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Federal Free State Tax

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Federal Free State Tax

Federal free state tax Publication 517 - Main Content Table of Contents Social Security CoverageCoverage of Members of the Clergy Coverage of Religious Workers (Church Employees) U. Federal free state tax S. Federal free state tax Citizens and Resident and Nonresident Aliens Ministerial ServicesMinisters Members of Religious Orders Christian Science Practitioners and Readers Exemption From Self-Employment (SE) TaxMembers of the Clergy Members of Recognized Religious Sects Self-Employment Tax: Figuring Net EarningsRegular Method Nonfarm Optional Method Income Tax: Income and ExpensesIncome Items Expense Items Income Tax Withholding and Estimated Tax Filing Your Return Retirement Savings ArrangementsDeducting contributions to tax-sheltered annuity plans. Federal free state tax Full-time student. Federal free state tax Adjusted gross income. Federal free state tax More information. Federal free state tax Earned Income Credit Comprehensive ExampleForm W-2 From Church Form W-2 From College Schedule C-EZ (Form 1040) Form 2106-EZ Schedule A (Form 1040) Schedule SE (Form 1040) Form 1040 Attachment 1 Attachment 2 How To Get Tax HelpLow Income Taxpayer Clinics Social Security Coverage This section gives information about which system (SECA or FICA) is used to collect social security and Medicare taxes from members of the clergy (ministers, members of a religious order, and Christian Science practitioners and readers) and religious workers (church employees). Federal free state tax Coverage of Members of the Clergy The services you perform in the exercise of your ministry, of the duties required by your religious order, or of your profession as a Christian Science practitioner or reader are covered by social security and Medicare under SECA. Federal free state tax Your earnings for these ministerial services (defined later) are subject to self-employment (SE) tax unless one of the following applies. Federal free state tax You are a member of a religious order who has taken a vow of poverty. Federal free state tax You ask the Internal Revenue Service (IRS) for an exemption from SE tax for your services and the IRS approves your request. Federal free state tax See Exemption From Self-Employment (SE) Tax , later. Federal free state tax You are subject only to the social security laws of a foreign country under the provisions of a social security agreement between the United States and that country. Federal free state tax For more information, see Bilateral Social Security (Totalization) Agreements in Publication 54. Federal free state tax Your earnings that are not from ministerial services may be subject to social security tax under FICA or SECA according to the rules that apply to taxpayers in general. Federal free state tax See Ministerial Services , later. Federal free state tax Ministers If you are a minister of a church, your earnings for the services you perform in your capacity as a minister are subject to SE tax, even if you perform these services as an employee of that church. Federal free state tax However, you can request that the IRS grant you an exemption, as discussed under Exemption From Self-Employment (SE) Tax , later. Federal free state tax For the specific services covered, see Ministerial Services , later. Federal free state tax Ministers defined. Federal free state tax   Ministers are individuals who are duly ordained, commissioned, or licensed by a religious body constituting a church or church denomination. Federal free state tax Ministers have the authority to conduct religious worship, perform sacerdotal functions, and administer ordinances or sacraments according to the prescribed tenets and practices of that church or denomination. Federal free state tax   If a church or denomination ordains some ministers and licenses or commissions others, anyone licensed or commissioned must be able to perform substantially all the religious functions of an ordained minister to be treated as a minister for social security purposes. Federal free state tax Employment status for other tax purposes. Federal free state tax   Even though all of your income from performing ministerial services is subject to self-employment tax for social security tax purposes, you may be an employee for income tax or retirement plan purposes in performing those same services. Federal free state tax For income tax or retirement plan purposes, your income earned as an employee will be considered wages. Federal free state tax Common-law employee. Federal free state tax   Under common-law rules, you are considered either an employee or a self-employed person. Federal free state tax Generally, you are an employee if you perform services for someone who has the legal right to control both what you do and how you do it, even if you have considerable discretion and freedom of action. Federal free state tax For more information about the common-law rules, see Publication 15-A, Employer's Supplemental Tax Guide. Federal free state tax   If a congregation employs you and pays you a salary, you are generally a common-law employee and income from the exercise of your ministry is wages for income tax purposes. Federal free state tax However, amounts received directly from members of the congregation, such as fees for performing marriages, baptisms, or other personal services, are not wages; such amounts are self-employment income for both income tax purposes and social security tax purposes. Federal free state tax Example. Federal free state tax A church hires and pays you a salary to perform ministerial services subject to its control. Federal free state tax Under the common-law rules, you are an employee of the church while performing those services. Federal free state tax Form SS-8. Federal free state tax   If you are not certain whether you are an employee or a self-employed person, you can get a determination from the IRS by filing Form SS-8. Federal free state tax Members of Religious Orders If you are a member of a religious order who has not taken a vow of poverty, your earnings for ministerial services you perform as a member of the order are subject to SE tax. Federal free state tax See Ministerial Services , later. Federal free state tax However, you can request that the IRS grant you an exemption as discussed under Exemption From Self-Employment (SE) Tax , later. Federal free state tax Vow of poverty. Federal free state tax   If you are a member of a religious order and have taken a vow of poverty, you are already exempt from paying SE tax on your earnings for ministerial services you perform as an agent of your church or its agencies. Federal free state tax You do not need to request a separate exemption. Federal free state tax For income tax purposes, the earnings are tax free to you. Federal free state tax Your earnings are considered the income of the religious order. Federal free state tax Services covered under FICA at the election of the order. Federal free state tax   However, even if you have taken a vow of poverty, the services you perform for your church or its agencies may be covered under social security. Federal free state tax Your services are covered if your order, or an autonomous subdivision of the order, elects social security coverage for its current and future vow-of-poverty members. Federal free state tax   The order or subdivision elects coverage by filing Form SS-16. Federal free state tax The election may cover certain vow-of-poverty members for a retroactive period of up to 20 calendar quarters before the quarter in which it files the certificate. Federal free state tax If the election is made, the order or subdivision pays both the employer's and employee's share of the tax. Federal free state tax You do not pay any of the FICA tax. Federal free state tax Services performed outside the order. Federal free state tax   Even if you are a member of a religious order who has taken a vow of poverty and the order requires you to turn over amounts you earn, your earnings are subject to federal income tax and either SE tax or FICA tax (including estimated tax payments and/or withholding) if you: Are self-employed or an employee of an organization outside your religious community, and Perform work not required by, or done on behalf of, the order. Federal free state tax   In these cases, your income from self-employment or as an employee of that outside organization is taxable to you directly. Federal free state tax You may, however, be able to take a charitable deduction for the amount you turn over to the order. Federal free state tax See Publication 526, Charitable Contributions. Federal free state tax Rulings. Federal free state tax   Organizations and individuals may request rulings from the IRS on whether they are religious orders, or members of a religious order, respectively, for FICA tax, SE tax, and federal income tax withholding purposes. Federal free state tax To request a ruling, follow the procedures in Revenue Procedure 2014-1, 2014-1 I. Federal free state tax R. Federal free state tax B. Federal free state tax 1, available at www. Federal free state tax irs. Federal free state tax gov/irb/2014-1_IRB/ar05. Federal free state tax html. Federal free state tax Christian Science Practitioners and Readers Generally, your earnings from services you perform in your profession as a Christian Science practitioner or reader are subject to SE tax. Federal free state tax However, you can request an exemption as discussed under Exemption From Self-Employment (SE) Tax , later. Federal free state tax Practitioners. Federal free state tax   Christian Science practitioners are members in good standing of the Mother Church, The First Church of Christ, Scientist, in Boston, Massachusetts, who practice healing according to the teachings of Christian Science. Federal free state tax State law specifically exempts Christian Science practitioners from licensing requirements. Federal free state tax   Some Christian Science practitioners also are Christian Science teachers or lecturers. Federal free state tax Income from teaching or lecturing is considered the same as income from their work as practitioners. Federal free state tax Readers. Federal free state tax   For tax purposes, Christian Science readers are considered the same as ordained, commissioned, or licensed ministers. Federal free state tax Coverage of Religious Workers (Church Employees) If you are a religious worker (a church employee) and are not in one of the classes already discussed, your wages are generally subject to social security and Medicare tax under FICA, not SECA. Federal free state tax Some exceptions are discussed next. Federal free state tax Election by Church To Exclude Its Employees From FICA Coverage Churches and qualified church-controlled organizations (church organizations) that are opposed for religious reasons to the payment of social security and Medicare taxes can elect to exclude their employees from FICA coverage. Federal free state tax If your employer makes this election, it does not pay the employer's portion of the FICA taxes or withhold from your pay your portion of the FICA taxes. Federal free state tax Instead, your wages are subject to SECA and you must pay SE tax on your wages if they exceed $108. Federal free state tax 28 during the tax year. Federal free state tax However, you can request an exemption from SE tax if you are a member of a recognized religious sect, as discussed below. Federal free state tax Churches and church organizations make this election by filing two copies of Form 8274. Federal free state tax For more information about making this election, see Form 8274. Federal free state tax Election by Certain Church Employees Who Are Opposed to Social Security and Medicare You may be able to choose to be exempt from social security and Medicare taxes, including the SE tax, if you are a member of a recognized religious sect or division and work for a church (or church-controlled nonprofit division) that does not pay the employer's part of the social security tax on wages. Federal free state tax This exemption does not apply to your service, if any, as a minister of a church or as a member of a religious order. Federal free state tax Make this choice by filing Form 4029. Federal free state tax See Requesting Exemption—Form 4029 , later, under Members of Recognized Religious Sects. Federal free state tax U. Federal free state tax S. Federal free state tax Citizens and Resident and Nonresident Aliens To be covered under the SE tax provisions (SECA), individuals generally must be citizens or resident aliens of the United States. Federal free state tax Nonresident aliens are not covered under SECA unless a social security agreement in effect between the United States and the foreign country determines that you are covered under the U. Federal free state tax S. Federal free state tax social security system. Federal free state tax To determine your alien status, see Publication 519, U. Federal free state tax S. Federal free state tax Tax Guide for Aliens. Federal free state tax Residents of Puerto Rico, the U. Federal free state tax S. Federal free state tax Virgin Islands, Guam, the CNMI, and American Samoa. Federal free state tax   If you are a resident of one of these U. Federal free state tax S. Federal free state tax possessions but not a U. Federal free state tax S. Federal free state tax citizen, for SE tax purposes you are treated the same as a citizen or resident alien of the United States. Federal free state tax For information on figuring the tax, see Self-Employment Tax: Figuring Net Earnings , later. Federal free state tax Ministerial Services Ministerial services, in general, are the services you perform in the exercise of your ministry, in the exercise of your duties as required by your religious order, or in the exercise of your profession as a Christian Science practitioner or reader. Federal free state tax Income you receive for performing ministerial services is subject to SE tax unless you have an exemption as explained later. Federal free state tax Even if you have an exemption, only the income you receive for performing ministerial services is exempt. Federal free state tax The exemption does not apply to any other income. Federal free state tax The following discussions provide more detailed information on ministerial services of ministers, members of a religious order, and Christian Science practitioners and readers. Federal free state tax Ministers Most services you perform as a minister, priest, rabbi, etc. Federal free state tax , are ministerial services. Federal free state tax These services include: Performing sacerdotal functions, Conducting religious worship, and Controlling, conducting, and maintaining religious organizations (including the religious boards, societies, and other integral agencies of such organizations) that are under the authority of a religious body that is a church or denomination. Federal free state tax You are considered to control, conduct, and maintain a religious organization if you direct, manage, or promote the organization's activities. Federal free state tax A religious organization is under the authority of a religious body that is a church or denomination if it is organized for and dedicated to carrying out the principles of a faith according to the requirements governing the creation of institutions of the faith. Federal free state tax Services for nonreligious organizations. Federal free state tax   Your services for a nonreligious organization are ministerial services if the services are assigned