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1040 Ez Forms And Instructions

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1040 Ez Forms And Instructions

1040 ez forms and instructions Index Symbols 10% owners, Ten-percent owners. 1040 ez forms and instructions 501(c) organizations, Foreign Governments and Certain Other Foreign Organizations 80/20 company, Dividends paid by a domestic corporation (an existing 80/20 company). 1040 ez forms and instructions A Acceptance agent, Unexpected payment. 1040 ez forms and instructions Accounts, offshore, Offshore accounts. 1040 ez forms and instructions Alien Illegal, Illegal aliens. 1040 ez forms and instructions Nonresident, Nonresident alien. 1040 ez forms and instructions Resident, Resident alien. 1040 ez forms and instructions Alimony, Pensions, Annuities, and Alimony (Income Code 14), Alimony payments. 1040 ez forms and instructions Allocation information, Failure to provide allocation information. 1040 ez forms and instructions American Samoa, U. 1040 ez forms and instructions S. 1040 ez forms and instructions Virgin Islands and American Samoa corporations. 1040 ez forms and instructions Amount to withhold, Determination of amount to withhold. 1040 ez forms and instructions Annuities, Pensions, Annuities, and Alimony (Income Code 14), Pensions and annuities. 1040 ez forms and instructions Artists and athletes Earnings of, Artists and Athletes (Income Codes 42 and 43) Special events and promotions, Artists and Athletes (Income Codes 42 and 43) Assistance (see Tax help) Awards, Other Grants, Prizes, and Awards B Backup withholding, Withholding and Reporting Obligations, Primary NRA and Form 1099 responsibility assumed. 1040 ez forms and instructions Banks, interest received by, Banks. 1040 ez forms and instructions Beneficial owner, Beneficial Owners Bonds sold between interest dates, Sales of bonds between interest dates. 1040 ez forms and instructions Branch profits tax, Corporation subject to branch profits tax. 1040 ez forms and instructions C Canada, Exception 3. 1040 ez forms and instructions , Deposit interest paid to nonresident alien individuals in 2012. 1040 ez forms and instructions , Deposit interest paid to certain nonresident alien individuals in 2013. 1040 ez forms and instructions Capital gains, Capital gains (Income Code 9). 1040 ez forms and instructions Central withholding agreements, Income Code 43. 1040 ez forms and instructions Consent dividends, Consent dividends. 1040 ez forms and instructions , Consent dividends. 1040 ez forms and instructions Contingent interest, Contingent interest. 1040 ez forms and instructions Controlled foreign corporations, interest paid to, Controlled foreign corporations. 1040 ez forms and instructions Controlling foreign corporations, Interest paid to controlling foreign corporations (Income Code 3). 1040 ez forms and instructions Covenant not to compete, Covenant not to compete. 1040 ez forms and instructions Crew members, Crew members. 1040 ez forms and instructions D Dependent personal services, Pay for dependent personal services (Income Code 17). 1040 ez forms and instructions Allowance for personal exemptions, Withholding exemptions. 1040 ez forms and instructions Defined, Pay for dependent personal services (Income Code 17). 1040 ez forms and instructions Exempt from withholding, Graduated rates. 1040 ez forms and instructions Depositing taxes How to, Depositing Withheld Taxes When to, When Deposits Are Required Deposits, Interest on deposits (Income Code 29). 1040 ez forms and instructions Disregarded entities, Disregarded entities. 1040 ez forms and instructions Dividends Direct dividend rate, Dividends qualifying for direct dividend rate (Income Code 7). 1040 ez forms and instructions Domestic corporation, Dividends paid by a domestic corporation (an existing 80/20 company). 1040 ez forms and instructions Foreign corporations, Dividends paid by foreign corporations (Income Code 8). 1040 ez forms and instructions In general, Dividends Documentary evidence, Documentary evidence. 1040 ez forms and instructions , Documentary Evidence, Documentary evidence. 1040 ez forms and instructions Documentation From foreign beneficial owners and U. 1040 ez forms and instructions S. 1040 ez forms and instructions payees, Documentation From foreign intermediaries and foreign flow-through entities, Foreign Intermediaries and Foreign Flow-Through Entities Presumptions in the absence of, Presumption Rules Qualified intermediaries, Documentation. 