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File 2011 taxes free online 13. File 2011 taxes free online   Employment Taxes Table of Contents What's New for 2013 What's New for 2014 Reminders Important Dates for 2014 Introduction Topics - This chapter discusses: Useful Items - You may want to see: Farm Employment Family Employees Crew Leaders Social Security and Medicare TaxesReligious exemption. File 2011 taxes free online Wage limit. File 2011 taxes free online Federal Income Tax WithholdingNew Form W-4 for 2014. File 2011 taxes free online Required Notice to Employees About Earned Income Credit (EIC) Reporting and Paying Social Security, Medicare, and Withheld Federal Income TaxesElectronic deposit requirement. File 2011 taxes free online Federal Unemployment (FUTA) TaxReporting and Paying FUTA Tax What's New for 2013 Social security and Medicare tax for 2013. File 2011 taxes free online  The employee tax rate for social security is 6. File 2011 taxes free online 2%. File 2011 taxes free online Previously, the employee tax rate for social security was 4. File 2011 taxes free online 2%. File 2011 taxes free online The employer tax rate for social security remains unchanged at 6. File 2011 taxes free online 2%. File 2011 taxes free online The social security wage base limit is $113,700. File 2011 taxes free online The Medicare tax rate is 1. File 2011 taxes free online 45% each for the employee and employer, unchanged from 2012. File 2011 taxes free online There is no wage base limit for Medicare tax. File 2011 taxes free online Additional Medicare Tax. File 2011 taxes free online  In addition to withholding Medicare tax at 1. File 2011 taxes free online 45%, you must withhold a 0. File 2011 taxes free online 9% Additional Medicare Tax from wages you pay to an employee in excess of $200,000 in a calendar year. File 2011 taxes free online 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 2011 taxes free online Additional Medicare Tax is only imposed on the employee. File 2011 taxes free online There is no employer share of Additional Medicare Tax. File 2011 taxes free online All wages that are subject to Medicare tax are subject to Additional Medicare Tax withholding if paid in excess of the $200,000 threshold. File 2011 taxes free online 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), Employer's Tax Guide. File 2011 taxes free online For more information on Additional Medicare Tax, visit IRS. File 2011 taxes free online gov and enter “Additional Medicare Tax” in the search box. File 2011 taxes free online Leave-based donation programs to aid victims of Hurricane Sandy. File 2011 taxes free online  Under these programs, employees may donate their vacation, sick, or personal leave in exchange for employer cash payments made before January 1, 2014, to qualified tax-exempt organizations providing relief for the victims of Hurricane Sandy. File 2011 taxes free online The donated leave will not be included in the income or wages of the employee. File 2011 taxes free online The employer may deduct the cash payments as business expenses or charitable contributions. File 2011 taxes free online For more information, see Notice 2012-69, 2012-51 I. File 2011 taxes free online R. File 2011 taxes free online B. File 2011 taxes free online 712, available at www. File 2011 taxes free online irs. File 2011 taxes free online gov/irb/2012-51_IRB/ar09. File 2011 taxes free online html. File 2011 taxes free online Work opportunity tax credit for qualified tax-exempt organizations hiring qualified veterans extended. File 2011 taxes free online  The work opportunity tax credit is now available for eligible unemployed veterans who begin work before January 1, 2014. File 2011 taxes free online Previously, the credit was available for unemployed veterans who began work on or after November 22, 2011, and before January 1, 2013. File 2011 taxes free online Qualified tax-exempt organizations that hire eligible unemployed veterans can claim the work opportunity tax credit against their payroll tax liability using Form 5884-C, Work Opportunity Credit for Qualified Tax-Exempt Organizations Hiring Qualified Veterans. File 2011 taxes free online For more information, visit IRS. File 2011 taxes free online gov and enter “work opportunity credit” in the search box. File 2011 taxes free online What's New for 2014 Social security and Medicare tax for 2014. File 2011 taxes free online  The employee and employer tax rates for social security and the maximum amount of wages subject to social security tax for 2014 will be discussed in Publication 51 (Circular A), Agricultural Employer's Tax Guide (For use in 2014). File 2011 taxes free online The Medicare tax rate for 2014 will also be discussed in Publication 51 (Circular A) (For use in 2014). File 2011 taxes free online There is no limit on the amount of wages subject to Medicare tax. File 2011 taxes free online Reminders Additional employment tax information for farmers. File 2011 taxes free online  See Publication 51 (Circular A) for more detailed guidance on employment taxes. File 2011 taxes free online For the latest information about employment tax developments impacting farmers, go to www. File 2011 taxes free online irs. File 2011 taxes free online gov/pub51. File 2011 taxes free online Correcting a previously filed Form 943. File 2011 taxes free online  If you discover an error on a previously filed Form 943, Employer's Annual Federal Tax Return for Agricultural Employees, make the correction using Form 943-X, Adjusted Employer's Annual Federal Tax Return for Agricultural Employees or Claim for Refund. File 2011 taxes free online Form 943-X is filed separately from Form 943. File 2011 taxes free online For more information on correcting Form 943, see the Instructions for Form 943-X. File 2011 taxes free online Federal tax deposits must be made by electronic funds transfer. File 2011 taxes free online  You must use electronic funds transfer to make all federal tax deposits. File 2011 taxes free online Generally, electronic funds transfers are made using the Electronic Federal Tax Payment System (EFTPS). File 2011 taxes free online 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 2011 taxes free online Also, you may arrange for your financial institution to initiate a same-day wire payment on your behalf. File 2011 taxes free online EFTPS is a free service provided by the Department of Treasury. File 2011 taxes free online Services provided by your tax professional, financial institution, payroll service, or other third party may have a fee. File 2011 taxes free online For more information on making federal tax deposits, see section 7 of Publication 51 (Circular A). File 2011 taxes free online To get more information about EFTPS or to enroll in EFTPS, visit www. File 2011 taxes free online eftps. File 2011 taxes free online gov or call 1-800-555-4477 or 1-800-733-4829 (TDD). File 2011 taxes free online Additional information about EFTPS is also available in Publication 966, Electronic Federal Tax Payment System: A Guide To Getting Started. File 2011 taxes free online Important Dates for 2014 You should take the action indicated by the dates listed. File 2011 taxes free online See By February 15 and On February 16 for Form W-4, Employee's Withholding Allowance Certificate, information. File 2011 taxes free online Due dates for deposits of withheld federal income taxes, social security taxes, and Medicare taxes are not listed here. File 2011 taxes free online For these dates, see Publication 509, Tax Calendars (For use in 2014). File 2011 taxes free online Note. File 2011 taxes free online  If any date shown below for filing a return, furnishing a form, or depositing taxes falls on a Saturday, Sunday, or legal holiday, the due date is the next business day. File 2011 taxes free online A statewide legal holiday delays a filing or furnishing due date only if the IRS office where you are required to file a return or furnish a form is located in that state. File 2011 taxes free online For any due date, you will meet the “file” or “furnish” date requirement if the envelope containing the tax return or form is properly addressed, contains sufficient postage, and is postmarked by the U. File 2011 taxes free online S. File 2011 taxes free online Postal Service by the due date, or sent by an IRS-designated delivery service by the due date. File 2011 taxes free online See Private delivery services in Publication 51 (Circular A). File 2011 taxes free online Federal tax deposits can only be made by electronic funds transfer and are governed by legal holidays in the District of Columbia. File 2011 taxes free online Statewide holidays no longer apply. File 2011 taxes free online For a list of legal holidays that delay the due date of a federal tax deposit, see section 7 of Publication 51 (Circular A). File 2011 taxes free online Fiscal year taxpayers. File 2011 taxes free online  The due dates listed below apply whether you use a calendar or a fiscal year. File 2011 taxes free online By January 31. File 2011 taxes free online   File Form 943 with the IRS. File 2011 taxes free online If you deposited all Form 943 taxes when due, you have 10 additional days to file. File 2011 taxes free online Furnish each employee with a completed Form W-2, Wage and Tax Statement. File 2011 taxes free online Furnish each recipient to whom you paid $600 or more in nonemployee compensation with a completed Form 1099 (for example, Form 1099-MISC). File 2011 taxes free online File Form 940, Employer's Annual Federal Unemployment (FUTA) Tax Return, with the IRS. File 2011 taxes free online If you deposited all the FUTA tax when due, you have 10 additional days to file. File 2011 taxes free online File Form 945, Annual Return of Withheld Federal Income Tax, with the IRS to report any nonpayroll income tax withheld during 2013. File 2011 taxes free online If you deposited all Form 945 taxes when due, you have 10 additional days to file. File 2011 taxes free online By February 15. File 2011 taxes free online  Ask for a new Form W-4 or Formulario W-4(SP), Certificado de Exención de Retenciones del Empleado, from each employee who claimed exemption from federal income tax withholding last year. File 2011 taxes free online On February 16. File 2011 taxes free online  Any Form W-4 claiming exemption from withholding for the previous year has now expired. File 2011 taxes free online Begin withholding for any employee who previously claimed exemption from withholding but has not given you a new Form W-4 for the current year. File 2011 taxes free online If the employee does not give you a new Form W-4, withhold taxes based on the last valid Form W-4 you have for the employee that does not claim exemption from withholding or, if one does not exist, as if he or she is single with zero withholding allowances. File 2011 taxes free online If the employee furnishes a new Form W-4 claiming exemption from withholding after February 15, you may apply the exemption to future wages, but do not refund taxes withheld while the exempt status was not in place. File 2011 taxes free online By February 28. File 2011 taxes free online   File paper Forms 1099 and 1096. File 2011 taxes free online File Copy A of all paper Forms 1099 with Form 1096, Annual Summary and Transmittal of U. File 2011 taxes free online S. File 2011 taxes free online Information Returns, with the IRS. File 2011 taxes free online For electronically filed returns, see By March 31 below. File 2011 taxes free online File paper Forms W-2 and W-3. File 2011 taxes free online File Copy A of all paper Forms W-2 with Form W-3, Transmittal of Wage and Tax Statements, with the Social Security Administration (SSA). File 2011 taxes free online For electronically filed returns, see By March 31 below. File 2011 taxes free online By March 31. File 2011 taxes free online   File electronic Forms W-2 and 1099. File 2011 taxes free online File electronic Forms W-2 with the SSA and Forms 1099 with the IRS. File 2011 taxes free online For more information on reporting Form W-2 information to the SSA electronically, visit the SSA's Employer W-2 Filing Instructions & Information webpage at www. File 2011 taxes free online socialsecurity. File 2011 taxes free online gov/employer. File 2011 taxes free online For information on filing information returns electronically with the IRS, see Publication 1220, Specifications for Filing Forms 1097, 1098, 1099, 3921, 3922, 5498, 8935, and W-2G Electronically. File 2011 taxes free online By April 30, July 31, October 31, and January 31. File 2011 taxes free online   Deposit FUTA taxes. File 2011 taxes free online Deposit FUTA tax due if it is more than $500. File 2011 taxes free online Before December 1. File 2011 taxes free online  Remind employees to submit a new Form W-4 if their withholding allowances have changed or will change for the next year. File 2011 taxes free online Introduction You are generally required to withhold federal income tax from the wages of your employees. File 2011 taxes free online You may also be subject to social security and Medicare taxes under the Federal Insurance Contributions Act (FICA) and federal unemployment tax under the Federal Unemployment Tax Act (FUTA). File 2011 taxes free online You must also withhold Additional Medicare Tax from wages you pay to an employee in excess of $200,000 in a calendar year. File 2011 taxes free online This chapter includes information about these taxes. File 2011 taxes free online You must also pay self-employment tax on your net earnings from farming. File 2011 taxes free online See chapter 12 for information on self-employment tax. File 2011 taxes free online Topics - This chapter discusses: Farm employment, Family employees, Crew leaders, Social security and Medicare taxes, Additional Medicare Tax withholding, Federal income tax withholding, Reporting and paying social security, Medicare, and withheld federal income taxes, and FUTA tax. File 2011 taxes free online Useful Items - You may want to see: Publication 15 (Circular E), Employer's Tax Guide 15-A Employer's Supplemental Tax Guide 15-B Employer's Tax Guide to Fringe Benefits 51 (Circular A), Agricultural Employer's Tax Guide 926 Household Employer's Tax Guide Form (and Instructions) W-2 Wage and Tax Statement W-4 Employee's Withholding Allowance Certificate W-9 Request for Taxpayer Identification Number and Certification 940 Employer's Annual Federal Unemployment (FUTA) Tax Return 943 Employer's Annual Federal Tax Return for Agricultural Employees 943-X Adjusted Employer's Annual Federal Tax Return for Agricultural Employees or Claim for Refund See chapter 16 for information about getting publications and forms. File 2011 taxes free online Farm Employment In general, you are an employer of farmworkers if your employees do any of the following types of work. File 2011 taxes free online Raising or harvesting agricultural or horticultural products on a farm, including raising and feeding of livestock. File 2011 taxes free online Operating, managing, conserving, improving, or maintaining your farm and its tools and equipment. File 2011 taxes free online Services performed in salvaging timber, or clearing land of brush and other debris, left by a hurricane (also known as hurricane labor). File 2011 taxes free online Handling, processing, or packaging any agricultural or horticultural commodity if you produced more than half of the commodity (for a group of up to 20 unincorporated operators, all of the commodity). File 2011 taxes free online Work related to cotton ginning, turpentine, gum resin products, or the operation and maintenance of irrigation facilities. File 2011 taxes free online For more information, see Publication 51 (Circular A). File 2011 taxes free online 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 2011 taxes free online This is so even when you give the employee freedom of action. File 2011 taxes free online What matters is that you have the right to control the details of how the services are performed. File 2011 taxes free online You are responsible for withholding and paying employment taxes for your employees. File 2011 taxes free online You are also required to file employment tax returns. File 2011 taxes free online These requirements do not apply to amounts that you pay to independent contractors. File 2011 taxes free online See Publication 15-A for more information on how to determine whether an individual providing services is an independent contractor or an employee. File 2011 taxes free online If you employ a family of workers, each worker subject to your control (not just the head of the family) is an employee. File 2011 taxes free online Special rules apply to crew leaders. File 2011 taxes free online See Crew Leaders , later. File 2011 taxes free online Employer identification number (EIN). File 2011 taxes free online   If you have employees, you must have an EIN. File 2011 