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H&r Block Tax Software

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H&r Block Tax Software

H&r block tax software Publication 559 - Introductory Material Table of Contents Future Developments Reminders Introduction Useful Items - You may want to see: Future Developments For the latest information about developments affecting Publication 559, such as legislation enacted after we release it, go to www. H&r block tax software irs. H&r block tax software gov/pub559. H&r block tax software Reminders Throughout this publication, section references are to the Internal Revenue Code unless otherwise noted. H&r block tax software Consistent treatment of estate and trust items. H&r block tax software  Beneficiaries must generally treat estate items the same way on their individual returns as they are treated on the estate's return. H&r block tax software Photographs of missing children. H&r block tax software  The Internal Revenue Service is a proud partner with the National Center for Missing and Exploited Children. H&r block tax software Photographs of missing children selected by the Center may appear in this publication on pages that would otherwise be blank. H&r block tax software You can help bring these children home by looking at the photographs and calling 1-800-THE-LOST (1-800-843-5678) if you recognize a child. H&r block tax software Introduction This publication is designed to help those in charge (personal representatives) of the property (estate) of an individual who has died (decedent). H&r block tax software It shows them how to complete and file federal income tax returns and explains their responsibility to pay any taxes due on behalf of the decedent. H&r block tax software A comprehensive example of the decedent's final tax return, Form 1040, and estate's income tax return, Form 1041, are included in this publication. H&r block tax software The publication also explains how much money or property a taxpayer can give away during their lifetime or leave to their heirs at their death before any tax will be owed. H&r block tax software A discussion of Form 709, United States Gift (and Generation-Skipping Transfer) Tax Return, and Form 706, United States Estate (and Generation-Skipping Transfer) Tax Return, is included. H&r block tax software Also included in this publication are the following items: A checklist of the forms you may need and their due dates. H&r block tax software A worksheet to reconcile amounts reported in the decedent's name on information returns including Forms W-2, 1099-INT, 1099-DIV, etc. H&r block tax software The worksheet will help you correctly determine the income to report on the decedent's final return and on the return for either the estate or a beneficiary. H&r block tax software Comments and suggestions. H&r block tax software   We welcome your comments about this publication and your suggestions for future editions. H&r block tax software   You can send us comments from http://www. H&r block tax software irs. H&r block tax software gov/formspubs. H&r block tax software Click on “More Information” and then on “Give us Feedback. H&r block tax software ” Or you can also send your comments to the Internal Revenue Service, Tax Forms and Publications Division, 1111 Constitution Ave. H&r block tax software NW, IR-6526, Washington, DC 20224. H&r block tax software Useful Items - You may want to see: Publication 3 Armed Forces' Tax Guide Form (and Instructions) SS-4 Application for Employer Identification Number 56 Notice Concerning Fiduciary Relationship 1040 U. H&r block tax software S. H&r block tax software Individual Income Tax Return 1041 U. H&r block tax software S. H&r block tax software Income Tax Return for Estates and Trusts 706 United States Estate (and Generation-Skipping Transfer) Tax Return 709 United States Gift (and Generation-Skipping Transfer) Tax Return 1310 Statement of Person Claiming Refund Due a Deceased Taxpayer  See How To Get Tax Help near the end of this publication for information about getting publications and forms. H&r block tax software Also near the end of this publication is Table A, a checklist of forms and their due dates for the executor, administrator, or personal representative. H&r block tax software Prev  Up  Next   Home   More Online Publications
 
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Page Last Reviewed or Updated: 19-Mar-2014

The H&r Block Tax Software

H&r block tax software 2. H&r block tax software   Employees' Pay Table of Contents Introduction Topics - This chapter discusses: Useful Items - You may want to see: Tests for Deducting PayTest 1—Reasonableness Test 2—For Services Performed Kinds of PayAwards Bonuses Education Expenses Fringe Benefits Loans or Advances Property Reimbursements for Business Expenses Sick and Vacation Pay Introduction You can generally deduct the amount you pay your employees for the services they perform. H&r block tax software The pay may be in cash, property, or services. H&r block tax software It may include wages, salaries, bonuses, commissions, or other non-cash compensation such as vacation allowances and fringe benefits. H&r block tax software For information about deducting employment taxes, see chapter 5. H&r block tax software You can claim employment credits, such as the following, if you hire individuals who meet certain requirements. H&r block tax software Empowerment zone employment credit (Form 8844). H&r block tax software Indian employment credit (Form 8845). H&r block tax software Work opportunity credit (Form 5884). H&r block tax software Credit for employer differential wage payments (Form 8932). H&r block tax software Reduce your deduction for employee wages by the amount of employment credits you claim. H&r block tax software For more information about these credits, see the form on which the credit is claimed. H&r block tax software Topics - This chapter discusses: Tests for deducting pay Kinds of pay Useful Items - You may want to see: Publication 15 (Circular E), Employer's Tax Guide 15-A Employer's Supplemental Tax Guide 15-B Employer's Tax Guide to Fringe Benefits See chapter 12 for information about getting publications and forms. H&r block tax software Tests for Deducting Pay To be deductible, your employees' pay must be an ordinary and necessary business expense and you must pay or incur it. H&r block tax software These and other requirements that apply to all business expenses are explained in chapter 1. H&r block tax software In addition, the pay must meet both of the following tests. H&r block tax software Test 1. H&r block tax software It must be reasonable. H&r block tax software Test 2. H&r block tax software It must be for services performed. H&r block tax software The form or method of figuring the pay does not affect its deductibility. H&r block tax software For example, bonuses and commissions based on sales or earnings, and paid under an agreement made before the services were performed, are both deductible. H&r block tax software Test 1—Reasonableness You must be able to prove that the pay is reasonable. H&r block tax software Whether the pay is reasonable depends on the circumstances that existed when you contracted for the services, not those that exist when reasonableness is questioned. H&r block tax software If the pay is excessive, the excess pay is disallowed as a deduction. H&r block tax software Factors to consider. H&r block tax software   Determine the reasonableness of pay by the facts and circumstances. H&r block tax software Generally, reasonable pay is the amount that a similar business would pay for the same or similar services. H&r block tax software   To determine if pay is reasonable, also consider the following items and any other pertinent facts. H&r block tax software The duties performed by the employee. H&r block tax software The volume of business handled. H&r block tax software The character and amount of responsibility. H&r block tax software The complexities of your business. H&r block tax software The amount of time required. H&r block tax software The cost of living in the locality. H&r block tax software The ability and achievements of the individual employee performing the service. H&r block tax software The pay compared with the gross and net income of the business, as well as with distributions to shareholders if the business is a corporation. H&r block tax software Your policy regarding pay for all your employees. H&r block tax software The history of pay for each employee. H&r block tax software Test 2—For Services Performed You must be able to prove the payment was made for services actually performed. H&r block tax software Employee-shareholder salaries. H&r block tax software   If a corporation pays an employee who is also a shareholder a salary that is unreasonably high considering the services actually performed, the excessive part of the salary may be treated as a constructive dividend to the employee-shareholder. H&r block tax software The excessive part of the salary would not be allowed as a salary deduction by the corporation. H&r block tax software For more information on corporate distributions to shareholders, see Publication 542, Corporations. H&r block tax software Kinds of Pay Some of the ways you may provide pay to your employees in addition to regular wages or salaries are discussed next. H&r block tax software For specialized and detailed information on employees' pay and the employment tax treatment of employees' pay, see Publications 15, 15-A, and 15-B. H&r block tax software Awards You can generally deduct amounts you pay to your employees as awards, whether paid in cash or property. H&r block tax software If you give property to an employee as an employee achievement award, your deduction may be limited. H&r block tax software Achievement awards. H&r block tax software   An achievement award is an item of tangible personal property that meets all the following requirements. H&r block tax software It is given to an employee for length of service or safety achievement. H&r block tax software It is awarded as part of a meaningful presentation. H&r block tax software It is awarded under conditions and circumstances that do not create a significant likelihood of disguised pay. H&r block tax software Length-of-service award. H&r block tax software    An award will qualify as a length-of-service award only if either of the following applies. H&r block tax software The employee receives the award after his or her first 5 years of employment. H&r block tax software The employee did not receive another length-of-service award (other than one of very small value) during the same year or in any of the prior 4 years. H&r block tax software Safety achievement award. H&r block tax software    An award for safety achievement will qualify as an achievement award unless one of the following applies. H&r block tax software It is given to a manager, administrator, clerical employee, or other professional employee. H&r block tax software During the tax year, more than 10% of your employees, excluding those listed in (1), have already received a safety achievement award (other than one of very small value). H&r block tax software Deduction limit. H&r block tax software   Your deduction for the cost of employee achievement awards given to any one employee during the tax year is limited to the following. H&r block tax software $400 for awards that are not qualified plan awards. H&r block tax software $1,600 for all awards, whether or not qualified plan awards. H&r block tax software   A qualified plan award is an achievement award given as part of an established written plan or program that does not favor highly compensated employees as to eligibility or benefits. H&r block tax software   A highly compensated employee is an employee who meets either of the following tests. H&r block tax software The employee was a 5% owner at any time during the year or the preceding year. H&r