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2012 Income Tax Booklet

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2012 Income Tax Booklet

2012 income tax booklet Publication 531 - Introductory Material Table of Contents Future Developments What's New Reminder IntroductionOrdering forms and publications. 2012 income tax booklet Tax questions. 2012 income tax booklet Future Developments For the latest information about developments related to Publication 531, such as legislation enacted after this publication was published, go to www. 2012 income tax booklet irs. 2012 income tax booklet gov/pub531. 2012 income tax booklet What's New Additional Medicare Tax. 2012 income tax booklet  Beginning in 2013, a 0. 2012 income tax booklet 9% Additional Medicare Tax applies to Medicare wages, Railroad Retirement Tax Act (RRTA) compensation, and self-employment income that are more than: $125,000 if married filing separately, $250,000 if married filing jointly, or $200,000 for any other filing status. 2012 income tax booklet An employer is required to withhold Additional Medicare Tax on any Medicare wages or RRTA compensation it pays to an employee in excess of $200,000 in a calendar year without regard to the employee's filing status. 2012 income tax booklet An employer is required to begin withholding Additional Medicare Tax in the pay period in which it pays wages or compensation in excess of $200,000 to an employee and continue to withhold it until the end of the calendar year. 2012 income tax booklet Additional Medicare Tax is only imposed on the employee. 2012 income tax booklet There is no employer share of Additional Medicare Tax. 2012 income tax booklet All wages and compensation that are subject to Medicare tax are subject to Additional Medicare Tax withholding if paid in excess of the $200,000 withholding threshold. 2012 income tax booklet Tips are subject to Additional Medicare Tax withholding, if, in combination with other wages paid by the employer, they exceed the $200,000 withholding threshold. 2012 income tax booklet Similarly, tips are subject to Additional Medicare Tax withholding, if, in combination with other RRTA compensation paid by the employer, they exceed the $200,000 withholding threshold. 2012 income tax booklet For more information on Additional Medicare Tax, go to www. 2012 income tax booklet irs. 2012 income tax booklet gov and enter “Additional Medicare Tax” in the search box. 2012 income tax booklet Reminder Photographs of missing children. 2012 income tax booklet  The Internal Revenue Service is a proud partner with the National Center for Missing and Exploited Children. 2012 income tax booklet Photographs of missing children selected by the Center may appear in this publication on pages that would otherwise be blank. 2012 income tax booklet You can help bring these children home by looking at the photographs and calling 1-800-THE-LOST (1-800-843-5678) if you recognize a child. 2012 income tax booklet Introduction This publication is for employees who receive tips. 2012 income tax booklet All tips you receive are income and are subject to federal income tax. 2012 income tax booklet You must include in gross income all tips you receive directly, charged tips paid to you by your employer, and your share of any tips you receive under a tip-splitting or tip-pooling arrangement. 2012 income tax booklet The value of noncash tips, such as tickets, passes, or other items of value, is also income and subject to tax. 2012 income tax booklet Reporting your tip income correctly is not difficult. 2012 income tax booklet You must do three things. 2012 income tax booklet Keep a daily tip record. 2012 income tax booklet Report tips to your employer. 2012 income tax booklet Report all your tips on your income tax return. 2012 income tax booklet  This publication will explain these three things and show you what to do on your tax return if you have not done the first two. 2012 income tax booklet This publication will also show you how to treat allocated tips. 2012 income tax booklet Comments and suggestions. 2012 income tax booklet   We welcome your comments about this publication and your suggestions for future editions. 2012 income tax booklet   You can write to us at the following address: Internal Revenue Service Tax Forms and Publications Division 1111 Constitution Ave. 2012 income tax booklet NW, IR-6526 Washington, DC 20224   We respond to many letters by telephone. 2012 income tax booklet Therefore, it would be helpful if you would include your daytime phone number, including the area code, in your correspondence. 2012 income tax booklet   You can send your comments from www. 2012 income tax booklet irs. 2012 income tax booklet gov/formspubs/. 2012 income tax booklet Click on “More Information” and then on “Comment on Tax Forms and Publications”. 2012 income tax booklet   Although we cannot respond individually to each comment received, we do appreciate your feedback and will consider your comments as we revise our tax products. 2012 income tax booklet Ordering forms and publications. 2012 income tax booklet   Visit www. 2012 income tax booklet irs. 2012 income tax booklet gov/formspubs/ to download forms and publications, call 1-800-TAX-FORM (1-800-829-3676), or write to the address below and receive a response within 10 days after your request is received. 2012 income tax booklet Internal Revenue Service 1201 N. 2012 income tax booklet Mitsubishi Motorway Bloomington, IL 61705-6613 Tax questions. 2012 income tax booklet   If you have a tax question, check the information available on IRS. 2012 income tax booklet gov or call 1-800-829-1040. 2012 income tax booklet We cannot answer tax questions sent to either of the above addresses. 2012 income tax booklet Prev  Up  Next   Home   More Online Publications
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Tax Information For Partnerships

2008 Changes to Form 1065 - Frequently Asked Questions
Form 1065 has a number of changes for 2008. For example, Schedule B and Schedule K-1 require reporting of ownership percentages. The FAQ page on Form 1065 changes offers helpful examples.

