holders. Tax software 2012   If you are a J-1 exchange visitor, you will also need to show your Form DS-2019. Tax software 2012 For more information, see SSA Publication 05-10107, Foreign Workers and Social Security Numbers, available online at www. Tax software 2012 socialsecurity. Tax software 2012 gov/pubs/10107. Tax software 2012 html. Tax software 2012 Individual taxpayer identification number (ITIN). Tax software 2012   If you do not have and are not eligible to get an SSN, you must apply for an ITIN. Tax software 2012 For details on how to do so, see Form W-7 and its instructions. Tax software 2012 Allow 6 to 10 weeks for the IRS to notify you of your ITIN. Tax software 2012 If you already have an ITIN, enter it wherever an SSN is required on your tax return. Tax software 2012   An ITIN is for tax use only. Tax software 2012 It does not entitle you to social security benefits or change your employment or immigration status under U. Tax software 2012 S. Tax software 2012 law. Tax software 2012   In addition to those aliens who are required to furnish a taxpayer identification number and are not eligible for an SSN, a Form W-7 must be filed for: Alien individuals who are claimed as dependents and are not eligible for an SSN, and Alien spouses who are claimed as exemptions and are not eligible for an SSN. Tax software 2012 Employer identification number (EIN). Tax software 2012   An individual may use an SSN (or ITIN) for individual taxes and an EIN for business taxes. Tax software 2012 To apply for an EIN, file Form SS-4, Application for Employer Identification Number, with the IRS. Tax software 2012 Filing Status The amount of your tax depends on your filing status. Tax software 2012 Your filing status is important in determining whether you can take certain deductions and credits. Tax software 2012 The rules for determining your filing status are different for resident aliens and nonresident aliens. Tax software 2012 Resident Aliens Resident aliens can use the same filing statuses available to U. Tax software 2012 S. Tax software 2012 citizens. Tax software 2012 See your form instructions or Publication 501 for more information on filing status. Tax software 2012 Married filing jointly. Tax software 2012   Generally, you can file as married filing jointly only if both you and your spouse were resident aliens for the entire tax year, or if you make one of the choices discussed in chapter 1 to treat your spouse as a resident alien for the entire tax year. Tax software 2012 Qualifying widow(er). Tax software 2012   If your spouse died in 2011 or 2012, you did not remarry before the end of 2013, and you have a dependent child living with you, you may qualify to file as a qualifying widow(er) and use the joint return tax rates. Tax software 2012 This applies only if you could have filed a joint return with your spouse for the year your spouse died. Tax software 2012 Head of household. Tax software 2012   You can qualify as head of household if you are unmarried or considered unmarried on the last day of the year and you pay more than half the cost of keeping up a home for you and a qualifying person. Tax software 2012 You must be a resident alien for the entire tax year. Tax software 2012   You are considered unmarried for this purpose if your spouse was a nonresident alien at any time during the year and you do not make one of the choices discussed in chapter 1 to treat your spouse as a resident alien for the entire tax year. Tax software 2012 Note. Tax software 2012   Even if you are considered unmarried for head of household purposes because you are married to a nonresident alien, you may still be considered married for purposes of the earned income credit. Tax software 2012 In that case, you will not be entitled to the credit. Tax software 2012 See Publication 596 for more information. Tax software 2012 Nonresident Aliens If you are a nonresident alien filing Form 1040NR, you may be able to use one of the filing statuses discussed later. Tax software 2012 If you are filing Form 1040NR-EZ, you can only claim “Single nonresident alien” or “Married nonresident alien” as your filing status. Tax software 2012 Married nonresident alien. Tax software 2012   Married nonresident aliens who are not married to U. Tax software 2012 S. Tax software 2012 citizens or residents generally must use the Tax Table column or the Tax Computation Worksheet for married filing separate returns when determining the tax on income effectively connected with a U. Tax software 2012 S. Tax software 2012 trade or business. Tax software 2012 Exceptions. Tax software 2012   Married nonresident aliens normally cannot use the Tax Table column or the Tax Computation Worksheet for single individuals. Tax software 2012 However, you may be able to file as single if you lived apart from your spouse during the last 6 months of the year and you are a married resident of Canada, Mexico, South Korea, or are a married U. Tax software 2012 S. Tax software 2012 national. Tax software 2012 See the instructions for Form 1040NR or Form 1040NR-EZ to see if you qualify. Tax software 2012 U. Tax software 2012 S. Tax software 2012 national is defined later in this section under Qualifying widow(er) . Tax software 2012   A nonresident alien generally cannot file as married filing jointly. Tax software 2012 However, a nonresident alien who is married to a U. Tax software 2012 S. Tax software 2012 citizen or resident can choose to be treated as a resident and file a joint return on Form 1040, Form 1040A, or Form 1040EZ. Tax software 2012 For information on these choices, see chapter 1. Tax software 2012 If you do not make the choice to file jointly, file Form 1040NR or Form 1040NR-EZ and use the Tax Table column or the Tax Computation Worksheet for married individuals filing separately. Tax software 2012 Qualifying widow(er). Tax software 2012   You may be eligible to file as a qualifying widow(er) and use the joint return tax rates if all of the following conditions apply. Tax software 2012 You were a resident of Canada, Mexico, or South Korea, or a U. Tax software 2012 S. Tax software 2012 national (defined later). Tax software 2012 Your spouse died in 2011 or 2012 and you did not remarry before the end of 2013. Tax software 2012 You have a dependent child living with you. Tax software 2012 See the instructions for Form 1040NR for the rules for filing as a qualifying widow(er) with a dependent child. Tax software 2012   A U. Tax software 2012 S. Tax software 2012 national is an individual who, although not a U. Tax software 2012 S. Tax software 2012 citizen, owes his or her allegiance to the United States. Tax software 2012 U. Tax software 2012 S. Tax software 2012 nationals include American Samoans and Northern Mariana Islanders who chose to become U. Tax software 2012 S. Tax software 2012 nationals instead of U. Tax software 2012 S. Tax software 2012 citizens. Tax software 2012 Head of household. Tax software 2012   You cannot file as head of household if you are a nonresident alien at any time during the tax year. Tax software 2012 However, if you are married, your spouse can qualify as a head of household if: Your spouse is a resident alien or U. Tax software 2012 S. Tax software 2012 citizen for the entire tax year, You do not choose to be treated as a resident alien, and Your spouse meets the other requirements for this filing status, as discussed earlier under Resident Aliens . Tax software 2012 Note. Tax software 2012   Even if your spouse is considered unmarried for head of household purposes because you are a nonresident alien, your spouse may still be considered married for purposes of the earned income credit. Tax software 2012 In that case, your spouse will not be entitled to the credit. Tax software 2012 See Publication 596 for more information. Tax software 2012 Estates and trusts. Tax software 2012   A nonresident alien estate or trust using Form 1040NR must use Tax Rate Schedule W in the Form 1040NR instructions when determining the tax on income effectively connected with a U. Tax software 2012 S. Tax software 2012 trade or business. Tax software 2012 Special rules for aliens from certain U. Tax software 2012 S. Tax software 2012 possessions. Tax software 2012   A nonresident alien who is a bona fide resident of American Samoa or Puerto Rico for the entire tax year and who is temporarily working in the United States should read Bona Fide Residents of American Samoa or Puerto Rico, at the end of this chapter, for information about special rules. Tax software 2012 Reporting Your Income You must report each item of income that is taxable according to the rules in chapters 2, 3, and 4. Tax software 2012 For resident aliens, this includes income from sources both within and outside the United States. Tax software 2012 For nonresident aliens, this includes both income that is effectively connected with a trade or business in the United States (subject to graduated tax rates) and income from U. Tax software 2012 S. Tax software 2012 sources that is not effectively connected (subject to a flat 30% tax rate or lower tax treaty rate). Tax software 2012 Deductions Resident and nonresident aliens can claim similar deductions on their U. Tax software 2012 S. Tax software 2012 tax returns. Tax software 2012 However, nonresident aliens generally can claim only deductions related to income that is effectively connected with their U. Tax software 2012 S. Tax software 2012 trade or business. Tax software 2012 Resident Aliens You can claim the same deductions allowed to U. Tax software 2012 S. Tax software 2012 citizens if you are a resident alien for the entire tax year. Tax software 2012 While the discussion that follows contains some of the same general rules and guidelines that apply to you, it is specifically directed toward nonresident aliens. Tax software 2012 You should get Form 1040 and instructions for more information on how to claim your allowable deductions. Tax software 2012 Nonresident Aliens You can claim deductions to figure your effectively connected taxable income. Tax software 2012 You generally cannot claim deductions related to income that is not connected with your U. Tax software 2012 S. Tax software 2012 business activities. Tax software 2012 Except for personal exemptions, and certain itemized deductions, discussed later, you can claim deductions only to the extent they are connected with your effectively connected income. Tax software 2012 Ordinary and necessary business expenses. Tax software 2012   You can deduct all ordinary and necessary expenses in the operation of your U. Tax software 2012 S. Tax software 2012 trade or business to the extent they relate to income effectively connected with that trade or business. Tax software 2012 The deduction for travel expenses while in the United States is discussed under Itemized Deductions, later. Tax software 2012 For information about other business expenses, see Publication 535. Tax software 2012 Losses. Tax software 2012   You can deduct losses resulting from transactions that you entered into for profit and that you were not reimbursed for by insurance, etc. Tax software 2012 to the extent that they relate to income that is effectively connected with a trade or business in the United States. Tax software 2012 Educator expenses. Tax software 2012   If you were an eligible educator in 2013, you can deduct as an adjustment to income up to $250 in unreimbursed qualified expenses you paid or incurred during 2013 for books, supplies (other than nonathletic supplies for courses of instruction in health or physical education), computer equipment, and other equipment and materials used in the classroom. Tax software 2012 For more information, see your tax form instructions. Tax software 2012 Individual retirement arrangement (IRA). Tax software 2012   If you made contributions to a traditional IRA for 2013, you may be able to take an IRA deduction. Tax software 2012 But you must have taxable compensation effectively connected with a U. Tax software 2012 S. Tax software 2012 trade or business to do so. Tax software 2012 A Form 5498 should be sent to you by May 31, 2014, that shows all contributions to your traditional IRA for 2013. Tax software 2012 If you were covered by a retirement plan (qualified pension, profit-sharing (including 401(k)), annuity, SEP, SIMPLE, etc. Tax software 2012 ) at work or through self-employment, your IRA deduction may be reduced or eliminated. Tax software 2012 But you can still make contributions to a traditional IRA even if you cannot deduct them. Tax software 2012 If you made nondeductible contributions to a traditional IRA for 2013, you must report them on Form 8606, Nondeductible IRAs. Tax software 2012   For more information, see Publication 590, Individual Retirement Arrangements (IRAs). Tax software 2012 Moving expenses. Tax software 2012   If you are a nonresident alien temporarily in the United States earning taxable income for performing personal services, you can deduct moving expenses to the United States if you meet both of the following tests. Tax software 2012 You are a full-time employee for at least 39 weeks during the 12 months right after you move, or if you are self-employed, you work full time for at least 39 weeks during the first 12 months and 78 weeks during the first 24 months right after you move. Tax software 2012 Your new job location is at least 50 miles farther (by the shortest commonly traveled route) from your former home than your former job location was. Tax software 2012 If you had no former job location, the new job location must be at least 50 miles from your former home. Tax software 2012   You cannot deduct the moving expense you have when returning to your home abroad or moving to a foreign job site. Tax software 2012   Figure your deductible moving expenses to the United States on Form 3903, and deduct them on line 26 of Form 1040NR. Tax software 2012   For more information on the moving expense deduction, see Publication 521. Tax software 2012 Reimbursements. Tax software 2012   If your employer reimbursed you for allowable moving expenses under an accountable plan, your employer should have excluded these reimbursements from your income. Tax software 2012 You can only deduct allowable moving expenses that were not reimbursed by your employer or that were reimbursed but the reimbursement was included in your income. Tax software 2012 For more information, see Publication 521. Tax software 2012 Moving expense or travel expense. Tax software 2012   If you deduct moving expenses to the United States, you cannot also deduct travel expenses (discussed later under Itemized Deductions) while temporarily away from your tax home in a foreign country. Tax software 2012 Moving expenses are based on a change in your principal place of business while travel expenses are based on your temporary absence from your principal place of business. Tax software 2012 Self-employed SEP, SIMPLE, and qualified retirement plans. Tax software 2012   If you are self-employed, you may be able to deduct contributions to a SEP, SIMPLE, or qualified retirement plan that provides retirement benefits for yourself and your common-law employees, if any. Tax software 2012 To make deductible contributions for yourself, you must have net earnings from self-employment that are effectively connected with your U. Tax software 2012 S. Tax software 2012 trade or business. Tax software 2012   Get Publication 560, Retirement Plans for Small Business (SEP, SIMPLE, and Qualified Plans), for further information. Tax software 2012 Penalty on early withdrawal of savings. Tax software 2012   You must include in income all effectively connected interest income you receive or that is credited to your account during the year. Tax software 2012 Do not reduce it by any penalty you must pay on an early withdrawal from a time savings account. Tax software 2012 However, if the interest income is effectively connected with your U. Tax software 2012 S. Tax software 2012 trade or business during the year, you can deduct on line 30 of Form 1040NR the amount of the early withdrawal penalty that the banking institution charged. Tax software 2012 Student loan interest expense. Tax software 2012   If you paid interest on a student loan in 2013, you may be able to deduct up to $2,500 of the interest you paid. Tax software 2012 Generally, you can claim the deduction if all the following requirements are met. Tax software 2012 Your filing status is any filing status except married filing separately. Tax software 2012 Your modified adjusted gross income is less than $75,000. Tax software 2012 No one else is claiming an exemption for you on his or her 2013 tax return. Tax software 2012 You paid interest on a loan taken out only to pay tuition and other qualified higher education expenses for yourself, your spouse, someone who was your dependent when the loan was taken out, or someone you could have claimed as a dependent for the year the loan was taken out except that: The person filed a joint return, The person had gross income that was equal to or more than the exemption amount for that year ($3,900 for 2013), or You could be claimed