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Federal Tax Forms

Federal tax forms Publication 51 - Main Content Table of Contents 1. Federal tax forms Taxpayer Identification NumbersWhen you receive your EIN. Federal tax forms Registering for SSNVS. Federal tax forms 2. Federal tax forms Who Are Employees?Crew Leaders Business Owned and Operated by Spouses 3. Federal tax forms Wages and Other Compensation 4. Federal tax forms Social Security and Medicare TaxesThe $150 Test or the $2,500 Test Social Security and Medicare Tax Withholding 5. Federal tax forms Federal Income Tax WithholdingImplementation of lock-in letter. Federal tax forms Seasonal employees and employees not currently performing services. Federal tax forms Termination and re-hire of employees. Federal tax forms How To Figure Federal Income Tax Withholding 6. Federal tax forms Required Notice to Employees About Earned Income Credit (EIC) 7. Federal tax forms Depositing TaxesWhen To Deposit How To Deposit Deposit Penalties Employers of Both Farm and Nonfarm Workers 8. Federal tax forms Form 943 9. Federal tax forms Reporting Adjustments on Form 943Current Year Adjustments Prior Year Adjustments 10. Federal tax forms Federal Unemployment (FUTA) Tax 11. Federal tax forms Reconciling Wage Reporting Forms 13. Federal tax forms Federal Income Tax Withholding MethodsWage Bracket Method Percentage Method Alternative Methods of Federal Income Tax Withholding How To Get Tax Help 1. Federal tax forms Taxpayer Identification Numbers If you are required to withhold any federal income, social security, or Medicare taxes, you will need an employer identification number (EIN) for yourself. Federal tax forms Also, you will need the SSN of each employee and the name of each employee as shown on the employee's social security card. Federal tax forms Employer identification number (EIN). Federal tax forms   An employer identification number (EIN) is a nine-digit number that the IRS issues. Federal tax forms The digits are arranged as follows: 00-0000000. Federal tax forms It is used to identify the tax accounts of employers and certain others who have no employees. Federal tax forms Use your EIN on all of the items that you send to the IRS and SSA. Federal tax forms   If you do not have an EIN, you may apply for one online. Federal tax forms Visit IRS. Federal tax forms gov and click on the Apply for an EIN Online link under Tools. Federal tax forms You may also apply for an EIN by calling 1-800-829-4933, or you can fax or mail Form SS-4, Application for Employer Identification Number, to the IRS. Federal tax forms Do not use a SSN in place of an EIN. Federal tax forms   If you do not have an EIN by the time a return is due, write “Applied For” and the date you applied for it in the space shown for the number. Federal tax forms If you took over another employer's business, do not use that employer's EIN. Federal tax forms   You should have only one EIN. Federal tax forms If you have more than one, and are not sure which one to use, call the toll-free Business and Specialty Tax Line at 1-800-829-4933 or 1-800-829-4059 (TDD/TTY for persons who are deaf, hard of hearing, or have a speech disability). Federal tax forms Provide the EINs that you have, the name and address to which each number was assigned, and the address of your principal place of business. Federal tax forms The IRS will tell you which EIN to use. Federal tax forms   For more information, see Publication 1635 or Publication 583. Federal tax forms When you receive your EIN. Federal tax forms   If you are a new employer that indicated a federal tax obligation when requesting an EIN, you will be pre-enrolled in the Electronic Federal Tax Payment System (EFTPS). Federal tax forms You will receive information in your Employer Identification Number (EIN) Package about Express Enrollment and an additional mailing containing your EFTPS personal identification number (PIN) and instructions for activating your PIN. Federal tax forms Call the toll-free number located in your “How to Activate Your Enrollment” brochure to activate your enrollment and begin making your employment tax deposits. Federal tax forms If you outsource any of your payroll and related tax duties to a third party payer, such as a payroll service provider or reporting agent, be sure to tell them about your EFTPS enrollment. Federal tax forms Social security number (SSN). Federal tax forms   An employee's social security number (SSN) consists of nine digits arranged as follows: 000-00-0000. Federal tax forms You must obtain each employee's name and SSN as shown on the employee's social security card because you must enter them on Form W-2. Federal tax forms Do not accept a social security card that says “Not valid for employment. Federal tax forms ” A social security number issued with this legend does not permit employment. Federal tax forms You may, but are not required to, photocopy the social security card if the employee provides it. Federal tax forms If you do not show the employee's correct name and SSN on Form W-2, you may owe a penalty unless you have reasonable cause. Federal tax forms See Publication 1586, Reasonable Cause Regulations & Requirements for Missing and Incorrect Name/TINs. Federal tax forms Applying for a social security card. Federal tax forms   Any employee who is legally eligible to work in the United States and does not have a social security card can get one by completing Form SS-5, Application for a Social Security Card, and submitting the necessary documentation to SSA. Federal tax forms You can get Form SS-5 at SSA offices, by calling 1-800-772-1213 or 1-800-325-0778 (TTY), or from the SSA website at www. Federal tax forms socialsecurity. Federal tax forms gov/online/ss-5. Federal tax forms html. Federal tax forms The employee must complete and sign Form SS-5; it cannot be filed by the employer. Federal tax forms You may be asked to supply a letter to accompany Form SS-5 if the employee has exceeded his or her yearly or lifetime limit for the number of replacement cards allowed. Federal tax forms Applying for a social security number. Federal tax forms   If you file Form W-2 on paper and your employee has applied for an SSN but does not have one when you must file Form W-2, enter “Applied For” on the form. Federal tax forms If you are filing electronically, enter all zeros (000-00-0000) in the social security number field. Federal tax forms When the employee receives the SSN, file Copy A of Form W-2c, Corrected Wage and Tax Statement, with the SSA to show the employee's SSN. Federal tax forms Furnish Copies B, C, and 2 of Form W-2c to the employee. Federal tax forms Up to 25 Forms W-2c per Form W-3c, Transmittal of Corrected Wage and Tax Statements, may be filed per session over the Internet, with no limit on the number of sessions. Federal tax forms For more information, visit SSA's Employer W-2 Filing Instructions & Information webpage at www. Federal tax forms socialsecurity. Federal tax forms gov/employer. Federal tax forms Advise your employee to correct the SSN on his or her original Form W-2. Federal tax forms Correctly record the employee's name and SSN. Federal tax forms   Record the name and number of each employee as they are shown on the employee's social security card. Federal tax forms If the employee's name is not correct as shown on the card (for example, because of marriage or divorce), the employee should request a corrected card from the SSA. Federal tax forms Continue to report the employee's wages under the old name until the employee shows you an updated social security card with the new name. Federal tax forms   If the SSA issues the employee a replacement card after a name change, or a new card with a different social security number after a change in alien work status, file a Form W-2c to correct the name/SSN reported on the most recently filed Form W-2. Federal tax forms It is not necessary to correct other years if the previous name and SSN were used for years before the most recent Form W-2. Federal tax forms IRS individual taxpayer identification numbers (ITINs) for aliens. Federal tax forms   Do not accept an ITIN in place of an SSN for employee identification or for work. Federal tax forms An ITIN is issued for use by resident and nonresident aliens who need identification for tax purposes, but who are not eligible for U. Federal tax forms S. Federal tax forms employment. Federal tax forms The ITIN is a nine-digit number formatted like an SSN (for example, NNN-NN-NNNN). Federal tax forms However, it begins with the number “9” and has either a “7” or “8” as the fourth digit (for example, 9NN-7N-NNNN or 9NN-8N-NNNN). Federal tax forms    An individual with an ITIN who later becomes eligible to work in the United States must obtain an SSN. Federal tax forms If the individual is currently eligible to work in the United States, instruct the individual to apply for an SSN and follow the instructions under Applying for a social security number, earlier in this section. Federal tax forms Do not use an ITIN in place of an SSN on Form W-2. Federal tax forms Verification of social security numbers. Federal tax forms   Employers and authorized reporting agents can use the Social Security Number Verification Service (SSNVS) to instantly verify up to 10 employee names and SSNs (per screen) at a time, or submit an electronic file of up to 250,000 names and SSNs and usually receive results the next business day. Federal tax forms Visit www. Federal tax forms socialsecurity. Federal tax forms gov/employer/ssnv. Federal tax forms htm for more information. Federal tax forms Registering for SSNVS. Federal tax forms   You must register online and receive authorization from your employer to use SSNVS. Federal tax forms To register, visit SSA's website at www. Federal tax forms socialsecurity. Federal tax forms gov/employer and click on the Business Services Online link. Federal tax forms Follow the registration instructions to obtain a user identification (ID) and password. Federal tax forms You will need to provide the following information about yourself and your company. Federal tax forms Name. Federal tax forms SSN. Federal tax forms Date of birth. Federal tax forms Type of employer. Federal tax forms EIN. Federal tax forms Company name, address, and telephone number. Federal tax forms Email address. Federal tax forms When you have completed the online registration process, SSA will mail a one-time activation code to your employer. Federal tax forms You must enter the activation code online to use SSNVS. Federal tax forms 2. Federal tax forms Who Are Employees? Generally, employees are defined either under common law or under statutes for certain situations. Federal tax forms See Publication 15-A for details on statutory employees and