taxes free online If you do not have an EIN, you may apply for one online. File 2011 taxes free online Go to IRS. File 2011 taxes free online gov and click on the Apply for an EIN Online link under Tools. File 2011 taxes free online You may also apply for an EIN by calling 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 2011 taxes free online The hours of operation for both numbers are Monday–Friday form 7:00 a. File 2011 taxes free online m. File 2011 taxes free online –7:00 p. File 2011 taxes free online m. File 2011 taxes free online local time (Alaska and Hawaii follow Pacific time). File 2011 taxes free online You can also fax or mail Form SS-4, Application for Employer Identification Number, to the IRS. File 2011 taxes free online Employee's social security number (SSN). File 2011 taxes free online   An employee who does not have an SSN should submit Form SS-5, Application for a Social Security Card, to the Social Security Administration (SSA). File 2011 taxes free online Form SS-5 is available from any SSA office or by calling 1-800-772-1213 (operates 24 hours per day). File 2011 taxes free online It is also available from the SSA's website at www. File 2011 taxes free online socialsecurity. File 2011 taxes free online gov. File 2011 taxes free online   The employee must furnish evidence of age, identity, and U. File 2011 taxes free online S. File 2011 taxes free online citizenship or lawful immigration status permitting employment with the Form SS-5. File 2011 taxes free online An employee who is age 18 or older must appear in person with this evidence at an SSA office. File 2011 taxes free online Form I-9. File 2011 taxes free online    You must verify that each new employee is legally eligible to work in the United States. File 2011 taxes free online This includes completing the Form I-9, Employment Eligibility Verification. File 2011 taxes free online Form I-9 is available from the U. File 2011 taxes free online S. File 2011 taxes free online Citizenship and Immigration Services (USCIS) offices or by calling the Bureau of Citizenship and Immigration Services Forms Request Line at 1-800-870-3676. File 2011 taxes free online Form I-9 is also available from the USCIS website at www. File 2011 taxes free online uscis. File 2011 taxes free online gov. File 2011 taxes free online You can also contact the USCIS at 1-800-375-5283 for more information. File 2011 taxes free online New hire reporting. File 2011 taxes free online   You are required to report any new employee to a designated state new hire registry. File 2011 taxes free online Many states accept a copy of Form W-4 with employer information added. File 2011 taxes free online Visit the Office of Child Support Enforcement website at www. File 2011 taxes free online acf. File 2011 taxes free online hhs. File 2011 taxes free online gov/programs/cse/newhire for more information. File 2011 taxes free online Family Employees Generally, the wages you pay to family members who are your employees are subject to employment taxes. File 2011 taxes free online However, certain exemptions may apply to wages paid to your child, spouse, or parent. File 2011 taxes free online Exemptions for your child. File 2011 taxes free online   Payments for the services of your child under age 18 who works for you in your trade or business (including a farm) are not subject to social security and Medicare taxes. File 2011 taxes free online However, see Nonexempt services of a child or spouse , later. File 2011 taxes free online Payments for the services of your child under age 21 employed by you in other than a trade or business, such as payments for household services in your home, are also not subject to social security or Medicare taxes. File 2011 taxes free online Payments for the services of your child under age 21 employed by you, whether or not in your trade or business, are not subject to FUTA tax. File 2011 taxes free online Although not subject to social security, Medicare, or FUTA tax, the child's wages still may be subject to federal income tax withholding. File 2011 taxes free online Exemptions for your spouse. File 2011 taxes free online   Payments for the services of your spouse who works for you in your trade or business are subject to federal income tax withholding and social security and Medicare taxes, but not FUTA tax. File 2011 taxes free online   Payments for the services of your spouse employed by you in other than a trade or business, such as payments for household services in your home, are not subject to social security, Medicare, or FUTA taxes. File 2011 taxes free online Nonexempt services of a child or spouse. File 2011 taxes free online   Payments for the services of your child or spouse are subject to federal income tax withholding as well as social security, Medicare, and FUTA taxes if he or she works for any of the following entities. File 2011 taxes free online A corporation, even if it is controlled by you. File 2011 taxes free online A partnership, even if you are a partner. File 2011 taxes free online This does not apply to wages paid to your child if each partner is a parent of the child. File 2011 taxes free online An estate or trust, even if it is the estate of a deceased parent. File 2011 taxes free online In these situations, the child or spouse is considered to work for the corporation, partnership, or estate, not you. File 2011 taxes free online Exemptions for your parent. File 2011 taxes free online   Payments for the services of your parent employed by you in your trade or business are subject to federal income tax withholding and social security and Medicare taxes. File 2011 taxes free online Social security and Medicare taxes do not apply to wages paid to your parent for services not in your trade or business, but they do apply to payments for household services in your home if both the following conditions are satisfied. File 2011 taxes free online 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. File 2011 taxes free online 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 2011 taxes free online   Wages you pay to your parent are not subject to FUTA tax, regardless of the type of services provided. File 2011 taxes free online Qualified joint venture. File 2011 taxes free online   If spouses elect to be treated as a qualified joint venture instead of a partnership, either spouse may report and pay the employment taxes due on the wages paid to employees using the EIN of that spouse's sole proprietorship. File 2011 taxes free online For more information about qualified joint ventures, see chapter 12. File 2011 taxes free online Crew Leaders If farmworkers are provided by a crew leader, the crew leader may be the employer of the workers. File 2011 taxes free online Social security and Medicare taxes. File 2011 taxes free online   For social security and Medicare tax purposes, the crew leader is the employer of the workers if both of the following requirements are met. File 2011 taxes free online The crew leader pays (either on his or her own behalf or on behalf of the farmer) the workers for their farm labor. File 2011 taxes free online The crew leader has not entered into a written agreement with the farmer under which the crew leader is designated as an employee of the farmer. File 2011 taxes free online Federal income tax withholding. File 2011 taxes free online   If the crew leader is the employer for social security and Medicare tax purposes, the crew leader is the employer for federal income tax withholding purposes. File 2011 taxes free online Federal unemployment (FUTA) tax. File 2011 taxes free online   For FUTA tax purposes, the crew leader is the employer of the workers if, in addition to the earlier requirements, either of the following requirements are met. File 2011 taxes free online The crew leader is registered under the Migrant and Seasonal Agricultural Worker Protection Act. File 2011 taxes free online Substantially all crew members operate or maintain mechanized equipment provided by the crew leader as part of the service to the farmer. File 2011 taxes free online   The farmer is the employer of workers furnished by a crew leader in all other situations. File 2011 taxes free online In addition, the farmer is the employer of workers furnished by a registered crew leader if the workers are the employees of the farmer under the common-law test. File 2011 taxes free online For example, some farmers employ individuals to recruit farmworkers exclusively for them. File 2011 taxes free online Although these individuals may be required to register under the Migrant and Seasonal Agricultural Worker Protection Act, the workers are employed directly by the farmer. File 2011 taxes free online The farmer is the employer in these cases. File 2011 taxes free online For information about common-law employees, see section 1 of Publication 15-A. File 2011 taxes free online For information about crew leaders, see the Department of Labor website at www. File 2011 taxes free online dol. File 2011 taxes free online gov/whd/regs/compliance/whdfs49. File 2011 taxes free online htm. File 2011 taxes free online Social Security and Medicare Taxes All cash wages you pay to an employee during the year for farmwork are subject to social security and Medicare taxes if you meet either of the following tests. File 2011 taxes free online You pay the employee $150 or more in cash wages (count all wages paid on a time, piecework, or other basis) during the year for farmwork (the $150 test). File 2011 taxes free online The $150 test applies separately to each farmworker that you employ. File 2011 taxes free online If you employ a family of workers, each member is treated separately. File 2011 taxes free online Do not count wages paid by other employers. File 2011 taxes free online You pay cash and noncash wages of $2,500 or more during the year to all your employees for farmwork (the $2,500 test). File 2011 taxes free online If the $2,500 test for the group is not met, the $150 test for an employee still applies. File 2011 taxes free online Exceptions. File 2011 taxes free online   Annual cash wages of less than $150 you pay to a seasonal farmworker are not subject to social security and Medicare taxes, even if you pay $2,500 or more to all your farmworkers. File 2011 taxes free online However, these wages count toward the $2,500 test for determining whether other farmworkers' wages are subject to social security and Medicare taxes. File 2011 taxes free online   A seasonal farmworker is a worker who: Works as a hand-harvest laborer, Is paid piece rates in an operation usually paid on this basis in the region of employment, Commutes daily from his or her permanent home to the farm, and Worked in agriculture less than 13 weeks in the preceding calendar year. File 2011 taxes free online   See Family Employees , earlier, for certain exemptions from social security and Medicare taxes that apply to your child, spouse, and parent. File 2011 taxes free online Religious exemption. File 2011 taxes free online   An exemption from social security and Medicare taxes is available to members of a recognized religious group or division opposed to public insurance. File 2011 taxes free online This exemption is available only if both the employee and the employer are members of the group or division. File 2011 taxes free online   For more information, see Publication 517, Social Security and Other Information for Members of the Clergy and Religious Workers. File 2011 taxes free online Cash wages. File 2011 taxes free online   Only cash wages paid to farmworkers are subject to social security and Medicare taxes. File 2011 taxes free online Cash wages include checks, money orders, and any kind of money or cash. File 2011 taxes free online   Only cash wages subject to social security and Medicare taxes are credited to your employees for social security benefit purposes. File 2011 taxes free online Payments not subject to these taxes, such as commodity wages, do not contribute to your employees' social security coverage. File 2011 taxes free online For information about social security benefits, contact the SSA at 1-800-772-1213 or online at www. File 2011 taxes free online socialsecurity. File 2011 taxes free online gov. File 2011 taxes free online Noncash wages. File 2011 taxes free online    Noncash wages include food, lodging, clothing, transportation passes, and other goods and services. File 2011 taxes free online Noncash wages paid to farmworkers, including commodity wages, are not subject to social security and Medicare taxes. File 2011 taxes free online However, they are subject to these taxes if the substance of the transaction is a cash payment. File 2011 taxes free online For information on lodging provided as a condition of employment, see Publication 15-B. File 2011 taxes free online   Report the value of noncash wages in box 1 of Form W-2 together with cash wages. File 2011 taxes free online Do not show noncash wages in box 3 or in box 5, (unless the substance of the transaction is a cash payment). File 2011 taxes free online Tax rates and social security wage limit. File 2011 taxes free online   For 2013, the employer and the employee will pay the following taxes. File 2011 taxes free online The employer and employee each pay 6. File 2011 taxes free online 2% of cash wages for social security tax (old-age, survivors, and disability insurance). File 2011 taxes free online The employer and employee each pay 1. File 2011 taxes free online 45% of cash wages for Medicare tax (hospital insurance). File 2011 taxes free online The employee pays 0. File 2011 taxes free online 9% of cash wages in excess of $200,000 for Additional Medicare Tax. File 2011 taxes free online Wage limit. File 2011 taxes free online   The limit on wages subject to the social security tax for 2013 is $113,700. File 2011 taxes free online There is no limit on wages subject to the Medicare tax. File 2011 taxes free online All covered wages are subject to the Medicare tax. File 2011 taxes free online Additionally, all wages in excess of $200,000 are subject to Additional Medicare Tax withholding. File 2011 taxes free online Paying employee's share. File 2011 taxes free online   If you would rather pay the employee's share of social security and Medicare taxes without deducting it from his or her wages, you may do so. File 2011 taxes free online It is additional income to the employee. File 2011 taxes free online You must include it in box 1 of the employee's Form W-2, but do not count it as social security and Medicare wages (boxes 3 and 5 on Form W-2) or as wages for federal unemployment (FUTA) tax purposes. File 2011 taxes free online Example. File 2011 taxes free online Jane operates a small family fruit farm. File 2011 taxes free online She employs day laborers in the picking season to enable her to timely get her crop to market. File 2011 taxes free online She does not deduct the employees' share of social security and Medicare taxes from their pay; instead, she pays it on their behalf. File 2011 taxes free online When her accountant, Susan, prepares the employees' Forms W-2, she adds each employee's share of social security and Medicare taxes paid by Jane to the employee's wage income (box 1 of Form W-2), but does not include it in box 3 (social security wages) or box 5 (Medicare wages and tips). File 2011 taxes free online For 2013, Jane paid Mary $1,000 during the year. File 2011 taxes free online Susan enters $1,076. File 2011 taxes free online 50 in box 1 of Mary's Form W-2 ($1,000 wages plus $76. File 2011 taxes free online 50 social security and Medicare taxes paid for Mary). File 2011 taxes free online She enters $1,000 in boxes 3 and 5 of Mary's Form W-2. File 2011 taxes free online Additional Medicare Tax. File 2011 taxes free online   In addition to withholding Medicare tax at 1. File 2011 taxes free online 45%, you must withhold a 0. File 2011 taxes free online 9% Additional Medicare Tax from wages you pay to an employee in excess of $200,000 in a calendar year. File 2011 taxes free online 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 2011 taxes free online Additional Medicare Tax is only imposed on the employee. File 2011 taxes free online There is no employer share of Additional Medicare Tax. File 2011 taxes free online All wages that are subject to Medicare tax are subject to Additional Medicare Tax withholding if paid in excess of the $200,000 threshold. File 2011 taxes free online   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 2011 taxes free online For more information on Additional Medicare Tax, visit IRS. File 2011 taxes free online gov and enter “Additional Medicare Tax” in the search box. File 2011 taxes free online Federal Income Tax Withholding If the cash wages you pay to farmworkers are subject to social security and Medicare taxes, they are also subject to federal income tax withholding. File 2011 taxes free online