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Irs Gov Org

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Irs Gov Org

Irs gov org Publication 721 - Introductory Material Table of Contents Reminders IntroductionOrdering forms and publications. Irs gov org Tax questions. Irs gov org Useful Items - You may want to see: Reminders Future developments. Irs gov org  For the latest information about developments related to Publication 721, such as legislation enacted after it was published, go to www. Irs gov org IRS. Irs gov org gov/pub721. Irs gov org Phased retirement. Irs gov org   The new phased retirement program was signed into law by the Moving Ahead for Progress in the 21st Century Act and will be available for retirement eligible individuals once the regulations for this program are effective. Irs gov org This new program will allow eligible employees to begin receiving annuity payments while working part-time. Irs gov org For more information, go to the Office of Personnel Management (OPM) website at www. Irs gov org opm. Irs gov org gov. Irs gov org Roth Thrift Savings Plan (TSP) balance. Irs gov org  You may be able to contribute to a designated Roth account through the TSP known as the Roth TSP. Irs gov org Roth TSP contributions are after-tax contributions, subject to the same contribution limits as the traditional TSP. Irs gov org Qualified distributions from a Roth TSP are not included in your income. Irs gov org See Thrift Savings Plan in Part II for more information. Irs gov org Rollovers. Irs gov org  You can roll over certain amounts from the CSRS, FERS, or TSP, to a tax-sheltered annuity plan (403(b) plan) or a state or local government section 457 deferred compensation plan. Irs gov org See Rollover Rules in Part II. Irs gov org Rollovers by surviving spouse. Irs gov org  You may be able to roll over a distribution you receive as the surviving spouse of a deceased employee or retiree into a qualified retirement plan or an IRA. Irs gov org See Rollover Rules in Part II. Irs gov org Thrift Savings Plan (TSP) beneficiary participant accounts. Irs gov org  If you are the spouse beneficiary of a decedent's TSP account, you have the option of leaving the death benefit payment in a TSP account in your own name (a beneficiary participant account). Irs gov org The amounts in the beneficiary participant account are neither taxable or reportable until you choose to make a withdrawal, or otherwise receive a distribution from the account. Irs gov org Benefits for public safety officer's survivors. Irs gov org  A survivor annuity received by the spouse, former spouse, or child of a public safety officer killed in the line of duty generally will be excluded from the recipient's income. Irs gov org For more information, see Dependents of public safety officers in Part IV. Irs gov org Uniformed services Thrift Savings Plan (TSP) accounts. Irs gov org  If you have a uniformed services TSP account, it may include contributions from combat zone pay. Irs gov org This pay is tax-exempt and contributions attributable to that pay are tax-exempt when they are distributed from the uniformed services TSP account. Irs gov org However, any earnings on those contributions are subject to tax when they are distributed. Irs gov org The statement you receive from the TSP will separately state the total amount of your distribution and the amount of your taxable distribution for the year. Irs gov org If you have both a civilian and a uniformed services TSP account, you should apply the rules discussed in this publication separately to each account. Irs gov org You can get more information from the TSP website, www. Irs gov org tsp. Irs gov org gov, or the TSP Service Office. Irs gov org Photographs of missing children. Irs gov org  The Internal Revenue Service is a proud partner with the National Center for Missing and Exploited Children. Irs gov org Photographs of missing children selected by the Center may appear in this publication on pages that would otherwise be blank. Irs gov org You can help bring these children home by looking at the photographs and calling 1-800-THE-LOST (1-800-843-5678) if you recognize a child. Irs gov org Introduction This publication explains how the federal income tax rules apply to civil service retirement benefits received by retired federal employees (including those disabled) or their survivors. Irs gov org These benefits are paid primarily under the Civil Service Retirement System (CSRS) or the Federal Employees' Retirement System (FERS). Irs gov org Tax rules for annuity benefits. Irs gov org   Part of the annuity benefits you receive is a tax-free recovery of your contributions to the CSRS or