nonemployees. Federal tax forms Employee status under common law. Federal tax forms   Generally, a worker who performs services for you is your employee if you have the right to control what will be done and how it will be done. Federal tax forms This is so even when you give the employee freedom of action. Federal tax forms What matters is that you have the right to control the details of how the services are performed. Federal tax forms See Publication 15-A for more information on how to determine whether an individual providing services is an independent contractor or an employee. Federal tax forms If an employer-employee relationship exists, it does not matter what it is called. Federal tax forms The employee may be called an agent or independent contractor. Federal tax forms It also does not matter how payments are measured or paid, what they are called, or if the employee works full or part time. Federal tax forms You are responsible for withholding and paying employment taxes for your employees. Federal tax forms You are also required to file employment tax returns. Federal tax forms These requirements do not apply to amounts that you pay to independent contractors. Federal tax forms The rules discussed in this publication apply only to workers who are your employees. Federal tax forms In general, you are an employer of farmworkers if your employees: Raise or harvest agricultural or horticultural products on your farm (including the raising and feeding of livestock); Work in connection with the operation, management, conservation, improvement, or maintenance of your farm and its tools and equipment; Provide services relating to salvaging timber, or clearing land of brush and other debris, left by a hurricane (also known as hurricane labor); Handle, process, or package any agricultural or horticultural commodity if you produced over half of the commodity (for a group of up to 20 unincorporated operators, all of the commodity); or Do work for you related to cotton ginning, turpentine, gum resin products, or the operation and maintenance of irrigation facilities. Federal tax forms For this purpose, the term “farm” includes stock, dairy, poultry, fruit, fur-bearing animal, and truck farms, as well as plantations, ranches, nurseries, ranges, greenhouses or other similar structures used primarily for the raising of agricultural or horticultural commodities, and orchards. Federal tax forms Farmwork does not include reselling activities that do not involve any substantial activity of raising agricultural or horticultural commodities, such as a retail store or a greenhouse used primarily for display or storage. Federal tax forms The table in section 12, How Do Employment Taxes Apply to Farmwork , distinguishes between farm and nonfarm activities, and also addresses rules that apply in special situations. Federal tax forms Crew Leaders If you are a crew leader, you are an employer of farmworkers. Federal tax forms A crew leader is a person who furnishes and pays (either on his or her own behalf or on behalf of the farm operator) workers to do farmwork for the farm operator. Federal tax forms If there is no written agreement between you and the farm operator stating that you are his or her employee and if you pay the workers (either for yourself or for the farm operator), then you are a crew leader. Federal tax forms For FUTA tax rules, see section 10. Federal tax forms Business Owned and Operated by Spouses If you and your spouse jointly own and operate a farm or nonfarm business and share in the profits and losses, you are partners in a partnership, whether or not you have a formal partnership agreement. Federal tax forms See Publication 541, Partnerships, for more details. Federal tax forms The partnership is considered the employer of any employees, and is liable for any employment taxes due on wages paid to its employees. Federal tax forms Exception—Qualified joint venture. Federal tax forms   For tax years beginning after December 31, 2006, the Small Business and Work Opportunity Tax Act of 2007 (Public Law 110-28) provides that a “qualified joint venture,” whose only members are spouses filing a joint income tax return, can elect not to be treated as a partnership for federal tax purposes. Federal tax forms A qualified joint venture conducts a trade or business where: The only members of the joint venture are spouses who file a joint income tax return, Both spouses materially participate (see Material participation in the Instructions for Schedule C (Form 1040), line G) in the trade or business (mere joint ownership of property is not enough), Both spouses elect to not be treated as a partnership, and The business is co-owned by both spouses and is not held in the name of a state law entity such as a partnership or limited liability company (LLC). Federal tax forms   To make the election, all items of income, gain, loss, deduction, and credit must be divided between the spouses, in accordance with each spouse's interest in the venture, and reported on separate Schedules C or F as sole proprietors. Federal tax forms Each spouse must also file a separate Schedule SE to pay self-employment taxes, as applicable. Federal tax forms   Spouses using the qualified joint venture rules are treated as sole proprietors for federal tax purposes and generally do not need an EIN. Federal tax forms If employment taxes are owed by the qualified joint venture, either spouse may report and pay the employment taxes due on the wages paid to the employees using the EIN of that spouse's sole proprietorship. Federal tax forms Generally, filing as a qualified joint venture will not increase the spouses' total tax owed on the joint income tax return. Federal tax forms However, it gives each spouse credit for social security earnings on which retirement benefits are based and for Medicare coverage without filing a partnership return. Federal tax forms    Note. Federal tax forms If your spouse is your employee, not your partner, you must pay social security and Medicare taxes for him or her. Federal tax forms   For more information on qualified joint ventures, visit IRS. Federal tax forms gov and enter “qualified joint venture” in the search box. Federal tax forms Exception—Community income. Federal tax forms   If you and your spouse wholly own an unincorporated business as community property under the community property laws of a state, foreign country, or U. Federal tax forms S. Federal tax forms possession, you can treat the business either as a sole proprietorship (of the spouse who carried on the business) or a partnership. Federal tax forms You may still make an election to be taxed as a qualified joint venture instead of a partnership. Federal tax forms See Exception—Qualified joint venture , earlier in this section. Federal tax forms 3. Federal tax forms Wages and Other Compensation Cash wages that you pay to employees for farmwork are generally subject to social security tax and Medicare tax. Federal tax forms You may also be required to withhold, deposit, and report Additional Medicare Tax. Federal tax forms See section 4 for more information. Federal tax forms If the wages are subject to social security and Medicare taxes, they are also subject to federal income tax withholding. Federal tax forms You may also be liable for FUTA tax, which is not withheld by you or paid by the employee. Federal tax forms FUTA tax is discussed in section 10. Federal tax forms Cash wages include checks, money orders, etc. Federal tax forms Do not count as cash wages the value of food, lodging, and other noncash items. Federal tax forms For more information on what payments are considered taxable wages, see Publication 15 (Circular E). Federal tax forms Commodity wages. Federal tax forms   Commodity wages are not cash and are not subject to social security and Medicare taxes or federal income tax withholding. Federal tax forms However, noncash payments, including commodity wages, are treated as cash wages (see above) if the substance of the transaction is a cash payment. Federal tax forms These noncash payments are subject to social security and Medicare taxes and federal income tax withholding. Federal tax forms Other compensation. Federal tax forms   Publications 15-A and 15-B discuss other forms of compensation that may be taxable. Federal tax forms Family members. Federal tax forms   Generally, the wages that you pay to family members who are your employees are subject to social security and Medicare taxes, federal income tax withholding, and FUTA tax. Federal tax forms However, certain exemptions may apply for your child, spouse, or parent. Federal tax forms See the table, How Do Employment Taxes Apply to Farmwork , in section 12. Federal tax forms Household employees. Federal tax forms   The wages of an employee who performs household services, such as a maid, babysitter, gardener, or cook, in your home are not subject to social security and Medicare taxes if you pay that employee cash wages of less than $1,900 in 2014. Federal tax forms   Social security and Medicare taxes do not apply to cash wages for housework in your private home if it was done by your spouse or your child under age 21. Federal tax forms Nor do the taxes apply to housework done by your parent unless: You have a child living in your home who is under age 18 or has a physical or mental condition that requires care by an adult for at least 4 continuous weeks in a calendar quarter, and You are a widow or widower, or divorced and not remarried, or have a spouse in the home who, because of a physical or mental condition, cannot care for your child for at least 4 continuous weeks in the quarter. Federal tax forms   For more information, see Publication 926, Household Employer's Tax Guide. Federal tax forms    Wages for household work may not be a deductible farm expense. Federal tax forms See Publication 225, Farmer's Tax Guide. Federal tax forms Share farmers. Federal tax forms   You do not have to withhold or pay social security and Medicare taxes on amounts paid to share farmers under share-farming arrangements. Federal tax forms Compensation paid to H-2A visa holders. Federal tax forms   Report compensation of $600 or more paid to foreign agricultural workers who entered the country on H-2A visas in box 1 of Form W-2 but do not report it as social security wages (box 3) or Medicare wages (box 5) on Form W-2 because compensation paid to H-2A workers for agricultural labor performed in connection with this visa is not subject to social security and Medicare taxes. Federal tax forms On Form W-2, do not check box 13 (Statutory employee), as H-2A workers are not statutory employees. Federal tax forms   An employer is not required to withhold federal income tax from compensation it pays an H-2A worker for agricultural