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Irs E File 2012

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Irs E File 2012

Irs e file 2012 5. Irs e file 2012   Soil and Water Conservation Expenses Table of Contents Introduction Topics - This chapter discusses: Business of Farming Plan Certification Conservation ExpensesWater well. Irs e file 2012 Assessment by Conservation DistrictAssessment for Depreciable Property 25% Limit on DeductionNet operating loss. Irs e file 2012 When to Deduct or Capitalize Sale of a Farm Introduction If you are in the business of farming, you can choose to deduct certain expenses for: Soil or water conservation, Prevention of erosion of land used in farming, or Endangered species recovery. Irs e file 2012 Otherwise, these are capital expenses that must be added to the basis of the land. Irs e file 2012 (See chapter 6 for information on determining basis. Irs e file 2012 ) Conservation expenses for land in a foreign country do not qualify for this special treatment. Irs e file 2012 The deduction for conservation expenses cannot be more than 25% of your gross income from farming. Irs e file 2012 See 25% Limit on Deduction , later. Irs e file 2012 Although some expenses are not deductible as soil and water conservation expenses, they may be deductible as ordinary and necessary farm expenses. Irs e file 2012 These include interest and taxes, the cost of periodically clearing brush from productive land, the regular removal of sediment from a drainage ditch, and expenses paid or incurred primarily to produce an agricultural crop that may also conserve soil. Irs e file 2012 You must include in income most government payments for approved conservation practices. Irs e file 2012 However, you can exclude some payments you receive under certain cost-sharing conservation programs. Irs e file 2012 For more information, see Agricultural Program Payments in chapter 3. Irs e file 2012 To get the full deduction to which you are entitled, you should maintain your records to clearly distinguish between your ordinary and necessary farm business expenses and your soil and water conservation expenses. Irs e file 2012 Topics - This chapter discusses: Business of farming Plan certification Conservation expenses Assessment by conservation district 25% limit on deduction When to deduct or capitalize Sale of a farm Business of Farming For purposes of soil and water conservation expenses, you are in the business of farming if you cultivate, operate, or manage a farm for profit, either as an owner or a tenant. Irs e file 2012 You are not in the business of farming if you cultivate or operate a farm for recreation or pleasure, rather than for profit. Irs e file 2012 You are not farming if you are engaged only in forestry or the growing of timber. Irs e file 2012 Farm defined. Irs e file 2012   A farm includes livestock, dairy, poultry, fish, fruit, and truck farms. Irs e file 2012 It also includes plantations, ranches, ranges, and orchards. Irs e file 2012 A fish farm is an area where fish and other marine animals are grown or raised and artificially fed, protected, etc. Irs e file 2012 It does not include an area where they are merely caught or harvested. Irs e file 2012 A plant nursery is a farm for purposes of deducting soil and water conservation expenses. Irs e file 2012 Farm rental. Irs e file 2012   If you own a farm and receive farm rental payments based on farm production, either in cash or crop shares, you are in the business of farming. Irs e file 2012 If you get cash rental for a farm you own that is not used in farm production, you cannot deduct soil and water conservation expenses for that farm. Irs e file 2012   If you receive a fixed rental payment that is not based on farm production, you are in the business of farming only if you materially participate in operating or managing the farm. Irs e file 2012 Example. Irs e file 2012 You own a farm in Iowa and live in California. Irs e file 2012 You rent the farm for $175 in cash per acre and do not materially participate in producing or managing production of the crops grown on the farm. Irs e file 2012 You cannot deduct your soil conservation expenses for this farm. Irs e file 2012 You must capitalize the expenses and add them to the basis of the land. Irs e file 2012     For more information, see Material participation for landlords under Landlord Participation in Farming in chapter 12. Irs e file 2012 Plan Certification You can deduct soil and water conservation expenses only if they are consistent with a plan approved by the Natural Resources Conservation Service (NRCS) of the Department of Agriculture. Irs e file 2012 If no such plan exists, the expenses must be consistent with a soil conservation plan of a comparable state agency. Irs e file 2012 Keep a copy of the plan with your books and records to support your deductions. Irs e file 2012 Conservation plan. Irs e file 2012   A conservation plan includes the farming conservation practices approved for the area where your farmland is located. Irs e file 2012 There are three types of approved plans. Irs e file 2012 NRCS individual site plans. Irs e file 2012 These plans are issued individually to farmers who request assistance from NRCS to develop a conservation plan designed specifically for their farmland. Irs e file 2012 NRCS county plans. Irs e file 2012 These plans include a listing of farm conservation practices approved for the county where the farmland is located. Irs e file 2012 You can deduct expenses for conservation practices not included on the NRCS county plans only if the practice is a part of an individual site plan. Irs e file 2012 Comparable state agency plans. Irs e file 2012 These plans are approved by state agencies and can be approved individual site plans or county plans. Irs e file 2012   A list of NRCS conservation programs is available at www. Irs e file 2012 nrcs. Irs e file 2012 usda. Irs e file 2012 gov/programs. Irs e file 2012 Individual site plans can be obtained from NRCS offices and the comparable state agencies. Irs e file 2012 Conservation Expenses You can deduct conservation expenses only for land you or your tenant are using, or have used in the past, for farming. Irs e file 2012 These expenses include, but are not limited to, the following. Irs e file 2012 The treatment or movement of earth, such as: Leveling, Conditioning, Grading, Terracing, Contour furrowing, and Restoration of soil fertility. Irs e file 2012 The construction, control, and protection of: Diversion channels, Drainage ditches, Irrigation ditches, Earthen dams, and Watercourses, outlets, and ponds. Irs e file 2012 The eradication of brush. Irs e file 2012 The planting of windbreaks. Irs e file 2012 You cannot deduct expenses to drain or fill wetlands, or to prepare land for center pivot irrigation systems, as soil and water conservation expenses. Irs e file 2012 These expenses are added to the basis of the land. Irs e file 2012 If you choose to deduct soil and water conservation expenses, you cannot exclude from gross income any cost-sharing payments you receive for those expenses. Irs e file 2012 See chapter 3 for information about payments eligible for the cost-sharing exclusion. Irs e file 2012 New farm or farmland. Irs e file 2012   If you acquire a new farm or new farmland from someone who was using it in farming immediately before you acquired the land, soil and water conservation expenses you incur on it will be treated as made on land used in farming at the time the expenses were paid or incurred. Irs e file 2012 You can deduct soil and water conservation expenses for this land if your use of it is substantially a continuation of its use in farming. Irs e file 2012 The new farming activity does not have to be the same as the old farming activity. Irs e file 2012 For example, if you buy land that was used for grazing cattle and then prepare it for use as an apple orchard, you can deduct your conservation expenses. Irs e file 2012 Land not used for farming. Irs e file 2012   If your conservation expenses benefit both land that does not qualify as land used for farming and land that does qualify, you must allocate the expenses between the two types of land. Irs e file 2012 For example, if the expenses benefit 200 acres of your land, but only 120 acres of this land are used for farming, then you can deduct 60% (120 ÷ 200) of the expenses. Irs e file 2012 You can use another method to allocate these expenses if you can clearly show that your method is more reasonable. Irs e file 2012 Depreciable conservation assets. Irs e file 2012   You generally cannot deduct your expenses for depreciable conservation assets. Irs e file 2012 However, you can deduct certain amounts you pay or incur for an assessment for depreciable property that a soil and water conservation or drainage district levies against your farm. Irs e file 2012 See Assessment for Depreciable Property , later. Irs e file 2012   You must capitalize expenses to buy, build, install, or improve depreciable structures or facilities. Irs e file 2012 These expenses include those for materials, supplies, wages, fuel, hauling, and moving dirt when making structures such as tanks, reservoirs, pipes, culverts, canals, dams, wells, or pumps composed of masonry, concrete, tile, metal, or wood. Irs e file 2012 You recover your capital investment through annual allowances for depreciation. Irs e file 2012   You can deduct soil and water conservation expenses for nondepreciable earthen items. Irs e file 2012 Nondepreciable earthen items include certain dams, ponds, and terraces described under Property Having a Determinable Useful Life in chapter 7. Irs e file 2012 Water well. Irs e file 2012   You cannot deduct the cost of drilling a water well for irrigation and other agricultural purposes as a soil and water conservation expense. Irs e file 2012 It is a capital expense. Irs e file 2012 You recover your cost through depreciation. Irs e file 2012 You also must capitalize your cost for drilling a test hole. Irs e file 2012 If the test hole produces no water and you continue drilling, the cost of the test hole is added to the cost of the producing well. Irs e file 2012 You can recover the total cost through depreciation deductions. Irs e file 2012   If a test hole, dry hole, or dried-up well (resulting from prolonged lack of rain, for instance) is abandoned, you can deduct your unrecovered cost in the year of abandonment. Irs e file 2012 Abandonment means that all economic benefits from the well are terminated. Irs e file 2012 For example, filling or sealing a well excavation or casing so that all economic benefits from the well are terminated constitutes an abandonment. Irs e file 2012 Endangered species recovery expenses. Irs e file 2012   If you are in the business of farming and meet other specific requirements, you can choose to deduct the conservation expenses discussed earlier as endangered species recovery expenses. Irs e file 2012 Otherwise, these are capital expenses that must be added to the basis of the land. Irs e file 2012   The expenses must be paid or incurred for the purpose of achieving site-specific management actions recommended in a recovery plan approved under section 4(f) of the Endangered Species Act of 1973. Irs e file 2012 See Internal Revenue Code section 175 for more information. Irs e file 2012 Assessment by Conservation District In some localities, a soil or water conservation or drainage district incurs expenses for soil or water conservation and levies an assessment against the farmers who benefit from the expenses. Irs e file 2012 You can deduct as a conservation expense amounts you pay or incur for the part of an assessment that: Covers expenses