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1040ez Worksheet

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1040ez Worksheet

1040ez worksheet Index Symbols "Hours of service" limits, Individuals subject to hours of service limits. 1040ez worksheet Form 2106, Hours of service limits. 1040ez worksheet 50% limit on meals, 50% limit on meals. 1040ez worksheet A Accountable plans, Accountable Plans, Per diem allowance more than federal rate. 1040ez worksheet Accounting to employer, Accountable Plans Adequate accounting, Adequate Accounting Independent contractors, Adequate accounting. 1040ez worksheet Adequate records, What Are Adequate Records? Advertising Car display, Advertising display on car. 1040ez worksheet Expenses, 3 - Advertising expenses. 1040ez worksheet Signs, display racks, or other promotional material to be used on recipient's business premises, Exceptions. 1040ez worksheet Airline clubs, Club dues and membership fees. 1040ez worksheet Allocating costs, Separating costs. 1040ez worksheet , Separating costs. 1040ez worksheet , Allocating between business and nonbusiness. 1040ez worksheet , Allocating total cost. 1040ez worksheet Allowance (see Reimbursements) Armed forces Assigned overseas, Members of the Armed Forces. 1040ez worksheet Assistance (see Tax help) Associated entertainment, Associated Test Athletic clubs, Club dues and membership fees. 1040ez worksheet B Basis of car, Basis. 1040ez worksheet (see also Depreciation of car) Bona fide business purpose, Bona fide business purpose. 1040ez worksheet Box seats at entertainment events, Skyboxes and other private luxury boxes. 1040ez worksheet Business travel, Trip Primarily for Business Outside U. 1040ez worksheet S. 1040ez worksheet , Travel Entirely for Business or Considered Entirely for Business Business use of car, Business and personal use. 1040ez worksheet More-than-50%-use test. 1040ez worksheet , More-than-50%-use test. 1040ez worksheet Qualified business use, Qualified business use. 1040ez worksheet C Canceled checks As evidence of business expenses, Canceled check. 1040ez worksheet Car expenses, Car Expenses, Reporting inclusion amounts. 1040ez worksheet Actual expenses, Actual Car Expenses Allowances for, Per Diem and Car Allowances, Allowance more than the federal rate. 1040ez worksheet Business and personal use, Business and personal use. 1040ez worksheet Combining expenses, Car expenses. 1040ez worksheet Disposition of car, Disposition of a Car Fixed and variable rate (FAVR) allowance, Fixed and variable rate (FAVR). 1040ez worksheet Form 2106, Car expenses. 1040ez worksheet Leasing a car, truck, or van, Leasing a Car, Reporting inclusion amounts. 1040ez worksheet Mileage rate (see Standard mileage rate) Taxes paid on car, Taxes paid on your car. 1040ez worksheet Traffic tickets, Fines and collateral. 1040ez worksheet Car pools, Car pools. 1040ez worksheet Car rentals, Reporting inclusion amounts. 1040ez worksheet Form 2106, Car rentals. 1040ez worksheet Car, defined, Car defined. 1040ez worksheet Car, truck, or van rentals, Leasing a Car, Reporting inclusion amounts. 1040ez worksheet Casualty and theft losses Cars, Casualty and theft losses. 1040ez worksheet Depreciation, Casualty or theft. 1040ez worksheet Charitable organizations Benefit events for, Exception for events that benefit charitable organizations. 1040ez worksheet Sports events to benefit, 5 - Charitable sports event. 1040ez worksheet Club dues, Club dues and membership fees. 1040ez worksheet Commuting expenses, Commuting expenses. 1040ez worksheet Conventions, Conventions, Meetings at conventions. 1040ez worksheet Country clubs, Club dues and membership fees. 1040ez worksheet Cruise ships, Cruise Ships D Daily business mileage and expense log (Table 6-2), Table 5-2. 1040ez worksheet Daily Business Mileage and Expense Log Name: Depreciation of car, Depreciation and section 179 deductions. 1040ez worksheet (see also Section 179 deductions) Adjustment for using standard mileage rate, Depreciation adjustment when you used the standard mileage rate. 1040ez worksheet Basis, Basis. 1040ez worksheet Sales taxes, Sales taxes. 1040ez worksheet Unrecovered basis, How to treat unrecovered basis. 1040ez worksheet Casualty or theft, effect, Casualty or theft. 1040ez worksheet Deduction, Depreciation and section 179 deductions. 1040ez worksheet , Depreciation deduction for the year of disposition. 1040ez worksheet Excess depreciation, Excess depreciation. 1040ez worksheet Modified Accelerated Cost Recovery System (MACRS), Modified Accelerated Cost Recovery System (MACRS). 1040ez worksheet Trade-in, effect, Car trade-in. 1040ez worksheet , Trade-in. 1040ez worksheet Trucks and vans, Trucks and vans. 1040ez worksheet Depreciation of Car Section 179 deduction, Section 179 deduction. 1040ez worksheet Directly-related entertainment, Directly-Related Test Disabled employees Impairment-related work expenses, Impairment-Related Work Expenses of Disabled Employees Documentary evidence, Documentary evidence. 1040ez worksheet E Employer-provided vehicles, Employer-provided vehicle. 1040ez worksheet Reporting requirements, Vehicle Provided by Your Employer Entertainment expenses, Entertainment, Individuals subject to hours of service limits. 1040ez worksheet , Gift or entertainment. 1040ez worksheet 50% limit, Directly before or after business discussion. 1040ez worksheet Determination of applicability (Figure A), 50% Limit Associated test, Associated Test Deductible, What Entertainment Expenses Are Deductible?, Expenses for spouses. 1040ez worksheet Summary (Table 2-1), Exception for events that benefit charitable organizations. 1040ez worksheet Directly-related test, Directly-Related Test Entertainment, defined, Entertainment. 1040ez worksheet Form 2106, Meal and entertainment expenses. 1040ez worksheet Tickets (see Tickets) Entertainment facilities Expenses for use of, Entertainment facilities. 1040ez worksheet Estimates of expenses, How To Prove Expenses Exceptions to the 50% Limit, Exceptions to the 50% Limit Excess reimbursements (see Reimbursements) Extravagant expenses, Lavish or extravagant. 1040ez worksheet , Lavish or extravagant expenses. 1040ez worksheet F Fair market value of car, Fair market value. 1040ez worksheet Farmers Form 1040, Schedule F, Self-employed. 1040ez worksheet Federal crime investigations or prosecutions Federal employees engaged in, Exception for federal crime investigations or prosecutions. 1040ez worksheet Federal rate for per diem, Standard Meal Allowance, The federal rate. 1040ez worksheet Fee-basis officials, Officials Paid on a Fee Basis Fees you pay, Parking fees. 1040ez worksheet Fixed and variable rate (FAVR) allowance, Fixed and variable rate (FAVR). 1040ez worksheet Form 1040, Schedule C, Self-employed. 1040ez worksheet Form 1040, Schedule F, Self-employed. 1040ez worksheet Form 2106, How to choose. 1040ez worksheet , Employees. 1040ez worksheet , Full value included in your income. 1040ez worksheet , Reporting your expenses under a nonaccountable plan. 1040ez worksheet , Completing Forms 2106 and 2106-EZ Form 2106-EZ, Form 2106-EZ. 1040ez worksheet Form 4562, Self-employed. 1040ez worksheet Form 4797, Excess depreciation. 1040ez worksheet Form W-2 Employer-provided vehicles, Value reported on Form W-2. 1040ez worksheet Reimbursement of personal expenses, Reimbursement for personal expenses. 1040ez worksheet Statutory employees, Statutory employees. 1040ez worksheet Free tax services, Free help with your tax return. 1040ez worksheet G Gifts, Gift or entertainment. 1040ez worksheet , Gifts $25 limit, $25 limit. 1040ez worksheet Combining for recordkeeping purposes, Gift expenses. 1040ez worksheet Reporting requirements, Gifts. 1040ez worksheet Golf clubs, Club dues and membership fees. 1040ez worksheet H Hauling tools, Hauling tools or instruments. 1040ez worksheet Help (see Tax help) High-low method Introduction, High-low method. 1040ez worksheet Transition rules, High-low method. 1040ez worksheet High-low rate method, High-low rate. 1040ez worksheet Home office, Office in the home. 1040ez worksheet Hotel clubs, Club dues and membership fees. 1040ez worksheet I Impairment-related work expenses, Impairment-Related Work Expenses of Disabled Employees Incidental expenses Defined, Incidental expenses. 1040ez worksheet Gifts, Incidental costs. 1040ez worksheet No meals, incidentals only, Incidental-expenses-only method. 1040ez worksheet Income-producing property, Income-producing property. 1040ez worksheet Incomplete records, What If I Have Incomplete Records? Indefinite job assignment, Temporary assignment vs. 1040ez worksheet indefinite assignment. 1040ez worksheet Independent contractors, Rules for Independent Contractors and Clients Interest on car loans, Interest on car loans. 1040ez worksheet Itinerants, Tax Home L Lavish or extravagant expenses, Lavish or extravagant. 1040ez worksheet , Lavish or extravagant expenses. 1040ez worksheet Leasing a car, truck, or van, Leasing a Car, Reporting inclusion amounts. 1040ez worksheet Luxury private boxes at entertainment events, Skyboxes and other private luxury boxes. 1040ez worksheet Luxury water travel, Luxury Water Travel M MACRS (Modified Accelerated Cost Recovery System), Modified Accelerated Cost Recovery System (MACRS). 1040ez worksheet 2011 chart (Table 4-1), Table 4-1. 1040ez worksheet 2013 MACRS Depreciation Chart (Use to Figure Depreciation for 2013. 1040ez worksheet ) Main place of business or work, Main place of business or work. 1040ez worksheet Married taxpayers Performing artists, Special rules for married persons. 1040ez worksheet Meal expenses, Meals 50% limit, 50% Limit Determination of applicability (Figure A), 50% Limit Exceptions, Exceptions to the 50% Limit Actual cost method, Actual Cost Form 2106, Meal and entertainment expenses. 1040ez worksheet Major cities with higher allowances, Amount of standard meal allowance. 