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File Taxes 2012

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File Taxes 2012

File taxes 2012 Publication 15 - Main Content Table of Contents 1. File taxes 2012 Employer Identification Number (EIN) 2. File taxes 2012 Who Are Employees?Relief provisions. File taxes 2012 Business Owned and Operated by Spouses 3. File taxes 2012 Family Employees 4. File taxes 2012 Employee's Social Security Number (SSN)Registering for SSNVS. File taxes 2012 5. File taxes 2012 Wages and Other CompensationAccountable plan. File taxes 2012 Nonaccountable plan. File taxes 2012 Per diem or other fixed allowance. File taxes 2012 50% test. File taxes 2012 Health Savings Accounts and medical savings accounts. File taxes 2012 Nontaxable fringe benefits. File taxes 2012 When fringe benefits are treated as paid. File taxes 2012 Valuation of fringe benefits. File taxes 2012 Withholding on fringe benefits. File taxes 2012 Depositing taxes on fringe benefits. File taxes 2012 6. File taxes 2012 TipsOrdering rule. File taxes 2012 7. File taxes 2012 Supplemental Wages 8. File taxes 2012 Payroll Period 9. File taxes 2012 Withholding From Employees' WagesIncome Tax Withholding Social Security and Medicare Taxes Part-Time Workers 10. File taxes 2012 Required Notice to Employees About the Earned Income Credit (EIC) 11. File taxes 2012 Depositing TaxesWhen To Deposit How To Deposit Deposit Penalties 12. File taxes 2012 Filing Form 941 or Form 944 13. File taxes 2012 Reporting Adjustments to Form 941 or Form 944Current Period Adjustments Prior Period Adjustments Wage Repayments 14. File taxes 2012 Federal Unemployment (FUTA) TaxSuccessor employer. File taxes 2012 Household employees. File taxes 2012 When to deposit. File taxes 2012 Household employees. File taxes 2012 Electronic filing by reporting agents. File taxes 2012 16. File taxes 2012 How To Use the Income Tax Withholding TablesWage Bracket Method Percentage Method Alternative Methods of Income Tax Withholding How To Get Tax Help 1. File taxes 2012 Employer Identification Number (EIN) If you are required to report employment taxes or give tax statements to employees or annuitants, you need an EIN. File taxes 2012 The EIN is a nine-digit number the IRS issues. File taxes 2012 The digits are arranged as follows: 00-0000000. File taxes 2012 It is used to identify the tax accounts of employers and certain others who have no employees. File taxes 2012 Use your EIN on all of the items you send to the IRS and SSA. File taxes 2012 For more information, see Publication 1635, Employer Identification Number: Understanding Your EIN. File taxes 2012 If you do not have an EIN, you may apply for one online. File taxes 2012 Go to the IRS. File taxes 2012 gov and click on the Apply for an EIN Online link under Tools. File taxes 2012 You may also apply for an EIN by calling 1-800-829-4933, or you can fax or mail Form SS-4, Application for Employer Identification Number, to the IRS. File taxes 2012 Do not use an SSN in place of an EIN. File taxes 2012 You should have only one EIN. File taxes 2012 If you have more than one and are not sure which one to use, call 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 taxes 2012 Give the numbers you have, the name and address to which each was assigned, and the address of your main place of business. File taxes 2012 The IRS will tell you which number to use. File taxes 2012 If you took over another employer's business (see Successor employer in section 9), do not use that employer's EIN. File taxes 2012 If you have applied for an EIN but do not have your EIN by the time a return is due, file a paper return and write “Applied For” and the date you applied for it in the space shown for the number. File taxes 2012 2. File taxes 2012 Who Are Employees? Generally, employees are defined either under common law or under statutes for certain situations. File taxes 2012 See Publication 15-A for details on statutory employees and nonemployees. File taxes 2012 Employee status under common law. File taxes 2012   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 taxes 2012 This is so even when you give the employee freedom of action. File taxes 2012 What matters is that you have the right to control the details of how the services are performed. File taxes 2012 See Publication 15-A for more information on how to determine whether an individual providing services is an independent contractor or an employee. File taxes 2012   Generally, people in business for themselves are not employees. File taxes 2012 For example, doctors, lawyers, veterinarians, and others in an independent trade in which they offer their services to the public are usually not employees. File taxes 2012 However, if the business is incorporated, corporate officers who work in the business are employees of the corporation. File taxes 2012   If an employer-employee relationship exists, it does not matter what it is called. File taxes 2012 The employee may be called an agent or independent contractor. File taxes 2012 It also does not matter how payments are measured or paid, what they are called, or if the employee works full or part time. File taxes 2012 Statutory employees. File taxes 2012   If someone who works for you is not an employee under the common law rules discussed earlier, do not withhold federal income tax from his or her pay, unless backup withholding applies. File taxes 2012 Although the following persons may not be common law employees, they are considered employees by statute for social security, Medicare, and FUTA tax purposes under certain conditions. File taxes 2012 An agent (or commission) driver who delivers food, beverages (other than milk), laundry, or dry cleaning for someone else. File taxes 2012 A full-time life insurance salesperson who sells primarily for one company. File taxes 2012 A homeworker who works by guidelines of the person for whom the work is done, with materials furnished by and returned to that person or to someone that person designates. File taxes 2012 A traveling or city salesperson (other than an agent-driver or commission-driver) who works full time (except for sideline sales activities) for one firm or person getting orders from customers. File taxes 2012 The orders must be for merchandise for resale or supplies for use in the customer's business. File taxes 2012 The customers must be retailers, wholesalers, contractors, or operators of hotels, restaurants, or other businesses dealing with food or lodging. File taxes 2012    Statutory nonemployees. File taxes 2012   Direct sellers, qualified real estate agents, and certain companion sitters are, by law, considered nonemployees. File taxes 2012 They are generally treated as self-employed for all federal tax purposes, including income and employment taxes. File taxes 2012 H-2A agricultural workers. File taxes 2012   On Form W-2, do not check box 13 (Statutory employee), as H-2A workers are not statutory employees. File taxes 2012 Treating employees as nonemployees. File taxes 2012   You will generally be liable for social security and Medicare taxes and withheld income tax if you do not deduct and withhold these taxes because you treated an employee as a nonemployee. File taxes 2012 You may be able to calculate your liability using special section 3509 rates for the employee share of social security and Medicare taxes and the federal income tax withholding. File taxes 2012 The applicable rates depend on whether you filed required Forms 1099. File taxes 2012 You cannot recover the employee share of social security, or Medicare tax, or income tax withholding from the employee if the tax is paid under section 3509. File taxes 2012 You are liable for the income tax withholding regardless of whether the employee paid income tax on the wages. File taxes 2012 You continue to owe the full employer share of social security and Medicare taxes. File taxes 2012 The employee remains liable for the employee share of social security and Medicare taxes. File taxes 2012 See Internal Revenue Code section 3509 for details. File taxes 2012 Also see the Instructions for Form 941-X. File taxes 2012   Section 3509 rates are not available if you intentionally disregard the requirement to withhold taxes from the employee or if you withheld income taxes but not social security or Medicare taxes. File taxes 2012 Section 3509 is not available for reclassifying statutory employees. File taxes 2012 See Statutory employees , earlier in this section. File taxes 2012   If the employer issued required information returns, the section 3509 rates are: For social security taxes; employer rate of 6. File taxes 2012 2% plus 20% of the employee rate (see the Instructions for Form 941-X). File taxes 2012 For Medicare taxes; employer rate of 1. File taxes 2012 45% plus 20% of the employee rate of 1. File taxes 2012 45%, for a total rate of 1. File taxes 2012 74% of wages. File taxes 2012 For Additional Medicare Tax; 0. File taxes 2012 18% (20% of the employee rate of 0. File taxes 2012 9%) of wages subject to Additional Medicare Tax. File taxes 2012 For income tax withholding, the rate is 1. File taxes 2012 5% of wages. File taxes 2012   If the employer did not issue required information returns, the section 3509 rates are: For social security taxes; employer rate of 6. File taxes 2012 2% plus 40% of the employee rate (see the Instructions for Form 941-X). File taxes 2012 For Medicare taxes; employer rate of 1. File taxes 2012 45% plus 40% of the employee rate of 1. File taxes 2012 45%, for a total rate of 2. File taxes 2012 03% of wages. File taxes 2012 For Additional Medicare Tax; 0. File taxes 2012 36% (40% of the employee rate of 0. File taxes 2012 9%) of wages subject to Additional Medicare Tax. File taxes 2012 For income tax withholding, the rate is 3. File taxes 2012 0% of wages. File taxes 2012 Relief provisions. File taxes 2012   If you have a reasonable basis for not treating a worker as an employee, you may be relieved from having to pay employment taxes for that worker. File taxes 2012 To get this relief, you must file all required federal tax returns, including information returns, on a basis consistent with your treatment of the worker. File taxes 2012 You (or your predecessor) must not have treated any worker holding a substantially similar position as an employee for any periods beginning after 1977. File taxes 2012 See Publication 1976, Do You Qualify for Relief Under Section 530. File taxes 2012 IRS help. File taxes 2012   If you want the IRS to determine whether a worker is an employee, file Form SS-8, Determination of Worker Status for Purposes of Federal Employment Taxes and Income Tax Withholding. File taxes 2012 Voluntary Classification Settlement Program (VCSP). File taxes 2012   Employers who are currently treating their workers (or a class or group of workers) as independent contractors or other nonemployees and want to voluntarily reclassify their workers as employees for future tax periods may be eligible to participate in the VCSP if certain requirements are met. File taxes 2012 To apply, use Form 8952, Application for Voluntary Classification Settlement Program (VCSP). File taxes 2012 For more information visit IRS. File taxes 2012 gov and enter “VCSP” in the search box. File taxes 2012 Business Owned and Operated by Spouses If you and your spouse jointly own and operate a business and share in the profits and losses, you are partners in a partnership, whether or not you have a formal partnership agreement. File taxes 2012 See Publication 541, Partnerships, for more details. File taxes 2012 The partnership is considered the employer of any employees, and is liable for any employment taxes due on wages paid to its employees. File taxes 2012 Exception—Qualified joint venture. File taxes 2012   For tax years beginning after December 31, 2006, the Small Business and Work Opportunity Tax Act of 2007 (Public Law 110-28) provides that a “qualified joint venture,” whose only members are spouses filing a joint income tax return, can elect not to be treated as a partnership for federal tax purposes. File taxes 2012 A qualified joint venture conducts a trade or business where: The only members of the joint venture are spouses who file a joint income tax return, Both spouses materially participate (see Material participation in the Instructions for Schedule C (Form 1040), line G) in the trade or business (mere joint ownership of property is not