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File 1040ez Online Irs

File 1040ez online irs Publication 51 - Main Content Table of Contents 1. File 1040ez online irs Taxpayer Identification NumbersWhen you receive your EIN. File 1040ez online irs Registering for SSNVS. File 1040ez online irs 2. File 1040ez online irs Who Are Employees?Crew Leaders Business Owned and Operated by Spouses 3. File 1040ez online irs Wages and Other Compensation 4. File 1040ez online irs Social Security and Medicare TaxesThe $150 Test or the $2,500 Test Social Security and Medicare Tax Withholding 5. File 1040ez online irs Federal Income Tax WithholdingImplementation of lock-in letter. File 1040ez online irs Seasonal employees and employees not currently performing services. File 1040ez online irs Termination and re-hire of employees. File 1040ez online irs How To Figure Federal Income Tax Withholding 6. File 1040ez online irs Required Notice to Employees About Earned Income Credit (EIC) 7. File 1040ez online irs Depositing TaxesWhen To Deposit How To Deposit Deposit Penalties Employers of Both Farm and Nonfarm Workers 8. File 1040ez online irs Form 943 9. File 1040ez online irs Reporting Adjustments on Form 943Current Year Adjustments Prior Year Adjustments 10. File 1040ez online irs Federal Unemployment (FUTA) Tax 11. File 1040ez online irs Reconciling Wage Reporting Forms 13. File 1040ez online irs Federal Income Tax Withholding MethodsWage Bracket Method Percentage Method Alternative Methods of Federal Income Tax Withholding How To Get Tax Help 1. File 1040ez online irs 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. File 1040ez online irs Also, you will need the SSN of each employee and the name of each employee as shown on the employee's social security card. File 1040ez online irs Employer identification number (EIN). File 1040ez online irs   An employer identification number (EIN) is a nine-digit number that the IRS issues. File 1040ez online irs The digits are arranged as follows: 00-0000000. File 1040ez online irs It is used to identify the tax accounts of employers and certain others who have no employees. File 1040ez online irs Use your EIN on all of the items that you send to the IRS and SSA. File 1040ez online irs   If you do not have an EIN, you may apply for one online. File 1040ez online irs Visit IRS. File 1040ez online irs gov and click on the Apply for an EIN Online link under Tools. File 1040ez online irs 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. File 1040ez online irs Do not use a SSN in place of an EIN. File 1040ez online irs   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. File 1040ez online irs If you took over another employer's business, do not use that employer's EIN. File 1040ez online irs   You should have only one EIN. File 1040ez online irs 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). File 1040ez online irs 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. File 1040ez online irs The IRS will tell you which EIN to use. File 1040ez online irs   For more information, see Publication 1635 or Publication 583. File 1040ez online irs When you receive your EIN. File 1040ez online irs   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). File 1040ez online irs 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. File 1040ez online irs 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. File 1040ez online irs 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. File 1040ez online irs Social security number (SSN). File 1040ez online irs   An employee's social security number (SSN) consists of nine digits arranged as follows: 000-00-0000. File 1040ez online irs 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. File 1040ez online irs Do not accept a social security card that says “Not valid for employment. File 1040ez online irs ” A social security number issued with this legend does not permit employment. File 1040ez online irs You may, but are not required to, photocopy the social security card if the employee provides it. File 1040ez online irs 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. File 1040ez online irs See Publication 1586, Reasonable Cause Regulations & Requirements for Missing and Incorrect Name/TINs. File 1040ez online irs Applying for a social security card. File 1040ez online irs   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. File 1040ez online irs 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. File 1040ez online irs socialsecurity. File 1040ez online irs gov/online/ss-5. File 1040ez online irs html. File 1040ez online irs The employee must complete and sign Form SS-5; it cannot be filed by the employer. File 1040ez online irs 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. File 1040ez online irs Applying for a social security number. File 1040ez online irs   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. File 1040ez online irs If you are filing electronically, enter all zeros (000-00-0000) in the social security number field. File 1040ez online irs 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. File 1040ez online irs Furnish Copies B, C, and 2 of Form W-2c to the employee. File 1040ez online irs 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. File 1040ez online irs For more information, visit SSA's Employer W-2 Filing Instructions & Information webpage at www. File 1040ez online irs socialsecurity. File 1040ez online irs gov/employer. File 1040ez online irs Advise your employee to correct the SSN on his or her original Form W-2. File 1040ez online irs Correctly record the employee's name and SSN. File 1040ez online irs   Record the name and number of each employee as they are shown on the employee's social security card. File 1040ez online irs 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. File 1040ez online irs 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. File 1040ez online irs   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. File 1040ez online irs 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. File 1040ez online irs IRS individual taxpayer identification numbers (ITINs) for aliens. File 1040ez online irs   Do not accept an ITIN in place of an SSN for employee identification or for work. File 1040ez online irs An ITIN is issued for use by resident and nonresident aliens who need identification for tax purposes, but who are not eligible for U. File 1040ez online irs S. File 1040ez online irs employment. File 1040ez online irs The ITIN is a nine-digit number formatted like an SSN (for example, NNN-NN-NNNN). File 1040ez online irs 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). File 1040ez online irs    An individual with an ITIN who later becomes eligible to work in the United States must obtain an SSN. File 1040ez online irs 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. File 1040ez online irs Do not use an ITIN in place of an SSN on Form W-2. File 1040ez online irs Verification of social security numbers. File 1040ez online irs   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. File 1040ez online irs Visit www. File 1040ez online irs socialsecurity. File 1040ez online irs gov/employer/ssnv. File 1040ez online irs htm for more information. File 1040ez online irs Registering for SSNVS. File 1040ez online irs   You must register online and receive authorization from your employer to use SSNVS. File 1040ez online irs To register, visit SSA's website at www. File 1040ez online irs socialsecurity. File 1040ez online irs gov/employer and click on the Business Services Online link. File 1040ez online irs Follow the registration instructions to obtain a user identification (ID) and password. File 1040ez online irs You will need to provide the following information about yourself and your company. File 1040ez online irs Name. File 1040ez online irs SSN. File 1040ez online irs Date of birth. File 1040ez online irs Type of employer. File 1040ez online irs EIN. File 1040ez online irs Company name, address, and telephone number. File 1040ez online irs Email address. File 1040ez online irs When you have completed the online registration process, SSA will mail a one-time activation code to your employer. File 1040ez online irs You must enter the activation code online to use SSNVS. File 1040ez online irs 2. File 1040ez online irs Who Are Employees? Generally, employees are defined either under common law or under statutes for certain situations. File 1040ez online irs See Publication 15-A for details on statutory employees and nonemployees. File 1040ez online irs Employee status under common law. File 1040ez online irs   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. File 1040ez online irs This is so even when you give the employee freedom of action. File 1040ez online irs What matters is that you have the right to control the details of how the services are performed. File 1040ez online irs See Publication 15-A for more information on how to determine whether an individual providing services is an independent contractor or an employee. File 1040ez online irs If an employer-employee relationship exists, it does not matter what it is called. File 1040ez online irs The employee may be called an agent or independent contractor. File 1040ez online irs It also does not matter how payments are measured or paid, what they are called, or if the employee works full or part time. File 1040ez online irs You are responsible for withholding and paying employment taxes for your employees. File 1040ez online irs You are also required to file employment tax returns. File 1040ez online irs These requirements do not apply to amounts that you pay to independent contractors. File 1040ez online irs The rules discussed in this publication apply only to workers who are your employees. File 1040ez online irs 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. File 1040ez online irs 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. File 1040ez online irs 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. File 1040ez online irs 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. File 1040ez online irs Crew Leaders If you are a crew leader, you are an employer of farmworkers. File 1040ez online irs 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. File 1040ez online irs 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. File 1040ez online irs For FUTA tax rules, see section 10. File 1040ez online irs 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. File 1040ez online irs See Publication 541, Partnerships, for more details. File 1040ez online irs The partnership is considered the employer of any employees, and is liable for any employment taxes due on wages paid to its employees. File 1040ez online irs Exception—Qualified joint venture. File 1040ez online irs   