or designated by your church. Federal free state tax Assigned or designated services qualify even if they do not involve performing sacerdotal functions or conducting religious worship. Federal free state tax   If your services are not assigned or designated by your church, they are ministerial services only if they involve performing sacerdotal functions or conducting religious worship. Federal free state tax Services that are not part of your ministry. Federal free state tax   Income from services you perform as an employee that are not ministerial services is subject to social security and Medicare tax withholding under FICA (not SECA) under the rules that apply to employees in general. Federal free state tax The following are not ministerial services. Federal free state tax Services you perform for nonreligious organizations other than the services stated above. Federal free state tax Services you perform as a duly ordained, commissioned, or licensed minister of a church as an employee of the United States, the District of Columbia, a foreign government, or any of their political subdivisions. Federal free state tax These services are not ministerial services even if you are performing sacerdotal functions or conducting religious worship. Federal free state tax (For example, if you perform services as a chaplain in the Armed Forces of the United States, those services are not ministerial services. Federal free state tax ) Services you perform in a government-owned and operated hospital. Federal free state tax (These services are considered performed by a government employee, not by a minister as part of the ministry. Federal free state tax ) However, services that you perform at a church-related hospital or health and welfare institution, or a private nonprofit hospital, are considered to be part of the ministry and are considered ministerial services. Federal free state tax Books or articles. Federal free state tax   Writing religious books or articles is considered to be in the exercise of your ministry and is considered a ministerial service. Federal free state tax   This rule also applies to members of religious orders and to Christian Science practitioners and readers. Federal free state tax Members of Religious Orders Services you perform as a member of a religious order in the exercise of duties required by the order are ministerial services. Federal free state tax The services are considered ministerial because you perform them as an agent of the order. Federal free state tax For example, if the order directs you to perform services for another agency of the supervising church or an associated institution, you are considered to perform the services as an agent of the order. Federal free state tax However, if the order directs you to work outside the order, this employment will not be considered a duty required by the order unless: Your services are the kind that are ordinarily performed by members of the order, and Your services are part of the duties that must be exercised for, or on behalf of, the religious order as its agent. Federal free state tax Effect of employee status. Federal free state tax   Ordinarily, if your services are not considered directed or required of you by the order, you and the outside party for whom you work are considered employee and employer. Federal free state tax In this case, your earnings from the services are taxed under the rules that apply to employees in general, not under the rules for services provided as agent for the order. Federal free state tax This result is true even if you have taken a vow of poverty. Federal free state tax Example. Federal free state tax Pat Brown and Chris Green are members of a religious order and have taken vows of poverty. Federal free state tax They renounce all claims to their earnings. Federal free state tax The earnings belong to the order. Federal free state tax Pat is a licensed attorney. Federal free state tax The superiors of the order instructed her to get a job with a law firm. Federal free state tax Pat joined a law firm as an employee and, as she requested, the firm made the salary payments directly to the order. Federal free state tax Chris is a secretary. Federal free state tax The superiors of the order instructed him to accept a job with the business office of the church that supervises the order. Federal free state tax Chris took the job and gave all his earnings to the order. Federal free state tax Pat's services are not duties required by the order. Federal free state tax Her earnings are subject to social security and Medicare tax under FICA and to federal income tax. Federal free state tax Chris' services are duties required by the order. Federal free state tax He is acting as an agent of the order and not as an employee of a third party. Federal free state tax He does not include the earnings in gross income, and they are not subject to income tax withholding or to social security and Medicare tax under FICA or SECA. Federal free state tax Christian Science Practitioners and Readers Services you perform as a Christian Science practitioner or reader in the exercise of your profession are ministerial services. Federal free state tax Amounts you receive for performing these services are generally subject to SE tax. Federal free state tax You may request an exemption from SE tax, discussed next, which applies only to those services. Federal free state tax Exemption From Self-Employment (SE) Tax You can request an exemption from SE tax if you are a member of the clergy (minister, member of a religious order, or Christian Science practitioner or reader) or a member of a recognized religious sect. Federal free state tax Generally, members of religious orders who have taken a vow of poverty are already exempt from paying SE tax, as discussed earlier under Members of Religious Orders under Social Security Coverage. Federal free state tax They do not have to request the exemption. Federal free state tax Who cannot be exempt. Federal free state tax   You cannot be exempt from SE tax if you made one of the following elections to be covered under social security. Federal free state tax These elections are irrevocable. Federal free state tax You elected to be covered under social security by filing Form 2031, Revocation of Exemption From Self-Employment Tax for Use by Ministers, Members of Religious Orders, and Christian Science Practitioners, for your 1986, 1987, 2000, or 2001 tax year. Federal free state tax You elected before 1968 to be covered under social security for your ministerial services. Federal free state tax Requesting exemption. Federal free state tax    Table 2, earlier, briefly summarizes the procedure for requesting exemption from the SE tax. Federal free state tax More detailed explanations follow. Federal free state tax If you are a minister, member of a religious order, or Christian Science practitioner, an approved exemption only applies to earnings you receive for ministerial services, discussed earlier. Federal free state tax It does not apply to any other self-employment income. Federal free state tax Table 2. Federal free state tax The Self-Employment Tax Exemption Application and Approval Process   Who Can Apply Members of the Clergy Members of Recognized  Religious Sects How File Form 4361 File Form 4029 When File by the due date (including extensions) of your income tax return for the second tax year in which you had at least $400 of net earnings from self-employment (at least part from ministerial services) File anytime Approval If approved, you will receive an approved copy of Form 4361 If approved, you will receive an approved copy of Form 4029 Effective Date For all tax years after 1967 in which you have at least $400 of net earnings from self-employment For all tax years beginning with the first year you meet the eligibility requirements discussed later Members of the Clergy To claim the exemption from SE tax, you must meet all of the following conditions. Federal free state tax You file Form 4361, described below under Requesting Exemption—Form 4361 . Federal free state tax You are conscientiously opposed to public insurance because of your individual religious considerations (not because of your general conscience), or you are opposed because of the principles of your religious denomination. Federal free state tax You file for other than economic reasons. Federal free state tax You inform the ordaining, commissioning, or licensing body of your church or order that you are opposed to public insurance if you are a minister or a member of a religious order (other than a vow-of-poverty member). Federal free state tax This requirement does not apply to Christian Science practitioners or readers. Federal free state tax You establish that the organization that ordained, commissioned, or licensed you, or your religious order, is a tax-exempt religious organization. Federal free state tax You establish that the organization is a church or a convention or association of churches. Federal free state tax You did not make an election discussed earlier under Who cannot be exempt . Federal free state tax You sign and return the statement the IRS mails to you to certify that you are requesting an exemption based on the grounds listed on the statement. Federal free state tax Requesting Exemption—Form 4361 To request exemption from SE tax, file Form 4361 in triplicate (original and two copies) with the IRS. Federal free state tax The IRS will return to you a copy of the Form 4361 that you filed indicating whether it has approved your exemption. Federal free state tax If it is approved, keep the approved copy of Form 4361 in your permanent records. Federal free state tax When to file. Federal free state tax   File Form 4361 by the date your income tax return is due, including extensions, for the second tax year in which both of the following are true. Federal free state tax You have net earnings from self-employment of at least $400. Federal free state tax Any part of those net earnings was from ministerial services you performed as a: Minister, Member of a religious order, or Christian Science practitioner or reader. Federal free state tax The 2 years do not have to be consecutive tax years. Federal free state tax    The approval process can take some time, so you should file Form 4361 as soon as possible. Federal free state tax Example 1. Federal free state tax Rev. Federal free state tax Lawrence Jaeger, a clergyman ordained in 2013, has net self-employment earnings as a minister of $450 in 2013 and $500 in 2014. Federal free state tax He must file his application for exemption by the due date, including extensions, for his 2014 income tax return. Federal free state tax However, if Rev. Federal free state tax Jaeger does not receive IRS approval for an exemption by April 15, 2015, his SE tax for 2014 is due by that date. Federal free state tax Example 2. Federal free state tax Rev. Federal free state tax Louise Wolfe has only $300 in net self-employment earnings as a minister in 2013, but earned more than $400 in 2012 and expects to earn more than $400 in 2014. Federal free state tax She must file her application for exemption by the due date, including extensions, for her 2014 income tax return. Federal free state tax However, if she does not receive IRS approval for an exemption by April 15, 2015, her SE tax for 2014 is due by that date. Federal free state tax Example 3. Federal free state tax In 2011, Rev. Federal free state tax David Moss was ordained a minister and had $700 in net self-employment earnings as a minister. Federal free state tax In 2012, he received $1,000 as a minister, but his related expenses were over $1,000. Federal free state tax Therefore, he had no net self-employment earnings as a minister in 2012. Federal free state tax Also in 2012, he opened a book store and had $8,000 in net self-employment earnings from the store. Federal free state tax In 2013, he had net self-employment earnings of $1,500 as a minister and $10,000 net self-employment earnings from the store. Federal free state tax Rev. Federal free state tax Moss had net earnings from self-employment in 2011 and 2013 that were $400 or more each year, and part of the self-employment earnings in each of those years was for his services as a minister. Federal free state tax Thus, he must file his application for exemption by the due date, including extensions, for his 2013 income tax return. Federal free state tax Death of individual. Federal free state tax   The right to file an application for exemption ends with an individual's death. Federal free state tax A surviving spouse, executor, or administrator cannot file an exemption application for a deceased clergy member. Federal free state tax Effective date of exemption. Federal free state tax   An approved exemption is effective for all tax years after 1967 in which you have $400 or more of net earnings from self-employment and any part of those earnings is for services as a member of the clergy. Federal free state tax Once the exemption is approved, it is irrevocable. Federal free state tax Example. Federal free state tax Rev. Federal free state tax Trudy Austin, ordained in 2010, had $400 or more in net self-employment earnings as a minister in both 2010 and 2013. Federal free state tax She files an application for exemption on February 20, 2014. Federal free state tax If an exemption is granted, it is effective for 2010 and the following years. Federal free state tax Refunds of SE tax. Federal free state tax   If, after receiving an approved Form 4361, you find that you overpaid SE tax, you can file a claim for refund on Form 1040X. Federal free state tax Generally, for a refund, you must file Form 1040X within 3 years from the date you filed the return or within 2 years from the date you paid the tax, whichever is later. Federal free state tax A return you filed, or tax you paid, before the due date is considered to have been filed or paid on the due date. Federal free state tax   If you file a claim after the 3-year period but within 2 years from the time you paid the tax, the credit or refund will not be more than the tax you paid within the 2 years immediately before you file the claim. Federal free state tax Members of Recognized Religious Sects If you are a member of a recognized religious sect, or a division of a recognized religious sect, you can apply for an exemption from payment of social security and Medicare taxes on both your self-employment income and the wages you earn from an employer who also has an exemption. Federal free state tax Exception. Federal free state tax   If you received social security benefits or payments, or anyone else received these benefits or payments based on your wages or self-employment income, you cannot apply. Federal free state tax However, if you pay your benefits back, you may be considered for exemption. Federal free state tax Contact your local Social Security Administration office to find out the amount you must pay back. Federal free state tax Eligibility requirements. Federal free state tax   To claim this exemption from SE tax, all the following requirements must be met. Federal free state tax You must file Form 4029, discussed later under Requesting Exemption—Form 4029 . Federal free state tax As a follower of the established teachings of the sect or division, you must be conscientiously opposed to accepting benefits of any private or public insurance that makes payments for death, disability, old age, retirement, or medical care, or provides services for medical care. Federal free state tax You must waive all rights to receive any social security payment or benefit and agree that no benefits or