1040ez worksheet Standard meal allowance, Standard Meal Allowance, Who can use the standard meal allowance. 1040ez worksheet , The standard meal allowance. 1040ez worksheet Meals, entertainment-related, A meal as a form of entertainment. 1040ez worksheet Mileage rate (see Standard mileage rate) Military (see Armed forces) Missing children, photographs of, Reminder Modified Accelerated Cost Recovery System (MACRS), Modified Accelerated Cost Recovery System (MACRS). 1040ez worksheet 2011 chart (Table 4-1), Table 4-1. 1040ez worksheet 2013 MACRS Depreciation Chart (Use to Figure Depreciation for 2013. 1040ez worksheet ) N Nonaccountable plans, Nonaccountable Plans O Office in the home, Office in the home. 1040ez worksheet Officials paid on fee basis, Officials Paid on a Fee Basis Overseas travel Conventions, Conventions Held Outside the North American Area Meal allowance, Standard meal allowance for areas outside the continental United States. 1040ez worksheet Part of trip outside U. 1040ez worksheet S. 1040ez worksheet , Part of Trip Outside the United States P Parking fees, Parking fees. 1040ez worksheet , Parking fees and tolls. 1040ez worksheet Per diem allowances, Per Diem and Car Allowances, Allowance more than the federal rate. 1040ez worksheet Defined, Reimbursement, allowance, or advance. 1040ez worksheet Federal rate for, The federal rate. 1040ez worksheet Per diem rates High-cost localities, High-low method. 1040ez worksheet High-low method, High-low method. 1040ez worksheet Regular federal method, Regular federal per diem rate method. 1040ez worksheet Standard rate for unlisted localities, High-low method. 1040ez worksheet , Regular federal per diem rate method. 1040ez worksheet Transition rules, High-low method. 1040ez worksheet , Federal per diem rate method. 1040ez worksheet Performing artists, Expenses of Certain Performing Artists Personal property taxes, Personal property taxes. 1040ez worksheet , Taxes paid on your car. 1040ez worksheet Personal trips, Trip Primarily for Personal Reasons Outside U. 1040ez worksheet S. 1040ez worksheet , Travel Primarily for Personal Reasons Placed in service, cars, Placed in service. 1040ez worksheet Probationary work period, Probationary work period. 1040ez worksheet Proving business purpose, Proving business purpose. 1040ez worksheet Public transportation Outside of U. 1040ez worksheet S. 1040ez worksheet travel, Public transportation. 1040ez worksheet Publications (see Tax help) R Recordkeeping requirements, Recordkeeping, Examples of Records Adequate records, What Are Adequate Records? Daily business mileage and expense log (Table 6-2), Table 5-2. 1040ez worksheet Daily Business Mileage and Expense Log Name: Destroyed records, Destroyed records. 1040ez worksheet How to prove expenses (Table 5-1), Table 5-1. 1040ez worksheet How To Prove Certain Business Expenses Incomplete records, What If I Have Incomplete Records? Reimbursed expenses, Reimbursed for expenses. 1040ez worksheet Sampling to prove expenses, Sampling. 1040ez worksheet Separating and combining expenses, Separating and Combining Expenses, If your return is examined. 1040ez worksheet Three-year period of retention, How Long To Keep Records and Receipts Weekly travel expense and entertainment record (Table 6-3), THIS IS NOT AN OFFICIAL INTERNAL REVENUE FORM Regular federal method Introduction, Regular federal per diem rate method. 1040ez worksheet Transition rules, Federal per diem rate method. 1040ez worksheet Reimbursements, Less than full value included in your income. 1040ez worksheet , Contractor does not adequately account. 1040ez worksheet Accountable plans, Accountable Plans Excess, Returning Excess Reimbursements, Nonaccountable Plans Form 2106, Reimbursements. 1040ez worksheet Nonaccountable plans, Nonaccountable Plans Nondeductible expenses, Reimbursement of nondeductible expenses. 1040ez worksheet Personal expenses, Reimbursement for personal expenses. 1040ez worksheet Recordkeeping, Reimbursed for expenses. 1040ez worksheet Reporting (Table 6-1), Table 6-1. 1040ez worksheet Reporting Travel, Entertainment, Gift, and Car Expenses and Reimbursements Unclaimed, Where To Report Reporting requirements, How To Report Per diem or car allowance, Reporting your expenses with a per diem or car allowance. 1040ez worksheet Reimbursements, Reimbursements, Contractor does not adequately account. 1040ez worksheet Reservists Transportation expenses, Armed Forces reservists. 1040ez worksheet Traveling more than 100 miles from home, Armed Forces Reservists Traveling More Than 100 Miles From Home Returning excess reimbursements, Returning Excess Reimbursements Rural mail carriers, Rural mail carriers. 1040ez worksheet S Section 179 deduction Amended return, How to choose. 1040ez worksheet Deduction, Section 179 Deduction Limits, Limits. 1040ez worksheet Self-employed persons, 2 - Self-employed. 1040ez worksheet Reporting requirements, Self-employed. 1040ez worksheet Skyboxes, Skyboxes and other private luxury boxes. 1040ez worksheet Spouse, expenses for, Travel expenses for another individual. 1040ez worksheet , Expenses for spouses. 1040ez worksheet Standard meal allowance, Standard Meal Allowance, Who can use the standard meal allowance. 1040ez worksheet , The standard meal allowance. 1040ez worksheet Standard mileage rate, What's New, Standard Mileage Rate, The standard mileage rate. 1040ez worksheet Depreciation adjustment for using, Depreciation adjustment when you used the standard mileage rate. 1040ez worksheet Form 2106, Standard mileage rate. 1040ez worksheet Statutory employees, Statutory employees. 1040ez worksheet T Tables and figures 50% limit determination (Figure A), 50% Limit Daily business mileage and expense log (Table 6-2), Table 5-2. 1040ez worksheet Daily Business Mileage and Expense Log Name: Entertainment expenses, determination of deductibility (Table 2-1), Table 2-1. 1040ez worksheet When Are Entertainment Expenses Deductible? Maximum depreciation deduction for cars table, Maximum Depreciation Deduction for Cars Modified Accelerated Cost Recovery System (MACRS) 2011 chart (Table 4-1), Table 4-1. 1040ez worksheet 2013 MACRS Depreciation Chart (Use to Figure Depreciation for 2013. 1040ez worksheet ) Proving expenses (Table 5-1), Table 5-1. 1040ez worksheet How To Prove Certain Business Expenses Reporting reimbursements (Table 6-1), Table 6-1. 1040ez worksheet Reporting Travel, Entertainment, Gift, and Car Expenses and Reimbursements Transportation expenses, determination of deductibility (Figure B), Gift or entertainment. 1040ez worksheet , Illustration of transportation expenses. 1040ez worksheet Travel expenses, determination of deductibility (Table 1-1), Table 1-1. 1040ez worksheet Travel Expenses You Can Deduct Weekly travel expense and entertainment record (Table 6-3), THIS IS NOT AN OFFICIAL INTERNAL REVENUE FORM Tax help, How To Get Tax Help Tax home, determination of, Tax Home Temporary job assignments, Temporary Assignment or Job Temporary work location, Temporary work location. 1040ez worksheet Tickets, Entertainment tickets. 1040ez worksheet , Gift or entertainment. 1040ez worksheet Season or series tickets, Season or series tickets. 1040ez worksheet Traffic violations, Fines and collateral. 1040ez worksheet Tools Hauling tools, Hauling tools or instruments. 1040ez worksheet Trade association meetings, Trade association meetings. 1040ez worksheet Trade-in of car, Car trade-in. 1040ez worksheet , Trade-in. 1040ez worksheet Traffic tickets, Fines and collateral. 1040ez worksheet Transients, Tax Home Transition rules, Transition Rules Example High-low method, High-low method. 1040ez worksheet High-low method, High-low method. 1040ez worksheet Regular federal method, Federal per diem rate method. 1040ez worksheet Transportation expenses, Transportation, Depreciation deduction for the year of disposition. 1040ez worksheet Car expenses, Car Expenses, Reporting inclusion amounts. 1040ez worksheet Deductible (Figure B), Gift or entertainment. 1040ez worksheet , Illustration of transportation expenses. 1040ez worksheet five or more cars, Five or more cars. 1040ez worksheet Form 2106, Transportation expenses. 1040ez worksheet Transportation workers, Special rate for transportation workers. 1040ez worksheet , Individuals subject to hours of service limits. 1040ez worksheet Travel advance, Reimbursement, allowance, or advance. 1040ez worksheet , Travel advance. 1040ez worksheet (see also Reimbursements) Travel expenses, Travel, Cruise Ships Another individual accompanying taxpayer, Travel expenses for another individual. 1040ez worksheet Away from home, Traveling Away From Home, Tax Home Deductible, What Travel Expenses Are Deductible?, Cruise Ships Summary of (Table 1-1), Table 1-1. 1040ez worksheet Travel Expenses You Can Deduct Defined, Travel expenses defined. 1040ez worksheet Going home on days off, Going home on days off. 1040ez worksheet In U. 1040ez worksheet S. 1040ez worksheet , Travel in the United States Lodging, Standard Meal Allowance Luxury water travel, Luxury Water Travel Outside U. 1040ez worksheet S. 1040ez worksheet , Travel Outside the United States Travel to family home, Tax Home Different From Family Home Trucks and vans Depreciation, Trucks and vans. 1040ez worksheet Transportation workers, Individuals subject to hours of service limits. 1040ez worksheet Transportation workers' expenses, Special rate for transportation workers. 1040ez worksheet Two places of work, Two places of work. 1040ez worksheet U Unclaimed reimbursements, Where To Report Unions Trips from union hall to place of work, Union members' trips from a union hall. 1040ez worksheet Unrecovered basis of car, How to treat unrecovered basis. 1040ez worksheet V Volunteers, Volunteers. 1040ez worksheet W Weekly travel expense and entertainment record (Table 6-3), THIS IS NOT AN OFFICIAL INTERNAL REVENUE FORM Prev  Up     Home   More Online Publications