as a dependent on someone else's return. Tax software 2012 The loan is not from a related person or a person who borrowed the proceeds under a qualified employer plan or a contract purchased under such a plan. Tax software 2012 The education expenses were paid or incurred within a reasonable period of time before or after the loan was taken out. Tax software 2012 The person for whom the expenses were paid or incurred was an eligible student. Tax software 2012 Use the worksheet in the Form 1040NR or Form 1040NR-EZ instructions to figure the deduction. Tax software 2012 For more information, see Publication 970, Tax Benefits for Education. Tax software 2012 Exemptions Resident aliens can claim personal exemptions and exemptions for dependents in the same way as U. Tax software 2012 S. Tax software 2012 citizens. Tax software 2012 However, nonresident aliens generally can claim only a personal exemption for themselves on their U. Tax software 2012 S. Tax software 2012 tax return. Tax software 2012 Resident Aliens You can claim personal exemptions and exemptions for dependents according to the dependency rules for U. Tax software 2012 S. Tax software 2012 citizens. Tax software 2012 You can claim an exemption for your spouse on a separate return if your spouse had no gross income for U. Tax software 2012 S. Tax software 2012 tax purposes and was not the dependent of another taxpayer. Tax software 2012 You can claim this exemption even if your spouse has not been a resident alien for a full tax year or is an alien who has not come to the United States. Tax software 2012 You can claim an exemption for each person who qualifies as a dependent according to the rules for U. Tax software 2012 S. Tax software 2012 citizens. Tax software 2012 The dependent must be a citizen or national (defined earlier) of the United States or be a resident of the United States, Canada, or Mexico for some part of the calendar year in which your tax year begins. Tax software 2012 Get Publication 501 for more information. Tax software 2012 Your spouse and each dependent for whom you claim an exemption must have either an SSN or an ITIN. Tax software 2012 See Identification Number, earlier. Tax software 2012 Nonresident Aliens Generally, if you are a nonresident alien engaged in a trade or business in the United States, you can claim only one personal exemption ($3,900 for 2013). Tax software 2012 You may be able to claim an exemption for a spouse and a dependent if you are described in any of the following discussions. Tax software 2012 Your spouse and each dependent for whom you claim an exemption must have either an SSN or an ITIN. Tax software 2012 See Identification Number, earlier. Tax software 2012 Residents of Mexico or Canada or U. Tax software 2012 S. Tax software 2012 nationals. Tax software 2012   If you are a resident of Mexico or Canada or a national of the United States (defined earlier), you can also claim a personal exemption for your spouse if your spouse had no gross income for U. Tax software 2012 S. Tax software 2012 tax purposes and cannot be claimed as the dependent on another U. Tax software 2012 S. Tax software 2012 taxpayer's return. Tax software 2012 In addition, you can claim exemptions for your dependents who meet certain tests. Tax software 2012 Residents of Mexico, Canada, or nationals of the United States must use the same rules as U. Tax software 2012 S. Tax software 2012 citizens to determine who is a dependent and for which dependents exemptions can be claimed. Tax software 2012 See Publication 501 for these rules. Tax software 2012 For purposes of these rules, dependents who are U. Tax software 2012 S. Tax software 2012 nationals meet the citizenship test discussed in Publication 501. Tax software 2012 Residents of South Korea. Tax software 2012   Nonresident aliens who are residents of South Korea may be able to claim exemptions for a spouse and children. Tax software 2012 The income tax treaty with South Korea imposes two additional requirements on South Korean residents: The spouse and all children claimed must live with the alien in the United States at some time during the tax year, and The additional deduction for the exemptions must be prorated based on the ratio of the alien's U. Tax software 2012 S. Tax software 2012 source gross income effectively connected with a U. Tax software 2012 S. Tax software 2012 trade or business for the tax year to the alien's entire income from all sources during the tax year. Tax software 2012 Example. Tax software 2012 Mr. Tax software 2012 Park, a nonresident alien who is a resident of South Korea, lives temporarily in the United States with his wife and two children. Tax software 2012 During the tax year he receives U. Tax software 2012 S. Tax software 2012 compensation of $18,000. Tax software 2012 He also receives $6,000 of income from sources outside the United States that is not effectively connected with his U. Tax software 2012 S. Tax software 2012 trade or business. Tax software 2012 Thus, his total income for the year is $24,000. Tax software 2012 Mr. Tax software 2012 Park meets all requirements for claiming exemptions for his spouse and two children. Tax software 2012 The additional deduction for 2013 is $8,775 figured as follows: $18,000 $24,000 × $11,700* = $8,775               *3 × $3,900 = $11,700   Students and business apprentices from India. Tax software 2012   Students and business apprentices who are eligible for the benefits of Article 21(2) of the United States–India Income Tax Treaty may be able to claim exemptions for their spouse and dependents. Tax software 2012   You can claim an exemption for your spouse if he or she had no gross income during the year and cannot be claimed as a dependent on another U. Tax software 2012 S. Tax software 2012 taxpayer's return. Tax software 2012   You can claim exemptions for each of your dependents not admitted to the United States on “F-2,” “J-2,” or “M-2” visas if they meet the same rules that apply to U. Tax software 2012 S. Tax software 2012 citizens. Tax software 2012 See Publication 501 for these rules. Tax software 2012   List your spouse and dependents on line 7c of Form 1040NR. Tax software 2012 Enter the total on the appropriate line to the right of line 7c. Tax software 2012 Itemized Deductions Nonresident aliens can claim some of the same itemized deductions that resident aliens can claim. Tax software 2012 However, nonresident aliens can claim itemized deductions only if they have income effectively connected with their U. Tax software 2012 S. Tax software 2012 trade or business. Tax software 2012 Resident Aliens You can claim the same itemized deductions as U. Tax software 2012 S. Tax software 2012 citizens, using Schedule A of Form 1040. Tax software 2012 These deductions include certain medical and dental expenses, state and local income taxes, real estate taxes, interest you paid on a home mortgage, charitable contributions, casualty and theft losses, and miscellaneous deductions. Tax software 2012 If you do not itemize your deductions, you can claim the standard deduction for your particular filing status. Tax software 2012 For further information, see Form 1040 and instructions. Tax software 2012 Nonresident Aliens You can deduct certain itemized deductions if you receive income effectively connected with your U. Tax software 2012 S. Tax software 2012 trade or business. Tax software 2012 These deductions include state and local income taxes, charitable contributions to U. Tax software 2012 S. Tax software 2012 organizations, casualty and theft losses, and miscellaneous deductions. Tax software 2012 Use Schedule A of Form 1040NR to claim itemized deductions. Tax software 2012 If you are filing Form 1040NR-EZ, you can only claim a deduction for state or local income taxes. Tax software 2012 If you are claiming any other itemized deduction, you must file Form 1040NR. Tax software 2012 Standard deduction. Tax software 2012   Nonresident aliens cannot claim the standard deduction. Tax software 2012 However, see Students and business apprentices from India , next. Tax software 2012 Students and business apprentices from India. Tax software 2012   A special rule applies to students and business apprentices who are eligible for the benefits of Article 21(2) of the United States–India Income Tax Treaty. Tax software 2012 You can claim the standard deduction provided you do not claim itemized deductions. Tax software 2012   Use Worksheet 5-1 to figure your standard deduction. Tax software 2012 If you are married and your spouse files a return and itemizes deductions, you cannot take the standard deduction. Tax software 2012 State and local income taxes. Tax software 2012   You can deduct state and local income taxes you paid on income that is effectively connected with a trade or business in the United States. Tax software 2012 If you received a refund or rebate in 2013 of taxes you paid in an earlier year, do not reduce your deduction by that amount. Tax software 2012 Instead, you must include the refund or rebate in income if you deducted the taxes in the earlier year and the deduction reduced your tax. Tax software 2012 See Recoveries in Publication 525 for details on how to figure the amount to include in income. Tax software 2012 Charitable contributions. Tax software 2012   You can deduct your charitable contributions or gifts to qualified organizations subject to certain limits. Tax software 2012 Qualified organizations include organizations that are religious, charitable, educational, scientific, or literary in nature, or that work to prevent cruelty to children or animals. Tax software 2012 Certain organizations that promote national or international amateur sports competition are also qualified organizations. Tax software 2012 Foreign organizations. Tax software 2012   Contributions made directly to a foreign organization are not deductible. Tax software 2012 However, you can deduct contributions to a U. Tax software 2012 S. Tax software 2012 organization that transfers funds to a charitable foreign organization if the U. Tax software 2012 S. Tax software 2012 organization controls the use of the funds or if the foreign organization is only an administrative arm of the U. Tax software 2012 S. Tax software 2012 organization. Tax software 2012   For more information about organizations that qualify to receive charitable contributions, see Publication 526, Charitable Contributions. Tax software 2012 Worksheet 5-1. Tax software 2012 2013 Standard Deduction Worksheet for Students and Business Apprentices From India Caution. Tax software 2012 If you are married filing a separate return and your spouse itemizes deductions, do not complete this worksheet. Tax software 2012 You cannot take the standard deduction even if you were born before January 2, 1949, or are blind. Tax software 2012 1 Enter the amount shown below for your filing status. Tax software 2012           Single or married filing separately—$6,100 Qualifying widow(er)—$12,200 1. Tax software 2012           2 Can you be claimed as a dependent on someone else's U. Tax software 2012 S. Tax software 2012 income tax return?  No. Tax software 2012 Enter the amount from line 1 on line 4. Tax software 2012 Skip line 3 and go to line 5. Tax software 2012   Yes. Tax software 2012 Go to line 3. Tax software 2012         3 Is your earned income* more than $650?           Yes. Tax software 2012 Add $350 to your earned income. Tax software 2012 Enter the total. Tax software 2012           No. Tax software 2012 Enter $1,000 3. Tax software 2012       4 Enter the smaller of line 1 or line 3 4. Tax software 2012   5 If born before January 2, 1949, OR blind, enter $1,200 ($1,500 if single). Tax software 2012 If born before January 2, 1949, AND blind, enter $2,400 ($3,000 if single). Tax software 2012 Otherwise, enter -0- 5. Tax software 2012   6 Add lines 4 and 5. Tax software 2012 Enter the total here and on Form 1040NR, line 38 (or Form 1040NR-EZ, line 11). Tax software 2012 Print “Standard Deduction Allowed Under U. Tax software 2012 S. Tax software 2012 –India Income Tax Treaty” in the space to the left of these lines. Tax software 2012 This is your standard deduction for 2013. Tax software 2012 6. Tax software 2012   *Earned income includes wages, salaries, tips, professional fees, and other compensation received for personal services you performed. Tax software 2012 It also includes any amount received as a scholarship that you must include in your income. Tax software 2012 Generally, your earned income is the total of the amount(s) you reported on Form 1040NR, lines 8,12,13, and 19, minus amounts on lines 27 and 31 (or Form 1040NR-EZ, lines 3 and 5, minus any amount on line 8). Tax software 2012 Contributions from which you benefit. Tax software 2012   If you receive a benefit as a result of making a contribution to a qualified organization, you can deduct only the amount of your contribution that is more than the value of the benefit you receive. Tax software 2012   If you pay more than the fair market value to a qualified organization for merchandise, goods, or services, the amount you pay that is more than the value of the item can be a charitable contribution. Tax software 2012 For the excess amount to qualify, you must pay it with the intent to make a charitable contribution. Tax software 2012 Cash contributions. Tax software 2012   You cannot deduct a cash contribution, regardless of the amount, unless you keep as a record of the contribution a bank record (such as a canceled check, a bank copy of a canceled check, or a bank statement containing the name of the charity, the date, and the amount) or a written record from the charity. Tax software 2012 The written record must include the name of the charity, date of the contribution, and the amount of the contribution. Tax software 2012   You may deduct a cash contribution of $250 or more only if you have a written statement from the charitable organization showing: The amount of any money contributed, Whether the organization gave you any goods or services in return for your contribution, and A description and estimate of the value of any goods or services described in (2). Tax software 2012 If you received only intangible religious benefits, the organization must state this, but it does not have to describe or value the benefit. Tax software 2012 Noncash contributions. Tax software 2012   For contributions not made in cash, the records you must keep depend on the amount of your deduction. Tax software 2012 See Publication 526 for details. Tax software 2012 For example, if you make a noncash contribution and the amount of your deduction is more than $500, you must complete and attach to your tax return Form 8283, Noncash Charitable Contributions. Tax software 2012 If you deduct more than $500 for a contribution of a motor vehicle, boat, or airplane, you must also attach a statement from the charitable organization to your return. Tax software 2012 If your total deduction is over $5,000, you also may have to get appraisals of the values of the property. Tax software 2012 If the donated property is valued at more than $5,000, you must obtain a qualified appraisal. Tax software 2012 You generally must attach to your tax return an appraisal of any property if your deduction for the property is more than $500,000. Tax software 2012 See Form 8283 and its instructions for details. Tax software 2012 Contributions of appreciated property. Tax software 2012   If you contribute property to a qualified organization, the amount of your charitable contribution is generally the fair market value of the property at the time of the contribution. Tax software 2012 However, if you contribute property with a fair market value that is more than your basis in it, you may have to reduce the fair market value by the amount of appreciation (increase in value) when you figure your deduction. Tax software 2012 Your basis in the property is generally what you paid for it. Tax software 2012 If you need more information about basis, get Publication 551, Basis of Assets. Tax software 2012   Different rules apply to figuring your deduction, depending on whether the property is: Ordinary income property, or Capital gain property. Tax software 2012 For information about these rules, see Publication 526. Tax software 2012 Limit. Tax software 2012   The amount you can deduct in a tax year is limited in the same way it is for a citizen or resident of the United States. Tax software 2012 For a discussion of limits on charitable contributions and other information, get Publication 526. Tax software 2012 Casualty and theft losses. Tax software 2012   You can deduct your loss from fire, storm, shipwreck, or other casualty, or theft of property even though your property is not connected with a U. Tax software 2012 S. Tax software 2012 trade or business. Tax software 2012 The property can be personal use property or income-producing property not connected with a U. Tax software 2012 S. Tax software 2012 trade or business. Tax software 2012 The property must be located in the United States at the time of the casualty or theft. Tax software 2012 You can deduct theft losses