payments will be made to anyone else based on your wages and self-employment income. Federal free state tax The Commissioner of Social Security must determine that: Your sect or division has the established teachings as described in (2) above, It is the practice, and has been for a substantial period of time, for members of the sect or division to provide for their dependent members in a manner that is reasonable in view of the members' general level of living, and The sect or division has existed at all times since December 31, 1950. Federal free state tax Requesting Exemption—Form 4029 To request the exemption, file Form 4029 in triplicate (original and two copies) with the Social Security Administration at the address shown on the form. Federal free state tax The sect or division must complete part of the form. Federal free state tax The IRS will return to you a copy of the Form 4029 that you filed indicating whether it has approved your exemption. Federal free state tax If it is approved, keep the approved copy of Form 4029 in your permanent records. Federal free state tax When to file. Federal free state tax   You can file Form 4029 at any time. Federal free state tax   If you have an approved exemption from SE tax and for some reason that approved exemption ended, you must file a new Form 4029 if you subsequently meet the eligibility requirements, discussed earlier. Federal free state tax See Effective date of exemption next for information on when the newly approved exemption would become effective. Federal free state tax    If you have a previously approved exemption from SE tax and you change membership to another recognized religious sect, without any change to your eligibility requirements, then you do not need to file a new Form 4029. Federal free state tax Effective date of exemption. Federal free state tax   An approved exemption from SE tax generally is effective for all tax years beginning with the first year you meet the eligibility requirements discussed earlier. Federal free state tax (For example, if you meet the eligibility requirements in 2011, you file Form 4029 in 2012, and the IRS approves your exemption in 2013, your exemption is effective for tax year 2011 and all later years. Federal free state tax )   The exemption will end if you fail to meet the eligibility requirements or if the Commissioner of Social Security determines that the sect or division fails to meet them. Federal free state tax You must notify the IRS within 60 days if you are no longer a member of the religious group, or if you no longer follow the established teachings of this group. Federal free state tax The exemption will end for the tax year where you or your sect/division first fails to meet the eligibility requirements. Federal free state tax Refunds of SE tax paid. Federal free state tax    To get a refund of any SE tax you paid while the exemption was in effect, file Form 1040X. Federal free state tax For information on filing this form, see Refunds of SE tax under Requesting Exemption—Form 4361, earlier. Federal free state tax Exemption From FICA Taxes Generally, under FICA, the employer and the employee each pay half of the social security and Medicare tax. Federal free state tax Both the employee and the employer, if they meet the eligibility requirements discussed earlier, can apply to be exempt from their share of FICA taxes on wages paid by the employer to the employee. Federal free state tax A partnership in which each partner holds a religious exemption from social security and Medicare is an employer for this purpose. Federal free state tax If the employer's application is approved, the exemption will apply only to FICA taxes on wages paid to employees who also received an approval of identical applications. Federal free state tax Information for employers. Federal free state tax   If you have an approved Form 4029 and you have an employee who has an approved Form 4029, do not report wages you paid to the employee as social security and Medicare wages. Federal free state tax   If you have an employee who does not have an approved Form 4029, you must withhold the employee's share of social security and Medicare taxes and pay the employer's share. Federal free state tax Form W-2. Federal free state tax   When preparing a Form W-2 for an employee with an approved Form 4029, enter “Form 4029” in box 14, “Other. Federal free state tax ” Do not make any entries in boxes 3, 4, 5, or 6. Federal free state tax Forms 941, 943, and 944. Federal free state tax   If both you and your employee have received approved Forms 4029, do not include these exempt wages on the following forms. Federal free state tax Instead, follow the instructions given below. Federal free state tax Form 941, Employer's QUARTERLY Federal Tax Return: check the box on line 4 and enter “Form 4029” in the empty space below the check box. Federal free state tax Form 943, Employer's Annual Federal Tax Return for Agricultural Employees: enter “Form 4029” on the dotted line next to the lines 2 and 4 entry spaces. Federal free state tax Form 944, Employer's ANNUAL Federal Tax Return: check the box on line 3 and enter “Form 4029” in the empty space below the check box. Federal free state tax Effective date. Federal free state tax   An approved exemption from FICA becomes effective on the first day of the first calendar quarter after the quarter in which you file Form 4029. Federal free state tax The exemption will end on the last day of the calendar quarter before the quarter in which the employer, employee, sect, or division fails to meet the requirements. Federal free state tax Self-Employment Tax: Figuring Net Earnings There are two methods for figuring your net earnings from self-employment as a member of the clergy or a religious worker. Federal free state tax Regular method. Federal free state tax Nonfarm optional method. Federal free state tax You may find Worksheets 1 through 4 helpful in figuring your net earnings from self-employment. Federal free state tax Blank worksheets are in the back of this publication, after the Comprehensive Example. Federal free state tax Regular Method Most people use the regular method. Federal free state tax Under this method, figure your net earnings from self-employment by totaling your gross income for services you performed as a minister, a member of a religious order who has not taken a vow of poverty, or a Christian Science practitioner or reader. Federal free state tax Then, subtract your allowable business deductions and multiply the difference by 92. Federal free state tax 35% (. Federal free state tax 9235). Federal free state tax Use Schedule SE (Form 1040) to figure your net earnings and SE tax. Federal free state tax If you are an employee of a church that elected to exclude you from FICA coverage, figure net earnings by multiplying your church wages shown on Form W-2 by 92. Federal free state tax 35% (. Federal free state tax 9235). Federal free state tax Do not reduce your wages by any business deductions when making this computation. Federal free state tax Use Schedule SE (Form 1040), Section B, to figure your net earnings and SE tax. Federal free state tax If you have an approved exemption, or you are automatically exempt, do not include the income or deductions from ministerial services in figuring your net earnings from self-employment. Federal free state tax Amounts included in gross income. Federal free state tax   To figure your net earnings from self-employment (on Schedule SE (Form 1040)), include in gross income: Salaries and fees for your ministerial services (discussed earlier), Offerings you receive for marriages, baptisms, funerals, masses, etc. Federal free state tax , The value of meals and lodging provided to you, your spouse, and your dependents for your employer's convenience, The fair rental value of a parsonage provided to you (including the cost of utilities that are furnished) and the rental allowance (including an amount for payment of utilities) paid to you, and Any amount a church pays toward your income tax or SE tax, other than withholding the amount from your salary. Federal free state tax This amount is also subject to income tax. Federal free state tax   For the income tax treatment of items (2) and (4), see Income Tax: Income and Expenses , later. Federal free state tax Example. Federal free state tax Pastor Roger Adams receives an annual salary of $39,000 as a full-time minister. Federal free state tax The $39,000 includes $5,000 that is designated as a rental allowance to pay utilities. Federal free state tax His church owns a parsonage that has a fair rental value of $12,000 per year. Federal free state tax The church gives Pastor Adams the use of the parsonage. Federal free state tax He is not exempt from SE tax. Federal free state tax He must include $51,000 ($39,000 plus $12,000) when figuring his net earnings for SE tax purposes. Federal free state tax The results would be the same if, instead of the use of the parsonage and receipt of the rental allowance for utilities, Pastor Adams had received an annual salary of $51,000 of which $17,000 ($5,000 plus $12,000) per year was designated as a rental allowance. Federal free state tax Overseas duty. Federal free state tax   Your net earnings from self-employment are determined without any foreign earned income exclusion or the foreign housing exclusion or deduction if you are a U. Federal free state tax S. Federal free state tax citizen or resident alien serving abroad and living in a foreign country. Federal free state tax   For information on excluding foreign earned income or the foreign housing amount, see Publication 54. Federal free state tax Example. Federal free state tax Diane Jones was the minister of a U. Federal free state tax S. Federal free state tax church in Mexico. Federal free state tax She earned $35,000 in that position and was able to exclude it all for income tax purposes under the foreign earned income exclusion. Federal free state tax The United States does not have a social security agreement with Mexico, so Mrs. Federal free state tax Jones is subject to U. Federal free state tax S. Federal free state tax SE tax and must include $35,000 when figuring net earnings from self-employment. Federal free state tax Specified U. Federal free state tax S. Federal free state tax possessions. Federal free state tax    The exclusion from gross income for amounts derived from American Samoa or Puerto Rico does not apply in computing net earnings from self-employment. Federal free state tax Also see Residents of Puerto Rico, the U. Federal free state tax S. Federal free state tax Virgin Islands, Guam, the CNMI, and American Samoa , earlier, under U. Federal free state tax S. Federal free state tax Citizens and Resident and Nonresident Aliens. Federal free state tax Amounts not included in gross income. Federal free state tax   Do not include the following amounts in gross income when figuring your net earnings from self-employment. Federal free state tax Offerings that others made to the church. Federal free state tax Contributions by your church to a tax-sheltered annuity plan set up for you, including any salary reduction contributions (elective deferrals) that are not included in your gross income. Federal free state tax Pension payments or retirement allowances you receive for your past ministerial services. Federal free state tax The rental value of a parsonage or a parsonage allowance provided to you after you retire. Federal free state tax Allowable deductions. Federal free state tax   When figuring your net earnings from self-employment, deduct all your expenses related to your ministerial services performed as a self-employed person. Federal free state tax These are ministerial expenses you incurred while working other than as a common-law employee of the church. Federal free state tax They include expenses incurred in performing marriages and baptisms, and in delivering speeches. Federal free state tax Deduct these expenses on Schedule C or C-EZ (Form 1040), and carry the net amount to line 2 of Schedule SE (Form 1040), Section A or B. Federal free state tax   Wages earned as a common-law employee (explained earlier) of a church are generally subject to self-employment tax unless an exemption is requested, as discussed earlier under Exemption From Self-Employment (SE) Tax . Federal free state tax Subtract any allowable expenses (including unreimbursed employee business expenses) from those wages, include the net amount on line 2 of Schedule SE (Form 1040), Section A or B, and attach an explanation. Federal free state tax Do not complete Schedule C or C-EZ (Form 1040). Federal free state tax However, for income tax purposes, the expenses are allowed only as an itemized deduction on Schedule A (Form 1040) to the extent they exceed 2% of adjusted gross income. Federal free state tax Employee reimbursement arrangements. Federal free state tax   If you received an advance, allowance, or reimbursement for your employee expenses, how you report this amount and your employee expenses depends on whether your employer reimbursed you under an accountable plan or a nonaccountable plan. Federal free state tax Ask your employer if you are not sure if it reimburses you using an accountable or a nonaccountable plan. Federal free state tax Accountable plans. Federal free state tax   To be an accountable plan, your employer's reimbursement arrangement must include all three of the following rules. Federal free state tax Your expenses must have a business connection—that is, you must have paid or incurred deductible expenses while performing services as an employee of your employer. Federal free state tax You must adequately account to your employer for these expenses within a reasonable period of time. Federal free state tax You must return any excess reimbursement or allowance within a reasonable period of time. Federal free state tax   The reimbursement is not reported on your Form W-2. Federal free state tax Generally, if your expenses equal your reimbursement, you have no deduction. Federal free state tax If your expenses are more than your reimbursement, you can deduct your excess expenses for SE tax and income tax purposes. Federal free state tax Nonaccountable plan. Federal free state tax   A nonaccountable plan is a reimbursement arrangement that does not meet all three of the rules listed under Accountable plans above. Federal free state tax In addition, even if your employer has an accountable plan, the following payments will be treated as being paid under a nonaccountable plan. Federal free state tax Excess reimbursements you fail to return to your employer. Federal free state tax Reimbursement of nondeductible expenses related to your employer's business. Federal free state tax   Your employer will combine any reimbursement paid to you under a nonaccountable plan with your wages, salary, or other compensation and report the combined total in box 1 of your Form W-2. Federal free state tax Since reimbursements under a nonaccountable plan are included in your gross income, you can deduct your related expenses (for SE tax and income tax purposes) regardless of whether they are more than, less than, or equal to your reimbursement. Federal free state tax   For more information on accountable and nonaccountable plans, see Publication 463, Travel, Entertainment, Gift, and Car Expenses. Federal free state tax Married Couple Missionary Team If both spouses are duly ordained, commissioned, or licensed ministers of a church and have an agreement that each will perform specific services for which they are paid jointly or separately, they must divide the self-employment income according to the