enough), Both spouses elect to not be treated as a partnership, and The business is co-owned by both spouses and is not held in the name of a state law entity such as a partnership or limited liability company (LLC). File taxes 2012   To make the election, all items of income, gain, loss, deduction, and credit must be divided between the spouses, in accordance with each spouse's interest in the venture, and reported on separate Schedules C or F as sole proprietors. File taxes 2012 Each spouse must also file a separate Schedule SE to pay self-employment taxes, as applicable. File taxes 2012   Spouses using the qualified joint venture rules are treated as sole proprietors for federal tax purposes and generally do not need an EIN. File taxes 2012 If employment taxes are owed by the qualified joint venture, either spouse may report and pay the employment taxes due on the wages paid to the employees using the EIN of that spouse's sole proprietorship. File taxes 2012 Generally, filing as a qualified joint venture will not increase the spouses' total tax owed on the joint income tax return. File taxes 2012 However, it gives each spouse credit for social security earnings on which retirement benefits are based and for Medicare coverage without filing a partnership return. File taxes 2012    Note. File taxes 2012 If your spouse is your employee, not your partner, see One spouse employed by another in section 3. File taxes 2012   For more information on qualified joint ventures, visit IRS. File taxes 2012 gov and enter “qualified joint venture” in the search box. File taxes 2012 Exception—Community income. File taxes 2012   If you and your spouse wholly own an unincorporated business as community property under the community property laws of a state, foreign country, or U. File taxes 2012 S. File taxes 2012 possession, you can treat the business either as a sole proprietorship (of the spouse who carried on the business) or a partnership. File taxes 2012 You may still make an election to be taxed as a qualified joint venture instead of a partnership. File taxes 2012 See Exception—Qualified joint venture , earlier. File taxes 2012 3. File taxes 2012 Family Employees Child employed by parents. File taxes 2012   Payments for the services of a child under age 18 who works for his or her parent in a trade or business are not subject to social security and Medicare taxes if the trade or business is a sole proprietorship or a partnership in which each partner is a parent of the child. File taxes 2012 If these payments are for work other than in a trade or business, such as domestic work in the parent's private home, they are not subject to social security and Medicare taxes until the child reaches age 21. File taxes 2012 However, see Covered services of a child or spouse , later in this section. File taxes 2012 Payments for the services of a child under age 21 who works for his or her parent, whether or not in a trade or business, are not subject to FUTA tax. File taxes 2012 Payments for the services of a child of any age who works for his or her parent are generally subject to income tax withholding unless the payments are for domestic work in the parent's home, or unless the payments are for work other than in a trade or business and are less than $50 in the quarter or the child is not regularly employed to do such work. File taxes 2012 One spouse employed by another. File taxes 2012   The wages for the services of an individual who works for his or her spouse in a trade or business are subject to income tax withholding and social security and Medicare taxes, but not to FUTA tax. File taxes 2012 However, the payments for services of one spouse employed by another in other than a trade or business, such as domestic service in a private home, are not subject to social security, Medicare, and FUTA taxes. File taxes 2012 Covered services of a child or spouse. File taxes 2012   The wages for the services of a child or spouse are subject to income tax withholding as well as social security, Medicare, and FUTA taxes if he or she works for: A corporation, even if it is controlled by the child's parent or the individual's spouse; A partnership, even if the child's parent is a partner, unless each partner is a parent of the child; A partnership, even if the individual's spouse is a partner; or An estate, even if it is the estate of a deceased parent. File taxes 2012 Parent employed by son or daughter. File taxes 2012   When the employer is a son or daughter employing his or her parent the following rules apply. File taxes 2012 Payments for the services of a parent in the son’s or daughter’s (the employer’s) trade or business are subject to income tax withholding and social security and Medicare taxes. File taxes 2012 Payments for the services of a parent not in the son’s or daughter’s (the employer’s) trade or business are generally not subject to social security and Medicare taxes. File taxes 2012    Social security and Medicare taxes do apply to payments made to a parent for domestic services if all of the following apply: The parent is employed by his or her son or daughter; The son or daughter (the employer) has a child or stepchild living in the home; The son or daughter (the employer) is a widow or widower, divorced, or living with a spouse who, because of a mental or physical condition, cannot care for the child or stepchild for at least 4 continuous weeks in a calendar quarter; and The child or stepchild is either under age 18 or requires the personal care of an adult for at least 4 continuous weeks in a calendar quarter due to a mental or physical condition. File taxes 2012   Payments made to a parent employed by his or her child are not subject to FUTA tax, regardless of the type of services provided. File taxes 2012 4. File taxes 2012 Employee's Social Security Number (SSN) You are required to get each employee's name and SSN and to enter them on Form W-2. File taxes 2012 This requirement also applies to resident and nonresident alien employees. File taxes 2012 You should ask your employee to show you his or her social security card. File taxes 2012 The employee may show the card if it is available. File taxes 2012 Do not accept a social security card that says “Not valid for employment. File taxes 2012 ” A social security number issued with this legend does not permit employment. File taxes 2012 You may, but are not required to, photocopy the social security card if the employee provides it. File taxes 2012 If you do not provide the correct employee name and SSN on Form W-2, you may owe a penalty unless you have reasonable cause. File taxes 2012 See Publication 1586, Reasonable Cause Regulations & Requirements for Missing and Incorrect Name/TINs, for information on the requirement to solicit the employee's SSN. File taxes 2012 Applying for a social security card. File taxes 2012   Any employee who is legally eligible to work in the United States and does not have a social security card can get one by completing Form SS-5, Application for a Social Security Card, and submitting the necessary documentation. File taxes 2012 You can get Form SS-5 at SSA offices, by calling 1-800-772-1213, or from the SSA website at www. File taxes 2012 socialsecurity. File taxes 2012 gov/online/ss-5. File taxes 2012 html. File taxes 2012 The employee must complete and sign Form SS-5; it cannot be filed by the employer. File taxes 2012 You may be asked to supply a letter to accompany Form SS-5 if the employee has exceeded his or her yearly or lifetime limit for the number of replacement cards allowed. File taxes 2012 Applying for a social security number. File taxes 2012   If you file Form W-2 on paper and your employee applied for an SSN but does not have one when you must file Form W-2, enter “Applied For” on the form. File taxes 2012 If you are filing electronically, enter all zeros (000-00-000) in the social security number field. File taxes 2012 When the employee receives the SSN, file Copy A of Form W-2c, Corrected Wage and Tax Statement, with the SSA to show the employee's SSN. File taxes 2012 Furnish copies B, C, and 2 of Form W-2c to the employee. File taxes 2012 Up to 25 Forms W-2c for each Form W-3c, Transmittal of Corrected Wage and Tax Statements, may now be filed per session over the Internet, with no limit on the number of sessions. File taxes 2012 For more information, visit the SSA's Employer W-2 Filing Instructions & Information webpage at www. File taxes 2012 socialsecurity. File taxes 2012 gov/employer. File taxes 2012 Advise your employee to correct the SSN on his or her original Form W-2. File taxes 2012 Correctly record the employee's name and SSN. File taxes 2012   Record the name and number of each employee as they are shown on the employee's social security card. File taxes 2012 If the employee's name is not correct as shown on the card (for example, because of marriage or divorce), the employee should request a corrected card from the SSA. File taxes 2012 Continue to report the employee's wages under the old name until the employee shows you an updated social security card with the new name. File taxes 2012 If the SSA issues the employee a replacement card after a name change, or a new card with a different social security number after a change in alien work status, file a Form W-2c to correct the name/SSN reported for the most recently filed Form W-2. File taxes 2012 It is not necessary to correct other years if the previous name and number were used for years before the most recent Form W-2. File taxes 2012 IRS individual taxpayer identification numbers (ITINs) for aliens. File taxes 2012   Do not accept an ITIN in place of an SSN for employee identification or for work. File taxes 2012 An ITIN is only available to resident and nonresident aliens who are not eligible for U. File taxes 2012 S. File taxes 2012 employment and need identification for other tax purposes. File taxes 2012 You can identify an ITIN because it is a nine-digit number, beginning with the number “9” with either a “7” or “8” as the fourth digit and is formatted like an SSN (for example, 9NN-7N-NNNN). File taxes 2012    An individual with an ITIN who later becomes eligible to work in the United States must obtain an SSN. File taxes 2012 If the individual is currently eligible to work in the United States, instruct the individual to apply for an SSN and follow the instructions under Applying for a social security number, earlier. File taxes 2012 Do not use an ITIN in place of an SSN on Form W-2. File taxes 2012 Verification of social security numbers. File taxes 2012   Employers and authorized reporting agents can use the Social Security Number Verification Service (SSNVS) to instantly verify up to 10 names and SSNs (per screen) at a time, or submit an electronic file of up to 250,000 names and SSNs and usually receive the results the next business day. File taxes 2012 Visit www. File taxes 2012 socialsecurity. File taxes 2012 gov/employer/ssnv. File taxes 2012 htm for more information. File taxes 2012 Registering for SSNVS. File taxes 2012   You must register online and receive authorization from your employer to use SSNVS. File taxes 2012 To register, visit SSA's website at www. File taxes 2012 ssa. File taxes 2012 gov/employer and click on the Business Services Online link. File taxes 2012 Follow the registration instructions to obtain a user identification (ID) and password. File taxes 2012 You will need to provide the following information about yourself and your company. File taxes 2012 Name. File taxes 2012 SSN. File taxes 2012 Date of birth. File taxes 2012 Type of employer. File taxes 2012 EIN. File taxes 2012 Company name, address, and telephone number. File taxes 2012 Email address. File taxes 2012   When you have completed the online registration process, SSA will mail a one-time activation code to your employer. File taxes 2012 You must enter the activation code online to use SSNVS. File taxes 2012 5. File taxes 2012 Wages and Other Compensation Wages subject to federal employment taxes generally include all pay you give to an employee for services performed. File taxes 2012 The pay may be in cash or in other forms. File taxes 2012 It includes salaries, vacation allowances, bonuses, commissions, and fringe benefits. File taxes 2012 It does not matter how you measure or make the payments. File taxes 2012 Amounts an employer pays as a bonus for signing or ratifying a contract in connection with the establishment