you could deduct if you had paid them directly, or Covers expenses for depreciable property used in the district's business. Irs e file 2012 Assessment for Depreciable Property You generally can deduct as a conservation expense amounts you pay or incur for the part of a conservation or drainage district assessment that covers expenses for depreciable property. Irs e file 2012 This includes items such as pumps, locks, concrete structures (including dams and weir gates), draglines, and similar equipment. Irs e file 2012 The depreciable property must be used in the district's soil and water conservation activities. Irs e file 2012 However, the following limits apply to these assessments. Irs e file 2012 The total assessment limit. Irs e file 2012 The yearly assessment limit. Irs e file 2012 After you apply these limits, the amount you can deduct is added to your other conservation expenses for the year. Irs e file 2012 The total for these expenses is then subject to the 25% of gross income from farming limit on the deduction, discussed later. Irs e file 2012 See Table 5-1 for a brief summary of these limits. Irs e file 2012 Table 5-1. Irs e file 2012 Limits on Deducting an Assessment by a Conservation District for Depreciable Property Total Limit on Deduction for Assessment for Depreciable Property Yearly Limit on Deduction for Assessment for Depreciable Property Yearly Limit for All Conservation Expenses 10% of: $500 + 10% of: 25% of: Total assessment against all members of the district for the property. Irs e file 2012 Your deductible share of the cost to the district for the property. Irs e file 2012 Your gross income from farming. Irs e file 2012 No one taxpayer can deduct more than 10% of the total assessment. Irs e file 2012 Any amount over 10% is a capital expense and is added to the basis of your land. Irs e file 2012 If an assessment is paid in installments, each payment must be prorated between the conservation expense and the capital expense. Irs e file 2012 If the amount you pay or incur for any year is more than the limit, you can deduct for that year only 10% of your deductible share of the cost. Irs e file 2012 You can deduct the remainder in equal amounts over the next 9 tax years. Irs e file 2012 Limit for all conservation expenses, including assessments for depreciable property. Irs e file 2012 Amounts greater than 25% can be carried to the following year and added to that year's expenses. Irs e file 2012 The total is then subject to the 25% of gross income from farming limit in that year. Irs e file 2012 To ensure your deduction is within the deduction limits, keep records to show the following. Irs e file 2012 The total assessment against all members of the district for the depreciable property. Irs e file 2012 Your deductible share of the cost to the district for the depreciable property. Irs e file 2012 Your gross income from farming. Irs e file 2012 Total assessment limit. Irs e file 2012   You cannot deduct more than 10% of the total amount assessed to all members of the conservation or drainage district for the depreciable property. Irs e file 2012 This applies whether you pay the assessment in one payment or in installments. Irs e file 2012 If your assessment is more than 10% of the total amount assessed, both the following rules apply. Irs e file 2012 The amount over 10% is a capital expense and is added to the basis of your land. Irs e file 2012 If the assessment is paid in installments, each payment must be prorated between the conservation expense and the capital expense. Irs e file 2012 Yearly assessment limit. Irs e file 2012   The maximum amount you can deduct in any one year is the total of 10% of your deductible share of the cost as explained earlier, plus $500. Irs e file 2012 If the amount you pay or incur is equal to or less than the maximum amount, you can deduct it in the year it is paid or incurred. Irs e file 2012 If the amount you pay or incur is more, you can deduct in that year only 10% of your deductible share of the cost. Irs e file 2012 You can deduct the remainder in equal amounts over the next 9 tax years. Irs e file 2012 Your total conservation expense deduction for each year is also subject to the 25% of gross income from farming limit on the deduction, discussed later. Irs e file 2012 Example 1. Irs e file 2012 This year, the soil conservation district levies and you pay an assessment of $2,400 against your farm. Irs e file 2012 Of the assessment, $1,500 is for digging drainage ditches. Irs e file 2012 You can deduct this part as a soil or conservation expense as if you had paid it directly. Irs e file 2012 The remaining $900 is for depreciable equipment to be used in the district's irrigation activities. Irs e file 2012 The total amount assessed by the district against all its members for the depreciable equipment is $7,000. Irs e file 2012 The total amount you can deduct for the depreciable equipment is limited to 10% of the total amount assessed by the district against all its members for depreciable equipment, or $700. Irs e file 2012 The $200 excess ($900 − $700) is a capital expense you must add to the basis of your farm. Irs e file 2012 To figure the maximum amount you can deduct for the depreciable equipment this year, multiply your deductible share of the total assessment ($700) by 10%. Irs e file 2012 Add $500 to the result for a total of $570. Irs e file 2012 Your deductible share, $700, is greater than the maximum amount deductible in one year, so you can deduct only $70 of the amount you paid or incurred for depreciable property this year (10% of $700). Irs e file 2012 You can deduct the balance at the rate of $70 a year over the next 9 years. Irs e file 2012 You add $70 to the $1,500 portion of the assessment for drainage ditches. Irs e file 2012 You can deduct $1,570 of the $2,400 assessment as a soil and water conservation expense this year, subject to the 25% of gross income from farming limit on the deduction, discussed later. Irs e file 2012 Example 2. Irs e file 2012 Assume the same facts in Example 1 except that $1,850 of the $2,400 assessment is for digging drainage ditches and $550 is for depreciable equipment. Irs e file 2012 The total amount assessed by the district against all its members for depreciable equipment is $5,500. Irs e file 2012 The total amount you can deduct for the depreciable equipment is limited to 10% of this amount, or $550. Irs e file 2012 The maximum amount you can deduct this year for the depreciable equipment is $555 (10% of your deductible share of the total assessment, $55, plus $500). Irs e file 2012 Since your deductible share is less than the maximum amount deductible in one year, you can deduct the entire $550 this year. Irs e file 2012 You can deduct the entire assessment, $2,400, as a soil and water conservation expense this year, subject to the 25% of gross income from farming limit on the deduction, discussed below. Irs e file 2012 Sale or other disposal of land during 9-year period. Irs e file 2012   If you dispose of the land during the 9-year period for deducting conservation expenses subject to the yearly limit, any amounts you have not yet deducted because of this limit are added to the basis of the property. Irs e file 2012 Death of farmer during 9-year period. Irs e file 2012   If a farmer dies during the 9-year period, any remaining amounts not yet deducted are deducted in the year of death. Irs e file 2012 25% Limit on Deduction The total deduction for conservation expenses in any tax year is limited to 25% of your gross income from farming for the year. Irs e file 2012 Gross income from farming. Irs e file 2012   Gross income from farming is the income you derive in the business of farming from the production of crops, fish, fruits, other agricultural products, or livestock. Irs e file 2012 Gains from sales of draft, breeding, or dairy livestock are included. Irs e file 2012 Gains from sales of assets such as farm machinery, or from the disposition of land, are not included. Irs e file 2012 Carryover of deduction. Irs e file 2012   If your deductible conservation expenses in any year are more than 25% of your gross income from farming for that year, you can carry the unused deduction over to later years. Irs e file 2012 However, the deduction in any later year is limited to 25% of the gross income from farming for that year as well. Irs e file 2012 Example. Irs e file 2012 In 2012, you have gross income of $32,000 from two farms. Irs e file 2012 During the year, you incurred $10,000 of deductible soil and water conservation expenses for one of the farms. Irs e file 2012 However, your deduction is limited to 25% of $32,000, or $8,000. Irs e file 2012 The $2,000 excess ($10,000 − $8,000) is carried over to 2013 and added to deductible soil and water conservation expenses made in that year. Irs e file 2012 The total of the 2012 carryover plus 2013 expenses is deductible in 2013, subject to the limit of 25% of your gross income from farming in 2013. Irs e file 2012 Any expenses over the limit in that year are carried to 2014 and later years. Irs e file 2012 Net operating loss. Irs e file 2012   The deduction for soil and water conservation expenses, after applying the 25% limit, is included when figuring a net operating loss (NOL) for the year. Irs e file 2012 If the NOL is carried to another year, the soil and water conservation deduction included in the NOL is not subject to the 25% limit in the year to which it is carried. Irs e file 2012 When to Deduct or Capitalize If you choose to deduct soil and water conservation expenses, you must deduct the total allowable amount on your tax return for the first year you pay or incur these expenses. Irs e file 2012 If you do not choose to deduct the expenses, you must capitalize them. Irs e file 2012 Change of method. Irs e file 2012   If you want to change your method for the treatment of soil and water conservation expenses, or you want to treat the expenses for a particular project or a single farm in a different manner, you must get the approval of the IRS. Irs e file 2012 To get this approval, submit a written request by the due date of your return for the first tax year you want the new method to apply. Irs e file 2012 You or your authorized representative must sign the request. Irs e file 2012   The request must include the following information. Irs e file 2012 Your name and address. Irs e file 2012 The first tax year the method or change of method is to apply. Irs e file 2012 Whether the method or change of method applies to all your soil and water conservation expenses or only to those for a particular project or farm. Irs e file 2012 If the method or change of method does not apply to all your expenses, identify the project or farm to which the expenses apply. Irs e file 2012 The total expenses you paid or incurred in the first tax year the method or change of method is to apply. Irs e file 2012 A statement that you will account separately in your books for the expenses to which this method or change of method relates. Irs e file 2012 Send your request to the following  address. Irs e file 2012  Department of the Treasury Internal Revenue Service Center Cincinnati, OH 45999  For more information, see Change in  Accounting Method in chapter 2. Irs e file 2012 Sale of a Farm If you sell your farm, you cannot adjust the basis of the land at the time of the sale for any unused carryover of soil and water conservation expenses (except for deductions of assessments for depreciable property, discussed earlier). Irs e file 2012 However, if you acquire another farm and return to the business of farming, you can start taking deductions again for the unused carryovers. Irs e file 2012 Gain on sale of farmland. Irs e file 2012   If you held the land 5 years or less before you sold it, gain on the sale of the land is treated as ordinary income up to the amount you previously deducted for soil and water conservation expenses. Irs e file 2012 If you held the land less than 10 but more than 5 years, the gain is treated as ordinary income up to a specified percentage of the previous deductions. Irs e file 2012 See Section 1252 property under Other Gains in chapter 9. Irs e file 2012 Prev  Up  Next   Home   More Online Publications