agreement. Federal free state tax If the agreement is with one spouse only and the other spouse is not paid for any specific duties, amounts received for their services are included only in the self-employment income of the spouse having the agreement. Federal free state tax Earnings Subject to SE Tax For 2013, the maximum net earnings from self-employment subject to social security (old age, survivors, and disability insurance) tax is $113,700 minus any wages and tips you earned that were subject to social security tax. Federal free state tax The tax rate for the social security part is 12. Federal free state tax 4%. Federal free state tax In addition, all of your net earnings are subject to the Medicare (hospital insurance) part of the SE tax. Federal free state tax This tax rate is 2. Federal free state tax 9%. Federal free state tax The combined self-employment tax rate is 15. Federal free state tax 3%. Federal free state tax Additional Medicare Tax. Federal free state tax   Beginning in 2013, a 0. Federal free state tax 9% Additional Medicare Tax applies to Medicare wages, railroad retirement (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. Federal free state tax Medicare wages and self-employment income are combined to determine if income exceeds the threshold. Federal free state tax A self-employment loss is not considered for purposes of this tax. Federal free state tax RRTA compensation is separately compared to the threshold. Federal free state tax For more information, see Form 8959, Additional Medicare Tax, and its separate instructions. Federal free state tax Nonfarm Optional Method You may be able to use the nonfarm optional method for figuring your net earnings from self-employment. Federal free state tax In general, the nonfarm optional method is intended to permit continued coverage for social security and Medicare purposes when your income for the tax year is low. Federal free state tax You may use the nonfarm optional method if you meet all the following tests. Federal free state tax You are self-employed on a regular basis. Federal free state tax You meet this test if your actual net earnings from self-employment were $400 or more in at least 2 of the 3 tax years before the one for which you use this method. Federal free state tax The net earnings can be from either farm or nonfarm earnings or both. Federal free state tax You have used this method less than 5 prior years. Federal free state tax (There is a 5-year lifetime limit. Federal free state tax ) The years do not have to be consecutive. Federal free state tax Your net nonfarm profits were: Less than $5,024, and Less than 72. Federal free state tax 189% of your gross nonfarm income. Federal free state tax If you meet all three tests, use Table 3 to figure your net earnings from self-employment under the nonfarm optional method. Federal free state tax Table 3. Federal free state tax Figuring Nonfarm Net Earnings IF your gross nonfarm income is . Federal free state tax . Federal free state tax . Federal free state tax THEN your net earnings are equal to . Federal free state tax . Federal free state tax . Federal free state tax $6,960 or less Two-thirds of your gross nonfarm income. Federal free state tax More than $6,960 $4,640. Federal free state tax Actual net earnings. Federal free state tax   Multiply your total earnings subject to SE tax by 92. Federal free state tax 35% (. Federal free state tax 9235) to get actual net earnings. Federal free state tax Actual net earnings are equivalent to net earnings under the “Regular Method. Federal free state tax ” More information. Federal free state tax   For more information on the nonfarm optional method, see Publication 334, Tax Guide for Small Business, and the Schedule SE (Form 1040) instructions. Federal free state tax Income Tax: Income and Expenses Some income and expense items are treated the same for both income tax and SE tax purposes and some are treated differently. Federal free state tax Note. Federal free state tax For purposes of this section, references to members of the clergy are only to ministers or members of a religious order. Federal free state tax Income Items The tax treatment of offerings and fees, outside earnings, rental allowances, rental value of a parsonage, earnings of members of religious orders, and foreign earned income is discussed here. Federal free state tax Offerings and Fees If you are a member of the clergy, you must include in your income offerings and fees you receive for marriages, baptisms, funerals, masses, etc. Federal free state tax , in addition to your salary. Federal free state tax If the offering is made to the religious institution, it is not taxable to you. Federal free state tax Outside Earnings If you are a member of a religious organization and you give your outside earnings to the organization, you still must include the earnings in your income. Federal free state tax However, you may be entitled to a charitable contribution deduction for the amount paid to the organization. Federal free state tax For more information, see Publication 526. Federal free state tax Exclusion of Rental Allowance and Fair Rental Value of a Parsonage Ordained, commissioned, or licensed ministers of the gospel may be able to exclude from income tax the rental allowance or fair rental value of a parsonage that is provided to them as pay for their services. Federal free state tax Services include: Ministerial services, discussed earlier, Administrative duties and teaching at theological seminaries, and The ordinary duties of a minister performed as an employee of the United States (other than as a chaplain in the Armed Forces), a state, possession, political subdivision, or the District of Columbia. Federal free state tax This exclusion applies only for income tax purposes. Federal free state tax It does not apply for SE tax purposes, as discussed earlier under Amounts included in gross income under Self-Employment Tax: Figuring Net Earnings. Federal free state tax Designation requirement. Federal free state tax   The church or organization that employs you must officially designate the payment as a housing allowance before it makes the payment. Federal free state tax It must designate a definite amount. Federal free state tax It cannot determine the amount of the housing allowance at a later date. Federal free state tax If the church or organization does not officially designate a definite amount as a housing allowance, you must include your total salary in your income. Federal free state tax   If you are employed and paid by a local congregation, a resolution by a national church agency of your denomination does not effectively designate a housing allowance for you. Federal free state tax The local congregation must officially designate the part of your salary that is a housing allowance. Federal free state tax However, a resolution of a national church agency can designate your housing allowance if you are directly employed by the national agency. Federal free state tax Rental allowances. Federal free state tax   If you receive in your salary an amount officially designated as a rental allowance (including an amount to pay utility costs), you can exclude the allowance from your gross income if: You use the amount to provide or rent a home, and The amount is not more than reasonable pay for your services. Federal free state tax   The amount you exclude cannot be more than the fair rental value of the home, including furnishings, plus the cost of utilities. Federal free state tax Fair rental value of parsonage. Federal free state tax   You can exclude from gross income the fair rental value of a house or parsonage, including utilities, furnished to you as part of your earnings. Federal free state tax However, the exclusion cannot be more than the reasonable pay for your services. Federal free state tax If you pay for the utilities, you can exclude any allowance designated for utility costs, up to your actual cost. Federal free state tax Example. Federal free state tax Rev. Federal free state tax Joanna Baker is a full-time minister. Federal free state tax The church allows her to use a parsonage that has an annual fair rental value of $24,000. Federal free state tax The church pays her an annual salary of $67,000, of which $7,500 is designated for utility costs. Federal free state tax Her actual utility costs during the year were $7,000. Federal free state tax For income tax purposes, Rev. Federal free state tax Baker excludes $31,000 from gross income ($24,000 fair rental value of the parsonage plus $7,000 from the allowance for utility costs). Federal free state tax She will report $60,000 ($59,500 salary plus $500 of unused utility allowance). Federal free state tax Her income for SE tax purposes, however, is $91,000 ($67,000 salary + $24,000 fair rental value of the parsonage). Federal free state tax Home ownership. Federal free state tax   If you own your home and you receive as part of your salary a housing or rental allowance, you may exclude from gross income the smallest of: The amount actually used to provide a home, The amount officially designated as a rental allowance, or The fair rental value of the home, including furnishings, utilities, garage, etc. Federal free state tax Excess rental allowance. Federal free state tax   You must include in gross income the amount of any rental allowance that is more than the smallest of: Your reasonable salary, The fair rental value of the home plus utilities, or The amount actually used to provide a home. Federal free state tax   Include in the total on Form 1040, line 7. Federal free state tax On the dotted line next to line 7, enter “Excess allowance” and the amount. Federal free state tax You may deduct the home mortgage interest and real estate taxes paid on your home even though you pay all or part of those expenses with funds you get through a tax-free rental or parsonage allowance. Federal free state tax However, you can only deduct these expenses as itemized deductions on Schedule A (Form 1040). Federal free state tax Retired ministers. Federal free state tax   If you are a retired minister, you can exclude from your gross income the rental value of a home (plus utilities) furnished to you by your church as a part of your pay for past services, or the part of your pension that was designated as a rental allowance. Federal free state tax However, a minister's surviving spouse cannot exclude the rental value unless the rental value is for ministerial services he or she performs or performed. Federal free state tax Teachers or administrators. Federal free state tax   If you are a minister employed as a teacher or administrator by a church school, college, or university, you are performing ministerial services for purposes of the housing exclusion. Federal free state tax However, if you perform services as a teacher or administrator on the faculty of a nonchurch college, you cannot exclude from your income a housing allowance or the value of a home that the college provides to you. Federal free state tax    If you live in faculty lodging as an employee of an educational institution or academic health center, all or part of the value of that lodging may be nontaxable under a different rule. Federal free state tax In Publication 525, see Faculty lodging in the discussion on meals and lodging under Fringe Benefits. Federal free state tax   If you serve as a minister of music or minister of education, or serve in an administrative or other function of your religious organization, but are not authorized to perform substantially all of the religious duties of an ordained minister in your church (even if you are commissioned as a minister of the gospel), the housing exclusion does not apply to you. Federal free state tax Theological students. Federal free state tax   If you are a theological student serving a required internship as a part-time or assistant pastor, you cannot exclude a parsonage or rental allowance from your income unless you are ordained, commissioned, or licensed as a minister. Federal free state tax Traveling evangelists. Federal free state tax   You can exclude a designated rental allowance from out-of-town churches if you meet all of the following requirements. Federal free state tax You are an ordained minister. Federal free state tax You perform ministerial services at churches located away from your community. Federal free state tax You actually use the rental allowance to maintain your permanent home. Federal free state tax Cantors. Federal free state tax   If you have a bona fide commission and your congregation employs you on a full-time basis to perform substantially all the religious functions of the Jewish faith, you can exclude a rental allowance from your gross income. Federal free state tax Earnings—Members of Religious Orders Your earnings may be exempt from both income tax and SE tax if you are a member of a religious order who: Has taken a vow of poverty, Receives earnings for services performed as an agent of the order and in the exercise of duties required by the order, and Renounces the earnings and gives them to the order. Federal free state tax See Members of Religious Orders , earlier, under Social Security Coverage. Federal free state tax Foreign Earned Income Certain income may be exempt from income tax if you work in a foreign country or in a specified U. Federal free state tax S. Federal free state tax possession. Federal free state tax Publication 54 discusses the foreign earned income exclusion. Federal free state tax Publication 570, Tax Guide for Individuals With Income From U. Federal free state tax S. Federal free state tax Possessions, covers the rules for taxpayers with income from U. Federal free state tax S. Federal free state tax possessions. Federal free state tax You can get these free publications from the Internal Revenue Service at IRS. Federal free state tax gov or from most U. Federal free state tax S. Federal free state tax Embassies or consulates. Federal free state tax Expense Items The tax treatment of ministerial trade or business expenses, expenses allocable to tax-free income, and health insurance costs is discussed here. Federal free state tax Ministerial Trade or Business Expenses as an Employee When you figure your income tax, you must itemize your deductions on Schedule A (Form 1040) to claim allowable deductions for ministerial trade or business expenses incurred while working as an employee. Federal free state tax You also may have to file Form 2106, Employee Business Expenses (or Form 2106-EZ, Unreimbursed Employee Business Expenses). Federal free state tax You claim these expenses as miscellaneous itemized deductions that are subject to the 2%-of-adjusted-gross-income (AGI) limit. Federal free state tax See Publication 529 for more information on this limit. Federal free state tax However, you cannot deduct any of your employee business expenses that are allocable to tax-free income (discussed next). Federal free state tax Expenses Allocable to Tax-Free Income If you receive a rental or parsonage allowance that is exempt from income tax (tax free), you must allocate a portion of the expenses of operating your ministry to that tax-free income. Federal free state tax You cannot deduct the portion of your expenses that you allocate to your tax-free rental or parsonage allowance. Federal free state tax Exception. Federal free state tax   This rule does not apply to your deductions for home mortgage interest or real estate taxes on your home. Federal free state tax Figuring the allocation. Federal free state tax   Figure the portion of your otherwise deductible expenses that you cannot deduct (because you must