of an employer-employee relationship and an amount paid to an employee for cancellation of an employment contract and relinquishment of contract rights are wages subject to social security, Medicare, and FUTA taxes and income tax withholding. File taxes 2012 Also, compensation paid to a former employee for services performed while still employed is wages subject to employment taxes. File taxes 2012 More information. File taxes 2012   See section 6 for a discussion of tips and section 7 for a discussion of supplemental wages. File taxes 2012 Also, see section 15 for exceptions to the general rules for wages. File taxes 2012 Publication 15-A provides additional information on wages, including nonqualified deferred compensation, and other compensation. File taxes 2012 Publication 15-B provides information on other forms of compensation, including: Accident and health benefits, Achievement awards, Adoption assistance, Athletic facilities, De minimis (minimal) benefits, Dependent care assistance, Educational assistance, Employee discounts, Employee stock options, Employer-provided cell phones, Group-term life insurance coverage, Health Savings Accounts, Lodging on your business premises, Meals, Moving expense reimbursements, No-additional-cost services, Retirement planning services, Transportation (commuting) benefits, Tuition reduction, and Working condition benefits. File taxes 2012 Employee business expense reimbursements. File taxes 2012   A reimbursement or allowance arrangement is a system by which you pay the advances, reimbursements, and charges for your employees' business expenses. File taxes 2012 How you report a reimbursement or allowance amount depends on whether you have an accountable or a nonaccountable plan. File taxes 2012 If a single payment includes both wages and an expense reimbursement, you must specify the amount of the reimbursement. File taxes 2012   These rules apply to all ordinary and necessary employee business expenses that would otherwise qualify for a deduction by the employee. File taxes 2012 Accountable plan. File taxes 2012   To be an accountable plan, your reimbursement or allowance arrangement must require your employees to meet all three of the following rules. File taxes 2012 They must have paid or incurred deductible expenses while performing services as your employees. File taxes 2012 The reimbursement or advance must be paid for the expense and must not be an amount that would have otherwise been paid by the employee. File taxes 2012 They must substantiate these expenses to you within a reasonable period of time. File taxes 2012 They must return any amounts in excess of substantiated expenses within a reasonable period of time. File taxes 2012   Amounts paid under an accountable plan are not wages and are not subject to income, social security, Medicare, and FUTA taxes. File taxes 2012   If the expenses covered by this arrangement are not substantiated (or amounts in excess of substantiated expenses are not returned within a reasonable period of time), the amount paid under the arrangement in excess of the substantiated expenses is treated as paid under a nonaccountable plan. File taxes 2012 This amount is subject to income, social security, Medicare, and FUTA taxes for the first payroll period following the end of the reasonable period of time. File taxes 2012   A reasonable period of time depends on the facts and circumstances. File taxes 2012 Generally, it is considered reasonable if your employees receive their advance within 30 days of the time they incur the expenses, adequately account for the expenses within 60 days after the expenses were paid or incurred, and return any amounts in excess of expenses within 120 days after the expenses were paid or incurred. File taxes 2012 Also, it is considered reasonable if you give your employees a periodic statement (at least quarterly) that asks them to either return or adequately account for outstanding amounts and they do so within 120 days. File taxes 2012 Nonaccountable plan. File taxes 2012   Payments to your employee for travel and other necessary expenses of your business under a nonaccountable plan are wages and are treated as supplemental wages and subject to income, social security, Medicare, and FUTA taxes. File taxes 2012 Your payments are treated as paid under a nonaccountable plan if: Your employee is not required to or does not substantiate timely those expenses to you with receipts or other documentation, You advance an amount to your employee for business expenses and your employee is not required to or does not return timely any amount he or she does not use for business expenses, You advance or pay an amount to your employee regardless of whether you reasonably expect the employee to have business expenses related to your business, or You pay an amount as a reimbursement you would have otherwise paid as wages. File taxes 2012   See section 7 for more information on supplemental wages. File taxes 2012 Per diem or other fixed allowance. File taxes 2012   You may reimburse your employees by travel days, miles, or some other fixed allowance under the applicable revenue procedure. File taxes 2012 In these cases, your employee is considered to have accounted to you if your reimbursement does not exceed rates established by the Federal Government. File taxes 2012 The 2013 standard mileage rate for auto expenses was 56. File taxes 2012 5 cents per mile. File taxes 2012 The rate for 2014 is 56 cents per mile. File taxes 2012   The government per diem rates for meals and lodging in the continental United States are listed in Publication 1542, Per Diem Rates. File taxes 2012 Other than the amount of these expenses, your employees' business expenses must be substantiated (for example, the business purpose of the travel or the number of business miles driven). File taxes 2012   If the per diem or allowance paid exceeds the amounts substantiated, you must report the excess amount as wages. File taxes 2012 This excess amount is subject to income tax withholding and payment of social security, Medicare, and FUTA taxes. File taxes 2012 Show the amount equal to the substantiated amount (for example, the nontaxable portion) in box 12 of Form W-2 using code “L. File taxes 2012 ” Wages not paid in money. File taxes 2012   If in the course of your trade or business you pay your employees in a medium that is neither cash nor a readily negotiable instrument, such as a check, you are said to pay them “in kind. File taxes 2012 ” Payments in kind may be in the form of goods, lodging, food, clothing, or services. File taxes 2012 Generally, the fair market value of such payments at the time they are provided is subject to federal income tax withholding and social security, Medicare, and FUTA taxes. File taxes 2012   However, noncash payments for household work, agricultural labor, and service not in the employer's trade or business are exempt from social security, Medicare, and FUTA taxes. File taxes 2012 Withhold income tax on these payments only if you and the employee agree to do so. File taxes 2012 Nonetheless, noncash payments for agricultural labor, such as commodity wages, are treated as cash payments subject to employment taxes if the substance of the transaction is a cash payment. File taxes 2012 Moving expenses. File taxes 2012   Reimbursed and employer-paid qualified moving expenses (those that would otherwise be deductible by the employee) paid under an accountable plan are not includible in an employee's income unless you have knowledge the employee deducted the expenses in a prior year. File taxes 2012 Reimbursed and employer-paid nonqualified moving expenses are includible in income and are subject to employment taxes and income tax withholding. File taxes 2012 For more information on moving expenses, see Publication 521, Moving Expenses. File taxes 2012 Meals and lodging. File taxes 2012   The value of meals is not taxable income and is not subject to income tax withholding and social security, Medicare, and FUTA taxes if the meals are furnished for the employer's convenience and on the employer's premises. File taxes 2012 The value of lodging is not subject to income tax withholding and social security, Medicare, and FUTA taxes if the lodging is furnished for the employer's convenience, on the employer's premises, and as a condition of employment. File taxes 2012    “For the convenience of the employer” means you have a substantial business reason for providing the meals and lodging other than to provide additional compensation to the employee. File taxes 2012 For example, meals you provide at the place of work so that an employee is available for emergencies during his or her lunch period are generally considered to be for your convenience. File taxes 2012   However, whether meals or lodging are provided for the convenience of the employer depends on all of the facts and circumstances. File taxes 2012 A written statement that the meals or lodging are for your convenience is not sufficient. File taxes 2012 50% test. File taxes 2012   If over 50% of the employees who are provided meals on an employer's business premises receive these meals for the convenience of the employer, all meals provided on the premises are treated as furnished for the convenience of the employer. File taxes 2012 If this 50% test is met, the value of the meals is excludable from income for all employees and is not subject to federal income tax withholding or employment taxes. File taxes 2012 For more information, see Publication 15-B. File taxes 2012 Health insurance plans. File taxes 2012   If you pay the cost of an accident or health insurance plan for your employees, including an employee's spouse and dependents, your payments are not wages and are not subject to social security, Medicare, and FUTA taxes, or federal income tax withholding. File taxes 2012 Generally, this exclusion also applies to qualified long-term care insurance contracts. File taxes 2012 However, for income tax withholding, the value of health insurance benefits must be included in the wages of S corporation employees who own more than 2% of the S corporation (2% shareholders). File taxes 2012 For social security, Medicare, and FUTA taxes, the health insurance benefits are excluded from the wages only for employees and their dependents or for a class or classes of employees and their dependents. File taxes 2012 See Announcement 92-16 for more information. File taxes 2012 You can find Announcement 92-16 on page 53 of Internal Revenue Bulletin 1992-5. File taxes 2012 Health Savings Accounts and medical savings accounts. File taxes 2012   Your contributions to an employee's Health Savings Account (HSA) or Archer medical savings account (MSA) are not subject to social security, Medicare, or FUTA taxes, or federal income tax withholding if it is reasonable to believe at the time of payment of the contributions they will be excludable from the income of the employee. File taxes 2012 To the extent it is not reasonable to believe they will be excludable, your contributions are subject to these taxes. File taxes 2012 Employee contributions to their HSAs or MSAs through a payroll deduction plan must be included in wages and are subject to social security, Medicare, and FUTA taxes and income tax withholding. File taxes 2012 However, HSA contributions made under a salary reduction arrangement in a section 125 cafeteria plan are not wages and are not subject to employment taxes or withholding. File taxes 2012 For more information, see the Instructions for Form 8889, Health Savings Accounts (HSAs). File taxes 2012 Medical care reimbursements. File taxes 2012   Generally, medical care reimbursements paid for an employee under an employer's self-insured medical reimbursement plan are not wages and are not subject to social security, Medicare, and FUTA taxes, or income tax withholding. File taxes 2012 See Publication 15-B for an exception for highly compensated employees. File taxes 2012 Differential wage payments. File taxes 2012   Differential wage payments are any payments made by an employer to an individual for a period during which the individual is performing service in the uniformed services while on active duty for a period of more than 30 days and represent all or a portion of the wages the individual would have received from the employer if the individual were performing services for the employer. File taxes 2012   Differential wage payments are wages