Although noncash wages are subject to federal income tax, withhold income tax only if you and the employee agree to do so. File 2011 taxes free online The amount to withhold is figured on gross wages without taking out social security and Medicare taxes, union dues, insurance, etc. File 2011 taxes free online Form W-4. File 2011 taxes free online   Generally, the amount of federal income tax you withhold is based on the employee's marital status and withholding allowances claimed on the employee's Form W-4. File 2011 taxes free online In general, an employee can claim withholding allowances on Form W-4 equal to the number of exemptions the employee will be entitled to claim on his or her tax return. File 2011 taxes free online An employee may also be able to claim a special withholding allowance and allowances for estimated deductions and credits. File 2011 taxes free online   Do not withhold federal income tax from the wages of an employee who, by filing Form W-4, certifies that he or she had no federal income tax liability last year and anticipates no liability for the current year. File 2011 taxes free online   You should give each new employee a Form W-4 as soon as you hire the employee. File 2011 taxes free online For Spanish-speaking employees, you may use Formulario W-4(SP) which is the Spanish translation of Form W-4. File 2011 taxes free online Have the employee complete and return the form to you before the first payday. File 2011 taxes free online If the employee does not return the completed form, you must withhold federal income tax as if the employee is single and claims no withholding allowances. File 2011 taxes free online New Form W-4 for 2014. File 2011 taxes free online   You should make the 2014 Form W-4 available to your employees and encourage them to check their income tax withholding for 2014. File 2011 taxes free online Those employees who owed a large amount of tax or received a large refund for 2013 may want to submit a new Form W-4. File 2011 taxes free online You cannot accept substitute Forms W-4 developed by employees. File 2011 taxes free online How to figure withholding. File 2011 taxes free online   You can use one of several methods to determine the amount to withhold. File 2011 taxes free online The methods are described in Publication 51 (Circular A), which contains tables showing the correct amount of federal income tax you should withhold. File 2011 taxes free online Publication 51 (Circular A) also contains additional information about federal income tax withholding. File 2011 taxes free online Nonemployee compensation. File 2011 taxes free online   Generally, you do not have to withhold federal income tax on payments for services to individuals who are not your employees. File 2011 taxes free online However, you may be required to report these payments on Form 1099-MISC, Miscellaneous Income, and to withhold under the backup withholding rules. File 2011 taxes free online For more information, see the Instructions for Form 1099-MISC. File 2011 taxes free online Required Notice to Employees About Earned Income Credit (EIC) You must provide notification about EIC to each employee who worked for you at any time during the year and from whom you did not withhold any federal income tax. File 2011 taxes free online However, you do not have to notify employees who claim exemption from federal income tax withholding on Form W-4. File 2011 taxes free online You meet the notification requirement by giving each employee any of the following. File 2011 taxes free online Form W-2, which contains EIC notification on the back of Copy B. File 2011 taxes free online A substitute Form W-2 with the exact EIC wording shown on the back of copy B of Form W-2. File 2011 taxes free online Notice 797, Possible Federal Tax Refund Due to the Earned Income Credit (EIC). File 2011 taxes free online Your own written statement with the exact wording of Notice 797. File 2011 taxes free online For more information, see Publication 51 (Circular A). File 2011 taxes free online Reporting and Paying Social Security, Medicare, and Withheld Federal Income Taxes You must withhold federal income, social security, and Medicare taxes required to be withheld from the salaries and wages of your employees. File 2011 taxes free online You are liable for the payment of these taxes to the federal government whether or not you collect them from your employees. File 2011 taxes free online If, for example, you withhold less than the correct tax from an employee's wages, you are still liable for the full amount. File 2011 taxes free online You must also pay the employer's share of social security and Medicare taxes. File 2011 taxes free online There is no employer share of Additional Medicare Tax. File 2011 taxes free online Form 943. File 2011 taxes free online   Report withheld federal income tax, social security tax, and Medicare tax on Form 943. File 2011 taxes free online Your 2013 Form 943 is due by January 31, 2014 (or February 10, 2014, if you made deposits on time in full payment of the taxes due for the year). File 2011 taxes free online Deposits. File 2011 taxes free online   Generally, you must deposit both the employer and employee shares of social security and Medicare taxes and federal income tax withheld during the year. File 2011 taxes free online However, you may make payments with Form 943 instead of depositing them if you accumulate less than a $2,500 tax liability (“Total taxes after adjustments” line on Form 943) during the year and you pay in full with a timely filed return. File 2011 taxes free online   For more information on deposit rules, see Publication 51 (Circular A). File 2011 taxes free online Electronic deposit requirement. File 2011 taxes free online   You must use electronic funds transfer to make all federal tax deposits. File 2011 taxes free online Generally, electronic funds transfers are made using EFTPS. File 2011 taxes free online 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 2011 taxes free online Also, you may arrange for your financial institution to initiate a same-day wire payment on your behalf. File 2011 taxes free online EFTPS is a free service provided by the Department of Treasury. File 2011 taxes free online Services provided by your tax professional, financial institution, payroll service, or other third party may have a fee. File 2011 taxes free online   For more information on making federal tax deposits, see section 7 of Publication 51 (Circular A). File 2011 taxes free online To get more information about EFTPS or to enroll in EFTPS, visit www. File 2011 taxes free online eftps. File 2011 taxes free online gov or call 1-800-555-4477 or 1-800-733-4829 (TDD). File 2011 taxes free online Additional information about EFTPS is also available in Publication 966. File 2011 taxes free online Form W-2. File 2011 taxes free online   By January 31, you must furnish each employee a Form W-2 showing total wages for the previous year and total federal income tax, social security tax, and Medicare tax withheld. File 2011 taxes free online However, if an employee stops working for you and requests the form earlier, you must give it to the employee within 30 days of the later of the following dates. File 2011 taxes free online The date the employee requests the form. File 2011 taxes free online The date you make your final payment of wages to the employee. File 2011 taxes free online Compensation paid to H-2A visa holders. File 2011 taxes free online   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. File 2011 taxes free online Compensation paid to H-2A workers for agricultural labor performed in connection with this visa is not subject to social security and Medicare taxes, and therefore should not be reported as wages subject to social security tax (line 2), Medicare tax (line 4), or Additional Medicare Tax (line 6) on Form 943, and should not be reported as social security wages (box 3) or Medicare wages (box 5) on Form W-2. File 2011 taxes free online   An employer is not required to withhold federal income tax from compensation it pays to an H-2A worker for agricultural labor performed in connection with this visa unless the worker asks for withholding and the employer agrees. File 2011 taxes free online In this case, the worker must give the employer a completed Form W-4. File 2011 taxes free online Federal income tax withheld should be reported on Form 943, line 8, and in box 2 of Form W-2. File 2011 taxes free online   These reporting rules apply when the H-2A worker provides his or her taxpayer identification number (TIN) to the employer. File 2011 taxes free online For the 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 2011 taxes free online Trust fund recovery penalty. File 2011 taxes free online   If you are responsible for withholding, accounting for, depositing, or paying federal withholding taxes and willfully fail to do so, you can be held liable for a penalty equal to the withheld tax not paid. File 2011 taxes free online A responsible person can be an officer of a corporation, a partner, a sole proprietor, or an employee of any form of business. File 2011 taxes free online A trustee or agent with authority over the funds of the business can also be held responsible for the penalty. File 2011 taxes free online   Willfully means voluntarily, consciously, and intentionally. File 2011 taxes free online Paying other expenses of the business instead of the taxes due is acting willfully. File 2011 taxes free online Consequences of treating an employee as an independent contractor. File 2011 taxes free online   If you classify an employee as an independent contractor and you have no reasonable basis for doing so, you may be held liable for employment taxes for that worker. File 2011 taxes free online See Publication 15-A for more information. File 2011 taxes free online Federal Unemployment (FUTA) Tax You must pay FUTA tax if you meet either of the following tests. File 2011 taxes free online You paid cash wages of $20,000 or more to farmworkers in any calendar quarter during the current or preceding calendar year. File 2011 taxes free online You employed 10 or more farmworkers for some part of at least 1 day during any 20 or more different calendar weeks during the current or preceding calendar year. File 2011 taxes free online These rules do not apply to exempt services of your spouse, your parents, or your children under age 21. File 2011 taxes free online See Family Employees , earlier. File 2011 taxes free online Alien farmworkers. File 2011 taxes free online   Wages paid to aliens admitted on a temporary basis to the United States to perform farmwork (also known as “H-2A visa workers”) are exempt from FUTA tax. File 2011 taxes free online However, include your employment of these workers and the wages you paid them to determine whether you meet either of the above tests. File 2011 taxes free online Commodity wages. File 2011 taxes free online   Payments in kind for farm labor are not cash wages. File 2011 taxes free online Do not count them to figure whether you are subject to FUTA tax or to figure how much tax you owe. File 2011 taxes free online Tax rate and credit. File 2011 taxes free online   The gross FUTA tax rate is 6. File 2011 taxes free online 0% of the first $7,000 cash wages you pay to each employee during the year. File 2011 taxes free online However, you are given a credit of up to 5. File 2011 taxes free online 4% of the first $7,000 cash wages you pay to each employee for the state unemployment tax you pay. File 2011 taxes free online If your state tax rate (experience rate) is less than 5. File 2011 taxes free online 4%, you may still be allowed the full 5. File 2011 taxes free online 4% credit. File 2011 taxes free online   If you do not pay the state tax, you cannot take the credit. File 2011 taxes free online If you are exempt from state unemployment tax for any reason, the full 6. File 2011 taxes free online 0% rate applies. File 2011 taxes free online See the Instructions for Form 940 for additional information. File 2011 taxes free online More information. File 2011 taxes free online   For more information on FUTA tax, see Publication 51 (Circular A). File 2011 taxes free online Reporting and Paying FUTA Tax The FUTA tax is imposed on you as the employer. File 2011 taxes free online It must not be collected or deducted from the wages of your employees. File 2011 taxes free online Form 940. File 2011 taxes free online   Report FUTA tax on Form 940. File 2011 taxes free online The 2013 Form 940 is due January 31, 2014 (or February 10, 2014, if you timely deposited the full amount of your 2013 FUTA tax). File 2011 taxes free online Deposits. File 2011 taxes free online   If at the end of any calendar quarter you owe, but have not yet deposited, more than $500 in FUTA tax for the year, you must make a deposit by the end of the following month. File 2011 taxes free online If the undeposited tax is $500 or less at the end of a quarter, you do not have to deposit it. File 2011 taxes free online You can add it to the tax for the next quarter. File 2011 taxes free online If the total undeposited tax is more than $500 at the end of the next quarter, a deposit will be required. File 2011 taxes free online If the total undeposited tax at the end of the 4th quarter is $500 or less, you can either make a deposit or pay it with your return by the January 31, 2014, due date. File 2011 taxes free online Electronic deposit requirement. File 2011 taxes free online   You must use electronic funds transfer to make all federal tax deposits. File 2011 taxes free online Generally, electronic funds transfers are made using EFTPS. File 2011 taxes free online 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 2011 taxes free online Also, you may arrange for your financial institution to initiate a same-day wire payment on your behalf. File 2011 taxes free online EFTPS is a free service provided by the Department of Treasury. File 2011 taxes free online Services provided by your tax professional, financial institution, payroll service, or other third party may have a fee. File 2011 taxes free online   For more information on making federal tax deposits, see section 7 of Publication 51 (Circular A). File 2011 taxes free online To get more information about EFTPS or to enroll in EFTPS, visit www. File 2011 taxes free online eftps. File 2011 taxes free online gov or call 1-800-555-4477 or 1-800-733-4829 (TDD). File 2011 taxes free online Additional information about EFTPS is also available in Publication 966. File 2011 taxes free online Prev  Up  Next   Home   More Online Publications
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The File 2011 Taxes Free Online