allocate that portion to tax-free income) by multiplying the expenses by the following fraction:      Tax-free rental or parsonage allowance     All income (taxable and tax free) earned from your ministry           When figuring the allocation, include the income and expenses related to the ministerial duties you perform both as an employee and as a self-employed person. Federal free state tax    Reduce your otherwise deductible expenses only in figuring your income tax, not your SE tax. Federal free state tax Example. Federal free state tax Rev. Federal free state tax Charles Ashford received $40,000 in earnings for ministerial services consisting of a $28,000 salary for ministerial services performed as an employee, $2,000 for weddings and baptisms performed as a self-employed person, and a $10,000 tax-free parsonage allowance. Federal free state tax He incurred $4,000 of unreimbursed expenses connected with his earnings for ministerial services. Federal free state tax $3,500 of the $4,000 is for employee expenses related to his ministerial salary, and $500 is related to the weddings and baptisms he performed as a self-employed person. Federal free state tax Rev. Federal free state tax Ashford figures the nondeductible (tax-free) portion of expenses related to his ministerial salary as follows: ($10,000 ÷ $40,000) x $3,500 = $875   Rev. Federal free state tax Ashford figures the nondeductible (tax-free) portion of expenses related to his wedding and baptism income as follows: ($10,000 ÷ $40,000) x $500 = $125 Required statement. Federal free state tax   If you receive a tax-free rental or parsonage allowance and have ministerial expenses, attach a statement to your tax return. Federal free state tax The statement must contain all of the following information. Federal free state tax A list of each item of taxable ministerial income by source (such as wages, salary, weddings, baptisms, etc. Federal free state tax ) plus the amount. Federal free state tax A list of each item of tax-free ministerial income by source (parsonage allowance) plus the amount. Federal free state tax A list of each item of otherwise deductible ministerial expenses plus the amount. Federal free state tax How you figured the nondeductible part of your otherwise deductible expenses. Federal free state tax A statement that the other deductions claimed on your tax return are not allocable to your tax-free income. Federal free state tax   See the attachments prepared for the Comprehensive Example , later. Federal free state tax Following the example, you will find blank worksheets for your own use. Federal free state tax Health Insurance Costs of Self-Employed Ministers If you are self-employed, you may be able to deduct the amount you paid in 2013 for medical and dental insurance and qualified long-term care insurance for you, your spouse, and your dependents. Federal free state tax If you qualify, you can take this deduction as an adjustment to income on Form 1040, line 29. Federal free state tax See the Instructions for Form 1040 to figure your deduction. Federal free state tax The following special rules apply to the self-employed health insurance deduction. Federal free state tax You cannot take a medical expense deduction on Schedule A (Form 1040) for any expenses you claim for purposes of the self-employed health insurance deduction. Federal free state tax You cannot take the deduction for any month you are eligible to participate in a subsidized plan of your (or your spouse's) employer. Federal free state tax The deduction cannot exceed your net earnings from the business under which the insurance plan is established. Federal free state tax Your net earnings under this rule do not include the income you earned as a common-law employee (discussed earlier) of a church. Federal free state tax More information. Federal free state tax   For more information about the self-employed health insurance deduction, see chapter 6 in Publication 535. Federal free state tax Deduction for SE Tax You can deduct one-half of your SE tax in figuring adjusted gross income. Federal free state tax This is an income tax deduction only, on Form 1040, line 27. Federal free state tax Do not claim this deduction in figuring net earnings from self-employment subject to SE tax. Federal free state tax Income Tax Withholding and Estimated Tax The federal income tax is a pay-as-you-go tax. Federal free state tax You must pay the tax as you earn or receive income during the year. Federal free state tax An employee usually has income tax withheld from his or her wages or salary. Federal free state tax However, your salary is not subject to federal income tax withholding if both of the following conditions apply. Federal free state tax You are a duly ordained, commissioned, or licensed minister, a member of a religious order (who has not taken a vow of poverty), or a Christian Science practitioner or reader. Federal free state tax Your salary is for ministerial services (see Ministerial Services , earlier). Federal free state tax If your salary is not subject to withholding, or if you do not pay enough tax through withholding, you may need to make estimated tax payments to avoid penalties for not paying enough tax as you earn your income. Federal free state tax You generally must make estimated tax payments if you expect to owe taxes, including SE tax, of $1,000 or more, when you file your return. Federal free state tax Determine your estimated tax by using the worksheets in Publication 505, Tax Withholding and Estimated Tax. Federal free state tax Pay the entire estimated tax for 2014 or the first installment by April 15, 2014. Federal free state tax See Form 1040-ES for the different payment methods. Federal free state tax The April 15 date applies whether or not your tax home and your abode are outside the United States and Puerto Rico. Federal free state tax For more information, see chapter 2 of Publication 505. Federal free state tax If you perform your services as a common-law employee of the church and your salary is not subject to income tax withholding, you can enter into a voluntary withholding agreement with the church to cover any income and SE tax that may be due. Federal free state tax Filing Your Return You must file an income tax return for 2013 if your gross income was at least the amount shown in the third column of Table 4 above. Federal free state tax Table 4. Federal free state tax 2013 Filing Requirements for Most Taxpayers IF your filing status is . Federal free state tax . Federal free state tax . Federal free state tax AND at the end of 2013 you were* . Federal free state tax . Federal free state tax . Federal free state tax THEN file a return if your gross income** was at least . Federal free state tax . Federal free state tax . Federal free state tax single under age 65 65 or older   $10,000 $11,500   married filing jointly*** under 65 (both spouses) 65 or older (one spouse) 65 or older (both spouses)   $20,000  $21,200  $22,400   married filing separately any age   $3,900   head of household under 65 65 or older   $12,850 $14,350   qualifying widow(er) with dependent child under 65 65 or older   $16,100  $17,300   * If you were born on January 1, 1949, you are considered to be age 65 at the end of 2013. Federal free state tax ** Gross income means all income you received in the form of money, goods, property, and services that is not exempt from tax, including any income from sources outside the United States or from the sale of your main home (even if you can exclude part or all of it). Federal free state tax Do not include any social security benefits unless (a) you are married filing a separate return and you lived with your spouse at any time in 2013, or (b) one-half of your social security benefits plus your other gross income and any tax-exempt interest is more than $25,000 ($32,000 if married filing jointly). Federal free state tax If (a) or (b) applies, see the instructions for Form 1040, lines 20a and 20b, to figure the taxable part of social security benefits you must include in gross income. Federal free state tax Gross income includes gains, but not losses, reported on Form 8949 or Schedule D (Form 1040). Federal free state tax Gross income from a business means, for example, the amount on Schedule C (Form 1040), line 7, or Schedule F (Form 1040), line 9. Federal free state tax But, in figuring gross income, do not reduce your income by any losses, including any loss on Schedule C (Form 1040), line 7, or Schedule F (Form 1040), line 9. Federal free state tax *** If you did not live with your spouse at the end of 2013 (or on the date your spouse died) and your gross income was at least $3,900, you must file a return regardless of your age. Federal free state tax Additional requirements. Federal free state tax   Even if your income was less than the amount shown in Table 4, you must file an income tax return on Form 1040, and attach a completed Schedule SE (Form 1040), if:    You are not exempt from SE tax, and you have net earnings from self-employment (discussed earlier under Self-Employment Tax: Figuring Net Earnings ) of $400 or more in the tax year, You are exempt from SE tax on earnings from ministerial services and you have $400 or more of other net earnings subject to SE tax, or You had wages of $108. Federal free state tax 28 or more from an electing church or church-controlled organization (see Coverage of Religious Workers (Church Employees) , earlier, under Social Security Coverage). Federal free state tax Self-employment tax. Federal free state tax   If you are liable for SE tax, you must file Schedule SE (Form 1040) with your return. Federal free state tax   If you filed Form 4361 and did not receive approval from the IRS, you must pay SE tax on your ministerial earnings, as explained earlier. Federal free state tax You should report ministerial earnings and expenses from nonemployee ministerial services on Schedule C or C-EZ (Form 1040). Federal free state tax You should then carry the net amount over to line 2 of Schedule SE (Form 1040), Section A or B. Federal free state tax However, if you were a duly ordained minister who was an employee of a church and you must pay SE tax on the wages you earned for those services, do not report those wages on Schedule C or C-EZ (Form 1040). Federal free state tax Instead, report those wages less any allowable expenses (including any unreimbursed employee business expenses), on line 2 of Schedule SE (Form 1040), Section A or B, and attach an explanation. Federal free state tax Note. Federal free state tax For income tax purposes, the unreimbursed employee business expenses that you incurred as an employee of the church and subtracted from your wages on line 2 of Schedule SE (Form 1040) are allowed only as an itemized deduction on Schedule A (Form 1040) if they exceed 2% of your adjusted gross income. Federal free state tax You cannot deduct these expenses on Schedule C or C-EZ (Form 1040) as a trade or business expense. Federal free state tax Exemption from SE tax. Federal free state tax   If you filed Form 4361 and received IRS approval not to be taxed on your ministerial earnings, and you do not have any other income subject to SE tax, do not file Schedule SE (Form 1040). Federal free state tax Instead, enter “Exempt—Form 4361” on the dotted line next to Form 1040, line 56. Federal free state tax However, if you had net earnings from another trade or business of $400 or more subject to SE tax, see line A at the top of Schedule SE (Form 1040), Section B. Federal free state tax    If you filed Form 4029 and received IRS approval not to be taxed on those earnings, and you do not have any other income subject to SE tax, do not file Schedule SE (Form 1040). Federal free state tax Instead, enter “Exempt—Form 4029” on the dotted line next to Form 1040, line 56. Federal free state tax More information. Federal free state tax   For more information on filing your return, including when and where to file it, see the Instructions for Form 1040. Federal free state tax Retirement Savings Arrangements Retirement savings arrangements are plans that offer you a tax-favored way to save for your retirement. Federal free state tax You generally can deduct your contributions to the plan. Federal free state tax Your contributions and the earnings on them are not taxed until they are distributed. Federal free state tax Retirement plans for the self-employed. Federal free state tax   To set up one of the following plans you must be self-employed. Federal free state tax SEP (simplified employee pension) plan. Federal free state tax SIMPLE (savings incentive match plan for employees) plan. Federal free state tax Qualified retirement plan (also called a Keogh or H. Federal free state tax R. Federal free state tax 10 plan). Federal free state tax   The common-law rules determine whether you are an employee or a self-employed person for purposes of setting up a retirement plan. Federal free state tax See Employment status for other tax purposes under Coverage of Members of the Clergy, earlier. Federal free state tax This result is true even if your compensation for ministerial services (defined earlier) is subject to SE tax. Federal free state tax   For example, if a congregation pays you a salary for performing ministerial services and you are subject to the congregation's control, you generally are a common-law employee. Federal free state tax You are not a self-employed person for purposes of setting up a retirement plan. Federal free state tax This result is true even if your salary is subject to SE tax. Federal free state tax   On the other hand, amounts received directly from members of the congregation, such as fees for performing marriages, baptisms, or other personal services that you report on Schedule C or C-EZ (Form 1040), are earnings from self-employment for all tax purposes. Federal free state tax   For more information on establishing a SEP, SIMPLE, or qualified retirement plan, see Publication 560, Retirement Plans for Small Business (SEP, SIMPLE, and Qualified Plans). Federal free state tax Individual retirement arrangements (IRAs). Federal free state tax   The traditional IRA and the Roth IRA are two individual retirement arrangements you can use to save money for your retirement. Federal free state tax Generally, your maximum contribution for 2013 to either of these plans (or to a combination of the two) is the smaller of your taxable compensation or $5,500 ($6,500 if you are age 50 or older). Federal free state tax   However, your maximum contribution to a Roth IRA will be further reduced or eliminated if your adjusted gross income is above a certain amount. Federal free state tax You cannot deduct Roth IRA contributions, but if you satisfy certain requirements, all earnings in the Roth IRA are tax free and neither your nondeductible contributions nor any earnings on them are taxable when distributed. Federal free state tax   If you contribute to a traditional IRA, your contribution may be deductible. Federal free state tax However, your deduction may be reduced or eliminated if you or your spouse is covered by an employer retirement plan (including, but not limited to, a SEP, SIMPLE, or qualified retirement plan). Federal free state tax   For more information on IRAs, see Publication 590. Federal free state tax Tax-sheltered annuity plans. Federal free state tax   Church employees, members of religious orders, and duly ordained, commissioned, or licensed ministers working as ministers or chaplains can participate in tax-sheltered annuity (403(b)) plans. Federal free state tax For more
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Sample Consumer Complaint Letter