1040 ez forms and instructions E Effectively connected income, Effectively Connected Income Defined, Effectively Connected Income Foreign partners, Partnership Withholding on Effectively Connected Income EFTPS, Electronic deposit requirement. 1040 ez forms and instructions Electronic deposit rules, Electronic deposit requirement. 1040 ez forms and instructions Employees, Employees. 1040 ez forms and instructions , Employee. 1040 ez forms and instructions Employer, Employer. 1040 ez forms and instructions F Federal unemployment tax, Federal unemployment tax (FUTA). 1040 ez forms and instructions Fellowship grants, Scholarships and Fellowship Grants (Income Code 15) Fellowship income, Scholarships, fellowships, and grants. 1040 ez forms and instructions Financial institutions, Branches of financial institutions. 1040 ez forms and instructions FIRPTA withholding, U. 1040 ez forms and instructions S. 1040 ez forms and instructions real property interest. 1040 ez forms and instructions , U. 1040 ez forms and instructions S. 1040 ez forms and instructions Real Property Interest Fiscally transparent entity, Fiscally transparent entity. 1040 ez forms and instructions Fixed or determinable annual or periodic income, Fixed or Determinable Annual or Periodical Income (FDAP) Flow-through entities, Flow-Through Entities, Nonqualified Intermediaries Foreign, Foreign partner. 1040 ez forms and instructions 501(c) organizations, Foreign Governments and Certain Other Foreign Organizations Bank, U. 1040 ez forms and instructions S. 1040 ez forms and instructions branches of foreign banks and foreign insurance companies. 1040 ez forms and instructions , Income paid to U. 1040 ez forms and instructions S. 1040 ez forms and instructions branch of foreign bank or insurance company. 1040 ez forms and instructions Charitable organizations, Other foreign organizations, associations, and charitable institutions. 1040 ez forms and instructions Corporations, Foreign corporations. 1040 ez forms and instructions Governments, Foreign Governments and Certain Other Foreign Organizations Insurance company, U. 1040 ez forms and instructions S. 1040 ez forms and instructions branches of foreign banks and foreign insurance companies. 1040 ez forms and instructions , Income paid to U. 1040 ez forms and instructions S. 1040 ez forms and instructions branch of foreign bank or insurance company. 1040 ez forms and instructions Intermediary, Foreign Intermediaries Organizations and associations, Other foreign organizations, associations, and charitable institutions. 1040 ez forms and instructions Partner, Who Must Withhold Partnerships, nonwithholding, Foreign partnerships. 1040 ez forms and instructions Person, Foreign Persons Private foundation, Foreign private foundations. 1040 ez forms and instructions , Foreign Governments and Certain Other Foreign Organizations Status, Establishment of foreign status. 1040 ez forms and instructions Trusts, Foreign simple and grantor trust. 1040 ez forms and instructions Form 1042, Withholding and Reporting Obligations, Form 1042 filing. 1040 ez forms and instructions , Responsibilities of WT. 1040 ez forms and instructions , Form 1042. 1040 ez forms and instructions 1042-S, Withholding and Reporting Obligations, Form 1042-S reporting. 1040 ez forms and instructions , Form 1042-S reporting. 1040 ez forms and instructions , Form 1042 filing. 1040 ez forms and instructions , Form 1042-S. 1040 ez forms and instructions 1099, Withholding and Reporting Obligations, Primary NRA and Form 1099 responsibility assumed. 1040 ez forms and instructions 1099-S, Form 1099-S, Proceeds From Real Estate Transactions. 1040 ez forms and instructions 4419, Electronic reporting. 1040 ez forms and instructions 7004, Extension to file Form 1042. 1040 ez forms and instructions 8233, Form 8233, Exemption From Withholding on Compensation for Independent (and Certain Dependent) Personal Services of a Nonresident Alien Individual. 1040 ez forms and instructions 8288, Reporting and Paying the Tax, Form 8288, U. 1040 ez forms and instructions S. 1040 ez forms and instructions Withholding Tax Return for Dispositions by Foreign Persons of U. 1040 ez forms and instructions S. 1040 ez forms and instructions Real Property Interests. 1040 ez forms and instructions 8288-A, Reporting and Paying the Tax, Form 8288-A, Statement of Withholding on Dispositions by Foreign Persons of U. 1040 ez forms and instructions S. 1040 ez forms and instructions Real Property Interests. 