File 2011 taxes free online Publication 515 - Main Content Table of Contents Withholding of TaxWithholding Agent Withholding and Reporting Obligations Persons Subject to NRA WithholdingIdentifying the Payee Foreign Persons DocumentationBeneficial Owners Foreign Intermediaries and Foreign Flow-Through Entities Standards of Knowledge Presumption Rules Income Subject to NRA WithholdingSource of Income Fixed or Determinable Annual or Periodical Income (FDAP) Withholding on Specific IncomeEffectively Connected Income Income Not Effectively Connected Pay for Personal Services Performed Artists and Athletes (Income Codes 42 and 43) Other Income Foreign Governments and Certain Other Foreign Organizations U. File 2011 taxes free online S. File 2011 taxes free online Taxpayer Identification NumbersUnexpected payment. File 2011 taxes free online Depositing Withheld TaxesWhen Deposits Are Required Adjustment for Overwithholding Returns RequiredJoint owners. File 2011 taxes free online Electronic reporting. File 2011 taxes free online Partnership Withholding on Effectively Connected IncomeWho Must Withhold Foreign Partner Publicly Traded Partnerships U. File 2011 taxes free online S. File 2011 taxes free online Real Property InterestForeign corporations. File 2011 taxes free online Domestic corporations. File 2011 taxes free online U. File 2011 taxes free online S. File 2011 taxes free online real property holding corporations. File 2011 taxes free online Partnerships. File 2011 taxes free online Trusts and estates. File 2011 taxes free online Domestically controlled QIE. File 2011 taxes free online Late filing of certifications or notices. File 2011 taxes free online Certifications. File 2011 taxes free online Liability of agent or qualified substitute. File 2011 taxes free online Reporting and Paying the Tax Withholding Certificates Tax Treaty TablesTable 1 Table 2 Table 3 How To Get Tax HelpLow Income Taxpayer Clinics (LITCs). File 2011 taxes free online Withholding of Tax In most cases, a foreign person is subject to U. File 2011 taxes free online S. File 2011 taxes free online tax on its U. File 2011 taxes free online S. File 2011 taxes free online source income. File 2011 taxes free online Most types of U. File 2011 taxes free online S. File 2011 taxes free online source income received by a foreign person are subject to U. File 2011 taxes free online S. File 2011 taxes free online tax of 30%. File 2011 taxes free online A reduced rate, including exemption, may apply if there is a tax treaty between the foreign person's country of residence and the United States. File 2011 taxes free online The tax is generally withheld (NRA withholding) from the payment made to the foreign person. File 2011 taxes free online The term “NRA withholding” is used in this publication descriptively to refer to withholding required under sections 1441, 1442, and 1443 of the Internal Revenue Code. File 2011 taxes free online In most cases, NRA withholding describes the withholding regime that requires withholding on a payment of U. File 2011 taxes free online S. File 2011 taxes free online source income. File 2011 taxes free online Payments to foreign persons, including nonresident alien individuals, foreign entities, and governments, may be subject to NRA withholding. File 2011 taxes free online NRA withholding does not include withholding under section 1445 of the Code (see U. File 2011 taxes free online S. File 2011 taxes free online Real Property Interest, later) or under section 1446 of the Code (see Partnership Withholding on Effectively Connected Income , later). File 2011 taxes free online A withholding agent (defined next) is the person responsible for withholding on payments made to a foreign person. File 2011 taxes free online However, a withholding agent that can reliably associate the payment with documentation (discussed later) from a U. File 2011 taxes free online S. File 2011 taxes free online person is not required to withhold. File 2011 taxes free online In addition, a withholding agent may apply a reduced rate of withholding (including an exemption from withholding) if it can reliably associate the payment with documentation from a beneficial owner that is a foreign person entitled to a reduced rate of withholding. File 2011 taxes free online Withholding Agent You are a withholding agent if you are a U. File 2011 taxes free online S. File 2011 taxes free online or foreign person that has control, receipt, custody, disposal, or payment of any item of income of a foreign person that is subject to withholding. File 2011 taxes free online A withholding agent may be an individual, corporation, partnership, trust, association, nominee (under section 1446 of the Code), or any other entity, including any foreign intermediary, foreign partnership, or U. File 2011 taxes free online S. File 2011 taxes free online branch of certain foreign banks and insurance companies. File 2011 taxes free online You may be a withholding agent even if there is no requirement to withhold from a payment or even if another person has withheld the required amount from the payment. File 2011 taxes free online Although several persons may be withholding agents for a single payment, the full tax is required to be withheld only once. File 2011 taxes free online In most cases, the U. File 2011 taxes free online S. File 2011 taxes free online person who pays an amount subject to NRA withholding is the person responsible for withholding. File 2011 taxes free online However, other persons may be required to withhold. File 2011 taxes free online For example, a payment made by a flow-through entity or nonqualified intermediary that knows, or has reason to know, that the full amount of NRA withholding was not done by the person from which it receives a payment is required to do the appropriate withholding since it also falls within the definition of a withholding agent. File 2011 taxes free online In addition, withholding must be done by any qualified intermediary, withholding foreign partnership, or withholding foreign trust in accordance with the terms of its withholding agreement, discussed later. File 2011 taxes free online Liability for tax. File 2011 taxes free online   As a withholding agent, you are personally liable for any tax required to be withheld. File 2011 taxes free online This liability is independent of the tax liability of the foreign person to whom the payment is made. File 2011 taxes free online If you fail to withhold and the foreign payee fails to satisfy its U. File 2011 taxes free online S. File 2011 taxes free online tax liability, then both you and the foreign person are liable for tax, as well as interest and any applicable penalties. File 2011 taxes free online   The applicable tax will be collected only once. File 2011 taxes free online If the foreign person satisfies its U. File 2011 taxes free online S. File 2011 taxes free online tax liability, you are not liable for the tax but remain liable for any interest and penalties for failure to withhold. File 2011 taxes free online Determination of amount to withhold. File 2011 taxes free online   You must withhold on the gross amount subject to NRA withholding. File 2011 taxes free online You cannot reduce the gross amount by any deductions. File 2011 taxes free online However, see Scholarships and Fellowship Grants and Pay for Personal Services Performed , later, for when a deduction for a personal exemption may be allowed. File 2011 taxes free online   If the determination of the source of the income or the amount subject to tax depends on facts that are not known at the time of payment, you must withhold an amount sufficient to ensure that at least 30% of the amount subsequently determined to be subject to withholding is withheld. File 2011 taxes free online In no case, however, should you withhold more than 30% of the total amount paid. File 2011 taxes free online Or, you may make a reasonable estimate of the amount from U. File 2011 taxes free online S. File 2011 taxes free online sources and put a corresponding part of the amount due in escrow until the amount from U. File 2011 taxes free online S. File 2011 taxes free online sources can be determined, at which time withholding becomes due. File 2011 taxes free online When to withhold. File 2011 taxes free online   Withholding is required at the time you make a payment of an amount subject to withholding. File 2011 taxes free online A payment is made to a person if that person realizes income, whether or not there is an actual transfer of cash or other property. File 2011 taxes free online A payment is considered made to a person if it is paid for that person's benefit. File 2011 taxes free online For example, a payment made to a creditor of a person in satisfaction of that person's debt to the creditor is considered made to the person. File 2011 taxes free online A payment also is considered made to a person if it is made to that person's agent. File 2011 taxes free online   A U. File 2011 taxes free online S. File 2011 taxes free online partnership should withhold when any distributions that include amounts subject to withholding are made. File 2011 taxes free online However, if a foreign partner's distributive share of income subject to withholding is not actually distributed, the U. File 2011 taxes free online S. File 2011 taxes free online partnership must withhold on the foreign partner's distributive share of the income on the earlier of the date that a Schedule K-1 (Form 1065) is provided or mailed to the partner or the due date for furnishing that schedule. File 2011 taxes free online If the distributable amount consists of effectively connected income, see Partnership Withholding on Effectively Connected Income , later. File 2011 taxes free online A U. File 2011 taxes free online S. File 2011 taxes free online trust is required to withhold on the amount includible in the gross income of a foreign beneficiary to the extent the trust's distributable net income consists of an amount subject to withholding. File 2011 taxes free online To the extent a U. File 2011 taxes free online S. File 2011 taxes free online trust is required to distribute an amount subject to withholding but does not actually distribute the amount, it must withhold on the foreign beneficiary's allocable share at the time the income is required to be reported on Form 1042-S. File 2011 taxes free online Withholding and Reporting Obligations You are required to report payments subject to NRA withholding on Form 1042-S and to file a tax return on Form 1042. File 2011 taxes free online (See Returns Required , later. File 2011 taxes free online ) An exception from reporting may apply to individuals who are not required to withhold from a payment and who do not make the payment in the course of their trade or business. File 2011 taxes free online Form 1099 reporting and backup withholding. File 2011 taxes free online    You also may be responsible as a payer for reporting on Form 1099 payments made to a U. File 2011 taxes free online S. File 2011 taxes free online person. File 2011 taxes free online You must withhold 28% (backup withholding rate) from a reportable payment made to a U. File 2011 taxes free online S. File 2011 taxes free online person that is subject to Form 1099 reporting if any of the following apply. File 2011 taxes free online The U. File 2011 taxes free online S. File 2011 taxes free online person has not provided its taxpayer identification number (TIN) in the manner required. File 2011 taxes free online The IRS notifies you that the TIN furnished by the payee is incorrect. File 2011 taxes free online There has been a notified payee underreporting. File 2011 taxes free online There has been a payee certification failure. File 2011 taxes free online In most cases, a TIN must be provided by a U. File 2011 taxes free online S. File 2011 taxes free online non-exempt recipient on Form W-9, Request for Taxpayer Identification Number and Certification. File 2011 taxes free online A payer files a tax return on Form 945, Annual Return of Withheld Federal Income Tax, for backup withholding. File 2011 taxes free online You may be required to file Form 1099 and, if appropriate, backup withhold, even if you do not make the payments directly to that U. File 2011 taxes free online S. File 2011 taxes free online person. File 2011 taxes free online For example, you are required to report income paid to a foreign intermediary or flow-through entity that collects for a U. File 2011 taxes free online S. File 2011 taxes free online person subject to Form 1099 reporting. File 2011 taxes free online See Identifying the Payee , later, for more information. File 2011 taxes free online Also see Section S. File 2011 taxes free online Special Rules for Reporting Payments Made Through Foreign Intermediaries and Foreign Flow-Through Entities on Form 1099 in the General Instructions for Certain Information Returns. File 2011 taxes free online Foreign persons who provide Form W-8BEN, Form W-8ECI, or Form W-8EXP (or applicable documentary evidence) are exempt from backup withholding and Form 1099 reporting. File 2011 taxes free online Wages paid to employees. File 2011 taxes free online   If you are the employer of a nonresident alien, you generally must withhold taxes at graduated rates. File 2011 taxes free online See Pay for Personal Services Performed , later. File 2011 taxes free online Effectively connected income by partnerships. File 2011 taxes free online   A withholding agent that is a partnership (whether U. File 2011 taxes free online S. File 2011 taxes free online or foreign) is also responsible for withholding on its income effectively connected with a U. File 2011 taxes free online S. File 2011 taxes free online trade or business that is allocable to foreign partners. File 2011 taxes free online See Partnership Withholding on Effectively Connected Income , later, for more information. File 2011 taxes free online U. File 2011 taxes free online S. File 2011 taxes free online real property interest. File 2011 taxes free online   A withholding agent also may be responsible for withholding if a foreign person transfers a U. File 2011 taxes free online S. File 2011 taxes free online real property interest to the agent, or if it is a corporation, partnership, trust, or estate that distributes a U. File 2011 taxes free online S. File 2011 taxes free online real property interest to a shareholder, partner, or beneficiary that is a foreign person. File 2011 taxes free online See U. File 2011 taxes free online S. File 2011 taxes free online Real Property Interest , later. File 2011 taxes free online Persons Subject to NRA Withholding NRA withholding applies only to payments made to a payee that is a foreign person. File 2011 taxes free online It does not apply to payments made to U. File 2011 taxes free online S. File 2011 taxes free online persons. File 2011 taxes free online Usually, you determine the payee's status as a U. File 2011 taxes free online S. File 2011 taxes free online or foreign person based on the documentation that person provides. File 2011 taxes free online See Documentation , later. File 2011 taxes free online However, if you have received no documentation or you cannot reliably associate all or a part of a payment with documentation, then you must apply certain presumption rules, discussed later. File 2011 taxes free online Identifying the Payee In most cases, the payee is the person to whom you make the payment, regardless of whether that person is the beneficial owner of the income. File 2011 taxes free online However, there are situations in which the payee is a person other than the one to whom you actually make a payment. File 2011 taxes free online U. File 2011 taxes free online S. File 2011 taxes free online agent of foreign person. File 2011 taxes free online   If you make a payment to a U. File 2011 taxes free online S. File 2011 taxes free online person and you have actual knowledge that the U. File 2011 taxes free online S. File 2011 taxes free online person is receiving the payment as an agent of a foreign person, you must treat the payment as made to the foreign person. File 2011 taxes free online However, if the U. File 2011 taxes free online S. File 2011 taxes free online person is a financial institution, you may treat the institution as the payee provided you have no reason to believe that the institution will not comply with its own obligation to withhold. File 2011 taxes free online   If the payment is not subject to NRA withholding (for example, gross proceeds from the sales of securities), you must treat the payment as made to a U. File 2011 taxes free online S. File 2011 taxes free online person and not as a payment to a foreign person. File 2011 taxes free online You may be required to report the payment on Form 1099 and, if applicable, backup withhold. File 2011 taxes free online Disregarded entities. File 2011 taxes free online   A business entity that is not a corporation and that has a single owner may be disregarded as an entity separate from its owner (a disregarded entity) for federal tax purposes. File 2011 taxes free online The payee of a payment made to a disregarded entity is the owner of the entity. File 2011 taxes free online   If the owner of the entity is a foreign person, you must apply NRA withholding unless you can treat the foreign owner as a beneficial owner entitled to a reduced rate of withholding. File 2011 taxes free online   If the owner is a U. File 2011 taxes free online S. File 2011 taxes free online person, you do not apply NRA withholding. File 2011 taxes free online However, you may be required to report the payment on Form 1099 and, if applicable, backup withhold. File 2011 taxes free online You may assume that a foreign entity is not a disregarded entity unless you can reliably associate the payment with documentation provided by the owner or you have actual knowledge or reason to know that the foreign entity is a disregarded entity. File 2011 taxes free online Flow-Through Entities The payees of payments (other than income effectively connected with a U. File 2011 taxes free online S. File 2011 taxes free online trade or business) made to a foreign flow-through entity are the owners or beneficiaries of the flow-through entity. File 2011 taxes free online This rule applies for purposes of NRA withholding and for Form 1099 reporting and backup withholding. File 2011 taxes free online Income that is, or is deemed to be, effectively connected with the conduct of a U. File 2011 taxes free online S. File 2011 taxes free online trade or business of a flow-through entity is treated as paid to the entity. File 2011 taxes free online All of the following are flow-through entities. File 2011 taxes free online A foreign partnership (other than a withholding foreign partnership). File 2011 taxes free online A foreign simple or foreign grantor trust (other than a withholding foreign trust). File 2011 taxes free online A fiscally transparent entity receiving income for which treaty benefits are claimed. File 2011 taxes free online See Fiscally transparent entity , later. File 