Partnership - Audit Techniques Guide (ATG)
The focus is on issues that fall within sections 701 through 761 of the Code (Subchapter K). Subchapter K deals primarily with the formation, operation, and termination of partnerships. Many issues arise during the initial or final year of the partnership.

Starting a Business
If you’re considering starting a business, then start here. This section provides links to everything from a checklist for a new business to selecting a business structure and more.

Notification of Possible Filing Requirement
This reminder is being issued to alert partnerships that they may have an additional filing requirement with the Internal Revenue Service related to a foreign partner(s) on their partnership return.

Modernized e-file (MeF) for Partnerships
This web site provides an overview of electronic filing and more detailed information for those partnerships that prepare and transmit their own income tax returns using MeF. Partnerships that rely upon third party tax professionals to prepare and transmit their tax returns should consult their tax professional.

Partnerships
A partnership is the relationship existing between two or more persons who join to carry on a trade or business.

Publicly Traded Partnerships
This page contains information related to publicly traded partnerships that have effectively connected income, gain, or loss and who must pay withholding tax on any distributions of income made to its foreign partners.

Report of Foreign Bank and Financial Accounts (FBAR)
If you own a foreign bank account, brokerage account, mutual fund, unit trust, or other financial account, then you may be required to report the account yearly to the Internal Revenue Service.