labor performed in connection with this visa unless the worker asks for withholding and the employer agrees. Federal tax forms In that case, the worker must give the employer a completed Form W-4. Federal tax forms Federal income tax withheld should be reported in box 2 of Form W-2. Federal tax forms These reporting rules apply when the H-2A worker provides his or her taxpayer identification number (TIN) to the employer. Federal tax forms For rules relating to backup withholding and reporting when the H-2A worker does not provide a TIN, see the Instructions for Form 1099-MISC and the Instructions for Form 945. Federal tax forms 4. Federal tax forms Social Security and Medicare Taxes Generally, you must withhold social security and Medicare taxes on all cash wage payments that you make to your employees. Federal tax forms You may also be required to withhold Additional Medicare Tax. Federal tax forms For more information, see Additional Medicare Tax withholding , later. Federal tax forms The $150 Test or the $2,500 Test All cash wages that you pay to an employee during the year for farmwork are subject to social security and Medicare taxes and federal income tax withholding if either of the two tests below is met. Federal tax forms You pay cash wages to an employee of $150 or more in a year for farmwork (count all cash wages paid on a time, piecework, or other basis). Federal tax forms The $150 test applies separately to each farmworker that you employ. Federal tax forms If you employ a family of workers, each member is treated separately. Federal tax forms Do not count wages paid by other employers. Federal tax forms The total that you pay for farmwork (cash and noncash) to all your employees is $2,500 or more during the year. Federal tax forms Exceptions. Federal tax forms   The $150 and $2,500 tests do not apply to wages that you pay to a farmworker who receives less than $150 in annual cash wages and the wages are not subject to social security and Medicare taxes, or federal income tax withholding, even if you pay $2,500 or more in that year to all of your farmworkers if the farmworker: Is employed in agriculture as a hand-harvest laborer, Is paid piece rates in an operation that is usually paid on a piece-rate basis in the region of employment, Commutes daily from his or her permanent home to the farm, and Had been employed in agriculture less than 13 weeks in the preceding calendar year. Federal tax forms   Amounts that you pay to these seasonal farmworkers, however, count toward the $2,500-or-more test to determine whether wages that you pay to other farmworkers are subject to social security and Medicare taxes. Federal tax forms Social Security and Medicare Tax Withholding The social security tax rate is 6. Federal tax forms 2%, for both the employee and employer, on the first $117,000 paid to each employee. Federal tax forms You must withhold at this rate from each employee and pay a matching amount. Federal tax forms The Medicare tax rate is 1. Federal tax forms 45% each for the employee and employer on all wages. Federal tax forms You must withhold at this rate from each employee and pay a matching amount. Federal tax forms There is no wage base limit for Medicare tax; all covered wages are subject to Medicare tax. Federal tax forms Social security and Medicare taxes apply to most payments of sick pay, including payments made by third parties such as insurance companies. Federal tax forms For details, see Publication 15-A. Federal tax forms Additional Medicare Tax withholding. Federal tax forms   In addition to withholding Medicare tax at 1. Federal tax forms 45%, you must withhold a 0. Federal tax forms 9% Additional Medicare Tax from wages you pay to an employee in excess of $200,000 in a calendar year. Federal tax forms You are required to begin withholding Additional Medicare Tax in the pay period in which you pay wages in excess of $200,000 to an employee and continue to withhold it each pay period until the end of the calendar year. Federal tax forms Additional Medicare Tax is only imposed on the employee. Federal tax forms There is no employer share of Additional Medicare Tax. Federal tax forms All wages that are subject to Medicare tax are subject to Additional Medicare Tax withholding if paid in excess of the $200,000 withholding threshold. Federal tax forms   For more information on what wages are subject to Medicare tax, see the chart, Special Rules for Various Types of Services and Payments, in section 15 of Publication 15 (Circular E). Federal tax forms For more information on Additional Medicare Tax, visit IRS. Federal tax forms gov and enter “Additional Medicare Tax” in the search box. Federal tax forms Employee share paid by employer. Federal tax forms   If you would rather pay a household or agricultural employee's share of the social security and Medicare taxes without withholding them from his or her wages, you may do so. Federal tax forms If you do not withhold the taxes, however, you must still pay them. Federal tax forms Any employee social security and Medicare taxes that you pay is additional income to the employee. Federal tax forms Include it in box 1 of the employee's Form W-2, but do not count it as social security and Medicare wages and do not include it in boxes 3 and 5. Federal tax forms Also, do not count the additional income as wages for FUTA tax purposes. Federal tax forms Different rules apply to employer payments of social security and Medicare taxes for non-household and non-agricultural employees. Federal tax forms See section 7 of Publication 15-A. Federal tax forms Withholding social security and Medicare taxes on nonresident alien employees. Federal tax forms   In general, if you pay wages to nonresident alien employees, you must withhold social security and Medicare taxes as you would for a U. Federal tax forms S. Federal tax forms citizen or resident alien. Federal tax forms However, see Publication 515, Withholding of Tax on Nonresident Aliens and Foreign Entities, for exceptions to this general rule. Federal tax forms Also see Compensation paid to H-2A visa holders in section 3. Federal tax forms Religious exemption. Federal tax forms    An exemption from social security and Medicare taxes is available to members of a recognized religious sect opposed to public insurance. Federal tax forms This exemption is available only if both the employee and the employer are members of the sect. Federal tax forms   For more information, see Publication 517, Social Security and Other Information for Members of the Clergy and Religious Workers. Federal tax forms 5. Federal tax forms Federal Income Tax Withholding Farmers and crew leaders must withhold federal income tax from the wages of farmworkers if the wages are subject to social security and Medicare taxes. Federal tax forms The amount to withhold is figured on gross wages before taking out social security and Medicare taxes, union dues, insurance, etc. Federal tax forms You may use one of several methods to determine the amount of federal income tax withholding. Federal tax forms They are discussed in section 13. Federal tax forms Form W-4. Federal tax forms   To know how much federal income tax to withhold from employees' wages, you should have a Form W-4 on file for each employee. Federal tax forms Encourage your employees to file an updated Form W-4 for 2014, especially if they owed taxes or received a large refund when filing their 2013 tax return. Federal tax forms Advise your employees to use the IRS Withholding Calculator on the IRS website at www. Federal tax forms irs. Federal tax forms gov/individuals for help in determining how many withholding allowances to claim on their Form W-4. Federal tax forms   Ask each new employee to give you a signed Form W-4 when starting work. Federal tax forms Make the form effective with the first wage payment. Federal tax forms If a new employee does not give you a completed Form W-4, withhold tax as if he or she is single, with no withholding allowances. Federal tax forms Forms in Spanish. Federal tax forms   You can provide Formulario W-4(SP) in place of Form W-4 to your Spanish-speaking employees. Federal tax forms For more information, see Publicación 17(SP). Federal tax forms Effective date of Form W-4. Federal tax forms   A Form W-4 remains in effect until the employee gives you a new one. Federal tax forms When you receive a new Form W-4, do not adjust withholding for pay periods before the effective date of the new form. Federal tax forms Do not adjust withholding retroactively. Federal tax forms If an employee gives you a replacement Form W-4, begin withholding no later than the start of the first payroll period ending on or after the 30th day from the date when you received the replacement Form W-4. Federal tax forms For exceptions, see Exemption from federal income tax withholding , IRS review of requested Forms W-4 , and Invalid Forms W-4 , later in this section. Federal tax forms A Form W-4 that makes a change for the next calendar year will not take effect in the current calendar year. Federal tax forms Completing Form W-4. Federal tax forms   The amount of federal income tax withholding is based on marital status and withholding allowances. Federal tax forms Your employees may not base their withholding amounts on a fixed dollar amount or percentage. Federal tax forms However, the employee may specify a dollar amount to be withheld in addition to the amount of withholding based on filing status and withholding allowances claimed on Form W-4. Federal tax forms   Employees may claim fewer withholding allowances than they are entitled to claim. Federal tax forms They may do this to ensure that they have enough withholding or to offset other sources of taxable income that are not subject to withholding. Federal tax forms   See Publication 505, Tax Withholding and Estimated Tax, for more information about completing Form W-4. Federal tax forms Along with Form W-4, you may wish to order Publication 505 for use by your employees. Federal tax forms    Do not accept any withholding or estimated tax payments from your employees in addition to withholding based on their Form W-4. Federal tax forms If an employee wants additional withholding, he or she should submit a new Form W-4 and, if necessary, pay estimated tax by filing Form 1040-ES, Estimated Tax for Individuals, or by using the Electronic Federal Tax Payment System (EFTPS) to make estimated tax payments. Federal tax forms Exemption from federal income tax withholding. Federal tax forms   Generally, an employee may claim exemption from federal income tax withholding because he or she had no federal income tax liability last year and expects none this year. Federal tax forms See the Form W-4 instructions for more information. Federal tax forms However, the