FERS. Irs gov org The rest of your benefits are taxable. Irs gov org If your annuity starting date is after November 18, 1996, you must use the Simplified Method to figure the taxable and tax-free parts. Irs gov org If your annuity starting date is before November 19, 1996, you generally could have chosen to use the Simplified Method or the General Rule. Irs gov org See Part II, Rules for Retirees . Irs gov org Thrift Savings Plan. Irs gov org   The Thrift Savings Plan (TSP) provides federal employees with the same savings and tax benefits that many private employers offer their employees. Irs gov org This plan is similar to private sector 401(k) plans. Irs gov org You can defer tax on part of your pay by having it contributed to your traditional balance in the plan. Irs gov org The contributions and earnings on them are not taxed until they are distributed to you. Irs gov org Also the TSP offers a Roth TSP option. Irs gov org Contributions to this type of balance are after tax and qualified distributions from the account are tax free. Irs gov org See Thrift Savings Plan in Part II. Irs gov org Comments and suggestions. Irs gov org   We welcome your comments about this publication and your suggestions for future editions. Irs gov org   You can write to us at the following address: Internal Revenue Service Tax Forms and Publications Division 1111 Constitution Ave. Irs gov org NW, IR-6526 Washington, DC 20224   We respond to many letters by telephone. Irs gov org Therefore, it would be helpful if you would include your daytime phone number, including the area code, in your correspondence. Irs gov org   You can send your comments from www. Irs gov org irs. Irs gov org gov/formspubs/. Irs gov org Click on “More Information” and then on “Comment on Tax Forms and Publications”. Irs gov org   Although we cannot respond individually to each comment received, we do appreciate your feedback and will consider your comments as we revise our tax products. Irs gov org Ordering forms and publications. Irs gov org   Visit www. Irs gov org irs. Irs gov org gov/formspubs/ to download forms and publications, call 1-800-TAX-FORM (1-800-829-3676), or write to the address below and receive a response within 10 days after your request is received. Irs gov org Internal Revenue Service 1201 N. Irs gov org Mitsubishi Motorway Bloomington, IL 61705-6613 Tax questions. Irs gov org   If you have a tax question, check the information available on IRS. Irs gov org gov or call 1-800-829-1040. Irs gov org We cannot answer tax questions sent to either of the above addresses. Irs gov org Useful Items - You may want to see: Publication 524 Credit for the Elderly or the Disabled 575 Pension and Annuity Income 590 Individual Retirement Arrangements (IRAs) 939 General Rule for Pensions and Annuities Form (and Instructions) CSA 1099R Statement of Annuity Paid CSF 1099R Statement of Survivor Annuity Paid W-4P Withholding Certificate for Pension or Annuity Payments 1099-R Distributions From Pensions, Annuities, Retirement or Profit-Sharing Plans, IRAs, Insurance Contracts, etc. Irs gov org 5329 Additional Taxes on Qualified Plans (including IRAs) and Other Tax-Favored Accounts See How To Get Tax Help near the end of this publication for information about getting publications and forms. Irs gov org Prev  Up  Next   Home   More Online Publications
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Facts & Figures

Highlights of IRS statistics available on this site include:

IRS Data Books: These contain files of data on collecting revenue, enforcing the law, assisting taxpayers and managing the system. Each Data Book table is in its own file. There is also a PDF file for each year's complete Data Book.

Weekly Filing Statistics Reports: These weekly reports contain data that track the filings of individual income tax returns on a weekly basis throughout the tax return filing season with a final report available towards the end of the year.

Tax Stats Home Page: This has links to all Statistics of Income (SOI) tables and articles, in various groupings — by IRS activity (Collection, Exam, etc.), by topic or by SOI publication series.

Projections: These forecasts of the number of returns to be filed for tax forms within the individual, tax-exempt and business areas may be found in various Projections publications or SOI Bulletins.

Individual Tax Stats: These are links to individual return data assembled in various ways. In some cases — such as county data, migration data or ZIP code data — the link shows an example of the files that can be ordered and/or the procedures for ordering data from SOI. Other links — such as state income data — contain links to available SOI data.