only in the year in which you discover the loss. Tax software 2012   The amount of the loss is the fair market value of the property immediately before the casualty or theft less its fair market value immediately after the casualty or theft (but not more than its cost or adjusted basis) less any insurance or other reimbursement. Tax software 2012 The fair market value of property immediately after a theft is considered zero, because you no longer have the property. Tax software 2012   If your property is covered by insurance, you should file a timely insurance claim for reimbursement. Tax software 2012 If you do not, you cannot deduct this loss as a casualty or theft loss. Tax software 2012   Figure your deductible casualty and theft losses on Form 4684, Casualties and Thefts. Tax software 2012 Losses from personal use property. Tax software 2012    You cannot deduct the first $100 of each casualty or theft loss to property held for personal use. Tax software 2012 You can deduct only the total of these losses for the year (reduced by the $100 limit) that is more than 10% of your adjusted gross income (line 37, Form 1040NR) for the year. Tax software 2012 Losses from income-producing property. Tax software 2012   These losses are not subject to the limitations that apply to personal use property. Tax software 2012 Use Section B of Form 4684 to figure your deduction for these losses. Tax software 2012 Job expenses and other miscellaneous deductions. Tax software 2012   You can deduct job expenses, such as allowable unreimbursed travel expenses (discussed next), and other miscellaneous deductions. Tax software 2012 Generally, the allowable deductions must be related to effectively connected income. Tax software 2012 Deductible expenses include: Union dues, Safety equipment and small tools needed for your job, Dues to professional organizations, Subscriptions to professional journals, Tax return preparation fees, and Casualty and theft losses of property used in performing services as an employee (employee property). Tax software 2012   Most miscellaneous itemized deductions are deductible only if they are more than 2% of your adjusted gross income (line 37, Form 1040NR). Tax software 2012 For more information on miscellaneous deductions, see the instructions for Form 1040NR. Tax software 2012 Travel expenses. Tax software 2012   You may be able to deduct your ordinary and necessary travel expenses while you are temporarily performing personal services in the United States. Tax software 2012 Generally, a temporary assignment in a single location is one that is realistically expected to last (and does in fact last) for one year or less. Tax software 2012 You must be able to show you were present in the United States on an activity that required your temporary absence from your regular place of work. Tax software 2012   For example, if you have established a “tax home” through regular employment in a foreign country, and intend to return to similar employment in the same country at the end of your temporary stay in the United States, you can deduct reasonable travel expenses you paid. Tax software 2012 You cannot deduct travel expenses for other members of your family or party. Tax software 2012 Deductible travel expenses. Tax software 2012   If you qualify, you can deduct your expenses for: Transportation—airfare, local transportation, including train, bus, etc. Tax software 2012 , Lodging—rent paid, utilities (do not include telephone), hotel or motel room expenses, and Meal expenses—actual expenses allowed if you keep records of the amounts, or, if you do not wish to keep detailed records, you are generally allowed a standard meal allowance amount depending on the date and area of your travel. Tax software 2012 You generally can deduct only 50% of unreimbursed meal expenses. Tax software 2012 The standard meal allowance rates for high-cost areas are available at www. Tax software 2012 gsa. Tax software 2012 gov/perdiem. Tax software 2012 The rates for other areas are in Publication 463. Tax software 2012   Use Form 2106 or 2106-EZ to figure your allowable expenses that you claim on line 7 of Schedule A (Form 1040NR). Tax software 2012 Expenses allocable to U. Tax software 2012 S. Tax software 2012 tax-exempt income. Tax software 2012   You cannot deduct an expense, or part of an expense, that is allocable to U. Tax software 2012 S. Tax software 2012 tax-exempt income, including income exempt by tax treaty. Tax software 2012 Example. Tax software 2012 Irina Oak, a citizen of Poland, resided in the United States for part of the year to acquire business experience from a U. Tax software 2012 S. Tax software 2012 company. Tax software 2012 During her stay in the United States, she received a salary of $8,000 from her Polish employer. Tax software 2012 She received no other U. Tax software 2012 S. Tax software 2012 source income. Tax software 2012 She spent $3,000 on travel expenses, of which $1,000 were for meals. Tax software 2012 None of these expenses were reimbursed. Tax software 2012 Under the tax treaty with Poland, $5,000 of her salary is exempt from U. Tax software 2012 S. Tax software 2012 income tax. Tax software 2012 In filling out Form 2106-EZ, she must reduce her deductible meal expenses by half ($500). Tax software 2012 She must reduce the remaining $2,500 of travel expenses by 62. Tax software 2012 5% ($1,563) because 62. Tax software 2012 5% ($5,000 ÷ $8,000) of her salary is exempt from tax. Tax software 2012 She enters the remaining total of $937 on line 7 of Schedule A (Form 1040NR). Tax software 2012 She completes the remaining lines according to the instructions for Schedule A. Tax software 2012 More information. Tax software 2012   For more information about deductible expenses, reimbursements, and recordkeeping, get Publication 463. Tax software 2012 Tax Credits and Payments This discussion covers tax credits and payments for resident aliens, followed by a discussion of the credits and payments for nonresident aliens. Tax software 2012 Resident Aliens Resident aliens generally claim tax credits and report tax payments, including withholding, using the same rules that apply to U. Tax software 2012 S. Tax software 2012 citizens. Tax software 2012 The following items are some of the credits you may be able to claim. Tax software 2012 Foreign tax credit. Tax software 2012   You can claim a credit, subject to certain limits, for income tax you paid or accrued to a foreign country on foreign source income. Tax software 2012 You cannot claim a credit for taxes paid or accrued on excluded foreign earned income. Tax software 2012 To claim a credit for income taxes paid or accrued to a foreign country, you generally will file Form 1116, Foreign Tax Credit (Individual, Estate, or Trust), with your Form 1040. Tax software 2012   For more information, get Publication 514, Foreign Tax Credit for Individuals. Tax software 2012 Child and dependent care credit. Tax software 2012   You may be able to take this credit if you pay someone to care for your qualifying child who is under age 13, or your disabled dependent or disabled spouse, so that you can work or look for work. Tax software 2012 Generally, you must be able to claim an exemption for your dependent. Tax software 2012   For more information, get Publication 503, Child and Dependent Care Expenses, and Form 2441, Child and Dependent Care Expenses. Tax software 2012 Credit for the elderly or the disabled. Tax software 2012   You may qualify for this credit if you are 65 or older or if you retired on permanent and total disability. Tax software 2012 For more information on this credit, get Publication 524, Credit for the Elderly or the Disabled, and Schedule R (Form 1040A or 1040). Tax software 2012 Education credits. Tax software 2012   You may qualify for these credits if you paid qualified education expenses for yourself, your spouse, or your dependent. Tax software 2012 There are two education credits: the American Opportunity Credit and the lifetime learning credit. Tax software 2012 You cannot claim these credits if you are married filing separately. Tax software 2012 Use Form 8863, Education Credits (American Opportunity and Lifetime Learning Credits), to figure the credit. Tax software 2012 For more information, see Publication 970. Tax software 2012 Retirement savings contributions credit. Tax software 2012   You may qualify for this credit (also known as the saver's credit) if you made eligible contributions to an employer-sponsored retirement plan or to an individual retirement arrangement (IRA) in 2013. Tax software 2012 You cannot claim this credit if: You were born after January 1, 1996, You were a full-time student, Your exemption is claimed by someone else on his or her 2013 tax return, or Your adjusted gross income is more than: $59,000, if your filing status is married filing jointly, $44,250, if your filing status is head of household, or $29,500, if your filing status is single, married filing separately, or qualifying widow(er). Tax software 2012 Use Form 8880, Credit for Qualified Retirement Savings Contributions, to figure the credit. Tax software 2012 For more information, see Publication 590. Tax software 2012 Child tax credit. Tax software 2012   You may be able to take this credit if you have a qualifying child. Tax software 2012   A qualifying child for purposes of the child tax credit is a child who: Was under age 17 at the end of 2013. Tax software 2012 Is your son, daughter, stepchild, foster child, brother, sister, stepbrother, stepsister, half brother, half sister, or a descendant of any of them (for example, your grandchild, niece, or nephew). Tax software 2012 Is a U. Tax software 2012 S. Tax software 2012 citizen, a U. Tax software 2012 S. Tax software 2012 national, or a resident alien. Tax software 2012 Did not provide over half of his or her own support for 2013. Tax software 2012 Lived with you more than half of 2013. Tax software 2012 Temporary absences, such as for school, vacation, or medical care, count as time lived in the home. Tax software 2012 Is claimed as a dependent on your return. Tax software 2012 An adopted child is always treated as your own child. Tax software 2012 An adopted child includes a child lawfully placed with you for legal adoption. Tax software 2012   See your form instructions for additional details. Tax software 2012 Adoption credit. Tax software 2012   You may qualify to take a tax credit of up to $12,970 for qualifying expenses paid to adopt an eligible child. Tax software 2012 This amount may be allowed for the adoption of a child with special needs regardless of whether you have qualifying expenses. Tax software 2012 To claim the adoption credit, file Form 8839, Qualified Adoption Expenses, with your Form 1040. Tax software 2012 Earned income credit. Tax software 2012   You may qualify for an earned income credit of up to $3,250 if a child lived with you in the United States and your earned income and adjusted gross income were each less than $37,870 ($43,210 if married filing jointly). Tax software 2012 If two children lived with you in the United States and your earned income and adjusted gross income were each less than $43,038 ($48,378 if married filing jointly), your credit could be as much as $5,372. Tax software 2012 If three or more children lived with you in the United States and your earned income and adjusted gross income were each less than $46,227 ($51,567 if married filing jointly), your credit could be as much as $6,044. Tax software 2012 If you do not have a qualifying child and your earned income and adjusted gross income were each less than $14,340 ($19,680 if married filing jointly), your credit could be as much as $487. Tax software 2012 You cannot claim the earned income credit if your filing status is married filing separately. Tax software 2012    You and your spouse (if filing a joint return) and any qualifying child must have valid SSNs to claim this credit. Tax software 2012 You cannot claim the credit using an ITIN. Tax software 2012 If a social security card has a legend that says Not Valid for Employment and the number was issued so that you (or your spouse or your qualifying child) could receive a federally funded benefit, you cannot claim the earned income credit. Tax software 2012 An example of a federally funded benefit is Medicaid. Tax software 2012 If a card has this legend and the individual's immigration status has changed so that the individual is now a U. Tax software 2012 S. Tax software 2012 citizen or lawful permanent resident, ask the SSA to issue a new social security card without the legend. Tax software 2012 Other information. Tax software 2012   There are other eligibility rules that are not discussed here. Tax software 2012 For more information, get Publication 596, Earned Income Credit. Tax software 2012 Nonresident Aliens You can claim some of the same credits that resident aliens can claim. Tax software 2012 You can also report certain taxes you paid, are considered to have paid, or that were withheld from your income. Tax software 2012 Credits Credits are allowed only if you receive effectively connected income. Tax software 2012 You may be able to claim some of the following credits. Tax software 2012 Foreign tax credit. Tax software 2012   If you receive foreign source income that is effectively connected with a trade or business in the United States, you can claim a credit for any income taxes paid or accrued to any foreign country or U. Tax software 2012 S. Tax software 2012 possession on that income. Tax software 2012   If you do not have foreign source income effectively connected with a U. Tax software 2012 S. Tax software 2012 trade or business, you cannot claim credits against your U. Tax software 2012 S. Tax software 2012 tax for taxes paid or accrued to a foreign country or U. Tax software 2012 S. Tax software 2012 possession. Tax software 2012   You cannot take any credit for taxes imposed by a foreign country or U. Tax software 2012 S. Tax software 2012 possession on your U. Tax software 2012 S. Tax software 2012 source income if those taxes were imposed only because you are a citizen or resident of the foreign country or possession. Tax software 2012   If you claim a foreign tax credit, you generally will have to attach to your return a Form 1116. Tax software 2012 See Publication 514 for more information. Tax software 2012 Child and dependent care credit. Tax software 2012   You may qualify for this credit if you pay someone to care for your qualifying child who is under age 13, or your disabled dependent or disabled spouse, so that you can work or look for work. Tax software 2012 Generally, you must be able to claim an exemption for your dependent. Tax software 2012   Married nonresident aliens can claim the credit only if they choose to file a joint return with a U. Tax software 2012 S. Tax software 2012 citizen or resident spouse as discussed in chapter 1, or if they qualify as certain married individuals living apart (see Joint Return Test in Publication 503). Tax software 2012   The amount of your child and dependent care expense that qualifies for the credit in any tax year cannot be more than your earned income from the United States for that tax year. Tax software 2012 Earned income generally means wages, salaries, and professional fees for personal services performed. Tax software 2012   For more information, get Publication 503. Tax software 2012 Education credits. Tax software 2012   If you are a nonresident alien for any part of the year, you generally cannot claim the education credits. Tax software 2012 However, if you are married and choose to file a joint return with a U. Tax software 2012 S. Tax software 2012 citizen or resident spouse as discussed in chapter 1, you may be eligible for these credits. Tax software 2012 Retirement savings contributions credit. Tax software 2012   You may qualify for this credit (also known as the saver's credit) if you made eligible contributions to an employer-sponsored retirement plan or to an individual retirement arrangement (IRA) in 2013. Tax software 2012 You cannot claim this credit if: You were born after January 1, 1996, You were a full-time student, Your exemption is claimed by someone else on his or her 2013 tax return, or Your adjusted gross income is more than $29,500. Tax software 2012 Use Form 8880 to figure the credit. Tax software 2012 For more information, see Publication 590. Tax software 2012 Child tax credit. Tax software 2012   You may be able to take this credit if you have a qualifying child. Tax software 2012   A qualifying child for purposes of the child tax credit is a child who: Was under age 17 at the end of 2013. Tax software 2012 Is your son, daughter, stepchild, foster child, brother, sister, stepbrother, stepsister, half brother, half sister, or a descendant of any of them (for example, your grandchild, niece, or nephew). Tax software 2012 Is a U. Tax software 2012 S. Tax software 2012 citizen, a U. Tax software 2012 S. Tax software 2012 national, or a resident alien. Tax software 2012 Did not provide over half of his or her own support for 2013. Tax software 2012 Lived with you