for income tax withholding, but are not subject to social security, Medicare, or FUTA taxes. File taxes 2012 Employers should report differential wage payments in box 1 of Form W-2. File taxes 2012 For more information about the tax treatment of differential wage payments, visit IRS. File taxes 2012 gov and enter “employees in a combat zone” in the search box. File taxes 2012 Fringe benefits. File taxes 2012   You generally must include fringe benefits in an employee's gross income (but see Nontaxable fringe benefits next). File taxes 2012 The benefits are subject to income tax withholding and employment taxes. File taxes 2012 Fringe benefits include cars you provide, flights on aircraft you provide, free or discounted commercial flights, vacations, discounts on property or services, memberships in country clubs or other social clubs, and tickets to entertainment or sporting events. File taxes 2012 In general, the amount you must include is the amount by which the fair market value of the benefits is more than the sum of what the employee paid for it plus any amount the law excludes. File taxes 2012 There are other special rules you and your employees may use to value certain fringe benefits. File taxes 2012 See Publication 15-B for more information. File taxes 2012 Nontaxable fringe benefits. File taxes 2012   Some fringe benefits are not taxable (or are minimally taxable) if certain conditions are met. File taxes 2012 See Publication 15-B for details. File taxes 2012 The following are some examples of nontaxable fringe benefits. File taxes 2012 Services provided to your employees at no additional cost to you. File taxes 2012 Qualified employee discounts. File taxes 2012 Working condition fringes that are property or services the employee could deduct as a business expense if he or she had paid for it. File taxes 2012 Examples include a company car for business use and subscriptions to business magazines. File taxes 2012 Certain minimal value fringes (including an occasional cab ride when an employee must work overtime and meals you provide at eating places you run for your employees if the meals are not furnished at below cost). File taxes 2012 Qualified transportation fringes subject to specified conditions and dollar limitations (including transportation in a commuter highway vehicle, any transit pass, and qualified parking). File taxes 2012 Qualified moving expense reimbursement. File taxes 2012 See Moving expenses , earlier in this section, for details. File taxes 2012 The use of on-premises athletic facilities, if substantially all of the use is by employees, their spouses, and their dependent children. File taxes 2012 Qualified tuition reduction an educational organization provides to its employees for education. File taxes 2012 For more information, see Publication 970, Tax Benefits for Education. File taxes 2012 Employer-provided cell phones provided primarily for a noncompensatory business reason. File taxes 2012   However, do not exclude the following fringe benefits from the income of highly compensated employees unless the benefit is available to other employees on a nondiscriminatory basis. File taxes 2012 No-additional-cost services. File taxes 2012 Qualified employee discounts. File taxes 2012 Meals provided at an employer operated eating facility. File taxes 2012 Reduced tuition for education. File taxes 2012  For more information, including the definition of a highly compensated employee, see Publication 15-B. File taxes 2012 When fringe benefits are treated as paid. File taxes 2012   You may choose to treat certain noncash fringe benefits as paid by the pay period, by the quarter, or on any other basis you choose as long as you treat the benefits as paid at least once a year. File taxes 2012 You do not have to make a formal choice of payment dates or notify the IRS of the dates you choose. File taxes 2012 You do not have to make this choice for all employees. File taxes 2012 You may change methods as often as you like, as long as you treat all benefits provided in a calendar year as paid by December 31 of the calendar year. File taxes 2012 See Publication 15-B for more information, including a discussion of the special accounting rule for fringe benefits provided during November and December. File taxes 2012 Valuation of fringe benefits. File taxes 2012   Generally, you must determine the value of fringe benefits no later than January 31 of the next year. File taxes 2012 Before January 31, you may reasonably estimate the value of the fringe benefits for purposes of withholding and depositing on time. File taxes 2012 Withholding on fringe benefits. File taxes 2012   You may add the value of fringe benefits to regular wages for a payroll period and figure withholding taxes on the total, or you may withhold federal income tax on the value of the fringe benefits at the optional flat 25% supplemental wage rate. File taxes 2012 However, see Withholding on supplemental wages when an employee receives more than $1 million of supplemental wages during the calendar year in section 7. File taxes 2012   You may choose not to withhold income tax on the value of an employee's personal use of a vehicle you provide. File taxes 2012 You must, however, withhold social security and Medicare taxes on the use of the vehicle. File taxes 2012 See Publication 15-B for more information on this election. File taxes 2012 Depositing taxes on fringe benefits. File taxes 2012   Once you choose when fringe benefits are paid, you must deposit taxes in the same deposit period you treat the fringe benefits as paid. File taxes 2012 To avoid a penalty, deposit the taxes following the general deposit rules for that deposit period. File taxes 2012   If you determine by January 31 you overestimated the value of a fringe benefit at the time you withheld and deposited for it, you may claim a refund for the overpayment or have it applied to your next employment tax return. File taxes 2012 See Valuation of fringe benefits , earlier. File taxes 2012 If you underestimated the value and deposited too little, you may be subject to a failure-to-deposit penalty. File taxes 2012 See section 11 for information on deposit penalties. File taxes 2012   If you deposited the required amount of taxes but withheld a lesser amount from the employee, you can recover from the employee the social security, Medicare, or income taxes you deposited on his or her behalf, and included in the employee's Form W-2. File taxes 2012 However, you must recover the income taxes before April 1 of the following year. File taxes 2012 Sick pay. File taxes 2012   In general, sick pay is any amount you pay under a plan to an employee who is unable to work because of sickness or injury. File taxes 2012 These amounts are sometimes paid by a third party, such as an insurance company or an employees' trust. File taxes 2012 In either case, these payments are subject to social security, Medicare, and FUTA taxes. File taxes 2012 Sick pay becomes exempt from these taxes after the end of 6 calendar months after the calendar month the employee last worked for the employer. File taxes 2012 The payments are always subject to federal income tax. File taxes 2012 See Publication 15-A for more information. File taxes 2012 6. File taxes 2012 Tips Tips your employee receives from customers are generally subject to withholding. File taxes 2012 Your employee must report cash tips to you by the 10th of the month after the month the tips are received. File taxes 2012 The report should include tips you paid over to the employee for charge customers, tips the employee received directly from customers, and tips received from other employees under any tip-sharing arrangement. File taxes 2012 Both directly and indirectly tipped employees must report tips to you. File taxes 2012 No report is required for months when tips are less than $20. File taxes 2012 Your employee reports the tips on Form 4070, Employee's Report of Tips to Employer, or on a similar statement. File taxes 2012 The statement must be signed by the employee and must include: The employee's name, address, and SSN, Your name and address, The month or period the report covers, and The total of tips received during the month or period. File taxes 2012 Both Forms 4070 and 4070-A, Employee's Daily Record of Tips, are included in Publication 1244, Employee's Daily Record of Tips and Report to Employer. File taxes 2012 You are permitted to establish a system for electronic tip reporting by employees. File taxes 2012 See Regulations section 31. File taxes 2012 6053-1(d). File taxes 2012 Collecting taxes on tips. File taxes 2012   You must collect income tax, employee social security tax, and employee Medicare tax on the employee's tips. File taxes 2012 The withholding rules for withholding an employee's share of Medicare tax on tips also apply to withholding the Additional Medicare Tax once wages and tips exceed $200,000 in the calendar year. File taxes 2012 If an employee reports to you in writing $20 or more of tips in a month, the tips are also subject to FUTA tax. File taxes 2012   You can collect these taxes from the employee's wages or from other funds he or she makes available. File taxes 2012 See Tips treated as supplemental wages in section 7 for more information. File taxes 2012 Stop collecting the employee social security tax when his or her wages and tips for tax year 2014 reach $117,000; collect the income and employee Medicare taxes for the whole year on all wages and tips. File taxes 2012 You are responsible for the employer social security tax on wages and tips until the wages (including tips) reach the limit. File taxes 2012 You are responsible for the employer Medicare tax for the whole year on all wages and tips. File taxes 2012 File Form 941 or Form 944 to report withholding and employment taxes on tips. File taxes 2012 Ordering rule. File taxes 2012   If, by the 10th of the month after the month for which you received an employee's report on tips, you do not have enough employee funds available to deduct the employee tax, you no longer have to collect it. File taxes 2012 If there are not enough funds available, withhold taxes in the following order. File taxes 2012 Withhold on regular wages and other compensation. File taxes 2012 Withhold social security and Medicare taxes on tips. File taxes 2012 Withhold income tax on tips. File taxes 2012 Reporting tips. File taxes 2012   Report tips and any collected and uncollected social security and Medicare taxes on Form W-2 and on Form 941, lines 5b, 5c, and 5d (Form 944, lines 4b, 4c, and 4d). File taxes 2012 Report an adjustment on Form 941, line 9 (Form 944, line 6), for the uncollected social security and Medicare taxes. File taxes 2012 Enter the amount of uncollected social security tax and Medicare tax on Form W-2, box 12, with codes “A” and “B. File taxes 2012 ” Do not include any uncollected Additional Medicare Tax in box 12 of Form W-2. File taxes 2012 See section 13 and the General Instructions for Forms W-2 and W-3. File taxes 2012   Revenue Ruling 2012-18 provides guidance for employers regarding social security and Medicare taxes imposed on tips, including information on the reporting of the employer share of social security and Medicare taxes under section 3121(q), the difference between tips and service charges, and the section 45B credit. File taxes 2012 See Revenue Ruling 2012-18, 2012-26 I. File taxes 2012 R. File taxes 2012 B. File taxes 2012 1032, available at www. File taxes 2012 irs. File taxes 2012 gov/irb/2012-26_IRB/ar07. File taxes 2012 html. File taxes 2012 Allocated tips. File taxes 2012   If you operate a large food or beverage establishment, you must report allocated tips under certain circumstances. File taxes 2012 However, do not withhold income, social security, or Medicare taxes on allocated tips. File taxes 2012   A large food or beverage establishment is one that provides food or beverages for consumption on the premises, where tipping is customary, and where there were normally more than 10 employees on a typical business day during the preceding year. File taxes 2012   The tips may be allocated by one of three methods—hours worked, gross receipts, or good faith agreement. File taxes 2012 For information about these allocation methods, including the requirement to file Forms 8027 electronically if 250 or more forms are filed, see the Instructions for Form 8027. File taxes 2012 For information on filing Form 8027 