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. File 1040ez online irs 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). File 1040ez online irs   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. File 1040ez online irs Each spouse must also file a separate Schedule SE to pay self-employment taxes, as applicable. File 1040ez online irs   Spouses using the qualified joint venture rules are treated as sole proprietors for federal tax purposes and generally do not need an EIN. File 1040ez online irs 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. File 1040ez online irs Generally, filing as a qualified joint venture will not increase the spouses' total tax owed on the joint income tax return. File 1040ez online irs 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. File 1040ez online irs    Note. File 1040ez online irs If your spouse is your employee, not your partner, you must pay social security and Medicare taxes for him or her. File 1040ez online irs   For more information on qualified joint ventures, visit IRS. File 1040ez online irs gov and enter “qualified joint venture” in the search box. File 1040ez online irs Exception—Community income. File 1040ez online irs   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. File 1040ez online irs S. File 1040ez online irs possession, you can treat the business either as a sole proprietorship (of the spouse who carried on the business) or a partnership. File 1040ez online irs You may still make an election to be taxed as a qualified joint venture instead of a partnership. File 1040ez online irs See Exception—Qualified joint venture , earlier in this section. File 1040ez online irs 3. File 1040ez online irs Wages and Other Compensation Cash wages that you pay to employees for farmwork are generally subject to social security tax and Medicare tax. File 1040ez online irs You may also be required to withhold, deposit, and report Additional Medicare Tax. File 1040ez online irs See section 4 for more information. File 1040ez online irs If the wages are subject to social security and Medicare taxes, they are also subject to federal income tax withholding. File 1040ez online irs You may also be liable for FUTA tax, which is not withheld by you or paid by the employee. File 1040ez online irs FUTA tax is discussed in section 10. File 1040ez online irs Cash wages include checks, money orders, etc. File 1040ez online irs Do not count as cash wages the value of food, lodging, and other noncash items. File 1040ez online irs For more information on what payments are considered taxable wages, see Publication 15 (Circular E). File 1040ez online irs Commodity wages. File 1040ez online irs   Commodity wages are not cash and are not subject to social security and Medicare taxes or federal income tax withholding. File 1040ez online irs However, noncash payments, including commodity wages, are treated as cash wages (see above) if the substance of the transaction is a cash payment. File 1040ez online irs These noncash payments are subject to social security and Medicare taxes and federal income tax withholding. File 1040ez online irs Other compensation. File 1040ez online irs   Publications 15-A and 15-B discuss other forms of compensation that may be taxable. File 1040ez online irs Family members. File 1040ez online irs   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. File 1040ez online irs However, certain exemptions may apply for your child, spouse, or parent. File 1040ez online irs See the table, How Do Employment Taxes Apply to Farmwork , in section 12. File 1040ez online irs Household employees. File 1040ez online irs   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. File 1040ez online irs   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. File 1040ez online irs 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. File 1040ez online irs   For more information, see Publication 926, Household Employer's Tax Guide. File 1040ez online irs    Wages for household work may not be a deductible farm expense. File 1040ez online irs See Publication 225, Farmer's Tax Guide. File 1040ez online irs Share farmers. File 1040ez online irs   You do not have to withhold or pay social security and Medicare taxes on amounts paid to share farmers under share-farming arrangements. File 1040ez online irs Compensation paid to H-2A visa holders. File 1040ez online irs   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. File 1040ez online irs On Form W-2, do not check box 13 (Statutory employee), as H-2A workers are not statutory employees. File 1040ez online irs   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. File 1040ez online irs In that case, the worker must give the employer a completed Form W-4. File 1040ez online irs Federal income tax withheld should be reported in box 2 of Form W-2. File 1040ez online irs These reporting rules apply when the H-2A worker provides his or her taxpayer identification number (TIN) to the employer. File 1040ez online irs 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. File 1040ez online irs 4. File 1040ez online irs 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. File 1040ez online irs You may also be required to withhold Additional Medicare Tax. File 1040ez online irs For more information, see Additional Medicare Tax withholding , later. File 1040ez online irs 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. File 1040ez online irs 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). File 1040ez online irs The $150 test applies separately to each farmworker that you employ. File 1040ez online irs If you employ a family of workers, each member is treated separately. File 1040ez online irs Do not count wages paid by other employers. File 1040ez online irs The total that you pay for farmwork (cash and noncash) to all your employees is $2,500 or more during the year. File 1040ez online irs Exceptions. File 1040ez online irs   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. File 1040ez online irs   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. File 1040ez online irs Social Security and Medicare Tax Withholding The social security tax rate is 6. File 1040ez online irs 2%, for both the employee and employer, on the first $117,000 paid to each employee. File 1040ez online irs You must withhold at this rate from each employee and pay a matching amount. File 1040ez online irs The Medicare tax rate is 1. File 1040ez online irs 45% each for the employee and employer on all wages. File 1040ez online irs You must withhold at this rate from each employee and pay a matching amount. File 1040ez online irs There is no wage base limit for Medicare tax; all covered wages are subject to Medicare tax. File 1040ez online irs Social security and Medicare taxes apply to most payments of sick pay, including payments made by third parties such as insurance companies. File 1040ez online irs For details, see Publication 15-A. File 1040ez online irs Additional Medicare Tax withholding. File 1040ez online irs   In addition to withholding Medicare tax at 1. File 1040ez online irs 45%, you must withhold a 0. File 1040ez online irs 9% Additional Medicare Tax from wages you pay to an employee in excess of $200,000 in a calendar year. File 1040ez online irs 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. File 1040ez online irs Additional Medicare Tax is only imposed on the employee. File 1040ez online irs There is no employer share of Additional Medicare Tax. File 1040ez online irs 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. File 1040ez online irs   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). File 1040ez online irs For more information on Additional Medicare Tax, visit IRS. File 1040ez online irs gov and enter “Additional Medicare Tax” in the search box. File 1040ez online irs Employee share paid by employer. File 1040ez online irs   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. File 1040ez online irs If you do not withhold the taxes, however, you must still pay them. File 1040ez online irs Any employee social security and Medicare taxes that you pay is additional income to the employee. File 1040ez online irs 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. File 1040ez online irs Also, do not count the additional income as wages for FUTA tax purposes. File 1040ez online irs Different rules apply to employer payments of social security and Medicare taxes for non-household and non-agricultural employees. File 1040ez online irs See section 7 of Publication 15-A. File 1040ez online irs Withholding social security and Medicare taxes on nonresident alien employees. File 1040ez online irs   In general, if you pay wages to nonresident alien employees, you must withhold social security and Medicare taxes as you would for a U. File 1040ez online irs S. File 1040ez online irs citizen or resident alien. File 1040ez online irs However, see Publication 515, Withholding of Tax on Nonresident Aliens and Foreign Entities, for exceptions to this general rule. File 1040ez online irs Also see Compensation paid to H-2A visa holders in section 3. File 1040ez online irs Religious exemption. File 1040ez online irs    An exemption from social security and Medicare taxes is available to members of a recognized religious sect opposed to public insurance. File 1040ez online irs This exemption is available only if both the employee and the employer are members of the sect. File 1040ez online irs   For more information, see Publication 517, Social Security and Other Information for Members of the Clergy and Religious Workers. File 1040ez online irs 5. File 1040ez online irs 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. File 1040ez online irs The amount to withhold is figured on gross wages before taking out social security and Medicare taxes, union dues, insurance, etc. File 1040ez online irs You may use one of several methods to determine the amount of federal income tax withholding. File 1040ez online irs They are discussed in section 13. File 1040ez online irs Form W-4. File 1040ez online irs   To know how much federal income tax to withhold from employees' wages, you should have a Form W-4 on file for each employee. File 1040ez online irs 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. File 1040ez online irs Advise your employees to use the IRS Withholding Calculator on the IRS website at www. File 1040ez online irs irs. File 1040ez online irs gov/individuals for help in determining how many withholding allowances to claim on their Form W-4. File 1040ez online irs   Ask each new employee to give you a signed Form W-4 when starting work. File 1040ez online irs Make the form effective with the first wage payment. File 1040ez online irs 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. File 1040ez online irs Forms in