2011 taxes free online In most cases, you treat a payee as a flow-through entity if it provides you with a Form W-8IMY (see Documentation , later) on which it claims such status. File 2011 taxes free online You also may be required to treat the entity as a flow-through entity under the presumption rules, discussed later. File 2011 taxes free online You must determine whether the owners or beneficiaries of a flow-through entity are U. File 2011 taxes free online S. File 2011 taxes free online or foreign persons, how much of the payment relates to each owner or beneficiary, and, if the owner or beneficiary is foreign, whether a reduced rate of NRA withholding applies. File 2011 taxes free online You make these determinations based on the documentation and other information (contained in a withholding statement) that is associated with the flow-through entity's Form W-8IMY. File 2011 taxes free online If you do not have all of the information that is required to reliably associate a payment with a specific payee, you must apply the presumption rules. File 2011 taxes free online See Documentation and Presumption Rules , later. File 2011 taxes free online Withholding foreign partnerships and withholding foreign trusts are not flow-through entities. File 2011 taxes free online Foreign partnerships. File 2011 taxes free online    A foreign partnership is any partnership that is not organized under the laws of any state of the United States or the District of Columbia or any partnership that is treated as foreign under the income tax regulations. File 2011 taxes free online If a foreign partnership is not a withholding foreign partnership, the payees of income are the partners of the partnership, provided the partners are not themselves a flow-through entity or a foreign intermediary. File 2011 taxes free online However, the payee is the partnership itself if the partnership is claiming treaty benefits on the basis that it is not fiscally transparent and that it meets all the other requirements for claiming treaty benefits. File 2011 taxes free online If a partner is a foreign flow-through entity or a foreign intermediary, you apply the payee determination rules to that partner to determine the payees. File 2011 taxes free online Example 1. File 2011 taxes free online A nonwithholding foreign partnership has three partners: a nonresident alien individual; a foreign corporation; and a U. File 2011 taxes free online S. File 2011 taxes free online citizen. File 2011 taxes free online You make a payment of U. File 2011 taxes free online S. File 2011 taxes free online source interest to the partnership. File 2011 taxes free online It gives you a Form W-8IMY with which it associates Form W-8BEN from the nonresident alien; Form W-8BEN from the foreign corporation; and Form W-9 from the U. File 2011 taxes free online S. File 2011 taxes free online citizen. File 2011 taxes free online The partnership also gives you a complete withholding statement that enables you to associate a part of the interest payment to each partner. File 2011 taxes free online You must treat all three partners as the payees of the interest payment as if the payment were made directly to them. File 2011 taxes free online Report the payment to the nonresident alien and the foreign corporation on Forms 1042-S. File 2011 taxes free online Report the payment to the U. File 2011 taxes free online S. File 2011 taxes free online citizen on Form 1099-INT. File 2011 taxes free online Example 2. File 2011 taxes free online A nonwithholding foreign partnership has two partners: a foreign corporation and a nonwithholding foreign partnership. File 2011 taxes free online The second partnership has two partners, both nonresident alien individuals. File 2011 taxes free online You make a payment of U. File 2011 taxes free online S. File 2011 taxes free online source interest to the first partnership. File 2011 taxes free online It gives you a valid Form W-8IMY with which it associates a Form W-8BEN from the foreign corporation and a Form W-8IMY from the second partnership. File 2011 taxes free online In addition, Forms W-8BEN from the partners are associated with the Form W-8IMY from the second partnership. File 2011 taxes free online The Forms W-8IMY from the partnerships have complete withholding statements associated with them. File 2011 taxes free online Because you can reliably associate a part of the interest payment with the Form W-8BEN provided by the foreign corporation and the Forms W-8BEN provided by the nonresident alien individual partners as a result of the withholding statements, you must treat them as the payees of the interest. File 2011 taxes free online Example 3. File 2011 taxes free online You make a payment of U. File 2011 taxes free online S. File 2011 taxes free online source dividends to a withholding foreign partnership. File 2011 taxes free online The partnership has two partners, both foreign corporations. File 2011 taxes free online You can reliably associate the payment with a valid Form W-8IMY from the partnership on which it represents that it is a withholding foreign partnership. File 2011 taxes free online You must treat the partnership as the payee of the dividends. File 2011 taxes free online Foreign simple and grantor trust. File 2011 taxes free online   A trust is foreign unless it meets both of the following tests. File 2011 taxes free online A court within the United States is able to exercise primary supervision over the administration of the trust. File 2011 taxes free online One or more U. File 2011 taxes free online S. File 2011 taxes free online persons have the authority to control all substantial decisions of the trust. File 2011 taxes free online   In most cases, a foreign simple trust is a foreign trust that is required to distribute all of its income annually. File 2011 taxes free online A foreign grantor trust is a foreign trust that is treated as a grantor trust under sections 671 through 679 of the Code. File 2011 taxes free online   The payees of a payment made to a foreign simple trust are the beneficiaries of the trust. File 2011 taxes free online The payees of a payment made to a foreign grantor trust are the owners of the trust. File 2011 taxes free online However, the payee is the foreign simple or grantor trust itself if the trust is claiming treaty benefits on the basis that it is not fiscally transparent and that it meets all the other requirements for claiming treaty benefits. File 2011 taxes free online If the beneficiaries or owners are themselves flow-through entities or foreign intermediaries, you apply the payee determination rules to that beneficiary or owner to determine the payees. File 2011 taxes free online Example. File 2011 taxes free online A foreign simple trust has three beneficiaries: two nonresident alien individuals and a U. File 2011 taxes free online S. File 2011 taxes free online citizen. File 2011 taxes free online You make a payment of interest to the foreign trust. File 2011 taxes free online It gives you a Form W-8IMY with which it associates Forms W-8BEN from the nonresident aliens and a Form W-9 from the U. File 2011 taxes free online S. File 2011 taxes free online citizen. File 2011 taxes free online The trust also gives you a complete withholding statement that enables you to associate a part of the interest payment with the forms provided by each beneficiary. File 2011 taxes free online You must treat all three beneficiaries as the payees of the interest payment as if the payment were made directly to them. File 2011 taxes free online Report the payment to the nonresident aliens on Forms 1042-S. File 2011 taxes free online Report the payment to the U. File 2011 taxes free online S. File 2011 taxes free online citizen on Form 1099-INT. File 2011 taxes free online Fiscally transparent entity. File 2011 taxes free online   If a reduced rate of withholding under an income tax treaty is claimed, a flow-through entity includes any entity in which the interest holder must treat the entity as fiscally transparent. File 2011 taxes free online The determination of whether an entity is fiscally transparent is made on an item of income basis (that is, the determination is made separately for interest, dividends, royalties, etc. File 2011 taxes free online ). File 2011 taxes free online The interest holder in an entity makes the determination by applying the laws of the jurisdiction where the interest holder is organized, incorporated, or otherwise considered a resident. File 2011 taxes free online An entity is considered to be fiscally transparent for the income to the extent the laws of that jurisdiction require the interest holder to separately take into account on a current basis the interest holder's share of the income, whether or not distributed to the interest holder, and the character and source of the income to the interest holder are determined as if the income was realized directly from the source that paid it to the entity. File 2011 taxes free online Subject to the standards of knowledge rules discussed later, you generally make the determination that an entity is fiscally transparent based on a Form W-8IMY provided by the entity. File 2011 taxes free online   The payees of a payment made to a fiscally transparent entity are the interest holders of the entity. File 2011 taxes free online Example. File 2011 taxes free online Entity A is a business organization organized under the laws of country X that has an income tax treaty in force with the United States. File 2011 taxes free online A has two interest holders, B and C. File 2011 taxes free online B is a corporation organized under the laws of country Y. File 2011 taxes free online C is a corporation organized under the laws of country Z. File 2011 taxes free online Both countries Y and Z have an income tax treaty in force with the United States. File 2011 taxes free online A receives royalty income from U. File 2011 taxes free online S. File 2011 taxes free online sources that is not effectively connected with the conduct of a trade or business in the United States. File 2011 taxes free online For U. File 2011 taxes free online S. File 2011 taxes free online income tax purposes, A is treated as a partnership. File 2011 taxes free online Country X treats A as a partnership and requires the interest holders in A to separately take into account on a current basis their respective shares of the income paid to A even if the income is not distributed. File 2011 taxes free online The laws of country X provide that the character and source of the income to A's interest holders are determined as if the income was realized directly from the source that paid it to A. File 2011 taxes free online Accordingly, A is fiscally transparent in its jurisdiction, country X. File 2011 taxes free online B and C are not fiscally transparent under the laws of their respective countries of incorporation. File 2011 taxes free online Country Y requires B to separately take into account on a current basis B's share of the income paid to A, and the character and source of the income to B is determined as if the income was realized directly from the source that paid it to A. File 2011 taxes free online Accordingly, A is fiscally transparent for that income under the laws of country Y, and B is treated as deriving its share of the U. File 2011 taxes free online S. File 2011 taxes free online source royalty income for purposes of the U. File 2011 taxes free online S. File 2011 taxes free online -Y income tax treaty. File 2011 taxes free online Country Z, on the other hand, treats A as a corporation and does not require C to take into account its share of A's income on a current basis whether or not distributed. File 2011 taxes free online Therefore, A is not treated as fiscally transparent under the laws of country Z. File 2011 taxes free online Accordingly, C is not treated as deriving its share of the U. File 2011 taxes free online S. File 2011 taxes free online source royalty income for purposes of the U. File 2011 taxes free online S. File 2011 taxes free online -Z income tax treaty. File 2011 taxes free online Foreign Intermediaries In most cases, if you make payments to a foreign intermediary, the payees are the persons for whom the foreign intermediary collects the payment, such as account holders or customers, not the intermediary itself. File 2011 taxes free online This rule applies for purposes of NRA withholding and for Form 1099 reporting and backup withholding. File 2011 taxes free online You may, however, treat a qualified intermediary that has assumed primary withholding responsibility for a payment as the payee, and you are not required to withhold. File 2011 taxes free online An intermediary is a custodian, broker, nominee, or any other person that acts as an agent for another person. File 2011 taxes free online A foreign intermediary is either a qualified intermediary or a nonqualified intermediary. File 2011 taxes free online In most cases, you determine whether an entity is a qualified intermediary or a nonqualified intermediary based on the representations the intermediary makes on Form W-8IMY. File 2011 taxes free online You must determine whether the customers or account holders of a foreign intermediary are U. File 2011 taxes free online S. File 2011 taxes free online or foreign persons and, if the account holder or customer is foreign, whether a reduced rate of NRA withholding applies. File 2011 taxes free online You make these determinations based on the foreign intermediary's Form W-8IMY and associated information and documentation. File 2011 taxes free online If you do not have all of the information or documentation that is required to reliably associate a payment with a payee, you must apply the presumption rules. File 2011 taxes free online See Documentation and Presumption Rules , later. File 2011 taxes free online Nonqualified intermediary. File 2011 taxes free online   A nonqualified intermediary (NQI) is any intermediary that is a foreign person and that is not a qualified intermediary. File 2011 taxes free online The payees of a payment made to an NQI are the customers or account holders on whose behalf the NQI is acting. File 2011 taxes free online Example. File 2011 taxes free online You make a payment of interest to a foreign bank that is a nonqualified intermediary. File 2011 taxes free online The bank gives you a Form W-8IMY and the Forms W-8BEN of two foreign persons, and a Form W-9 from a U. File 2011 taxes free online S. File 2011 taxes free online person for whom the bank is collecting the payments. File 2011 taxes free online The bank also associates with its Form W-8IMY a withholding statement on which it allocates the interest payment to each account holder and provides all other information required to be on the withholding statement. File 2011 taxes free online The account holders are the payees of the interest payment. File 2011 taxes free online You should report the part of the interest paid to the two foreign persons on Forms 1042-S and the part paid to the U. File 2011 taxes free online S. File 2011 taxes free online person on Form 1099-INT. File 2011 taxes free online Qualified intermediary. File 2011 taxes free online   A qualified intermediary (QI) is any foreign intermediary (or foreign branch of a U. File 2011 taxes free online S. File 2011 taxes free online intermediary) that has entered into a qualified intermediary withholding agreement (discussed later) with the IRS. File 2011 taxes free online You may treat a QI as a payee to the extent the QI assumes primary withholding responsibility or primary Form 1099 reporting and backup withholding responsibility for a payment. File 2011 taxes free online In this situation, the QI is required to withhold the tax. File 2011 taxes free online You can determine whether a QI has assumed responsibility from the Form W-8IMY provided by the QI. File 2011 taxes free online   A payment to a QI to the extent it does not assume primary NRA withholding responsibility is considered made to the person on whose behalf the QI acts. File 2011 taxes free online If a QI does not assume Form 1099 reporting and backup withholding responsibility, you must report on Form 1099 and, if applicable, backup withhold as if you were making the payment directly to the U. File 2011 taxes free online S. File 2011 taxes free online person. File 2011 taxes free online Branches of financial institutions. File 2011 taxes free online   Branches of financial institutions are not permitted to operate as QIs if they are located outside of countries having approved “know-your-customer” (KYC) rules. File 2011 taxes free online The countries with approved KYC rules are listed on IRS. File 2011 taxes free online gov. File 2011 taxes free online QI withholding agreement. File 2011 taxes free online   Foreign financial institutions and foreign branches of U. File 2011 taxes free online