electronically with the IRS, see Publication 1239. File taxes 2012 Tip Rate Determination and Education Program. File taxes 2012   Employers may participate in the Tip Rate Determination and Education Program. File taxes 2012 The program primarily consists of two voluntary agreements developed to improve tip income reporting by helping taxpayers to understand and meet their tip reporting responsibilities. File taxes 2012 The two agreements are the Tip Rate Determination Agreement (TRDA) and the Tip Reporting Alternative Commitment (TRAC). File taxes 2012 A tip agreement, the Gaming Industry Tip Compliance Agreement (GITCA), is available for the gaming (casino) industry. File taxes 2012 To get more information about TRDA and TRAC agreements, see Publication 3144, Tips on Tips. File taxes 2012 Additionally, visit IRS. File taxes 2012 gov and enter “MSU tips” in the search box to get more information about GITCA, TRDA, or TRAC agreements. File taxes 2012 7. File taxes 2012 Supplemental Wages Supplemental wages are wage payments to an employee that are not regular wages. File taxes 2012 They include, but are not limited to, bonuses, commissions, overtime pay, payments for accumulated sick leave, severance pay, awards, prizes, back pay, retroactive pay increases, and payments for nondeductible moving expenses. File taxes 2012 Other payments subject to the supplemental wage rules include taxable fringe benefits and expense allowances paid under a nonaccountable plan. File taxes 2012 How you withhold on supplemental wages depends on whether the supplemental payment is identified as a separate payment from regular wages. File taxes 2012 See Regulations section 31. File taxes 2012 3402(g)-1 for additional guidance for wages paid after January 1, 2007. File taxes 2012 Also see Revenue Ruling 2008-29, 2008-24 I. File taxes 2012 R. File taxes 2012 B. File taxes 2012 1149, available at www. File taxes 2012 irs. File taxes 2012 gov/irb/2008-24_IRB/ar08. File taxes 2012 html. File taxes 2012 Withholding on supplemental wages when an employee receives more than $1 million of supplemental wages from you during the calendar year. File taxes 2012   Special rules apply to the extent supplemental wages paid to any one employee during the calendar year exceed $1 million. File taxes 2012 If a supplemental wage payment, together with other supplemental wage payments made to the employee during the calendar year, exceeds $1 million, the excess is subject to withholding at 39. File taxes 2012 6% (or the highest rate of income tax for the year). File taxes 2012 Withhold using the 39. File taxes 2012 6% rate without regard to the employee's Form W-4. File taxes 2012 In determining supplemental wages paid to the employee during the year, include payments from all businesses under common control. File taxes 2012 For more information, see Treasury Decision 9276, 2006-37 I. File taxes 2012 R. File taxes 2012 B. File taxes 2012 423, available at www. File taxes 2012 irs. File taxes 2012 gov/irb/2006-37_IRB/ar09. File taxes 2012 html. File taxes 2012 Withholding on supplemental wage payments to an employee who does not receive $1 million of supplemental wages during the calendar year. File taxes 2012   If the supplemental wages paid to the employee during the calendar year are less than or equal to $1 million, the following rules apply in determining the amount of income tax to be withheld. File taxes 2012 Supplemental wages combined with regular wages. File taxes 2012   If you pay supplemental wages with regular wages but do not specify the amount of each, withhold federal income tax as if the total were a single payment for a regular payroll period. File taxes 2012 Supplemental wages identified separately from regular wages. File taxes 2012   If you pay supplemental wages separately (or combine them in a single payment and specify the amount of each), the federal income tax withholding method depends partly on whether you withhold income tax from your employee's regular wages. File taxes 2012 If you withheld income tax from an employee's regular wages in the current or immediately preceding calendar year, you can use one of the following methods for the supplemental wages. File taxes 2012 Withhold a flat 25% (no other percentage allowed). File taxes 2012 If the supplemental wages are paid concurrently with regular wages, add the supplemental wages to the concurrently paid regular wages. File taxes 2012 If there are no concurrently paid regular wages, add the supplemental wages to alternatively, either the regular wages paid or to be paid for the current payroll period or the regular wages paid for the preceding payroll period. File taxes 2012 Figure the income tax withholding as if the total of the regular wages and supplemental wages is a single payment. File taxes 2012 Subtract the tax withheld from the regular wages. File taxes 2012 Withhold the remaining tax from the supplemental wages. File taxes 2012 If there were other payments of supplemental wages paid during the payroll period made before the current payment of supplemental wages, aggregate all the payments of supplemental wages paid during the payroll period with the regular wages paid during the payroll period, calculate the tax on the total, subtract the tax already withheld from the regular wages and the previous supplemental wage payments, and withhold the remaining tax. File taxes 2012 If you did not withhold income tax from the employee's regular wages in the current or immediately preceding calendar year, use method 1-b. File taxes 2012 This would occur, for example, when the value of the employee's withholding allowances claimed on Form W-4 is more than the wages. File taxes 2012 Regardless of the method you use to withhold income tax on supplemental wages, they are subject to social security, Medicare, and FUTA taxes. File taxes 2012 Example 1. File taxes 2012 You pay John Peters a base salary on the 1st of each month. File taxes 2012 He is single and claims one withholding allowance. File taxes 2012 In January he is paid $1,000. File taxes 2012 Using the wage bracket tables, you withhold $50 from this amount. File taxes 2012 In February, he receives salary of $1,000 plus a commission of $2,000, which you combine with regular wages and do not separately identify. File taxes 2012 You figure the withholding based on the total of $3,000. File taxes 2012 The correct withholding from the tables is $338. File taxes 2012 Example 2. File taxes 2012 You pay Sharon Warren a base salary on the 1st of each month. File taxes 2012 She is single and claims one allowance. File taxes 2012 Her May 1 pay is $2,000. File taxes 2012 Using the wage bracket tables, you withhold $188. File taxes 2012 On May 14 she receives a bonus of $1,000. File taxes 2012 Electing to use supplemental wage withholding method 1-b, you: Add the bonus amount to the amount of wages from the most recent base salary pay date (May 1) ($2,000 + $1,000 = $3,000). File taxes 2012 Determine the amount of withholding on the combined $3,000 amount to be $338 using the wage bracket tables. File taxes 2012 Subtract the amount withheld from wages on the most recent base salary pay date (May 1) from the combined withholding amount ($338 – $188 = $150). File taxes 2012 Withhold $150 from the bonus payment. File taxes 2012 Example 3. File taxes 2012 The facts are the same as in Example 2, except you elect to use the flat rate method of withholding on the bonus. File taxes 2012 You withhold 25% of $1,000, or $250, from Sharon's bonus payment. File taxes 2012 Example 4. File taxes 2012 The facts are the same as in Example 2, except you elect to pay Sharon a second bonus of $2,000 on May 28. File taxes 2012 Using supplemental wage withholding method 1-b, you: Add the first and second bonus amounts to the amount of wages from the most recent base salary pay date (May 1) ($2,000 + $1,000 + $2,000 = $5,000). File taxes 2012 Determine the amount of withholding on the combined $5,000 amount to be $781 using the wage bracket tables. File taxes 2012 Subtract the amounts withheld from wages on the most recent base salary pay date (May 1) and the amounts withheld from the first bonus payment from the combined withholding amount ($781 – $188 – $150 = $443). File taxes 2012 Withhold $443 from the second bonus payment. File taxes 2012 Tips treated as supplemental wages. File taxes 2012   Withhold income tax on tips from wages earned by the employee or from other funds the employee makes available. File taxes 2012 If an employee receives regular wages and reports tips, figure income tax withholding as if the tips were supplemental wages. File taxes 2012 If you have not withheld income tax from the regular wages, add the tips to the regular wages. File taxes 2012 Then withhold income tax on the total. File taxes 2012 If you withheld income tax from the regular wages, you can withhold on the tips by method 1-a or 1-b discussed earlier in this section under Supplemental wages identified separately from regular wages. File taxes 2012 Vacation pay. File taxes 2012   Vacation pay is subject to withholding as if it were a regular wage payment. File taxes 2012 When vacation pay is in addition to regular wages for the vacation period, treat it as a supplemental wage payment. File taxes 2012 If the vacation pay is for a time longer than your usual payroll period, spread it over the pay periods for which you pay it. File taxes 2012 8. File taxes 2012 Payroll Period Your payroll period is a period of service for which you usually pay wages. File taxes 2012 When you have a regular payroll period, withhold income tax for that time period even if your employee does not work the full period. File taxes 2012 No regular payroll period. File taxes 2012   When you do not have a regular payroll period, withhold the tax as if you paid wages for a daily or miscellaneous payroll period. File taxes 2012 Figure the number of days (including Sundays and holidays) in the period covered by the wage payment. File taxes 2012 If the wages are unrelated to a specific length of time (for example, commissions paid on completion of a sale), count back the number of days from the payment period to the latest of: The last wage payment made during the same calendar year, The date employment began, if during the same calendar year, or January 1 of the same year. File taxes 2012 Employee paid for period less than 1 week. File taxes 2012   When you pay an employee for a period of less than one week, and the employee signs a statement under penalties of perjury indicating he or she is not working for any other employer during the same week for wages subject to withholding, figure withholding based on a weekly payroll period. File taxes 2012 If the employee later begins to work for another employer for wages subject to withholding, the employee must notify you within 10 days. File taxes 2012 You then figure withholding based on the daily or miscellaneous period. File taxes 2012 9. File taxes 2012 Withholding From Employees' Wages Income Tax Withholding Using Form W-4 to figure withholding. File taxes 2012   To know how much federal income tax to withhold from employees' wages, you should have a Form W-4 on file for each employee. File taxes 2012 Encourage your employees to file an updated Form W-4 for 2014, especially if they owed taxes or received a large refund when filing their 2013 tax return. File taxes 2012 Advise your employees to use the IRS Withholding Calculator on the IRS website at www. File taxes 2012 irs. File taxes 2012 gov/individuals for help in determining how many withholding allowances to claim on their Forms W-4. File taxes 2012   Ask all new employees to give you a signed Form W-4 when they start work. File taxes 2012 Make the form effective with the first wage payment. File taxes 2012 If a new employee does not give you a completed Form W-4, withhold income tax as if he or she is single, with no withholding allowances. File taxes 2012 Form in Spanish. File taxes 2012   You can provide Formulario W-4(SP), Certificado de Exención de Retenciones del Empleado, in place of Form W-4, to your Spanish-speaking employees. File taxes 2012 For more information, see Publicación 17(SP), El Impuesto Federal sobre los Ingresos (Para Personas Físicas). File taxes 2012 The rules discussed in this section that apply to Form W-4 also apply to Formulario W-4(SP). File taxes 2012 Electronic system to receive Form W-4. File taxes 2012   You may establish a