Spanish. File 1040ez online irs   You can provide Formulario W-4(SP) in place of Form W-4 to your Spanish-speaking employees. File 1040ez online irs For more information, see Publicación 17(SP). File 1040ez online irs Effective date of Form W-4. File 1040ez online irs   A Form W-4 remains in effect until the employee gives you a new one. File 1040ez online irs When you receive a new Form W-4, do not adjust withholding for pay periods before the effective date of the new form. File 1040ez online irs Do not adjust withholding retroactively. File 1040ez online irs 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. File 1040ez online irs 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. File 1040ez online irs A Form W-4 that makes a change for the next calendar year will not take effect in the current calendar year. File 1040ez online irs Completing Form W-4. File 1040ez online irs   The amount of federal income tax withholding is based on marital status and withholding allowances. File 1040ez online irs Your employees may not base their withholding amounts on a fixed dollar amount or percentage. File 1040ez online irs 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. File 1040ez online irs   Employees may claim fewer withholding allowances than they are entitled to claim. File 1040ez online irs 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. File 1040ez online irs   See Publication 505, Tax Withholding and Estimated Tax, for more information about completing Form W-4. File 1040ez online irs Along with Form W-4, you may wish to order Publication 505 for use by your employees. File 1040ez online irs    Do not accept any withholding or estimated tax payments from your employees in addition to withholding based on their Form W-4. File 1040ez online irs 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. File 1040ez online irs Exemption from federal income tax withholding. File 1040ez online irs   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. File 1040ez online irs See the Form W-4 instructions for more information. File 1040ez online irs However, the wages are still subject to social security and Medicare taxes. File 1040ez online irs   A Form W-4 claiming exemption from withholding is effective when it is filed with the employer and only for that calendar year. File 1040ez online irs 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. File 1040ez online irs 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. File 1040ez online irs 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. File 1040ez online irs Withholding income taxes on the wages of nonresident alien employees. File 1040ez online irs   In general, you must withhold federal income taxes on the wages of nonresident alien employees. File 1040ez online irs However, see Publication 515 for exceptions to this general rule. File 1040ez online irs Also see Compensation paid to H-2A visa workers in section 3. File 1040ez online irs Withholding adjustment for nonresident alien employees. File 1040ez online irs   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. File 1040ez online irs 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. File 1040ez online irs See Withholding adjustment for nonresident alien employees in section 9 of Publication 15 (Circular E). File 1040ez online irs Nonresident alien employee's Form W-4. File 1040ez online irs   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. File 1040ez online irs   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. File 1040ez online irs    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. File 1040ez online irs Form 8233. File 1040ez online irs   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. File 1040ez online irs See Publication 515 for details. File 1040ez online irs IRS review of requested Forms W-4. File 1040ez online irs   When requested by the IRS, you must make original Forms W-4 available for inspection by an IRS employee. File 1040ez online irs You may also be directed to send certain Forms W-4 to the IRS. File 1040ez online irs 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. File 1040ez online irs 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. File 1040ez online irs 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. File 1040ez online irs When we refer to Form W-4, the same rules apply to Formulario W-4(SP), its Spanish translation. File 1040ez online irs   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). File 1040ez online irs 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”). File 1040ez online irs Initial lock-in letter. File 1040ez online irs   The IRS uses information reported on Form W-2 to identify employees with withholding compliance problems. File 1040ez online irs 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. File 1040ez online irs 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. File 1040ez online irs 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. File 1040ez online irs You may follow any reasonable business practice to furnish the employee copy to the employee. File 1040ez online irs Implementation of lock-in letter. File 1040ez online irs   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. File 1040ez online irs You must begin withholding tax on the basis of the notice for any wages paid after the date specified in the notice. File 1040ez online irs 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. File 1040ez online irs Seasonal employees and employees not currently performing services. File 1040ez online irs   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. File 1040ez online irs 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. File 1040ez online irs You reasonably expect the employee to resume services within 12 months of the date of the notice. File 1040ez online irs 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. File 1040ez online irs Termination and re-hire of employees. File 1040ez online irs   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. File 1040ez online irs 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. File 1040ez online irs Modification notice. File 1040ez online irs   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. File 1040ez online irs The modification notice may change the marital status and/or the number of withholding allowances permitted. File 1040ez online irs You must withhold federal income tax based on the effective date specified in the modification notice. File 1040ez online irs New Form W-4 after IRS notice. File 1040ez online irs   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. File 1040ez online irs 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. File 1040ez online irs 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. File 1040ez online irs   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. File 1040ez online irs Otherwise, disregard any subsequent Forms W-4 provided by the employee and withhold based on the IRS notice or modification notice. File 1040ez online irs Substitute Forms W-4. File 1040ez online irs   You are encouraged to have your employees use the official version of Form W-4 to claim withholding allowances or exemption from withholding. File 1040ez online irs Call the IRS at 1-800-TAX-FORM (1-800-829-3676) or visit IRS. File 1040ez online irs gov to obtain copies of Form W-4. File 1040ez online irs   You may use a substitute version of Form W-4 to meet your business needs. File 1040ez online irs 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. File 1040ez online irs 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. File 1040ez online irs   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. File 1040ez online irs However, continue to use any valid Forms W-4 developed by your employees that you accepted before October 11, 2007. File 1040ez online irs Invalid Forms W-4. File 1040ez online irs   Any unauthorized change or addition to Form W-4 makes it invalid. File 1040ez online irs This includes taking out any language by which the employee certifies that the form is correct. File 1040ez online irs 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. File 1040ez online irs An employee who submits a false Form W-4 may be subject to a $500 penalty. File 1040ez online irs 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. File 1040ez online irs   When you get an invalid Form W-4, do not use it to figure federal income tax withholding. File 1040ez online irs Tell the employee that it is invalid and ask for another one. File 1040ez online irs If the employee does not give you a valid one, withhold taxes as if the employee was single and claiming no withholding allowances. File 1040ez online irs However, if you have an earlier Form W-4 for this worker that is valid, withhold as you did before. File 1040ez online irs   For additional information about these rules, see Treasury Decision 9337, 2007-35 I. File 1040ez online irs R. File 1040ez online irs B. File 1040ez online irs 455, available at www. File 1040ez online irs irs. File 1040ez online irs gov/irb/2007-35_IRB/ar10. File 1040ez online irs html. File 1040ez online irs Amounts exempt from levy on wages, salary, and other income. File 1040ez online irs   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. File 1040ez online irs 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. File 1040ez online irs 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. File 1040ez online irs How To Figure Federal Income Tax Withholding There are several ways to figure federal income tax withholding. File 1040ez online irs Wage bracket tables. File 1040ez online irs See section 13 for directions on how to use the tables. File 1040ez online irs Percentage method. File 1040ez online irs See section 13 for directions on how to use the percentage method. File 1040ez online irs Alternative formula tables for percentage method withholding. File 1040ez online irs See Publication 15-A. File 1040ez online irs Wage bracket percentage method withholding tables. File 1040ez online irs See Publication 15-A. File 1040ez online irs Other alternative methods. File 1040ez online irs See Publication 15-A. File 1040ez online irs 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. File 1040ez online irs If an employee wants additional federal tax withheld, have the employee show the extra amount on Form W-4. File 1040ez online irs Supplemental wages. File 1040ez online irs   Supplemental wages are wage payments to an employee that are not regular wages. File 1040ez online irs 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. File 1040ez online irs Other payments subject to the supplemental wage rules include taxable fringe benefits and expense allowances paid under a nonaccountable plan. File 1040ez online irs   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. File 