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Free State E File Taxes

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Free State E File Taxes

Free state e file taxes How To Get Tax Help Table of Contents You can get help with unresolved tax issues, order free publications and forms, ask tax questions, and get more information from the IRS in several ways. Free state e file taxes By selecting the method that is best for you, you will have quick and easy access to tax help. Free state e file taxes Contacting your Taxpayer Advocate. Free state e file taxes   If you have attempted to deal with an IRS problem unsuccessfully, you should contact your Taxpayer Advocate. Free state e file taxes   The Taxpayer Advocate represents your interests and concerns within the IRS by protecting your rights and resolving problems that have not been fixed through normal channels. Free state e file taxes While Taxpayer Advocates cannot change the tax law or make a technical tax decision, they can clear up problems that resulted from previous contacts and ensure that your case is given a complete and impartial review. Free state e file taxes   To contact your Taxpayer Advocate: Call the Taxpayer Advocate at 1–877–777–4778. Free state e file taxes Call the IRS at 1–800–829–1040. Free state e file taxes Call, write, or fax the Taxpayer Advocate office in your area. Free state e file taxes Call 1–800–829–4059 if you are a TTY/TDD user. Free state e file taxes   For more information, see Publication 1546, The Taxpayer Advocate Service of the IRS. Free state e file taxes Free tax services. Free state e file taxes   To find out what services are available, get Publication 910, Guide to Free Tax Services. Free state e file taxes It contains a list of free tax publications and an index of tax topics. Free state e file taxes It also describes other free tax information services, including tax education and assistance programs and a list of TeleTax topics. Free state e file taxes Personal computer. Free state e file taxes With your personal computer and modem, you can access the IRS on the Internet at www. Free state e file taxes irs. Free state e file taxes gov. Free state e file taxes While visiting our web site, you can: Find answers to questions you may have. Free state e file taxes Download forms and publications or search for forms and publications by topic or keyword. Free state e file taxes View forms that may be filled in electronically, print the completed form, and then save the form for recordkeeping. Free state e file taxes View Internal Revenue Bulletins published in the last few years. Free state e file taxes Search regulations and the Internal Revenue Code. Free state e file taxes Receive our electronic newsletters on hot tax issues and news. Free state e file taxes Get information on starting and operating a small business. Free state e file taxes You can also reach us with your computer using File Transfer Protocol at ftp. Free state e file taxes irs. Free state e file taxes gov. Free state e file taxes TaxFax Service. Free state e file taxes Using the phone attached to your fax machine, you can receive forms and instructions by calling 703–368–9694. Free state e file taxes Follow the directions from the prompts. Free state e file taxes When you order forms, enter the catalog number for the form you need. Free state e file taxes The items you request will be faxed to you. Free state e file taxes For help with transmission problems, call the FedWorld Help Desk at 703–487–4608. Free state e file taxes Phone. Free state e file taxes Many services are available by phone. Free state e file taxes Ordering forms, instructions, and publications. Free state e file taxes Call 1–800–829–3676 to order current and prior year forms, instructions, and publications. Free state e file taxes Asking tax questions. Free state e file taxes Call the IRS with your tax questions at 1–800–829–1040. Free state e file taxes TTY/TDD equipment. Free state e file taxes If you have access to TTY/TDD equipment, call 1–800–829–4059 to ask tax questions or to order forms and publications. Free state e file taxes TeleTax topics. Free state e file taxes Call 1–800–829–4477 to listen to pre-recorded messages covering various tax topics. Free state e file taxes Evaluating the quality of our telephone services. Free state e file taxes To ensure that IRS representatives give accurate, courteous, and professional answers, we evaluate the quality of our telephone services in several ways. Free state e file taxes A second IRS representative sometimes monitors live telephone calls. Free state e file taxes That person only evaluates the IRS assistor and does not keep a record of any taxpayer's name or tax