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The Irs E File 2012

Irs e file 2012 Publication 51 - Main Content Table of Contents 1. Irs e file 2012 Taxpayer Identification NumbersWhen you receive your EIN. Irs e file 2012 Registering for SSNVS. Irs e file 2012 2. Irs e file 2012 Who Are Employees?Crew Leaders Business Owned and Operated by Spouses 3. Irs e file 2012 Wages and Other Compensation 4. Irs e file 2012 Social Security and Medicare TaxesThe $150 Test or the $2,500 Test Social Security and Medicare Tax Withholding 5. Irs e file 2012 Federal Income Tax WithholdingImplementation of lock-in letter. Irs e file 2012 Seasonal employees and employees not currently performing services. Irs e file 2012 Termination and re-hire of employees. Irs e file 2012 How To Figure Federal Income Tax Withholding 6. Irs e file 2012 Required Notice to Employees About Earned Income Credit (EIC) 7. Irs e file 2012 Depositing TaxesWhen To Deposit How To Deposit Deposit Penalties Employers of Both Farm and Nonfarm Workers 8. Irs e file 2012 Form 943 9. Irs e file 2012 Reporting Adjustments on Form 943Current Year Adjustments Prior Year Adjustments 10. Irs e file 2012 Federal Unemployment (FUTA) Tax 11. Irs e file 2012 Reconciling Wage Reporting Forms 13. Irs e file 2012 Federal Income Tax Withholding MethodsWage Bracket Method Percentage Method Alternative Methods of Federal Income Tax Withholding How To Get Tax Help 1. Irs e file 2012 Taxpayer Identification Numbers If you are required to withhold any federal income, social security, or Medicare taxes, you will need an employer identification number (EIN) for yourself. Irs e file 2012 Also, you will need the SSN of each employee and the name of each employee as shown on the employee's social security card. Irs e file 2012 Employer identification number (EIN). Irs e file 2012   An employer identification number (EIN) is a nine-digit number that the IRS issues. Irs e file 2012 The digits are arranged as follows: 00-0000000. Irs e file 2012 It is used to identify the tax accounts of employers and certain others who have no employees. Irs e file 2012 Use your EIN on all of the items that you send to the IRS and SSA. Irs e file 2012   If you do not have an EIN, you may apply for one online. Irs e file 2012 Visit IRS. Irs e file 2012 gov and click on the Apply for an EIN Online link under Tools. Irs e file 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. Irs e file 2012 Do not use a SSN in place of an EIN. Irs e file 2012   If you do not have an EIN by the time a return is due, write “Applied For” and the date you applied for it in the space shown for the number. Irs e file 2012 If you took over another employer's business, do not use that employer's EIN. Irs e file 2012   You should have only one EIN. Irs e file 2012 If you have more than one, and are not sure which one to use, call the toll-free Business and Specialty Tax Line at 1-800-829-4933 or 1-800-829-4059 (TDD/TTY for persons who are deaf, hard of hearing, or have a speech disability). Irs e file 2012 Provide the EINs that you have, the name and address to which each number was assigned, and the address of your principal place of business. Irs e file 2012 The IRS will tell you which EIN to use. Irs e file 2012   For more information, see Publication 1635 or Publication 583. Irs e file 2012 When you receive your EIN. Irs e file 2012   If you are a new employer that indicated a federal tax obligation when requesting an EIN, you will be pre-enrolled in the Electronic Federal Tax Payment System (EFTPS). Irs e file 2012 You will receive information in your Employer Identification Number (EIN) Package about Express Enrollment and an additional mailing containing your EFTPS personal identification number (PIN) and instructions for activating your PIN. Irs e file 2012 Call the toll-free number located in your “How to Activate Your Enrollment” brochure to activate your enrollment and begin making your employment tax deposits. Irs e file 2012 If you outsource any of your payroll and related tax duties to a third party payer, such as a payroll service provider or reporting agent, be sure to tell them about your EFTPS enrollment. Irs e file 2012 Social security number (SSN). Irs e file 2012   An employee's social security number (SSN) consists of nine digits arranged as follows: 000-00-0000. Irs e file 2012 You must obtain each employee's name and SSN as shown on the employee's social security card because you must enter them on Form W-2. Irs e file 2012 Do not accept a social security card that says “Not valid for employment. Irs e file 2012 ” A social security number issued with this legend does not permit employment. Irs e file 2012 You may, but are not required to, photocopy the social security card if the employee provides it. Irs e file 2012 If you do not show the employee's correct name and SSN on Form W-2, you may owe a penalty unless you have reasonable cause. Irs e file 2012 See Publication 1586, Reasonable Cause Regulations & Requirements for Missing and Incorrect Name/TINs. Irs e file 2012 Applying for a social security card. Irs e file 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 to SSA. Irs e file 2012 You can get Form SS-5 at SSA offices, by calling 1-800-772-1213 or 1-800-325-0778 (TTY), or from the SSA website at www. Irs e file 2012 socialsecurity. Irs e file 2012 gov/online/ss-5. Irs e file 2012 html. Irs e file 2012 The employee must complete and sign Form SS-5; it cannot be filed by the employer. Irs e file 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. Irs e file 2012 Applying for a social security number. Irs e file 2012   If you file Form W-2 on paper and your employee has applied for an SSN but does not have one when you must file Form W-2, enter “Applied For” on the form. Irs e file 2012 If you are filing electronically, enter all zeros (000-00-0000) in the social security number field. Irs e file 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. Irs e file 2012 Furnish Copies B, C, and 2 of Form W-2c to the employee. Irs e file 2012 Up to 25 Forms W-2c per Form W-3c, Transmittal of Corrected Wage and Tax Statements, may be filed per session over the Internet, with no limit on the number of sessions. Irs e file 2012 For more information, visit SSA's Employer W-2 Filing Instructions & Information webpage at www. Irs e file 2012 socialsecurity. Irs e file 2012 gov/employer. Irs e file 2012 Advise your employee to correct the SSN on his or her original Form W-2. Irs e file 2012 Correctly record the employee's name and SSN. Irs e file 2012   Record the name and number of each employee as they are shown on the employee's social security card. Irs e file 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. Irs e file 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. Irs e file 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 on the most recently filed Form W-2. Irs e file 2012 It is not necessary to correct other years if the previous name and SSN were used for years before the most recent Form W-2. Irs e file 2012 IRS individual taxpayer identification numbers (ITINs) for aliens. Irs e file 2012   Do not accept an ITIN in place of an SSN for employee identification or for work. Irs e file 2012 An ITIN is issued for use by resident and nonresident aliens who need identification for tax purposes, but who are not eligible for U. Irs e file 2012 S. Irs e file 2012 employment. Irs e file 2012 The ITIN is a nine-digit number formatted like an SSN (for example, NNN-NN-NNNN). Irs e file 2012 However, it begins with the number “9” and has either a “7” or “8” as the fourth digit (for example, 9NN-7N-NNNN or 9NN-8N-NNNN). Irs e file 2012    An individual with an ITIN who later becomes eligible to work in the United States must obtain an SSN. Irs e file 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 in this section. Irs e file 2012 Do not use an ITIN in place of an SSN on Form W-2. Irs e file 2012 Verification of social security numbers. Irs e file 2012   Employers and authorized reporting agents can use the Social Security Number Verification Service (SSNVS) to instantly verify up to 10 employee names and SSNs (per screen) at a time, or submit an electronic file of up to 250,000 names and SSNs and usually receive results the next business day. Irs e file 2012 Visit www. Irs e file 2012 socialsecurity. Irs e file 2012 gov/employer/ssnv. Irs e file 2012 htm for more information. Irs e file 2012 Registering for SSNVS. Irs e file 2012   You must register online and receive authorization from your employer to use SSNVS. Irs e file 2012 To register, visit SSA's website at www. Irs e file 2012 socialsecurity. Irs e file 2012 gov/employer and click on the Business Services Online link. Irs e file 2012 Follow the registration instructions to obtain a user identification (ID) and password. Irs e file 2012 You will need to provide the following information about yourself and your company. Irs e file 2012 Name. Irs e file 2012 SSN. Irs e file 2012 Date of birth. Irs e file 2012 Type of employer. Irs e file 2012 EIN. Irs e file 2012 Company name, address, and telephone number. Irs e file 2012 Email address. Irs e file 2012 When you have completed the online registration process, SSA will mail a one-time activation code to your employer. Irs e file 2012 You must enter the activation code online to use SSNVS. Irs e file 2012 2. Irs e file 2012 Who Are Employees? Generally, employees are defined either under common law or under statutes for certain situations. Irs e file 2012 See Publication 15-A for details on statutory employees and nonemployees. Irs e file 2012 Employee status under common law. Irs e file 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. Irs e file 2012 This is so even when you give the employee freedom of action. Irs e file 2012 What matters is that you have the right to control the details of how the services are performed. Irs e file 2012 See Publication 15-A for more information on how to determine whether an individual providing services is an independent contractor or an employee. Irs e file 2012 If an employer-employee relationship exists, it does not matter what it is called. Irs e file 2012 The employee may be called an agent or independent contractor. Irs e file 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. Irs e file 2012 You are responsible for withholding and paying employment taxes for your employees. Irs e file 2012 You are also required to file employment tax returns. Irs e file 2012 These requirements do not apply to amounts that you pay to independent contractors. Irs e file 2012 The rules discussed in this publication apply only to workers who are your employees. Irs e file 2012 In general, you are an employer of farmworkers if your employees: Raise or harvest agricultural or horticultural products on your farm (including the raising and feeding of livestock); Work in connection with the operation, management, conservation, improvement, or maintenance of your farm and its tools and equipment; Provide services relating to salvaging timber, or clearing land of brush and other debris, left by a hurricane (also known as hurricane labor); Handle, process, or package