1040ez online irs   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. File 1040ez online irs 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. File 1040ez online irs Withhold a flat 25% (no other percentage allowed). File 1040ez online irs If the supplemental wages are paid concurrently with regular wages, add the supplemental wages to the concurrently paid regular wages. File 1040ez online irs 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. File 1040ez online irs Figure the income tax withholding as if the total of the regular wages and supplemental wages is a single payment. File 1040ez online irs Subtract the tax withheld from the regular wages. File 1040ez online irs Withhold the remaining tax from the supplemental wages. File 1040ez online irs 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. File 1040ez online irs 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. File 1040ez online irs This would occur, for example, when the value of the employee's withholding allowances claimed on Form W-4 is more than the wages. File 1040ez online irs    Separate rules apply to any supplemental wages exceeding $1 million that you pay to an individual during the year. File 1040ez online irs See section 7 in Publication 15 (Circular E) for details. File 1040ez online irs   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. File 1040ez online irs 6. File 1040ez online irs 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. File 1040ez online irs 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. File 1040ez online irs This is because eligible employees may get a refund of the amount of EIC that is more than the tax that they owe. File 1040ez online irs 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. File 1040ez online irs 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. File 1040ez online irs 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. File 1040ez online irs 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. File 1040ez online irs If Form W-2 is not required, you must notify the employee by February 7, 2014. File 1040ez online irs 7. File 1040ez online irs Depositing Taxes Generally, you must deposit both the employer and employee shares of social security and Medicare taxes and federal income tax withheld. File 1040ez online irs You must use electronic funds transfer to make all federal tax deposits. File 1040ez online irs See How To Deposit , later in this section. File 1040ez online irs 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. File 1040ez online irs For more information, see COBRA premium assistance credit under Introduction. File 1040ez online irs Payment with return. File 1040ez online irs   You may make payments with Forms 943 or 945 instead of depositing if one of the following applies. File 1040ez online irs 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. File 1040ez online irs 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. File 1040ez online irs You are a monthly schedule depositor and make a payment in accordance with the Accuracy of Deposits Rule discussed later in this section. File 1040ez online irs This payment may be $2,500 or more. File 1040ez online irs Only monthly schedule depositors, defined later, are allowed to make an Accuracy of Deposits Rule payment with the return. File 1040ez online irs Semiweekly schedule depositors must timely deposit the amount. File 1040ez online irs See Accuracy of Deposits Rule and How To Deposit, later in this section. File 1040ez online irs 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. File 1040ez online irs See Employers of Both Farm and Nonfarm Workers, later in this section. File 1040ez online irs The rules for determining when to deposit Form 943 taxes are discussed below. File 1040ez online irs See section 10 for the separate rules that apply to FUTA tax. File 1040ez online irs Under these rules, you are classified as either a monthly schedule depositor or a semiweekly schedule depositor. File 1040ez online irs 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. File 1040ez online irs The terms identify which set of rules you must follow when you incur a tax liability (for example, when you have a payday). File 1040ez online irs 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. File 1040ez online irs If you reported $50,000 or less of Form 943 taxes for the lookback period, you are a monthly schedule depositor. File 1040ez online irs If you reported more than $50,000 of Form 943 taxes for the lookback period, you are a semiweekly schedule depositor. File 1040ez online irs Lookback period. File 1040ez online irs   The lookback period is the second calendar year preceding the current calendar year. File 1040ez online irs For example, the lookback period for 2014 is 2012. File 1040ez online irs Example of deposit schedule based on lookback period. File 1040ez online irs Rose Co. File 1040ez online irs reported taxes on Form 943 as follows. File 1040ez online irs 2012 — $48,000 2013 — $60,000 Rose Co. File 1040ez online irs 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. File 1040ez online irs However, for 2015, Rose Co. File 1040ez online irs is a semiweekly schedule depositor because the total taxes before adjustment for its lookback period ($60,000 for calendar year 2013) exceeded $50,000. File 1040ez online irs Adjustments to lookback period taxes. File 1040ez online irs   To determine your taxes for the lookback period, use only the tax that you reported on the original return (Form 943, line 9). File 1040ez online irs Do not include adjustments shown on Form 943-X, Adjusted Employer's Annual Federal Tax Return for Agricultural Employees or Claim for Refund. File 1040ez online irs Example of adjustments. File 1040ez online irs An employer originally reported total tax of $45,000 for the lookback period in 2012. File 1040ez online irs 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. File 1040ez online irs The total tax reported in the lookback period is still $45,000. File 1040ez online irs The $10,000 adjustment is also not treated as part of the 2014 taxes. File 1040ez online irs Deposit period. File 1040ez online irs   The term “deposit period” refers to the period during which tax liabilities are accumulated for each required deposit due date. File 1040ez online irs For monthly schedule depositors, the deposit period is a calendar month. File 1040ez online irs The deposit periods for semiweekly schedule depositors are Wednesday through Friday and Saturday through Tuesday. File 1040ez online irs 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. File 1040ez online irs You must deposit Form 943 taxes on payments made during a calendar month by the 15th day of the following month. File 1040ez online irs Monthly schedule example. File 1040ez online irs   Red Co. File 1040ez online irs is a seasonal employer and a monthly schedule depositor. File 1040ez online irs It pays wages each Friday. File 1040ez online irs It paid wages during August 2014, but did not pay any wages during September. File 1040ez online irs Red Co. File 1040ez online irs must deposit the combined tax liabilities for the August paydays by September 15. File 1040ez online irs Red Co. File 1040ez online irs 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. File 1040ez online irs New employers. File 1040ez online irs   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. File 1040ez online irs 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). File 1040ez online irs 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. File 1040ez online irs Under the semiweekly deposit schedule, deposit Form 943 taxes for payments made on Wednesday, Thursday, and/or Friday by the following Wednesday. File 1040ez online irs Deposit amounts accumulated for payments made on Saturday, Sunday, Monday, and/or Tuesday by the following Friday. File 1040ez online irs 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. File 1040ez online irs 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. File 1040ez online irs If you made no additional payments on Saturday through Tuesday, no deposit is due on Friday. File 1040ez online irs Semiweekly schedule depositors must complete Form 943-A, Agricultural Employer's Record of Federal Tax Liability, and submit it with Form 943. File 1040ez online irs Semiweekly Deposit Schedule IF the payday falls on a. File 1040ez online irs . File 1040ez online irs . File 1040ez online irs THEN deposit taxes by the following. File 1040ez online irs . File 1040ez online irs . File 1040ez online irs Wednesday, Thursday, and/or Friday Wednesday Saturday, Sunday, Monday, and/or Tuesday Friday Semiweekly schedule example. File 1040ez online irs   Green, Inc. File 1040ez online irs , is a semiweekly schedule depositor and pays wages once each month on the last Friday of the month. File 1040ez online irs Green, Inc. File 1040ez online irs , will deposit only once a month, but the deposit will be made under the semiweekly deposit schedule as follows. File 1040ez online irs Green, Inc. File 1040ez online irs 's tax liability for the April 25, 2014 (Friday), wage payment must be deposited by April 30, 2014 (Wednesday). File 1040ez online irs Semiweekly deposit period spanning two quarters. File 1040ez online irs   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. File 1040ez online irs 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. File 1040ez online irs Both deposits will be due Friday, April 4, 2014 (3 business days from the end of the semiweekly deposit period). File 1040ez online irs 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. File 1040ez online irs A business day is any day other than a Saturday, Sunday, or legal holiday. File 1040ez online irs 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). File 1040ez online irs Semiweekly schedule depositors   will always have 3 business days to make a deposit. File 1040ez online irs 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. File 1040ez online irs 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). File 1040ez online irs Legal holiday. File 1040ez online irs   The term “legal holiday” means any legal holiday in the District of Columbia. File 1040ez online irs Legal holidays for 2014 are listed below. File 1040ez online irs January 1— New Year's Day January 20— Birthday of Martin Luther King, Jr. File 1040ez online irs 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. File 1040ez online irs For purposes of the $100,000 rule, do not continue accumulating a tax liability after the end of a deposit period. File 1040ez online irs 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. File 1040ez online irs Thus, $95,000 must be deposited by Friday and $10,000 must be deposited by the following