Topic 602 - Child and Dependent Care Credit

You may be able to claim the child and dependent care credit if you paid work-related expenses for the care of a qualifying individual. The credit is generally a percentage of the amount of work-related expenses you paid to a care provider for the care of a qualifying individual. The percentage depends on your adjusted gross income. Work-related expenses qualifying for the credit are those paid for the care of a qualifying individual to enable you to work or actively look for work.

Expenses are paid for the care of a qualifying individual if the primary function is to assure the individual's well-being and protection. In general, amounts paid for services outside your household qualify for the credit if the care is provided for (i) a qualifying individual who is your qualifying child under age 13 or (ii) a qualifying individual who regularly spends at least 8 hours each day in your household.

The total expenses that may be used to calculate the credit are capped at $3,000 (for one qualifying individual) or at $6,000 (for two or more qualifying individuals). The dollar limits may differ depending on the tax year in question. The expenses qualifying for the computation of the credit must be reduced by the amount of any dependent care benefits provided by your employer that you exclude from gross income. In general, you can exclude up to $5,000 for dependent care benefits received from your employer. Also, generally, the expenses claimed may not exceed the lesser of your earned income or your spouse’s earned income. A special rule applies if your spouse is a full-time student or incapable of self-care. For additional information, refer to Publication 503, Child and Dependent Care Expenses.

For purposes of the child and dependent care credit, a qualifying individual is:

  1. Your dependent qualifying child who is under age 13 when the care is provided,
  2. Your spouse who is physically or mentally incapable of self-care and who has the same principal place of abode as you for more than half of the year, or
  3. Your dependent who is physically or mentally incapable of self-care, and who has the same principal place of abode as you for more than half of the year. For this purpose, whether an individual is your dependent is determined without regard to the individual's gross income, whether the individual files a joint return, or whether you are a dependent of another taxpayer.

An individual is physically or mentally incapable of self-care if, as a result of a physical or mental defect, the individual is incapable of caring for his or her hygiene or nutritional needs, or requires the full-time attention of another person for the individual's own safety or the safety of others.

For more information on who is a dependent or a qualifying child, refer to Publication 501, Exemptions, Standard Deduction, and Filing Information.

A noncustodial parent may not treat a child as a qualifying individual for purposes of the credit, even if the noncustodial parent may claim an exemption for the child. For more information on divorced or separated parents or parents who live apart at all times during the last six months of the year, refer to the topic Child of Divorced or Separated Parents or Parents Living Apart in Publication 503, Child and Dependent Care Expenses.

If a person is a qualifying individual for only a part of the tax year, only those expenses paid during that part of the year are included in calculating the credit.

In addition to paying for the care of a qualifying individual, you must meet all of the following conditions to claim the credit:

  1. Your payment must be made to a care provider who is not your spouse, the parent of your child who is your qualifying individual, your child under age 19, or a dependent of you or your spouse.
  2. You must file a joint return if you are married.
  3. You must provide the taxpayer identification number (usually the social security number) of each qualifying individual on the return on which you claim the credit.
  4. You must report the name, address, and taxpayer identification number (either the social security number, or the employer identification number) of the care provider on your return. If the care provider is a tax-exempt organization, you need only report the name and address on your return. You can use Form W-10 (PDF), Dependent Care Provider's Identification and Certification, to request this information from the care provider. If you do not provide information regarding the care provider, you may still be eligible for the credit if you can show that you exercised due diligence in attempting to provide the required information.

If you qualify for the credit, complete Form 2441 (PDF) and Form 1040 (PDF) or Form 1040A (PDF). If you received dependent care benefits from your employer (this amount should be shown on your Form W-2 (PDF), you must complete Part III of Form 2441. You cannot claim the child and dependent care credit if you use Form 1040EZ (PDF).

If you pay a provider to care for your dependent or spouse in your home, you may be a household employer. If you are a household employer, you may have to withhold and pay social security and Medicare taxes and pay federal unemployment tax. For more information, refer to Publication 926, Household Employer's Tax Guide, or Topic 756.