Statistics of Income Bulletins: These quarterly Bulletins contain articles and data releases on a wide variety of topics.

Page Last Reviewed or Updated: 04-Feb-2014

The Irs Gov Org

Irs gov org Publication 51 - Main Content Table of Contents 1. Irs gov org Taxpayer Identification NumbersWhen you receive your EIN. Irs gov org Registering for SSNVS. Irs gov org 2. Irs gov org Who Are Employees?Crew Leaders Business Owned and Operated by Spouses 3. Irs gov org Wages and Other Compensation 4. Irs gov org Social Security and Medicare TaxesThe $150 Test or the $2,500 Test Social Security and Medicare Tax Withholding 5. Irs gov org Federal Income Tax WithholdingImplementation of lock-in letter. Irs gov org Seasonal employees and employees not currently performing services. Irs gov org Termination and re-hire of employees. Irs gov org How To Figure Federal Income Tax Withholding 6. Irs gov org Required Notice to Employees About Earned Income Credit (EIC) 7. Irs gov org Depositing TaxesWhen To Deposit How To Deposit Deposit Penalties Employers of Both Farm and Nonfarm Workers 8. Irs gov org Form 943 9. Irs gov org Reporting Adjustments on Form 943Current Year Adjustments Prior Year Adjustments 10. Irs gov org Federal Unemployment (FUTA) Tax 11. Irs gov org Reconciling Wage Reporting Forms 13. Irs gov org Federal Income Tax Withholding MethodsWage Bracket Method Percentage Method Alternative Methods of Federal Income Tax Withholding How To Get Tax Help 1. Irs gov org 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 gov org 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 gov org Employer identification number (EIN). Irs gov org   An employer identification number (EIN) is a nine-digit number that the IRS issues. Irs gov org The digits are arranged as follows: 00-0000000. Irs gov org It is used to identify the tax accounts of employers and certain others who have no employees. Irs gov org Use your EIN on all of the items that you send to the IRS and SSA. Irs gov org   If you do not have an EIN, you may apply for one online. Irs gov org Visit IRS. Irs gov org gov and click on the Apply for an EIN Online link under Tools. Irs gov org 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 gov org Do not use a SSN in place of an EIN. Irs gov org   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 gov org If you took over another employer's business, do not use that employer's EIN. Irs gov org   You should have only one EIN. Irs gov org 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 gov org 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 gov org The IRS will tell you which EIN to use. Irs gov org   For more information, see Publication 1635 or Publication 583. Irs gov org When you receive your EIN. Irs gov org   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 gov org 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 gov org 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 gov org 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 gov org Social security number (SSN). Irs gov org   An employee's social security number (SSN) consists of nine digits arranged as follows: 000-00-0000. Irs gov org 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 gov org Do not accept a social security card that says “Not valid for employment. Irs gov org ” A social security number issued with this legend does not permit employment. Irs gov org You may, but are not required to, photocopy the social security card if the employee provides it. Irs gov org 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 gov org See Publication 1586, Reasonable Cause Regulations & Requirements for Missing and Incorrect Name/TINs. Irs gov org Applying for a social security card. Irs gov org   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 gov org 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 gov org socialsecurity. Irs gov org gov/online/ss-5. Irs gov org html. Irs gov org The employee must complete and sign Form SS-5; it cannot be filed by the employer. Irs gov org 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 gov org Applying for a social security number. Irs gov org   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 gov org If you are filing electronically, enter all zeros (000-00-0000) in the social security number field. Irs gov org 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 gov org Furnish Copies B, C, and 2 of Form W-2c to the employee. Irs gov org 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 gov org For more information, visit SSA's Employer W-2 Filing Instructions & Information webpage at www. Irs gov org socialsecurity. Irs gov org gov/employer. Irs gov org Advise your employee to correct the SSN on his or her original Form W-2. Irs gov org Correctly record the employee's name and SSN. Irs gov org   Record the name and number of each employee as they are shown on the employee's social security card. Irs gov org 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 gov org 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 gov org   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 gov org 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 gov org IRS individual taxpayer identification numbers (ITINs) for aliens. Irs gov org   Do not accept an ITIN in place of an SSN for employee identification or for work. Irs gov org 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 gov org S. Irs gov org