Wednesday. File 1040ez online irs 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. File 1040ez online irs For example, Fir Co. File 1040ez online irs is a semiweekly schedule depositor. File 1040ez online irs On Monday, Fir Co. File 1040ez online irs accumulates taxes of $110,000 and must deposit this amount on Tuesday, the next business day. File 1040ez online irs On Tuesday, Fir Co. File 1040ez online irs accumulates additional taxes of $30,000. File 1040ez online irs Because the $30,000 is not added to the previous $110,000 and is less than $100,000, Fir Co. File 1040ez online irs does not have to deposit the $30,000 until Friday (following the semiweekly deposit schedule). File 1040ez online irs 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. File 1040ez online irs Example of the $100,000 next-day deposit rule. File 1040ez online irs   Elm, Inc. File 1040ez online irs , started its business on May 1, 2014. File 1040ez online irs Because Elm, Inc. File 1040ez online irs , is a new employer, the taxes for its lookback period are considered to be zero; therefore, Elm, Inc. File 1040ez online irs , is a monthly schedule depositor. File 1040ez online irs On May 8, Elm, Inc. File 1040ez online irs , paid wages for the first time and accumulated taxes of $50,000. File 1040ez online irs On May 9 (Friday), Elm, Inc. File 1040ez online irs , paid wages and accumulated taxes of $60,000, for a total of $110,000. File 1040ez online irs Because Elm, Inc. File 1040ez online irs , accumulated $110,000 on May 9, it must deposit $110,000 by May 12 (Monday), the next business day. File 1040ez online irs Elm, Inc. File 1040ez online irs , became a semiweekly schedule depositor on May 10. File 1040ez online irs It will be a semiweekly schedule depositor for the remainder of 2014 and for 2015. File 1040ez online irs Accuracy of Deposits Rule You are required to deposit 100% of your tax liability on or before the deposit due date. File 1040ez online irs However, penalties will not be applied for depositing less than 100% if both of the following conditions are met. File 1040ez online irs Any deposit shortfall does not exceed the greater of $100 or 2% of the amount of taxes otherwise required to be deposited. File 1040ez online irs The deposit shortfall is paid or deposited by the shortfall makeup date as described below. File 1040ez online irs 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. File 1040ez online irs You may pay the shortfall with your Form 943 even if the amount is $2,500 or more. File 1040ez online irs 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. File 1040ez online irs For example, if a semiweekly schedule depositor has a deposit shortfall during February 2014, the shortfall makeup date is March 19, 2014 (Wednesday). File 1040ez online irs How To Deposit You must deposit employment taxes by electronic funds transfer. File 1040ez online irs See Payment with return , earlier in this section, for exceptions explaining when taxes may be paid with the tax return instead of being deposited. File 1040ez online irs Electronic deposit requirement. File 1040ez online irs   You must use electronic funds transfer to make all federal tax deposits (such as deposits of employment tax, excise tax, and corporate income tax). File 1040ez online irs Generally, electronic funds transfers are made using the Electronic Federal Tax Payment System (EFTPS). File 1040ez online irs 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. File 1040ez online irs   EFTPS is a free service provided by the Department of Treasury. File 1040ez online irs 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). File 1040ez online irs You can also visit the EFTPS website at www. File 1040ez online irs eftps. File 1040ez online irs gov. File 1040ez online irs Additional information about EFTPS is also available in Publication 966. File 1040ez online irs New employers that have a federal tax obligation will be pre-enrolled in EFTPS. File 1040ez online irs Call the toll-free number located in your Employer Identification Number (EIN) Package to activate your enrollment and begin making your tax deposit payments. File 1040ez online irs See When you receive your EIN in section 1 for more information. File 1040ez online irs Deposit record. File 1040ez online irs   For your records, an Electronic Funds Transfer (EFT) Trace Number will be provided with each successful payment. File 1040ez online irs The number can be used as a receipt or to trace the payment. File 1040ez online irs Depositing on time. File 1040ez online irs   For deposits made by EFTPS to be on time, you must initiate the deposit by 8 p. File 1040ez online irs m. File 1040ez online irs Eastern time the day before the date a deposit is due. File 1040ez online irs If you use a third party to make a deposit on your behalf, they may have different cutoff times. File 1040ez online irs Same-day payment option. File 1040ez online irs   If you fail to initiate a deposit transaction on EFTPS by 8 p. File 1040ez online irs m. File 1040ez online irs 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). File 1040ez online irs To use the same-day payment method, you will need to make arrangements with your financial institution ahead of time. File 1040ez online irs Please check with your financial institution regarding availability, deadlines, and costs. File 1040ez online irs Your financial institution may charge you a fee for payments made this way. File 1040ez online irs To learn more about the information you will need to provide to your financial institution to make a same-day wire payment, visit www. File 1040ez online irs eftps. File 1040ez online irs gov to download the Same-Day Payment Worksheet. File 1040ez online irs 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. File 1040ez online irs 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. File 1040ez online irs 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. File 1040ez online irs For amounts not properly deposited or not deposited on time, the penalty rates are shown next. File 1040ez online irs Penalty Charged for. File 1040ez online irs . File 1040ez online irs . File 1040ez online irs 2% Deposits made 1 to 5 days late. File 1040ez online irs 5% Deposits made 6 to 15 days late. File 1040ez online irs 10% Deposits made 16 or more days late. File 1040ez online irs Also applies to amounts paid within 10 days of the date of the first notice the IRS sent asking for the tax due. File 1040ez online irs 10% Amounts (that should have been deposited) paid directly to the IRS or paid with your tax return. File 1040ez online irs See Payment with return , earlier in this section, for exceptions. File 1040ez online irs 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. File 1040ez online irs Late deposit penalty amounts are determined using calendar days, starting from the due date of the liability. File 1040ez online irs Order in which deposits are applied. File 1040ez online irs   Deposits generally are applied to the most recent tax liability within the year. File 1040ez online irs 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. File 1040ez online irs Follow the instructions on the penalty notice that you received. File 1040ez online irs For examples on how the IRS will apply deposits and more information on designating deposits, see Revenue Procedure 2001-58. File 1040ez online irs You can find Revenue Procedure 2001-58 on page 579 of Internal Revenue Bulletin 2001-50 at www. File 1040ez online irs irs. File 1040ez online irs gov/pub/irs-irbs/irb01-50. File 1040ez online irs pdf. File 1040ez online irs Example. File 1040ez online irs Cedar, Inc. File 1040ez online irs , is required to make a deposit of $1,000 on July 15 and $1,500 on August 15. File 1040ez online irs It does not make the deposit on July 15. File 1040ez online irs On August 15, Cedar, Inc. File 1040ez online irs , deposits $2,000. File 1040ez online irs 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. File 1040ez online irs Accordingly, $500 of the July 15 liability remains undeposited. File 1040ez online irs The penalty on this underdeposit will apply as explained above. File 1040ez online irs Trust fund recovery penalty. File 1040ez online irs   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. File 1040ez online irs The penalty is the full amount of the unpaid trust fund tax. File 1040ez online irs This penalty may apply to you if these unpaid taxes cannot be immediately collected from the employer or business. File 1040ez online irs   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. File 1040ez online irs   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. File 1040ez online irs A responsible person also may include one who signs checks for the business or otherwise has authority to cause the spending of business funds. File 1040ez online irs    Willfully means voluntarily, consciously, and intentionally. File 1040ez online irs 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. File 1040ez online irs “Average” failure-to-deposit penalty. File 1040ez online irs   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. File 1040ez online irs 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. File 1040ez online irs Completed Form 943, line 17, instead of Form 943-A. File 1040ez online irs Failed to attach a properly completed Form 943-A. File 1040ez online irs Completed Form 943-A incorrectly, for example, by entering tax deposits instead of tax liabilities in the numbered spaces. File 1040ez online irs   IRS figures the penalty by allocating your tax liability on Form 943, line 11, equally throughout the tax period. File 1040ez online irs Your deposits and payments may not be counted as timely because IRS does not know the actual dates of your tax liabilities. File 1040ez online irs   You can avoid the penalty by reviewing your return before filing it. File 1040ez online irs Follow these steps before filing your Form 943. File 1040ez online irs If you are a monthly schedule depositor, report your tax liabilities (not your deposits) in the monthly entry spaces on Form 943, line 17. File 1040ez online irs 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. File 1040ez online irs 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. File 1040ez online irs Do not show negative amounts on Form 943, line 17, or Form 943-A. File 1040ez online irs 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. File 1040ez online irs 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). File 1040ez online irs Form 943 taxes and Form 941/944 taxes are not combined for purposes of applying any of the deposit schedule rules. File 1040ez online irs If a deposit is due, deposi
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Understanding your CP51C Notice