Page Last Reviewed or Updated: December 12, 2013

The 1040ez Worksheet

1040ez worksheet Publication 957 - Main Content Table of Contents 1. 1040ez worksheet What is Back Pay?Reporting Back Pay Back Pay Under a Statute Nonstatutory Back Pay Format for Report to the SSA Questions 2. 1040ez worksheet Special Wage PaymentsReporting Special Wage Payments Reporting Nonstatutory (Nonqualified) Stock Options as Special Wage Payments Nonqualified Deferred Compensation and Section 457 Plans Additional Reporting Examples for Nonqualified Deferred Compensation (NQDC) PlansSpecial rule for box 11 of Form W-2 (distributions and deferral in the same year). 1040ez worksheet 1. 1040ez worksheet What is Back Pay? Back pay is pay received in a tax year(s) for actual or deemed employment in an earlier tax year(s). 1040ez worksheet For social security coverage and benefit purposes, all back pay, whether or not under a statute, is wages if it is payment for covered employment. 1040ez worksheet Damages for personal injury, interest, penalties, and legal fees included with back pay awards are not wages. 1040ez worksheet Report all back pay. 1040ez worksheet However, the tax year(s) for which back pay is credited as wages for social security purposes is different if it is awarded under a statute. 1040ez worksheet See Back Pay Under a Statute , later, for more information. 1040ez worksheet Reporting Back Pay The Internal Revenue Service (IRS) and the SSA consider back pay awards to be wages. 1040ez worksheet However, for income tax purposes, the IRS treats all back pay as wages in the year paid. 1040ez worksheet Employers should use Form W-2, Wage and Tax Statement, or electronic wage reports to report back pay as wages in the year they actually pay the employee. 1040ez worksheet The SSA no longer accepts reports on tapes, cartridges, and diskettes. 1040ez worksheet Example. 1040ez worksheet In 2012, Terry Morris earned wages of $50,000. 1040ez worksheet In the same year, she received $100,000 in settlement of a back pay case against her employer that covered the periods January 2007 through December 2011. 1040ez worksheet Her employer properly reflected social security wages of $110,100 and Medicare wages of $150,000 on her 2012 Form W-2. 1040ez worksheet However, if an employer did not include back pay wages on a previously filed Form W-2, magnetic media, or electronically filed wage report, the employer should prepare a wage correction report, Form W-2c, Corrected Wage and Tax Statement, or electronically filed report, to add the back pay award to the wages previously reported. 1040ez worksheet Example. 1040ez worksheet If, in the above example, Terry Morris' employer had prepared her 2012 Form W-2 reporting social security and Medicare wages of only $50,000 each, the employer would have to correct that report. 1040ez worksheet A Form W-2c correcting the 2012 Form W-2 would show previously reported social security and Medicare wages of $50,000 and the correct amount of $110,100 for social security wages and $150,000 for Medicare wages. 1040ez worksheet SSA treatment of back pay under a statute. 1040ez worksheet   Under the law, the SSA credits back pay awarded under a statute to an individual's earnings record in the period(s) the wages should have been paid. 1040ez worksheet This is important because wages not credited to the proper year may result in lower social security benefits or failure to meet the requirements for benefits. 1040ez worksheet   However, back pay under statute payments will remain posted to the employee's social security earnings record in the year reported on Form W-2 (or Form W-2c) unless the employer or employee notifies the SSA (in a separate, special report) of the back pay under a statute payment. 1040ez worksheet Then, the SSA can allocate the statutory back pay to the appropriate periods. 1040ez worksheet   If a back pay award is not made under a statute, the SSA credits back pay as wages in the year paid. 1040ez worksheet    If employers do notify the SSA of this payment, they should prepare a special report (with the information noted below) and send it to: Social Security Administration Attn: CPS Back Pay Staff 7-B-15 SWT 1500 Woodlawn Drive Baltimore, MD 21241-0001 Be sure to send this special report to the above address because the SSA handles it separately from other reports. 1040ez worksheet    If you paid the back pay award in the same tax year to which it applies, report the wages on that year's Form W-2. 1040ez worksheet No further action is necessary. 1040ez worksheet Example. 1040ez worksheet In 2012, Judy Wilson received a salary of $30,000 and a back pay under statute award of $2,000 for the period January through June 2012. 1040ez worksheet Her employer properly reported wages of $32,000 for social security and Medicare on her 2012 Form W-2. 1040ez worksheet No further action is necessary. 1040ez worksheet Information the SSA needs to properly credit back pay under a statute (special report). 1040ez worksheet   After you complete the special report, you or the employee should send it to the SSA when or after you submit the Form W-2 (on paper or electronically) to the SSA for the year you pay the statutory back pay to the employee. 1040ez worksheet There is no statute of limitations on the filing of the special report to enable the SSA to allocate the wages. 1040ez worksheet The special report must include the following information. 1040ez worksheet The employer's name, address, and employer identification number (EIN). 1040ez worksheet A signed statement citing the federal or state statute under which the payment was made. 1040ez worksheet If the statute is not identified, the SSA will assume the payment was not under a statute and will not allocate to earlier period(s). 1040ez worksheet The name and telephone number of a person to contact. 1040ez worksheet The SSA may have additional questions concerning the back pay case or the individual employee's information. 1040ez worksheet A list of employees receiving the payment and the following information for each employee: The tax year you paid and reported the back pay. 1040ez worksheet The employee's social security number (SSN). 1040ez worksheet The employee's name (as shown on his or her social security card). 1040ez worksheet The amount of the back pay award excluding any amounts specifically designated otherwise, for example, damages for personal injury, interest, penalties, and legal fees. 1040ez worksheet The period(s) the back pay award covers (beginning and ending dates—month and year). 1040ez worksheet The other wages paid subject to social security and/or Medicare taxes and reported in the same year as the back pay award (if none, show zero)*. 1040ez worksheet Do not include the back pay award shown in that wage report. 1040ez worksheet If you originally submitted the report under an establishment number, show that number and the amount of money that is to remain under that establishment number. 1040ez worksheet The amount to allocate to each reporting period*. 1040ez worksheet This includes any amount you want allocated (if applicable) to the tax year of the award payment. 1040ez worksheet If you do not give the SSA specific amounts to allocate, the SSA does the allocation by dividing the back pay award by the number of months or years covered by the award. 1040ez worksheet *Note. 1040ez worksheet   For periods before January 1, 1978 (before January 1, 1981, for state and local government employers covered by a Section 218 agreement), show the wage amounts for each calendar quarter ending March 31, June 30, September 30, and December 31. 1040ez worksheet For all tax years, show and identify the social security and/or Medicare Qualified Government Employment (MQGE) wages (where applicable) separately. 1040ez worksheet MQGE is applicable to federal employees beginning in 1983, and for certain state and local government employees beginning in 1986. 1040ez worksheet For tax years 1991 and later, list the social security and Medicare wages separately. 1040ez worksheet If you originally reported the individual's wages under an establishment or payroll record unit number, show the amount of wages to remain in the award year for that number and furnish that number to the SSA along with the EIN. 1040ez worksheet Back Pay Under a Statute Back pay awarded under a statute is a payment by an employer following an award, determination, or agreement approved or sanctioned by a court or government agency responsible for enforcing a federal or state statute that protects an employee's right to employment or wages. 1040ez worksheet Examples of pertinent statutes include: Age Discrimination in Employment Act, Americans with Disabilities Act, Equal Pay Act, Fair Labor Standards Act, National Labor Relations Act, State minimum wage laws, and State statutes that protect rights to employment and wages. 1040ez worksheet Payments based on laws that have a similar effect to those listed above also may qualify as payments made under a statute. 1040ez worksheet Back pay awards, under some of the statutes listed above, may be compensation for personal injury and not pay for employment. 1040ez worksheet Such awards are not wages for social security coverage purposes. 1040ez worksheet If a court-approved or sanctioned settlement agreement states that the agreement is not an admission of discrimination, liability, or act of wrongdoing, the statement does not change the nature of a back pay award. 