identification number. Free state e file taxes We sometimes record telephone calls to evaluate IRS assistors objectively. Free state e file taxes We hold these recordings no longer than one week and use them only to measure the quality of assistance. Free state e file taxes We value our customers' opinions. Free state e file taxes Throughout this year, we will be surveying our customers for their opinions on our service. Free state e file taxes Walk-in. Free state e file taxes You can walk in to many post offices, libraries, and IRS offices to pick up certain forms, instructions, and publications. Free state e file taxes Some IRS offices, libraries, grocery stores, copy centers, city and county governments, credit unions, and office supply stores have an extensive collection of products available to print from a CD-ROM or photocopy from reproducible proofs. Free state e file taxes Also, some IRS offices and libraries have the Internal Revenue Code, regulations, Internal Revenue Bulletins, and Cumulative Bulletins available for research purposes. Free state e file taxes Mail. Free state e file taxes You can send your order for forms, instructions, and publications to the Distribution Center nearest to you and receive a response within 10 workdays after your request is received. Free state e file taxes Find the address that applies to your part of the country. Free state e file taxes Western part of U. Free state e file taxes S. Free state e file taxes : Western Area Distribution Center Rancho Cordova, CA 95743–0001 Central part of U. Free state e file taxes S. Free state e file taxes : Central Area Distribution Center P. Free state e file taxes O. Free state e file taxes Box 8903 Bloomington, IL 61702–8903 Eastern part of U. Free state e file taxes S. Free state e file taxes and foreign addresses: Eastern Area Distribution Center P. Free state e file taxes O. Free state e file taxes Box 85074 Richmond, VA 23261–5074 CD-ROM. Free state e file taxes You can order IRS Publication 1796, Federal Tax Products on CD-ROM, and obtain: Current tax forms, instructions, and publications. Free state e file taxes Prior-year tax forms and instructions. Free state e file taxes Popular tax forms that may be filled in electronically, printed out for submission, and saved for recordkeeping. Free state e file taxes Internal Revenue Bulletins. Free state e file taxes The CD-ROM can be purchased from National Technical Information Service (NTIS) by calling 1–877–233–6767 or on the Internet at www. Free state e file taxes irs. Free state e file taxes gov. Free state e file taxes The first release is available in mid-December and the final release is available in late January. Free state e file taxes IRS Publication 3207, Small Business Resource Guide, is an interactive CD-ROM that contains information important to small businesses. Free state e file taxes It is available in mid-February. Free state e file taxes You can get a free copy by calling 1–800–829–3676 or visiting the IRS web site at www. Free state e file taxes irs. Free state e file taxes gov. Free state e file taxes Prev  Up  Next   Home   More Online Publications
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The Free State E File Taxes

Free state e file taxes 2. Free state e file taxes   Simplified Employee Pensions (SEPs) Table of Contents Topics - This chapter discusses: Useful Items - You may want to see: Setting Up a SEPWhen not to use Form 5305-SEP. Free state e file taxes How Much Can I Contribute?Contribution Limits Deducting ContributionsDeduction Limit for Contributions for Participants Deduction Limit for Self-Employed Individuals Carryover of Excess SEP Contributions When To Deduct Contributions Where To Deduct Contributions Salary Reduction Simplified Employee Pensions (SARSEPs)SARSEP ADP test. Free state e file taxes Deferral percentage. Free state e file taxes Employee compensation. Free state e file taxes Compensation of self-employed individuals. Free state e file taxes Choice not to treat deferrals as compensation. Free state e file taxes Limit on Elective Deferrals Tax Treatment of Deferrals Distributions (Withdrawals) Additional TaxesEffects on employee. Free state e file taxes Reporting and Disclosure Requirements Topics - This chapter discusses: Setting up a SEP How much can I contribute Deducting contributions Salary reduction simplified employee pensions (SARSEPs) Distributions (withdrawals) Additional taxes Reporting and disclosure requirements Useful Items - You may want to see: Publication 590 Individual Retirement Arrangements (IRAs) 3998 Choosing A Retirement Solution for Your Small Business 4285 SEP Checklist 4286 SARSEP Checklist 4333 SEP Retirement Plans for Small Businesses 4336 