1040 ez forms and instructions 8288-B, Categories (1), (2), and (3). 1040 ez forms and instructions 8804, Form 8804, Annual Return for Partnership Withholding Tax (Section 1446). 1040 ez forms and instructions 8805, Form 8805, Foreign Partner's Information Statement of Section 1446 Withholding Tax. 1040 ez forms and instructions 8813, Form 8813, Partnership Withholding Tax Payment Voucher (Section 1446). 1040 ez forms and instructions 8833, Claiming treaty benefits. 1040 ez forms and instructions 940, Federal unemployment tax (FUTA). 1040 ez forms and instructions 941, Reporting requirements for wages and withheld taxes paid to nonresident aliens. 1040 ez forms and instructions 972, Consent dividends. 1040 ez forms and instructions SS-4, U. 1040 ez forms and instructions S. 1040 ez forms and instructions Taxpayer Identification Numbers SS-5, U. 1040 ez forms and instructions S. 1040 ez forms and instructions Taxpayer Identification Numbers W-2, Reporting requirements for wages and withheld taxes paid to nonresident aliens. 1040 ez forms and instructions , Form W-2. 1040 ez forms and instructions W-4, Alternate withholding procedure. 1040 ez forms and instructions , Form W-4, Employee's Withholding Allowance Certificate. 1040 ez forms and instructions , Withholding exemptions. 1040 ez forms and instructions , Special instructions for Form W-4. 1040 ez forms and instructions W-7, U. 1040 ez forms and instructions S. 1040 ez forms and instructions Taxpayer Identification Numbers W-8BEN, Beneficial Owners W-8ECI, Documentary evidence. 1040 ez forms and instructions W-8EXP, Form W-8ECI, Certificate of Foreign Person's Claim That Income Is Effectively Connected With the Conduct of a Trade or Business in the United States. 1040 ez forms and instructions W-8IMY, Foreign Intermediaries and Foreign Flow-Through Entities W-9, U. 1040 ez forms and instructions S. 1040 ez forms and instructions Taxpayer Identification Numbers Free tax services, How To Get Tax Help FUTA, Federal unemployment tax (FUTA). 1040 ez forms and instructions G Gambling winnings, Gambling winnings (Income Code 28). 1040 ez forms and instructions Graduated rates, Graduated rates. 1040 ez forms and instructions Graduated withholding, Wages Paid to Employees— Graduated Withholding Grant income, Scholarships, fellowships, and grants. 1040 ez forms and instructions Grants, Scholarships and Fellowship Grants (Income Code 15), Other Grants, Prizes, and Awards Green card test, Resident alien. 1040 ez forms and instructions Guam, Guam or Northern Mariana Islands corporations. 1040 ez forms and instructions H Help (see Tax help) I Identification number, taxpayer, U. 1040 ez forms and instructions S. 1040 ez forms and instructions Taxpayer Identification Numbers, Identification numbers. 1040 ez forms and instructions Illegal aliens, Illegal aliens. 1040 ez forms and instructions Important reminders, Reminders Income Fixed or determinable annual or periodical, Fixed or Determinable Annual or Periodical Income (FDAP) Interest, Interest Notional principal contract, Notional principal contract income. 1040 ez forms and instructions Other than effectively connected, Income Not Effectively Connected Personal service, Personal service income. 1040 ez forms and instructions Source of, Source of Income Transportation, Transportation income. 1040 ez forms and instructions Income code 01, Interest paid by U. 1040 ez forms and instructions S. 1040 ez forms and instructions obligors—general (Income Code 1). 1040 ez forms and instructions 02, Interest on real property mortgages (Income Code 2). 1040 ez forms and instructions 03, Interest paid to controlling foreign corporations (Income Code 3). 1040 ez forms and instructions 04, Interest paid by foreign corporations (Income Code 4). 1040 ez forms and instructions 06, Dividends paid by U. 1040 ez forms and instructions S. 1040 ez forms and instructions corporations — general (Income Code 6). 1040 ez forms and instructions 07, Dividends qualifying for direct dividend rate (Income Code 7). 1040 ez forms and instructions 08, Dividends paid by foreign corporations (Income Code 8). 1040 ez forms and instructions 09, Capital gains (Income Code 9). 1040 ez forms and instructions 10, Industrial royalties (Income Code 10). 1040 ez forms and instructions 11, Motion picture or television copyright royalties (Income Code 11). 1040 ez forms and instructions 12, Other royalties (for example, copyright, recording, publishing) (Income Code 12). 