We computed the tax on your Form 1040, 1040A or 1040EZ. You owe taxes.


What you need to do

  • Read your notice carefully. It will explain how we calculated your tax return.
  • You don't need to do anything if you agree with our calculations.
  • Contact us if you disagree with the amount of tax we computed.

You may want to...


Answers to Common Questions

What should I do if I disagree with the notice?
Call us at the toll free number on the top right corner of your notice. Please have your paperwork (such as cancelled checks, amended return, etc.) ready when you call.


Tips for next year

Consider filing your taxes electronically. Filing online can help you avoid mistakes and find credits and deductions that you may qualify for. In many cases you can file for free. Learn more about e-file.

Page Last Reviewed or Updated: 04-Mar-2014

Printable samples of this notice (PDF)

 

Tax publications you may find useful

 

How to get help

  • Call the 1-800 number listed on the top right corner of your notice.
  • Authorize someone (e.g., accountant) to contact the IRS on your behalf using Form 2848.
  • See if you qualify for help from a Low Income Taxpayer Clinic.
     

The File 1040ez Online Irs

File 1040ez online irs 3. File 1040ez online irs   SIMPLE Plans Table of Contents Topics - This chapter discusses: Useful Items - You may want to see: SIMPLE IRA PlanWho Can Set Up a SIMPLE IRA Plan? Who Can Participate in a SIMPLE IRA Plan? How To Set Up a SIMPLE IRA Plan Notification Requirement Contribution Limits When To Deduct Contributions Where To Deduct Contributions Tax Treatment of Contributions Distributions (Withdrawals) More Information on SIMPLE IRA Plans SIMPLE 401(k) Plan Topics - This chapter discusses: SIMPLE IRA plan SIMPLE 401(k) plan Useful Items - You may want to see: Publications 590 Individual Retirement Arrangements (IRAs) 3998 Choosing A Retirement Solution for Your Small Business 4284 SIMPLE IRA Plan Checklist 4334 SIMPLE IRA Plans for Small Businesses Forms (and Instructions) W-2 Wage and Tax Statement 5304-SIMPLE Savings Incentive Match Plan for Employees of Small Employers (SIMPLE)–Not for Use With a Designated Financial Institution 5305-SIMPLE Savings Incentive Match Plan for Employees of Small Employers (SIMPLE)–for Use With a Designated Financial Institution 8880 Credit for Qualified Retirement Savings Contributions 8881 Credit for Small Employer Pension Plan Startup Costs A savings incentive match plan for employees (SIMPLE plan) is a written arrangement that provides you and your employees with a simplified way to make contributions to provide retirement income. File 1040ez online irs Under a SIMPLE plan, employees can choose to make salary reduction contributions to the plan rather than receiving these amounts as part of their regular pay. File 1040ez online irs In addition, you will contribute matching or nonelective contributions. File 1040ez online irs SIMPLE plans can only be maintained on a calendar-year basis. File 1040ez online irs A SIMPLE plan can be set up in either of the following ways. File 1040ez online irs Using SIMPLE IRAs (SIMPLE IRA plan). File 1040ez online irs As part of a 401(k) plan (SIMPLE 401(k) plan). File 1040ez online irs Many financial institutions will help you set up a SIMPLE plan. File 1040ez online irs SIMPLE IRA Plan A SIMPLE IRA plan is a retirement plan that uses SIMPLE IRAs for each eligible employee. File 1040ez online irs Under a SIMPLE IRA plan, a SIMPLE IRA must be set up for each eligible employee. File 1040ez online irs For the definition of an eligible employee, see Who Can Participate in a SIMPLE IRA Plan , later. File 1040ez online irs Who Can Set Up a SIMPLE IRA Plan? You can set up a SIMPLE IRA plan if you meet both the following requirements. File 1040ez online irs You meet the employee limit. File 1040ez online irs You do not maintain another qualified plan unless the other plan is for collective bargaining employees. File 1040ez online irs Employee limit. File 1040ez online irs   You can set up a SIMPLE IRA plan only if you had 100 or fewer employees who received $5,000 or more in compensation from you for the preceding year. File 1040ez online irs Under this rule, you must take into account all employees employed at any time during the calendar year regardless of whether they are eligible to participate. File 1040ez online irs Employees include self-employed individuals who received earned income and leased employees (defined in chapter 1). File 1040ez online irs   Once you set up a SIMPLE IRA plan, you must continue to meet the 100-employee limit each year you maintain the plan. File 1040ez online irs Grace period for employers who cease to meet the 100-employee limit. File 1040ez online irs   If you maintain the SIMPLE IRA plan for at least 1 year and you cease to meet the 100-employee limit in a later year, you will be treated as meeting it for the 2 calendar years immediately following the calendar year for which you last met it. File 1040ez online irs   A different rule applies if you do not meet the 100-employee limit because of an acquisition, disposition, or similar transaction. File 1040ez online irs Under this rule, the SIMPLE IRA plan will be treated as meeting the 100-employee limit for the year of the transaction and the 2 following years if both the following conditions are satisfied. File 1040ez online irs Coverage under the plan has not significantly changed during the grace period. File 1040ez online irs The SIMPLE IRA plan would have continued to qualify after the transaction if you had remained a separate employer. File 1040ez online irs    The grace period for acquisitions, dispositions, and similar transactions also applies if, because of these types of transactions, you do not meet the rules explained under Other qualified plan or Who Can Participate in a SIMPLE IRA Plan, below. File 1040ez online irs Other qualified plan. File 1040ez online irs   The SIMPLE IRA plan generally must be the only retirement plan to which you make contributions, or to which benefits accrue, for service in any year beginning with the year the SIMPLE IRA plan becomes effective. File 1040ez online irs Exception. File 1040ez online irs   If you maintain a qualified plan for collective bargaining employees, you are permitted to maintain a SIMPLE IRA plan for other employees. File 1040ez online irs Who Can Participate in a SIMPLE IRA Plan? Eligible employee. File 1040ez online irs   Any employee who received at least $5,000 in compensation during any 2 years preceding the current calendar year and is reasonably expected to receive at least $5,000 during the current calendar year is eligible to participate. File 1040ez online irs The term “employee” includes a self-employed individual who received earned income. File 1040ez online irs   You can use less restrictive eligibility requirements (but not more restrictive ones) by eliminating or reducing the prior year compensation requirements, the current year compensation requirements, or both. File 1040ez online irs For example, you can allow participation for employees who received at least $3,000 in compensation during any preceding calendar year. File 1040ez online irs However, you cannot impose any other conditions for participating in a SIMPLE IRA plan. File 1040ez online irs Excludable employees. File 1040ez online irs   The following employees do not need to be covered under a SIMPLE IRA plan. File 1040ez online irs Employees who are covered by a union agreement and whose retirement benefits were bargained for in good faith by the employees' union and you. File 1040ez online irs Nonresident alien employees who have received no U. File 1040ez online irs S. File 1040ez online irs source wages, salaries, or other personal services compensation from you. File 1040ez online irs Compensation. File 1040ez online irs   Compensation for employees is the total wages, tips, and other compensation from the employer subject to federal income tax withholding and the amounts paid for domestic service in a private home, local college club, or local chapter of a college fraternity or sorority. File 1040ez online irs Compensation also includes the employee's salary reduction contributions made under this plan and, if applicable, elective deferrals under a section 401(k) plan, a SARSEP, or a section 403(b) annuity contract and compensation deferred under a section 457 plan required to be reported by the employer on Form W-2. File 1040ez online irs If you are self-employed, compensation is your net earnings from self-employment (line 4 of Short Schedule SE or line 6 of Long Schedule SE (Form 1040)) before subtracting any contributions made to the SIMPLE IRA plan for yourself. File 1040ez online irs How To Set Up a SIMPLE IRA Plan You can use Form 5304-SIMPLE or Form 5305-SIMPLE to set up a SIMPLE IRA plan. File 1040ez online irs Each form is a model savings incentive match plan for employees (SIMPLE) plan document. File 1040ez online irs Which form you use depends on whether you select a financial institution or your employees select the institution that will receive the contributions. File 1040ez online irs Use Form 5304-SIMPLE if you allow each plan participant to select the financial institution for