1040ez worksheet The payments made in such a settlement may still be back pay and wages under the rules discussed here. 1040ez worksheet Nonstatutory Back Pay A payment for back wages negotiated between an employer and employee without an award, determination, or agreement approved or sanctioned by a court or government agency, the payment is not made under a statute. 1040ez worksheet Delayed wage payments and retroactive pay increases resulting from union negotiation or payments under local ordinances or regulations are back pay and are wages. 1040ez worksheet However, they are not payments made under a statute. 1040ez worksheet If you are uncertain whether the back pay award was under a qualified statute, you may need to contact your personnel department or legal counsel or the attorney who filed the suit. 1040ez worksheet Format for Report to the SSA Use the format shown in Table 1, later, to send the SSA the information needed to properly credit back pay under a statute. 1040ez worksheet In a cover letter, include: Name and address of the employer, Statute under which you paid the back pay, Name and telephone number of the employer contact, and Signature of the reporting official. 1040ez worksheet Under certain circumstances, back pay may be a special wage payment and excluded from wages counted under the social security earnings test. 1040ez worksheet If you pay back pay to an employee age 61 or older, report it to the SSA in accordance with this section. 1040ez worksheet Read Special Wage Payments, later, for additional reporting instructions. 1040ez worksheet Questions If you have questions concerning back pay under a statute, call the SSA at 1-800-772-6270. 1040ez worksheet Exception. 1040ez worksheet   If you are a state or local government employer who was covered by an agreement under Section 218 of the Social Security Act before January 1, 1987, and you paid a back pay award before January 1, 1987, which you did not report to the SSA, contact your state Social Security Administrator's office. 1040ez worksheet Table 1. 1040ez worksheet Format for Report (Under Covering Letter) to Request SSA to Allocate Back Pay Under Statute Wages Employer's EIN: xx-xxxxxxx Tax Year in Which Award Payment Was Paid: 2012 (1) SSN and Employee Name (2)1 Award Amount and Period(s) (3)2,3 Other Soc. 1040ez worksheet Sec. 1040ez worksheet /Med. 1040ez worksheet Wages Paid In Award Year (4)3 Allocation     Soc. 1040ez worksheet Sec. 1040ez worksheet Med. 1040ez worksheet /MQGE Year Soc. 1040ez worksheet Sec. 1040ez worksheet Med. 1040ez worksheet /MQGE xxx-xx-xxxx HELEN T. 1040ez worksheet SMITH $100,000 1/2009 - 12/2012 $40,000 $40,000 2009 2010 2011 2012 $20,000 25,000 27,000 28,000 $20,000 25,000 27,000 28,000 xxx-xx-xxxx SAM W. 1040ez worksheet EVANS 30,000 7/89-12/91 -0- -0- 1989 1990 1991   6,000 12,000 12,000 xxx-xx-xxxx ROLAND S. 1040ez worksheet ADAMS 15,000 7/80-12/81 -0- -0- 9/80 12/80 1981 3,500 3,500 8,000   1Exclude amounts specifically designated as damages, penalties, etc. 1040ez worksheet  2Exclude the amount of back pay, if any, included in that amount. 1040ez worksheet  3For periods before January 1, 1978 (and for state and local government (Section 218) employers before January 1, 1981), show the wage amounts by calendar quarters. 1040ez worksheet The social security and/or Medicare Qualified Government Employment (MQGE) wages (where applicable) must be shown separately FOR ALL YEARS. 1040ez worksheet (Wages subject ONLY to MQGE would be shown in the Medicare/MQGE column; no wages would be shown in the Soc. 1040ez worksheet Sec. 1040ez worksheet column. 1040ez worksheet ) For tax years 1991 and later, the social security and Medicare wages must be listed separately. 1040ez worksheet Explanation of examples. 1040ez worksheet Helen T. 1040ez worksheet Smith–The back pay award, excluding interest, was $100,000 for the periods 1/2009-12/2012. 1040ez worksheet In 2012, this employee was also paid $40,000 in other wages. 1040ez worksheet (Her Form W-2 for 2012 reported $110,100 for social security and $140,000 for Medicare. 1040ez worksheet The SSA allocation will result in adjusted posted wages of $68,000 for social security and $68,000 for Medicare for 2012. 1040ez worksheet ) Sam W. 1040ez worksheet Evans–The back pay award was $30,000 for the periods 7/89-12/91. 1040ez worksheet This employee was hired in 1989 and was subject to MQGE only. 1040ez worksheet He was no longer employed by this governmental employer in 2012. 1040ez worksheet (His Form W-2 for 2012 reported $30,000 for social security and $30,000 for Medicare. 1040ez worksheet After the SSA allocation, he will not have any net posted wages for 2012. 1040ez worksheet ) Roland S. 1040ez worksheet Adams–The back pay award was $15,000 for the periods 7/80-12/81. 1040ez worksheet He was no longer employed by this state and local government (Section 218) employer in 2012. 1040ez worksheet (His Form W-2 for 2012 reported $15,000 for social security and $15,000 for Medicare; after the SSA allocation, he will not have any net posted wages for 2012. 1040ez worksheet ) If the state Social Security Administrator's office needs more information, they can contact the SSA at the following address:   Social Security Administration Office of Income Security Programs Office of Earnings and Program Integrity Policy 6401 Security Boulevard 2506 OPS Baltimore, MD 21235 2. 1040ez worksheet Special Wage Payments A special wage payment (SWP) is an amount paid by an employer to an employee (or former employee) for services performed in a prior year. 1040ez worksheet Employers should report to the SSA special wage payments made to employees and former employees who are recipients of social security retirement benefits. 1040ez worksheet Special wage payments made to a retired employee receiving social security or to an employee who continues to work while receiving social security benefits may reduce the benefits the individual receives if not reported to the SSA. 1040ez worksheet Special wage payments may include (but are not limited to): Accumulated sick and vacation pay, Back pay, Bonuses, Deferred compensation, Payments because of retirement, Sales commissions, Severance pay, and Stock options. 1040ez worksheet Note. 1040ez worksheet Payments made after retirement that are part of the normal payroll cycle should not be routinely reported as special wage payments. 1040ez worksheet Earnings Test. 1040ez worksheet   Benefits paid to a social security beneficiary under full retirement age may be reduced if the beneficiary continues to work. 1040ez worksheet The SSA uses the information in boxes 1, 3, and 5 of Form W-2 to determine the beneficiary's current year earnings. 1040ez worksheet Special wage payments, which are for services performed in a prior year, will increase the current year earnings on Form W-2, which also may result in a reduction in the beneficiary's benefits. 1040ez worksheet If a benefit is reduced because of a special wage payment, the beneficiary must get documentation from the employer before the SSA can restore the deducted portion. 1040ez worksheet Therefore, employer reports of special wage payments help prevent incorrect benefit reductions. 1040ez worksheet Reporting Special Wage Payments Employers must report special wage payments for income tax purposes and social security and Medicare taxes in the year received. 1040ez worksheet Report income, social security, and/or Medicare taxes for special wage payments on Form W-2. 1040ez worksheet See Nonqualified Deferred Compensation and Section 457 Plans, later, for reporting nonqualified deferred compensation plan deferrals and payments on Form W-2. 1040ez worksheet In addition, report to the SSA special wage payments made during the reporting year to retired employees and employees who continue to work while receiving social security benefits. 1040ez worksheet Submit reports after the close of the tax year. 1040ez worksheet To avoid delays in processing, submit reports in time to reach the SSA by April 1. 1040ez worksheet Use one of the following reporting methods. 1040ez worksheet Electronic reporting. 1040ez worksheet   Special wage payment files can be sent electronically by logging onto Business Services Online (BSO) via the socialsecurity. 1040ez worksheet gov website. 1040ez worksheet BSO enables organizations and authorized individuals to conduct business with and submit confidential information to the Social Security Administration. 1040ez worksheet You must register to use this website. 1040ez worksheet The web address is www. 1040ez worksheet socialsecurity. 1040ez worksheet gov/bso/bsowelcome. 1040ez worksheet htm. 1040ez worksheet   Use the specifications and record layout shown in  Table 2, later. 1040ez worksheet Only one file at a time may be submitted. 1040ez worksheet If your file is large (>10MB), or you have a slow internet connection, the transmission will be faster if the file is zipped. 1040ez worksheet A zipped file contains a file that has been compressed to reduce its file size. 1040ez worksheet WinZip and PKZIP are examples of acceptable compression packages. 1040ez worksheet   Electronic submissions not meeting the specifications in Table 2 will be rejected. 1040ez worksheet Paper listing. 1040ez worksheet   A paper listing can be used to report special wage payments to several employees. 