any agricultural or horticultural commodity if you produced over half of the commodity (for a group of up to 20 unincorporated operators, all of the commodity); or Do work for you related to cotton ginning, turpentine, gum resin products, or the operation and maintenance of irrigation facilities. Irs e file 2012 For this purpose, the term “farm” includes stock, dairy, poultry, fruit, fur-bearing animal, and truck farms, as well as plantations, ranches, nurseries, ranges, greenhouses or other similar structures used primarily for the raising of agricultural or horticultural commodities, and orchards. Irs e file 2012 Farmwork does not include reselling activities that do not involve any substantial activity of raising agricultural or horticultural commodities, such as a retail store or a greenhouse used primarily for display or storage. Irs e file 2012 The table in section 12, How Do Employment Taxes Apply to Farmwork , distinguishes between farm and nonfarm activities, and also addresses rules that apply in special situations. Irs e file 2012 Crew Leaders If you are a crew leader, you are an employer of farmworkers. Irs e file 2012 A crew leader is a person who furnishes and pays (either on his or her own behalf or on behalf of the farm operator) workers to do farmwork for the farm operator. Irs e file 2012 If there is no written agreement between you and the farm operator stating that you are his or her employee and if you pay the workers (either for yourself or for the farm operator), then you are a crew leader. Irs e file 2012 For FUTA tax rules, see section 10. Irs e file 2012 Business Owned and Operated by Spouses If you and your spouse jointly own and operate a farm or nonfarm business and share in the profits and losses, you are partners in a partnership, whether or not you have a formal partnership agreement. Irs e file 2012 See Publication 541, Partnerships, for more details. Irs e file 2012 The partnership is considered the employer of any employees, and is liable for any employment taxes due on wages paid to its employees. Irs e file 2012 Exception—Qualified joint venture. Irs e file 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. Irs e file 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). Irs e file 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. Irs e file 2012 Each spouse must also file a separate Schedule SE to pay self-employment taxes, as applicable. Irs e file 2012   Spouses using the qualified joint venture rules are treated as sole proprietors for federal tax purposes and generally do not need an EIN. Irs e file 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. Irs e file 2012 Generally, filing as a qualified joint venture will not increase the spouses' total tax owed on the joint income tax return. Irs e file 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. Irs e file 2012    Note. Irs e file 2012 If your spouse is your employee, not your partner, you must pay social security and Medicare taxes for him or her. Irs e file 2012   For more information on qualified joint ventures, visit IRS. Irs e file 2012 gov and enter “qualified joint venture” in the search box. Irs e file 2012 Exception—Community income. Irs e file 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. Irs e file 2012 S. Irs e file 2012 possession, you can treat the business either as a sole proprietorship (of the spouse who carried on the business) or a partnership. Irs e file 2012 You may still make an election to be taxed as a qualified joint venture instead of a partnership. Irs e file 2012 See Exception—Qualified joint venture , earlier in this section. Irs e file 2012 3. Irs e file 2012 Wages and Other Compensation Cash wages that you pay to employees for farmwork are generally subject to social security tax and Medicare tax. Irs e file 2012 You may also be required to withhold, deposit, and report Additional Medicare Tax. Irs e file 2012 See section 4 for more information. Irs e file 2012 If the wages are subject to social security and Medicare taxes, they are also subject to federal income tax withholding. Irs e file 2012 You may also be liable for FUTA tax, which is not withheld by you or paid by the employee. Irs e file 2012 FUTA tax is discussed in section 10. Irs e file 2012 Cash wages include checks, money orders, etc. Irs e file 2012 Do not count as cash wages the value of food, lodging, and other noncash items. Irs e file 2012 For more information on what payments are considered taxable wages, see Publication 15 (Circular E). Irs e file 2012 Commodity wages. Irs e file 2012   Commodity wages are not cash and are not subject to social security and Medicare taxes or federal income tax withholding. Irs e file 2012 However, noncash payments, including commodity wages, are treated as cash wages (see above) if the substance of the transaction is a cash payment. Irs e file 2012 These noncash payments are subject to social security and Medicare taxes and federal income tax withholding. Irs e file 2012 Other compensation. Irs e file 2012   Publications 15-A and 15-B discuss other forms of compensation that may be taxable. Irs e file 2012 Family members. Irs e file 2012   Generally, the wages that you pay to family members who are your employees are subject to social security and Medicare taxes, federal income tax withholding, and FUTA tax. Irs e file 2012 However, certain exemptions may apply for your child, spouse, or parent. Irs e file 2012 See the table, How Do Employment Taxes Apply to Farmwork , in section 12. Irs e file 2012 Household employees. Irs e file 2012   The wages of an employee who performs household services, such as a maid, babysitter, gardener, or cook, in your home are not subject to social security and Medicare taxes if you pay that employee cash wages of less than $1,900 in 2014. Irs e file 2012   Social security and Medicare taxes do not apply to cash wages for housework in your private home if it was done by your spouse or your child under age 21. Irs e file 2012 Nor do the taxes apply to housework done by your parent unless: You have a child living in your home who is under age 18 or has a physical or mental condition that requires care by an adult for at least 4 continuous weeks in a calendar quarter, and You are a widow or widower, or divorced and not remarried, or have a spouse in the home who, because of a physical or mental condition, cannot care for your child for at least 4 continuous weeks in the quarter. Irs e file 2012   For more information, see Publication 926, Household Employer's Tax Guide. Irs e file 2012    Wages for household work may not be a deductible farm expense. Irs e file 2012 See Publication 225, Farmer's Tax Guide. Irs e file 2012 Share farmers. Irs e file 2012   You do not have to withhold or pay social security and Medicare taxes on amounts paid to share farmers under share-farming arrangements. Irs e file 2012 Compensation paid to H-2A visa holders. Irs e file 2012   Report compensation of $600 or more paid to foreign agricultural workers who entered the country on H-2A visas in box 1 of Form W-2 but do not report it as social security wages (box 3) or Medicare wages (box 5) on Form W-2 because compensation paid to H-2A workers for agricultural labor performed in connection with this visa is not subject to social security and Medicare taxes. Irs e file 2012 On Form W-2, do not check box 13 (Statutory employee), as H-2A workers are not statutory employees. Irs e file 2012   An employer is not required to withhold federal income tax from compensation it pays an H-2A worker for agricultural labor performed in connection with this visa unless the worker asks for withholding and the employer agrees. Irs e file 2012 In that case, the worker must give the employer a completed Form W-4. Irs e file 2012 Federal income tax withheld should be reported in box 2 of Form W-2. Irs e file 2012 These reporting rules apply when the H-2A worker provides his or her taxpayer identification number (TIN) to the employer. Irs e file 2012 For rules relating to backup withholding and reporting when the H-2A worker does not provide a TIN, see the Instructions for Form 1099-MISC and the Instructions for Form 945. Irs e file 2012 4. Irs e file 2012 Social Security and Medicare Taxes Generally, you must withhold social security and Medicare taxes on all cash wage payments that you make to your employees. Irs e file 2012 You may also be required to withhold Additional Medicare Tax. Irs e file 2012 For more information, see Additional Medicare Tax withholding , later. Irs e file 2012 The $150 Test or the $2,500 Test All cash wages that you pay to an employee during the year for farmwork are subject to social security and Medicare taxes and federal income tax withholding if either of the two tests below is met. Irs e file 2012 You pay cash wages to an employee of $150 or more in a year for farmwork (count all cash wages paid on a time, piecework, or other basis). Irs e file 2012 The $150 test applies separately to each farmworker that you employ. Irs e file 2012 If you employ a family of workers, each member is treated separately. Irs e file 2012 Do not count wages paid by other employers. Irs e file 2012 The total that you pay for farmwork (cash and noncash) to all your employees is $2,500 or more during the year. Irs e file 2012 Exceptions. Irs e file 2012   The $150 and $2,500 tests do not apply to wages that you pay to a farmworker who receives less than $150 in annual cash wages and the wages are not subject to social security and Medicare taxes, or federal income tax withholding, even if you pay $2,500 or more in that year to all of your farmworkers if the farmworker: Is employed in agriculture as a hand-harvest laborer, Is paid piece rates in an operation that is usually paid on a piece-rate basis in the region of employment, Commutes daily from his or her permanent home to the farm, and Had been employed in agriculture less than 13 weeks in the preceding calendar year. Irs e file 2012   Amounts that you pay to these seasonal farmworkers, however, count toward the $2,500-or-more test to determine whether wages that you pay to other farmworkers are subject to social security and Medicare taxes. Irs e file 2012 Social Security and Medicare Tax Withholding The social security tax rate is 6. Irs e file 2012 2%, for both the employee and employer, on the first $117,000 paid to each employee. Irs e file 2012 You must withhold at this rate from each employee and pay a matching amount. Irs e file 2012 The Medicare tax rate is 1. Irs e file 2012 45% each for the employee and employer on all wages. Irs e file 2012 You must withhold at this rate from each employee and pay a matching amount. Irs e file 2012 There is no wage base limit for Medicare tax; all covered wages are subject to Medicare tax. Irs e file 2012 Social security and Medicare taxes apply to most payments of sick pay, including payments made by third parties such as insurance companies. Irs e file 2012 For details, see Publication 15-A. Irs e file 2012 Additional Medicare Tax withholding. Irs e file 2012   In addition to withholding Medicare tax at 1. Irs e file 2012 45%, you must withhold a 0. Irs e file 2012 9% Additional Medicare Tax from wages you pay to an employee in excess of $200,000 in a calendar year. Irs e file 2012 You are required to begin withholding Additional Medicare Tax in the pay period in which you pay wages in excess of $200,000 to an employee and continue to withhold it each pay period until the end of the calendar year. Irs e file 2012 Additional Medicare Tax is only imposed on the employee. Irs e file 2012 There is no employer share of Additional Medicare Tax. Irs e file 2012 All wages that are subject to Medicare tax are subject