wages are still subject to social security and Medicare taxes. Federal tax forms   A Form W-4 claiming exemption from withholding is effective when it is filed with the employer and only for that calendar year. Federal tax forms To continue to be exempt from withholding in the next calendar year, an employee must give you a new Form W-4 by February 15. Federal tax forms If the employee does not give you a new Form W-4 by February 15, withhold tax based on the last valid Form W-4 you have for the employee that did not claim an exemption from withholding or, if one does not exist, withhold as if he or she is single with zero withholding allowances. Federal tax forms If the employee provides a new Form W-4 claiming an exemption from withholding on February 16 or later, you may apply the exemption to future wages, but do not refund taxes withheld while the exempt status was not in place. Federal tax forms Withholding income taxes on the wages of nonresident alien employees. Federal tax forms   In general, you must withhold federal income taxes on the wages of nonresident alien employees. Federal tax forms However, see Publication 515 for exceptions to this general rule. Federal tax forms Also see Compensation paid to H-2A visa workers in section 3. Federal tax forms Withholding adjustment for nonresident alien employees. Federal tax forms   A special procedure applies for figuring the amount of income tax to withhold from wages of nonresident alien employees performing services within the United States for wages paid in 2014. Federal tax forms This procedure requires a special chart to be used with the withholding tables to determine the amount to withhold from the wages of the nonresident alien employee. Federal tax forms See Withholding adjustment for nonresident alien employees in section 9 of Publication 15 (Circular E). Federal tax forms Nonresident alien employee's Form W-4. Federal tax forms   When completing Forms W-4, nonresident aliens are required to: Not claim exemption from income tax withholding; Request withholding as if they are single, regardless of their actual marital status; Claim only one allowance (if the nonresident alien is a resident of Canada, Mexico, or Korea, he or she may claim more than one allowance); and Write “Nonresident Alien” or “NRA” above the dotted line on line 6 of Form W-4. Federal tax forms   If you maintain an electronic Form W-4 system, you should provide a field for nonresident alien employees to enter nonresident alien status in lieu of writing “Nonresident Alien” or “NRA” above the dotted line on line 6. Federal tax forms    A nonresident alien employee may request additional withholding at his or her option for other purposes, although such additions should not be necessary for withholding to cover federal income tax liability related to employment. Federal tax forms Form 8233. Federal tax forms   If a nonresident alien employee claims a tax treaty exemption from withholding, the employee must submit Form 8233, Exemption from Withholding on Compensation for Independent (and Certain Dependent) Personal Services of a Nonresident Alien Individual, with respect to the income exempt under the treaty, instead of Form W-4. Federal tax forms See Publication 515 for details. Federal tax forms IRS review of requested Forms W-4. Federal tax forms   When requested by the IRS, you must make original Forms W-4 available for inspection by an IRS employee. Federal tax forms You may also be directed to send certain Forms W-4 to the IRS. Federal tax forms You may receive a notice from the IRS requiring you to submit a copy of Form W-4 for one or more of your named employees. Federal tax forms Send the requested copy or copies of Form W-4 to the IRS at the address provided and in the manner directed by the notice. Federal tax forms The IRS may also require you to submit copies of Form W-4 to the IRS as directed by a revenue procedure or notice published in the Internal Revenue Bulletin. Federal tax forms When we refer to Form W-4, the same rules apply to Formulario W-4(SP), its Spanish translation. Federal tax forms   After submitting a copy of the requested Form W-4 to the IRS, continue to withhold federal income tax based on that Form W-4 if it is valid (see Invalid Forms W-4 , later in this section). Federal tax forms However, if the IRS later notifies you in writing that the employee is not entitled to claim a complete exemption from withholding or more than the maximum number of withholding allowances specified by the IRS in the written notice, withhold federal income tax based on the effective date, marital status, and maximum number of withholding allowances specified in the notice (commonly referred to as a “lock-in letter”). Federal tax forms Initial lock-in letter. Federal tax forms   The IRS uses information reported on Form W-2 to identify employees with withholding compliance problems. Federal tax forms In some cases, where a serious under-withholding problem is found to exist for a particular employee, the IRS may issue a lock-in letter to the employer specifying the maximum number of withholding allowances and marital status permitted for a specific employee. Federal tax forms You will also receive a copy for the employee that identifies the maximum number of withholding allowances permitted and the process by which the employee can provide additional information to the IRS for purposes of determining the appropriate number of withholding allowances. Federal tax forms If the employee is employed by you as of the date of the notice, you must furnish the employee copy to the employee within 10 business days of receipt. Federal tax forms You may follow any reasonable business practice to furnish the employee copy to the employee. Federal tax forms Implementation of lock-in letter. Federal tax forms   When you receive the notice specifying the maximum number of withholding allowances and marital status permitted, you may not withhold immediately on the basis of the notice. Federal tax forms You must begin withholding tax on the basis of the notice for any wages paid after the date specified in the notice. Federal tax forms The delay between your receipt of the notice and the date to begin the withholding on the basis of the notice permits the employee to contact the IRS. Federal tax forms Seasonal employees and employees not currently performing services. Federal tax forms   If you receive a notice for an employee who is not currently performing services for you, you are still required to furnish the employee copy to the employee and withhold based on the notice if any of the following apply. Federal tax forms You are paying wages for the employee's prior services and the wages are subject to income tax withholding on or after the date specified in the notice. Federal tax forms You reasonably expect the employee to resume services within 12 months of the date of the notice. Federal tax forms The employee is on a bona fide leave of absence that does not exceed 12 months or the employee has a right to reemployment after the leave of absence. Federal tax forms Termination and re-hire of employees. Federal tax forms   If you are required to furnish and withhold based on the notice and the employment relationship is terminated after the date of the notice, you must continue to withhold based on the notice if you continue to pay any wages subject to income tax withholding. Federal tax forms You must also withhold based on the notice or modification notice (explained next) if the employee resumes the employment relationship with you within 12 months after the termination of the employment relationship. Federal tax forms Modification notice. Federal tax forms   After issuing the notice specifying the maximum number of withholding allowances and marital status permitted, the IRS may issue a subsequent notice (modification notice) that modifies the original notice. Federal tax forms The modification notice may change the marital status and/or the number of withholding allowances permitted. Federal tax forms You must withhold federal income tax based on the effective date specified in the modification notice. Federal tax forms New Form W-4 after IRS notice. Federal tax forms   After the IRS issues a notice or modification notice, if the employee provides you with a new Form W-4 claiming complete exemption from withholding or claims a marital status, a number of withholding allowances, and any additional withholding that results in less withholding than would result under the IRS notice or modification notice, you must disregard the new Form W-4. Federal tax forms You are required to withhold on the basis of the notice or modification notice unless the IRS subsequently notifies you to withhold based on the new Form W-4. Federal tax forms If the employee wants to put a new Form W-4 into effect that results in less withholding than required, the employee must contact the IRS. Federal tax forms   If, after you receive an IRS notice or modification notice, your employee provides you with a new Form W-4 that does not claim exemption from federal income tax withholding and claims a marital status, a number of withholding allowances, and any additional withholding that results in more withholding than would result under the notice or modification notice, you must withhold tax on the basis of that new Form W-4. Federal tax forms Otherwise, disregard any subsequent Forms W-4 provided by the employee and withhold based on the IRS notice or modification notice. Federal tax forms Substitute Forms W-4. Federal tax forms   You are encouraged to have your employees use the official version of Form W-4 to claim withholding allowances or exemption from withholding. Federal tax forms Call the IRS at 1-800-TAX-FORM (1-800-829-3676) or visit IRS. Federal tax forms gov to obtain copies of Form W-4. Federal tax forms   You may use a substitute version of Form W-4 to meet your business needs. Federal tax forms However, your substitute Form W-4 must contain language that is identical to the official Form W-4 and your form must meet all current IRS rules for substitute forms. Federal tax forms At the time that you provide your substitute form to the employee, you must provide him or her with all tables, instructions, and worksheets from the current Form W-4. Federal tax forms   You cannot accept a substitute Form W-4 developed by an employee, and the employee submitting such form will be treated as failing to furnish a Form W-4. Federal tax forms However, continue to use any valid Forms W-4 developed by your employees that you accepted before October 11, 2007. Federal tax forms Invalid Forms W-4. Federal tax forms   Any unauthorized change or addition to Form W-4 makes it invalid. Federal tax forms This includes taking out any language by which the