employment. Irs gov org The ITIN is a nine-digit number formatted like an SSN (for example, NNN-NN-NNNN). Irs gov org 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 gov org    An individual with an ITIN who later becomes eligible to work in the United States must obtain an SSN. Irs gov org 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 gov org Do not use an ITIN in place of an SSN on Form W-2. Irs gov org Verification of social security numbers. Irs gov org   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 gov org Visit www. Irs gov org socialsecurity. Irs gov org gov/employer/ssnv. Irs gov org htm for more information. Irs gov org Registering for SSNVS. Irs gov org   You must register online and receive authorization from your employer to use SSNVS. Irs gov org To register, visit SSA's website at www. Irs gov org socialsecurity. Irs gov org gov/employer and click on the Business Services Online link. Irs gov org Follow the registration instructions to obtain a user identification (ID) and password. Irs gov org You will need to provide the following information about yourself and your company. Irs gov org Name. Irs gov org SSN. Irs gov org Date of birth. Irs gov org Type of employer. Irs gov org EIN. Irs gov org Company name, address, and telephone number. Irs gov org Email address. Irs gov org When you have completed the online registration process, SSA will mail a one-time activation code to your employer. Irs gov org You must enter the activation code online to use SSNVS. Irs gov org 2. Irs gov org Who Are Employees? Generally, employees are defined either under common law or under statutes for certain situations. Irs gov org See Publication 15-A for details on statutory employees and nonemployees. Irs gov org Employee status under common law. Irs gov org   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 gov org This is so even when you give the employee freedom of action. Irs gov org What matters is that you have the right to control the details of how the services are performed. Irs gov org See Publication 15-A for more information on how to determine whether an individual providing services is an independent contractor or an employee. Irs gov org If an employer-employee relationship exists, it does not matter what it is called. Irs gov org The employee may be called an agent or independent contractor. Irs gov org 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 gov org You are responsible for withholding and paying employment taxes for your employees. Irs gov org You are also required to file employment tax returns. Irs gov org These requirements do not apply to amounts that you pay to independent contractors. Irs gov org The rules discussed in this publication apply only to workers who are your employees. Irs gov org 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 gov org 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 gov org 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 gov org 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 gov org Crew Leaders If you are a crew leader, you are an employer of farmworkers. Irs gov org 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 gov org 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 gov org For FUTA tax rules, see section 10. Irs gov org 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 gov org See Publication 541, Partnerships, for more details. Irs gov org The partnership is considered the employer of any employees, and is liable for any employment taxes due on wages paid to its employees. Irs gov org Exception—Qualified joint venture. Irs gov org   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 gov org 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 gov org   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 gov org Each spouse must also file a separate Schedule SE to pay self-employment taxes, as applicable. Irs gov org   Spouses using the qualified joint venture rules are treated as sole proprietors for federal tax purposes and generally do not need an EIN. Irs gov org 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 gov org Generally, filing as a qualified joint venture will not increase the spouses' total tax owed on the joint income tax return. Irs gov org 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 gov org    Note. Irs gov org If your spouse is your employee, not your partner, you must pay social security and Medicare taxes for him or her. Irs gov org   For more information on qualified joint ventures, visit IRS. Irs gov org gov and enter “qualified joint venture” in the search box. Irs gov org Exception—Community income. Irs gov org   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 gov org S. Irs gov org possession, you can treat the business either as a sole proprietorship (of the spouse who carried on the business) or a partnership. Irs gov org You may still make an election to be taxed as a qualified joint venture instead of a partnership. Irs gov org See Exception—Qualified joint venture , earlier in this section. Irs gov org 3. Irs gov org Wages and Other Compensation Cash wages that you pay to employees for farmwork are generally subject to social security tax and Medicare tax. Irs gov org You may also be required to withhold, deposit, and report Additional Medicare Tax. Irs gov org See section 4 for more information. Irs gov org If the wages are subject to social security and Medicare taxes, they