1040ez worksheet Use the format shown in Table 3, later. 1040ez worksheet Submit paper listings to the local SSA office nearest your place of business. 1040ez worksheet Visit www. 1040ez worksheet socialsecurity. 1040ez worksheet gov/locator to find a Social Security office near you. 1040ez worksheet Form SSA-131. 1040ez worksheet   Use Form SSA-131 to report special wage payments made to an employee. 1040ez worksheet Also use this form to report nonqualified deferred compensation and section 457 plan deferrals and payments that could not be reported in box 11 of Form W-2. 1040ez worksheet    This image is too large to be displayed in the current screen. 1040ez worksheet Please click the link to view the image. 1040ez worksheet Publication 957 Reporting Back Pay to the Social Security Administration Instructions for Form SSA–131   EMPLOYER INSTRUCTIONS FOR COMPLETING SPECIAL WAGE PAYMENT FORM 1. 1040ez worksheet Provide the EIN that was used or will be used to report the employee's wages on the Form W-2. 1040ez worksheet 2. 1040ez worksheet Enter the date the employee retired. 1040ez worksheet Enter “Not Retired” if the employee has not retired. 1040ez worksheet 3. 1040ez worksheet Enter the date that the employee last performed services; was not expected to return to work; and was not subject to recall to render additional services. 1040ez worksheet This date should be the same as or earlier than the date in item “2”. 1040ez worksheet Enter “Not Retired” if the employee has not retired. 1040ez worksheet 4. 1040ez worksheet Enter the wages that were paid to the employee in the tax year that were for services that were performed in years prior to the tax year or that were paid on account of retirement. 1040ez worksheet  Examples (not all inclusive) of payments to be included: Payments in lieu of vacation that were earned in a year prior to the tax year. 1040ez worksheet Accumulated sick payments which were paid in a lump sum based on “retirement” as the sole condition of payment. 1040ez worksheet Accumulated sick payments paid at or after the date in item 3, which were earned in a year prior to the tax year. 1040ez worksheet Payments “on account of retirement”–dismissal, severance or termination pay paid because of retirement. 1040ez worksheet Bonuses which are paid pursuant to a prior contract, agreement or promise causing the employee to expect such payments regularly; or announced to induce the employee to work more steadily, rapidly or efficiently or to remain with the employer. 1040ez worksheet Stock Options. 1040ez worksheet   Do not include in item “4” payments: For annual, sick, holiday, or vacation pay if used (absence from work) prior to the date of retirement (earlier of items “2” or “3”). 1040ez worksheet That were reported or will be reported under “Nonqualified Plans” on the Form W-2. 1040ez worksheet That were deducted from the employee's wages and paid to a deferred compensation plan (e. 1040ez worksheet g. 1040ez worksheet , 401k). 1040ez worksheet Employees health and dental plan benefits (non-covered/non-taxable for Social Security Wages). 1040ez worksheet Bonuses earned and paid in the tax year. 1040ez worksheet 5. 1040ez worksheet Check whether payments listed in item 4 will be made for years after the tax year. 1040ez worksheet If yes, please show the amounts and years in which these will be paid, if known. 1040ez worksheet 6. 1040ez worksheet Nonqualified deferred compensation and section 457 plans only. 1040ez worksheet If you were unable to report nonqualified deferred compensation or section 457 plan payments and deferrals (contributions) on Form W-2 because both payments and deferrals occurred during the year, show the amount of wages earned by the employee during the tax year. 1040ez worksheet Generally, the wages earned will be the compensation reported in block 1 of Form W-2 less payments from a nonqualified deferred compensation (or 457) plan, but including any amounts deferred under the plan during the tax year (See IRS Publication 957). 1040ez worksheet Paperwork/Privacy Act Notice: This report is authorized by regulation 20 CFR 404. 1040ez worksheet 702. 1040ez worksheet The information that you provide will be used in making a determination regarding the amount of Social Security benefits payable to the above named individual. 1040ez worksheet While your response is voluntary, if you do not respond we may not be able to make a correct determination regarding the amount of Social Security benefits payable to the above named individual for the year in question. 1040ez worksheet We may also use the information you give us when we match records by computer. 1040ez worksheet Matching programs compare our records with those of other Federal, State, or local government agencies. 1040ez worksheet Many agencies may use matching programs to find or prove that a person qualifies for benefits paid by the Federal Government. 1040ez worksheet The law allows us to do this even if you do not agree to it. 1040ez worksheet Explanations about these and other reasons why information you provide us may be used or given out are available in Social Security Offices. 1040ez worksheet If you want to learn more about this, contact any Social Security Office. 1040ez worksheet The Paperwork Reduction Act: This information collection meets the clearance requirements of 44 U. 1040ez worksheet S. 1040ez worksheet C. 1040ez worksheet §3507, as amended by Section 2 of the Paperwork Reduction Act of 1995. 1040ez worksheet You are not required to answer these questions unless we display a valid Office of Management and Budget control number. 1040ez worksheet We estimate that it will take you about 20 minutes to read the instructions, gather the necessary facts, and answer the questions. 1040ez worksheet Form SSA-131 (8-2001) EF (06-2002)   Submit Form SSA-131 to the SSA office nearest your place of business. 1040ez worksheet Or, the employee can submit it to the SSA office handling the claim. 1040ez worksheet You or the employee must submit this form before the SSA can exclude the special wage payments for purposes of the earnings test. 1040ez worksheet If reporting on more than one employee, complete a separate Form SSA-131 for each employee or use the paper listing format (except for reporting nonqualified and section 457 plan deferrals and payments) in Table 3. 1040ez worksheet Do not report payments from nonqualified deferred compensation or section 457 plans that were reported in box 11 of Form W-2. 1040ez worksheet Use Form SSA-131 if deferrals to and payments from nonqualified or section 457 plans occurred during the tax year. 1040ez worksheet Reporting Nonstatutory (Nonqualified) Stock Options as Special Wage Payments A nonstatutory (nonqualified) option to purchase stock which is exercised in a year after the year in which the option was earned is a special wage payment. 1040ez worksheet It should not count for the social security earnings test. 1040ez worksheet Nonstatutory (nonqualified) options exercised as special wage payments by retired employees or employees who continue to work while receiving social security benefits should be reported by employers using the above reporting methods. 1040ez worksheet Nonqualified Deferred Compensation and Section 457 Plans A nonqualified deferred compensation plan is a plan or arrangement established and maintained by an employer for one or more of its employees that provides for the deferral of compensation, but does not meet the requirements for a tax-qualified deferred compensation plan. 1040ez worksheet For social security and Medicare purposes, deferred compensation plans for employees of state and local governments (section 457 plans) are treated the same as nonqualified plans. 1040ez worksheet Nonqualified and section 457 plans are reported differently than other special wage payments. 1040ez worksheet See Reporting Amounts Deferred to Nonqualified and Section 457 Plans below for specific instructions. 1040ez worksheet Reporting Amounts Deferred to Nonqualified and Section 457 Plans Generally, when the related services are performed, nonqualified deferred compensation is subject to social security and Medicare tax when deferred. 1040ez worksheet However, if nonqualified and section 457 plans contain provisions that delay the employee's right to receive payments from the plan, a period of substantial risk of forfeiture exists. 1040ez worksheet The plans' deferrals, or contributions, are not subject to social security and Medicare taxes until the period of substantial risk of forfeiture ends. 1040ez worksheet No risk of forfeiture. 1040ez worksheet   If there is no risk of forfeiture, report wage amounts deferred to a nonqualified deferred compensation or section 457 plan in box 3 (up to the wage base maximum) and/or box 5 of Form W-2. 1040ez worksheet Example. 1040ez worksheet Company X's nonqualified deferred compensation plan allows the deferral of up to $20,000 of employee salaries each year. 1040ez worksheet The plan has no risk of forfeiture. 1040ez worksheet In 2012, Employee A defers $20,000 to the plan from a total salary of $200,000. 1040ez worksheet Form W-2 Completion Amount Box 1 $200,000 Box 3* 110,100 Box 5 200,000 *Wage base maximum for tax year 2012 Risk of forfeiture lapses before retirement. 