to Additional Medicare Tax withholding if paid in excess of the $200,000 withholding threshold. Irs e file 2012   For more information on what wages are subject to Medicare tax, see the chart, Special Rules for Various Types of Services and Payments, in section 15 of Publication 15 (Circular E). Irs e file 2012 For more information on Additional Medicare Tax, visit IRS. Irs e file 2012 gov and enter “Additional Medicare Tax” in the search box. Irs e file 2012 Employee share paid by employer. Irs e file 2012   If you would rather pay a household or agricultural employee's share of the social security and Medicare taxes without withholding them from his or her wages, you may do so. Irs e file 2012 If you do not withhold the taxes, however, you must still pay them. Irs e file 2012 Any employee social security and Medicare taxes that you pay is additional income to the employee. Irs e file 2012 Include it in box 1 of the employee's Form W-2, but do not count it as social security and Medicare wages and do not include it in boxes 3 and 5. Irs e file 2012 Also, do not count the additional income as wages for FUTA tax purposes. Irs e file 2012 Different rules apply to employer payments of social security and Medicare taxes for non-household and non-agricultural employees. Irs e file 2012 See section 7 of Publication 15-A. Irs e file 2012 Withholding social security and Medicare taxes on nonresident alien employees. Irs e file 2012   In general, if you pay wages to nonresident alien employees, you must withhold social security and Medicare taxes as you would for a U. Irs e file 2012 S. Irs e file 2012 citizen or resident alien. Irs e file 2012 However, see Publication 515, Withholding of Tax on Nonresident Aliens and Foreign Entities, for exceptions to this general rule. Irs e file 2012 Also see Compensation paid to H-2A visa holders in section 3. Irs e file 2012 Religious exemption. Irs e file 2012    An exemption from social security and Medicare taxes is available to members of a recognized religious sect opposed to public insurance. Irs e file 2012 This exemption is available only if both the employee and the employer are members of the sect. Irs e file 2012   For more information, see Publication 517, Social Security and Other Information for Members of the Clergy and Religious Workers. Irs e file 2012 5. Irs e file 2012 Federal Income Tax Withholding Farmers and crew leaders must withhold federal income tax from the wages of farmworkers if the wages are subject to social security and Medicare taxes. Irs e file 2012 The amount to withhold is figured on gross wages before taking out social security and Medicare taxes, union dues, insurance, etc. Irs e file 2012 You may use one of several methods to determine the amount of federal income tax withholding. Irs e file 2012 They are discussed in section 13. Irs e file 2012 Form W-4. Irs e file 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. Irs e file 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. Irs e file 2012 Advise your employees to use the IRS Withholding Calculator on the IRS website at www. Irs e file 2012 irs. Irs e file 2012 gov/individuals for help in determining how many withholding allowances to claim on their Form W-4. Irs e file 2012   Ask each new employee to give you a signed Form W-4 when starting work. Irs e file 2012 Make the form effective with the first wage payment. Irs e file 2012 If a new employee does not give you a completed Form W-4, withhold tax as if he or she is single, with no withholding allowances. Irs e file 2012 Forms in Spanish. Irs e file 2012   You can provide Formulario W-4(SP) in place of Form W-4 to your Spanish-speaking employees. Irs e file 2012 For more information, see Publicación 17(SP). Irs e file 2012 Effective date of Form W-4. Irs e file 2012   A Form W-4 remains in effect until the employee gives you a new one. Irs e file 2012 When you receive a new Form W-4, do not adjust withholding for pay periods before the effective date of the new form. Irs e file 2012 Do not adjust withholding retroactively. Irs e file 2012 If an employee gives you a replacement Form W-4, begin withholding no later than the start of the first payroll period ending on or after the 30th day from the date when you received the replacement Form W-4. Irs e file 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. Irs e file 2012 A Form W-4 that makes a change for the next calendar year will not take effect in the current calendar year. Irs e file 2012 Completing Form W-4. Irs e file 2012   The amount of federal income tax withholding is based on marital status and withholding allowances. Irs e file 2012 Your employees may not base their withholding amounts on a fixed dollar amount or percentage. Irs e file 2012 However, the employee may specify a dollar amount to be withheld in addition to the amount of withholding based on filing status and withholding allowances claimed on Form W-4. Irs e file 2012   Employees may claim fewer withholding allowances than they are entitled to claim. Irs e file 2012 They may do this to ensure that they have enough withholding or to offset other sources of taxable income that are not subject to withholding. Irs e file 2012   See Publication 505, Tax Withholding and Estimated Tax, for more information about completing Form W-4. Irs e file 2012 Along with Form W-4, you may wish to order Publication 505 for use by your employees. Irs e file 2012    Do not accept any withholding or estimated tax payments from your employees in addition to withholding based on their Form W-4. Irs e file 2012 If an employee wants additional withholding, he or she should submit a new Form W-4 and, if necessary, pay estimated tax by filing Form 1040-ES, Estimated Tax for Individuals, or by using the Electronic Federal Tax Payment System (EFTPS) to make estimated tax payments. Irs e file 2012 Exemption from federal income tax withholding. Irs e file 2012   Generally, an employee may claim exemption from federal income tax withholding because he or she had no federal income tax liability last year and expects none this year. Irs e file 2012 See the Form W-4 instructions for more information. Irs e file 2012 However, the wages are still subject to social security and Medicare taxes. Irs e file 2012   A Form W-4 claiming exemption from withholding is effective when it is filed with the employer and only for that calendar year. Irs e file 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. Irs e file 2012 If the employee does not give you a new Form W-4 by February 15, withhold tax based on the last valid Form W-4 you have for the employee that did not claim an exemption from withholding or, if one does not exist, withhold as if he or she is single with zero withholding allowances. Irs e file 2012 If the employee provides a new Form W-4 claiming an exemption from withholding on February 16 or later, you may apply the exemption to future wages, but do not refund taxes withheld while the exempt status was not in place. Irs e file 2012 Withholding income taxes on the wages of nonresident alien employees. Irs e file 2012   In general, you must withhold federal income taxes on the wages of nonresident alien employees. Irs e file 2012 However, see Publication 515 for exceptions to this general rule. Irs e file 2012 Also see Compensation paid to H-2A visa workers in section 3. Irs e file 2012 Withholding adjustment for nonresident alien employees. Irs e file 2012   A special procedure applies for figuring the amount of income tax to withhold from wages of nonresident alien employees performing services within the United States for wages paid in 2014. Irs e file 2012 This procedure requires a special chart to be used with the withholding tables to determine the amount to withhold from the wages of the nonresident alien employee. Irs e file 2012 See Withholding adjustment for nonresident alien employees in section 9 of Publication 15 (Circular E). Irs e file 2012 Nonresident alien employee's Form W-4. Irs e file 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 Korea, he or she may claim more than one allowance); and Write “Nonresident Alien” or “NRA” above the dotted line on line 6 of Form W-4. Irs e file 2012   If you maintain an electronic Form W-4 system, you should provide a field for nonresident alien employees to enter nonresident alien status in lieu of writing “Nonresident Alien” or “NRA” above the dotted line on line 6. Irs e file 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. Irs e file 2012 Form 8233. Irs e file 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. Irs e file 2012 See Publication 515 for details. Irs e file 2012 IRS review of requested Forms W-4. Irs e file 2012   When requested by the IRS, you must make original Forms W-4 available for inspection by an IRS employee. Irs e file 2012 You may also be directed to send certain Forms W-4 to the IRS. Irs e file 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. Irs e file 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. Irs e file 2012 The IRS may also require you to submit copies of Form W-4 to the IRS as directed by a revenue procedure or notice published in the Internal Revenue Bulletin. Irs e file 2012 When we refer to Form W-4, the same rules apply to Formulario W-4(SP), its Spanish translation. Irs e file 2012   After submitting a copy of the requested Form W-4 to the IRS, continue to withhold federal income tax based on that Form W-4 if it is valid (see Invalid Forms W-4 , later in this section). Irs e file 2012 However, if the IRS later notifies you in writing that the employee is not entitled to claim a complete exemption from withholding or more than the maximum number of withholding allowances specified by the IRS in the written notice, withhold federal income tax based on the effective date, marital status, and maximum number of withholding allowances specified in the notice (commonly referred to as a “lock-in letter”). Irs e file 2012 Initial lock-in letter. Irs e file 2012   The IRS uses information reported on Form W-2 to identify employees with withholding compliance problems. Irs e file 2012 In some cases, where a serious under-withholding problem is found to exist for a particular employee, the IRS may issue a lock-in letter to the employer specifying the maximum number of withholding allowances and marital status permitted for a specific employee. Irs e file 2012 You will also receive a copy for the employee that identifies the maximum number of withholding allowances permitted and the process by which the employee can provide additional information to the IRS for purposes of determining the appropriate number of withholding allowances. Irs e file 2012 If the employee is employed by you as of the date of the notice, you must furnish the employee copy to the employee within 10 business days of receipt. Irs e file 2012 You may follow any reasonable business practice to furnish the employee copy to the employee. Irs e file 2012 Implementation of lock-in letter. Irs e file 2012   When you receive the notice specifying the maximum number of withholding allowances and marital status permitted, you may not withhold immediately on the basis of the notice. Irs e file 2012 You must begin withholding tax on the basis of the notice for any wages paid after the date specified in the notice. Irs e file 2012 The delay between your receipt of the notice and the date to begin the withholding on the basis of the notice permits the employee to contact the IRS. Irs e file 2012 Seasonal employees and employees not currently performing services. Irs e file 2012   If you receive a notice for an employee who is not currently performing services for you, you are still required to furnish the employee