1040 ez forms and instructions 13, Real Property Income and Natural Resources Royalties (Income Code 13) 14, Pensions, Annuities, and Alimony (Income Code 14) 15, Scholarships and Fellowship Grants (Income Code 15) 16, Pay for independent personal services (Income Code 16). 1040 ez forms and instructions 17, Pay for dependent personal services (Income Code 17). 1040 ez forms and instructions 18, Pay for teaching (Income Code 18). 1040 ez forms and instructions 19, Pay during studying and training (Income Code 19). 1040 ez forms and instructions 20, Artists and Athletes (Income Codes 42 and 43) 24, Reporting and Paying the Tax 25, Reporting and Paying the Tax 26, Reporting and Paying the Tax 27, Publicly Traded Partnerships 28, Gambling winnings (Income Code 28). 1040 ez forms and instructions 29, Interest on deposits (Income Code 29). 1040 ez forms and instructions 30, Original issue discount (Income Code 30). 1040 ez forms and instructions 50, Other income (Income Code 50). 1040 ez forms and instructions Independent personal services Defined, Pay for independent personal services (Income Code 16). 1040 ez forms and instructions Exempt from withholding, Pay for independent personal services (Income Code 16). 1040 ez forms and instructions , 30% rate. 1040 ez forms and instructions India, Students and business apprentices from India. 1040 ez forms and instructions Indirect account holders, Indirect Account Holders Installment payment, Installment payments. 1040 ez forms and instructions , Installment payments. 1040 ez forms and instructions Insurance proceeds, Insurance proceeds. 1040 ez forms and instructions Interest Contingent, Contingent interest. 1040 ez forms and instructions Controlling foreign corporations, Interest paid to controlling foreign corporations (Income Code 3). 1040 ez forms and instructions Deposits, Interest on deposits (Income Code 29). 1040 ez forms and instructions Foreign business arrangements, Interest from foreign business arrangements. 1040 ez forms and instructions Foreign corporations, Interest paid by foreign corporations (Income Code 4). 1040 ez forms and instructions Income, Interest Portfolio, Portfolio interest. 1040 ez forms and instructions , Interest that does not qualify as portfolio interest. 1040 ez forms and instructions Real property mortgages, Interest on real property mortgages (Income Code 2). 1040 ez forms and instructions Intermediary Foreign, Foreign Intermediaries Nonqualified, Nonqualified intermediary. 1040 ez forms and instructions Qualified, Qualified intermediary. 1040 ez forms and instructions , Qualified Intermediaries International organizations, Foreign Governments and Certain Other Foreign Organizations ITIN, U. 1040 ez forms and instructions S. 1040 ez forms and instructions Taxpayer Identification Numbers K Knowledge, standards of, Standards of Knowledge L Liability of withholding agent, Liability for tax. 1040 ez forms and instructions M Magnetic media reporting, Electronic reporting. 1040 ez forms and instructions Marketable securities, Marketable securities. 1040 ez forms and instructions Mexico, Exception 3. 1040 ez forms and instructions Missing children, Reminders More information (see Tax help) Mortgages, Interest on real property mortgages (Income Code 2). 1040 ez forms and instructions N Non-registered obligations, Obligations not in registered form. 1040 ez forms and instructions Nonqualified intermediary, Nonqualified intermediary. 1040 ez forms and instructions , Nonqualified Intermediaries Nonresident alien Defined, Nonresident alien. 1040 ez forms and instructions Married to U. 1040 ez forms and instructions S. 1040 ez forms and instructions citizen or resident, Married to U. 1040 ez forms and instructions S. 1040 ez forms and instructions citizen or resident alien. 1040 ez forms and instructions Nonwage pay, Pay that is not wages. 1040 ez forms and instructions Northern Mariana Islands, Guam or Northern Mariana Islands corporations. 1040 ez forms and instructions Notional principal contract income, Notional principal contract income. 1040 ez forms and instructions NRA withholding In general, Withholding of Tax Income subject to, Income Subject to NRA Withholding Persons subject to, Persons Subject to NRA Withholding O Obligations Registered, Obligations in registered form. 1040 ez forms and instructions Obligations: Not in registered form, Obligations not in registered form. 1040 ez forms and instructions Offshore accounts, Offshore accounts. 