This sample complaint letter will help you provide all of the necessary information to file a complaint.


How to Use the Sample Complaint Letter

Use the sample consumer complaint letter below to draft a complaint letter or e-mail. You can also copy and paste your complaint into a company's "Contact Us" form.

Download the complaint letter in Word format.

Sample Complaint Letter and E-mail

[Your Address]
[Your City, State, ZIP]
(Your e-mail address, if sending via e-mail)

Date

[Name of Contact Person] (if available)
[Title] (if available)
[Company Name]
[Consumer Complaint Division] (if you have no specific contact)
[Street Address]
[City, State, ZIP Code]

Dear [Contact Person]:

Re: (account number, if applicable)

On [date], I [bought, leased, rented, or had repaired] a [name of the product, with serial or model number, or service performed] at [location, date, and other important details of the transaction].

Unfortunately, your product [or service] has not performed well [or the service was inadequate] because [state the problem]. I am disappointed because [explain the problem: for example, the product does not work properly; the service was not performed correctly; I was billed the wrong amount; something was not disclosed clearly or was misrepresented; etc.].

To resolve the problem, I would appreciate your [state the specific action you want: money refunded, charge card credit, repair, exchange, etc.]. Enclosed are copies (do not send originals) of my records [include receipts, guarantees, warranties, canceled checks, contracts, model and serial numbers, and any other documents].

I look forward to your reply and a resolution to my problem and will wait until [set a time limit] before seeking help from a consumer protection agency or the Better Business Bureau. Please contact me at the above address or by phone at [home and/or office numbers with area code].

Sincerely,

Your name

Enclosure(s)

Keys to an Effective Complaint Letter

  • Describe your purchase.
  • Include the name of the product and serial number.
  • Include the date and place of purchase.
  • State your problem.
  • Give the history of your purchase.
  • Ask for specific action.
  • Allow time for action.
  • State how you can be reached.
  • Enclose copies of your documents and receipts (but never send originals).
  • Keep copies of all your letters, faxes, e-mails, and related documents.

Tips for Filing a Complaint

When filing a complaint, remember these tips:

  • Remain calm. The person who can help probably didn't cause the problem.
  • Don't use an angry, threatening, or sarcastic tone.
  • State exactly what you want done about the problem.
  • Document each step, and keep copies.
  • Start with the seller first. You can resolve many problems by calling a company's toll-free number. Even on the phone, you should know the details of the complaint. You can use the sample letter below to jot down a few notes before you call. If necessary, ask to speak to a manager.
  • If that doesn't work, send a letter or e-mail to the manufacturer's national headquarters or consumer affairs office. Some experts suggest that a letter is the most effective method for contacting a company, so if e-mails and phone calls don't work, try mailing a letter.

Learn more about the steps to file a consumer complaint.