receiving his or her SIMPLE IRA plan contributions. File 1040ez online irs Use Form 5305-SIMPLE if you require that all contributions under the SIMPLE IRA plan be deposited initially at a designated financial institution. File 1040ez online irs The SIMPLE IRA plan is adopted when you have completed all appropriate boxes and blanks on the form and you (and the designated financial institution, if any) have signed it. File 1040ez online irs Keep the original form. File 1040ez online irs Do not file it with the IRS. File 1040ez online irs Other uses of the forms. File 1040ez online irs   If you set up a SIMPLE IRA plan using Form 5304-SIMPLE or Form 5305-SIMPLE, you can use the form to satisfy other requirements, including the following. File 1040ez online irs Meeting employer notification requirements for the SIMPLE IRA plan. File 1040ez online irs Form 5304-SIMPLE and Form 5305-SIMPLE contain a Model Notification to Eligible Employees that provides the necessary information to the employee. File 1040ez online irs Maintaining the SIMPLE IRA plan records and proving you set up a SIMPLE IRA plan for employees. File 1040ez online irs Deadline for setting up a SIMPLE IRA plan. File 1040ez online irs   You can set up a SIMPLE IRA plan effective on any date from January 1 through October 1 of a year, provided you did not previously maintain a SIMPLE IRA plan. File 1040ez online irs This requirement does not apply if you are a new employer that comes into existence after October 1 of the year the SIMPLE IRA plan is set up and you set up a SIMPLE IRA plan as soon as administratively feasible after your business comes into existence. File 1040ez online irs If you previously maintained a SIMPLE IRA plan, you can set up a SIMPLE IRA plan effective only on January 1 of a year. File 1040ez online irs A SIMPLE IRA plan cannot have an effective date that is before the date you actually adopt the plan. File 1040ez online irs Setting up a SIMPLE IRA. File 1040ez online irs   SIMPLE IRAs are the individual retirement accounts or annuities into which the contributions are deposited. File 1040ez online irs A SIMPLE IRA must be set up for each eligible employee. File 1040ez online irs Forms 5305-S, SIMPLE Individual Retirement Trust Account, and 5305-SA, SIMPLE Individual Retirement Custodial Account, are model trust and custodial account documents the participant and the trustee (or custodian) can use for this purpose. File 1040ez online irs   A SIMPLE IRA cannot be a Roth IRA. File 1040ez online irs Contributions to a SIMPLE IRA will not affect the amount an individual can contribute to a Roth or traditional IRA. File 1040ez online irs Deadline for setting up a SIMPLE IRA. File 1040ez online irs   A SIMPLE IRA must be set up for an employee before the first date by which a contribution is required to be deposited into the employee's IRA. File 1040ez online irs See Time limits for contributing funds , later, under Contribution Limits. File 1040ez online irs Credit for startup costs. File 1040ez online irs   You may be able to claim a tax credit for part of the ordinary and necessary costs of starting a SIMPLE IRA plan that first became effective in 2013. File 1040ez online irs For more information, see Credit for startup costs under Reminders, earlier. File 1040ez online irs Notification Requirement If you adopt a SIMPLE IRA plan, you must notify each employee of the following information before the beginning of the election period. File 1040ez online irs The employee's opportunity to make or change a salary reduction choice under a SIMPLE IRA plan. File 1040ez online irs Your decision to make either matching contributions or nonelective contributions (discussed later). File 1040ez online irs A summary description provided by the financial institution. File 1040ez online irs Written notice that his or her balance can be transferred without cost or penalty if they use a designated financial institution. File 1040ez online irs Election period. File 1040ez online irs   The election period is generally the 60-day period immediately preceding January 1 of a calendar year (November 2 to December 31 of the preceding calendar year). File 1040ez online irs However, the dates of this period are modified if you set up a SIMPLE IRA plan in mid-year (for example, on July 1) or if the 60-day period falls before the first day an employee becomes eligible to participate in the SIMPLE IRA plan. File 1040ez online irs   A SIMPLE IRA plan can provide longer periods for permitting employees to enter into salary reduction agreements or to modify prior agreements. File 1040ez online irs For example, a SIMPLE IRA plan can provide a 90-day election period instead of the 60-day period. File 1040ez online irs Similarly, in addition to the 60-day period, a SIMPLE IRA plan can provide quarterly election periods during the 30 days before each calendar quarter, other than the first quarter of each year. File 1040ez online irs Contribution Limits Contributions are made up of salary reduction contributions and employer contributions. File 1040ez online irs You, as the employer, must make either matching contributions or nonelective contributions, defined later. File 1040ez online irs No other contributions can be made to the SIMPLE IRA plan. File 1040ez online irs These contributions, which you can deduct, must be made timely. File 1040ez online irs See Time limits for contributing funds , later. File 1040ez online irs Salary reduction contributions. File 1040ez online irs   The amount the employee chooses to have you contribute to a SIMPLE IRA on his or her behalf cannot be more than $12,000 for 2013 and 2014. File 1040ez online irs These contributions must be expressed as a percentage of the employee's compensation unless you permit the employee to express them as a specific dollar amount. File 1040ez online irs You cannot place restrictions on the contribution amount (such as limiting the contribution percentage), except to comply with the $12,000 limit. File 1040ez online irs   If you or an employee participates in any other qualified plan during the year and you or your employee have salary reduction contributions (elective deferrals) under those plans, the salary reduction contributions under a SIMPLE IRA plan also count toward the overall annual limit ($17,500 for 2013 and 2014) on exclusion of salary reduction contributions and other elective deferrals. File 1040ez online irs Catch-up contributions. File 1040ez online irs   A SIMPLE IRA plan can permit participants who are age 50 or over at the end of the calendar year to also make catch-up contributions. File 1040ez online irs The catch-up contribution limit for 2013 and 2014 for SIMPLE IRA plans is $2,500. File 1040ez online irs Salary reduction contributions are not treated as catch-up contributions for 2013 or 2014 until they exceed $12,000. File 1040ez online irs However, the catch-up contribution a participant can make for a year cannot exceed the lesser of the following amounts. File 1040ez online irs The catch-up contribution limit. File 1040ez online irs The excess of the participant's compensation over the salary reduction contributions that are not catch-up contributions. File 1040ez online irs Employer matching contributions. File 1040ez online irs   You are generally required to match each employee's salary reduction contributions on a dollar-for-dollar basis up to 3% of the employee's compensation. File 1040ez online irs This requirement does not apply if you make nonelective contributions as discussed later. File 1040ez online irs Example. File 1040ez online irs In 2013, your employee, John Rose, earned $25,000 and chose to defer 5% of his salary. File 1040ez online irs Your net earnings from self-employment are $40,000, and you choose to contribute 10% of your earnings to your SIMPLE IRA. File 1040ez online irs You make 3% matching contributions. File 1040ez online irs The total contribution you make for John is $2,000, figured as follows. File 1040ez online irs Salary reduction contributions ($25,000 × . File 1040ez online irs 05) $1,250 Employer matching contribution ($25,000 × . File 1040ez online irs 03) 750 Total contributions $2,000     The total contribution you make for yourself is $5,200, figured as follows. File 1040ez online irs Salary reduction contributions ($40,000 × . File 1040ez online irs 10) $4,000 Employer matching contribution ($40,000 × . File 1040ez online irs 03) 1,200 Total contributions $5,200 Lower percentage. File 1040ez online irs   If you choose a matching contribution less than 3%, the percentage must be at least 1%. File 1040ez online irs You must notify the employees of the lower match within a reasonable period of time before the 60-day election period (discussed earlier) for the calendar year. File 1040ez online irs You cannot choose a percentage less than 3% for more than 2 years during the 5-year period that ends with (and includes) the year for which the choice is effective. File 1040ez online irs Nonelective contributions. File 1040ez online irs   Instead of matching contributions, you can choose to make nonelective contributions of 2% of compensation on behalf of each eligible employee who has at least $5,000 (or some lower amount you select) of compensation