S. File 2011 taxes free online financial institutions can enter into an agreement with the IRS to be a qualified intermediary. File 2011 taxes free online   A QI is entitled to certain simplified withholding and reporting rules. File 2011 taxes free online In general, there are three major areas whereby intermediaries with QI status are afforded such simplified treatment. File 2011 taxes free online   To apply for QI status, complete Form 14345, Qualified Intermediary Application, and Form SS-4, Application for Employer Identification Number. File 2011 taxes free online These forms, and the procedures required to obtain a QI withholding agreement are available at www. File 2011 taxes free online irs. File 2011 taxes free online gov/Businesses/Corporations/Qualified-Intermediaries-(QI). File 2011 taxes free online Documentation. File 2011 taxes free online   A QI is not required to forward documentation obtained from foreign account holders to the U. File 2011 taxes free online S. File 2011 taxes free online withholding agent from whom the QI receives a payment of U. File 2011 taxes free online S. File 2011 taxes free online source income. File 2011 taxes free online The QI maintains such documentation at its location and provides the U. File 2011 taxes free online S. File 2011 taxes free online withholding agent with withholding rate pools. File 2011 taxes free online A withholding rate pool is a payment of a single type of income that is subject to a single rate of withholding. File 2011 taxes free online   A QI is required to provide the U. File 2011 taxes free online S. File 2011 taxes free online withholding agent with information regarding U. File 2011 taxes free online S. File 2011 taxes free online persons subject to Form 1099 information reporting unless the QI assumes the primary obligation to do Form 1099 reporting and backup withholding. File 2011 taxes free online   If a QI obtains documentary evidence under the “know-your-customer” rules that apply to the QI under local law, and the documentary evidence is of a type specified in an attachment to the QI agreement, the documentary evidence remains valid until there is a change in circumstances or the QI knows the information is incorrect. File 2011 taxes free online This indefinite validity period rule does not apply to Forms W-8 or to documentary evidence that is not of the type specified in the attachment to the agreement. File 2011 taxes free online Form 1042-S reporting. File 2011 taxes free online   A QI is permitted to report payments made to its direct foreign account holders on a pooled basis rather than reporting payments to each direct account holder specifically. File 2011 taxes free online Pooled basis reporting is not available for payments to certain account holders, such as a nonqualified intermediary or a flow-through entity (discussed earlier). File 2011 taxes free online Collective refund procedures. File 2011 taxes free online   A QI may seek a refund on behalf of its direct account holders. File 2011 taxes free online The direct account holders, therefore, are not required to file returns with the IRS to obtain refunds, but rather may obtain them from the QI. File 2011 taxes free online U. File 2011 taxes free online S. File 2011 taxes free online branches of foreign banks and foreign insurance companies. File 2011 taxes free online   Special rules apply to a U. File 2011 taxes free online S. File 2011 taxes free online branch of a foreign bank subject to Federal Reserve Board supervision or a foreign insurance company subject to state regulatory supervision. File 2011 taxes free online If you agree to treat the branch as a U. File 2011 taxes free online S. File 2011 taxes free online person, you may treat the branch as a U. File 2011 taxes free online S. File 2011 taxes free online payee for a payment subject to NRA withholding provided you receive a Form W-8IMY from the U. File 2011 taxes free online S. File 2011 taxes free online branch on which the agreement is evidenced. File 2011 taxes free online If you treat the branch as a U. File 2011 taxes free online S. File 2011 taxes free online payee, you are not required to withhold. File 2011 taxes free online Even though you agree to treat the branch as a U. File 2011 taxes free online S. File 2011 taxes free online person, you must report the payment on Form 1042-S. File 2011 taxes free online   A financial institution organized in a U. File 2011 taxes free online S. File 2011 taxes free online possession is treated as a U. File 2011 taxes free online S. File 2011 taxes free online branch. File 2011 taxes free online The special rules discussed in this section apply to a possessions financial institution. File 2011 taxes free online   If you are paying a U. File 2011 taxes free online S. File 2011 taxes free online branch an amount that is not subject to NRA withholding, treat the payment as made to a foreign person, irrespective of any agreement to treat the branch as a U. File 2011 taxes free online S. File 2011 taxes free online person for amounts subject to NRA withholding. File 2011 taxes free online Consequently, amounts not subject to NRA withholding that are paid to a U. File 2011 taxes free online S. File 2011 taxes free online branch are not subject to Form 1099 reporting or backup withholding. File 2011 taxes free online   Alternatively, a U. File 2011 taxes free online S. File 2011 taxes free online branch may provide you with a Form W-8IMY with which it associates the documentation of the persons on whose behalf it acts. File 2011 taxes free online In this situation, the payees are the persons on whose behalf the branch acts provided you can reliably associate the payment with valid documentation from those persons. File 2011 taxes free online See Nonqualified Intermediaries under  Documentation, later. File 2011 taxes free online   If the U. File 2011 taxes free online S. File 2011 taxes free online branch does not provide you with a Form W-8IMY, then you should treat a payment subject to NRA withholding as made to the foreign person of which the branch is a part and the income as effectively connected with the conduct of a trade or business in the United States. File 2011 taxes free online Withholding foreign partnership and foreign trust. File 2011 taxes free online   A withholding foreign partnership (WP) is any foreign partnership that has entered into a WP withholding agreement with the IRS and is acting in that capacity. File 2011 taxes free online A withholding foreign trust (WT) is a foreign simple or grantor trust that has entered into a WT withholding agreement with the IRS and is acting in that capacity. File 2011 taxes free online   A WP or WT may act in that capacity only for payments of amounts subject to NRA withholding that are distributed to, or included in the distributive share of, its direct partners, beneficiaries, or owners. File 2011 taxes free online A WP or WT acting in that capacity must assume NRA withholding responsibility for these amounts. File 2011 taxes free online You may treat a WP or WT as a payee if it has provided you with documentation (discussed later) that represents that it is acting as a WP or WT for such amounts. File 2011 taxes free online WP and WT withholding agreements. File 2011 taxes free online   The WP and WT withholding agreements and the application procedures for the agreements are in Revenue Procedure 2003-64. File 2011 taxes free online Also see the following items. File 2011 taxes free online Revenue Procedure 2004-21. File 2011 taxes free online Revenue Procedure 2005-77. File 2011 taxes free online Employer identification number (EIN). File 2011 taxes free online   A completed Form SS-4 must be submitted with the application for being a WP or WT. File 2011 taxes free online The WP or WT will be assigned a WP-EIN or WT-EIN to be used only when acting in that capacity. File 2011 taxes free online Documentation. File 2011 taxes free online   A WP or WT must provide you with a Form W-8IMY that certifies that the WP or WT is acting in that capacity and a written statement identifying the amounts for which it is so acting. File 2011 taxes free online The statement is not required to contain withholding rate pool information or any information relating to the identity of a direct partner, beneficiary, or owner. File 2011 taxes free online The Form W-8IMY must contain the WP-EIN or WT-EIN. File 2011 taxes free online Foreign Persons A payee is subject to NRA withholding only if it is a foreign person. File 2011 taxes free online A foreign person includes a nonresident alien individual, foreign corporation, foreign partnership, foreign trust, foreign estate, and any other person that is not a U. File 2011 taxes free online S. File 2011 taxes free online person. File 2011 taxes free online It also includes a foreign branch of a U. File 2011 taxes free online S. File 2011 taxes free online financial institution if the foreign branch is a qualified intermediary. File 2011 taxes free online In most cases, the U. File 2011 taxes free online S. File 2011 taxes free online branch of a foreign corporation or partnership is treated as a foreign person. File 2011 taxes free online Nonresident alien. File 2011 taxes free online   A nonresident alien is an individual who is not a U. File 2011 taxes free online S. File 2011 taxes free online citizen or a resident alien. File 2011 taxes free online A resident of a foreign country under the residence article of an income tax treaty is a nonresident alien individual for purposes of withholding. File 2011 taxes free online Married to U. File 2011 taxes free online S. File 2011 taxes free online citizen or resident alien. File 2011 taxes free online   Nonresident alien individuals married to U. File 2011 taxes free online S. File 2011 taxes free online citizens or resident aliens may choose to be treated as resident aliens for certain income tax purposes. File 2011 taxes free online However, these individuals are still subject to the NRA withholding rules that apply to nonresident aliens for all income except wages. File 2011 taxes free online Wages paid to these individuals are subject to graduated withholding. File 2011 taxes free online See Wages Paid to Employees—Graduated Withholding . File 2011 taxes free online Resident alien. File 2011 taxes free online   A resident alien is an individual who is not a citizen or national of the United States and who meets either the green card test or the substantial presence test for the calendar year. File 2011 taxes free online Green card test. File 2011 taxes free online An alien is a resident alien if the individual was a lawful permanent resident of the United States at any time during the calendar year. File 2011 taxes free online This is known as the green card test because these aliens hold immigrant visas (also known as green cards). File 2011 taxes free online Substantial presence test. File 2011 taxes free online An alien is considered a resident alien if the individual meets the substantial presence test for the calendar year. File 2011 taxes free online Under this test, the individual must be physically present in the United States on at least: 31 days during the current calendar year, and 183 days during the current year and the 2 preceding years, counting all the days of physical presence in the current year, but only 1/3 the number of days of presence in the first preceding year, and only 1/6 the number of days in the second preceding year. File 2011 taxes free online   In most cases, the days the alien is in the United States as a teacher, student, or trainee on an “F,” “J,” “M,” or “Q” visa are not counted. File 2011 taxes free online This exception is for a limited period of time. File 2011 taxes free online   For more information on resident and nonresident status, the tests for residence, and the exceptions to them, see Publication 519. File 2011 taxes free online Note. File 2011 taxes free online   If your employee is late in notifying you that his or her status changed from nonresident alien to resident alien, you may have to make an adjustment to Form 941 if that employee was exempt from withholding of social security and Medicare taxes as a nonresident alien. File 2011 taxes free online For more information on making adjustments, see chapter 13 of Publication 15 (Circular E). File 2011 taxes free online Resident of a U. File 2011 taxes free online S. File 2011 taxes free online possession. File 2011 taxes free online   A bona fide resident of Puerto Rico, the U. File 2011 taxes free online S. File 2011 taxes free online Virgin Islands, Guam, the Commonwealth of the Northern Mariana Islands (CNMI), or American Samoa who is not a U. File 2011 taxes free online S. File 2011 taxes free online citizen or a U. File 2011 taxes free online S. File 2011 taxes free online national is treated as a nonresident alien for the withholding rules explained here. File 2011 taxes free online A bona fide resident of a possession is someone who: Meets the presence test, Does not have a tax home outside the possession, and Does not have a closer connection to the United States or to a foreign country than to the possession. File 2011 taxes free online   For more information, see Publication 570, Tax Guide for Individuals With Income From U. File 2011 taxes free online S. File 2011 taxes free online Possessions. File 2011 taxes free online Foreign corporations. File 2011 taxes free online   A foreign corporation is one that does not fit the definition of a domestic corporation. File 2011 taxes free online A domestic corporation is one that was created or organized in the United States or under the laws of the United States, any of its states, or the District of Columbia. File 2011 taxes free online Guam or Northern Mariana Islands corporations. File 2011 taxes free online   A corporation created or organized in, or under the laws of, Guam or the CNMI is not considered a foreign corporation for the purpose of withholding tax for the tax year if: At all times during the tax year less than 25% in value of the corporation's stock is owned, directly or indirectly, by foreign persons; and At least 20% of the corporation's gross income is derived from sources within Guam or the CNMI for the 3-year period ending with the close of the preceding tax year of the corporation (or the period the corporation has been in existence, if less). File 2011 taxes free online Note. File 2011 taxes free online   The provisions discussed below under U. File 2011 taxes free online S. File 2011 taxes free online Virgin Islands and American Samoa corporations will apply to Guam or CNMI corporations when an implementing agreement is in effect between the United States and that possession. File 2011 taxes free online U. File 2011 taxes free online S. File 2011 taxes free online Virgin Islands and American Samoa corporations. File 2011 taxes free online   A corporation created or organized in, or under the laws of, the U. File 2011 taxes free online S. File 2011 taxes free online Virgin Islands or American Samoa is not considered a foreign corporation for the purposes of withholding tax for the tax year if: At all times during the tax year less than 25% in value of the corporation's stock is owned, directly or indirectly, by foreign persons, At least 65% of the corporation's gross income is effectively connected with the conduct of a trade or business in the U. File 2011 taxes free online S. File 2011 taxes free online Virgin Islands, American Samoa, Guam, the CNMI, or the United States for the 3-year period ending with the close of the tax year of the corporation (or the period the corporation or any predecessor has been in existence, if less), and No substantial part of the income of the corporation is used, directly or indirectly, to satisfy obligations to a person who is not a bona fide resident of the U. File 2011 taxes free online S. File 2011 taxes free online Virgin Islands, American Samoa, Guam, the CNMI, or the United States. File 2011 taxes free online Foreign private foundations. File 2011 taxes free online   A private foundation that was created or organized under the laws of a foreign country is a foreign private foundation. File 2011 taxes free online Gross investment income from sources within the United States paid to a qualified foreign private foundation is subject to NRA withholding at a 4% rate (unless exempted by a treaty) rather than the ordinary statutory 30% rate. File 2011 taxes free online Other foreign organizations, associations, and charitable institutions. File 2011 taxes free online   An organization may be exempt from income tax under section 501(a) of the Internal Revenue Code even if it was formed under foreign law. File 2011 taxes free online In most cases, you do not have to withhold tax on payments of income to these foreign tax-exempt organizations unless the IRS has determined that they are foreign private foundations. File 