SARSEP for Small Businesses 4407 SARSEP—Key Issues and Assistance Forms (and Instructions) W-2 Wage and Tax Statement 1040 U. Free state e file taxes S. Free state e file taxes Individual Income Tax Return 5305-SEP Simplified Employee Pension—Individual Retirement Accounts Contribution Agreement 5305A-SEP Salary Reduction Simplified Employee Pension—Individual Retirement Accounts Contribution Agreement 8880 Credit for Qualified Retirement Savings Contributions 8881 Credit for Small Employer Pension Plan Startup Costs A SEP is a written plan that allows you to make contributions toward your own retirement and your employees' retirement without getting involved in a more complex qualified plan. Free state e file taxes Under a SEP, you make contributions to a traditional individual retirement arrangement (called a SEP-IRA) set up by or for each eligible employee. Free state e file taxes A SEP-IRA is owned and controlled by the employee, and you make contributions to the financial institution where the SEP-IRA is maintained. Free state e file taxes SEP-IRAs are set up for, at a minimum, each eligible employee (defined below). Free state e file taxes A SEP-IRA may have to be set up for a leased employee (defined in chapter 1), but does not need to be set up for excludable employees (defined later). Free state e file taxes Eligible employee. Free state e file taxes   An eligible employee is an individual who meets all the following requirements. Free state e file taxes Has reached age 21. Free state e file taxes Has worked for you in at least 3 of the last 5 years. Free state e file taxes Has received at least $550 in compensation from you in 2013. Free state e file taxes This amount remains the same in 2014. Free state e file taxes    You can use less restrictive participation requirements than those listed, but not more restrictive ones. Free state e file taxes Excludable employees. Free state e file taxes   The following employees can be excluded from coverage under a SEP. Free state e file taxes Employees covered by a union agreement and whose retirement benefits were bargained for in good faith by the employees' union and you. Free state e file taxes Nonresident alien employees who have received no U. Free state e file taxes S. Free state e file taxes source wages, salaries, or other personal services compensation from you. Free state e file taxes For more information about nonresident aliens, see Publication 519, U. Free state e file taxes S. Free state e file taxes Tax Guide for Aliens. Free state e file taxes Setting Up a SEP There are three basic steps in setting up a SEP. Free state e file taxes You must execute a formal written agreement to provide benefits to all eligible employees. Free state e file taxes You must give each eligible employee certain information about the SEP. Free state e file taxes A SEP-IRA must be set up by or for each eligible employee. Free state e file taxes Many financial institutions will help you set up a SEP. Free state e file taxes Formal written agreement. Free state e file taxes   You must execute a formal written agreement to provide benefits to all eligible employees under a SEP. Free state e file taxes You can satisfy the written agreement requirement by adopting an IRS model SEP using Form 5305-SEP. Free state e file taxes However, see When not to use Form 5305-SEP, below. Free state e file taxes   If you adopt an IRS model SEP using Form 5305-SEP, no prior IRS approval or determination letter is required. Free state e file taxes Keep the original form. Free state e file taxes Do not file it with the IRS. Free state e file taxes Also, using Form 5305-SEP will usually relieve you from filing annual retirement plan information returns with the IRS and the Department of Labor. Free state e file taxes See the Form 5305-SEP instructions for details. Free state e file taxes If you choose not to use Form 5305-SEP, you should seek professional advice in adopting a SEP. Free state e file taxes When not to use Form 5305-SEP. Free state e file taxes   You cannot use Form 5305-SEP if any of the following apply. Free state e file taxes You currently maintain any other qualified retirement plan other than another SEP. Free state e file taxes You have any eligible employees for whom IRAs have not been set up. Free state e file taxes You use the services of leased employees, who are not your common-law employees (as described in chapter 1). Free state e file taxes You are a member of any of the following unless all eligible employees of all the members of these groups, trades, or businesses participate under the SEP. Free state e file taxes An affiliated service group described in section 414(m). Free state e file taxes A controlled group