copy to the employee and withhold based on the notice if any of the following apply. Irs e file 2012 You are paying wages for the employee's prior services and the wages are subject to income tax withholding on or after the date specified in the notice. Irs e file 2012 You reasonably expect the employee to resume services within 12 months of the date of the notice. Irs e file 2012 The employee is on a bona fide leave of absence that does not exceed 12 months or the employee has a right to reemployment after the leave of absence. Irs e file 2012 Termination and re-hire of employees. Irs e file 2012   If you are required to furnish and withhold based on the notice and the employment relationship is terminated after the date of the notice, you must continue to withhold based on the notice if you continue to pay any wages subject to income tax withholding. Irs e file 2012 You must also withhold based on the notice or modification notice (explained next) if the employee resumes the employment relationship with you within 12 months after the termination of the employment relationship. Irs e file 2012 Modification notice. Irs e file 2012   After issuing the notice specifying the maximum number of withholding allowances and marital status permitted, the IRS may issue a subsequent notice (modification notice) that modifies the original notice. Irs e file 2012 The modification notice may change the marital status and/or the number of withholding allowances permitted. Irs e file 2012 You must withhold federal income tax based on the effective date specified in the modification notice. Irs e file 2012 New Form W-4 after IRS notice. Irs e file 2012   After the IRS issues a notice or modification notice, if the employee provides you with a new Form W-4 claiming complete exemption from withholding or claims a marital status, a number of withholding allowances, and any additional withholding that results in less withholding than would result under the IRS notice or modification notice, you must disregard the new Form W-4. Irs e file 2012 You are required to withhold on the basis of the notice or modification notice unless the IRS subsequently notifies you to withhold based on the new Form W-4. Irs e file 2012 If the employee wants to put a new Form W-4 into effect that results in less withholding than required, the employee must contact the IRS. Irs e file 2012   If, after you receive an IRS notice or modification notice, your employee provides you with a new Form W-4 that does not claim exemption from federal income tax withholding and claims a marital status, a number of withholding allowances, and any additional withholding that results in more withholding than would result under the notice or modification notice, you must withhold tax on the basis of that new Form W-4. Irs e file 2012 Otherwise, disregard any subsequent Forms W-4 provided by the employee and withhold based on the IRS notice or modification notice. Irs e file 2012 Substitute Forms W-4. Irs e file 2012   You are encouraged to have your employees use the official version of Form W-4 to claim withholding allowances or exemption from withholding. Irs e file 2012 Call the IRS at 1-800-TAX-FORM (1-800-829-3676) or visit IRS. Irs e file 2012 gov to obtain copies of Form W-4. Irs e file 2012   You may use a substitute version of Form W-4 to meet your business needs. Irs e file 2012 However, your substitute Form W-4 must contain language that is identical to the official Form W-4 and your form must meet all current IRS rules for substitute forms. Irs e file 2012 At the time that you provide your substitute form to the employee, you must provide him or her with all tables, instructions, and worksheets from the current Form W-4. Irs e file 2012   You cannot accept a substitute Form W-4 developed by an employee, and the employee submitting such form will be treated as failing to furnish a Form W-4. Irs e file 2012 However, continue to use any valid Forms W-4 developed by your employees that you accepted before October 11, 2007. Irs e file 2012 Invalid Forms W-4. Irs e file 2012   Any unauthorized change or addition to Form W-4 makes it invalid. Irs e file 2012 This includes taking out any language by which the employee certifies that the form is correct. Irs e file 2012 A Form W-4 is also invalid if, by the date an employee gives it to you, he or she indicates in any way that it is false. Irs e file 2012 An employee who submits a false Form W-4 may be subject to a $500 penalty. Irs e file 2012 You may treat a Form W-4 as invalid if the employee wrote “exempt” on line 7 and also entered a number on line 5 or an amount on line 6. Irs e file 2012   When you get an invalid Form W-4, do not use it to figure federal income tax withholding. Irs e file 2012 Tell the employee that it is invalid and ask for another one. Irs e file 2012 If the employee does not give you a valid one, withhold taxes as if the employee was single and claiming no withholding allowances. Irs e file 2012 However, if you have an earlier Form W-4 for this worker that is valid, withhold as you did before. Irs e file 2012   For additional information about these rules, see Treasury Decision 9337, 2007-35 I. Irs e file 2012 R. Irs e file 2012 B. Irs e file 2012 455, available at www. Irs e file 2012 irs. Irs e file 2012 gov/irb/2007-35_IRB/ar10. Irs e file 2012 html. Irs e file 2012 Amounts exempt from levy on wages, salary, and other income. Irs e file 2012   If you receive a Notice of Levy on Wages, Salary, and Other Income—Forms 668-W(ACS), 668-W(c)(DO), or 668-W(ICS), you must withhold amounts as described in the instructions for these forms. Irs e file 2012 Publication 1494, Tables for Figuring Amount Exempt From Levy on Wages, Salary, and Other Income—Forms 668-W(ACS), 668-W(c)(DO), and 668-W(ICS), shows the exempt amount. Irs e file 2012 If a levy issued in a prior year is still in effect and the taxpayer submits a new Statement of Exemptions and Filing Status, use the current year Publication 1494 to compute the exempt amount. Irs e file 2012 How To Figure Federal Income Tax Withholding There are several ways to figure federal income tax withholding. Irs e file 2012 Wage bracket tables. Irs e file 2012 See section 13 for directions on how to use the tables. Irs e file 2012 Percentage method. Irs e file 2012 See section 13 for directions on how to use the percentage method. Irs e file 2012 Alternative formula tables for percentage method withholding. Irs e file 2012 See Publication 15-A. Irs e file 2012 Wage bracket percentage method withholding tables. Irs e file 2012 See Publication 15-A. Irs e file 2012 Other alternative methods. Irs e file 2012 See Publication 15-A. Irs e file 2012 Employers with automated payroll systems will find the two alternative formula tables and the two alternative wage bracket percentage method tables in Publication 15-A useful. Irs e file 2012 If an employee wants additional federal tax withheld, have the employee show the extra amount on Form W-4. Irs e file 2012 Supplemental wages. Irs e file 2012   Supplemental wages are wage payments to an employee that are not regular wages. Irs e file 2012 They include, but are not limited to, bonuses, commissions, overtime pay, accumulated sick leave, severance pay, awards, prizes, back pay and retroactive pay increases for current employees, and payments for nondeductible moving expenses. Irs e file 2012 Other payments subject to the supplemental wage rules include taxable fringe benefits and expense allowances paid under a nonaccountable plan. Irs e file 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 was a single payment for a regular payroll period. Irs e file 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 federal income tax from your employee's regular wages. Irs e file 2012 If you withheld federal income tax from an employee's regular wages in the current or immediately preceding calendar year, you can use one of the following methods for the supplemental wages. Irs e file 2012 Withhold a flat 25% (no other percentage allowed). Irs e file 2012 If the supplemental wages are paid concurrently with regular wages, add the supplemental wages to the concurrently paid regular wages. Irs e file 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. Irs e file 2012 Figure the income tax withholding as if the total of the regular wages and supplemental wages is a single payment. Irs e file 2012 Subtract the tax withheld from the regular wages. Irs e file 2012 Withhold the remaining tax from the supplemental wages. Irs e file 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 previous supplemental wage payments, and withhold the remaining tax from the current payment of supplemental wages. Irs e file 2012 If you did not withhold federal income tax from the employee's regular wages in the current or immediately preceding calendar year, use method 1-b above. Irs e file 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. Irs e file 2012    Separate rules apply to any supplemental wages exceeding $1 million that you pay to an individual during the year. Irs e file 2012 See section 7 in Publication 15 (Circular E) for details. Irs e file 2012   Regardless of the method that you use to withhold federal income tax on supplemental wages, they are generally subject to social security, Medicare, and FUTA taxes. Irs e file 2012 6. Irs e file 2012 Required Notice to Employees About Earned Income Credit (EIC) You must notify employees who have no federal income tax withheld that they may be able to claim a tax refund because of the EIC. Irs e file 2012 Although you do not have to notify employees who claim exemption from withholding on Form W-4 about the EIC, you are encouraged to notify any employees whose wages for 2013 were less than $46,227 ($51,567 if married filing jointly) that they may be eligible to claim the credit for 2013. Irs e file 2012 This is because eligible employees may get a refund of the amount of EIC that is more than the tax that they owe. Irs e file 2012 You will meet the notification requirement if you issue to the employee Form W-2 with the EIC notice on the back of Copy B, or a substitute Form W-2 with the same statement. Irs e file 2012 You may also meet the requirement by providing Notice 797, Possible Federal Tax Refund Due to the Earned Income Credit (EIC), or your own statement that contains the same wording. Irs e file 2012 If a substitute Form W-2 is given to the employee on time but does not have the required statement, you must notify the employee within 1 week of the date that the substitute Form W-2 is given. Irs e file 2012 If Form W-2 is required but is not given on time, you must give the employee Notice 797 or your written statement by the date that Form W-2 is required to be given. Irs e file 2012 If Form W-2 is not required, you must notify the employee by February 7, 2014. Irs e file 2012 7. Irs e file 2012 Depositing Taxes Generally, you must deposit both the employer and employee shares of social security and Medicare taxes and federal income tax withheld. Irs e file 2012 You must use electronic funds transfer to make all federal tax deposits. Irs e file 2012 See How To Deposit , later in this section. Irs e file 2012 The credit against employment taxes for COBRA premium assistance payments is treated as a deposit of taxes on the first day of your return period. Irs e file 2012 For more information, see COBRA premium assistance credit under Introduction. Irs e file 2012 Payment with return. Irs e file 2012   You may make payments with Forms 943 or 945 instead of depositing if one of the following applies. Irs e file 2012 You report less than a $2,500 tax liability for the year (Form 943, line 11; Form 945, line 3) and you pay in