1040 ez forms and instructions Original issue discount, Original issue discount (Income Code 30). 1040 ez forms and instructions Overwithholding, adjustment for, Adjustment for Overwithholding P Partner, Foreign partner. 1040 ez forms and instructions Partner, foreign, Who Must Withhold Partnerships Effectively connected income of foreign partners, Partnership Withholding on Effectively Connected Income Foreign, Foreign partnerships. 1040 ez forms and instructions Publicly traded, Publicly Traded Partnerships Smaller, Smaller partnerships and trusts. 1040 ez forms and instructions , Smaller partnerships and trusts. 1040 ez forms and instructions , Smaller partnerships and trusts. 1040 ez forms and instructions Withholding foreign, Withholding foreign partnership and foreign trust. 1040 ez forms and instructions , Withholding Foreign Partnerships Pay for personal services Artists and athletes, Artists and Athletes (Income Codes 42 and 43) Dependent personal services, Pay for dependent personal services (Income Code 17). 1040 ez forms and instructions Employees, Wages Paid to Employees— Graduated Withholding Exempt from withholding, Pay for Personal Services Performed Independent personal services, Pay for independent personal services (Income Code 16). 1040 ez forms and instructions Salaries and wages, Wages Paid to Employees— Graduated Withholding Scholarship or fellowship recipient, Pay for services rendered. 1040 ez forms and instructions Studying, Pay during studying and training (Income Code 19). 1040 ez forms and instructions Teaching, Pay for teaching (Income Code 18). 1040 ez forms and instructions Training, Pay during studying and training (Income Code 19). 1040 ez forms and instructions Payee, Identifying the Payee Penalties Deposit, Penalty for failure to make deposits on time. 1040 ez forms and instructions Form 1042, Penalties Form 8804, Penalties. 1040 ez forms and instructions Form 8805, Penalties. 1040 ez forms and instructions Magnetic media, Failure to file electronically. 1040 ez forms and instructions Trust fund recovery, Trust fund recovery penalty. 1040 ez forms and instructions Pensions, Pension payments. 1040 ez forms and instructions , Pensions, Annuities, and Alimony (Income Code 14), Pensions and annuities. 1040 ez forms and instructions Per diem, Per diem paid by the U. 1040 ez forms and instructions S. 1040 ez forms and instructions Government. 1040 ez forms and instructions Personal service income, Personal service income. 1040 ez forms and instructions Pooled withholding information, Pooled withholding information. 1040 ez forms and instructions Portfolio interest, Portfolio interest. 1040 ez forms and instructions , Interest that does not qualify as portfolio interest. 1040 ez forms and instructions Presumption Corporation, Presumption Rules Individual, Presumption Rules Partnership, Presumption Rules Rules, Presumption Rules Trust, Presumption Rules Private foundation, foreign, Foreign private foundations. 1040 ez forms and instructions Prizes, Other Grants, Prizes, and Awards Publications (see Tax help) Puerto Rico, Resident of a U. 1040 ez forms and instructions S. 1040 ez forms and instructions possession. 1040 ez forms and instructions , Exception 4. 1040 ez forms and instructions Q QI withholding agreement, QI withholding agreement. 1040 ez forms and instructions Qualified intermediary, Qualified intermediary. 1040 ez forms and instructions , Qualified Intermediaries Qualified investment entity (QIE) Distributions paid by, Qualified investment entities. 1040 ez forms and instructions Dividends paid by, Dividends paid by U. 1040 ez forms and instructions S. 1040 ez forms and instructions corporations — general (Income Code 6). 1040 ez forms and instructions R Racing purses, Racing purses. 1040 ez forms and instructions Real property interest Disposition of, U. 1040 ez forms and instructions S. 1040 ez forms and instructions Real Property Interest Withholding certificates, Withholding Certificates Reason to know, Reason To Know Refund procedures Qualified intermediaries, Collective refund procedures. 1040 ez forms and instructions Registered obligations, Obligations in registered form. 1040 ez forms and instructions Researchers, Tax treaties. 1040 ez forms and instructions Resident alien defined, Resident alien. 