of corporations described in section 414(b). Free state e file taxes Trades or businesses under common control described in section 414(c). Free state e file taxes You do not pay the cost of the SEP contributions. Free state e file taxes Information you must give to employees. Free state e file taxes   You must give each eligible employee a copy of Form 5305-SEP, its instructions, and the other information listed in the Form 5305-SEP instructions. Free state e file taxes An IRS model SEP is not considered adopted until you give each employee this information. Free state e file taxes Setting up the employee's SEP-IRA. Free state e file taxes   A SEP-IRA must be set up by or for each eligible employee. Free state e file taxes SEP-IRAs can be set up with banks, insurance companies, or other qualified financial institutions. Free state e file taxes You send SEP contributions to the financial institution where the SEP-IRA is maintained. Free state e file taxes Deadline for setting up a SEP. Free state e file taxes   You can set up a SEP for any year as late as the due date (including extensions) of your income tax return for that year. Free state e file taxes Credit for startup costs. Free state e file taxes   You may be able to claim a tax credit for part of the ordinary and necessary costs of starting a SEP that first became effective in 2013. Free state e file taxes For more information, see Credit for startup costs under Reminders, earlier. Free state e file taxes How Much Can I Contribute? The SEP rules permit you to contribute a limited amount of money each year to each employee's SEP-IRA. Free state e file taxes If you are self-employed, you can contribute to your own SEP-IRA. Free state e file taxes Contributions must be in the form of money (cash, check, or money order). Free state e file taxes You cannot contribute property. Free state e file taxes However, participants may be able to transfer or roll over certain property from one retirement plan to another. Free state e file taxes See Publication 590 for more information about rollovers. Free state e file taxes You do not have to make contributions every year. Free state e file taxes But if you make contributions, they must be based on a written allocation formula and must not discriminate in favor of highly compensated employees (defined in chapter 1). Free state e file taxes When you contribute, you must contribute to the SEP-IRAs of all participants who actually performed personal services during the year for which the contributions are made, including employees who die or terminate employment before the contributions are made. Free state e file taxes Contributions are deductible within limits, as discussed later, and generally are not taxable to the plan participants. Free state e file taxes A SEP-IRA cannot be a Roth IRA. Free state e file taxes Employer contributions to a SEP-IRA will not affect the amount an individual can contribute to a Roth or traditional IRA. Free state e file taxes Unlike regular contributions to a traditional IRA, contributions under a SEP can be made to participants over age 70½. Free state e file taxes If you are self-employed, you can also make contributions under the SEP for yourself even if you are over 70½. Free state e file taxes Participants age 70½ or over must take required minimum distributions. Free state e file taxes Time limit for making contributions. Free state e file taxes   To deduct contributions for a year, you must make the contributions by the due date (including extensions) of your tax return for the year. Free state e file taxes Contribution Limits Contributions you make for 2013 to a common-law employee's SEP-IRA cannot exceed the lesser of 25% of the employee's compensation or $51,000. Free state e file taxes Compensation generally does not include your contributions to the SEP. Free state e file taxes The SEP plan document will specify how the employer contribution is determined and how it will be allocated to participants. Free state e file taxes Example. Free state e file taxes Your employee, Mary Plant, earned $21,000 for 2013. Free state e file taxes The maximum contribution you can make to her SEP-IRA is $5,250 (25% x $21,000). Free state e file taxes Contributions for yourself. Free state e file taxes   The annual limits on your contributions to a common-law employee's SEP-IRA also apply to contributions you make to your own SEP-IRA. Free state e file taxes However, special rules apply when figuring your maximum deductible contribution. Free state e file taxes See Deduction Limit for Self-Employed Individuals , later. Free state e file taxes Annual compensation limit. Free state e file taxes   You cannot consider the part of an employee's