full with a return that is filed on time. Irs e file 2012 However, if you are unsure that you will report less than $2,500, deposit under the rules explained in this section so that you will not be subject to failure-to-deposit penalties. Irs e file 2012 You are a monthly schedule depositor and make a payment in accordance with the Accuracy of Deposits Rule discussed later in this section. Irs e file 2012 This payment may be $2,500 or more. Irs e file 2012 Only monthly schedule depositors, defined later, are allowed to make an Accuracy of Deposits Rule payment with the return. Irs e file 2012 Semiweekly schedule depositors must timely deposit the amount. Irs e file 2012 See Accuracy of Deposits Rule and How To Deposit, later in this section. Irs e file 2012 When To Deposit If you employ both farm and nonfarm workers, do not combine the taxes reportable on Forms 941 or 944 with Form 943 to decide whether to make a deposit. Irs e file 2012 See Employers of Both Farm and Nonfarm Workers, later in this section. Irs e file 2012 The rules for determining when to deposit Form 943 taxes are discussed below. Irs e file 2012 See section 10 for the separate rules that apply to FUTA tax. Irs e file 2012 Under these rules, you are classified as either a monthly schedule depositor or a semiweekly schedule depositor. Irs e file 2012 The terms “monthly schedule depositor” and “semiweekly schedule depositor” do not refer to how often your business pays its employees or how often you are required to make deposits. Irs e file 2012 The terms identify which set of rules you must follow when you incur a tax liability (for example, when you have a payday). Irs e file 2012 The deposit schedule that you must use for a calendar year is determined from the tax liability reported on your Form 943, line 9, for the lookback period, discussed next. Irs e file 2012 If you reported $50,000 or less of Form 943 taxes for the lookback period, you are a monthly schedule depositor. Irs e file 2012 If you reported more than $50,000 of Form 943 taxes for the lookback period, you are a semiweekly schedule depositor. Irs e file 2012 Lookback period. Irs e file 2012   The lookback period is the second calendar year preceding the current calendar year. Irs e file 2012 For example, the lookback period for 2014 is 2012. Irs e file 2012 Example of deposit schedule based on lookback period. Irs e file 2012 Rose Co. Irs e file 2012 reported taxes on Form 943 as follows. Irs e file 2012 2012 — $48,000 2013 — $60,000 Rose Co. Irs e file 2012 is a monthly schedule depositor for 2014 because its taxes for the lookback period ($48,000 for calendar year 2012) were not more than $50,000. Irs e file 2012 However, for 2015, Rose Co. Irs e file 2012 is a semiweekly schedule depositor because the total taxes before adjustment for its lookback period ($60,000 for calendar year 2013) exceeded $50,000. Irs e file 2012 Adjustments to lookback period taxes. Irs e file 2012   To determine your taxes for the lookback period, use only the tax that you reported on the original return (Form 943, line 9). Irs e file 2012 Do not include adjustments shown on Form 943-X, Adjusted Employer's Annual Federal Tax Return for Agricultural Employees or Claim for Refund. Irs e file 2012 Example of adjustments. Irs e file 2012 An employer originally reported total tax of $45,000 for the lookback period in 2012. Irs e file 2012 The employer discovered during March 2014 that the tax reported for the lookback period was understated by $10,000 and corrected this error by filing Form 943-X. Irs e file 2012 The total tax reported in the lookback period is still $45,000. Irs e file 2012 The $10,000 adjustment is also not treated as part of the 2014 taxes. Irs e file 2012 Deposit period. Irs e file 2012   The term “deposit period” refers to the period during which tax liabilities are accumulated for each required deposit due date. Irs e file 2012 For monthly schedule depositors, the deposit period is a calendar month. Irs e file 2012 The deposit periods for semiweekly schedule depositors are Wednesday through Friday and Saturday through Tuesday. Irs e file 2012 Monthly Deposit Schedule If the tax liability reported on Form 943, line 9, for the lookback period is $50,000 or less, you are a monthly schedule depositor for the current year. Irs e file 2012 You must deposit Form 943 taxes on payments made during a calendar month by the 15th day of the following month. Irs e file 2012 Monthly schedule example. Irs e file 2012   Red Co. Irs e file 2012 is a seasonal employer and a monthly schedule depositor. Irs e file 2012 It pays wages each Friday. Irs e file 2012 It paid wages during August 2014, but did not pay any wages during September. Irs e file 2012 Red Co. Irs e file 2012 must deposit the combined tax liabilities for the August paydays by September 15. Irs e file 2012 Red Co. Irs e file 2012 does not have a deposit requirement for September (that is, due by October 15, 2014) because no wages were paid in September; therefore, it did not have a tax liability for September. Irs e file 2012 New employers. Irs e file 2012   For agricultural employers, your tax liability for any year in the lookback period before the date you started or acquired your business is considered to be zero. Irs e file 2012 Therefore, you are a monthly schedule depositor for the first and second calendar years of your agricultural business (but see the $100,000 Next-Day Deposit Rule , later in this section). Irs e file 2012 Semiweekly Deposit Schedule You are a semiweekly schedule depositor for a calendar year if the tax liability on Form 943, line 9, during your lookback period was more than $50,000. Irs e file 2012 Under the semiweekly deposit schedule, deposit Form 943 taxes for payments made on Wednesday, Thursday, and/or Friday by the following Wednesday. Irs e file 2012 Deposit amounts accumulated for payments made on Saturday, Sunday, Monday, and/or Tuesday by the following Friday. Irs e file 2012 Semiweekly depositors are not required to deposit twice a week if their payments were in the same semiweekly period unless the $100,000 Next-Day Deposit Rule (discussed later in this section) applies. Irs e file 2012 For example, if you made a payment on both Wednesday and Friday and incurred taxes of $10,000 for each pay date, deposit the $20,000 by the following Wednesday. Irs e file 2012 If you made no additional payments on Saturday through Tuesday, no deposit is due on Friday. Irs e file 2012 Semiweekly schedule depositors must complete Form 943-A, Agricultural Employer's Record of Federal Tax Liability, and submit it with Form 943. Irs e file 2012 Semiweekly Deposit Schedule IF the payday falls on a. Irs e file 2012 . Irs e file 2012 . Irs e file 2012 THEN deposit taxes by the following. Irs e file 2012 . Irs e file 2012 . Irs e file 2012 Wednesday, Thursday, and/or Friday Wednesday Saturday, Sunday, Monday, and/or Tuesday Friday Semiweekly schedule example. Irs e file 2012   Green, Inc. Irs e file 2012 , is a semiweekly schedule depositor and pays wages once each month on the last Friday of the month. Irs e file 2012 Green, Inc. Irs e file 2012 , will deposit only once a month, but the deposit will be made under the semiweekly deposit schedule as follows. Irs e file 2012 Green, Inc. Irs e file 2012 's tax liability for the April 25, 2014 (Friday), wage payment must be deposited by April 30, 2014 (Wednesday). Irs e file 2012 Semiweekly deposit period spanning two quarters. Irs e file 2012   If you have more than one pay date during a semiweekly period and the pay dates fall in different calendar quarters, you will need to make separate deposits for the separate liabilities. Irs e file 2012 For example, if you have a pay date on Monday, March 31, 2014 (first quarter), and another pay date on Tuesday, April 1, 2014 (second quarter), two separate deposits will be required even though the pay dates fall within the same semiweekly period. Irs e file 2012 Both deposits will be due Friday, April 4, 2014 (3 business days from the end of the semiweekly deposit period). Irs e file 2012 Deposits on Business Days Only If a deposit is required to be made on a day that is not a business day, the deposit is considered timely if it is made by the close of the next business day. Irs e file 2012 A business day is any day other than a Saturday, Sunday, or legal holiday. Irs e file 2012 For example, if a deposit is required to be made on Friday and Friday is a legal holiday, the deposit is considered timely if it is made by the following Monday (if Monday is a business day). Irs e file 2012 Semiweekly schedule depositors   will always have 3 business days to make a deposit. Irs e file 2012 That is, if any of the 3 weekdays after the end of a semiweekly period is a legal holiday, you will have an additional day for each day that is a legal holiday to make the deposit. Irs e file 2012 For example, if a semiweekly schedule depositor accumulated taxes on Friday and the following Monday is a legal holiday, the deposit normally due on Wednesday may be made on Thursday (this allows 3 business days to make the deposit). Irs e file 2012 Legal holiday. Irs e file 2012   The term “legal holiday” means any legal holiday in the District of Columbia. Irs e file 2012 Legal holidays for 2014 are listed below. Irs e file 2012 January 1— New Year's Day January 20— Birthday of Martin Luther King, Jr. Irs e file 2012 February 17— Washington's Birthday April 16— District of Columbia Emancipation Day May 26— Memorial Day July 4— Independence Day September 1— Labor Day October 13— Columbus Day November 11— Veterans' Day November 27— Thanksgiving Day December 25— Christmas Day $100,000 Next-Day Deposit Rule If you accumulate $100,000 or more of Form 943 taxes (that is, taxes reported on Form 943, line 11) on any day during a deposit period, you must deposit the tax by the close of the next business day, whether you are a monthly or a semiweekly schedule depositor. Irs e file 2012 For purposes of the $100,000 rule, do not continue accumulating a tax liability after the end of a deposit period. Irs e file 2012 For example, if a semiweekly schedule depositor has accumulated a liability of $95,000 on a Tuesday (of a Saturday-through-Tuesday deposit period) and accumulated a $10,000 liability on Wednesday, the $100,000 next-day deposit rule does not apply because the $10,000 is accumulated in the next deposit period. Irs e file 2012 Thus, $95,000 must be deposited by Friday and $10,000 must be deposited by the following Wednesday. Irs e file 2012 However, once you accumulate at least $100,000 in a deposit period, stop accumulating at the end of that day and begin to accumulate anew on the next day. Irs e file 2012 For example, Fir Co. Irs e file 2012 is a semiweekly schedule depositor. Irs e file 2012 On Monday, Fir Co. Irs e file 2012 accumulates taxes of $110,000 and must deposit this amount on Tuesday, the next business day. Irs e file 2012 On Tuesday, Fir Co. Irs e file 2012 accumulates additional taxes of $30,000. Irs e file 2012 Because the $30,000 is not added to the previous $110,000 and is less than $100,000, Fir Co. Irs e file 2012 does not have to deposit the $30,000 until Friday (following the semiweekly deposit schedule). Irs e file 2012 If you are a monthly schedule depositor and you accumulate a $100,000 tax liability on any day, you become a semiweekly schedule depositor on the next day and remain so for at least the rest of the calendar year and for the following calendar year. Irs e file 2012 Example of the $100,000 next-day deposit rule. Irs e file 2012   Elm, Inc. Irs e file 2012 , started its business on May 1, 2014. Irs e file 2012 Because Elm, Inc. Irs e file 2012 , is a new employer, the taxes