more than half of 2013. Tax software 2012 Temporary absences, such as for school, vacation, or medical care, count as time lived in the home. Tax software 2012 Is claimed as a dependent on your return. Tax software 2012 An adopted child is always treated as your own child. Tax software 2012 An adopted child includes a child lawfully placed with you for legal adoption. Tax software 2012   See your form instructions for additional details. Tax software 2012 Adoption credit. Tax software 2012   You may qualify to take a tax credit of up to $12,970 for qualifying expenses paid to adopt an eligible child. Tax software 2012 This amount may be allowed for the adoption of a child with special needs regardless of whether you have qualifying expenses. Tax software 2012 To claim the adoption credit, file Form 8839 with your Form 1040NR. Tax software 2012   Married nonresident aliens can claim the credit only if they choose to file a joint return with a U. Tax software 2012 S. Tax software 2012 citizen or resident spouse as discussed in chapter 1, or if they qualify as certain married individuals living apart (see Married Persons Not Filing Jointly in the Form 8839 instructions). Tax software 2012 Credit for prior year minimum tax. Tax software 2012   If you paid alternative minimum tax in a prior year, get Form 8801, Credit for Prior Year Minimum Tax—Individuals, Estates, and Trusts, to see if you qualify for this credit. Tax software 2012 Earned income credit. Tax software 2012   If you are a nonresident alien for any part of the tax year, you generally cannot get the earned income credit. Tax software 2012 However, if you are married and choose to file a joint return with a U. Tax software 2012 S. Tax software 2012 citizen or resident spouse as discussed in chapter 1, you may be eligible for the credit. Tax software 2012    You, your spouse, and any qualifying child must have valid SSNs to claim this credit. Tax software 2012 You cannot claim the credit using an ITIN. Tax software 2012 If a social security card has a legend that says Not Valid for Employment and the number was issued so that you (or your spouse or your qualifying child) could receive a federally funded benefit, you cannot claim the earned income credit. Tax software 2012 An example of a federally funded benefit is Medicaid. Tax software 2012 If a card has this legend and the individual's immigration status has changed so that the individual is now a U. Tax software 2012 S. Tax software 2012 citizen or lawful permanent resident, ask the SSA to issue a new social security card without the legend. Tax software 2012   See Publication 596 for more information on the credit. Tax software 2012 Tax Withheld You can claim the tax withheld during the year as a payment against your U. Tax software 2012 S. Tax software 2012 tax. Tax software 2012 You claim it on line 61 of Form 1040NR or on line 18 of Form 1040NR-EZ. Tax software 2012 The tax withheld reduces any tax you owe with Form 1040NR or Form 1040NR-EZ. Tax software 2012 Withholding from wages. Tax software 2012   Any federal income tax withheld from your wages during the tax year while you were a nonresident alien is allowed as a payment against your U. Tax software 2012 S. Tax software 2012 income tax liability for the same year. Tax software 2012 You can claim the income tax withheld whether or not you were engaged in a trade or business in the United States during the year, and whether or not the wages (or any other income) were connected with a trade or business in the United States. Tax software 2012 Excess social security tax withheld. Tax software 2012   If you have two or more employers, you may be able to claim a credit against your U. Tax software 2012 S. Tax software 2012 income tax liability for social security tax withheld in excess of the maximum required. Tax software 2012 See Social Security and Medicare Taxes in chapter 8 for more information. Tax software 2012 Additional Medicare Tax. Tax software 2012   Your employer is responsible for withholding the 0. Tax software 2012 9% Additional Medicare Tax on Medicare wages or RRTA compensation it pays to you in excess of $200,000 in 2013. Tax software 2012 If you do not owe Additional Medicare Tax, you can claim a credit for any withheld Additional Medicare Tax against the total tax liability shown on your tax return by filing Form 8959. Tax software 2012 Tax paid on undistributed long-term capital gains. Tax software 2012   If you are a shareholder in a mutual fund (or other regulated investment company) or real estate investment trust, you can claim a credit for your share of any taxes paid by the company on its undistributed long-term capital gains. Tax software 2012 You will receive information on Form 2439, Notice to Shareholder of Undistributed Long-Term Capital Gains, which you must attach to your return. Tax software 2012 Tax withheld at the source. Tax software 2012   You can claim as a payment any tax withheld at the source on investment and other fixed or determinable annual or periodic income paid to you. Tax software 2012 Fixed or determinable income includes interest, dividend, rental, and royalty income that you do not claim to be effectively connected income. Tax software 2012 Wage or salary payments can be fixed or determinable income to you, but usually are subject to withholding as discussed above. Tax software 2012 Taxes on fixed or determinable income are withheld at a 30% rate or at a lower treaty rate. Tax software 2012 Tax withheld on partnership income. Tax software 2012   If you are a foreign partner in a partnership, the partnership will withhold tax on your share of effectively connected taxable income from the partnership. Tax software 2012 The partnership will give you a statement on Form 8805, Foreign Partner's Information Statement of Section 1446 Withholding Tax, showing the tax withheld. Tax software 2012 A partnership that is publicly traded may withhold on your actual distributions of effectively connected income. Tax software 2012 In this case, the partnership will give you a statement on Form 1042-S. Tax software 2012 Claim the tax withheld as a payment on line 61b or 61d of Form 1040NR, as appropriate. Tax software 2012 Claiming tax withheld on your return. Tax software 2012   When you fill out your tax return, take extra care to enter the correct amount of any tax withheld shown on your information documents. Tax software 2012 The following table lists some of the more common information documents and shows where to find the amount of tax withheld. Tax software 2012 Form number Location  of tax  withheld RRB-1042S Box 12 SSA-1042S Box 9 W-2 Box 2 W-2c Box 2 1042-S Box 9 8805 Line 10 8288-A Box 2 Bona Fide Residents of American Samoa or Puerto Rico If you are a nonresident alien who is a bona fide resident of American Samoa or Puerto Rico for the entire tax year, you generally are taxed the same as resident aliens. Tax software 2012 You should file Form 1040 and report all income from sources both in and outside the United States. Tax software 2012 However, you can exclude the income discussed in the following paragraphs. Tax software 2012 For tax purposes other than reporting income, however, you will be treated as a nonresident alien. Tax software 2012 For example, you are not allowed the standard deduction, you cannot file a joint return, and you are not allowed a deduction for a dependent unless that person is a citizen or national of the United States. Tax software 2012 There are also limits on what deductions and credits are allowed. Tax software 2012 See Nonresident Aliens under Deductions , Itemized Deductions , and Tax Credits and Payments in this chapter. Tax software 2012 Residents of Puerto Rico. Tax software 2012   If you are a bona fide resident of Puerto Rico for the entire year, you can exclude from gross income all income from sources in Puerto Rico (other than amounts for services performed as an employee of the United States or any of its agencies). Tax software 2012   If you report income on a calendar year basis and you do not have wages subject to withholding, file your return and pay your tax by June 15. Tax software 2012 You must also make your first payment of estimated tax by June 15. Tax software 2012 You cannot file a joint income tax return or make joint payments of estimated tax. Tax software 2012 However, if you are married to a U. Tax software 2012 S. Tax software 2012 citizen or resident, see Nonresident Spouse Treated as a Resident in chapter 1. Tax software 2012   If you earn wages subject to withholding, your U. Tax software 2012 S. Tax software 2012 income tax return is due by April 15. Tax software 2012 Your first payment of estimated tax is also due by April 15. Tax software 2012 For information on withholding and estimated tax, see chapter 8 . Tax software 2012 Residents of American Samoa. Tax software 2012   If you are a bona fide resident of American Samoa for the entire year, you can exclude from gross income all income from sources in American Samoa (other than amounts for services performed as an employee of the U. Tax software 2012 S. Tax software 2012 government or any of its agencies). Tax software 2012 An employee of the American Samoan government is not considered an employee of the U. Tax software 2012 S. Tax software 2012 government or any of its agencies for purposes of the exclusion. Tax software 2012 For more information about this exclusion, get Form 4563 and Publication 570, Tax Guide for Individuals With Income From U. Tax software 2012 S. Tax software 2012 Possessions. Tax software 2012 Prev  Up  Next   Home   More Online Publications
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Understanding Your CP563 Notice

We reviewed your Form W-7A, Application for Taxpayer Identification Number for Pending U.S. Adoptions, and we need additional information in order to process it.


What you need to do

  • Complete the CP563 response card and provide the requested information as described in your notice.

You may want to

  • Call the IRS at 1-512-460-7898 or 1-267-941-1000 (for international calls), if you have additional questions.

 

Page Last Reviewed or Updated: 27-Jan-2014

Printable samples of this notice (PDF)

 

 

How to get help

  • Call the 1-800 number listed on the top right corner of your notice.
  • Authorize someone (e.g., accountant) to contact the IRS on your behalf using Form 2848.
  • See if you qualify for help from a Low Income Taxpayer Clinic.
     

The Tax Software 2012

Tax software 2012 Publication 51 - Main Content Table of Contents 1. Tax software 2012 Taxpayer Identification NumbersWhen you receive your EIN. Tax software 2012 Registering for SSNVS. Tax software 2012 2. Tax software 2012 Who Are Employees?Crew Leaders Business Owned and Operated by Spouses 3. Tax software 2012 Wages and Other Compensation 4. Tax software 2012 Social Security and Medicare TaxesThe $150 Test or the $2,500 Test Social Security and Medicare Tax Withholding 5. Tax software 2012 Federal Income Tax WithholdingImplementation of lock-in letter. Tax software 2012 Seasonal employees and employees not currently performing services. Tax software 2012 Termination and re-hire of employees. Tax software 2012 How To Figure Federal Income Tax Withholding 6. Tax software 2012 Required Notice to Employees About Earned Income Credit (EIC) 7. Tax software 2012 Depositing TaxesWhen To Deposit How To Deposit Deposit Penalties Employers of Both Farm and Nonfarm Workers 8. Tax software 2012 Form 943 9. Tax software 2012 Reporting Adjustments on Form 943Current Year Adjustments Prior Year Adjustments 10. Tax software 2012 Federal Unemployment (FUTA) Tax 11. Tax software 2012 Reconciling Wage Reporting Forms 13. Tax software 2012 Federal Income Tax Withholding MethodsWage Bracket Method Percentage Method Alternative Methods of Federal Income Tax Withholding How To Get Tax Help 1. Tax software 2012 Taxpayer Identification Numbers If you are required to withhold any federal income, social security, or Medicare taxes, you will need an employer identification number (EIN) for yourself. Tax software 2012 Also, you will need the SSN of each employee and the name of each employee as shown on the employee's social security card. Tax software 2012 Employer identification number (EIN). Tax software 2012   An employer identification number (EIN) is a nine-digit number that the IRS issues. Tax software 2012 The digits are arranged as follows: 00-0000000. Tax software 2012 It is used to identify the tax accounts of employers and certain others who have no employees. Tax software 2012 Use your EIN on all of the items that you send to the IRS and SSA. Tax software 2012   If you do not have an EIN, you may apply for one online. Tax software 2012 Visit IRS. Tax software 2012 gov and click on the Apply for an EIN Online link under Tools. Tax software 2012 You may also apply for an EIN by calling 1-800-829-4933, or you can fax or mail Form SS-4, Application for Employer Identification Number, to the IRS. Tax software 2012 Do not use a SSN in place of an EIN. Tax software 2012   If you do not have an EIN by the time a return is due, write “Applied For” and the date you applied for it in the space shown for the number. Tax software 2012 If you took over another employer's business, do not use that employer's EIN. Tax software 2012   You should have only one EIN. Tax software 2012 If you have more than one, and are not sure which one to use, call the toll-free Business and Specialty Tax Line at 1-800-829-4933 or 1-800-829-4059 (TDD/TTY for persons who are deaf, hard of hearing, or have a speech disability). Tax software 2012 Provide the EINs that you have, the name and address to which each number was assigned, and the address of your principal place of business. Tax software 2012 The IRS will tell you which EIN to use. Tax software 2012   For more information, see Publication 1635 or Publication 583. Tax software 2012 When you receive your EIN. Tax software 2012   If you are a new employer that indicated a federal tax obligation when requesting an EIN, you will be pre-enrolled in the Electronic Federal Tax Payment System (EFTPS). Tax software 2012 You will receive information in your Employer Identification Number (EIN) Package about Express Enrollment and an additional mailing containing your EFTPS personal identification number (PIN) and instructions for activating your PIN. Tax software 2012 Call the toll-free number located in your “How to Activate Your Enrollment” brochure to activate your enrollment and begin making your employment tax deposits. Tax software 2012 If you outsource any of your payroll and related tax duties to a third party payer, such as a payroll service provider or reporting agent, be sure to tell them about your EFTPS enrollment. Tax software 2012 Social security number (SSN). Tax software 2012   An employee's social security number (SSN) consists of nine digits arranged as follows: 000-00-0000. Tax software 2012 You must obtain each employee's name and SSN as shown on the employee's social security card because you must enter them on Form W-2. Tax software 2012 Do not accept a social security card that says “Not valid for employment. Tax software 2012 ” A social security number issued with this legend does not permit employment. Tax software 2012 You may, but are not required to, photocopy the social security card if the employee provides it. Tax software 2012 If you do not show the employee's correct name and SSN on Form W-2, you may owe a penalty unless you have reasonable cause. Tax software 2012 See Publication 1586, Reasonable Cause Regulations & Requirements for Missing and Incorrect Name/TINs. Tax software 2012 Applying for a social security card. Tax software 2012   Any employee who is legally eligible to work in the United States and does not have a social security card can get one by completing Form SS-5, Application for a Social Security Card, and submitting the necessary documentation to SSA. Tax software 2012 You can get Form SS-5 at SSA offices, by calling 1-800-772-1213 or 1-800-325-0778 (TTY), or from the SSA website at www. Tax software 2012 socialsecurity. Tax software 2012 gov/online/ss-5. Tax software 2012 html. Tax software 2012 The employee must complete and sign Form SS-5; it cannot be filed by the employer. Tax software 2012 You may be asked to supply a letter to accompany Form SS-5 if the employee has exceeded his or her yearly or lifetime limit for the number of replacement cards allowed. Tax software 2012 Applying for a social security number. Tax software 2012   If you file Form W-2 on paper and your employee has applied for an SSN but does not have one when you must file Form W-2, enter “Applied For” on the form. Tax software 2012 If you are filing electronically, enter all zeros (000-00-0000) in the social security number field. Tax software 2012 When the employee receives the SSN, file Copy A of Form W-2c, Corrected Wage and Tax Statement, with the SSA to show the employee's SSN. Tax software 2012 Furnish Copies B, C, and 2 of Form W-2c to the employee. Tax software 2012 Up to 25 Forms W-2c per Form W-3c, Transmittal of Corrected Wage and Tax Statements, may be filed