compensation over $255,000 when figuring your contribution limit for that employee. Free state e file taxes However, $51,000 is the maximum contribution for an eligible employee. Free state e file taxes These limits are $260,000 and $52,000, respectively, in 2014. Free state e file taxes Example. Free state e file taxes Your employee, Susan Green, earned $210,000 for 2013. Free state e file taxes Because of the maximum contribution limit for 2013, you can only contribute $51,000 to her SEP-IRA. Free state e file taxes More than one plan. Free state e file taxes   If you contribute to a defined contribution plan (defined in chapter 4), annual additions to an account are limited to the lesser of $51,000 or 100% of the participant's compensation. Free state e file taxes When you figure this limit, you must add your contributions to all defined contribution plans maintained by you. Free state e file taxes Because a SEP is considered a defined contribution plan for this limit, your contributions to a SEP must be added to your contributions to other defined contribution plans you maintain. Free state e file taxes Tax treatment of excess contributions. Free state e file taxes   Excess contributions are your contributions to an employee's SEP-IRA (or to your own SEP-IRA) for 2013 that exceed the lesser of the following amounts. Free state e file taxes 25% of the employee's compensation (or, for you, 20% of your net earnings from self-employment). Free state e file taxes $51,000. Free state e file taxes Excess contributions are included in the employee's income for the year and are treated as contributions by the employee to his or her SEP-IRA. Free state e file taxes For more information on employee tax treatment of excess contributions, see chapter 1 in Publication 590. Free state e file taxes Reporting on Form W-2. Free state e file taxes   Do not include SEP contributions on your employee's Form W-2 unless contributions were made under a salary reduction arrangement (discussed later). Free state e file taxes Deducting Contributions Generally, you can deduct the contributions you make each year to each employee's SEP-IRA. Free state e file taxes If you are self-employed, you can deduct the contributions you make each year to your own SEP-IRA. Free state e file taxes Deduction Limit for Contributions for Participants The most you can deduct for your contributions to you or your employee's SEP-IRA is the lesser of the following amounts. Free state e file taxes Your contributions (including any excess contributions carryover). Free state e file taxes 25% of the compensation (limited to $255,000 per participant) paid to the participants during 2013 from the business that has the plan, not to exceed $51,000 per participant. Free state e file taxes In 2014, the amounts in (2) above are $260,000 and $52,000, respectively. Free state e file taxes Deduction Limit for Self-Employed Individuals If you contribute to your own SEP-IRA, you must make a special computation to figure your maximum deduction for these contributions. Free state e file taxes When figuring the deduction for contributions made to your own SEP-IRA, compensation is your net earnings from self-employment (defined in chapter 1), which takes into account both the following deductions. Free state e file taxes The deduction for the deductible part of your self-employment tax. Free state e file taxes The deduction for contributions to your own SEP-IRA. Free state e file taxes The deduction for contributions to your own SEP-IRA and your net earnings depend on each other. Free state e file taxes For this reason, you determine the deduction for contributions to your own SEP-IRA indirectly by reducing the contribution rate called for in your plan. Free state e file taxes To do this, use the Rate Table for Self-Employed or the Rate Worksheet for Self-Employed, whichever is appropriate for your plan's contribution rate, in chapter 5. Free state e file taxes Then figure your maximum deduction by using the Deduction Worksheet for Self-Employed in chapter 5. Free state e file taxes Carryover of Excess SEP Contributions If you made SEP contributions that are more than the deduction limit (nondeductible contributions), you can carry over and deduct the difference in later years. Free state e file taxes However, the carryover, when combined with the contribution for the later year, is subject to the deduction limit for that year. Free state e file taxes If you also contributed to a defined benefit plan or defined contribution plan, see Carryover of Excess Contributions under Employer Deduction in chapter 4 for the carryover limit. Free state e file taxes Excise tax. Free state e file taxes   If you made nondeductible (excess) contributions to a SEP, you may be subject to a 10% excise tax. Free state e file taxes For information about the excise tax, see Excise Tax for Nondeductible (Excess) Contributions under Employer Deduction in chapter 4. Free state e file taxes When To Deduct Contributions When you can deduct contributions made for a year depends on the tax year on which the SEP is maintained. Free state e file taxes If the SEP is maintained on a calendar year basis, you deduct the yearly contributions on your tax return for the year within which the calendar year ends. Free state e file taxes If you file your tax return and maintain the SEP using a fiscal year or short tax year, you deduct contributions made for a year on your tax return for that year. Free state e file taxes Example. Free state e file taxes You are a fiscal year taxpayer whose tax year ends June 30. Free state e file taxes You maintain a SEP on a calendar year basis. Free state e file taxes You deduct SEP contributions made for calendar year 2013 on your tax return for your tax year ending June 30, 2014. Free state e file taxes Where To Deduct Contributions Deduct the contributions you make for your common-law employees on your tax return. Free state e file taxes For example, sole proprietors deduct them on Schedule C (Form 1040) or Schedule F (Form 1040), Profit or Loss From Farming; partnerships deduct them on Form 1065, U. Free state e file taxes S. Free state e file taxes Return of Partnership Income; and corporations deduct them on Form 1120, U. Free state e file taxes S. Free state e file taxes Corporation Income Tax Return, or Form 1120S, U. Free state e file taxes S. Free state e file taxes Income Tax Return for an S Corporation. Free state e file taxes Sole proprietors and partners deduct contributions for themselves on line 28 of Form 1040. Free state e file taxes (If you are a partner, contributions for yourself are shown on the Schedule K-1 (Form 1065), Partner's Share of Income, Deductions, Credits, etc. Free state e file taxes , you receive from the partnership. Free state e file taxes ) Remember that sole proprietors and partners can't deduct as a business expense contributions made to a SEP for themselves, only those made for their common-law employees. Free state e file taxes Salary Reduction Simplified Employee Pensions (SARSEPs) A SARSEP is a SEP set up before 1997 that includes a salary reduction arrangement. Free state e file taxes (See the Caution, next. Free state e file taxes ) Under a SARSEP, your employees can choose to have you contribute part of their pay to their SEP-IRAs rather than receive it in cash. Free state e file taxes This contribution is called an “elective deferral” because employees choose (elect) to set aside the money, and they defer the tax on the money until it is distributed to them. Free state e file taxes You are not allowed to set up a SARSEP after 1996. Free state e file taxes However, participants (including employees hired after 1996) in a SARSEP set up before 1997 can continue to have you contribute part of their pay to the plan. Free state e file taxes If you are interested in setting up a retirement plan that includes a salary reduction arrangement, see chapter 3. Free state e file taxes Who can have a SARSEP?   A SARSEP set up before 1997 is available to you and your eligible employees only if all the following requirements are met. Free state e file taxes At least 50% of your employees eligible to participate choose to make elective deferrals. Free state e file taxes You have 25 or fewer employees who were eligible to participate in the SEP at any time during the preceding year. Free state e file taxes The elective deferrals of your highly compensated employees meet the SARSEP ADP test. Free state e file taxes SARSEP ADP test. Free state e file taxes   Under the SARSEP ADP test, the amount deferred each year by each eligible highly compensated employee as a percentage of pay (the deferral percentage) cannot be more than 125% of the average deferral percentage (ADP) of all non-highly compensated employees eligible to participate. Free state e file taxes A highly compensated employee is defined in chapter 1. Free state e file taxes Deferral percentage. Free state e file taxes   The deferral percentage for an employee for a year is figured as follows. Free state e file taxes   The elective employer contributions (excluding certain catch-up contributions)  paid to the SEP for the employee for the year     The employee's compensation (limited to $255,000 in 2013)   The instructions for Form 5305A-SEP have a worksheet you can use to determine whether the elective deferrals of your highly compensated employees meet the SARSEP ADP test. Free state e file taxes