Page Last Reviewed or Updated: 30-Mar-2014

The 2012 Income Tax Booklet

2012 income tax booklet 5. 2012 income tax booklet   Table and Worksheets for the Self-Employed Table of Contents Community property laws. 2012 income tax booklet As discussed in chapters 2 and 4, if you are self-employed, you must use the rate table or rate worksheet and deduction worksheet to figure your deduction for contributions you made for yourself to a SEP-IRA or qualified plan. 2012 income tax booklet First, use either the rate table or rate worksheet to find your reduced contribution rate. 2012 income tax booklet Then complete the deduction worksheet to figure your deduction for contributions. 2012 income tax booklet The table and the worksheets in chapter 5 apply only to self-employed individuals who have only one defined contribution plan, such as a profit-sharing plan. 2012 income tax booklet A SEP plan is treated as a profit-sharing plan. 2012 income tax booklet However, do not use this worksheet for SARSEPs. 2012 income tax booklet Rate table for self-employed. 2012 income tax booklet   If your plan's contribution rate is a whole percentage (for example, 12% rather than 12½%), you can use the table on the next page to find your reduced contribution rate. 2012 income tax booklet Otherwise, use the rate worksheet provided below. 2012 income tax booklet   First, find your plan contribution rate (the contribution rate stated in your plan) in Column A of the table. 2012 income tax booklet Then read across to the rate under Column B. 2012 income tax booklet Enter the rate from Column B in step 4 of the Deduction Worksheet for Self-Employed on this page. 2012 income tax booklet    Example. 2012 income tax booklet You are a sole proprietor with no employees. 2012 income tax booklet If your plan's contribution rate is 10% of a participant's compensation, your rate is 0. 2012 income tax booklet 090909. 2012 income tax booklet Enter this rate in step 4 of the Deduction Worksheet for Self-Employed on this page. 2012 income tax booklet Deduction Worksheet for Self-Employed   Step 1           Enter your net profit from line 31, Schedule C (Form 1040); line 3, Schedule C-EZ (Form 1040); line 34, Schedule F (Form 1040)*; or box 14, code A**, Schedule K-1 (Form 1065)*. 2012 income tax booklet For information on other income included in net profit from self-employment, see the Instructions for Schedule SE, Form 1040. 2012 income tax booklet       *Reduce this amount by any amount reported on Schedule SE (Form 1040), line 1b. 2012 income tax booklet       **General partners should reduce this amount by the same additional expenses subtracted from box 14, code A to determine the amount on line 1 or 2 of Schedule SE. 2012 income tax booklet     Step 2           Enter your deduction for self-employment tax from Form 1040, line 27             Step 3           Net earnings from self-employment. 2012 income tax booklet Subtract step 2 from step 1     Step 4           Enter your rate from the Rate Table for Self-Employed or Rate Worksheet for Self-Employed     Step 5           Multiply step 3 by step 4     Step 6           Multiply $255,000 by your plan contribution rate (not the reduced rate)     Step 7           Enter the smaller of step 5 or step 6     Step 8           Contribution dollar limit $51,000     • If you made any elective deferrals to your self-employed plan, go to step 9. 2012 income tax booklet         • Otherwise, skip steps 9 through 20 and enter the smaller of step 7 or step 8 on step 21. 2012 income tax booklet       Step 9           Enter your allowable elective deferrals (including designated Roth contributions) made to your self-employed plan during 2013. 2012 income tax booklet Do not enter more than $17,500     Step 10           Subtract step 9 from step 8     Step 11           Subtract step 9 from step 3       Step 12           Enter one-half of step 11     Step 13           Enter the smallest of step 7, 10, or 12     Step 14           Subtract step 13 from step 3     Step 15           Enter the smaller of step 9 or step 14       • If you made catch-up contributions, go to step 16. 2012 income tax booklet         • Otherwise, skip steps 16 through 18 and go to step 19. 2012 income tax booklet       Step 16           Subtract step 15 from step 14     Step 17           Enter your catch-up contributions (including designated Roth contributions), if any. 2012 income tax booklet Do not enter more than $5,500     Step 18           Enter the smaller of step 16 or step 17     Step 19           Add steps 13, 15, and 18. 2012 income tax booklet     Step 20           Enter the amount of designated Roth contributions included on lines 9 and 17. 2012 income tax booklet     Step 21           Subtract step 20 from step 19. 2012 income tax booklet This is your maximum deductible contribution. 2012 income tax booklet                 Next: Enter your actual contribution, not to exceed your maximum deductible contribution, on Form 1040, line 28. 2012 income tax booklet   Rate worksheet for self-employed. 2012 income tax booklet   If your plan's contribution rate is not a whole percentage (for example, 10½%), you cannot use the Rate Table for Self-Employed. 2012 income tax booklet Use the following worksheet instead. 2012 income tax booklet Rate Worksheet for Self-Employed 1) Plan contribution rate as a decimal (for example, 10½% = 0. 2012 income tax booklet 105)   2) Rate in line 1 plus 1 (for example, 0. 2012 income tax booklet 105 + 1 = 1. 2012 income tax booklet 105)   3) Self-employed rate as a decimal rounded to at least 3 decimal places (line 1 ÷ line 2) (for example, 0. 2012 income tax booklet 105 ÷ 1. 2012 income tax booklet 105 = 0. 2012 income tax booklet 095)   Figuring your deduction. 2012 income tax booklet   Now that you have your self-employed rate from either the rate table or rate worksheet, you can figure your maximum deduction for contributions for yourself by completing the Deduction Worksheet for Self-Employed. 2012 income tax booklet Community property laws. 2012 income tax booklet   If you reside in a community property state and you are married and filing a separate return, disregard community property laws for step 1 of the Deduction Worksheet for Self-Employed. 