are also subject to federal income tax withholding. Irs gov org You may also be liable for FUTA tax, which is not withheld by you or paid by the employee. Irs gov org FUTA tax is discussed in section 10. Irs gov org Cash wages include checks, money orders, etc. Irs gov org Do not count as cash wages the value of food, lodging, and other noncash items. Irs gov org For more information on what payments are considered taxable wages, see Publication 15 (Circular E). Irs gov org Commodity wages. Irs gov org   Commodity wages are not cash and are not subject to social security and Medicare taxes or federal income tax withholding. Irs gov org However, noncash payments, including commodity wages, are treated as cash wages (see above) if the substance of the transaction is a cash payment. Irs gov org These noncash payments are subject to social security and Medicare taxes and federal income tax withholding. Irs gov org Other compensation. Irs gov org   Publications 15-A and 15-B discuss other forms of compensation that may be taxable. Irs gov org Family members. Irs gov org   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 gov org However, certain exemptions may apply for your child, spouse, or parent. Irs gov org See the table, How Do Employment Taxes Apply to Farmwork , in section 12. Irs gov org Household employees. Irs gov org   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 gov org   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 gov org 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 gov org   For more information, see Publication 926, Household Employer's Tax Guide. Irs gov org    Wages for household work may not be a deductible farm expense. Irs gov org See Publication 225, Farmer's Tax Guide. Irs gov org Share farmers. Irs gov org   You do not have to withhold or pay social security and Medicare taxes on amounts paid to share farmers under share-farming arrangements. Irs gov org Compensation paid to H-2A visa holders. Irs gov org   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 gov org On Form W-2, do not check box 13 (Statutory employee), as H-2A workers are not statutory employees. Irs gov org   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 gov org In that case, the worker must give the employer a completed Form W-4. Irs gov org Federal income tax withheld should be reported in box 2 of Form W-2. Irs gov org These reporting rules apply when the H-2A worker provides his or her taxpayer identification number (TIN) to the employer. Irs gov org 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 gov org 4. Irs gov org 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 gov org You may also be required to withhold Additional Medicare Tax. Irs gov org For more information, see Additional Medicare Tax withholding , later. Irs gov org 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 gov org 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 gov org The $150 test applies separately to each farmworker that you employ. Irs gov org If you employ a family of workers, each member is treated separately. Irs gov org Do not count wages paid by other employers. Irs gov org The total that you pay for farmwork (cash and noncash) to all your employees is $2,500 or more during the year. Irs gov org Exceptions. Irs gov org   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 gov org   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 gov org Social Security and Medicare Tax Withholding The social security tax rate is 6. Irs gov org 2%, for both the employee and employer, on the first $117,000 paid to each employee. Irs gov org You must withhold at this rate from each employee and pay a matching amount. Irs gov org The Medicare tax rate is 1. Irs gov org 45% each for the employee and employer on all wages. Irs gov org You must withhold at this rate from each employee and pay a matching amount. Irs gov org There is no wage base limit for Medicare tax; all covered wages are subject to Medicare tax. Irs gov org Social security and Medicare taxes apply to most payments of sick pay, including payments made by third parties such as insurance companies. Irs gov org For details, see Publication 15-A. Irs gov org Additional Medicare Tax withholding. Irs gov org   In addition to withholding Medicare tax at 1. Irs gov org 45%, you must withhold a 0. Irs gov org 9% Additional Medicare Tax from wages you pay to an employee in excess of $200,000 in a calendar year. Irs gov org 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 gov org Additional Medicare Tax is only imposed on the employee. Irs gov org There is no employer share of Additional Medicare Tax. Irs gov org 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 gov org   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 gov org For more information on Additional Medicare Tax, visit IRS. Irs gov org gov and enter “Additional Medicare Tax” in the search box. Irs gov org Employee share paid by employer. Irs gov org   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 gov org If you do not withhold the taxes, however, you must still pay them. Irs gov org Any employee social security and Medicare taxes that you pay is additional income to the employee. Irs gov org 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 gov org Also, do not count the additional income as wages for FUTA tax purposes. Irs gov org Different rules apply to employer payments of social security and