employee certifies that the form is correct. Federal tax forms A Form W-4 is also invalid if, by the date an employee gives it to you, he or she indicates in any way that it is false. Federal tax forms An employee who submits a false Form W-4 may be subject to a $500 penalty. Federal tax forms You may treat a Form W-4 as invalid if the employee wrote “exempt” on line 7 and also entered a number on line 5 or an amount on line 6. Federal tax forms   When you get an invalid Form W-4, do not use it to figure federal income tax withholding. Federal tax forms Tell the employee that it is invalid and ask for another one. Federal tax forms If the employee does not give you a valid one, withhold taxes as if the employee was single and claiming no withholding allowances. Federal tax forms However, if you have an earlier Form W-4 for this worker that is valid, withhold as you did before. Federal tax forms   For additional information about these rules, see Treasury Decision 9337, 2007-35 I. Federal tax forms R. Federal tax forms B. Federal tax forms 455, available at www. Federal tax forms irs. Federal tax forms gov/irb/2007-35_IRB/ar10. Federal tax forms html. Federal tax forms Amounts exempt from levy on wages, salary, and other income. Federal tax forms   If you receive a Notice of Levy on Wages, Salary, and Other Income—Forms 668-W(ACS), 668-W(c)(DO), or 668-W(ICS), you must withhold amounts as described in the instructions for these forms. Federal tax forms Publication 1494, Tables for Figuring Amount Exempt From Levy on Wages, Salary, and Other Income—Forms 668-W(ACS), 668-W(c)(DO), and 668-W(ICS), shows the exempt amount. Federal tax forms If a levy issued in a prior year is still in effect and the taxpayer submits a new Statement of Exemptions and Filing Status, use the current year Publication 1494 to compute the exempt amount. Federal tax forms How To Figure Federal Income Tax Withholding There are several ways to figure federal income tax withholding. Federal tax forms Wage bracket tables. Federal tax forms See section 13 for directions on how to use the tables. Federal tax forms Percentage method. Federal tax forms See section 13 for directions on how to use the percentage method. Federal tax forms Alternative formula tables for percentage method withholding. Federal tax forms See Publication 15-A. Federal tax forms Wage bracket percentage method withholding tables. Federal tax forms See Publication 15-A. Federal tax forms Other alternative methods. Federal tax forms See Publication 15-A. Federal tax forms Employers with automated payroll systems will find the two alternative formula tables and the two alternative wage bracket percentage method tables in Publication 15-A useful. Federal tax forms If an employee wants additional federal tax withheld, have the employee show the extra amount on Form W-4. Federal tax forms Supplemental wages. Federal tax forms   Supplemental wages are wage payments to an employee that are not regular wages. Federal tax forms They include, but are not limited to, bonuses, commissions, overtime pay, accumulated sick leave, severance pay, awards, prizes, back pay and retroactive pay increases for current employees, and payments for nondeductible moving expenses. Federal tax forms Other payments subject to the supplemental wage rules include taxable fringe benefits and expense allowances paid under a nonaccountable plan. Federal tax forms   If you pay supplemental wages with regular wages but do not specify the amount of each, withhold federal income tax as if the total was a single payment for a regular payroll period. Federal tax forms   If you pay supplemental wages separately (or combine them in a single payment and specify the amount of each), the federal income tax withholding method depends partly on whether you withhold federal income tax from your employee's regular wages. Federal tax forms If you withheld federal income tax from an employee's regular wages in the current or immediately preceding calendar year, you can use one of the following methods for the supplemental wages. Federal tax forms Withhold a flat 25% (no other percentage allowed). Federal tax forms If the supplemental wages are paid concurrently with regular wages, add the supplemental wages to the concurrently paid regular wages. Federal tax forms If there are no concurrently paid regular wages, add the supplemental wages to alternatively, either the regular wages paid or to be paid for the current payroll period or the regular wages paid for the preceding payroll period. Federal tax forms Figure the income tax withholding as if the total of the regular wages and supplemental wages is a single payment. Federal tax forms Subtract the tax withheld from the regular wages. Federal tax forms Withhold the remaining tax from the supplemental wages. Federal tax forms If there were other payments of supplemental wages paid during the payroll period made before the current payment of supplemental wages, aggregate all the payments of supplemental wages paid during the payroll period with the regular wages paid during the payroll period, calculate the tax on the total, subtract the tax already withheld from the regular wages and previous supplemental wage payments, and withhold the remaining tax from the current payment of supplemental wages. Federal tax forms If you did not withhold federal income tax from the employee's regular wages in the current or immediately preceding calendar year, use method 1-b above. Federal tax forms This would occur, for example, when the value of the employee's withholding allowances claimed on Form W-4 is more than the wages. Federal tax forms    Separate rules apply to any supplemental wages exceeding $1 million that you pay to an individual during the year. Federal tax forms See section 7 in Publication 15 (Circular E) for details. Federal tax forms   Regardless of the method that you use to withhold federal income tax on supplemental wages, they are generally subject to social security, Medicare, and FUTA taxes. Federal tax forms 6. Federal tax forms Required Notice to Employees About Earned Income Credit (EIC) You must notify employees who have no federal income tax withheld that they may be able to claim a tax refund because of the EIC. Federal tax forms Although you do not have to notify employees who claim exemption from withholding on Form W-4 about the EIC, you are encouraged to notify any employees whose wages for 2013 were less than $46,227 ($51,567 if married filing jointly) that they may be eligible to claim the credit for 2013. Federal tax forms This is because eligible employees may get a refund of the amount of EIC that is more than the tax that they owe. Federal tax forms You will meet the notification requirement if you issue to the employee Form W-2 with the EIC notice on the back of Copy B, or a substitute Form W-2 with the same statement. Federal tax forms You may also meet the requirement by providing Notice 797, Possible Federal Tax Refund Due to the Earned Income Credit (EIC), or your own statement that contains the same wording. Federal tax forms If a substitute Form W-2 is given to the employee on time but does not have the required statement, you must notify the employee within 1 week of the date that the substitute Form W-2 is given. Federal tax forms If Form W-2 is required but is not given on time, you must give the employee Notice 797 or your written statement by the date that Form W-2 is required to be given. Federal tax forms If Form W-2 is not required, you must notify the employee by February 7, 2014. Federal tax forms 7. Federal tax forms Depositing Taxes Generally, you must deposit both the employer and employee shares of social security and Medicare taxes and federal income tax withheld. Federal tax forms You must use electronic funds transfer to make all federal tax deposits. Federal tax forms See How To Deposit , later in this section. Federal tax forms The credit against employment taxes for COBRA premium assistance payments is treated as a deposit of taxes on the first day of your return period. Federal tax forms For more information, see COBRA premium assistance credit under Introduction. Federal tax forms Payment with return. Federal tax forms   You may make payments with Forms 943 or 945 instead of depositing if one of the following applies. Federal tax forms You report less than a $2,500 tax liability for the year (Form 943, line 11; Form 945, line 3) and you pay in full with a return that is filed on time. Federal tax forms However, if you are unsure that you will report less than $2,500, deposit under the rules explained in this section so that you will not be subject to failure-to-deposit penalties. Federal tax forms You are a monthly schedule depositor and make a payment in accordance with the Accuracy of Deposits Rule discussed later in this section. Federal tax forms This payment may be $2,500 or more. Federal tax forms Only monthly schedule depositors, defined later, are allowed to make an Accuracy of Deposits Rule payment with the return. Federal tax forms Semiweekly schedule depositors must timely deposit the amount. Federal tax forms See Accuracy of Deposits Rule and How To Deposit, later in this section. Federal tax forms When To Deposit If you employ both farm and nonfarm workers, do not combine the taxes reportable on Forms 941 or 944 with Form 943 to decide whether to make a deposit. Federal tax forms See Employers of Both Farm and Nonfarm Workers, later in this section. Federal tax forms The rules for determining when to deposit Form 943 taxes are discussed below. Federal tax forms See section 10 for the separate rules that apply to FUTA tax. Federal tax forms Under these rules, you are classified as either a monthly schedule depositor or a semiweekly schedule depositor. Federal tax forms The terms “monthly schedule depositor” and “semiweekly schedule depositor” do not refer to how often your business pays its employees or how often you are required to make deposits. Federal tax forms The terms identify which set of rules you must follow when you incur a tax liability (for example, when you have a payday). Federal tax forms The deposit schedule that you must use for a calendar year is determined from the tax liability reported on your Form 943, line 9, for the lookback period, discussed next. Federal tax forms If you reported $50,000 or less of Form 943 taxes for the lookback period, you are a monthly schedule depositor. Federal tax forms If you reported more than $50,000 of Form 943 taxes for the lookback period, you are a semiweekly schedule depositor. Federal tax forms Lookback period. Federal tax forms   The lookback period is the second calendar year preceding the current calendar year. Federal tax forms For example, the lookback period for 2014 is 2012. Federal tax