per session over the Internet, with no limit on the number of sessions. Tax software 2012 For more information, visit SSA's Employer W-2 Filing Instructions & Information webpage at www. Tax software 2012 socialsecurity. Tax software 2012 gov/employer. Tax software 2012 Advise your employee to correct the SSN on his or her original Form W-2. Tax software 2012 Correctly record the employee's name and SSN. Tax software 2012   Record the name and number of each employee as they are shown on the employee's social security card. Tax software 2012 If the employee's name is not correct as shown on the card (for example, because of marriage or divorce), the employee should request a corrected card from the SSA. Tax software 2012 Continue to report the employee's wages under the old name until the employee shows you an updated social security card with the new name. Tax software 2012   If the SSA issues the employee a replacement card after a name change, or a new card with a different social security number after a change in alien work status, file a Form W-2c to correct the name/SSN reported on the most recently filed Form W-2. Tax software 2012 It is not necessary to correct other years if the previous name and SSN were used for years before the most recent Form W-2. Tax software 2012 IRS individual taxpayer identification numbers (ITINs) for aliens. Tax software 2012   Do not accept an ITIN in place of an SSN for employee identification or for work. Tax software 2012 An ITIN is issued for use by resident and nonresident aliens who need identification for tax purposes, but who are not eligible for U. Tax software 2012 S. Tax software 2012 employment. Tax software 2012 The ITIN is a nine-digit number formatted like an SSN (for example, NNN-NN-NNNN). Tax software 2012 However, it begins with the number “9” and has either a “7” or “8” as the fourth digit (for example, 9NN-7N-NNNN or 9NN-8N-NNNN). Tax software 2012    An individual with an ITIN who later becomes eligible to work in the United States must obtain an SSN. Tax software 2012 If the individual is currently eligible to work in the United States, instruct the individual to apply for an SSN and follow the instructions under Applying for a social security number, earlier in this section. Tax software 2012 Do not use an ITIN in place of an SSN on Form W-2. Tax software 2012 Verification of social security numbers. Tax software 2012   Employers and authorized reporting agents can use the Social Security Number Verification Service (SSNVS) to instantly verify up to 10 employee names and SSNs (per screen) at a time, or submit an electronic file of up to 250,000 names and SSNs and usually receive results the next business day. Tax software 2012 Visit www. Tax software 2012 socialsecurity. Tax software 2012 gov/employer/ssnv. Tax software 2012 htm for more information. Tax software 2012 Registering for SSNVS. Tax software 2012   You must register online and receive authorization from your employer to use SSNVS. Tax software 2012 To register, visit SSA's website at www. Tax software 2012 socialsecurity. Tax software 2012 gov/employer and click on the Business Services Online link. Tax software 2012 Follow the registration instructions to obtain a user identification (ID) and password. Tax software 2012 You will need to provide the following information about yourself and your company. Tax software 2012 Name. Tax software 2012 SSN. Tax software 2012 Date of birth. Tax software 2012 Type of employer. Tax software 2012 EIN. Tax software 2012 Company name, address, and telephone number. Tax software 2012 Email address. Tax software 2012 When you have completed the online registration process, SSA will mail a one-time activation code to your employer. Tax software 2012 You must enter the activation code online to use SSNVS. Tax software 2012 2. Tax software 2012 Who Are Employees? Generally, employees are defined either under common law or under statutes for certain situations. Tax software 2012 See Publication 15-A for details on statutory employees and nonemployees. Tax software 2012 Employee status under common law. Tax software 2012   Generally, a worker who performs services for you is your employee if you have the right to control what will be done and how it will be done. Tax software 2012 This is so even when you give the employee freedom of action. Tax software 2012 What matters is that you have the right to control the details of how the services are performed. Tax software 2012 See Publication 15-A for more information on how to determine whether an individual providing services is an independent contractor or an employee. Tax software 2012 If an employer-employee relationship exists, it does not matter what it is called. Tax software 2012 The employee may be called an agent or independent contractor. Tax software 2012 It also does not matter how payments are measured or paid, what they are called, or if the employee works full or part time. Tax software 2012 You are responsible for withholding and paying employment taxes for your employees. Tax software 2012 You are also required to file employment tax returns. Tax software 2012 These requirements do not apply to amounts that you pay to independent contractors. Tax software 2012 The rules discussed in this publication apply only to workers who are your employees. Tax software 2012 In general, you are an employer of farmworkers if your employees: Raise or harvest agricultural or horticultural products on your farm (including the raising and feeding of livestock); Work in connection with the operation, management, conservation, improvement, or maintenance of your farm and its tools and equipment; Provide services relating to salvaging timber, or clearing land of brush and other debris, left by a hurricane (also known as hurricane labor); Handle, process, or package any agricultural or horticultural commodity if you produced over half of the commodity (for a group of up to 20 unincorporated operators, all of the commodity); or Do work for you related to cotton ginning, turpentine, gum resin products, or the operation and maintenance of irrigation facilities. Tax software 2012 For this purpose, the term “farm” includes stock, dairy, poultry, fruit, fur-bearing animal, and truck farms, as well as plantations, ranches, nurseries, ranges, greenhouses or other similar structures used primarily for the raising of agricultural or horticultural commodities, and orchards. Tax software 2012 Farmwork does not include reselling activities that do not involve any substantial activity of raising agricultural or horticultural commodities, such as a retail store or a greenhouse used primarily for display or storage. Tax software 2012 The table in section 12, How Do Employment Taxes Apply to Farmwork , distinguishes between farm and nonfarm activities, and also addresses rules that apply in special situations. Tax software 2012 Crew Leaders If you are a crew leader, you are an employer of farmworkers. Tax software 2012 A crew leader is a person who furnishes and pays (either on his or her own behalf or on behalf of the farm operator) workers to do farmwork for the farm operator. Tax software 2012 If there is no written agreement between you and the farm operator stating that you are his or her employee and if you pay the workers (either for yourself or for the farm operator), then you are a crew leader. Tax software 2012 For FUTA tax rules, see section 10. Tax software 2012 Business Owned and Operated by Spouses If you and your spouse jointly own and operate a farm or nonfarm business and share in the profits and losses, you are partners in a partnership, whether or not you have a formal partnership agreement. Tax software 2012 See Publication 541, Partnerships, for more details. Tax software 2012 The partnership is considered the employer of any employees, and is liable for any employment taxes due on wages paid to its employees. Tax software 2012 Exception—Qualified joint venture. Tax software 2012   For tax years beginning after December 31, 2006, the Small Business and Work Opportunity Tax Act of 2007 (Public Law 110-28) provides that a “qualified joint venture,” whose only members are spouses filing a joint income tax return, can elect not to be treated as a partnership for federal tax purposes. Tax software 2012 A qualified joint venture conducts a trade or business where: The only members of the joint venture are spouses who file a joint income tax return, Both spouses materially participate (see Material participation in the Instructions for Schedule C (Form 1040), line G) in the trade or business (mere joint ownership of property is not enough), Both spouses elect to not be treated as a partnership, and The business is co-owned by both spouses and is not held in the name of a state law entity such as a partnership or limited liability company (LLC). Tax software 2012   To make the election, all items of income, gain, loss, deduction, and credit must be divided between the spouses, in accordance with each spouse's interest in the venture, and reported on separate Schedules C or F as sole proprietors. Tax software 2012 Each spouse must also file a separate Schedule SE to pay self-employment taxes, as applicable. Tax software 2012   Spouses using the qualified joint venture rules are treated as sole proprietors for federal tax purposes and generally do not need an EIN. Tax software 2012 If employment taxes are owed by the qualified joint venture, either spouse may report and pay the employment taxes due on the wages paid to the employees using the EIN of that spouse's sole proprietorship. Tax software 2012 Generally, filing as a qualified joint venture will not increase the spouses' total tax owed on the joint income tax return. Tax software 2012 However, it gives each spouse credit for social security earnings on which retirement benefits are based and for Medicare coverage without filing a partnership return. Tax software 2012    Note. Tax software 2012 If your spouse is your employee, not your partner, you must pay social security and Medicare taxes for him or her. Tax software 2012   For more information on qualified joint ventures, visit IRS. Tax software 2012 gov and enter “qualified joint venture” in the search box. Tax software 2012 Exception—Community income. Tax software 2012   If you and your spouse wholly own an unincorporated business as community property under the community property laws of a state, foreign country, or U. Tax software 2012 S. Tax software 2012 possession, you can treat the business either as a sole proprietorship (of the spouse who carried on the business) or a partnership. Tax software 2012 You may still make an election to be taxed as a qualified joint venture instead of a partnership. Tax software 2012 See Exception—Qualified joint venture , earlier in this section. Tax software 2012 3. Tax software 2012 Wages and Other Compensation Cash wages that you pay to employees for farmwork are generally subject to social security tax and Medicare tax. Tax software 2012 You may also be required to withhold, deposit, and report Additional Medicare Tax. Tax software 2012 See section 4 for more information. Tax software 2012 If the wages are subject to social security and Medicare taxes, they are also subject to federal income tax withholding. Tax software 2012 You may also be liable for FUTA tax, which is not withheld by you or paid by the employee. Tax software 2012 FUTA tax is discussed in section 10. Tax software 2012 Cash wages include checks, money orders, etc. Tax software 2012 Do not count as cash wages the value of food, lodging, and other noncash items. Tax software 2012 For more information on what payments are considered taxable wages, see Publication 15 (Circular E). Tax software 2012 Commodity wages. Tax software 2012   Commodity wages are not cash and are not subject to social security and Medicare taxes or federal income tax withholding. Tax software 2012 However, noncash payments, including commodity wages, are treated as cash wages (see above) if the substance of the transaction is a cash payment. Tax software 2012 These noncash payments are subject to social security and Medicare taxes and federal income tax withholding. Tax software 2012 Other compensation. Tax software 2012   Publications 15-A and 15-B discuss other forms of compensation that may be taxable. Tax software 2012 Family members. Tax software 2012   Generally, the wages that you pay to family members who are your employees are subject to social security and Medicare taxes, federal income tax withholding, and FUTA tax. Tax software 2012 However, certain exemptions may apply for your child, spouse, or parent. Tax software 2012 See the table, How Do Employment Taxes Apply to Farmwork , in section 12. Tax software 2012 Household employees. Tax software 2012   The wages of an employee who performs household services, such as a maid, babysitter, gardener, or cook, in your home are not subject to social security and Medicare taxes if you pay that employee cash wages of less than $1,900 in 2014. Tax software 2012   Social security and Medicare taxes do not apply to cash wages for housework in your private home if it was done by your spouse or your child under age 21. Tax software 2012 Nor do the taxes apply to housework done by your parent unless: You have a child living in your home who is under age 18 or has a physical or mental condition that requires care by an adult for at least 4 continuous weeks in a calendar quarter, and You are a widow or widower, or divorced and not remarried, or have a spouse in the home who, because of a physical or mental condition, cannot care for your child for at least 4 continuous weeks in the quarter. Tax software 2012   For more information, see Publication 926, Household Employer's Tax Guide. Tax software 2012    Wages for household work may not be a deductible farm expense. Tax software 2012 See Publication 225, Farmer's Tax Guide. Tax software 2012 Share farmers. Tax software 2012   You do not have to withhold or pay social security and Medicare taxes on amounts paid to share farmers under share-farming arrangements. Tax software 2012 Compensation paid to H-2A visa holders. Tax software 2012   Report compensation of $600 or more paid to foreign agricultural workers who entered the country on H-2A visas in box 1 of Form W-2 but do not report it as social security wages (box 3) or Medicare wages (box 5) on Form W-2 because compensation paid to H-2A workers for agricultural labor performed in connection with this visa is not subject to social security and Medicare taxes. Tax software 2012 On Form W-2, do not check box 13 (Statutory employee), as H-2A workers are not statutory employees. Tax software 2012   An employer is not required to withhold federal income tax from compensation it pays an H-2A worker for agricultural labor performed in connection with this visa unless the worker asks for withholding and the employer agrees. Tax software 2012 In that case, the worker must give the employer a completed Form W-4. Tax software 2012 Federal income tax withheld should be reported in box 2 of Form W-2. Tax software 2012 These reporting rules apply when the H-2A worker provides his or her taxpayer identification number (TIN) to the employer. Tax software 2012 For rules relating to backup withholding and reporting when the H-2A worker does not provide a TIN, see the Instructions for Form 1099-MISC and the Instructions for Form 945. Tax software 2012 4. Tax software 2012 Social Security and Medicare Taxes Generally, you must withhold social security and Medicare taxes on all cash wage payments that you make to your employees. Tax software 2012 You may also be required to withhold Additional Medicare Tax. Tax software 2012 For more information, see Additional Medicare Tax withholding , later. Tax software 2012 The $150 Test or the $2,500 Test All cash wages that you pay to an employee during the year for farmwork are subject to social security and Medicare taxes and federal income tax withholding if either of the two tests below is met. Tax software 2012 You pay cash wages to an employee of $150 or more in a year for farmwork (count all cash wages paid on a time, piecework, or other basis). Tax software 2012 The $150 test applies separately to each farmworker that you employ. Tax software 2012 If you employ a family of workers, each member is treated separately. Tax software 2012 Do not count wages paid by other employers. Tax software 2012 The total that you pay for farmwork (cash and noncash) to all your employees is $2,500 or more during the year. Tax software 2012 Exceptions. Tax software 2012   The $150 and $2,500 tests do not apply to wages that you pay to a farmworker who receives less than $150 in annual cash wages and the wages are not subject to social security and Medicare taxes, or federal income tax withholding, even if you pay $2,500 or more in that year to all of your farmworkers if the farmworker: Is employed in agriculture as a hand-harvest laborer, Is paid piece rates in an operation that is usually paid on a piece-rate basis in the region of employment, Commutes daily from his or her permanent home to the farm, and Had been