Medicare taxes for non-household and non-agricultural employees. Irs gov org See section 7 of Publication 15-A. Irs gov org Withholding social security and Medicare taxes on nonresident alien employees. Irs gov org   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 gov org S. Irs gov org citizen or resident alien. Irs gov org However, see Publication 515, Withholding of Tax on Nonresident Aliens and Foreign Entities, for exceptions to this general rule. Irs gov org Also see Compensation paid to H-2A visa holders in section 3. Irs gov org Religious exemption. Irs gov org    An exemption from social security and Medicare taxes is available to members of a recognized religious sect opposed to public insurance. Irs gov org This exemption is available only if both the employee and the employer are members of the sect. Irs gov org   For more information, see Publication 517, Social Security and Other Information for Members of the Clergy and Religious Workers. Irs gov org 5. Irs gov org 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 gov org The amount to withhold is figured on gross wages before taking out social security and Medicare taxes, union dues, insurance, etc. Irs gov org You may use one of several methods to determine the amount of federal income tax withholding. Irs gov org They are discussed in section 13. Irs gov org Form W-4. Irs gov org   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 gov org 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 gov org Advise your employees to use the IRS Withholding Calculator on the IRS website at www. Irs gov org irs. Irs gov org gov/individuals for help in determining how many withholding allowances to claim on their Form W-4. Irs gov org   Ask each new employee to give you a signed Form W-4 when starting work. Irs gov org Make the form effective with the first wage payment. Irs gov org 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 gov org Forms in Spanish. Irs gov org   You can provide Formulario W-4(SP) in place of Form W-4 to your Spanish-speaking employees. Irs gov org For more information, see Publicación 17(SP). Irs gov org Effective date of Form W-4. Irs gov org   A Form W-4 remains in effect until the employee gives you a new one. Irs gov org When you receive a new Form W-4, do not adjust withholding for pay periods before the effective date of the new form. Irs gov org Do not adjust withholding retroactively. Irs gov org 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 gov org 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 gov org A Form W-4 that makes a change for the next calendar year will not take effect in the current calendar year. Irs gov org Completing Form W-4. Irs gov org   The amount of federal income tax withholding is based on marital status and withholding allowances. Irs gov org Your employees may not base their withholding amounts on a fixed dollar amount or percentage. Irs gov org 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 gov org   Employees may claim fewer withholding allowances than they are entitled to claim. Irs gov org 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 gov org   See Publication 505, Tax Withholding and Estimated Tax, for more information about completing Form W-4. Irs gov org Along with Form W-4, you may wish to order Publication 505 for use by your employees. Irs gov org    Do not accept any withholding or estimated tax payments from your employees in addition to withholding based on their Form W-4. Irs gov org 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 gov org Exemption from federal income tax withholding. Irs gov org   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 gov org See the Form W-4 instructions for more information. Irs gov org However, the wages are still subject to social security and Medicare taxes. Irs gov org   A Form W-4 claiming exemption from withholding is effective when it is filed with the employer and only for that calendar year. Irs gov org 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 gov org 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 gov org 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 gov org Withholding income taxes on the wages of nonresident alien employees. Irs gov org   In general, you must withhold federal income taxes on the wages of nonresident alien employees. Irs gov org However, see Publication 515 for exceptions to this general rule. Irs gov org Also see Compensation paid to H-2A visa workers in section 3. Irs gov org Withholding adjustment for nonresident alien employees. Irs gov org   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 gov org 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 gov org See Withholding adjustment for nonresident alien employees in section 9 of Publication 15 (Circular E). Irs gov org Nonresident alien employee's Form W-4. Irs gov org   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 gov org   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 gov org    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 gov org Form 8233. Irs gov org   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 gov org See Publication 515 for details. Irs gov org IRS review of requested Forms W-4. Irs gov org   When requested by the IRS, you must make original Forms W-4 available for inspection by an IRS employee. Irs gov org You may also be directed to send certain Forms W-4 to the IRS. Irs gov org 