2011 taxes free online   Payments to these organizations, however, must be reported on Form 1042-S, even though no tax is withheld. File 2011 taxes free online   You must withhold tax on the unrelated business income (as described in Publication 598, Tax on Unrelated Business Income of Exempt Organizations) of foreign tax-exempt organizations in the same way that you would withhold tax on similar income of nonexempt organizations. File 2011 taxes free online U. File 2011 taxes free online S. File 2011 taxes free online branches of foreign persons. File 2011 taxes free online   In most cases, a payment to a U. File 2011 taxes free online S. File 2011 taxes free online branch of a foreign person is a payment made to the foreign person. File 2011 taxes free online However, you may treat payments to U. File 2011 taxes free online S. File 2011 taxes free online branches of foreign banks and foreign insurance companies (discussed earlier) that are subject to U. File 2011 taxes free online S. File 2011 taxes free online regulatory supervision as payments made to a U. File 2011 taxes free online S. File 2011 taxes free online person, if you and the U. File 2011 taxes free online S. File 2011 taxes free online branch have agreed to do so, and if their agreement is evidenced by a withholding certificate, Form W-8IMY. File 2011 taxes free online For this purpose, a financial institution organized under the laws of a U. File 2011 taxes free online S. File 2011 taxes free online possession is treated as a U. File 2011 taxes free online S. File 2011 taxes free online branch. File 2011 taxes free online Documentation In most cases, you must withhold 30% from the gross amount paid to a foreign payee unless you can reliably associate the payment with valid documentation that establishes either of the following. File 2011 taxes free online The payee is a U. File 2011 taxes free online S. File 2011 taxes free online person. File 2011 taxes free online The payee is a foreign person that is the beneficial owner of the income and is entitled to a reduced rate of withholding. File 2011 taxes free online In most cases, you must get the documentation before you make the payment. File 2011 taxes free online The documentation is not valid if you know, or have reason to know, that it is unreliable or incorrect. File 2011 taxes free online See Standards of Knowledge , later. File 2011 taxes free online If you cannot reliably associate a payment with valid documentation, you must use the presumption rules discussed later. File 2011 taxes free online For example, if you do not have documentation or you cannot determine the part of a payment that is allocable to specific documentation, you must use the presumption rules. File 2011 taxes free online The specific types of documentation are discussed in this section. File 2011 taxes free online However, see Withholding on Specific Income , later, as well as the instructions to the particular forms. File 2011 taxes free online As the withholding agent, you also may want to see the Instructions for the Requester of Forms W-8BEN, W-8ECI, W-8EXP, and W-8IMY. File 2011 taxes free online Section 1446 withholding. File 2011 taxes free online   Under section 1446 of the Code, a partnership must withhold tax on its effectively connected income allocable to a foreign partner. File 2011 taxes free online In most cases, a partnership determines if a partner is a foreign partner and the partner's tax classification based on the withholding certificate provided by the partner. File 2011 taxes free online This is the same documentation that is filed for NRA withholding, but may require additional information as discussed under each of the forms in this section. File 2011 taxes free online Joint owners. File 2011 taxes free online    If you make a payment to joint owners, you need to get documentation from each owner. File 2011 taxes free online Form W-9. File 2011 taxes free online   In most cases, you can treat the payee as a U. File 2011 taxes free online S. File 2011 taxes free online person if the payee gives you a Form W-9. File 2011 taxes free online The Form W-9 can be used only by a U. File 2011 taxes free online S. File 2011 taxes free online person and must contain the payee's taxpayer identification number (TIN). File 2011 taxes free online If there is more than one owner, you may treat the total amount as paid to a U. File 2011 taxes free online S. File 2011 taxes free online person if any one of the owners gives you a Form W-9. File 2011 taxes free online See U. File 2011 taxes free online S. File 2011 taxes free online Taxpayer Identification Numbers , later. File 2011 taxes free online U. File 2011 taxes free online S. File 2011 taxes free online persons are not subject to NRA withholding, but may be subject to Form 1099 reporting and backup withholding. File 2011 taxes free online Form W-8. File 2011 taxes free online   In most cases, a foreign payee of the income should give you a form in the Form W-8 series. File 2011 taxes free online Until further notice, you can rely upon Forms W-8 that contain a P. File 2011 taxes free online O. File 2011 taxes free online box as a permanent residence address provided you do not know, or have reason to know, that the person providing the form is a U. File 2011 taxes free online S. File 2011 taxes free online person and that a street address is available. File 2011 taxes free online You may rely on Forms W-8 for which there is a U. File 2011 taxes free online S. File 2011 taxes free online mailing address provided you received the form prior to December 31, 2001. File 2011 taxes free online   If certain requirements are met, the foreign person can give you documentary evidence, rather than a Form W-8. File 2011 taxes free online You can rely on documentary evidence in lieu of a Form W-8 for a payment made in a U. File 2011 taxes free online S. File 2011 taxes free online possession. File 2011 taxes free online Other documentation. File 2011 taxes free online   Other documentation may be required to claim an exemption from, or a reduced rate of, withholding on pay for personal services. File 2011 taxes free online The nonresident alien individual may have to give you a Form W-4 or a Form 8233, Exemption From Withholding on Compensation for Independent (and Certain Dependent) Personal Services of a Nonresident Alien Individual. File 2011 taxes free online These forms are discussed in Pay for Personal Services Performed under Withholding on Specific Income. File 2011 taxes free online Beneficial Owners If all the appropriate requirements have been established on a Form W-8BEN, W-8ECI, W-8EXP or, if applicable, on documentary evidence, you may treat the payee as a foreign beneficial owner. File 2011 taxes free online Form W-8BEN, Certificate of Foreign Status of Beneficial Owner for United States Tax Withholding. File 2011 taxes free online   This form is used by a foreign person to: Establish foreign status; Claim that such person is the beneficial owner of the income for which the form is being furnished or a partner in a partnership subject to section 1446 withholding; and If applicable, claim a reduced rate of, or exemption from, withholding under an income tax treaty. File 2011 taxes free online   Form W-8BEN also may be used to claim that the foreign person is exempt from Form 1099 reporting and backup withholding for income that is not subject to NRA withholding. File 2011 taxes free online For example, a foreign person may provide a Form W-8BEN to a broker to establish that the gross proceeds from the sale of securities are not subject to Form 1099 reporting or backup withholding. File 2011 taxes free online Claiming treaty benefits. File 2011 taxes free online   You may apply a reduced rate of withholding to a foreign person that provides a Form W-8BEN claiming a reduced rate of withholding under an income tax treaty only if the person provides a U. File 2011 taxes free online S. File 2011 taxes free online TIN and certifies that: It is a resident of a treaty country; It is the beneficial owner of the income; If it is an entity, it derives the income within the meaning of section 894 of the Internal Revenue Code (it is not fiscally transparent); and It meets any limitation on benefits provision contained in the treaty, if applicable. File 2011 taxes free online   If the foreign beneficial owner claiming a treaty benefit is related to you, the foreign beneficial owner also must certify on Form W-8BEN that it will file Form 8833, Treaty-Based Return Position Disclosure Under Section 6114 or 7701(b), if the amount subject to NRA withholding received during a calendar year exceeds, in the aggregate, $500,000. File 2011 taxes free online   An entity derives income for which it is claiming treaty benefits only if the entity is not treated as fiscally transparent for that income. File 2011 taxes free online See Fiscally transparent entity discussed earlier under Flow-Through Entities. File 2011 taxes free online   Limitations on benefits provisions generally prohibit third country residents from obtaining treaty benefits. File 2011 taxes free online For example, a foreign corporation may not be entitled to a reduced rate of withholding unless a minimum percentage of its owners are citizens or residents of the United States or the treaty country. File 2011 taxes free online   The exemptions from, or reduced rates of, U. File 2011 taxes free online S. File 2011 taxes free online tax vary under each treaty. File 2011 taxes free online You must check the provisions of the tax treaty that apply. File 2011 taxes free online Tables at the end of this publication show the countries with which the United States has income tax treaties and the rates of withholding that apply in cases where all conditions of the particular treaty articles are satisfied. File 2011 taxes free online   If you know, or have reason to know, that an owner of income is not eligible for treaty benefits claimed, you must not apply the treaty rate. File 2011 taxes free online You are not, however, responsible for misstatements on a Form W-8, documentary evidence, or statements accompanying documentary evidence for which you did not have actual knowledge, or reason to know, that the statements were incorrect. File 2011 taxes free online Exceptions to TIN requirement. File 2011 taxes free online   A foreign person does not have to provide a TIN to claim a reduced rate of withholding under a treaty if the requirements for the following exceptions are met. File 2011 taxes free online Income from marketable securities (discussed next). File 2011 taxes free online Unexpected payments to an individual (discussed under U. File 2011 taxes free online S. File 2011 taxes free online Taxpayer Identification Numbers ). File 2011 taxes free online Marketable securities. File 2011 taxes free online   A Form W-8BEN provided to claim treaty benefits does not need a U. File 2011 taxes free online S. File 2011 taxes free online TIN if the foreign beneficial owner is claiming the benefits on income from marketable securities. File 2011 taxes free online For this purpose, income from a marketable security consists of the following items. File 2011 taxes free online Dividends and interest from stocks and debt obligations that are actively traded. File 2011 taxes free online Dividends from any redeemable security issued by an investment company registered under the Investment Company Act of 1940 (mutual fund). File 2011 taxes free online Dividends, interest, or royalties from units of beneficial interest in a unit investment trust that are (or were upon issuance) publicly offered and are registered with the SEC under the Securities Act of 1933. File 2011 taxes free online Income related to loans of any of the above securities. File 2011 taxes free online Offshore accounts. File 2011 taxes free online   If a payment is made outside the United States to an offshore account, a payee may give you documentary evidence, rather than Form W-8BEN. File 2011 taxes free online   In most cases, a payment is made outside the United States if you complete the acts necessary to effect the payment outside the United States. File 2011 taxes free online However, an amount paid by a bank or other financial institution on a deposit or account usually will be treated as paid at the branch or office where the amount is credited. File 2011 taxes free online An offshore account is an account maintained at an office or branch of a U. File 2011 taxes free online S. File 2011 taxes free online or foreign bank or other financial institution at any location outside the United States. File 2011 taxes free online   You may rely on documentary evidence given to you by a nonqualified intermediary or a flow-through entity with its Form W-8IMY. File 2011 taxes free online This rule applies even though you make the payment to a nonqualified intermediary or flow-through entity in the United States. File 2011 taxes free online In most cases, the nonqualified intermediary or flow-through entity that gives you documentary evidence also will have to give you a withholding statement, discussed later. File 2011 taxes free online Documentary evidence. File 2011 taxes free online   You may apply a reduced rate of withholding to income from marketable securities (discussed earlier) paid outside the United States to an offshore account if the beneficial owner gives you documentary evidence in place of a Form W-8BEN. File 2011 taxes free online To claim treaty benefits, the documentary evidence must be one of the following: A certificate of residence that: Is issued by a tax official of the treaty country of which the foreign beneficial owner claims to be a resident, States that the person has filed its most recent income tax return as a resident of that country, and Is issued within 3 years prior to being presented to you. File 2011 taxes free online Documentation for an individual that: Includes the individual's name, address, and photograph, Is an official document issued by an authorized governmental body, and Is issued no more than 3 years prior to being presented to you. File 2011 taxes free online Documentation for an entity that: Includes the name of the entity, Includes the address of its principal office in the treaty country, and Is an official document issued by an authorized governmental body. File 2011 taxes free online In addition to the documentary evidence, a foreign beneficial owner that is an entity must provide a statement that it derives the income for which it claims treaty benefits and that it meets one or more of the conditions set forth in a limitation on benefits article, if any, (or similar provision) contained in the applicable treaty. File 2011 taxes free online Form W-8ECI, Certificate of Foreign Person's Claim That Income Is Effectively Connected With the Conduct of a Trade or Business in the United States. File 2011 taxes free online   This form is used by a foreign person to: Establish foreign status, Claim that such person is the beneficial owner of the income for which the form is being furnished, and Claim that the income is effectively connected with the conduct of a trade or business in the United States. File 2011 taxes free online (See Effectively Connected Income , later. File 2011 taxes free online )   Effectively connected income for which a valid Form W-8ECI has been provided is generally not subject to NRA withholding. File 2011 taxes free online   If a partner submits this form to a partnership, the income claimed to be effectively connected with the conduct of a U. File 2011 taxes free online S. File 2011 taxes free online trade or business is subject to withholding under section 1446. File 2011 taxes free online If the partner has made, or will make, an election under section 871(d) or 882(d), the partner must submit Form W-8ECI, and attach a copy of the election, or a statement of intent to elect, to the form. File 2011 taxes free online    If the partner's only effectively connected income is the income allocated from the partnership and the partner is not making the election under section 871(d) or 882(d), the partner should provide Form W-8BEN to the partnership. File 2011 taxes free online Form W-8EXP, Certificate of Foreign Government or Other Foreign Organization for United States Tax Withholding. File 2011 taxes free online   This form is used by a foreign government, international organization, foreign central bank of issue, foreign tax-exempt organization, foreign private foundation, or government of a U. File 2011 taxes free online S. File 2011 taxes free online possession to: Establish foreign status, Claim that such person is the beneficial owner of the income for which the form is being furnished, and Claim a reduced rate of, or an exemption from, withholding as such an entity. File 2011 taxes free online   If the government or organization is a partner in a partnership carrying on a trade