block tax software The employee received more than $115,000 in pay for the preceding year. H&r block tax software You can choose to ignore test (2) if the employee was not also in the top 20% of employees ranked by pay for the preceding year. H&r block tax software   An award is not a qualified plan award if the average cost of all the employee achievement awards given during the tax year (that would be qualified plan awards except for this limit) is more than $400. H&r block tax software To figure this average cost, ignore awards of nominal value. H&r block tax software Deduct achievement awards as a nonwage business expense on your return or business schedule. H&r block tax software You may not owe employment taxes on the value of some achievement awards you provide to an employee. H&r block tax software See Publication 15-B. H&r block tax software Bonuses You can generally deduct a bonus paid to an employee if you intended the bonus as additional pay for services, not as a gift, and the services were performed. H&r block tax software However, the total bonuses, salaries, and other pay must be reasonable for the services performed. H&r block tax software If the bonus is paid in property, see Property , later. H&r block tax software Gifts of nominal value. H&r block tax software    If, to promote employee goodwill, you distribute food or merchandise of nominal value to your employees at holidays, you can deduct the cost of these items as a nonwage business expense. H&r block tax software Your deduction for de minimis gifts of food or drink are not subject to the 50% deduction limit that generally applies to meals. H&r block tax software For more information on this deduction limit, see Meals and lodging , later. H&r block tax software Education Expenses If you pay or reimburse education expenses for an employee, you can deduct the payments if they are part of a qualified educational assistance program. H&r block tax software Deduct them on the “Employee benefit programs” or other appropriate line of your tax return. H&r block tax software For information on educational assistance programs, see Educational Assistance in section 2 of Publication 15-B. H&r block tax software Fringe Benefits A fringe benefit is a form of pay for the performance of services. H&r block tax software You can generally deduct the cost of fringe benefits. H&r block tax software You may be able to exclude all or part of the value of some fringe benefits from your employees' pay. H&r block tax software You also may not owe employment taxes on the value of the fringe benefits. H&r block tax software See Table 2-1, Special Rules for Various Types of Fringe Benefits, in Publication 15-B for details. H&r block tax software Your deduction for the cost of fringe benefits for activities generally considered entertainment, amusement, or recreation, or for a facility used in connection with such an activity (for example, a company aircraft) for certain officers, directors, and more-than-10% shareholders is limited. H&r block tax software Certain fringe benefits are discussed next. H&r block tax software See Publication 15-B for more details on these and other fringe benefits. H&r block tax software Meals and lodging. H&r block tax software   You can usually deduct the cost of furnishing meals and lodging to your employees. H&r block tax software Deduct the cost in whatever category the expense falls. H&r block tax software For example, if you operate a restaurant, deduct the cost of the meals you furnish to employees as part of the cost of goods sold. H&r block tax software If you operate a nursing home, motel, or rental property, deduct the cost of furnishing lodging to an employee as expenses for utilities, linen service, salaries, depreciation, etc. H&r block tax software Deduction limit on meals. H&r block tax software   You can generally deduct only 50% of the cost of furnishing meals to your employees. H&r block tax software However, you can deduct the full cost of the following meals. H&r block tax software Meals whose value you include in an employee's wages. H&r block tax software Meals that qualify as a de minimis fringe benefit as discussed in section 2 of Publication 15-B. H&r block tax software This generally includes meals you furnish to employees at your place of business if more than half of these employees are provided the meals for your convenience. H&r block tax software Meals you furnish to your employees at the work site when you operate a restaurant or catering service. H&r block tax software Meals you furnish to your employees as part of the expense of providing recreational or social activities, such as a company picnic. H&r block tax software Meals you are required by federal law to furnish to crew members of certain commercial vessels (or would be required to furnish if the vessels were operated at sea). H&r block tax software This does not include meals you furnish on vessels primarily providing luxury water transportation. H&r block tax software Meals you furnish on an oil or gas platform or drilling rig located offshore or in Alaska. H&r block tax software This includes meals you furnish at a support camp that is near and integral to an oil or gas drilling rig located in Alaska. H&r block tax software Employee benefit programs. H&r block tax software   Employee benefit programs include the following. H&r block tax software Accident and health plans. H&r block tax software Adoption assistance. H&r block tax software Cafeteria plans. H&r block tax software Dependent care assistance. H&r block tax software Education assistance. H&r block tax software Life insurance coverage. H&r block tax software Welfare benefit funds. H&r block tax software   You can generally deduct amounts you spend on employee benefit programs on the applicable line of your tax return. H&r block tax software For example, if you provide dependent care by operating a dependent care facility for your employees, deduct your costs in whatever categories they fall (utilities, salaries, etc. H&r block tax software ). H&r block tax software Life insurance coverage. H&r block tax software   You cannot deduct the cost of life insurance coverage for you, an employee, or any person with a financial interest in your business, if you are directly or indirectly the beneficiary of the policy. H&r block tax software See Regulations section 1. H&r block tax software 264-1 for more information. H&r block tax software Welfare benefit funds. H&r block tax software   A welfare benefit fund is a funded plan (or a funded arrangement having the effect of a plan) that provides welfare benefits to your employees, independent contractors, or their beneficiaries. H&r block tax software Welfare benefits are any benefits other than deferred compensation or transfers of restricted property. H&r block tax software   Your deduction for contributions to a welfare benefit fund is limited to the fund's qualified cost for the tax year. H&r block tax software If your contributions to the fund are more than its qualified cost, carry the excess over to the next tax year. H&r block tax software   Generally, the fund's “qualified cost” is the total of the following amounts, reduced by the after-tax income of the fund. H&r block tax software The cost you would have been able to deduct using the cash method of accounting if you had paid for the benefits directly. H&r block tax software The contributions added to a reserve account that are needed to fund claims incurred but not paid as of the end of the year. H&r block tax software These claims can be for supplemental unemployment benefits, severance pay, or disability, medical, or life insurance benefits. H&r block tax software   For more information, see sections 419(c) and 419A of the Internal Revenue Code and the related regulations. H&r block tax software Loans or Advances You generally can deduct as wages an advance you make to an employee for services performed if you do not expect the employee to repay the advance. H&r block tax software However, if the employee performs no services, treat the amount you advanced as a loan. H&r block tax software If the employee does not repay the loan, treat it as income to the employee. H&r block tax software Below-market interest rate loans. H&r block tax software   On certain loans you make to an employee or shareholder, you are treated as having received interest income and as having paid compensation or dividends equal to that interest. H&r block tax software See Below-Market Loans in chapter 4. H&r block tax software Property If you transfer property (including your company's stock) to an employee as payment for services, you can generally deduct it as wages. H&r block tax software The amount you can deduct is the property's fair market value on the date of the transfer less any amount the employee paid for the property. H&r block tax software You can claim the deduction only for the tax year in which your employee includes the property's value in income. H&r block tax software Your employee is deemed to have included the value in income if you report it on Form W-2, Wage and Tax Statement, in a timely manner. H&r block tax software You treat the deductible amount as received in exchange for the property, and you must recognize any gain or loss realized on the transfer, unless it is the company's stock transferred as payment for services. H&r block tax software Your gain or loss is the difference between the fair market value of the property and its adjusted basis on the date of transfer. H&r block tax software These rules also apply to property transferred to an independent contractor for services, generally reported on Form 1099-MISC, Miscellaneous Income. H&r block tax software Restricted property. H&r block tax software   If the property you transfer for services is subject to restrictions that affect its value, you generally cannot deduct it and do not report gain or loss until it is substantially vested in the recipient. H&r block tax software However, if the recipient pays for the property, you must report any gain at the time of the transfer up to the amount paid. H&r block tax software    “Substantially vested” means the property is not subject to a substantial risk of forfeiture. H&r block tax software This means that the recipient is not likely to have to give up his or her rights in the property in the future. H&r block tax software Reimbursements for Business Expenses You can generally deduct the amount you pay or reimburse employees for business expenses incurred for your business. H&r block tax software However, your deduction may be limited. H&r block tax software If you make the payment under an accountable plan, deduct it in the category of the expense paid. H&r block tax software For example, if you pay an employee for travel expenses incurred on your behalf, deduct this payment as a travel expense. H&r block tax software If you make the payment under a nonaccountable plan, deduct it as wages and include it in the employee's Form W-2. H&r block tax software See Reimbursement of Travel, Meals, and Entertainment in chapter 11 for more information about deducting reimbursements and an explanation of accountable and nonaccountable plans. H&r block tax software Sick and Vacation Pay Sick pay. H&r block tax software   You can deduct amounts you pay to your employees for sickness and injury, including lump-sum amounts, as wages. H&r block tax software However, your deduction is limited to amounts not compensated by insurance or other means. H&r block tax software Vacation pay. H&r block tax software   Vacation pay is an employee benefit. H&r block tax software It includes amounts paid for unused vacation leave. H&r block tax software You can deduct vacation pay only in the tax year in which the employee actually receives it. H&r block tax software This rule applies regardless of whether you use the cash or accrual method of accounting. H&r block tax software Prev  Up  Next   Home   More Online Publications