system to electronically receive Forms W-4 from your employees. File taxes 2012 See Regulations section 31. File taxes 2012 3402(f)(5)-1(c) for more information. File taxes 2012 Effective date of Form W-4. File taxes 2012   A Form W-4 remains in effect until the employee gives you a new one. File taxes 2012 When you receive a new Form W-4 from an employee, do not adjust withholding for pay periods before the effective date of the new form. File taxes 2012 If an employee gives you a Form W-4 that replaces an existing Form W-4, begin withholding no later than the start of the first payroll period ending on or after the 30th day from the date when you received the replacement Form W-4. File taxes 2012 For exceptions, see Exemption from federal income tax withholding , IRS review of requested Forms W-4 , and Invalid Forms W-4 , later in this section. File taxes 2012 A Form W-4 that makes a change for the next calendar year will not take effect in the current calendar year. File taxes 2012 Successor employer. File taxes 2012   If you are a successor employer (see Successor employer , later in this section), secure new Forms W-4 from the transferred employees unless the “Alternative Procedure” in section 5 of Revenue Procedure 2004-53 applies. File taxes 2012 See Revenue Procedure 2004-53, 2004-34 I. File taxes 2012 R. File taxes 2012 B. File taxes 2012 320, available at www. File taxes 2012 irs. File taxes 2012 gov/irb/2004-34_IRB/ar13. File taxes 2012 html. File taxes 2012 Completing Form W-4. File taxes 2012   The amount of any federal income tax withholding must be based on marital status and withholding allowances. File taxes 2012 Your employees may not base their withholding amounts on a fixed dollar amount or percentage. File taxes 2012 However, an employee may specify a dollar amount to be withheld in addition to the amount of withholding based on filing status and withholding allowances claimed on Form W-4. File taxes 2012 Employees may claim fewer withholding allowances than they are entitled to claim. File taxes 2012 They may wish to claim fewer allowances to ensure they have enough withholding or to offset the tax on other sources of taxable income not subject to withholding. File taxes 2012 See Publication 505, Tax Withholding and Estimated Tax, for more information about completing Form W-4. File taxes 2012 Along with Form W-4, you may wish to order Publication 505 for use by your employees. File taxes 2012 Do not accept any withholding or estimated tax payments from your employees in addition to withholding based on their Form W-4. File taxes 2012 If they require additional withholding, they should submit a new Form W-4 and, if necessary, pay estimated tax by filing Form 1040-ES, Estimated Tax for Individuals, or by using the Electronic Federal Tax Payment System (EFTPS) to make estimated tax payments. File taxes 2012 Exemption from federal income tax withholding. File taxes 2012   Generally, an employee may claim exemption from federal income tax withholding because he or she had no income tax liability last year and expects none this year. File taxes 2012 See the Form W-4 instructions for more information. File taxes 2012 However, the wages are still subject to social security and Medicare taxes. File taxes 2012 See also Invalid Forms W-4 , later in this section. File taxes 2012   A Form W-4 claiming exemption from withholding is effective when it is filed with the employer and only for that calendar year. File taxes 2012 To continue to be exempt from withholding in the next calendar year, an employee must give you a new Form W-4 by February 15. File taxes 2012 If the employee does not give you a new Form W-4 by February 15, begin withholding based on the last Form W-4 for the employee that did not claim an exemption from withholding or, if one was not filed, then withhold tax as if he or she is single with zero withholding allowances. File taxes 2012 If the employee provides a new Form W-4 claiming exemption from withholding on February 16 or later, you may apply it to future wages but do not refund any taxes already withheld. File taxes 2012 Withholding income taxes on the wages of nonresident alien employees. File taxes 2012   In general, you must withhold federal income taxes on the wages of nonresident alien employees. File taxes 2012 However, see Publication 515, Withholding of Tax on Nonresident Aliens and Foreign Entities, for exceptions to this general rule. File taxes 2012 Also see section 3 of Publication 51 (Circular A), Agricultural Employer's Tax Guide, for guidance on H-2A visa workers. File taxes 2012 Withholding adjustment for nonresident alien employees. File taxes 2012   For 2014, apply the procedure discussed next to figure the amount of income tax to withhold from the wages of nonresident alien employees performing services within the United States. File taxes 2012 Nonresident alien students from India and business apprentices from India are not subject to this procedure. File taxes 2012 Instructions. File taxes 2012   To figure how much income tax to withhold from the wages paid to a nonresident alien employee performing services in the United States, use the following steps. File taxes 2012 Step 1. File taxes 2012   Add to the wages paid to the nonresident alien employee for the payroll period the amount shown in the chart below for the applicable payroll period. File taxes 2012    Amount to Add to Nonresident Alien Employee's Wages for Calculating Income Tax Withholding Only   Payroll Period Add Additional     Weekly $ 43. File taxes 2012 30     Biweekly 86. File taxes 2012 50     Semimonthly 93. File taxes 2012 80     Monthly 187. File taxes 2012 50     Quarterly 562. File taxes 2012 50     Semiannually 1,125. File taxes 2012 00     Annually 2,250. File taxes 2012 00     Daily or Miscellaneous (each day of the payroll period) 8. File taxes 2012 70   Step 2. File taxes 2012   Use the amount figured in Step 1 and the number of withholding allowances claimed (generally limited to one allowance) to figure income tax withholding. File taxes 2012 Determine the value of withholding allowances by multiplying the number of withholding allowances claimed by the appropriate amount from Table 5. File taxes 2012 Percentage Method—2014 Amount for One Withholding Allowance shown on page 41. File taxes 2012 If you are using the Percentage Method Tables for Income Tax Withholding, provided on pages 43–44, reduce the amount figured in Step 1 by the value of withholding allowances and use that reduced amount to figure the income tax withholding. File taxes 2012 If you are using the Wage Bracket Method for Income Tax Withholding, provided on pages 45–64, use the amount figured in Step 1 and the number of withholding allowances to figure income tax withholding. File taxes 2012 The amounts from the chart above are added to wages solely for calculating income tax withholding on the wages of the nonresident alien employee. File taxes 2012 The amounts from the chart should not be included in any box on the employee's Form W-2 and do not increase the income tax liability of the employee. File taxes 2012 Also, the amounts from the chart do not increase the social security tax or Medicare tax liability of the employer or the employee, or the FUTA tax liability of the employer. File taxes 2012 This procedure only applies to nonresident alien employees who have wages subject to income tax withholding. File taxes 2012 Example. File taxes 2012 An employer using the percentage method of withholding pays wages of $500 for a biweekly payroll period to a married nonresident alien employee. File taxes 2012 The nonresident alien has properly completed Form W-4, entering marital status as “single” with one withholding allowance and indicating status as a nonresident alien on Form W-4, line 6 (see Nonresident alien employee's Form W-4 , later in this section). File taxes 2012 The employer determines the wages to be used in the withholding tables by adding to the $500 amount of wages paid the amount of $86. File taxes 2012 50 from the chart under Step 1 ($586. File taxes 2012 50 total). File taxes 2012 The employer then applies the applicable tables to determine the income tax withholding for nonresident aliens (see Step 2 ). File taxes 2012 Reminder: If you use the Percentage Method Tables for Income Tax Withholding, reduce the amount figured in Step 1 by the value of withholding allowances and use that reduced amount to figure income tax withholding. File taxes 2012 The $86. File taxes 2012 50 added to wages for calculating income tax withholding is not reported on Form W-2, and does not increase the income tax liability of the employee. File taxes 2012 Also, the $86. File taxes 2012 50 added to wages does not affect the social security tax or Medicare tax liability of the employer or the employee, or the FUTA tax liability of the employer. File taxes 2012 Supplemental wage payment. File taxes 2012   This procedure for determining the amount of income tax withholding does not apply to a supplemental wage payment (see section 7) if the 39. File taxes 2012 6% mandatory flat rate withholding applies or if the 25% optional flat rate withholding is being used to calculate income tax withholding on the supplemental wage payment. File taxes 2012 Nonresident alien employee's Form W-4. File taxes 2012   When completing Forms W-4, nonresident aliens are required to: Not claim exemption from income tax withholding, Request withholding as if they are single, regardless of their actual marital status, Claim only one allowance (if the nonresident alien is a resident of Canada, Mexico, or South Korea, or a student or business apprentice from India, he or she may claim more than one allowance), and Write “Nonresident Alien” or “NRA” above the dotted line on line 6 of Form W-4. File taxes 2012   If you maintain an electronic Form W-4 system, you should provide a field for nonresident aliens to enter nonresident alien status in lieu of writing “Nonresident Alien” or “NRA” above the dotted line on line 6. File taxes 2012 A nonresident alien employee may request additional withholding at his or her option for other purposes, although such additions should not be necessary for withholding to cover federal income tax liability related to employment. File taxes 2012 Form 8233. File taxes 2012   If a nonresident alien employee claims a tax treaty exemption from withholding, the employee must submit Form 8233, Exemption From Withholding on Compensation for Independent (and Certain Dependent) Personal Services of a Nonresident Alien Individual, with respect to the income exempt under the treaty, instead of Form W-4. File taxes 2012 See Publication 515 for details. File taxes 2012 IRS review of requested Forms W-4. File taxes 2012   When requested by the IRS, you must make original Forms W-4 available for inspection by an IRS employee. File taxes 2012 You may also be directed to send certain Forms W-4 to the IRS. File taxes 2012 You may receive a notice from the IRS requiring you to submit a copy of Form W-4 for one or more of your named employees. File taxes 2012 Send the requested copy or copies of Form W-4 to the IRS at the address provided and in the manner directed by the notice. File taxes 2012 The IRS may also require you to submit copies of Form W-4 to the IRS as directed by Treasury Decision 9337, 2007-35 I. File taxes 2012 R. File taxes 2012 B. File taxes 2012 455, which is available at www. File taxes 2012 irs. File taxes 2012 gov/irb/2007-35_IRB/ar10. File taxes 2012 html. File taxes 2012 When we refer to Form W-4, the same rules apply to Formulario W-4(SP), its Spanish translation. File taxes 2012 After submitting a copy of a requested Form W-4 to the IRS, continue to withhold federal income tax based on that Form W-4 if it is valid (see Invalid Forms W-4 , later in this section). File taxes 2012 However, if the IRS later notifies you in writing the employee is not entitled to claim exemption from withholding or a claimed number of withholding allowances, withhold federal income tax based on the effective date, marital status, and maximum number of withholding allowances specified in the IRS notice (commonly referred to as a "lock-in letter
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Independent establishments are created by Congress to address concerns that go beyond the scope of ordinary legislation. These agencies are responsible for keeping the government and economy running smoothly.