or business in the United States, the effectively connected income allocable to the partner is subject to withholding under section 1446. File 2011 taxes free online   See Foreign Governments and Certain Other Foreign Organizations , later. File 2011 taxes free online Foreign Intermediaries and Foreign Flow-Through Entities Payments made to a foreign intermediary or foreign flow-through entity are treated as made to the payees on whose behalf the intermediary or entity acts. File 2011 taxes free online The Form W-8IMY provided by a foreign intermediary or flow-through entity must be accompanied by additional information for you to be able to reliably associate the payment with a payee. File 2011 taxes free online The additional information required depends on the type of intermediary or flow-through entity and the extent of the withholding responsibilities it assumes. File 2011 taxes free online Form W-8IMY, Certificate of Foreign Intermediary, Foreign Flow-Through Entity, or Certain U. File 2011 taxes free online S. File 2011 taxes free online Branches for United States Tax Withholding. File 2011 taxes free online   This form is used by foreign intermediaries and foreign flow-through entities, as well as certain U. File 2011 taxes free online S. File 2011 taxes free online branches, to: Represent that a foreign person is a qualified intermediary or nonqualified intermediary, Represent, if applicable, that the qualified intermediary is assuming primary NRA withholding responsibility and/or primary Form 1099 reporting and backup withholding responsibility, Represent that a foreign partnership or a foreign simple or grantor trust is a withholding foreign partnership or a withholding foreign trust, Represent that a foreign flow-through entity is a nonwithholding foreign partnership, or a nonwithholding foreign trust and that the income is not effectively connected with the conduct of a trade or business in the United States, Represent that the provider is a U. File 2011 taxes free online S. File 2011 taxes free online branch of a foreign bank or insurance company and either is agreeing to be treated as a U. File 2011 taxes free online S. File 2011 taxes free online person or is transmitting documentation of the persons on whose behalf it is acting, or Represent that, for purposes of section 1446, it is an upper-tier foreign partnership or a foreign grantor trust and that the form is being used to transmit the required documentation. File 2011 taxes free online For information on qualifying as an upper-tier foreign partnership, see Regulations section 1. File 2011 taxes free online 1446-5. File 2011 taxes free online Qualified Intermediaries In most cases, a QI is any foreign intermediary that has entered into a QI withholding agreement (discussed earlier) with the IRS. File 2011 taxes free online A foreign intermediary that has received a QI employer identification number (QI-EIN) may represent on Form W-8IMY that it is a QI before it receives a fully executed agreement. File 2011 taxes free online The intermediary can claim that it is a QI until the IRS revokes its QI-EIN. File 2011 taxes free online The IRS will revoke a QI-EIN if the QI agreement is not executed and returned to the IRS within a reasonable period of time after the agreement was sent to the intermediary for signature. File 2011 taxes free online Responsibilities. File 2011 taxes free online   Payments made to a QI that does not assume NRA withholding responsibility are treated as paid to its account holders and customers. File 2011 taxes free online However, a QI is not required to provide you with documentation it obtains from its foreign account holders and customers. File 2011 taxes free online Instead, it provides you with a withholding statement that contains withholding rate pool information. File 2011 taxes free online A withholding rate pool is a payment of a single type of income, determined in accordance with the categories of income reported on Form 1042-S that is subject to a single rate of withholding. File 2011 taxes free online A qualified intermediary is required to provide you with information regarding U. File 2011 taxes free online S. File 2011 taxes free online persons subject to Form 1099 reporting and to provide you withholding rate pool information separately for each such U. File 2011 taxes free online S. File 2011 taxes free online person unless it has assumed Form 1099 reporting and backup withholding responsibility. File 2011 taxes free online For the alternative procedure for providing rate pool information for U. File 2011 taxes free online S. File 2011 taxes free online non-exempt persons, see the Form W-8IMY instructions. File 2011 taxes free online   The withholding statement must: Designate those accounts for which it acts as a qualified intermediary, Designate those accounts for which it assumes primary NRA withholding responsibility and/or primary Form 1099 and backup withholding responsibility, and Provide sufficient information for you to allocate the payment to a withholding rate pool. File 2011 taxes free online   The extent to which you must have withholding rate pool information depends on the withholding and reporting obligations assumed by the QI. File 2011 taxes free online Primary responsibility not assumed. File 2011 taxes free online   If a QI does not assume primary NRA withholding responsibility or primary Form 1099 reporting and backup withholding responsibility for the payment, you can reliably associate the payment with valid documentation only to the extent you can reliably determine the part of the payment that relates to each withholding rate pool for foreign payees. File 2011 taxes free online Unless the alternative procedure applies, the qualified intermediary must provide you with a separate withholding rate pool for each U. File 2011 taxes free online S. File 2011 taxes free online person subject to Form 1099 reporting and/or backup withholding. File 2011 taxes free online The QI must provide a Form W-9 or, in the absence of the form, the name, address, and TIN, if available, for such person. File 2011 taxes free online Primary NRA withholding responsibility assumed. File 2011 taxes free online   If you make a payment to a QI that assumes primary NRA withholding responsibility (but not primary Form 1099 reporting and backup withholding responsibility), you can reliably associate the payment with valid documentation only to the extent you can reliably determine the part of the payment that relates to the withholding rate pool for which the QI assumes primary NRA withholding responsibility and the part of the payment attributable to withholding rate pools for each U. File 2011 taxes free online S. File 2011 taxes free online person, unless the alternative procedure applies, subject to Form 1099 reporting and/or backup withholding. File 2011 taxes free online The QI must provide a Form W-9 or, in the absence of the form, the name, address, and TIN, if available, for such person. File 2011 taxes free online Primary NRA and Form 1099 responsibility assumed. File 2011 taxes free online   If you make a payment to a QI that assumes both primary NRA withholding responsibility and primary Form 1099 reporting and backup withholding responsibility, you can reliably associate a payment with valid documentation provided that you receive a valid Form W-8IMY. File 2011 taxes free online It is not necessary to associate the payment with withholding rate pools. File 2011 taxes free online Example. File 2011 taxes free online You make a payment of dividends to a QI. File 2011 taxes free online It has five customers: two are foreign persons who have provided documentation entitling them to a 15% rate of withholding on dividends; two are foreign persons subject to a 30% rate of withholding on dividends; and one is a U. File 2011 taxes free online S. File 2011 taxes free online individual who provides it with a Form W-9. File 2011 taxes free online Each customer is entitled to 20% of the dividend payment. File 2011 taxes free online The QI does not assume any primary withholding responsibility. File 2011 taxes free online The QI gives you a Form W-8IMY with which it associates the Form W-9 and a withholding statement that allocates 40% of the dividend to a 15% withholding rate pool, 40% to a 30% withholding rate pool, and 20% to the U. File 2011 taxes free online S. File 2011 taxes free online individual. File 2011 taxes free online You should report on Forms 1042-S 40% of the payment as made to a 15% rate dividend pool and 40% of the payment as made to a 30% rate dividend pool. File 2011 taxes free online The part of the payment allocable to the U. File 2011 taxes free online S. File 2011 taxes free online individual (20%) is reportable on Form 1099-DIV. File 2011 taxes free online Smaller partnerships and trusts. File 2011 taxes free online   A QI may apply special rules to a smaller partnership or trust (Joint Account Provision) only if the partnership or trust meets the following conditions. File 2011 taxes free online It is a foreign partnership or foreign simple or grantor trust. File 2011 taxes free online It is a direct account holder of the QI. File 2011 taxes free online It does not have any partner, beneficiary, or owner that is a U. File 2011 taxes free online S. File 2011 taxes free online person or a pass- through partner, beneficiary, or owner. File 2011 taxes free online   For information on these rules, see section 4A. File 2011 taxes free online 01 of the QI agreement. File 2011 taxes free online This is found in Appendix 3 of Revenue Procedure 2003-64. File 2011 taxes free online Also see Revenue Procedure 2004-21. File 2011 taxes free online Related partnerships and trusts. File 2011 taxes free online    A QI may apply special rules to a related partnership or trust only if the partnership or trust meets the following conditions. File 2011 taxes free online It is a foreign partnership or foreign simple or grantor trust. File 2011 taxes free online It is either: A direct account holder of the QI, or An indirect account holder of the QI that is a direct partner, beneficiary, or owner of a partnership or trust to which the QI has applied this rule. File 2011 taxes free online For information on these rules, see section 4A. File 2011 taxes free online 02 of the QI agreement. File 2011 taxes free online This is found in Appendix 3 of Revenue Procedure 2003-64. File 2011 taxes free online Also see Revenue Procedure 2005-77. File 2011 taxes free online Nonqualified Intermediaries If you are making a payment to an NQI, foreign flow-through entity, or U. File 2011 taxes free online S. File 2011 taxes free online branch that is using Form W-8IMY to transmit information about the branch's account holders or customers, you can treat the payment (or a part of the payment) as reliably associated with valid documentation from a specific payee only if, prior to making the payment: You can allocate the payment to a valid Form W-8IMY, You can reliably determine how much of the payment relates to valid documentation provided by a payee (a person that is not itself a foreign intermediary, flow- through entity, or U. File 2011 taxes free online S. File 2011 taxes free online branch), and You have sufficient information to report the payment on Form 1042-S or Form 1099, if reporting is required. File 2011 taxes free online The NQI, flow-through entity, or U. File 2011 taxes free online S. File 2011 taxes free online branch must give you certain information on a withholding statement that is associated with the Form W-8IMY. File 2011 taxes free online A withholding statement must be updated to keep the information accurate prior to each payment. File 2011 taxes free online Withholding statement. File 2011 taxes free online   In most cases, a withholding statement must contain the following information. File 2011 taxes free online The name, address, and TIN (if any, or if required) of each person for whom documentation is provided. File 2011 taxes free online The type of documentation (documentary evidence, Form W-8, or Form W-9) for every person for whom documentation has been provided. File 2011 taxes free online The status of the person for whom the documentation has been provided, such as whether the person is a U. File 2011 taxes free online S. File 2011 taxes free online exempt recipient (U. File 2011 taxes free online S. File 2011 taxes free online person exempt from Form 1099 reporting), U. File 2011 taxes free online S. File 2011 taxes free online non-exempt recipient (U. File 2011 taxes free online S. File 2011 taxes free online person subject to Form 1099 reporting), or a foreign person. File 2011 taxes free online For a foreign person, the statement must indicate whether the person is a beneficial owner or a foreign intermediary, flow-through entity, or a U. File 2011 taxes free online S. File 2011 taxes free online branch. File 2011 taxes free online The type of recipient the person is, based on the recipient codes used on Form 1042-S. File 2011 taxes free online Information allocating each payment, by income type, to each payee (including U. File 2011 taxes free online S. File 2011 taxes free online exempt and U. File 2011 taxes free online S. File 2011 taxes free online non-exempt recipients) for whom documentation has been provided. File 2011 taxes free online The rate of withholding that applies to each foreign person to whom a payment is allocated. File 2011 taxes free online A foreign payee's country of residence. File 2011 taxes free online If a reduced rate of withholding is claimed, the basis for a reduced rate of withholding (for example, portfolio interest, treaty benefit, etc. File 2011 taxes free online ). File 2011 taxes free online In the case of treaty benefits claimed by entities, whether the applicable limitation on benefits statement and the statement that the foreign person derives the income for which treaty benefits are claimed, have been made. File 2011 taxes free online The name, address, and TIN (if any) of any other NQI, flow-through entity, or U. File 2011 taxes free online S. File 2011 taxes free online branch from which the payee will directly receive a payment. File 2011 taxes free online Any other information a withholding agent requests to fulfill its reporting and withholding obligations. File 2011 taxes free online Alternative procedure. File 2011 taxes free online   Under this alternative procedure the NQI can give you the information that allocates each payment to each foreign and U. File 2011 taxes free online S. File 2011 taxes free online exempt recipient by January 31 following the calendar year of payment, rather than prior to the payment being made as otherwise required. File 2011 taxes free online To take advantage of this procedure, the NQI must: (a) inform you, on its withholding statement, that it is using the alternative procedure; and (b) obtain your consent. File 2011 taxes free online You must receive the withholding statement with all the required information (other than item 5) prior to making the payment. File 2011 taxes free online    This alternative procedure cannot be used for payments to U. File 2011 taxes free online S. File 2011 taxes free online non-exempt recipients. File 2011 taxes free online Therefore, an NQI must always provide you with allocation information for all U. File 2011 taxes free online S. File 2011 taxes free online non-exempt recipients prior to a payment being made. File 2011 taxes free online Pooled withholding information. File 2011 taxes free online   If an NQI uses the alternative procedure, it must provide you with withholding rate pool information, as opposed to individual allocation information, prior to the payment of a reportable amount. File 2011 taxes free online A withholding rate pool is a payment of a single type of income (as determined by the income categories on Form 1042-S) that is subject to a single rate of withholding. File 2011 taxes free online For example, an NQI that has foreign account holders receiving royalties and dividends, both subject to the 15% rate, will provide you with information for two withholding rate pools (one for royalties and one for dividends). File 2011 taxes free online The NQI must provide you with the payee specific allocation information (information allocating each payment to each payee) by January 31 following the calendar year of payment. File 2011 taxes free online Failure to provide allocation information. File 2011 taxes free online   If an NQI fails to provide you with the payee specific allocation information for a withholding rate pool by January 31, you must not apply the alternative procedure to any of the NQI's withholding rate pools from that date forward. File 2011 taxes free online You must treat the payees as undocumented and apply the presumption rules, discussed later in Presumption Rules . File 2011 taxes free online An NQI is deemed to have f