1040 ez forms and instructions Returns required, Returns Required Royalties, Royalties, Real Property Income and Natural Resources Royalties (Income Code 13) Ryukyu Islands, Income from U. 1040 ez forms and instructions S. 1040 ez forms and instructions Savings Bonds of residents of the Ryukyu Islands or the Trust Territory of the Pacific Islands. 1040 ez forms and instructions S Salaries, Wages Paid to Employees— Graduated Withholding Saving clause, Nonresident alien who becomes a resident alien. 1040 ez forms and instructions Scholarship, Scholarships, fellowships, and grants. 1040 ez forms and instructions , Scholarships and Fellowship Grants (Income Code 15) Securities, Marketable securities. 1040 ez forms and instructions , Income from securities. 1040 ez forms and instructions Services performed outside the U. 1040 ez forms and instructions S. 1040 ez forms and instructions , Services performed outside the United States. 1040 ez forms and instructions Short-term obligation, Short-term obligations. 1040 ez forms and instructions Social security, Social security and Medicare tax. 1040 ez forms and instructions Source of income, Source of Income Standards of knowledge, Standards of Knowledge Substantial presence test, Resident alien. 1040 ez forms and instructions T Tax Reporting and paying, Reporting and Paying the Tax Tax help, How To Get Tax Help Tax treaties Claiming benefits, Claiming treaty benefits. 1040 ez forms and instructions Dependent personal services, Tax treaties. 1040 ez forms and instructions Entertainers and athletes, Tax treaties. 1040 ez forms and instructions Gains, Tax treaties. 1040 ez forms and instructions Gambling winnings, Tax treaties. 1040 ez forms and instructions Independent personal services, Tax treaties. 1040 ez forms and instructions Student, Tax treaties. 1040 ez forms and instructions Students and trainees, Tax treaties. 1040 ez forms and instructions Tables, Tax Treaty Tables Teaching, Tax treaties. 1040 ez forms and instructions Tax-exempt entities, Foreign Governments and Certain Other Foreign Organizations Taxpayer Advocate, Taxpayer Advocate Service. 1040 ez forms and instructions Taxpayer identification number (TIN), U. 1040 ez forms and instructions S. 1040 ez forms and instructions Taxpayer Identification Numbers, Identification numbers. 1040 ez forms and instructions Exceptions, Exceptions to TIN requirement. 1040 ez forms and instructions Teachers, Pay for teaching (Income Code 18). 1040 ez forms and instructions Ten-percent owners, Ten-percent owners. 1040 ez forms and instructions Territorial limits, Territorial limits. 1040 ez forms and instructions Totalization agreements, Social security and Medicare tax. 1040 ez forms and instructions Transportation income, Transportation income. 1040 ez forms and instructions Travel expenses, Travel expenses. 1040 ez forms and instructions Trust Territory of the Pacific Islands, Income from U. 1040 ez forms and instructions S. 1040 ez forms and instructions Savings Bonds of residents of the Ryukyu Islands or the Trust Territory of the Pacific Islands. 1040 ez forms and instructions Trusts Foreign, Foreign simple and grantor trust. 1040 ez forms and instructions Smaller, Smaller partnerships and trusts. 1040 ez forms and instructions Withholding foreign, Withholding foreign partnership and foreign trust. 1040 ez forms and instructions , Withholding Foreign Trusts TTY/TDD information, How To Get Tax Help U U. 1040 ez forms and instructions S. 1040 ez forms and instructions agent of foreign person, U. 1040 ez forms and instructions S. 1040 ez forms and instructions agent of foreign person. 1040 ez forms and instructions U. 1040 ez forms and instructions S. 1040 ez forms and instructions branch Foreign bank, U. 1040 ez forms and instructions S. 1040 ez forms and instructions branches of foreign banks and foreign insurance companies. 1040 ez forms and instructions , Income paid to U. 1040 ez forms and instructions S. 1040 ez forms and instructions branch of foreign bank or insurance company. 1040 ez forms and instructions Foreign insurance company, U. 1040 ez forms and instructions S. 1040 ez forms and instructions branches of foreign banks and foreign insurance companies. 1040 ez forms and instructions , Income paid to U. 1040 ez forms and instructions S. 1040 ez forms and instructions branch of foreign bank or insurance company. 1040 ez forms and instructions Foreign person, U. 1040 ez forms and instructions S. 1040 ez forms and instructions branches of foreign persons. 