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 gov org 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 gov org 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 gov org When we refer to Form W-4, the same rules apply to Formulario W-4(SP), its Spanish translation. Irs gov org   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 gov org 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 gov org Initial lock-in letter. Irs gov org   The IRS uses information reported on Form W-2 to identify employees with withholding compliance problems. Irs gov org 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 gov org 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 gov org 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 gov org You may follow any reasonable business practice to furnish the employee copy to the employee. Irs gov org Implementation of lock-in letter. Irs gov org   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 gov org You must begin withholding tax on the basis of the notice for any wages paid after the date specified in the notice. Irs gov org 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 gov org Seasonal employees and employees not currently performing services. Irs gov org   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 gov org 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 gov org You reasonably expect the employee to resume services within 12 months of the date of the notice. Irs gov org 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 gov org Termination and re-hire of employees. Irs gov org   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 gov org 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 gov org Modification notice. Irs gov org   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 gov org The modification notice may change the marital status and/or the number of withholding allowances permitted. Irs gov org You must withhold federal income tax based on the effective date specified in the modification notice. Irs gov org New Form W-4 after IRS notice. Irs gov org   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 gov org 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 gov org 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 gov org   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 gov org Otherwise, disregard any subsequent Forms W-4 provided by the employee and withhold based on the IRS notice or modification notice. Irs gov org Substitute Forms W-4. Irs gov org   You are encouraged to have your employees use the official version of Form W-4 to claim withholding allowances or exemption from withholding. Irs gov org Call the IRS at 1-800-TAX-FORM (1-800-829-3676) or visit IRS. Irs gov org gov to obtain copies of Form W-4. Irs gov org   You may use a substitute version of Form W-4 to meet your business needs. Irs gov org 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 gov org 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 gov org   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 gov org However, continue to use any valid Forms W-4 developed by your employees that you accepted before October 11, 2007. Irs gov org Invalid Forms W-4. Irs gov org   Any unauthorized change or addition to Form W-4 makes it invalid. Irs gov org This includes taking out any language by which the employee certifies that the form is correct. Irs gov org 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 gov org An employee who submits a false Form W-4 may be subject to a $500 penalty. Irs gov org 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 gov org   When you get an invalid Form W-4, do not use it to figure federal income tax withholding. Irs gov org Tell the employee that it is invalid and ask for another one. Irs gov org If the employee does not give you a valid one, withhold taxes as if the employee was single and claiming no withholding allowances. Irs gov org However, if you have an earlier Form W-4 for this worker that is valid, withhold as you did before. Irs gov org   For additional information about these rules, see Treasury Decision 9337, 2007-35 I. Irs gov org R. Irs gov org B. Irs gov org 455, available at www. Irs gov org irs. Irs gov org gov/irb/2007-35_IRB/ar10. Irs gov org html. Irs gov org Amounts exempt from levy on wages, salary, and other income. Irs gov org   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 gov org 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 gov org 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 gov org How To Figure Federal Income Tax Withholding There are several ways to figure federal income tax withholding. Irs gov org Wage bracket tables. Irs gov org See section 13 for directions on how to use the tables. Irs gov org Percentage method. Irs gov org See section 13 for directions on how to use the percentage method. Irs gov org Alternative formula tables for percentage method withholding. Irs gov org See Publication 15-A. Irs gov org Wage bracket percentage method withholding tables. Irs gov org See Publication 15-A. Irs gov org Other alternative methods. Irs gov org See Publication 15-A. Irs gov org 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 gov org If an employee wants additional federal tax withheld, have the employee show the extra amount on Form W-4. Irs gov org Supplemental wages. Irs gov org   Supplemental wages are wage payments to an employee that are not regular