employed in agriculture less than 13 weeks in the preceding calendar year. Tax software 2012   Amounts that you pay to these seasonal farmworkers, however, count toward the $2,500-or-more test to determine whether wages that you pay to other farmworkers are subject to social security and Medicare taxes. Tax software 2012 Social Security and Medicare Tax Withholding The social security tax rate is 6. Tax software 2012 2%, for both the employee and employer, on the first $117,000 paid to each employee. Tax software 2012 You must withhold at this rate from each employee and pay a matching amount. Tax software 2012 The Medicare tax rate is 1. Tax software 2012 45% each for the employee and employer on all wages. Tax software 2012 You must withhold at this rate from each employee and pay a matching amount. Tax software 2012 There is no wage base limit for Medicare tax; all covered wages are subject to Medicare tax. Tax software 2012 Social security and Medicare taxes apply to most payments of sick pay, including payments made by third parties such as insurance companies. Tax software 2012 For details, see Publication 15-A. Tax software 2012 Additional Medicare Tax withholding. Tax software 2012   In addition to withholding Medicare tax at 1. Tax software 2012 45%, you must withhold a 0. Tax software 2012 9% Additional Medicare Tax from wages you pay to an employee in excess of $200,000 in a calendar year. Tax software 2012 You are required to begin withholding Additional Medicare Tax in the pay period in which you pay wages in excess of $200,000 to an employee and continue to withhold it each pay period until the end of the calendar year. Tax software 2012 Additional Medicare Tax is only imposed on the employee. Tax software 2012 There is no employer share of Additional Medicare Tax. Tax software 2012 All wages that are subject to Medicare tax are subject to Additional Medicare Tax withholding if paid in excess of the $200,000 withholding threshold. Tax software 2012   For more information on what wages are subject to Medicare tax, see the chart, Special Rules for Various Types of Services and Payments, in section 15 of Publication 15 (Circular E). Tax software 2012 For more information on Additional Medicare Tax, visit IRS. Tax software 2012 gov and enter “Additional Medicare Tax” in the search box. Tax software 2012 Employee share paid by employer. Tax software 2012   If you would rather pay a household or agricultural employee's share of the social security and Medicare taxes without withholding them from his or her wages, you may do so. Tax software 2012 If you do not withhold the taxes, however, you must still pay them. Tax software 2012 Any employee social security and Medicare taxes that you pay is additional income to the employee. Tax software 2012 Include it in box 1 of the employee's Form W-2, but do not count it as social security and Medicare wages and do not include it in boxes 3 and 5. Tax software 2012 Also, do not count the additional income as wages for FUTA tax purposes. Tax software 2012 Different rules apply to employer payments of social security and Medicare taxes for non-household and non-agricultural employees. Tax software 2012 See section 7 of Publication 15-A. Tax software 2012 Withholding social security and Medicare taxes on nonresident alien employees. Tax software 2012   In general, if you pay wages to nonresident alien employees, you must withhold social security and Medicare taxes as you would for a U. Tax software 2012 S. Tax software 2012 citizen or resident alien. Tax software 2012 However, see Publication 515, Withholding of Tax on Nonresident Aliens and Foreign Entities, for exceptions to this general rule. Tax software 2012 Also see Compensation paid to H-2A visa holders in section 3. Tax software 2012 Religious exemption. Tax software 2012    An exemption from social security and Medicare taxes is available to members of a recognized religious sect opposed to public insurance. Tax software 2012 This exemption is available only if both the employee and the employer are members of the sect. Tax software 2012   For more information, see Publication 517, Social Security and Other Information for Members of the Clergy and Religious Workers. Tax software 2012 5. Tax software 2012 Federal Income Tax Withholding Farmers and crew leaders must withhold federal income tax from the wages of farmworkers if the wages are subject to social security and Medicare taxes. Tax software 2012 The amount to withhold is figured on gross wages before taking out social security and Medicare taxes, union dues, insurance, etc. Tax software 2012 You may use one of several methods to determine the amount of federal income tax withholding. Tax software 2012 They are discussed in section 13. Tax software 2012 Form W-4. Tax software 2012   To know how much federal income tax to withhold from employees' wages, you should have a Form W-4 on file for each employee. Tax software 2012 Encourage your employees to file an updated Form W-4 for 2014, especially if they owed taxes or received a large refund when filing their 2013 tax return. Tax software 2012 Advise your employees to use the IRS Withholding Calculator on the IRS website at www. Tax software 2012 irs. Tax software 2012 gov/individuals for help in determining how many withholding allowances to claim on their Form W-4. Tax software 2012   Ask each new employee to give you a signed Form W-4 when starting work. Tax software 2012 Make the form effective with the first wage payment. Tax software 2012 If a new employee does not give you a completed Form W-4, withhold tax as if he or she is single, with no withholding allowances. Tax software 2012 Forms in Spanish. Tax software 2012   You can provide Formulario W-4(SP) in place of Form W-4 to your Spanish-speaking employees. Tax software 2012 For more information, see Publicación 17(SP). Tax software 2012 Effective date of Form W-4. Tax software 2012   A Form W-4 remains in effect until the employee gives you a new one. Tax software 2012 When you receive a new Form W-4, do not adjust withholding for pay periods before the effective date of the new form. Tax software 2012 Do not adjust withholding retroactively. Tax software 2012 If an employee gives you a replacement Form W-4, begin withholding no later than the start of the first payroll period ending on or after the 30th day from the date when you received the replacement Form W-4. Tax software 2012 For exceptions, see Exemption from federal income tax withholding , IRS review of requested Forms W-4 , and Invalid Forms W-4 , later in this section. Tax software 2012 A Form W-4 that makes a change for the next calendar year will not take effect in the current calendar year. Tax software 2012 Completing Form W-4. Tax software 2012   The amount of federal income tax withholding is based on marital status and withholding allowances. Tax software 2012 Your employees may not base their withholding amounts on a fixed dollar amount or percentage. Tax software 2012 However, the employee may specify a dollar amount to be withheld in addition to the amount of withholding based on filing status and withholding allowances claimed on Form W-4. Tax software 2012   Employees may claim fewer withholding allowances than they are entitled to claim. Tax software 2012 They may do this to ensure that they have enough withholding or to offset other sources of taxable income that are not subject to withholding. Tax software 2012   See Publication 505, Tax Withholding and Estimated Tax, for more information about completing Form W-4. Tax software 2012 Along with Form W-4, you may wish to order Publication 505 for use by your employees. Tax software 2012    Do not accept any withholding or estimated tax payments from your employees in addition to withholding based on their Form W-4. Tax software 2012 If an employee wants additional withholding, he or she should submit a new Form W-4 and, if necessary, pay estimated tax by filing Form 1040-ES, Estimated Tax for Individuals, or by using the Electronic Federal Tax Payment System (EFTPS) to make estimated tax payments. Tax software 2012 Exemption from federal income tax withholding. Tax software 2012   Generally, an employee may claim exemption from federal income tax withholding because he or she had no federal income tax liability last year and expects none this year. Tax software 2012 See the Form W-4 instructions for more information. Tax software 2012 However, the wages are still subject to social security and Medicare taxes. Tax software 2012   A Form W-4 claiming exemption from withholding is effective when it is filed with the employer and only for that calendar year. Tax software 2012 To continue to be exempt from withholding in the next calendar year, an employee must give you a new Form W-4 by February 15. Tax software 2012 If the employee does not give you a new Form W-4 by February 15, withhold tax based on the last valid Form W-4 you have for the employee that did not claim an exemption from withholding or, if one does not exist, withhold as if he or she is single with zero withholding allowances. Tax software 2012 If the employee provides a new Form W-4 claiming an exemption from withholding on February 16 or later, you may apply the exemption to future wages, but do not refund taxes withheld while the exempt status was not in place. Tax software 2012 Withholding income taxes on the wages of nonresident alien employees. Tax software 2012   In general, you must withhold federal income taxes on the wages of nonresident alien employees. Tax software 2012 However, see Publication 515 for exceptions to this general rule. Tax software 2012 Also see Compensation paid to H-2A visa workers in section 3. Tax software 2012 Withholding adjustment for nonresident alien employees. Tax software 2012   A special procedure applies for figuring the amount of income tax to withhold from wages of nonresident alien employees performing services within the United States for wages paid in 2014. Tax software 2012 This procedure requires a special chart to be used with the withholding tables to determine the amount to withhold from the wages of the nonresident alien employee. Tax software 2012 See Withholding adjustment for nonresident alien employees in section 9 of Publication 15 (Circular E). Tax software 2012 Nonresident alien employee's Form W-4. Tax software 2012   When completing Forms W-4, nonresident aliens are required to: Not claim exemption from income tax withholding; Request withholding as if they are single, regardless of their actual marital status; Claim only one allowance (if the nonresident alien is a resident of Canada, Mexico, or Korea, he or she may claim more than one allowance); and Write “Nonresident Alien” or “NRA” above the dotted line on line 6 of Form W-4. Tax software 2012   If you maintain an electronic Form W-4 system, you should provide a field for nonresident alien employees to enter nonresident alien status in lieu of writing “Nonresident Alien” or “NRA” above the dotted line on line 6. Tax software 2012    A nonresident alien employee may request additional withholding at his or her option for other purposes, although such additions should not be necessary for withholding to cover federal income tax liability related to employment. Tax software 2012 Form 8233. Tax software 2012   If a nonresident alien employee claims a tax treaty exemption from withholding, the employee must submit Form 8233, Exemption from Withholding on Compensation for Independent (and Certain Dependent) Personal Services of a Nonresident Alien Individual, with respect to the income exempt under the treaty, instead of Form W-4. Tax software 2012 See Publication 515 for details. Tax software 2012 IRS review of requested Forms W-4. Tax software 2012   When requested by the IRS, you must make original Forms W-4 available for inspection by an IRS employee. Tax software 2012 You may also be directed to send certain Forms W-4 to the IRS. Tax software 2012 You may receive a notice from the IRS requiring you to submit a copy of Form W-4 for one or more of your named employees. Tax software 2012 Send the requested copy or copies of Form W-4 to the IRS at the address provided and in the manner directed by the notice. Tax software 2012 The IRS may also require you to submit copies of Form W-4 to the IRS as directed by a revenue procedure or notice published in the Internal Revenue Bulletin. Tax software 2012 When we refer to Form W-4, the same rules apply to Formulario W-4(SP), its Spanish translation. Tax software 2012   After submitting a copy of the requested Form W-4 to the IRS, continue to withhold federal income tax based on that Form W-4 if it is valid (see Invalid Forms W-4 , later in this section). Tax software 2012 However, if the IRS later notifies you in writing that the employee is not entitled to claim a complete exemption from withholding or more than the maximum number of withholding allowances specified by the IRS in the written notice, withhold federal income tax based on the effective date, marital status, and maximum number of withholding allowances specified in the notice (commonly referred to as a “lock-in letter”). Tax software 2012 Initial lock-in letter. Tax software 2012   The IRS uses information reported on Form W-2 to identify employees with withholding compliance problems. Tax software 2012 In some cases, where a serious under-withholding problem is found to exist for a particular employee, the IRS may issue a lock-in letter to the employer specifying the maximum number of withholding allowances and marital status permitted for a specific employee. Tax software 2012 You will also receive a copy for the employee that identifies the maximum number of withholding allowances permitted and the process by which the employee can provide additional information to the IRS for purposes of determining the appropriate number of withholding allowances. Tax software 2012 If the employee is employed by you as of the date of the notice, you must furnish the employee copy to the employee within 10 business days of receipt. Tax software 2012 You may follow any reasonable business practice to furnish the employee copy to the employee. Tax software 2012 Implementation of lock-in letter. Tax software 2012   When you receive the notice specifying the maximum number of withholding allowances and marital status permitted, you may not withhold immediately on the basis of the notice. Tax software 2012 You must begin withholding tax on the basis of the notice for any wages paid after the date specified in the notice. Tax software 2012 The delay between your receipt of the notice and the date to begin the withholding on the basis of the notice permits the employee to contact the IRS. Tax software 2012 Seasonal employees and employees not currently performing services. Tax software 2012   If you receive a notice for an employee who is not currently performing services for you, you are still required to furnish the employee copy to the employee and withhold based on the notice if any of the following apply. Tax software 2012 You are paying wages for the employee's prior services and the wages are subject to income tax withholding on or after the date specified in the notice. Tax software 2012 You reasonably expect the employee to resume services within 12 months of the date of the notice. Tax software 2012 The employee is on a bona fide leave of absence that does not exceed 12 months or the employee has a right to reemployment after the leave of absence. Tax software 2012 Termination and re-hire of employees. Tax software 2012   If you are required to furnish and withhold based on the notice and the employment relationship is terminated after the date of the notice, you must continue to withhold based on the notice if you continue to pay any wages subject to income tax withholding. Tax software 2012 You must also withhold based on the notice or modification notice (explained next) if the employee resumes the employment relationship with you within 12 months after the termination of the employment relationship. Tax software 2012 Modification notice. Tax software 2012   After issuing the notice specifying the maximum number of withholding allowances and marital status permitted, the IRS may issue a subsequent notice (modification notice) that modifies the original notice. Tax software 2012 The modification notice may change the marital status and/or the number of withholding allowances permitted. Tax software 2012 You must withhold federal income tax based on the effective date specified in the modification notice. Tax software 2012 New Form W-4 after IRS notice. Tax software 2012   After the IRS issues a notice or modification notice, if the employee provides you with a new Form W-4 claiming complete exemption from withholding or claims a marital status, a number of withholding allowances, and any additional withholding that results in less withholding than would result under the IRS notice or modification notice, you must disregard the new Form W-4. Tax software 2012 You are required to withhold on the basis of the notice or modification notice unless the IRS subsequently notifies you to withhold