forms Example of deposit schedule based on lookback period. Federal tax forms Rose Co. Federal tax forms reported taxes on Form 943 as follows. Federal tax forms 2012 — $48,000 2013 — $60,000 Rose Co. Federal tax forms is a monthly schedule depositor for 2014 because its taxes for the lookback period ($48,000 for calendar year 2012) were not more than $50,000. Federal tax forms However, for 2015, Rose Co. Federal tax forms is a semiweekly schedule depositor because the total taxes before adjustment for its lookback period ($60,000 for calendar year 2013) exceeded $50,000. Federal tax forms Adjustments to lookback period taxes. Federal tax forms   To determine your taxes for the lookback period, use only the tax that you reported on the original return (Form 943, line 9). Federal tax forms Do not include adjustments shown on Form 943-X, Adjusted Employer's Annual Federal Tax Return for Agricultural Employees or Claim for Refund. Federal tax forms Example of adjustments. Federal tax forms An employer originally reported total tax of $45,000 for the lookback period in 2012. Federal tax forms The employer discovered during March 2014 that the tax reported for the lookback period was understated by $10,000 and corrected this error by filing Form 943-X. Federal tax forms The total tax reported in the lookback period is still $45,000. Federal tax forms The $10,000 adjustment is also not treated as part of the 2014 taxes. Federal tax forms Deposit period. Federal tax forms   The term “deposit period” refers to the period during which tax liabilities are accumulated for each required deposit due date. Federal tax forms For monthly schedule depositors, the deposit period is a calendar month. Federal tax forms The deposit periods for semiweekly schedule depositors are Wednesday through Friday and Saturday through Tuesday. Federal tax forms Monthly Deposit Schedule If the tax liability reported on Form 943, line 9, for the lookback period is $50,000 or less, you are a monthly schedule depositor for the current year. Federal tax forms You must deposit Form 943 taxes on payments made during a calendar month by the 15th day of the following month. Federal tax forms Monthly schedule example. Federal tax forms   Red Co. Federal tax forms is a seasonal employer and a monthly schedule depositor. Federal tax forms It pays wages each Friday. Federal tax forms It paid wages during August 2014, but did not pay any wages during September. Federal tax forms Red Co. Federal tax forms must deposit the combined tax liabilities for the August paydays by September 15. Federal tax forms Red Co. Federal tax forms does not have a deposit requirement for September (that is, due by October 15, 2014) because no wages were paid in September; therefore, it did not have a tax liability for September. Federal tax forms New employers. Federal tax forms   For agricultural employers, your tax liability for any year in the lookback period before the date you started or acquired your business is considered to be zero. Federal tax forms Therefore, you are a monthly schedule depositor for the first and second calendar years of your agricultural business (but see the $100,000 Next-Day Deposit Rule , later in this section). Federal tax forms Semiweekly Deposit Schedule You are a semiweekly schedule depositor for a calendar year if the tax liability on Form 943, line 9, during your lookback period was more than $50,000. Federal tax forms Under the semiweekly deposit schedule, deposit Form 943 taxes for payments made on Wednesday, Thursday, and/or Friday by the following Wednesday. Federal tax forms Deposit amounts accumulated for payments made on Saturday, Sunday, Monday, and/or Tuesday by the following Friday. Federal tax forms Semiweekly depositors are not required to deposit twice a week if their payments were in the same semiweekly period unless the $100,000 Next-Day Deposit Rule (discussed later in this section) applies. Federal tax forms For example, if you made a payment on both Wednesday and Friday and incurred taxes of $10,000 for each pay date, deposit the $20,000 by the following Wednesday. Federal tax forms If you made no additional payments on Saturday through Tuesday, no deposit is due on Friday. Federal tax forms Semiweekly schedule depositors must complete Form 943-A, Agricultural Employer's Record of Federal Tax Liability, and submit it with Form 943. Federal tax forms Semiweekly Deposit Schedule IF the payday falls on a. Federal tax forms . Federal tax forms . Federal tax forms THEN deposit taxes by the following. Federal tax forms . Federal tax forms . Federal tax forms Wednesday, Thursday, and/or Friday Wednesday Saturday, Sunday, Monday, and/or Tuesday Friday Semiweekly schedule example. Federal tax forms   Green, Inc. Federal tax forms , is a semiweekly schedule depositor and pays wages once each month on the last Friday of the month. Federal tax forms Green, Inc. Federal tax forms , will deposit only once a month, but the deposit will be made under the semiweekly deposit schedule as follows. Federal tax forms Green, Inc. Federal tax forms 's tax liability for the April 25, 2014 (Friday), wage payment must be deposited by April 30, 2014 (Wednesday). Federal tax forms Semiweekly deposit period spanning two quarters. Federal tax forms   If you have more than one pay date during a semiweekly period and the pay dates fall in different calendar quarters, you will need to make separate deposits for the separate liabilities. Federal tax forms For example, if you have a pay date on Monday, March 31, 2014 (first quarter), and another pay date on Tuesday, April 1, 2014 (second quarter), two separate deposits will be required even though the pay dates fall within the same semiweekly period. Federal tax forms Both deposits will be due Friday, April 4, 2014 (3 business days from the end of the semiweekly deposit period). Federal tax forms Deposits on Business Days Only If a deposit is required to be made on a day that is not a business day, the deposit is considered timely if it is made by the close of the next business day. Federal tax forms A business day is any day other than a Saturday, Sunday, or legal holiday. Federal tax forms For example, if a deposit is required to be made on Friday and Friday is a legal holiday, the deposit is considered timely if it is made by the following Monday (if Monday is a business day). Federal tax forms Semiweekly schedule depositors   will always have 3 business days to make a deposit. Federal tax forms That is, if any of the 3 weekdays after the end of a semiweekly period is a legal holiday, you will have an additional day for each day that is a legal holiday to make the deposit. Federal tax forms For example, if a semiweekly schedule depositor accumulated taxes on Friday and the following Monday is a legal holiday, the deposit normally due on Wednesday may be made on Thursday (this allows 3 business days to make the deposit). Federal tax forms Legal holiday. Federal tax forms   The term “legal holiday” means any legal holiday in the District of Columbia. Federal tax forms Legal holidays for 2014 are listed below. Federal tax forms January 1— New Year's Day January 20— Birthday of Martin Luther King, Jr. Federal tax forms February 17— Washington's Birthday April 16— District of Columbia Emancipation Day May 26— Memorial Day July 4— Independence Day September 1— Labor Day October 13— Columbus Day November 11— Veterans' Day November 27— Thanksgiving Day December 25— Christmas Day $100,000 Next-Day Deposit Rule If you accumulate $100,000 or more of Form 943 taxes (that is, taxes reported on Form 943, line 11) on any day during a deposit period, you must deposit the tax by the close of the next business day, whether you are a monthly or a semiweekly schedule depositor. Federal tax forms For purposes of the $100,000 rule, do not continue accumulating a tax liability after the end of a deposit period. Federal tax forms For example, if a semiweekly schedule depositor has accumulated a liability of $95,000 on a Tuesday (of a Saturday-through-Tuesday deposit period) and accumulated a $10,000 liability on Wednesday, the $100,000 next-day deposit rule does not apply because the $10,000 is accumulated in the next deposit period. Federal tax forms Thus, $95,000 must be deposited by Friday and $10,000 must be deposited by the following Wednesday. Federal tax forms However, once you accumulate at least $100,000 in a deposit period, stop accumulating at the end of that day and begin to accumulate anew on the next day. Federal tax forms For example, Fir Co. Federal tax forms is a semiweekly schedule depositor. Federal tax forms On Monday, Fir Co. Federal tax forms accumulates taxes of $110,000 and must deposit this amount on Tuesday, the next business day. Federal tax forms On Tuesday, Fir Co. Federal tax forms accumulates additional taxes of $30,000. Federal tax forms Because the $30,000 is not added to the previous $110,000 and is less than $100,000, Fir Co. Federal tax forms does not have to deposit the $30,000 until Friday (following the semiweekly deposit schedule). Federal tax forms If you are a monthly schedule depositor and you accumulate a $100,000 tax liability on any day, you become a semiweekly schedule depositor on the next day and remain so for at least the rest of the calendar year and for the following calendar year. Federal tax forms Example of the $100,000 next-day deposit rule. Federal tax forms   Elm, Inc. Federal tax forms , started its business on May 1, 2014. Federal tax forms Because Elm, Inc. Federal tax forms , is a new employer, the taxes for its lookback period are considered to be zero; therefore, Elm, Inc. Federal tax forms , is a monthly schedule depositor. Federal tax forms On May 8, Elm, Inc. Federal tax forms , paid wages for the first time and accumulated taxes of $50,000. Federal tax forms On May 9 (Friday), Elm, Inc. Federal tax forms , paid wages and accumulated taxes of $60,000, for a total of $110,000. Federal tax forms Because Elm, Inc. Federal tax forms , accumulated $110,000 on May 9, it must deposit $110,000 by May 12 (Monday), the next business day. Federal tax forms Elm, Inc. Federal tax forms , became a semiweekly schedule depositor on May 10. Federal tax forms It will be a semiweekly schedule depositor for the remainder of 2014 and for 2015. Federal tax forms Accuracy of Deposits Rule You are required to deposit 100% of your tax liability on or before the deposit due date. Federal tax forms However, penalties will not be applied for depositing less than 100% if both of the following conditions are met. Federal tax forms Any deposit shortfall does not exceed the greater of $100 or 2% of the amount of taxes otherwise required to be deposited. Federal tax forms The deposit shortfall is paid or deposited by the shortfall makeup