Employee compensation. Free state e file taxes   For figuring the deferral percentage, compensation is generally the amount you pay to the employee for the year. Free state e file taxes Compensation includes the elective deferral and other amounts deferred in certain employee benefit plans. Free state e file taxes See Compensation in chapter 1. Free state e file taxes Elective deferrals under the SARSEP are included in figuring your employees' deferral percentage even though they are not included in the income of your employees for income tax purposes. Free state e file taxes Compensation of self-employed individuals. Free state e file taxes   If you are self-employed, compensation is your net earnings from self-employment as defined in chapter 1. Free state e file taxes   Compensation does not include tax-free items (or deductions related to them) other than foreign earned income and housing cost amounts. Free state e file taxes Choice not to treat deferrals as compensation. Free state e file taxes   You can choose not to treat elective deferrals (and other amounts deferred in certain employee benefit plans) for a year as compensation under your SARSEP. Free state e file taxes Limit on Elective Deferrals The most a participant can choose to defer for calendar year 2013 is the lesser of the following amounts. Free state e file taxes 25% of the participant's compensation (limited to $255,000 of the participant's compensation). Free state e file taxes $17,500. Free state e file taxes The $17,500 limit applies to the total elective deferrals the employee makes for the year to a SEP and any of the following. Free state e file taxes Cash or deferred arrangement (section 401(k) plan). Free state e file taxes Salary reduction arrangement under a tax-sheltered annuity plan (section 403(b) plan). Free state e file taxes SIMPLE IRA plan. Free state e file taxes In 2014, the $255,000 limit increases to $260,000 and the $17,500 limit remains at $17,500. Free state e file taxes Catch-up contributions. Free state e file taxes   A SARSEP can permit participants who are age 50 or over at the end of the calendar year to also make catch-up contributions. Free state e file taxes The catch-up contribution limit for 2013 is $5,500 and remains at $5,500 for 2014. Free state e file taxes Elective deferrals are not treated as catch-up contributions for 2013 until they exceed the elective deferral limit (the lesser of 25% of compensation or $17,500), the SARSEP ADP test limit discussed earlier, or the plan limit (if any). Free state e file taxes However, the catch-up contribution a participant can make for a year cannot exceed the lesser of the following amounts. Free state e file taxes The catch-up contribution limit. Free state e file taxes The excess of the participant's compensation over the elective deferrals that are not catch-up contributions. Free state e file taxes   Catch-up contributions are not subject to the elective deferral limit (the lesser of 25% of compensation or $17,500 in 2013 and in 2014). Free state e file taxes Overall limit on SEP contributions. Free state e file taxes   If you also make nonelective contributions to a SEP-IRA, the total of the nonelective and elective contributions to that SEP-IRA cannot exceed the lesser of 25% of the employee's compensation or $51,000 for 2013 ($52,000 for 2014). Free state e file taxes The same rule applies to contributions you make to your own SEP-IRA. Free state e file taxes See Contribution Limits , earlier. Free state e file taxes Figuring the elective deferral. Free state e file taxes   For figuring the 25% limit on elective deferrals, compensation does not include SEP contributions, including elective deferrals or other amounts deferred in certain employee benefit plans. Free state e file taxes Tax Treatment of Deferrals Elective deferrals that are not more than the limits discussed earlier under Limit on Elective Deferrals are excluded from your employees' wages subject to federal income tax in the year of deferral. Free state e file taxes However, these deferrals are included in wages for social security, Medicare, and federal unemployment (FUTA) tax. Free state e file taxes Excess deferrals. Free state e file taxes   For 2013, excess deferrals are the elective deferrals for the year that are more than the $17,500 limit discussed earlier. Free state e file taxes For a participant who is eligible to make catch-up contributions, excess deferrals are the elective deferrals that are more than $23,000. Free state e file taxes The treatment of excess deferrals made under a SARSEP is similar to the treatment of excess deferrals made under a qualified plan. Free state e file taxes See Treatment of Excess Deferrals under