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The Federal Free State Tax

Federal free state tax 2. Federal free state tax   Filing Status Table of Contents What's New Introduction Useful Items - You may want to see: Marital StatusDivorced persons. Federal free state tax Divorce and remarriage. Federal free state tax Annulled marriages. Federal free state tax Head of household or qualifying widow(er) with dependent child. Federal free state tax Considered married. Federal free state tax Same-sex marriage. Federal free state tax Spouse died during the year. Federal free state tax Married persons living apart. Federal free state tax Single Married Filing JointlyFiling a Joint Return Married Filing SeparatelySpecial Rules Head of HouseholdConsidered Unmarried Keeping Up a Home Qualifying Person Qualifying Widow(er) With Dependent Child What's New Filing status for same-sex married couples. Federal free state tax  If you have a same-sex spouse whom you legally married in a state (or foreign country) that recognizes same-sex marriage, you and your spouse generally must use the married filing jointly or married filing separately filing status on your 2013 return, even if you and your spouse now live in a state (or foreign country) that does not recognize same-sex marriage. Federal free state tax See Same-sex marriage under Marital Status, later. Federal free state tax Introduction This chapter helps you determine which filing status to use. Federal free state tax There are five filing statuses. Federal free state tax Single. Federal free state tax Married Filing Jointly. Federal free state tax Married Filing Separately. Federal free state tax Head of Household. Federal free state tax Qualifying Widow(er) With Dependent Child. Federal free state tax If more than one filing status applies to you, choose the one that will give you the lowest tax. Federal free state tax You must determine your filing status before you can determine whether you must file a tax return (chapter 1), your standard deduction (chapter 20), and your tax (chapter 30). Federal free state tax You also use your filing status to determine whether you are eligible to claim certain deductions and credits. Federal free state tax Useful Items - You may want to see: Publication 501 Exemptions, Standard Deduction, and Filing Information 519 U. Federal free state tax S. Federal free state tax Tax Guide for Aliens 555 Community Property Marital Status In general, your filing status depends on whether you are considered unmarried or married. Federal free state tax Unmarried persons. Federal free state tax   You are considered unmarried for the whole year if, on the last day of your tax year, you are unmarried or legally separated from your spouse under a divorce or separate maintenance decree. Federal free state tax State law governs whether you are married or legally separated under a divorce or separate maintenance decree. Federal free state tax Divorced persons. Federal free state tax   If you are divorced under a final decree by the last day of the year, you are considered unmarried for the whole year. Federal free state tax Divorce and remarriage. Federal free state tax   If you obtain a divorce for the sole purpose of filing tax returns as unmarried individuals, and at the time of divorce you intend to and do, in fact, remarry each other in the next tax year, you and your spouse must file as married individuals in both years. Federal free state tax Annulled marriages. Federal free state tax    If you obtain a court decree of annulment, which holds that no valid marriage ever existed, you are considered unmarried even if you filed joint returns for earlier years. Federal free state tax You must file Form 1040X, Amended U. Federal free state tax S. Federal free state tax Individual Income Tax Return, claiming single or head of household status for all tax years that are affected by the annulment and are not closed by the statute of limitations for filing a tax return. Federal free state tax Generally, for a credit or refund, you must file Form 1040X within 3 years (including extensions) after the date you filed your original return or within 2 years after the date you paid the tax, whichever is later. Federal free state tax If you filed your original return early (for example, March 1), your return is considered filed on the due date (generally April 15). Federal free state tax However, if you had an extension to file (for example, until October 15) but you filed earlier and we received it on July 1, your return is considered filed on July 1. Federal free state tax Head of household or qualifying widow(er) with dependent child. Federal free state tax   If you are considered unmarried, you may be able to file as a head of household or as a qualifying widow(er) with a dependent child. Federal free state tax See Head of Household and Qualifying Widow(er) With Dependent Child to see if you qualify. Federal free state tax Married persons. Federal free state tax   If you are considered married, you and your spouse can file a joint return or separate returns. Federal free state tax Considered married. Federal free state tax   You are considered married for the whole year if, on the last day of your tax year, you and your spouse meet any one of the following tests. Federal free state tax You are married and living together as a married couple. Federal free state tax You are living together in a common law marriage recognized in the state where you now live or in the state where the common law marriage began. Federal free state tax You are married and living apart, but not legally separated under a decree of divorce or separate maintenance. Federal free state tax You are separated under an interlocutory (not final) decree of divorce. Federal free state tax Same-sex marriage. Federal free state tax   For federal tax purposes, individuals of the same sex are considered married if they were lawfully married in a state (or foreign country) whose laws authorize the marriage of two individuals of the same sex, even if the state (or foreign country) in which they now live does not recognize same-sex marriage. Federal free state tax The term “spouse” includes an individual married to a person of the same sex if the couple is lawfully married under state (or foreign) law. Federal free state tax However, individuals who have entered into a registered domestic partnership, civil union, or other similar relationship that is not considered a marriage under state (or foreign) law are not considered married for federal tax purposes. Federal free state tax For more details, see Publication 501. Federal free state tax Spouse died during the year. Federal free state tax   If your spouse died during the year, you are considered married for the whole year for filing status purposes. Federal free state tax   If you did not remarry before the end of the tax year, you can file a joint return for yourself and your deceased spouse. Federal free state tax For the next 2 years, you may be entitled to the special benefits described later under Qualifying Widow(er) With Dependent Child . Federal free state tax   If you remarried before the end of the tax year, you can file a joint return with your new spouse. Federal free state tax Your deceased spouse's filing status is married filing separately for that year. Federal free state tax Married persons living apart. Federal free state tax   If you live apart from your spouse and meet certain tests, you may be able to file as head of household even if you are not divorced or legally separated. Federal free state tax If you qualify to file as head of household instead of married filing separately, your standard deduction will be higher. Federal free state tax Also, your tax may be lower, and you may be able to claim the earned income credit. Federal free state tax See Head of Household , later. Federal free state tax Single Your filing status is single if you are considered unmarried and you do not qualify for another filing status. Federal free state tax To determine your marital status, see Marital Status , earlier. Federal free state tax Widow(er). Federal free state tax   Your filing status may be single if you were widowed before January 1, 2013, and did not remarry before the end of 2013. Federal free state tax You may, however, be able to use another filing status that will give you a lower tax. Federal free state tax See Head of Household and Qualifying Widow(er) With Dependent Child , later, to see if you qualify. Federal free state tax How to file. Federal free state tax   You can file Form 1040. Federal free state tax If you have taxable income of less than $100,000, you may be able to file Form 1040A. Federal free state tax If, in addition, you have no dependents, and are under 65 and not blind, and meet other requirements, you can file Form 1040EZ. Federal free state tax If you file Form 1040A or Form 1040, show your filing status as single by checking the box on line 1. Federal free state tax Use the Single column of the Tax Table or Section A of the Tax Computation Worksheet to figure your tax. Federal free state tax Married Filing Jointly You can choose married filing jointly as your filing status if you are considered married and both you and your spouse agree to file a joint return. Federal free state tax On a joint return, you and your spouse report your combined income and deduct your combined allowable expenses. Federal free state tax You can file a joint return even if one of you had no income or deductions. Federal free state tax If you and your spouse decide to file a joint return, your tax may be lower than your combined tax for the other filing statuses. Federal free state tax Also, your standard deduction (if you do not itemize deductions) may be higher, and you may qualify for tax benefits that do not apply to other filing statuses. Federal free state tax If you and your spouse each have income, you may want to figure your tax both on a joint return and on separate returns (using the filing status of married filing separately). Federal free state tax You can choose the method that gives the two of you the lower combined tax. Federal free state tax How to file. Federal free state tax   If you file as married filing jointly, you can use Form 1040. Federal free state tax If you and your spouse have taxable income of less than $100,000, you may be able to file Form 1040A. Federal free state tax If, in addition, you and your spouse have no dependents, are both under 65 and not blind, and meet other requirements, you can file Form 1040EZ. Federal free state tax If you file Form 1040 or Form 1040A, show this filing status by checking the box on line 2. Federal free state tax Use the Married filing jointly column of the Tax Table or Section B of the Tax Computation Worksheet to figure your tax. Federal free state tax Spouse died. Federal free state tax   If your spouse died during the year, you are considered married for the whole year and can choose married filing jointly as your filing status. Federal free state tax See Spouse died during the year under Marital Status, earlier, for more information. Federal free state tax   If your spouse died in 2014 before filing a 2013 return, you can choose married filing jointly as your filing status on your 2013 return. Federal free state tax Divorced persons. Federal free state tax   If you are divorced under a final decree by the last day of the year, you are considered unmarried for the whole year and you cannot choose married filing jointly as your filing status. Federal free state tax Filing a Joint Return Both you and your spouse must include all of your income, exemptions, and deductions on your joint return. Federal free state tax Accounting period. Federal free state tax   Both of you must use the same accounting period, but you can use different accounting methods. Federal free state tax See Accounting Periods and Accounting Methods in chapter 1. Federal free state tax Joint responsibility. Federal free state tax   Both of you may be held responsible, jointly and individually, for the tax and any interest or penalty due on your joint return. Federal free state tax This means that if one spouse does not pay the tax due, the other may have to. Federal free state tax Or, if one spouse does not report the correct tax, both spouses may be responsible for any additional taxes assessed by the IRS. Federal free state tax One spouse may be held responsible for all the tax due even if all the income was earned by the other spouse. Federal free state tax You may want to file separately if: You believe your spouse is not reporting all of his or her income, or You do not want to be responsible for any taxes due if your spouse does not have enough tax withheld or does not pay enough estimated tax. Federal free state tax Divorced taxpayer. Federal free state tax   You may be held jointly and individually responsible for any tax, interest, and penalties due on a joint return filed before your divorce. Federal free state tax This responsibility may apply even if your divorce decree states that your former spouse will be responsible for any amounts due on previously filed joint returns. Federal free state tax Relief from joint responsibility. Federal free state tax   In some cases, one spouse may be relieved of joint responsibility for tax, interest, and penalties on a joint return for items of the other spouse that were incorrectly reported on the joint return. Federal free state tax You can ask for relief no matter how small the liability. Federal free state tax   There are three types of relief available. Federal free state tax Innocent spouse relief. Federal free state tax Separation of liability (available only to joint filers who are divorced, widowed, legally separated, or have not lived together for the 12 months ending on the date the election for this relief is filed). Federal free state tax Equitable relief. Federal free state tax    You must file Form 8857, Request for Innocent Spouse Relief, to request relief from joint responsibility. Federal free state tax Publication 971, Innocent Spouse Relief, explains these kinds of relief and who may qualify for them. Federal free state tax Signing a joint return. Federal free state tax   For a return to be considered a joint return, both spouses generally must sign the return. Federal free state tax Spouse died before signing. Federal free state tax   If your spouse died before signing the return, the executor or administrator must sign the return for your spouse. Federal free state tax If neither you nor anyone else has yet been appointed as executor or administrator, you can sign the return for your spouse and enter “Filing as surviving spouse” in the area where you sign the return. Federal free state tax Spouse away from home. Federal free state tax   If your spouse is away from home, you should prepare the return, sign it, and send it to your spouse to sign so that it can be filed on time. Federal free state tax Injury or disease prevents signing. Federal free state tax   If your spouse cannot sign because of disease or injury and tells you to sign for him or her, you can sign your spouse's name in the proper space on the return followed by the words “By (your name), Husband (or Wife). Federal free state tax ” Be sure to also sign in the space provided for your signature. Federal free state tax Attach a dated statement, signed by you, to the return. Federal free state tax The statement should include the form number of the return you are filing, the tax year, and the reason your spouse cannot sign, and should state that your spouse has agreed to your signing for him or her. Federal free state tax Signing as guardian of spouse. Federal free state tax   If you are the guardian of your spouse who is mentally incompetent, you can sign the return for your spouse as guardian. Federal free state tax Spouse in combat zone. Federal free state tax   You can sign a joint return for your spouse if your spouse cannot sign because he or she is serving in a combat zone (such as the Persian Gulf Area, Serbia, Montenegro, Albania, or Afghanistan), even if you do not have a power of attorney or other statement. Federal free state tax Attach a signed statement to your return explaining that your spouse is serving in a combat zone. Federal free state tax For more information on special tax rules for persons who are serving in a combat zone, or who are in missing status as a result of serving in a combat zone, see Publication 3, Armed Forces' Tax Guide. Federal free state tax Other reasons spouse cannot sign. Federal free state tax    If your spouse cannot sign the joint return for any other reason, you can sign for your spouse only if you are given a valid power of attorney (a legal document giving you permission to act for your spouse). Federal free state tax Attach the power of attorney (or a copy of it) to your tax return. Federal free state tax You can use Form 2848, Power of Attorney and Declaration of Representative. Federal free state tax Nonresident alien or dual-status alien. Federal free state tax   Generally, a married couple cannot file a joint return if either one is a nonresident alien at any time during the tax year. Federal free state tax However, if one spouse was a nonresident alien or dual-status alien who was married to a U. Federal free state tax S. Federal free state tax citizen or resident alien at the end of the year, the spouses can choose to file a joint return. Federal free state tax If you do file a joint return, you and your spouse are both treated as U. Federal free state tax S. Federal free state tax residents for the entire tax year. Federal free state tax See chapter 1 of Publication 519. Federal free state tax Married Filing Separately You can choose married filing separately as your filing status if you are married. Federal free state tax This filing status may benefit you if you want to be responsible only for your own tax or if it results in less tax than filing a joint return. Federal free state tax If you and your spouse do not agree to file a joint return, you must use this filing status unless you qualify for head of household status, discussed later. Federal free state tax You may be able to choose head of household filing status if you are considered unmarried because you live apart from your spouse and meet certain tests (explained later, under Head of Household ). Federal free state tax This can apply to you even if you are not divorced or legally separated. Federal free state tax If you qualify to file as head of household, instead of as married filing separately, your tax may be lower, you may be able to claim the earned income credit and certain other credits, and your standard deduction will be higher. Federal free state tax The head of household filing status allows you to choose the standard deduction even if your spouse chooses to itemize deductions. Federal free state tax See Head of Household , later, for more information. Federal free state tax You will generally pay more combined tax on separate returns than you would on a joint return for the reasons listed under Special Rules, later. Federal free state tax However, unless you are required to file separately, you should figure your tax both ways (on a joint return and on separate returns). Federal free state tax This way you can make sure you are using the filing status that results in the lowest combined tax. Federal free state tax When figuring the combined tax of a married couple, you may want to consider state taxes as well as federal taxes. Federal free state tax How to file. Federal free state tax   If you file a separate return, you generally report only your own income, exemptions, credits, and deductions. Federal free state tax You can claim an exemption for your spouse only if your spouse had no gross income, is not filing a return, and was not the dependent of another person. Federal free state tax You can file Form 1040. Federal free state tax If your taxable income is less than $100,000, you may be able to file Form 1040A. Federal free state tax Select this filing status by checking the box on line 3 of either form. Federal free state tax Enter your spouse's full name and SSN or ITIN in the spaces provided. Federal free state tax If your spouse does not have and is not required to have an SSN or ITIN, enter “NRA” in the space for your spouse's SSN. Federal free state tax Use the Married filing separately column of the Tax Table or Section C of the Tax Computation Worksheet to figure your tax. Federal free state tax Special Rules If you choose married filing separately as your filing status, the following special rules apply. Federal free state tax Because of these special rules, you usually pay more tax on a separate return than if you use another filing status you qualify for. Federal free state tax   Your tax rate generally is higher than on a joint return. Federal free state tax Your exemption amount for figuring the alternative minimum tax is half that allowed on a joint return. Federal free state tax You cannot take the credit for child and dependent care expenses in most cases, and the amount you can exclude from income under an employer's dependent care assistance program is limited to $2,500 (instead of $5,000). Federal free state tax If you are legally separated or living apart from your spouse, you may be able to file a separate return and still take the credit. Federal free state tax For more information about these expenses, the credit, and the exclusion, see chapter 32. Federal free state tax You cannot take the earned income credit. Federal free state tax You cannot take the exclusion or credit for adoption expenses in most cases. Federal free state tax You cannot take the education credits (the American opportunity credit and lifetime learning credit), the deduction for student loan interest, or the tuition and fees