1040 ez forms and instructions U. 1040 ez forms and instructions S. 1040 ez forms and instructions national, 30% rate. 1040 ez forms and instructions U. 1040 ez forms and instructions S. 1040 ez forms and instructions real property interest, U. 1040 ez forms and instructions S. 1040 ez forms and instructions real property interest. 1040 ez forms and instructions U. 1040 ez forms and instructions S. 1040 ez forms and instructions savings bonds, Income from U. 1040 ez forms and instructions S. 1040 ez forms and instructions Savings Bonds of residents of the Ryukyu Islands or the Trust Territory of the Pacific Islands. 1040 ez forms and instructions U. 1040 ez forms and instructions S. 1040 ez forms and instructions territorial limits, Territorial limits. 1040 ez forms and instructions U. 1040 ez forms and instructions S. 1040 ez forms and instructions Virgin Islands, U. 1040 ez forms and instructions S. 1040 ez forms and instructions Virgin Islands and American Samoa corporations. 1040 ez forms and instructions Unexpected payment, Unexpected payment. 1040 ez forms and instructions W Wages Paid to employees, Wages Paid to Employees— Graduated Withholding Pay that is not, Pay that is not wages. 1040 ez forms and instructions When to withhold, When to withhold. 1040 ez forms and instructions Withhold, amount to, Determination of amount to withhold. 1040 ez forms and instructions Withhold, when to, When to withhold. 1040 ez forms and instructions Withholding Agreements, QI withholding agreement. 1040 ez forms and instructions , WP and WT withholding agreements. 1040 ez forms and instructions , Withholding agreements. 1040 ez forms and instructions , Income Code 43. 1040 ez forms and instructions Alternative procedure, Alternative procedure. 1040 ez forms and instructions Certificate, Withholding Certificates, Withholding certificate. 1040 ez forms and instructions Rate pool, Pooled withholding information. 1040 ez forms and instructions Real property, U. 1040 ez forms and instructions S. 1040 ez forms and instructions Real Property Interest Withholding agent Defined, Withholding Agent Liability, Liability for tax. 1040 ez forms and instructions Returns required, Returns Required Tax deposit requirements, Depositing Withheld Taxes Withholding exemptions and reductions Dependent personal services, Graduated rates. 1040 ez forms and instructions Exemption, Withholding exemption. 1040 ez forms and instructions Final payment exemption, Final payment exemption. 1040 ez forms and instructions Foreign governments, Foreign Governments and Certain Other Foreign Organizations International organizations, Foreign Governments and Certain Other Foreign Organizations Real property interest, Withholding Certificates Researchers, Tax treaties. 1040 ez forms and instructions Scholarships and fellowship grants, Alternate withholding procedure. 1040 ez forms and instructions Students, Tax treaties. 1040 ez forms and instructions Withholding agreements, Withholding agreements. 1040 ez forms and instructions , Income Code 43. 1040 ez forms and instructions Prev  Up     Home   More Online Publications
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Letter 1961C Frequently Asked Questions (FAQs)

What is the letter telling me?

This letter is in response to an oral or written request for a Direct Debit Installment Agreement. It explains why your request for a Direct Debit could not be granted and the steps you need to take to qualify for a Direct Debit Installment Agreement.

What do I have to do?

You need to complete the Form 433 and return it to us with your bank account and routing numbers.

How much time do I have?

You should return this information to us as soon as possible.

What happens if I don't take any action?

If you do not make an arrangement to pay the balance you owe, enforced collection action may be taken to collect the amount you owe, including the filing of a Notice of Federal Tax Lien, or garnishment of your wages and/or bank accounts.

Who should I contact?

If you have any questions about this letter, call us at the number printed in the letter. The person who answers the phone will assist you.

What if I don't agree or have already taken corrective action?

If you do not agree with this letter, call us immediately at the number included. We will do our best to help you. If you have called us about this matter before, but we did not correct the problem, you may want to contact the Office of the Taxpayer Advocate.

Page Last Reviewed or Updated: 30-Jan-2014

The 1040 Ez Forms And Instructions

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