2012 income tax booklet Enter on step 1 the total net profit you actually earned. 2012 income tax booklet Rate Table for Self-Employed Column A  If the plan contri- bution rate is: (shown as %) Column B  Your rate is: (shown as decimal) 1 . 2012 income tax booklet 009901 2 . 2012 income tax booklet 019608 3 . 2012 income tax booklet 029126 4 . 2012 income tax booklet 038462 5 . 2012 income tax booklet 047619 6 . 2012 income tax booklet 056604 7 . 2012 income tax booklet 065421 8 . 2012 income tax booklet 074074 9 . 2012 income tax booklet 082569 10 . 2012 income tax booklet 090909 11 . 2012 income tax booklet 099099 12 . 2012 income tax booklet 107143 13 . 2012 income tax booklet 115044 14 . 2012 income tax booklet 122807 15 . 2012 income tax booklet 130435 16 . 2012 income tax booklet 137931 17 . 2012 income tax booklet 145299 18 . 2012 income tax booklet 152542 19 . 2012 income tax booklet 159664 20 . 2012 income tax booklet 166667 21 . 2012 income tax booklet 173554 22 . 2012 income tax booklet 180328 23 . 2012 income tax booklet 186992 24 . 2012 income tax booklet 193548 25* . 2012 income tax booklet 200000* *The deduction for annual employer contributions (other than elective deferrals) to a SEP plan, a profit-sharing plan, or a money purchase plan cannot be more than 20% of your net earnings (figured without deducting contributions for yourself) from the business that has the plan. 2012 income tax booklet Example. 2012 income tax booklet You are a sole proprietor with no employees. 2012 income tax booklet The terms of your plan provide that you contribute 8½% (. 2012 income tax booklet 085) of your compensation to your plan. 2012 income tax booklet Your net profit from line 31, Schedule C (Form 1040) is $200,000. 2012 income tax booklet You have no elective deferrals or catch-up contributions. 2012 income tax booklet Your self-employment tax deduction on line 27 of Form 1040 is $9,728. 2012 income tax booklet See the filled-in portions of both Schedule SE (Form 1040), Self-Employment Income, and Form 1040, later. 2012 income tax booklet You figure your self-employed rate and maximum deduction for employer contributions you made for yourself as follows. 2012 income tax booklet Deduction Worksheet for Self-Employed   Step 1           Enter your net profit from line 31, Schedule C (Form 1040); line 3, Schedule C-EZ (Form 1040); line 34, Schedule F (Form 1040)*; or box 14, code A**, Schedule K-1 (Form 1065)*. 2012 income tax booklet For information on other income included in net profit from self-employment, see the Instructions for Schedule SE, Form 1040. 2012 income tax booklet $200,000     *Reduce this amount by any amount reported on Schedule SE (Form 1040), line 1b. 2012 income tax booklet       **General partners should reduce this amount by the same additional expenses subtracted from box 14, code A to determine the amount on line 1 or 2 of Schedule SE. 2012 income tax booklet     Step 2           Enter your deduction for self-employment tax from Form 1040, line 27 9,728           Step 3           Net earnings from self-employment. 2012 income tax booklet Subtract step 2 from step 1 190,272   Step 4           Enter your rate from the Rate Table for Self-Employed or Rate Worksheet for Self-Employed 0. 2012 income tax booklet 078   Step 5           Multiply step 3 by step 4 14,841   Step 6           Multiply $255,000 by your plan contribution rate (not the reduced rate) 21,675   Step 7           Enter the smaller of step 5 or step 6 14,841   Step 8           Contribution dollar limit $51,000     • If you made any elective deferrals to your self-employed plan, go to step 9. 2012 income tax booklet         • Otherwise, skip steps 9 through 20 and enter the smaller of step 7 or step 8 on step 21. 2012 income tax booklet       Step 9           Enter your allowable elective deferrals (including designated Roth contributions) made to your self-employed plan during 2013. 2012 income tax booklet Do not enter more than $17,500 N/A   Step 10           Subtract step 9 from step 8     Step 11           Subtract step 9 from step 3       Step 12           Enter one-half of step 11     Step 13           Enter the smallest of step 7, 10, or 12     Step 14           Subtract step 13 from step 3     Step 15           Enter the smaller of step 9 or step 14       • If you made catch-up contributions, go to step 16. 2012 income tax booklet         • Otherwise, skip steps 16 through 18 and go to step 19. 2012 income tax booklet       Step 16           Subtract step 15 from step 14     Step 17           Enter your catch-up contributions (including designated Roth contributions), if any. 2012 income tax booklet Do not enter more than $5,500     Step 18           Enter the smaller of step 16 or step 17     Step 19           Add steps 13, 15, and 18. 2012 income tax booklet     Step 20           Enter the amount of designated Roth contributions included on lines 9 and 17     Step 21           Subtract step 20 from step 19. 2012 income tax booklet This is your maximum deductible contribution $14,841                 Next: Enter your actual contribution, not to exceed your maximum deductible contribution, on Form 1040, line 28. 2012 income tax booklet   See the filled-in Deduction Worksheet for Self-Employed on this page. 2012 income tax booklet Rate Worksheet for Self-Employed 1) Plan contribution rate as a decimal (for example, 10½% = 0. 2012 income tax booklet 105) 0. 2012 income tax booklet 085 2) Rate in line 1 plus 1 (for example, 0. 2012 income tax booklet 105 + 1 = 1. 2012 income tax booklet 105) 1. 2012 income tax booklet 085 3) Self-employed rate as a decimal rounded to at least 3 decimal places (line 1 ÷ line 2) (for example, 0. 2012 income tax booklet 105 ÷ 1. 2012 income tax booklet 105 = 0. 2012 income tax booklet 095) 0. 2012 income tax booklet 078 This image is too large to be displayed in the current screen. 2012 income tax booklet Please click the link to view the image. 2012 income tax booklet Portion of Form 1040 and Portion of Schedule SE Prev  Up  Next   Home   More Online Publications