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File taxes 2012 14. File taxes 2012   Excise Taxes Table of Contents Introduction Topics - This chapter discusses: Useful Items - You may want to see: Fuels Used in FarmingBuyer of fuel, including undyed diesel fuel or undyed kerosene. File taxes 2012 Undyed diesel fuel, undyed kerosene, and Other Fuels (including alternative fuel). File taxes 2012 Custom application of fertilizer and pesticide. File taxes 2012 Fuel not used for farming. File taxes 2012 Dyed Diesel Fuel and Dyed Kerosene Fuels Used in Off-Highway Business Use Fuels Used for Household Purposes or Other Than as a Fuel for Propulsion Engines How To Claim a Credit or RefundCredit only. File taxes 2012 Claiming a Credit Claiming a Refund Including the Credit or Refund in Income Introduction You may be eligible to claim a credit on your income tax return for the federal excise tax on certain fuels. File taxes 2012 You may also be eligible to claim a quarterly refund of the fuel taxes during the year, instead of waiting to claim a credit on your income tax return. File taxes 2012 Whether you can claim a credit or refund depends on whether the fuel was taxed and the purpose (nontaxable use) for which you used the fuel. File taxes 2012 The nontaxable uses of fuel for which a farmer may claim a credit or refund are generally the following. File taxes 2012 Use on a farm for farming purposes. File taxes 2012 Off-highway business use. File taxes 2012 Uses other than as a fuel in a propulsion engine, such as home use. File taxes 2012 Table 14-1 presents an overview of credits and refunds that may be claimed for fuels used for the nontaxable uses listed above. File taxes 2012 See Publication 510, Excise Taxes, for more information. File taxes 2012 Topics - This chapter discusses: Fuels used in farming Dyed diesel fuel and dyed kerosene Fuels used in off-highway business use Fuels used for household purposes How to claim a credit or refund Including the credit or refund in income Useful Items - You may want to see: Publication 510 Excise Taxes Form (and Instructions) 720 Quarterly Federal Excise Tax Return 4136 Credit for Federal Tax Paid on Fuels 8849 Claim for Refund of Excise Taxes See chapter 16 for information about getting publications and forms. File taxes 2012 Fuels Used in Farming Owners, operators, and tenants of farms and certain other persons may be eligible to claim a credit or refund of excise taxes on fuel used in the trade or business of farming, when used on a farm in the United States for farming purposes. File taxes 2012 See Table 14-1 for a list of available fuel tax credits and refunds. File taxes 2012 Fuel is used on a farm for farming purposes only if used in carrying on a trade or business of farming, on a farm in the United States, and for farming purposes. File taxes 2012 Farm. File taxes 2012   A farm includes livestock, dairy, fish, poultry, fruit, fur-bearing animals, and truck farms, orchards, plantations, ranches, nurseries, ranges, and feed yards for finishing cattle. File taxes 2012 It also includes structures such as greenhouses used primarily for raising agricultural or horticultural commodities. File taxes 2012 A fish farm is an area where fish are grown or raised and not merely caught or harvested. File taxes 2012 Table 14-1. File taxes 2012 Fuel Tax Credits and Refunds at a Glance Use this table to see if you can take a credit or refund for a nontaxable use of the fuel listed. File taxes 2012 Fuel Used On a Farm for Farming Purposes Off-Highway Business Use Household Use or Use Other Than as a Fuel1 Gasoline Credit only Credit or refund None Aviation gasoline Credit only None None Undyed diesel fuel and undyed kerosene Credit or refund Credit or refund2 Credit or refund2 Kerosene for use in aviation Credit or refund None None Dyed diesel fuel and dyed kerosene None None None Other Fuels (including alternative fuels)3 Credit or refund Credit or refund None 1For a use other than as fuel in a propulsion engine. File taxes 2012 2Applies to undyed kerosene not sold from a blocked pump or, under certain circumstances, for blending with undyed diesel fuel to be used for heating purposes. File taxes 2012 See Reg. File taxes 2012 48. File taxes 2012 6427-10 (b)(1) for the definition of a blocked pump. File taxes 2012 3Other Fuels means any liquid except gas oil, fuel oil, or any product taxable under Internal Revenue Code section 4081. File taxes 2012 It includes the alternative fuels: liquefied petroleum gas (LPG),“P” Series fuels, compressed natural gas (CNG), liquefied hydrogen, any liquid fuel derived from coal (including peat) through the Fischer-Tropsch process, liquid fuel derived from biomass, liquid natural gas (LNG), liquefied gas derived from biomass, and compressed gas derived from biomass. File taxes 2012 Farming purposes. File taxes 2012   As the owner, tenant, or operator and the ultimate purchaser of fuel that you purchased, you use the fuel on a farm for farming purposes if you use it in any of the following ways. File taxes 2012 To cultivate the soil or to raise or harvest any agricultural or horticultural commodity. File taxes 2012 To raise, shear, feed, care for, train, or manage livestock, bees, poultry, fur-bearing animals, or wildlife. File taxes 2012 To operate, manage, conserve, improve, or maintain your farm and its tools and equipment. File taxes 2012 To handle, dry, pack, grade, or store any raw agricultural or horticultural commodity. File taxes 2012 For this use to qualify, you must have produced more than half the commodity so treated during the tax year. File taxes 2012 The more-than-one-half test applies separately to each commodity. File taxes 2012 Commodity means a single raw product. File taxes 2012 For example, apples and peaches are two separate commodities. File taxes 2012 To plant, cultivate, care for, or cut trees or to prepare (other than sawing logs into lumber, chipping, or other milling) trees for market, but only if these activities are incidental to your farming operations. File taxes 2012 Your tree operations are incidental only if they are minor in nature when compared to the total farming operations. File taxes 2012   If any other person, such as a neighbor or custom operator (independent contractor), performs a service for you on your farm for any of the purposes included in list items (1) or (2), above, you are considered to be the ultimate purchaser who used the fuel on a farm for farming purposes. File taxes 2012 Therefore, you can still claim the credit or refund for the fuel so used. File taxes 2012 However, see Custom application of fertilizer and pesticide, later. File taxes 2012 If the other person performs any other services for you on your farm for purposes not included in list items (1) or (2) above, no one can claim the credit or refund for fuel used on your farm for those other services. File taxes 2012 Buyer of fuel, including undyed diesel fuel or undyed kerosene. File taxes 2012   If doubt exists whether the owner, tenant, or operator of the farm bought the fuel, determine who actually bore the cost of the fuel. File taxes 2012 For example, if the owner of a farm and his or her tenant equally share the cost of gasoline used on the farm, each can claim a credit for the tax on half the fuel used. File taxes 2012 Undyed diesel fuel, undyed kerosene, and Other Fuels (including alternative fuel). File taxes 2012   Usually, the farmer is the only person who can make a claim for credit or refund for the tax on undyed diesel fuel, undyed kerosene, or other fuels (including alternative fuel) used for farming purposes. File taxes 2012 However, see Custom application of fertilizer and pesticide, next. File taxes 2012 Also see Dyed Diesel Fuel and Dyed Kerosene, later. File taxes 2012 Example. File taxes 2012 Farm owner Haleigh Blue hired custom operator Tyler Steele to cultivate the soil on her farm. File taxes 2012 Tyler used 200 gallons of undyed diesel fuel that he purchased to perform the work on Haleigh's farm. File taxes 2012 In addition, Haleigh hired contractor Lee Brown to pack and store her apple crop. File taxes 2012 Lee bought 25 gallons of undyed diesel fuel to use in packing the apples. File taxes 2012 Haleigh can claim the credit for the 200 gallons of undyed diesel fuel used by Tyler on her farm because it qualifies as fuel used on the farm for farming purposes. File taxes 2012 No one can claim a credit for the 25 gallons used by Lee because that fuel was not used for a farming purpose included in list items (1) or (2), above. File taxes 2012 In the above example, both Tyler Steele and Lee Brown could have purchased dyed (untaxed) diesel fuel for their tasks. File taxes 2012 Custom application of fertilizer and pesticide. File taxes 2012   Fuel used on a farm for farming purposes includes fuel used in the application (including aerial application) of fertilizer, pesticides, or other substances. File taxes 2012 Generally, the applicator is treated as having used the fuel on a farm for farming purposes. File taxes 2012 For applicators using highway vehicles, only the fuel used on the farm is exempt. File taxes 2012 Fuel used traveling on the highway to and from the farm is taxable. File taxes 2012 Fuel used by an aerial applicator for the direct flight between the airfield and one or more farms is treated as used for a farming purpose. File taxes 2012 For aviation gasoline, the aerial applicator makes the claim as the ultimate purchaser. File taxes 2012 For kerosene used in aviation, the ultimate purchaser may make the claim or waive the right to make the claim to the registered ultimate vendor. File taxes 2012 A sample waiver is included as Model Waiver L in the appendix of Publication 510. File taxes 2012 A registered ultimate vendor is the person who sells undyed diesel fuel, undyed kerosene, or kerosene for use in aviation to the user (ultimate purchaser) of the fuel for use on a farm for farming purposes. File taxes 2012 To claim a credit or refund of tax, the ultimate vendor must be registered with the Internal Revenue Service at the time the claim is made. File taxes 2012 However, registered ultimate vendors cannot make claims for undyed diesel fuel and undyed kerosene sold for use on a farm for farming purposes. File taxes 2012 Fuel not used for farming. File taxes 2012   You do not use fuel on a farm for farming purposes when you use it in any of the following ways. File taxes 2012 Off the farm, such as on the highway or in noncommercial aviation, even if the fuel is used in transporting livestock, feed, crops, or equipment. File taxes 2012 For personal use, such as lawn mowing. File taxes 2012 In processing, packaging, freezing, or canning operations. File taxes 2012 In processing crude gum into gum spirits of turpentine or gum resin or in processing maple sap into maple syrup or maple sugar. File taxes 2012 All-terrain vehicles (ATVs). File taxes 2012   Fuel used in ATVs on a farm for farming purposes, discussed earlier, is eligible for a credit or refund of excise taxes on the fuel. File taxes 2012 Fuel used in ATVs for nonfarming purposes is not eligible for a credit or refund of the taxes. File taxes 2012 If ATVs are used both for farming and nonfarming purposes, only that portion of the fuel used for farming purposes is eligible for the credit or refund. File taxes 2012 Dyed Diesel Fuel and Dyed Kerosene If you purchase dyed diesel fuel or dyed kerosene for a nontaxable use, you must use it only on a farm for farming purposes or for other nontaxable purposes. File taxes 2012 For example, you should not use dyed diesel fuel in a truck that is used both on the farm for farming purposes and on the highway, even though the highway use is in connection with farm business. File taxes 2012 Excise tax applies to the fuel used by the truck on the highways. File taxes 2012 In this situation, undyed (taxed) fuel should be purchased for the truck. File taxes 2012 You should keep fuel records of the use of the truck on the farm for farming purposes, and for other uses. File taxes 2012 You may be eligible for a credit or refund for the excise tax on fuel used on the farm for farming purposes. File taxes 2012 Penalty. File taxes 2012   A penalty is imposed on any person who knowingly uses, sells, or alters dyed diesel fuel or dyed kerosene for any purpose other than a nontaxable use. File taxes 2012 The penalty is the greater of $1,000 or $10 per gallon of the dyed diesel fuel or dyed kerosene involved. File taxes 2012 After the first violation, the $1,000 portion of the penalty increases depending on the number of violations. File taxes 2012 For more information on this penalty, see Publication 510. File taxes 2012 Fuels Used in Off-Highway Business Use You may be eligible to claim a credit or refund for the excise tax on fuel used in an off-highway business use. File taxes 2012 Off-highway business use. File taxes 2012   This is any use of fuel in a trade or business or in an income-producing activity. File taxes 2012 The use must not be in a highway vehicle registered or required to be registered for use on public highways. File taxes 2012 Off-highway business use generally does not include any use in a recreational motorboat. File taxes 2012 Examples. File taxes 2012   Off-highway business use includes the use of fuels in a trade or business in any of the following ways. File taxes 2012 In stationary machines such as generators, compressors, power saws, and similar equipment; For cleaning ; and In forklift trucks, bulldozers, and earthmovers. File taxes 2012   Off-highway nonbusiness (taxable) use of fuel includes: use in minibikes, snowmobiles, power lawn mowers, chain saws, and other yard equipment. File taxes 2012 For more information, see Publication 510. File taxes 2012 Fuels Used for Household Purposes or Other Than as a Fuel for Propulsion Engines You may be eligible to claim a credit or refund for the excise tax on undyed diesel fuel or kerosene used for home heating, lighting, and cooking. File taxes 2012 This also applies to diesel fuel and kerosene used in a home generator to produce electricity for home use. File taxes 2012 Home use of a fuel does not include use in a propulsion engine and it is not considered an off-highway business use. File taxes 2012 How To Claim a Credit or Refund You may be able to claim a credit or refund of the excise tax on fuels you use for nontaxable uses. File taxes 2012 The basic rules for claiming credits and refunds are listed in Table 14-2 . File taxes 2012 Table 14-2. File taxes 2012 Claiming a Credit or Refund of Excise Taxes This table gives the basic rules for claiming a credit or refund of excise taxes on fuels used for a nontaxable use. File taxes 2012   Credit Refund Which form to use Form 4136, Credit for Federal Tax Paid on Fuels Form 8849, Claim for Refund of Excise Taxes, and Schedule 1 (Form 8849), Nontaxable Use of Fuels Type of form Annual Quarterly When to file With your income tax return By the last day of the quarter following the last quarter included in the claim Amount of tax Any amount $750 or more1 1You may carry over an amount less than $750 to the next quarter. File taxes 2012 Keep at your principal place of business all records needed to enable the IRS to verify that you are the person entitled to claim a credit or refund and the amount you claimed. File taxes 2012 You do not have to use any special form, but the records should establish the following information. File taxes 2012 The total number of gallons bought and used during the period covered by your claim. File taxes 2012 The dates of the purchases. File taxes 2012 The names and addresses of suppliers and amounts bought from each during the period covered by your claim. File taxes 2012 The nontaxable use for which you used the fuel. File taxes 2012 The number of gallons used for each nontaxable use. File taxes 2012 It is important that your records separately show the number of gallons used for each nontaxable use that qualifies as a claim. File taxes 2012 For more information about recordkeeping, see Publication 583, Starting a Business and Keeping Records. File taxes 2012 Credit or refund. File taxes 2012   A credit is an amount that reduces the tax on your income tax return when you file it at the end of the year. File taxes 2012 If you meet certain requirements, you may claim a refund during the year instead of waiting until you file your income tax return. File taxes 2012 Credit only. File taxes 2012   You can claim the following taxes only as a credit on your income tax return. File taxes 2012 Tax on gasoline and aviation gasoline you used on a farm for farming purposes. File taxes 2012 Tax on fuels (including undyed diesel fuel or undyed kerosene) you used for nontaxable uses if the total for the tax year is less than $750. File taxes 2012 Tax on fuel you did not include in any claim for refund previously filed for any quarter of the tax year. File taxes 2012 Claiming a Credit You make a claim for a fuel tax credit on Form 4136 and attach it to your income tax return. File taxes 2012 Do not claim a credit for any excise tax for which you have filed a refund claim. File taxes 2012 How to claim a credit. File taxes 2012   How you claim a credit depends on whether you are an individual, partnership, corporation, S corporation, trust, or farmers' cooperative association. File taxes 2012 Individuals. File taxes 2012   You claim the credit on the “Credit for federal tax on fuels” line of your Form 1040. File taxes 2012 If you would not otherwise have to file an income tax return, you must do so to get a fuel tax credit. File taxes 2012 Partnership. File taxes 2012   Partnerships (other than electing large partnerships) claim the credit by including a statement on Schedule K-1 (Form 1065), Partner's Share of Income, Deductions, Credits, etc. File taxes 2012 , showing each partner's share of the number of gallons of each fuel sold or used for a nontaxable use, the type of use, and the applicable credit per gallon. File taxes 2012 Each partner claims the credit on his or her income tax return for the partner's share of the fuel used by the partnership. File taxes 2012 An electing large partnership can claim the credit on the “Other payments” line of Form 1065-B, U. File taxes 2012 S. File taxes 2012 Return of Income for Electing Large Partnerships. File taxes 2012 Other entities. File taxes 2012   Corporations, S corporations, farmers' cooperative associations, and trusts make the claim on the appropriate line of their income tax return. File taxes 2012 When to claim a credit. File taxes 2012   You can claim a fuel tax credit on your income tax return for the year you used the fuel. File taxes 2012 You may be able to make a fuel tax claim on an amended income tax return for the year you used the fuel. File taxes 2012 A claim for credit or refund of an overpayment must generally be filed within the later of: Three years from the date the original return was filed, or Two years from the date the tax was paid. File taxes 2012 Claiming a Refund Generally, you may claim a refund of excise taxes on Form 8849. File taxes 2012 Complete and attach to Form 8849 the appropriate Form 8849 schedule(s). File taxes 2012 The instructions for Form 8849 and the separate instructions for each schedule explain the requirements for making a claim for refund. File taxes 2012 If you file Form 720, you can use its Schedule C for your refund claims for the quarter. File taxes 2012 See the Instructions for Form 720. File taxes 2012 Do not claim a refund on Form 8849 for any amount for which you have filed or will file a claim on Form 720 or Form 4136. File taxes 2012 You may file a claim for refund for any quarter of your tax year for which you can claim $750 or more. File taxes 2012 This amount is the excise tax on all fuels used for a nontaxable use during that quarter or any prior quarter (for which no other claim has been filed) during the tax year. File taxes 2012 If you cannot claim at least $750 at the end of a quarter, you carry the amount over to the next quarter of your tax year to determine if you can claim at least $750 for that quarter. File taxes 2012 If you cannot claim at least $750 at the end of the fourth quarter of your tax year, you must claim a credit on your income tax return using Form 4136. File taxes 2012 Only one claim can be filed for a quarter. File taxes 2012 You cannot claim a refund for excise tax on gasoline and aviation gasoline used on a farm for farming purposes. File taxes 2012 You must claim a credit on your income tax return for the tax. File taxes 2012 How to file a quarterly claim. File taxes 2012   File the claim for refund by filling out Schedule 1 (Form 8849) and attaching it to Form 8849. File taxes 2012 Send it to the address shown in the instructions. File taxes 2012 If you file Form 720, you can use its Schedule C for your refund claims. File taxes 2012 See the Instructions for Form 720. File taxes 2012 When to file a quarterly claim. File taxes 2012   You must file a quarterly claim by the last day of the first quarter following the last quarter included in the claim. File taxes 2012 If you do not file a timely refund claim for the fourth quarter of your tax year, you will have to claim a credit for that amount on your income tax return, as discussed earlier. File taxes 2012    In most situations, the amount claimed as a credit or refund will be less than the amount deducted as fuel tax expense because the Leaking Underground Storage Tank (LUST) tax of $0. File taxes 2012 001 per gallon is generally not subject to credit or refund. File taxes 2012 Including the Credit or Refund in Income Include any credit or refund of excise taxes on fuels in your gross income if you claimed the total cost of the fuel (including the excise taxes) as an expense deduction that reduced your income tax liability. File taxes 2012 Which year you include a credit or refund in gross income depends on whether you use the cash or an accrual method of accounting. File taxes 2012 Cash method. File taxes 2012   If you use the cash method and file a claim for refund, include the refund amount in gross income for the tax year in which you receive the refund. File taxes 2012 If you claim a credit on your income tax return, include the credit amount in gross income for the tax year in which you file Form 4136. File taxes 2012 If you file an amended return and claim a credit, include the credit amount in gross income for the tax year in which you receive the credit. File taxes 2012 Example. File taxes 2012 Sharon Brown, a farmer who uses the cash method, filed her 2012 Form 1040 on March 3, 2013. File taxes 2012 On her Schedule F, she deducted the total cost of gasoline (including $110 of excise taxes) used on the farm for farming purposes. File taxes 2012 Then, on Form 4136, she claimed the $110 as a credit. File taxes 2012 Sharon reports the $110 as other income on line 8b of her 2013 Schedule F. File taxes 2012 Accrual method. File taxes 2012   If you use an accrual method, include the amount of credit or refund in gross income for the tax year in which you used the fuels. File taxes 2012 It does not matter whether you filed for a quarterly refund or claimed the entire amount as a credit. File taxes 2012 Example. File taxes 2012 Patty Green, a farmer who uses the accrual method, files her 2012 Form 1040 on April 15, 2013. File taxes 2012 On Schedule F, she deducts the total cost of gasoline (including $155 of excise taxes) she used on the farm for farming purposes during 2012. File taxes 2012 On Form 4136, Patty claims the $155 as a credit. File taxes 2012 She reports the $155 as other income on line 8b of her 2012 Schedule F. File taxes 2012 Prev  Up  Next   Home   More Online Publications