deduction. Federal free state tax You cannot exclude any interest income from qualified U. Federal free state tax S. Federal free state tax savings bonds you used for higher education expenses. Federal free state tax If you lived with your spouse at any time during the tax year: You cannot claim the credit for the elderly or the disabled, and You must include in income a greater percentage (up to 85%) of any social security or equivalent railroad retirement benefits you received. Federal free state tax The following credits and deductions are reduced at income levels half those for a joint return: The child tax credit, The retirement savings contributions credit, The deduction for personal exemptions, and Itemized deductions. Federal free state tax Your capital loss deduction limit is $1,500 (instead of $3,000 on a joint return). Federal free state tax If your spouse itemizes deductions, you cannot claim the standard deduction. Federal free state tax If you can claim the standard deduction, your basic standard deduction is half the amount allowed on a joint return. Federal free state tax Adjusted gross income (AGI) limits. Federal free state tax   If your AGI on a separate return is lower than it would have been on a joint return, you may be able to deduct a larger amount for certain deductions that are limited by AGI, such as medical expenses. Federal free state tax Individual retirement arrangements (IRAs). Federal free state tax   You may not be able to deduct all or part of your contributions to a traditional IRA if you or your spouse were covered by an employee retirement plan at work during the year. Federal free state tax Your deduction is reduced or eliminated if your income is more than a certain amount. Federal free state tax This amount is much lower for married individuals who file separately and lived together at any time during the year. Federal free state tax For more information, see How Much Can You Deduct in chapter 17. Federal free state tax Rental activity losses. Federal free state tax   If you actively participated in a passive rental real estate activity that produced a loss, you generally can deduct the loss from your nonpassive income, up to $25,000. Federal free state tax This is called a special allowance. Federal free state tax However, married persons filing separate returns who lived together at any time during the year cannot claim this special allowance. Federal free state tax Married persons filing separate returns who lived apart at all times during the year are each allowed a $12,500 maximum special allowance for losses from passive real estate activities. Federal free state tax See Limits on Rental Losses in chapter 9. Federal free state tax Community property states. Federal free state tax   If you live in Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington, or Wisconsin and file separately, your income may be considered separate income or community income for income tax purposes. Federal free state tax See Publication 555. Federal free state tax Joint Return After Separate Returns You can change your filing status from a separate return to a joint return by filing an amended return using Form 1040X. Federal free state tax You generally can change to a joint return any time within 3 years from the due date of the separate return or returns. Federal free state tax This does not include any extensions. Federal free state tax A separate return includes a return filed by you or your spouse claiming married filing separately, single, or head of household filing status. Federal free state tax Separate Returns After Joint Return Once you file a joint return, you cannot choose to file separate returns for that year after the due date of the return. Federal free state tax Exception. Federal free state tax   A personal representative for a decedent can change from a joint return elected by the surviving spouse to a separate return for the decedent. Federal free state tax The personal representative has 1 year from the due date of the return (including extensions) to make the change. Federal free state tax See Publication 559, Survivors, Executors, and Administrators, for more information on filing a return for a decedent. Federal free state tax Head of Household You may be able to file as head of household if you meet all the following requirements. Federal free state tax You are unmarried or “considered unmarried” on the last day of the year. Federal free state tax See Marital Status , earlier, and Considered Unmarried , later. Federal free state tax You paid more than half the cost of keeping up a home for the year. Federal free state tax A qualifying person lived with you in the home for more than half the year (except for temporary absences, such as school). Federal free state tax However, if the qualifying person is your dependent parent, he or she does not have to live with you. Federal free state tax See Special rule for parent , later, under Qualifying Person. Federal free state tax If you qualify to file as head of household, your tax rate usually will be lower than the rates for single or married filing separately. Federal free state tax You will also receive a higher standard deduction than if you file as single or married filing separately. Federal free state tax Kidnapped child. Federal free state tax   A child may qualify you to file as head of household even if the child has been kidnapped. Federal free state tax For more information, see Publication 501. Federal free state tax How to file. Federal free state tax   If you file as head of household, you can use Form 1040. Federal free state tax If your taxable income is less than $100,000, you may be able to file Form 1040A. Federal free state tax Indicate your choice of this filing status by checking the box on line 4 of either form. Federal free state tax Use the Head of a household column of the Tax Table or Section D of the Tax Computation Worksheet to figure your tax. Federal free state tax Considered Unmarried To qualify for head of household status, you must be either unmarried or considered unmarried on the last day of the year. Federal free state tax You are considered unmarried on the last day of the tax year if you meet all the following tests. Federal free state tax You file a separate return (defined earlier under Joint Return After Separate Returns ). Federal free state tax You paid more than half the cost of keeping up your home for the tax year. Federal free state tax Your spouse did not live in your home during the last 6 months of the tax year. Federal free state tax Your spouse is considered to live in your home even if he or she is temporarily absent due to special circumstances. Federal free state tax See Temporary absences , under Qualifying Person, later. Federal free state tax Your home was the main home of your child, stepchild, or foster child for more than half the year. Federal free state tax (See Home of qualifying person , under Qualifying Person, later, for rules applying to a child's birth, death, or temporary absence during the year. Federal free state tax ) You must be able to claim an exemption for the child. Federal free state tax However, you meet this test if you cannot claim the exemption only because the noncustodial parent can claim the child using the rules described in Children of divorced or separated parents (or parents who live apart) under Qualifying Child in chapter 3, or in Support Test for Children of Divorced or Separated Parents (or Parents Who Live Apart) under Qualifying Relative in chapter 3. Federal free state tax The general rules for claiming an exemption for a dependent are explained under Exemptions for Dependents in chapter 3. Federal free state tax If you were considered married for part of the year and lived in a community property state (listed earlier under Married Filing Separately), special rules may apply in determining your income and expenses. Federal free state tax See Publication 555 for more information. Federal free state tax Nonresident alien spouse. Federal free state tax   You are considered unmarried for head of household purposes if your spouse was a nonresident alien at any time during the year and you do not choose to treat your nonresident spouse as a resident alien. Federal free state tax However, your spouse is not a qualifying person for head of household purposes. Federal free state tax You must have another qualifying person and meet the other tests to be eligible to file as a head of household. Federal free state tax Choice to treat spouse as resident. Federal free state tax   You are considered married if you choose to treat your spouse as a resident alien. Federal free state tax See Publication 519. Federal free state tax Keeping Up a Home To qualify for head of household status, you must pay more than half of the cost of keeping up a home for the year. Federal free state tax You can determine whether you paid more than half of the cost of keeping up a home by using Worksheet 2–1. Federal free state tax Worksheet 2-1. Federal free state tax Cost of Keeping Up a Home   Amount You Paid Total Cost Property taxes $ $ Mortgage interest expense     Rent     Utility charges     Repairs/maintenance     Property insurance     Food consumed on the premises     Other household expenses     Totals $ $ Minus total amount you paid   () Amount others paid   $ If the total amount you paid is more than the amount others paid, you meet the requirement of paying more than half the cost of keeping up the home. Federal free state tax Costs you include. Federal free state tax   Include in the cost of keeping up a home expenses such as rent, mortgage interest, real estate taxes, insurance on the home, repairs, utilities, and food eaten in the home. Federal free state tax   If you used payments you received under Temporary Assistance for Needy Families (TANF) or other public assistance programs to pay part of the cost of keeping up your home, you cannot count them as money you paid. Federal free state tax However, you must include them in the total cost of keeping up your home to figure if you paid over half the cost. Federal free state tax Costs you do not include. Federal free state tax   Do not include the costs of clothing, education, medical treatment, vacations, life insurance, or transportation. Federal free state tax Also, do not include the rental value of a home you own or the value of your services or those of a member of your household. Federal free state tax Qualifying Person See Table 2-1 to see who is a qualifying person. Federal free state tax Any person not described in Table 2-1 is not a qualifying person. Federal free state tax Table 2-1. Federal free state tax Who Is a Qualifying Person Qualifying You To File as Head of Household?1 Caution. Federal free state tax See the text of this chapter for the other requirements you must meet to claim head of household filing status. Federal free state tax IF the person is your . Federal free state tax . Federal free state tax . Federal free state tax   AND . Federal free state tax . Federal free state tax . Federal free state tax   THEN that person is . Federal free state tax . Federal free state tax . Federal free state tax qualifying child (such as a son, daughter, or grandchild who lived with you more than half the year and meets certain other tests)2   he or she is single   a qualifying person, whether or not you can claim an exemption for the person. Federal free state tax   he or she is married and you can claim an exemption for him or her   a qualifying person. Federal free state tax   he or she is married and you cannot claim an exemption for him or her   not a qualifying person. Federal free state tax 3 qualifying relative4 who is your father or mother   you can claim an exemption for him or her5   a qualifying person. Federal free state tax 6   you cannot claim an exemption for him or her   not a qualifying person. Federal free state tax qualifying relative4 other than your father or mother (such as a grandparent, brother, or sister who meets certain tests)   he or she lived with you more than half the year, and he or she is related to you in one of the ways listed under Relatives who do not have to live with you in chapter 3 and you can claim an exemption for him or her5   a qualifying person. Federal free state tax   he or she did not live with you more than half the year   not a qualifying person. Federal free state tax   he or she is not related to you in one of the ways listed under Relatives who do not have to live with you in chapter 3 and is your qualifying relative only because he or she lived with you all year as a member of your household   not a qualifying person. Federal free state tax   you cannot claim an exemption for him or her   not a qualifying person. Federal free state tax 1A person cannot qualify more than one taxpayer to use the head of household filing status for the year. Federal free state tax 2The term “qualifying child” is defined in chapter 3. Federal free state tax Note. Federal free state tax If you are a noncustodial parent, the term “qualifying child” for head of household filing status does not include a child who is your qualifying child for exemption purposes only because of the rules described under Children of divorced or separated parents (or parents who live apart) under Qualifying Child in chapter 3. Federal free state tax If you are the custodial parent and those rules apply, the child generally is your qualifying child for head of household filing status even though the child is not a qualifying child for whom you can claim an exemption. Federal free state tax 3This person is a qualifying person if the only reason you cannot claim the exemption is that you can be claimed as a dependent on someone else's return. Federal free state tax 4The term “ qualifying relative ” is defined in chapter 3. Federal free state tax 5If you can claim an exemption for a person only because of a multiple support agreement, that person is not a qualifying person. Federal free state tax See Multiple Support Agreement in chapter 3. Federal free state tax 6See Special rule for parent . Federal free state tax Example 1—child. Federal free state tax Your unmarried son lived with you all year and was 18 years old at the end of the year. Federal free state tax He did not provide more than half of his own support and does not meet the tests to be a qualifying child of anyone else. Federal free state tax As a result, he is your qualifying child (see Qualifying Child in chapter 3) and, because he is single, your qualifying person for you to claim head of household filing status. Federal free state tax Example 2—child who is not qualifying person. Federal free state tax The facts are the same as in Example 1 except your son was 25 years old at the end of the year and his gross income was $5,000. Federal free state tax Because he does not meet the age test (explained under Qualifying Child in chapter 3), your son is not your qualifying child. Federal free state tax Because he does not meet the gross income test (explained later under Qualifying Relative in chapter 3), he is not your qualifying relative. Federal free state tax As a result, he is not your qualifying person for head of household purposes. Federal free state tax Example 3—girlfriend. Federal free state tax Your girlfriend lived with you all year. Federal free state tax Even though she may be your qualifying relative if the gross income and support tests (explained in chapter 3) are met, she is not your qualifying person for head of household purposes because she is not related to you in one of the ways listed under Relatives who do not have to live with you in chapter 3. Federal free state tax See Table 2-1. Federal free state tax Example 4—girlfriend's child. Federal free state tax The facts are the same as in Example 3 except your girlfriend's 10-year-old son also lived with you all year. Federal free state tax He is not your qualifying child and, because he is your girlfriend's qualifying child, he is not your qualifying relative (see Not a Qualifying Child Test in chapter 3). Federal free state tax As a result, he is not your qualifying person for head of household purposes. Federal free state tax Home of qualifying person. Federal free state tax   Generally, the qualifying person must live with you for more than half of the year. Federal free state tax Special rule for parent. Federal free state tax   If your qualifying person is your father or mother, you may be eligible to file as head of household even if your father or mother does not live with you. Federal free state tax However, you must be able to claim an exemption for your father or mother. Federal free state tax Also, you must pay more than half the cost of keeping up a home that was the main home for the entire year for your father or mother. Federal free state tax   You are keeping up a main home for your father or mother if you pay more than half the cost of keeping your parent in a rest home or home for the elderly. Federal free state tax Death or birth. Federal free state tax   You may be eligible to file as head of household even if the individual who qualifies you for this filing status is born or dies during the year. Federal free state tax If the individual is your qualifying child, the child must have lived with you for more than half the part of the year he or she was alive. Federal free state tax If the individual is anyone else, see Publication 501. Federal free state tax Temporary absences. Federal free state tax   You and your qualifying person are considered to live together even if one or both of you are temporarily absent from your home due to special circumstances such as illness, education, business, vacation, or military service. Federal free state tax It must be reasonable to assume the absent person will return to the home after the temporary absence. Federal free state tax You must continue to keep up the home during the absence. Federal free state tax Qualifying Widow(er) With Dependent Child If your spouse died in 2013, you can use married filing jointly as your filing status for 2013 if you otherwise qualify to use that status. Federal free state tax The year of death is the last year for which you can file jointly with your deceased spouse. Federal free state tax See Married Filing Jointly , earlier. Federal free state tax You may be eligible to use qualifying widow(er) with dependent child as your filing status for 2 years following the year your spouse died. Federal free state tax For example, if your spouse died in 2012, and you have not remarried, you may be able to use this filing status for 2013 and 2014. Federal free state tax This filing status entitles you to use joint return tax rates and the highest standard deduction amount (if you do not itemize deductions). Federal free state tax It does not entitle you to file a joint return. Federal free state tax How to file. Federal free state tax   If you file as qualifying widow(er) with dependent child, you can use Form 1040. Federal free state tax If you also have taxable income of less than $100,000 and meet certain other conditions, you may be able to file Form 1040A. Federal free state tax Check the box on line 5 of either form. Federal free state tax Use the Married filing jointly column of the Tax Table or Section B of the Tax Computation Worksheet to figure your tax. Federal free state tax Eligibility rules. Federal free state tax   You are eligible to file your 2013 return as a qualifying widow(er) with dependent child if you meet all of the following tests. Federal free state tax You were entitled to file a joint return with your spouse for the year your spouse died. Federal free state tax It does not matter whether you actually filed a joint return. Federal free state tax Your spouse died in 2011 or 2012 and you did not remarry before the end of 2013. Federal free state tax You have a child or stepchild for whom you can claim an exemption. Federal free state tax This does not include a foster child. Federal free state tax This child lived in your home all year, except for temporary absences. Federal free state tax See Temporary absences , earlier, under Head of Household. Federal free state tax There are also exceptions, described later, for a child who was born or died during the year and for a kidnapped child. Federal free state tax You paid more than half the cost of keeping up a home for the year. Federal free state tax See Keeping Up a Home , earlier, under Head of Household. Federal free state tax Example. Federal free state tax John's wife died in 2011. Federal free state tax John has not remarried. Federal free state tax During 2012 and 2013, he continued to keep up a home for himself and his child, who lives with him and for whom he can claim an exemption. Federal free state tax For 2011 he was entitled to file a joint return for himself and his deceased wife. Federal free state tax For 2012 and 2013, he can file as qualifying widower with a dependent child. Federal free state tax After 2013 he can file as head of household if he qualifies. Federal free state tax Death or birth. Federal free state tax    You may be eligible to file as a qualifying widow(er) with dependent child if the child who qualifies you for this filing status is born or dies during the year. Federal free state tax You must have provided more than half of the cost of keeping up a home that was the child's main home during the entire part of the year he or she was alive. Federal free state tax Kidnapped child. Federal free state tax   A child may qualify you for qualifying widow(er) with dependent child, even if the child has been kidnapped. Federal free state tax See Publication 501. Federal free state tax    As mentioned earlier, this filing status is available for only 2 years following the year your spouse died. Federal free state tax Prev  Up  Next   Home   More Online Publications