from you for the year. File 1040ez online irs If you make this choice, you must make nonelective contributions whether or not the employee chooses to make salary reduction contributions. File 1040ez online irs Only $255,000 of the employee's compensation can be taken into account to figure the contribution limit in 2013 ($260,000 in 2014). File 1040ez online irs   If you choose this 2% contribution formula, you must notify the employees within a reasonable period of time before the 60-day election period (discussed earlier) for the calendar year. File 1040ez online irs Example 1. File 1040ez online irs In 2013, your employee, Jane Wood, earned $36,000 and chose to have you contribute 10% of her salary. File 1040ez online irs Your net earnings from self-employment are $50,000, and you choose to contribute 10% of your earnings to your SIMPLE IRA. File 1040ez online irs You make a 2% nonelective contribution. File 1040ez online irs Both of you are under age 50. File 1040ez online irs The total contribution you make for Jane is $4,320, figured as follows. File 1040ez online irs Salary reduction contributions ($36,000 × . File 1040ez online irs 10) $3,600 2% nonelective contributions ($36,000 × . File 1040ez online irs 02) 720 Total contributions $4,320     The total contribution you make for yourself is $6,000, figured as follows. File 1040ez online irs Salary reduction contributions ($50,000 × . File 1040ez online irs 10) $5,000 2% nonelective contributions ($50,000 × . File 1040ez online irs 02) 1,000 Total contributions $6,000 Example 2. File 1040ez online irs Using the same facts as in Example 1, above, the maximum contribution you make for Jane or for yourself if you each earned $75,000 is $13,500, figured as follows. File 1040ez online irs Salary reduction contributions (maximum amount allowed) $12,000 2% nonelective contributions ($75,000 × . File 1040ez online irs 02) 1,500 Total contributions $13,500 Time limits for contributing funds. File 1040ez online irs   You must make the salary reduction contributions to the SIMPLE IRA within 30 days after the end of the month in which the amounts would otherwise have been payable to the employee in cash. File 1040ez online irs You must make matching contributions or nonelective contributions by the due date (including extensions) for filing your federal income tax return for the year. File 1040ez online irs Certain plans subject to Department of Labor rules may have an earlier due date for salary reduction contributions. File 1040ez online irs When To Deduct Contributions You can deduct SIMPLE IRA contributions in the tax year within which the calendar year for which contributions were made ends. File 1040ez online irs You can deduct contributions for a particular tax year if they are made for that tax year and are made by the due date (including extensions) of your federal income tax return for that year. File 1040ez online irs Example 1. File 1040ez online irs Your tax year is the fiscal year ending June 30. File 1040ez online irs Contributions under a SIMPLE IRA plan for the calendar year 2013 (including contributions made in 2013 before July 1, 2013) are deductible in the tax year ending June 30, 2014. File 1040ez online irs Example 2. File 1040ez online irs You are a sole proprietor whose tax year is the calendar year. File 1040ez online irs Contributions under a SIMPLE IRA plan for the calendar year 2013 (including contributions made in 2014 by April 15, 2014) are deductible in the 2013 tax year. File 1040ez online irs Where To Deduct Contributions Deduct the contributions you make for your common-law employees on your tax return. File 1040ez online irs For example, sole proprietors deduct them on Schedule C (Form 1040) or Schedule F (Form 1040); partnerships deduct them on Form 1065; and corporations deduct them on Form 1120 or Form 1120S. File 1040ez online irs Sole proprietors and partners deduct contributions for themselves on line 28 of Form 1040. File 1040ez online irs (If you are a partner, contributions for yourself are shown on the Schedule K-1 (Form 1065) you receive from the partnership. File 1040ez online irs ) Tax Treatment of Contributions You can deduct your contributions and your employees can exclude these contributions from their gross income. File 1040ez online irs SIMPLE IRA plan contributions are not subject to federal income tax withholding. File 1040ez online irs However, salary reduction contributions are subject to social security, Medicare, and federal unemployment (FUTA) taxes. File 1040ez online irs Matching and nonelective contributions are not subject to these taxes. File 1040ez online irs Reporting on Form W-2. File 1040ez online irs   Do not include SIMPLE IRA plan contributions in the “Wages, tips, other compensation” box of Form W-2. File 1040ez online irs You must, however, include them in the “Social security wages” and “Medicare wages and tips” boxes. File 1040ez online irs You must also include them in box 12. File 1040ez online irs Mark the “Retirement plan” checkbox in box 13. File 1040ez online irs For more information, see the Form W-2 instructions. File 1040ez online irs Distributions (Withdrawals) Distributions from a SIMPLE IRA are subject to IRA rules and generally are includible in income for the year received. File 1040ez online irs Tax-free rollovers can be made from one SIMPLE IRA into another SIMPLE IRA. File 1040ez online irs However, a rollover from a SIMPLE IRA to a non-SIMPLE IRA can be made tax free only after a 2-year participation in the SIMPLE IRA plan. File 1040ez online irs Generally, you or your employee must begin to receive distributions from a SIMPLE IRA by April 1 of the first year after the calendar year in which you or your employee reaches age 70½. File 1040ez online irs Early withdrawals generally are subject to a 10% additional tax. File 1040ez online irs However, the additional tax is increased to 25% if funds are withdrawn within 2 years of beginning participation. File 1040ez online irs More information. File 1040ez online irs   See Publication 590 for information about IRA rules, including those on the tax treatment of distributions, rollovers, required distributions, and income tax withholding. File 1040ez online irs More Information on SIMPLE IRA Plans If you need help to set up or maintain a SIMPLE IRA plan, go to the IRS website and search SIMPLE IRA Plan. File 1040ez online irs SIMPLE 401(k) Plan You can adopt a SIMPLE plan as part of a 401(k) plan if you meet the 100-employee limit as discussed earlier under SIMPLE IRA Plan. File 1040ez online irs A SIMPLE 401(k) plan is a qualified retirement plan and generally must satisfy the rules discussed under Qualification Rules in chapter 4, including the required distribution rules. File 1040ez online irs However, a SIMPLE 401(k) plan is not subject to the nondiscrimination and top-heavy rules discussed in chapter 4 if the plan meets the conditions listed below. File 1040ez online irs Under the plan, an employee can choose to have you make salary reduction contributions for the year to a trust in an amount expressed as a percentage of the employee's compensation, but not more than $12,000 for 2013 and 2014. File 1040ez online irs If permitted under the plan, an employee who is age 50 or over can also make a catch-up contribution of up to $2,500 for 2013 and 2014. File 1040ez online irs See Catch-up contributions , earlier under Contribution Limits. File 1040ez online irs You must make either: Matching contributions up to 3% of compensation for the year, or Nonelective contributions of 2% of compensation on behalf of each eligible employee who has at least $5,000 of compensation from you for the year. File 1040ez online irs No other contributions can be made to the trust. File 1040ez online irs No contributions are made, and no benefits accrue, for services during the year under any other qualified retirement plan sponsored by you on behalf of any employee eligible to participate in the SIMPLE 401(k) plan. File 1040ez online irs The employee's rights to any contributions are nonforfeitable. File 1040ez online irs No more than $255,000 of the employee's compensation can be taken into account in figuring matching contributions and nonelective contributions in 2013 ($260,000 in 2014). File 1040ez online irs Compensation is defined earlier in this chapter. File 1040ez online irs Employee notification. File 1040ez online irs   The notification requirement that applies to SIMPLE IRA plans also applies to SIMPLE 401(k) plans. File 1040ez online irs See Notification Requirement in this chapter. File 1040ez online irs Credit for startup costs. File 1040ez online irs   You may be able to claim a tax credit for part of the ordinary and necessary costs of starting a SIMPLE 401(k) plan that first became effective in 2013. File 1040ez online irs For more information, see Credit for startup costs under Reminders, earlier. File 1040ez online irs Note on Forms. File 1040ez online irs   Please note that Forms 5304-SIMPLE and 5305-SIMPLE can not be used to establish a SIMPLE 401(k) plan. File 1040ez online irs To set up a SIMPLE 401(k) plan, see Adopting a Written Plan in chapter 4. File 1040ez online irs Prev  Up  Next   Home   More Online Publications