date as described below. Federal tax forms Makeup Date for Deposit Shortfall:    Monthly Schedule Depositor—Deposit the shortfall or pay it with your return by the due date of your Form 943. Federal tax forms You may pay the shortfall with your Form 943 even if the amount is $2,500 or more. Federal tax forms Semiweekly Schedule Depositor—Deposit by the earlier of (a) the first Wednesday or Friday (whichever comes first) that falls on or after the 15th of the month following the month in which the shortfall occurred, or (b) the due date for Form 943. Federal tax forms For example, if a semiweekly schedule depositor has a deposit shortfall during February 2014, the shortfall makeup date is March 19, 2014 (Wednesday). Federal tax forms How To Deposit You must deposit employment taxes by electronic funds transfer. Federal tax forms See Payment with return , earlier in this section, for exceptions explaining when taxes may be paid with the tax return instead of being deposited. Federal tax forms Electronic deposit requirement. Federal tax forms   You must use electronic funds transfer to make all federal tax deposits (such as deposits of employment tax, excise tax, and corporate income tax). Federal tax forms Generally, electronic funds transfers are made using the Electronic Federal Tax Payment System (EFTPS). Federal tax forms If you do not want to use EFTPS, you can arrange for your tax professional, financial institution, payroll service, or other trusted third party to make electronic deposits on your behalf. Federal tax forms   EFTPS is a free service provided by the Department of Treasury. Federal tax forms To get more information or to enroll in EFTPS, call 1-800-555-4477 (business), 1-800-316-6541 (individual), or 1-800-733-4829 (TDD). Federal tax forms You can also visit the EFTPS website at www. Federal tax forms eftps. Federal tax forms gov. Federal tax forms Additional information about EFTPS is also available in Publication 966. Federal tax forms New employers that have a federal tax obligation will be pre-enrolled in EFTPS. Federal tax forms Call the toll-free number located in your Employer Identification Number (EIN) Package to activate your enrollment and begin making your tax deposit payments. Federal tax forms See When you receive your EIN in section 1 for more information. Federal tax forms Deposit record. Federal tax forms   For your records, an Electronic Funds Transfer (EFT) Trace Number will be provided with each successful payment. Federal tax forms The number can be used as a receipt or to trace the payment. Federal tax forms Depositing on time. Federal tax forms   For deposits made by EFTPS to be on time, you must initiate the deposit by 8 p. Federal tax forms m. Federal tax forms Eastern time the day before the date a deposit is due. Federal tax forms If you use a third party to make a deposit on your behalf, they may have different cutoff times. Federal tax forms Same-day payment option. Federal tax forms   If you fail to initiate a deposit transaction on EFTPS by 8 p. Federal tax forms m. Federal tax forms Eastern time the day before the date a deposit is due, you can still make your deposit on time by using the Federal Tax Application (FTA). Federal tax forms To use the same-day payment method, you will need to make arrangements with your financial institution ahead of time. Federal tax forms Please check with your financial institution regarding availability, deadlines, and costs. Federal tax forms Your financial institution may charge you a fee for payments made this way. Federal tax forms To learn more about the information you will need to provide to your financial institution to make a same-day wire payment, visit www. Federal tax forms eftps. Federal tax forms gov to download the Same-Day Payment Worksheet. Federal tax forms Deposit Penalties Penalties may apply if you do not make required deposits on time or if you make deposits for less than the required amount. Federal tax forms The penalties do not apply if any failure to make a proper and timely deposit was due to reasonable cause and not to willful neglect. Federal tax forms IRS may also waive deposit penalties if you inadvertently fail to deposit in the first quarter that a deposit is due, or the first quarter during which your frequency of deposits changed, if you timely filed your employment tax return. Federal tax forms For amounts not properly deposited or not deposited on time, the penalty rates are shown next. Federal tax forms Penalty Charged for. Federal tax forms . Federal tax forms . Federal tax forms 2% Deposits made 1 to 5 days late. Federal tax forms 5% Deposits made 6 to 15 days late. Federal tax forms 10% Deposits made 16 or more days late. Federal tax forms Also applies to amounts paid within 10 days of the date of the first notice the IRS sent asking for the tax due. Federal tax forms 10% Amounts (that should have been deposited) paid directly to the IRS or paid with your tax return. Federal tax forms See Payment with return , earlier in this section, for exceptions. Federal tax forms 15% Amounts still unpaid more than 10 days after the date of the first notice that the IRS sent asking for the tax due or the day on which you received notice and demand for immediate payment, whichever is earlier. Federal tax forms Late deposit penalty amounts are determined using calendar days, starting from the due date of the liability. Federal tax forms Order in which deposits are applied. Federal tax forms   Deposits generally are applied to the most recent tax liability within the year. Federal tax forms If you receive a failure-to-deposit penalty notice, you may designate how your deposits are to be applied in order to minimize the amount of the penalty, if you do so within 90 days of the date of the notice. Federal tax forms Follow the instructions on the penalty notice that you received. Federal tax forms For examples on how the IRS will apply deposits and more information on designating deposits, see Revenue Procedure 2001-58. Federal tax forms You can find Revenue Procedure 2001-58 on page 579 of Internal Revenue Bulletin 2001-50 at www. Federal tax forms irs. Federal tax forms gov/pub/irs-irbs/irb01-50. Federal tax forms pdf. Federal tax forms Example. Federal tax forms Cedar, Inc. Federal tax forms , is required to make a deposit of $1,000 on July 15 and $1,500 on August 15. Federal tax forms It does not make the deposit on July 15. Federal tax forms On August 15, Cedar, Inc. Federal tax forms , deposits $2,000. Federal tax forms Under the deposits rule, which applies deposits to the most recent tax liability, $1,500 of the deposit is applied to the August 15 deposit and the remaining $500 is applied to the July deposit. Federal tax forms Accordingly, $500 of the July 15 liability remains undeposited. Federal tax forms The penalty on this underdeposit will apply as explained above. Federal tax forms Trust fund recovery penalty. Federal tax forms   If federal income, social security, or Medicare taxes that must be withheld are not withheld or are not deposited or paid to the United States Treasury, the trust fund recovery penalty may apply. Federal tax forms The penalty is the full amount of the unpaid trust fund tax. Federal tax forms This penalty may apply to you if these unpaid taxes cannot be immediately collected from the employer or business. Federal tax forms   The trust fund recovery penalty may be imposed on all persons who are determined by the IRS to be responsible for collecting, accounting for, and paying over these taxes, and who acted willfully in not doing so. Federal tax forms   A responsible person can be an officer or employee of a corporation, a partner or employee of a partnership, an accountant, a volunteer director/trustee, or an employee of a sole proprietorship. Federal tax forms A responsible person also may include one who signs checks for the business or otherwise has authority to cause the spending of business funds. Federal tax forms    Willfully means voluntarily, consciously, and intentionally. Federal tax forms A responsible person acts willfully if the person knows that the required actions of collecting, accounting for or paying over trust fund taxes are not taking place, or recklessly disregards obvious and known risks to the government's right to receive trust fund taxes. Federal tax forms “Average” failure-to-deposit penalty. Federal tax forms   IRS may assess an “averaged” failure-to-deposit penalty of 2% to 10% if you are a monthly schedule depositor and did not properly complete Form 943, line 17, when your tax liability shown on Form 943, line 11, was $2,500 or more. Federal tax forms IRS may also assess this penalty of 2% to 10% if you are a semiweekly schedule depositor and your tax liability shown on Form 943, line 11, was $2,500 or more and you did any of the following. Federal tax forms Completed Form 943, line 17, instead of Form 943-A. Federal tax forms Failed to attach a properly completed Form 943-A. Federal tax forms Completed Form 943-A incorrectly, for example, by entering tax deposits instead of tax liabilities in the numbered spaces. Federal tax forms   IRS figures the penalty by allocating your tax liability on Form 943, line 11, equally throughout the tax period. Federal tax forms Your deposits and payments may not be counted as timely because IRS does not know the actual dates of your tax liabilities. Federal tax forms   You can avoid the penalty by reviewing your return before filing it. Federal tax forms Follow these steps before filing your Form 943. Federal tax forms If you are a monthly schedule depositor, report your tax liabilities (not your deposits) in the monthly entry spaces on Form 943, line 17. Federal tax forms If you are a semiweekly schedule depositor, report your tax liabilities (not your deposits) on Form 943-A in the lines that represent the dates you paid your employees. Federal tax forms Verify that your total liability shown on Form 943, line 17, or Form 943-A, line M, equals your tax liability shown on Form 943, line 11. Federal tax forms Do not show negative amounts on Form 943, line 17, or Form 943-A. Federal tax forms For prior period errors discovered after December 31, 2008, do not adjust your tax liabilities reported on Form 943, line 17, or on Form 943-A. Federal tax forms Employers of Both Farm and Nonfarm Workers If you employ both farm and nonfarm workers, you must treat employment taxes for the farmworkers (Form 943 taxes) separately from employment taxes for the nonfarm workers (Form 941 and 944 taxes). Federal tax forms Form 943 taxes and Form 941/944 taxes are not combined for purposes of applying any of the deposit schedule rules. Federal tax forms If a deposit is due, deposi
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Understanding your CP503 Notice