based on the new Form W-4. Tax software 2012 If the employee wants to put a new Form W-4 into effect that results in less withholding than required, the employee must contact the IRS. Tax software 2012   If, after you receive an IRS notice or modification notice, your employee provides you with a new Form W-4 that does not claim exemption from federal income tax withholding and claims a marital status, a number of withholding allowances, and any additional withholding that results in more withholding than would result under the notice or modification notice, you must withhold tax on the basis of that new Form W-4. Tax software 2012 Otherwise, disregard any subsequent Forms W-4 provided by the employee and withhold based on the IRS notice or modification notice. Tax software 2012 Substitute Forms W-4. Tax software 2012   You are encouraged to have your employees use the official version of Form W-4 to claim withholding allowances or exemption from withholding. Tax software 2012 Call the IRS at 1-800-TAX-FORM (1-800-829-3676) or visit IRS. Tax software 2012 gov to obtain copies of Form W-4. Tax software 2012   You may use a substitute version of Form W-4 to meet your business needs. Tax software 2012 However, your substitute Form W-4 must contain language that is identical to the official Form W-4 and your form must meet all current IRS rules for substitute forms. Tax software 2012 At the time that you provide your substitute form to the employee, you must provide him or her with all tables, instructions, and worksheets from the current Form W-4. Tax software 2012   You cannot accept a substitute Form W-4 developed by an employee, and the employee submitting such form will be treated as failing to furnish a Form W-4. Tax software 2012 However, continue to use any valid Forms W-4 developed by your employees that you accepted before October 11, 2007. Tax software 2012 Invalid Forms W-4. Tax software 2012   Any unauthorized change or addition to Form W-4 makes it invalid. Tax software 2012 This includes taking out any language by which the employee certifies that the form is correct. Tax software 2012 A Form W-4 is also invalid if, by the date an employee gives it to you, he or she indicates in any way that it is false. Tax software 2012 An employee who submits a false Form W-4 may be subject to a $500 penalty. Tax software 2012 You may treat a Form W-4 as invalid if the employee wrote “exempt” on line 7 and also entered a number on line 5 or an amount on line 6. Tax software 2012   When you get an invalid Form W-4, do not use it to figure federal income tax withholding. Tax software 2012 Tell the employee that it is invalid and ask for another one. Tax software 2012 If the employee does not give you a valid one, withhold taxes as if the employee was single and claiming no withholding allowances. Tax software 2012 However, if you have an earlier Form W-4 for this worker that is valid, withhold as you did before. Tax software 2012   For additional information about these rules, see Treasury Decision 9337, 2007-35 I. Tax software 2012 R. Tax software 2012 B. Tax software 2012 455, available at www. Tax software 2012 irs. Tax software 2012 gov/irb/2007-35_IRB/ar10. Tax software 2012 html. Tax software 2012 Amounts exempt from levy on wages, salary, and other income. Tax software 2012   If you receive a Notice of Levy on Wages, Salary, and Other Income—Forms 668-W(ACS), 668-W(c)(DO), or 668-W(ICS), you must withhold amounts as described in the instructions for these forms. Tax software 2012 Publication 1494, Tables for Figuring Amount Exempt From Levy on Wages, Salary, and Other Income—Forms 668-W(ACS), 668-W(c)(DO), and 668-W(ICS), shows the exempt amount. Tax software 2012 If a levy issued in a prior year is still in effect and the taxpayer submits a new Statement of Exemptions and Filing Status, use the current year Publication 1494 to compute the exempt amount. Tax software 2012 How To Figure Federal Income Tax Withholding There are several ways to figure federal income tax withholding. Tax software 2012 Wage bracket tables. Tax software 2012 See section 13 for directions on how to use the tables. Tax software 2012 Percentage method. Tax software 2012 See section 13 for directions on how to use the percentage method. Tax software 2012 Alternative formula tables for percentage method withholding. Tax software 2012 See Publication 15-A. Tax software 2012 Wage bracket percentage method withholding tables. Tax software 2012 See Publication 15-A. Tax software 2012 Other alternative methods. Tax software 2012 See Publication 15-A. Tax software 2012 Employers with automated payroll systems will find the two alternative formula tables and the two alternative wage bracket percentage method tables in Publication 15-A useful. Tax software 2012 If an employee wants additional federal tax withheld, have the employee show the extra amount on Form W-4. Tax software 2012 Supplemental wages. Tax software 2012   Supplemental wages are wage payments to an employee that are not regular wages. Tax software 2012 They include, but are not limited to, bonuses, commissions, overtime pay, accumulated sick leave, severance pay, awards, prizes, back pay and retroactive pay increases for current employees, and payments for nondeductible moving expenses. Tax software 2012 Other payments subject to the supplemental wage rules include taxable fringe benefits and expense allowances paid under a nonaccountable plan. Tax software 2012   If you pay supplemental wages with regular wages but do not specify the amount of each, withhold federal income tax as if the total was a single payment for a regular payroll period. Tax software 2012   If you pay supplemental wages separately (or combine them in a single payment and specify the amount of each), the federal income tax withholding method depends partly on whether you withhold federal income tax from your employee's regular wages. Tax software 2012 If you withheld federal income tax from an employee's regular wages in the current or immediately preceding calendar year, you can use one of the following methods for the supplemental wages. Tax software 2012 Withhold a flat 25% (no other percentage allowed). Tax software 2012 If the supplemental wages are paid concurrently with regular wages, add the supplemental wages to the concurrently paid regular wages. Tax software 2012 If there are no concurrently paid regular wages, add the supplemental wages to alternatively, either the regular wages paid or to be paid for the current payroll period or the regular wages paid for the preceding payroll period. Tax software 2012 Figure the income tax withholding as if the total of the regular wages and supplemental wages is a single payment. Tax software 2012 Subtract the tax withheld from the regular wages. Tax software 2012 Withhold the remaining tax from the supplemental wages. Tax software 2012 If there were other payments of supplemental wages paid during the payroll period made before the current payment of supplemental wages, aggregate all the payments of supplemental wages paid during the payroll period with the regular wages paid during the payroll period, calculate the tax on the total, subtract the tax already withheld from the regular wages and previous supplemental wage payments, and withhold the remaining tax from the current payment of supplemental wages. Tax software 2012 If you did not withhold federal income tax from the employee's regular wages in the current or immediately preceding calendar year, use method 1-b above. Tax software 2012 This would occur, for example, when the value of the employee's withholding allowances claimed on Form W-4 is more than the wages. Tax software 2012    Separate rules apply to any supplemental wages exceeding $1 million that you pay to an individual during the year. Tax software 2012 See section 7 in Publication 15 (Circular E) for details. Tax software 2012   Regardless of the method that you use to withhold federal income tax on supplemental wages, they are generally subject to social security, Medicare, and FUTA taxes. Tax software 2012 6. Tax software 2012 Required Notice to Employees About Earned Income Credit (EIC) You must notify employees who have no federal income tax withheld that they may be able to claim a tax refund because of the EIC. Tax software 2012 Although you do not have to notify employees who claim exemption from withholding on Form W-4 about the EIC, you are encouraged to notify any employees whose wages for 2013 were less than $46,227 ($51,567 if married filing jointly) that they may be eligible to claim the credit for 2013. Tax software 2012 This is because eligible employees may get a refund of the amount of EIC that is more than the tax that they owe. Tax software 2012 You will meet the notification requirement if you issue to the employee Form W-2 with the EIC notice on the back of Copy B, or a substitute Form W-2 with the same statement. Tax software 2012 You may also meet the requirement by providing Notice 797, Possible Federal Tax Refund Due to the Earned Income Credit (EIC), or your own statement that contains the same wording. Tax software 2012 If a substitute Form W-2 is given to the employee on time but does not have the required statement, you must notify the employee within 1 week of the date that the substitute Form W-2 is given. Tax software 2012 If Form W-2 is required but is not given on time, you must give the employee Notice 797 or your written statement by the date that Form W-2 is required to be given. Tax software 2012 If Form W-2 is not required, you must notify the employee by February 7, 2014. Tax software 2012 7. Tax software 2012 Depositing Taxes Generally, you must deposit both the employer and employee shares of social security and Medicare taxes and federal income tax withheld. Tax software 2012 You must use electronic funds transfer to make all federal tax deposits. Tax software 2012 See How To Deposit , later in this section. Tax software 2012 The credit against employment taxes for COBRA premium assistance payments is treated as a deposit of taxes on the first day of your return period. Tax software 2012 For more information, see COBRA premium assistance credit under Introduction. Tax software 2012 Payment with return. Tax software 2012   You may make payments with Forms 943 or 945 instead of depositing if one of the following applies. Tax software 2012 You report less than a $2,500 tax liability for the year (Form 943, line 11; Form 945, line 3) and you pay in full with a return that is filed on time. Tax software 2012 However, if you are unsure that you will report less than $2,500, deposit under the rules explained in this section so that you will not be subject to failure-to-deposit penalties. Tax software 2012 You are a monthly schedule depositor and make a payment in accordance with the Accuracy of Deposits Rule discussed later in this section. Tax software 2012 This payment may be $2,500 or more. Tax software 2012 Only monthly schedule depositors, defined later, are allowed to make an Accuracy of Deposits Rule payment with the return. Tax software 2012 Semiweekly schedule depositors must timely deposit the amount. Tax software 2012 See Accuracy of Deposits Rule and How To Deposit, later in this section. Tax software 2012 When To Deposit If you employ both farm and nonfarm workers, do not combine the taxes reportable on Forms 941 or 944 with Form 943 to decide whether to make a deposit. Tax software 2012 See Employers of Both Farm and Nonfarm Workers, later in this section. Tax software 2012 The rules for determining when to deposit Form 943 taxes are discussed below. Tax software 2012 See section 10 for the separate rules that apply to FUTA tax. Tax software 2012 Under these rules, you are classified as either a monthly schedule depositor or a semiweekly schedule depositor. Tax software 2012 The terms “monthly schedule depositor” and “semiweekly schedule depositor” do not refer to how often your business pays its employees or how often you are required to make deposits. Tax software 2012 The terms identify which set of rules you must follow when you incur a tax liability (for example, when you have a payday). Tax software 2012 The deposit schedule that you must use for a calendar year is determined from the tax liability reported on your Form 943, line 9, for the lookback period, discussed next. Tax software 2012 If you reported $50,000 or less of Form 943 taxes for the lookback period, you are a monthly schedule depositor. Tax software 2012 If you reported more than $50,000 of Form 943 taxes for the lookback period, you are a semiweekly schedule depositor. Tax software 2012 Lookback period. Tax software 2012   The lookback period is the second calendar year preceding the current calendar year. Tax software 2012 For example, the lookback period for 2014 is 2012. Tax software 2012 Example of deposit schedule based on lookback period. Tax software 2012 Rose Co. Tax software 2012 reported taxes on Form 943 as follows. Tax software 2012 2012 — $48,000 2013 — $60,000 Rose Co. Tax software 2012 is a monthly schedule depositor for 2014 because its taxes for the lookback period ($48,000 for calendar year 2012) were not more than $50,000. Tax software 2012 However, for 2015, Rose Co. Tax software 2012 is a semiweekly schedule depositor because the total taxes before adjustment for its lookback period ($60,000 for calendar year 2013) exceeded $50,000. Tax software 2012 Adjustments to lookback period taxes. Tax software 2012   To determine your taxes for the lookback period, use only the tax that you reported on the original return (Form 943, line 9). Tax software 2012 Do not include adjustments shown on Form 943-X, Adjusted Employer's Annual Federal Tax Return for Agricultural Employees or Claim for Refund. Tax software 2012 Example of adjustments. Tax software 2012 An employer originally reported total tax of $45,000 for the lookback period in 2012. Tax software 2012 The employer discovered during March 2014 that the tax reported for the lookback period was understated by $10,000 and corrected this error by filing Form 943-X. Tax software 2012 The total tax reported in the lookback period is still $45,000. Tax software 2012 The $10,000 adjustment is also not treated as part of the 2014 taxes. Tax software 2012 Deposit period. Tax software 2012   The term “deposit period” refers to the period during which tax liabilities are accumulated for each required deposit due date. Tax software 2012 For monthly schedule depositors, the deposit period is a calendar month. Tax software 2012 The deposit periods for semiweekly schedule depositors are Wednesday through Friday and Saturday through Tuesday. Tax software 2012 Monthly Deposit Schedule If the tax liability reported on Form 943, line 9, for the lookback period is $50,000 or less, you are a monthly schedule depositor for the current year. Tax software 2012 You must deposit Form 943 taxes on payments made during a calendar month by the 15th day of the following month. Tax software 2012 Monthly schedule example. Tax software 2012   Red Co. Tax software 2012 is a seasonal employer and a monthly schedule depositor. Tax software 2012 It pays wages each Friday. Tax software 2012 It paid wages during August 2014, but did not pay any wages during September. Tax software 2012 Red Co. Tax software 2012 must deposit the combined tax liabilities for the August paydays by September 15. Tax software 2012 Red Co. Tax software 2012 does not have a deposit requirement for September (that is, due by October 15, 2014) because no wages were paid in September; therefore, it did not have a tax liability for September. Tax software 2012 New employers. Tax software 2012   For agricultural employers, your tax liability for any year in the lookback period before the date you started or acquired your business is considered to be zero. Tax software 2012 Therefore, you are a monthly schedule depositor for the first and second calendar years of your agricultural business (but see the $100,000 Next-Day Deposit Rule , later in this section). Tax software 2012 Semiweekly Deposit Schedule You are a semiweekly schedule depositor for a calendar year if the tax liability on Form 943, line 9, during your lookback period was more than $50,000. Tax software 2012 Under the semiweekly deposit schedule, deposit Form 943 taxes for payments made on Wednesday, Thursday, and/or Friday by the following Wednesday. Tax software 2012 Deposit amounts accumulated for payments made on Saturday, Sunday, Monday, and/or Tuesday by the following Friday. Tax software 2012 Semiweekly depositors are not required to deposit twice a week if their payments were in the same semiweekly period unless the $100,000 Next-Day Deposit Rule (discussed later in this section) applies. Tax software 2012 For example, if you made a payment on both Wednesday and Friday and incurred taxes of $10,000 for each pay date, deposit the $20,000 by the following Wednesday. Tax software 2012 If you made no additional payments on Saturday through Tuesday, no deposit is due on Friday. Tax software 2012 Semiweekly schedule depositors must complete Form 943-A, Agricultural Employer's Record of