Elective Deferrals (401(k) Plans) in chapter 4. Free state e file taxes Excess SEP contributions. Free state e file taxes   Excess SEP contributions are elective deferrals of highly compensated employees that are more than the amount permitted under the SARSEP ADP test. Free state e file taxes You must notify your highly compensated employees within 2½ months after the end of the plan year of their excess SEP contributions. Free state e file taxes If you do not notify them within this time period, you must pay a 10% tax on the excess. Free state e file taxes For an explanation of the notification requirements, see Rev. Free state e file taxes Proc. Free state e file taxes 91-44, 1991-2 C. Free state e file taxes B. Free state e file taxes 733. Free state e file taxes If you adopted a SARSEP using Form 5305A-SEP, the notification requirements are explained in the instructions for that form. Free state e file taxes Reporting on Form W-2. Free state e file taxes   Do not include elective deferrals in the “Wages, tips, other compensation” box of Form W-2. Free state e file taxes You must, however, include them in the “Social security wages” and “Medicare wages and tips” boxes. Free state e file taxes You must also include them in box 12. Free state e file taxes Mark the “Retirement plan” checkbox in box 13. Free state e file taxes For more information, see the Form W-2 instructions. Free state e file taxes Distributions (Withdrawals) As an employer, you cannot prohibit distributions from a SEP-IRA. Free state e file taxes Also, you cannot make your contributions on the condition that any part of them must be kept in the account after you have made your contributions to the employee's accounts. Free state e file taxes Distributions are subject to IRA rules. Free state e file taxes Generally, you or your employee must begin to receive distributions from a SEP-IRA by April 1 of the first year after the calendar year in which you or your employee reaches age 70½. Free state e file taxes For more information about IRA rules, including the tax treatment of distributions, rollovers, required distributions, and income tax withholding, see Publication 590. Free state e file taxes Additional Taxes The tax advantages of using SEP-IRAs for retirement savings can be offset by additional taxes that may be imposed for all the following actions. Free state e file taxes Making excess contributions. Free state e file taxes Making early withdrawals. Free state e file taxes Not making required withdrawals. Free state e file taxes For information about these taxes, see chapter 1 in Publication 590. Free state e file taxes Also, a SEP-IRA may be disqualified, or an excise tax may apply, if the account is involved in a prohibited transaction, discussed next. Free state e file taxes Prohibited transaction. Free state e file taxes   If an employee improperly uses his or her SEP-IRA, such as by borrowing money from it, the employee has engaged in a prohibited transaction. Free state e file taxes In that case, the SEP-IRA will no longer qualify as an IRA. Free state e file taxes For a list of prohibited transactions, see Prohibited Transactions in chapter 4. Free state e file taxes Effects on employee. Free state e file taxes   If a SEP-IRA is disqualified because of a prohibited transaction, the assets in the account will be treated as having been distributed to the employee on the first day of the year in which the transaction occurred. Free state e file taxes The employee must include in income the fair market value of the assets (on the first day of the year) that is more than any cost basis in the account. Free state e file taxes Also, the employee may have to pay the additional tax for making early withdrawals. Free state e file taxes Reporting and Disclosure Requirements If you set up a SEP using Form 5305-SEP, you must give your eligible employees certain information about the SEP when you set it up. Free state e file taxes See Setting Up a SEP , earlier. Free state e file taxes Also, you must give your eligible employees a statement each year showing any contributions to their SEP-IRAs. Free state e file taxes You must also give them notice of any excess contributions. Free state e file taxes For details about other information you must give them, see the instructions for Form 5305-SEP or Form 5305A-SEP (for a salary reduction SEP). Free state e file taxes Even if you did not use Form 5305-SEP or Form 5305A-SEP to set up your SEP, you must give your employees information similar to that described above. Free state e file taxes For more information, see the instructions for either Form 5305-SEP or Form 5305A-SEP. Free state e file taxes Prev  Up  Next   Home   More Online Publications