We have not heard from you and you still have an unpaid balance on one of your tax accounts.

Printable samples of this notice (PDF)

Tax publications you may find useful

How to get help

Calling the 1-800 number listed on the top right corner of your notice is the fastest way to get your questions answered.

You can also authorize someone (such as an accountant) to contact the IRS on your behalf using this Power of Attorney and Declaration of Representative (Form 2848).

Or you may qualify for help from a Low Income Taxpayer Clinic.
 


What you need to do

  • Read your notice carefully — it explains your due date, amount due, and payment options.
  • Make your payment by your due date. Go to the payments page to find out more about your payment options.

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Answers to Common Questions

What is the notice telling me?
This notice is another reminder that you still owe a balance on one of your tax accounts. You are getting this notice because we have not received your payment or response to previous notice(s) requesting you pay this balance.

What do I have to do?
Pay the amount due shown on the notice. Mail us your payment in the envelope we sent you. Include the bottom part of the notice to make sure we correctly credit your account.

If you can't pay the whole amount now, call us at the number printed at the top of the notice to see if you qualify for an installment agreement.

How much time do I have?
You should pay the entire balance within 10 days of the date of the notice or additional penalty and interest will be added.

What happens if I don't pay?
We may file a Notice of Federal Tax Lien that gives us legal claim to your property as security or payment for your tax debt. We will also look for other assets you may own.

Who should I contact?
If you have any questions about the notice, call us at the number printed at the top of the notice. A customer service representative will assist you.

What if I don't agree or have already taken corrective action?
If you do not agree with this notice, call us immediately at the number printed at the top of the notice. We will do our best to help you.

Page Last Reviewed or Updated: 05-Mar-2014

The Federal Tax Forms

Federal tax forms 11. Federal tax forms   Employer-Provided Educational Assistance Table of Contents Introduction Working condition fringe benefit. Federal tax forms Introduction If you receive educational assistance benefits from your employer under an educational assistance program, you can exclude up to $5,250 of those benefits each year. Federal tax forms This means your employer should not include those benefits with your wages, tips, and other compensation shown in box 1 of your Form W-2. Federal tax forms This also means that you do not have to include the benefits on your income tax return. Federal tax forms You cannot use any of the tax-free education expenses paid for by your employer as the basis for any other deduction or credit, including the American opportunity credit and lifetime learning credit. Federal tax forms Educational assistance program. Federal tax forms   To qualify as an educational assistance program, the plan must be written and must meet certain other requirements. Federal tax forms Your employer can tell you whether there is a qualified program where you work. Federal tax forms Educational assistance benefits. Federal tax forms   Tax-free educational assistance benefits include payments for tuition, fees and similar expenses, books, supplies, and equipment. Federal tax forms Education generally includes any form of instruction or training that improves or develops your capabilities. Federal tax forms The payments do not have to be for work-related courses or courses that are part of a degree program. Federal tax forms   Educational assistance benefits do not include payments for the following items. Federal tax forms Meals, lodging, or transportation. Federal tax forms Tools or supplies (other than textbooks) that you can keep after completing the course of instruction. Federal tax forms Courses involving sports, games, or hobbies unless they: Have a reasonable relationship to the business of your employer, or Are required as part of a degree program. Federal tax forms Benefits over $5,250. Federal tax forms   If your employer pays more than $5,250 in educational assistance benefits for you during the year, you must generally pay tax on the amount over $5,250. Federal tax forms Your employer should include in your wages (Form W-2, box 1) the amount that you must include in income. Federal tax forms Working condition fringe benefit. Federal tax forms    However, if the benefits over $5,250 also qualify as a working condition fringe benefit, your employer does not have to include them in your wages. Federal tax forms A working condition fringe benefit is a benefit which, had you paid for it, you could deduct as an employee business expense. Federal tax forms For more information on working condition fringe benefits, see Working Condition Benefits in chapter 2 of Publication 15-B, Employer's Tax Guide to Fringe Benefits. Federal tax forms Prev  Up  Next   Home   More Online Publications