for its lookback period are considered to be zero; therefore, Elm, Inc. Irs e file 2012 , is a monthly schedule depositor. Irs e file 2012 On May 8, Elm, Inc. Irs e file 2012 , paid wages for the first time and accumulated taxes of $50,000. Irs e file 2012 On May 9 (Friday), Elm, Inc. Irs e file 2012 , paid wages and accumulated taxes of $60,000, for a total of $110,000. Irs e file 2012 Because Elm, Inc. Irs e file 2012 , accumulated $110,000 on May 9, it must deposit $110,000 by May 12 (Monday), the next business day. Irs e file 2012 Elm, Inc. Irs e file 2012 , became a semiweekly schedule depositor on May 10. Irs e file 2012 It will be a semiweekly schedule depositor for the remainder of 2014 and for 2015. Irs e file 2012 Accuracy of Deposits Rule You are required to deposit 100% of your tax liability on or before the deposit due date. Irs e file 2012 However, penalties will not be applied for depositing less than 100% if both of the following conditions are met. Irs e file 2012 Any deposit shortfall does not exceed the greater of $100 or 2% of the amount of taxes otherwise required to be deposited. Irs e file 2012 The deposit shortfall is paid or deposited by the shortfall makeup date as described below. Irs e file 2012 Makeup Date for Deposit Shortfall:    Monthly Schedule Depositor—Deposit the shortfall or pay it with your return by the due date of your Form 943. Irs e file 2012 You may pay the shortfall with your Form 943 even if the amount is $2,500 or more. Irs e file 2012 Semiweekly Schedule Depositor—Deposit by the earlier of (a) the first Wednesday or Friday (whichever comes first) that falls on or after the 15th of the month following the month in which the shortfall occurred, or (b) the due date for Form 943. Irs e file 2012 For example, if a semiweekly schedule depositor has a deposit shortfall during February 2014, the shortfall makeup date is March 19, 2014 (Wednesday). Irs e file 2012 How To Deposit You must deposit employment taxes by electronic funds transfer. Irs e file 2012 See Payment with return , earlier in this section, for exceptions explaining when taxes may be paid with the tax return instead of being deposited. Irs e file 2012 Electronic deposit requirement. Irs e file 2012   You must use electronic funds transfer to make all federal tax deposits (such as deposits of employment tax, excise tax, and corporate income tax). Irs e file 2012 Generally, electronic funds transfers are made using the Electronic Federal Tax Payment System (EFTPS). Irs e file 2012 If you do not want to use EFTPS, you can arrange for your tax professional, financial institution, payroll service, or other trusted third party to make electronic deposits on your behalf. Irs e file 2012   EFTPS is a free service provided by the Department of Treasury. Irs e file 2012 To get more information or to enroll in EFTPS, call 1-800-555-4477 (business), 1-800-316-6541 (individual), or 1-800-733-4829 (TDD). Irs e file 2012 You can also visit the EFTPS website at www. Irs e file 2012 eftps. Irs e file 2012 gov. Irs e file 2012 Additional information about EFTPS is also available in Publication 966. Irs e file 2012 New employers that have a federal tax obligation will be pre-enrolled in EFTPS. Irs e file 2012 Call the toll-free number located in your Employer Identification Number (EIN) Package to activate your enrollment and begin making your tax deposit payments. Irs e file 2012 See When you receive your EIN in section 1 for more information. Irs e file 2012 Deposit record. Irs e file 2012   For your records, an Electronic Funds Transfer (EFT) Trace Number will be provided with each successful payment. Irs e file 2012 The number can be used as a receipt or to trace the payment. Irs e file 2012 Depositing on time. Irs e file 2012   For deposits made by EFTPS to be on time, you must initiate the deposit by 8 p. Irs e file 2012 m. Irs e file 2012 Eastern time the day before the date a deposit is due. Irs e file 2012 If you use a third party to make a deposit on your behalf, they may have different cutoff times. Irs e file 2012 Same-day payment option. Irs e file 2012   If you fail to initiate a deposit transaction on EFTPS by 8 p. Irs e file 2012 m. Irs e file 2012 Eastern time the day before the date a deposit is due, you can still make your deposit on time by using the Federal Tax Application (FTA). Irs e file 2012 To use the same-day payment method, you will need to make arrangements with your financial institution ahead of time. Irs e file 2012 Please check with your financial institution regarding availability, deadlines, and costs. Irs e file 2012 Your financial institution may charge you a fee for payments made this way. Irs e file 2012 To learn more about the information you will need to provide to your financial institution to make a same-day wire payment, visit www. Irs e file 2012 eftps. Irs e file 2012 gov to download the Same-Day Payment Worksheet. Irs e file 2012 Deposit Penalties Penalties may apply if you do not make required deposits on time or if you make deposits for less than the required amount. Irs e file 2012 The penalties do not apply if any failure to make a proper and timely deposit was due to reasonable cause and not to willful neglect. Irs e file 2012 IRS may also waive deposit penalties if you inadvertently fail to deposit in the first quarter that a deposit is due, or the first quarter during which your frequency of deposits changed, if you timely filed your employment tax return. Irs e file 2012 For amounts not properly deposited or not deposited on time, the penalty rates are shown next. Irs e file 2012 Penalty Charged for. Irs e file 2012 . Irs e file 2012 . Irs e file 2012 2% Deposits made 1 to 5 days late. Irs e file 2012 5% Deposits made 6 to 15 days late. Irs e file 2012 10% Deposits made 16 or more days late. Irs e file 2012 Also applies to amounts paid within 10 days of the date of the first notice the IRS sent asking for the tax due. Irs e file 2012 10% Amounts (that should have been deposited) paid directly to the IRS or paid with your tax return. Irs e file 2012 See Payment with return , earlier in this section, for exceptions. Irs e file 2012 15% Amounts still unpaid more than 10 days after the date of the first notice that the IRS sent asking for the tax due or the day on which you received notice and demand for immediate payment, whichever is earlier. Irs e file 2012 Late deposit penalty amounts are determined using calendar days, starting from the due date of the liability. Irs e file 2012 Order in which deposits are applied. Irs e file 2012   Deposits generally are applied to the most recent tax liability within the year. Irs e file 2012 If you receive a failure-to-deposit penalty notice, you may designate how your deposits are to be applied in order to minimize the amount of the penalty, if you do so within 90 days of the date of the notice. Irs e file 2012 Follow the instructions on the penalty notice that you received. Irs e file 2012 For examples on how the IRS will apply deposits and more information on designating deposits, see Revenue Procedure 2001-58. Irs e file 2012 You can find Revenue Procedure 2001-58 on page 579 of Internal Revenue Bulletin 2001-50 at www. Irs e file 2012 irs. Irs e file 2012 gov/pub/irs-irbs/irb01-50. Irs e file 2012 pdf. Irs e file 2012 Example. Irs e file 2012 Cedar, Inc. Irs e file 2012 , is required to make a deposit of $1,000 on July 15 and $1,500 on August 15. Irs e file 2012 It does not make the deposit on July 15. Irs e file 2012 On August 15, Cedar, Inc. Irs e file 2012 , deposits $2,000. Irs e file 2012 Under the deposits rule, which applies deposits to the most recent tax liability, $1,500 of the deposit is applied to the August 15 deposit and the remaining $500 is applied to the July deposit. Irs e file 2012 Accordingly, $500 of the July 15 liability remains undeposited. Irs e file 2012 The penalty on this underdeposit will apply as explained above. Irs e file 2012 Trust fund recovery penalty. Irs e file 2012   If federal income, social security, or Medicare taxes that must be withheld are not withheld or are not deposited or paid to the United States Treasury, the trust fund recovery penalty may apply. Irs e file 2012 The penalty is the full amount of the unpaid trust fund tax. Irs e file 2012 This penalty may apply to you if these unpaid taxes cannot be immediately collected from the employer or business. Irs e file 2012   The trust fund recovery penalty may be imposed on all persons who are determined by the IRS to be responsible for collecting, accounting for, and paying over these taxes, and who acted willfully in not doing so. Irs e file 2012   A responsible person can be an officer or employee of a corporation, a partner or employee of a partnership, an accountant, a volunteer director/trustee, or an employee of a sole proprietorship. Irs e file 2012 A responsible person also may include one who signs checks for the business or otherwise has authority to cause the spending of business funds. Irs e file 2012    Willfully means voluntarily, consciously, and intentionally. Irs e file 2012 A responsible person acts willfully if the person knows that the required actions of collecting, accounting for or paying over trust fund taxes are not taking place, or recklessly disregards obvious and known risks to the government's right to receive trust fund taxes. Irs e file 2012 “Average” failure-to-deposit penalty. Irs e file 2012   IRS may assess an “averaged” failure-to-deposit penalty of 2% to 10% if you are a monthly schedule depositor and did not properly complete Form 943, line 17, when your tax liability shown on Form 943, line 11, was $2,500 or more. Irs e file 2012 IRS may also assess this penalty of 2% to 10% if you are a semiweekly schedule depositor and your tax liability shown on Form 943, line 11, was $2,500 or more and you did any of the following. Irs e file 2012 Completed Form 943, line 17, instead of Form 943-A. Irs e file 2012 Failed to attach a properly completed Form 943-A. Irs e file 2012 Completed Form 943-A incorrectly, for example, by entering tax deposits instead of tax liabilities in the numbered spaces. Irs e file 2012   IRS figures the penalty by allocating your tax liability on Form 943, line 11, equally throughout the tax period. Irs e file 2012 Your deposits and payments may not be counted as timely because IRS does not know the actual dates of your tax liabilities. Irs e file 2012   You can avoid the penalty by reviewing your return before filing it. Irs e file 2012 Follow these steps before filing your Form 943. Irs e file 2012 If you are a monthly schedule depositor, report your tax liabilities (not your deposits) in the monthly entry spaces on Form 943, line 17. Irs e file 2012 If you are a semiweekly schedule depositor, report your tax liabilities (not your deposits) on Form 943-A in the lines that represent the dates you paid your employees. Irs e file 2012 Verify that your total liability shown on Form 943, line 17, or Form 943-A, line M, equals your tax liability shown on Form 943, line 11. Irs e file 2012 Do not show negative amounts on Form 943, line 17, or Form 943-A. Irs e file 2012 For prior period errors discovered after December 31, 2008, do not adjust your tax liabilities reported on Form 943, line 17, or on Form 943-A. Irs e file 2012 Employers of Both Farm and Nonfarm Workers If you employ both farm and nonfarm workers, you must treat employment taxes for the farmworkers (Form 943 taxes) separately from employment taxes for the nonfarm workers (Form 941 and 944 taxes). Irs e file 2012 Form 943 taxes and Form 941/944 taxes are not combined for purposes of applying any of the deposit schedule rules. Irs e file 2012 If a deposit is due, deposi