1040ez worksheet   If the substantial risk of forfeiture lapses before the employee retires, report all past contributions to the plan (or the value of the plan), including accumulated earned interest, in box 3 (up to the wage base maximum) and/or box 5 of Form W-2. 1040ez worksheet The accumulated deferrals are reported along with any other social security and Medicare wages earned during the year. 1040ez worksheet   Report in box 11 of Form W-2 the amount of deferrals, including any accumulated interest, that became taxable for social security and Medicare taxes during the year (but were for prior year services) because the deferred amounts were no longer subject to a substantial risk of forfeiture. 1040ez worksheet If the employee continues working, future deferrals are social security and Medicare wages when they are earned. 1040ez worksheet    Do not include in box 11 deferrals that are included in boxes 3 and/or 5 and that are for current year services. 1040ez worksheet Risk of forfeiture lapses at retirement. 1040ez worksheet   When an employee's right to a payment is contingent upon working until retirement, report all past contributions to the plan (or the value of the plan), including accumulated earned interest, as social security and/or Medicare wages in the year of retirement. 1040ez worksheet Add the amount to other wages paid in that year, and enter in box 3 (up to the wage base maximum) and/or box 5 of Form W-2. 1040ez worksheet   Report in box 11 of Form W-2 the amount of deferrals, including any accumulated interest, that became taxable for social security and Medicare taxes during the year (but were for prior year services) because the deferred amounts were no longer subject to a substantial risk of forfeiture. 1040ez worksheet    Do not include in box 11 deferrals that are included in boxes 3 and/or 5 and that are for current year services. 1040ez worksheet Example—risk of forfeiture. 1040ez worksheet At the end of the risk-of-forfeiture period for Company Y's nonqualified deferred compensation plan, Employee B's accumulated deferrals, plus interest earned by the plan, are $120,000, not including B's $20,000 deferral for this year. 1040ez worksheet B's wages, including this year's deferred amount, are $80,000. 1040ez worksheet Form W-2 Completion Amount Box 1 $60,000 Box 3* 110,100 Box 5 200,000 Box 11 120,000 *Wage base maximum for tax year 2012 Reporting Payments From Nonqualified and Nongovernmental Section 457 Plans When an employee or former employee retires and begins receiving payments (distributions) from a nonqualified or nongovernmental section 457 plan, report the payments in boxes 1 and 11 of Form W-2. 1040ez worksheet Report payments (distributions) from a governmental section 457 plan on Form 1099-R, Distributions from Pensions, Annuities, Retirement or Profit-Sharing Plans, IRAs, Insurance Contracts, etc. 1040ez worksheet Example. 1040ez worksheet Employee D retired from the XYZ company and began receiving social security benefits. 1040ez worksheet XYZ paid D a $12,000 bonus upon retirement for sales made in a prior year, and D received $25,000 in payments from XYZ's nonqualified deferred compensation plan. 1040ez worksheet In addition, D agreed to continue performing services for XYZ, but on a part-time basis for wages of $15,000 per year. 1040ez worksheet D made no deferrals to the nonqualified plan this year. 1040ez worksheet Form W-2 Completion Amount Box 1 $52,000 Box 3 27,000 Box 5 27,000 Box 11 25,000 Report the $12,000 bonus to the SSA using electronic reporting, a paper listing, or Form SSA-131. 1040ez worksheet For more information, see Reporting Special Wage Payments , earlier. 1040ez worksheet Reporting Payments and Deferrals in the Same Year Do not complete box 11 when payments (distributions) are made from a nonqualified plan and deferrals are reported in boxes 3 and/or 5 of Form W-2 (including current year deferrals). 1040ez worksheet Report to the SSA on Form SSA-131 the total amount the employee earned during the tax year. 1040ez worksheet Normally, the amount earned is the amount reported in box 1 of Form W-2 less payments from a nonqualified or section 457 plan, but including any amounts deferred under the plan during the tax year. 1040ez worksheet See Form SSA-131 and its instructions, earlier. 1040ez worksheet Example. 1040ez worksheet Employee K retired this year from Company XYZ and began receiving social security benefits. 1040ez worksheet During the year he earned wages of $50,000 and deferred $35,000 of the wages into the company's nonqualified deferred compensation plan. 1040ez worksheet K also received $75,000 in payments from the company's nonqualified plan. 1040ez worksheet Form W-2 Completion Amount Special Wage Payment $75,000 Wages 50,000 Minus: deferral 35,000 Total reported in Box 1 $90,000     Wages including deferral reported in  Boxes 3 and 5 $50,000     Leave Box 11 blank. 1040ez worksheet File Form SSA-131 -0-     Form SSA-131 Completion Amount from Box 1 of Form W-2 $90,000 Minus: payments from a nonqualified plan 75,000 Plus: amounts deferred into the plan during the year 35,000 Total wages earned for purposes of Form SSA-131 (item 6) $50,000 Additional Reporting Examples for Nonqualified Deferred Compensation (NQDC) Plans It is not necessary to show amounts deferred during the year under an NQDC plan subject to section 409A. 1040ez worksheet If you report section 409A deferrals, show the amount in box 12 of Form W-2 using code Y. 1040ez worksheet For more information, see Notice 2008-115, 2008-52 I. 1040ez worksheet R. 1040ez worksheet B. 1040ez worksheet 1367, available at www. 1040ez worksheet irs. 1040ez worksheet gov/irb/2008-52_IRB/ar10. 1040ez worksheet html. 1040ez worksheet Special reporting rules apply when an NQDC plan is not compliant with section 409A (when there has been a “plan failure”). 1040ez worksheet Income included under section 409A from an NQDC plan is reported in box 1 and box 12 of Form W-2 using code Z. 1040ez worksheet See Notice 2008-115. 1040ez worksheet The following examples use small dollar amounts for illustrative purposes. 1040ez worksheet However, the amount reported in box 3 of Form W-2 is always limited by the social security earnings wage base (for example, $110,100 for 2012). 1040ez worksheet The term “vested” in the following examples means that the amount deferred is not subject to a substantial risk of forfeiture. 1040ez worksheet Conversely, the term “not vested” means that the amount deferred is subject to a substantial risk of forfeiture. 1040ez worksheet The examples assume that the NQDC plan is in compliance with section 409A, and that amounts deferred under the plan are not includible in gross income as they are deferred. 1040ez worksheet For purposes of the examples, it is assumed that the regular pay of the employee is remuneration for employment and wages for employment tax purposes except to the extent the deferral of a portion of the regular pay results in a reduction in wages. 1040ez worksheet Example 1: Deferral that is immediately vested (no substantial risk of forfeiture) with no distributions and no vesting of prior-year deferrals. 1040ez worksheet For the year, the employee’s regular pay was $200, and the employee deferred $20 of the pay into her employer’s NQDC plan. 1040ez worksheet The deferral of $20 was vested upon deferral and there was an employer match of $10 under the plan, which was also vested. 1040ez worksheet Regular pay = $200; Deferral, vested = $20; Employer match, vested = $10. 1040ez worksheet Form W-2 Completion Amount Box 1 ($200 Regular pay minus $20 vested deferral) $180 Box 3 ($200 Regular pay plus $10 Employer match, vested) 210 Box 5 ($200 Regular pay plus $10 Employer match, vested) 210 Box 11 -0- Example 2: Deferral with delayed vesting (substantial risk of forfeiture) of employee and employer portions (no distributions and no vesting of prior-year deferrals). 1040ez worksheet For the year, the employee’s regular pay was $200, and the employee deferred $20 of the pay into the employer’s nonqualified deferred compensation plan. 1040ez worksheet The deferral of $20 was not vested upon deferral, and there was an employer match of $10 under the plan, which was also not vested. 1040ez worksheet Regular pay = $200; Deferral, not vested = $20; Employer match, not vested = $10. 1040ez worksheet Form W-2 Completion Amount Box 1 ($200 Regular pay minus $20 Deferral, not vested) $180 Box 3 ($200 Regular pay minus $20 Deferral, not vested) 180 Box 5 ($200 Regular pay minus $20 Deferral, not vested) 180 Box 11 -0- Example 3: Deferral that is immediately vested with prior-year deferrals and investment earnings on the prior-year deferrals that are now vesting (no distributions). 1040ez worksheet For the year, the employee’s regular pay was $200, and the employee deferred $20 of the pay into the employer’s nonqualified deferred compensation plan. 1040ez worksheet The deferral of $20 was vested upon deferral. 1040ez worksheet During the year, $100 of prior-year deferrals and $15 of investment earnings on the $100 of prior-year deferrals became vested. 1040ez worksheet Regular pay = $200; Deferral, vested = $20; Vesting of prior-year deferrals = $100; Vesting of investment earnings on $100 of prior-year deferral = $15. 