Federal Tax Liability, and submit it with Form 943. Tax software 2012 Semiweekly Deposit Schedule IF the payday falls on a. Tax software 2012 . Tax software 2012 . Tax software 2012 THEN deposit taxes by the following. Tax software 2012 . Tax software 2012 . Tax software 2012 Wednesday, Thursday, and/or Friday Wednesday Saturday, Sunday, Monday, and/or Tuesday Friday Semiweekly schedule example. Tax software 2012   Green, Inc. Tax software 2012 , is a semiweekly schedule depositor and pays wages once each month on the last Friday of the month. Tax software 2012 Green, Inc. Tax software 2012 , will deposit only once a month, but the deposit will be made under the semiweekly deposit schedule as follows. Tax software 2012 Green, Inc. Tax software 2012 's tax liability for the April 25, 2014 (Friday), wage payment must be deposited by April 30, 2014 (Wednesday). Tax software 2012 Semiweekly deposit period spanning two quarters. Tax software 2012   If you have more than one pay date during a semiweekly period and the pay dates fall in different calendar quarters, you will need to make separate deposits for the separate liabilities. Tax software 2012 For example, if you have a pay date on Monday, March 31, 2014 (first quarter), and another pay date on Tuesday, April 1, 2014 (second quarter), two separate deposits will be required even though the pay dates fall within the same semiweekly period. Tax software 2012 Both deposits will be due Friday, April 4, 2014 (3 business days from the end of the semiweekly deposit period). Tax software 2012 Deposits on Business Days Only If a deposit is required to be made on a day that is not a business day, the deposit is considered timely if it is made by the close of the next business day. Tax software 2012 A business day is any day other than a Saturday, Sunday, or legal holiday. Tax software 2012 For example, if a deposit is required to be made on Friday and Friday is a legal holiday, the deposit is considered timely if it is made by the following Monday (if Monday is a business day). Tax software 2012 Semiweekly schedule depositors   will always have 3 business days to make a deposit. Tax software 2012 That is, if any of the 3 weekdays after the end of a semiweekly period is a legal holiday, you will have an additional day for each day that is a legal holiday to make the deposit. Tax software 2012 For example, if a semiweekly schedule depositor accumulated taxes on Friday and the following Monday is a legal holiday, the deposit normally due on Wednesday may be made on Thursday (this allows 3 business days to make the deposit). Tax software 2012 Legal holiday. Tax software 2012   The term “legal holiday” means any legal holiday in the District of Columbia. Tax software 2012 Legal holidays for 2014 are listed below. Tax software 2012 January 1— New Year's Day January 20— Birthday of Martin Luther King, Jr. Tax software 2012 February 17— Washington's Birthday April 16— District of Columbia Emancipation Day May 26— Memorial Day July 4— Independence Day September 1— Labor Day October 13— Columbus Day November 11— Veterans' Day November 27— Thanksgiving Day December 25— Christmas Day $100,000 Next-Day Deposit Rule If you accumulate $100,000 or more of Form 943 taxes (that is, taxes reported on Form 943, line 11) on any day during a deposit period, you must deposit the tax by the close of the next business day, whether you are a monthly or a semiweekly schedule depositor. Tax software 2012 For purposes of the $100,000 rule, do not continue accumulating a tax liability after the end of a deposit period. Tax software 2012 For example, if a semiweekly schedule depositor has accumulated a liability of $95,000 on a Tuesday (of a Saturday-through-Tuesday deposit period) and accumulated a $10,000 liability on Wednesday, the $100,000 next-day deposit rule does not apply because the $10,000 is accumulated in the next deposit period. Tax software 2012 Thus, $95,000 must be deposited by Friday and $10,000 must be deposited by the following Wednesday. Tax software 2012 However, once you accumulate at least $100,000 in a deposit period, stop accumulating at the end of that day and begin to accumulate anew on the next day. Tax software 2012 For example, Fir Co. Tax software 2012 is a semiweekly schedule depositor. Tax software 2012 On Monday, Fir Co. Tax software 2012 accumulates taxes of $110,000 and must deposit this amount on Tuesday, the next business day. Tax software 2012 On Tuesday, Fir Co. Tax software 2012 accumulates additional taxes of $30,000. Tax software 2012 Because the $30,000 is not added to the previous $110,000 and is less than $100,000, Fir Co. Tax software 2012 does not have to deposit the $30,000 until Friday (following the semiweekly deposit schedule). Tax software 2012 If you are a monthly schedule depositor and you accumulate a $100,000 tax liability on any day, you become a semiweekly schedule depositor on the next day and remain so for at least the rest of the calendar year and for the following calendar year. Tax software 2012 Example of the $100,000 next-day deposit rule. Tax software 2012   Elm, Inc. Tax software 2012 , started its business on May 1, 2014. Tax software 2012 Because Elm, Inc. Tax software 2012 , is a new employer, the taxes for its lookback period are considered to be zero; therefore, Elm, Inc. Tax software 2012 , is a monthly schedule depositor. Tax software 2012 On May 8, Elm, Inc. Tax software 2012 , paid wages for the first time and accumulated taxes of $50,000. Tax software 2012 On May 9 (Friday), Elm, Inc. Tax software 2012 , paid wages and accumulated taxes of $60,000, for a total of $110,000. Tax software 2012 Because Elm, Inc. Tax software 2012 , accumulated $110,000 on May 9, it must deposit $110,000 by May 12 (Monday), the next business day. Tax software 2012 Elm, Inc. Tax software 2012 , became a semiweekly schedule depositor on May 10. Tax software 2012 It will be a semiweekly schedule depositor for the remainder of 2014 and for 2015. Tax software 2012 Accuracy of Deposits Rule You are required to deposit 100% of your tax liability on or before the deposit due date. Tax software 2012 However, penalties will not be applied for depositing less than 100% if both of the following conditions are met. Tax software 2012 Any deposit shortfall does not exceed the greater of $100 or 2% of the amount of taxes otherwise required to be deposited. Tax software 2012 The deposit shortfall is paid or deposited by the shortfall makeup date as described below. Tax software 2012 Makeup Date for Deposit Shortfall:    Monthly Schedule Depositor—Deposit the shortfall or pay it with your return by the due date of your Form 943. Tax software 2012 You may pay the shortfall with your Form 943 even if the amount is $2,500 or more. Tax software 2012 Semiweekly Schedule Depositor—Deposit by the earlier of (a) the first Wednesday or Friday (whichever comes first) that falls on or after the 15th of the month following the month in which the shortfall occurred, or (b) the due date for Form 943. Tax software 2012 For example, if a semiweekly schedule depositor has a deposit shortfall during February 2014, the shortfall makeup date is March 19, 2014 (Wednesday). Tax software 2012 How To Deposit You must deposit employment taxes by electronic funds transfer. Tax software 2012 See Payment with return , earlier in this section, for exceptions explaining when taxes may be paid with the tax return instead of being deposited. Tax software 2012 Electronic deposit requirement. Tax software 2012   You must use electronic funds transfer to make all federal tax deposits (such as deposits of employment tax, excise tax, and corporate income tax). Tax software 2012 Generally, electronic funds transfers are made using the Electronic Federal Tax Payment System (EFTPS). Tax software 2012 If you do not want to use EFTPS, you can arrange for your tax professional, financial institution, payroll service, or other trusted third party to make electronic deposits on your behalf. Tax software 2012   EFTPS is a free service provided by the Department of Treasury. Tax software 2012 To get more information or to enroll in EFTPS, call 1-800-555-4477 (business), 1-800-316-6541 (individual), or 1-800-733-4829 (TDD). Tax software 2012 You can also visit the EFTPS website at www. Tax software 2012 eftps. Tax software 2012 gov. Tax software 2012 Additional information about EFTPS is also available in Publication 966. Tax software 2012 New employers that have a federal tax obligation will be pre-enrolled in EFTPS. Tax software 2012 Call the toll-free number located in your Employer Identification Number (EIN) Package to activate your enrollment and begin making your tax deposit payments. Tax software 2012 See When you receive your EIN in section 1 for more information. Tax software 2012 Deposit record. Tax software 2012   For your records, an Electronic Funds Transfer (EFT) Trace Number will be provided with each successful payment. Tax software 2012 The number can be used as a receipt or to trace the payment. Tax software 2012 Depositing on time. Tax software 2012   For deposits made by EFTPS to be on time, you must initiate the deposit by 8 p. Tax software 2012 m. Tax software 2012 Eastern time the day before the date a deposit is due. Tax software 2012 If you use a third party to make a deposit on your behalf, they may have different cutoff times. Tax software 2012 Same-day payment option. Tax software 2012   If you fail to initiate a deposit transaction on EFTPS by 8 p. Tax software 2012 m. Tax software 2012 Eastern time the day before the date a deposit is due, you can still make your deposit on time by using the Federal Tax Application (FTA). Tax software 2012 To use the same-day payment method, you will need to make arrangements with your financial institution ahead of time. Tax software 2012 Please check with your financial institution regarding availability, deadlines, and costs. Tax software 2012 Your financial institution may charge you a fee for payments made this way. Tax software 2012 To learn more about the information you will need to provide to your financial institution to make a same-day wire payment, visit www. Tax software 2012 eftps. Tax software 2012 gov to download the Same-Day Payment Worksheet. Tax software 2012 Deposit Penalties Penalties may apply if you do not make required deposits on time or if you make deposits for less than the required amount. Tax software 2012 The penalties do not apply if any failure to make a proper and timely deposit was due to reasonable cause and not to willful neglect. Tax software 2012 IRS may also waive deposit penalties if you inadvertently fail to deposit in the first quarter that a deposit is due, or the first quarter during which your frequency of deposits changed, if you timely filed your employment tax return. Tax software 2012 For amounts not properly deposited or not deposited on time, the penalty rates are shown next. Tax software 2012 Penalty Charged for. Tax software 2012 . Tax software 2012 . Tax software 2012 2% Deposits made 1 to 5 days late. Tax software 2012 5% Deposits made 6 to 15 days late. Tax software 2012 10% Deposits made 16 or more days late. Tax software 2012 Also applies to amounts paid within 10 days of the date of the first notice the IRS sent asking for the tax due. Tax software 2012 10% Amounts (that should have been deposited) paid directly to the IRS or paid with your tax return. Tax software 2012 See Payment with return , earlier in this section, for exceptions. Tax software 2012 15% Amounts still unpaid more than 10 days after the date of the first notice that the IRS sent asking for the tax due or the day on which you received notice and demand for immediate payment, whichever is earlier. Tax software 2012 Late deposit penalty amounts are determined using calendar days, starting from the due date of the liability. Tax software 2012 Order in which deposits are applied. Tax software 2012   Deposits generally are applied to the most recent tax liability within the year. Tax software 2012 If you receive a failure-to-deposit penalty notice, you may designate how your deposits are to be applied in order to minimize the amount of the penalty, if you do so within 90 days of the date of the notice. Tax software 2012 Follow the instructions on the penalty notice that you received. Tax software 2012 For examples on how the IRS will apply deposits and more information on designating deposits, see Revenue Procedure 2001-58. Tax software 2012 You can find Revenue Procedure 2001-58 on page 579 of Internal Revenue Bulletin 2001-50 at www. Tax software 2012 irs. Tax software 2012 gov/pub/irs-irbs/irb01-50. Tax software 2012 pdf. Tax software 2012 Example. Tax software 2012 Cedar, Inc. Tax software 2012 , is required to make a deposit of $1,000 on July 15 and $1,500 on August 15. Tax software 2012 It does not make the deposit on July 15. Tax software 2012 On August 15, Cedar, Inc. Tax software 2012 , deposits $2,000. Tax software 2012 Under the deposits rule, which applies deposits to the most recent tax liability, $1,500 of the deposit is applied to the August 15 deposit and the remaining $500 is applied to the July deposit. Tax software 2012 Accordingly, $500 of the July 15 liability remains undeposited. Tax software 2012 The penalty on this underdeposit will apply as explained above. Tax software 2012 Trust fund recovery penalty. Tax software 2012   If federal income, social security, or Medicare taxes that must be withheld are not withheld or are not deposited or paid to the United States Treasury, the trust fund recovery penalty may apply. Tax software 2012 The penalty is the full amount of the unpaid trust fund tax. Tax software 2012 This penalty may apply to you if these unpaid taxes cannot be immediately collected from the employer or business. Tax software 2012   The trust fund recovery penalty may be imposed on all persons who are determined by the IRS to be responsible for collecting, accounting for, and paying over these taxes, and who acted willfully in not doing so. Tax software 2012   A responsible person can be an officer or employee of a corporation, a partner or employee of a partnership, an accountant, a volunteer director/trustee, or an employee of a sole proprietorship. Tax software 2012 A responsible person also may include one who signs checks for the business or otherwise has authority to cause the spending of business funds. Tax software 2012    Willfully means voluntarily, consciously, and intentionally. Tax software 2012 A responsible person acts willfully if the person knows that the required actions of collecting, accounting for or paying over trust fund taxes are not taking place, or recklessly disregards obvious and known risks to the government's right to receive trust fund taxes. Tax software 2012 “Average” failure-to-deposit penalty. Tax software 2012   IRS may assess an “averaged” failure-to-deposit penalty of 2% to 10% if you are a monthly schedule depositor and did not properly complete Form 943, line 17, when your tax liability shown on Form 943, line 11, was $2,500 or more. Tax software 2012 IRS may also assess this penalty of 2% to 10% if you are a semiweekly schedule depositor and your tax liability shown on Form 943, line 11, was $2,500 or more and you did any of the following. Tax software 2012 Completed Form 943, line 17, instead of Form 943-A. Tax software 2012 Failed to attach a properly completed Form 943-A. Tax software 2012 Completed Form 943-A incorrectly, for example, by entering tax deposits instead of tax liabilities in the numbered spaces. Tax software 2012   IRS figures the penalty by allocating your tax liability on Form 943, line 11, equally throughout the tax period. Tax software 2012 Your deposits and payments may not be counted as timely because IRS does not know the actual dates of your tax liabilities. Tax software 2012   You can avoid the penalty by reviewing your return before filing it. Tax software 2012 Follow these steps before filing your Form 943. Tax software 2012 If you are a monthly schedule depositor, report your tax liabilities (not your deposits) in the monthly entry spaces on Form 943, line 17. Tax software 2012 If you are a semiweekly schedule depositor, report your tax liabilities (not your deposits) on Form 943-A in the lines that represent the dates you paid your employees. Tax software 2012 Verify that your total liability shown on Form 943, line 17, or Form 943-A, line M, equals your tax liability shown on Form 943, line 11. Tax software 2012 Do not show negative amounts on Form 943, line 17, or Form 943-A. Tax software 2012 For prior period errors discovered after December 31, 2008, do not adjust your tax liabilities reported on Form 943, line 17, or on Form 943-A. Tax software 2012 Employers of Both Farm and Nonfarm Workers If you employ both farm and nonfarm workers, you must treat employment taxes for the farmworkers (Form 943 taxes) separately from employment taxes for the nonfarm workers (Form 941 and 944 taxes). Tax software 2012 Form 943 taxes and Form 941/944 taxes are not combined for purposes of applying any of the deposit schedule rules. Tax software 2012 If a deposit is due, deposi