1040ez worksheet Form W-2 Completion Amount Box 1 ($200 Regular pay minus $20 Deferral, vested) $180 Box 3 ($200 Regular pay plus $100 vested prior-year deferral plus $15 earnings on deferral) 315 Box 5 ($200 Regular pay plus $100 vested prior-year deferral plus $15 vested investment earnings on prior year deferral) 315 Box 11 ($100 vested prior-year deferral plus $15 earnings) 115 Example 4: No deferrals but there are distributions (no vesting of prior-year deferrals). 1040ez worksheet For the year, the employee’s regular pay was $100, and the employee deferred no pay into the employer’s NQDC plan. 1040ez worksheet There was no vesting of prior-year deferrals under the plan. 1040ez worksheet During the year, there were total distributions of $50 from the plan to the employee. 1040ez worksheet Regular pay = $100; Distribution = $50. 1040ez worksheet Form W-2 Completion Amount Box 1 ($100 Regular pay plus $50 Distribution) $150 Box 3 ($100 Regular pay ) 100 Box 5 ($100 Regular pay) 100 Box 11 ($50 Distribution) 50 Special rule for box 11 of Form W-2 (distributions and deferral in the same year). 1040ez worksheet   If, in the same year, there are NQDC distributions and there are deferrals that are reportable in boxes 3 and/or 5 (current or prior-year deferrals) of Form W-2, do not complete box 11. 1040ez worksheet Instead, report on Form SSA-131 the total amount the employee earned during the year. 1040ez worksheet * Submit the SSA-131 to the nearest SSA office or give it to the employee. 1040ez worksheet   *Generally, the amount earned by the employee during the tax year for purposes of item 6 of Form SSA-131 is the amount reported in box 1 of Form W-2 plus current-year deferrals that are vested (employee and employer portions) less distributions. 1040ez worksheet Do not consider prior-year deferrals that are vesting in the current year. 1040ez worksheet If there was a plan failure, the box 1 amount in this calculation should be as if there were no plan failure. 1040ez worksheet Example 5: Deferral that is immediately vested and there are distributions (no vesting of prior-year deferrals). 1040ez worksheet For the year, the employee’s regular pay was $200, and the employee deferred $20 of the pay into the employer’s NQDC plan. 1040ez worksheet There was also an employer match of $10. 1040ez worksheet The deferral and employer match were vested upon deferral. 1040ez worksheet There was no vesting of prior-year deferrals under the plan. 1040ez worksheet During the year, there were total distributions of $50 from the plan to the employee. 1040ez worksheet Regular pay = $200; Deferral, vested = $20; Employer match, vested = $10; Distribution = $50. 1040ez worksheet Form W-2 Completion Amount Box 1 ($50 Special Wage Payment (Distribution) plus $200 Regular pay minus $20 Deferral, vested) $230 Boxes 3 and 5 ($200 Regular pay plus $10 vested employer match) 210 Leave Box 11 blank. 1040ez worksheet File Form SSA-131 -0-     Form SSA-131 Completion Item 6 - amount of wages earned by the employee during the tax year ($230 from Box 1 of Form W-2 minus $50 Distribution plus $30 vested current year employee deferral and employer match) $210 Example 6: Deferral with delayed vesting and there are distributions (no vesting of prior-year deferrals). 1040ez worksheet For the year, the employee’s regular pay was $200, and the employee deferred $20 of the pay into the employer’s NQDC plan. 1040ez worksheet The deferral was not vested upon deferral. 1040ez worksheet There was no vesting of prior-year deferrals under the plan. 1040ez worksheet During the year, there were total distributions of $50 from the plan to the employee. 1040ez worksheet Regular pay = $200; Deferral, not vested = $20; Distribution = $50. 1040ez worksheet Form W-2 Completion Amount Box 1 ($50 Special Wage Payment (Distribution) plus $200 Regular pay minus $20 Deferral, not vested) $230 Boxes 3 and 5 ($200 Regular pay minus $20 deferral that is not vested) 180 Box 11 ($50 Distribution). 1040ez worksheet 50 Example 7: Deferral that is immediately vested and there are distributions (also vesting of prior-year deferrals and earnings on those prior-year deferrals). 1040ez worksheet For the year, the employee’s regular pay was $200, and the employee deferred $20 of the pay into the employer’s NQDC plan. 1040ez worksheet The deferral was vested upon deferral. 1040ez worksheet There was vesting of $100 of prior-year deferrals and $15 of earnings on the $100 prior-year deferral under the plan. 1040ez worksheet During the year, there were total distributions of $50 from the plan to the employee. 1040ez worksheet Regular pay = $200; Deferral, vested = $20; Distribution = $50; Vesting of prior-year deferrals ($100) and earnings on those prior-year deferrals ($15) = $115. 1040ez worksheet Form W-2 Completion Amount Box 1 ($50 Special Wage Payment (Distribution) plus $200 Regular pay minus $20 vested deferral $230 Boxes 3 and 5 ($200 Regular pay Plus $115 vested prior deferral (with vested earnings on the deferral)) 315 Leave Box 11 blank. 1040ez worksheet File Form SSA-131 -0-     Form SSA-131 Completion Item 6, amount of wages earned by the employee during the tax year ($230 from Box 1 of Form W-2 minus $50 Distribution plus $20 vested current year deferral) $200 Example 8: Deferral with delayed vesting and there are distributions (vesting of prior-year deferrals, including employer matches, and earnings on those deferrals). 1040ez worksheet For the year, the employee’s regular pay was $200, and the employee deferred $20 of the pay into the employer’s NQDC plan. 1040ez worksheet The deferral was not vested upon deferral. 1040ez worksheet There was also vesting of prior-year deferrals and employer matches and earnings on these amounts under the plan ($115). 1040ez worksheet During the year, there were total distributions of $50 from the plan to the employee. 1040ez worksheet Regular pay = $200; Deferral, not vested = $20; Distribution = $50; Vesting of prior-year deferrals and employer match = $100 plus earnings on that $100 of $15. 1040ez worksheet Form W-2 Completion Amount Box 1 ($50 Special Wage Payment (Distribution) plus $200 regular pay minus $20 Deferral, not vested) $230 Boxes 3 and 5 ($200 Regular pay plus $115 vested prior-year deferral and prior year employer match and earning on the prior year amounts minus $20 deferral that is not vested) 295 Leave Box 11 blank. 1040ez worksheet File Form SSA-131 -0-     Form SSA-131 Completion Item 6 ($230 Amount from Box 1 of Form W-2 minus $50 Distribution) $180 Table 2. 1040ez worksheet Specifications for Electronic Reporting of Special Wage Payments Record Position  Field Size   Description Start End 1 3 3 Record Type—must include only the capital letters “SWP” 4 12 9 SSN—must be numeric and may not be all zeros 13 27 15 Last Name—all capitals and no punctuation; may have blanks on right only 28 38 11 First Name—all capitals and no punctuation; may have blanks on right only 39 39 1 Middle Initial—must be either a capital letter or blank 40 48 9 EIN—must be numeric and may not be all zeros 49 59 11 Payment—must be numeric; may not be all zeros; last two digits on right are assumed to be cents; no period or dollar sign 60 63 4 Payment Year—must be only a four-digit year 64 66 3 SSA Office Code—must be numeric and may be all zeros 67 67 1 Payment Type Code—must be the capital letter “T” 68 117 50 Filler  The record format is a fixed length of 117. 1040ez worksheet  The file format is ASCII. 1040ez worksheet  Submit only one file at a time. 1040ez worksheet   Table 3. 1040ez worksheet Sample—Paper Listing for Reporting Special Wage Payments to Several Employees Report of Special Wage PaymentsTax Year: Page of A. 1040ez worksheet Employer Name: EIN:   Address: Contact Name:     Phone: ( )   . 1040ez worksheet 1) B. 1040ez worksheet Employee Name: (Last) (First) (MI)   C. 1040ez worksheet SSN: D. 1040ez worksheet SWP:$ E. 1040ez worksheet Type: Other: 2) B. 1040ez worksheet Employee Name: (Last) (First) (MI)   C. 1040ez worksheet SSN: D. 1040ez worksheet SWP:$ E. 1040ez worksheet Type: Other: 3) B. 1040ez worksheet Employee Name: (Last) (First) (MI)   C. 1040ez worksheet SSN: D. 1040ez worksheet SWP:$ E. 1040ez worksheet Type: Other: 4) B. 1040ez worksheet Employee Name: (Last) (First) (MI)   C. 1040ez worksheet SSN: D. 1040ez worksheet SWP:$ E. 1040ez worksheet Type: Other: 5) B. 1040ez worksheet Employee Name: (Last) (First) (MI)   C. 1040ez worksheet SSN: D. 1040ez worksheet SWP:$ E. 1040ez worksheet Type: Other:     INSTRUCTIONS:   Enter tax year and page number. 1040ez worksheet   A. 1040ez worksheet Employer name, employer identification number (EIN), address, the name of a contact person, and a phone number where the contact person can be reached during normal business hours. 1040ez worksheet   B. 1040ez worksheet Employee's name. 1040ez worksheet   C. 1040ez worksheet Employee's social security number (SSN). 1040ez worksheet   D. 1040ez worksheet Total amount of special wage payments made to the employee. 1040ez worksheet   E. 1040ez worksheet Type of special wage payment from the following list: (1) Vacation Pay, (2) Sick Pay, (3) Severance Pay,  (4) Bonus, (5) Deferred Compensation, (6) Stock Options, and (7) Other—Please explain. 1040ez worksheet   Do not use a paper listing for nonqualified deferred compensation and section 457 plan deferrals and payments that could not be reported in block 11 of Form W-2. 1040ez worksheet (Get Form SSA-131. 1040ez worksheet )                 Prev  Up  Next   Home   More Online Publications