wages. Irs gov org 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 gov org Other payments subject to the supplemental wage rules include taxable fringe benefits and expense allowances paid under a nonaccountable plan. Irs gov org   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 gov org   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 gov org 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 gov org Withhold a flat 25% (no other percentage allowed). Irs gov org If the supplemental wages are paid concurrently with regular wages, add the supplemental wages to the concurrently paid regular wages. Irs gov org 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 gov org Figure the income tax withholding as if the total of the regular wages and supplemental wages is a single payment. Irs gov org Subtract the tax withheld from the regular wages. Irs gov org Withhold the remaining tax from the supplemental wages. Irs gov org 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 gov org 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 gov org 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 gov org    Separate rules apply to any supplemental wages exceeding $1 million that you pay to an individual during the year. Irs gov org See section 7 in Publication 15 (Circular E) for details. Irs gov org   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 gov org 6. Irs gov org 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 gov org 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 gov org This is because eligible employees may get a refund of the amount of EIC that is more than the tax that they owe. Irs gov org 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 gov org 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 gov org 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 gov org 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 gov org If Form W-2 is not required, you must notify the employee by February 7, 2014. Irs gov org 7. Irs gov org Depositing Taxes Generally, you must deposit both the employer and employee shares of social security and Medicare taxes and federal income tax withheld. Irs gov org You must use electronic funds transfer to make all federal tax deposits. Irs gov org See How To Deposit , later in this section. Irs gov org 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 gov org For more information, see COBRA premium assistance credit under Introduction. Irs gov org Payment with return. Irs gov org   You may make payments with Forms 943 or 945 instead of depositing if one of the following applies. Irs gov org 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 gov org 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 gov org You are a monthly schedule depositor and make a payment in accordance with the Accuracy of Deposits Rule discussed later in this section. Irs gov org This payment may be $2,500 or more. Irs gov org Only monthly schedule depositors, defined later, are allowed to make an Accuracy of Deposits Rule payment with the return. Irs gov org Semiweekly schedule depositors must timely deposit the amount. Irs gov org See Accuracy of Deposits Rule and How To Deposit, later in this section. Irs gov org 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 gov org See Employers of Both Farm and Nonfarm Workers, later in this section. Irs gov org The rules for determining when to deposit Form 943 taxes are discussed below. Irs gov org See section 10 for the separate rules that apply to FUTA tax. Irs gov org Under these rules, you are classified as either a monthly schedule depositor or a semiweekly schedule depositor. Irs gov org 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 gov org The terms identify which set of rules you must follow when you incur a tax liability (for example, when you have a payday). Irs gov org 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 gov org If you reported $50,000 or less of Form 943 taxes for the lookback period, you are a monthly schedule depositor. Irs gov org If you reported more than $50,000 of Form 943 taxes for the lookback period, you are a semiweekly schedule depositor. Irs gov org Lookback period. Irs gov org   The lookback period is the second calendar year preceding the current calendar year. Irs gov org For example, the lookback period for 2014 is 2012. Irs gov org Example of deposit schedule based on lookback period. Irs gov org Rose Co. Irs gov org reported taxes on Form 943 as follows. Irs gov org 2012 — $48,000 2013 — $60,000 Rose Co. Irs gov org 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 gov org However, for 2015, Rose Co. Irs gov org 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 gov org Adjustments to lookback period taxes. Irs gov org   To determine your taxes for the lookback period, use only the tax that you reported on the original return (Form 943, line 9). Irs gov org Do not include adjustments shown on Form 943-X, Adjusted Employer's Annual Federal Tax Return for Agricultural Employees or Claim for Refund. Irs gov org Example of adjustments. Irs gov org An employer originally reported total tax of $45,000 for the lookback period in 2012. Irs gov org 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 gov org The total tax reported in the lookback period is still $45,000. Irs gov org The $10,000 adjustment is also not treated as part of the 2014 taxes. Irs gov org Deposit period. Irs gov org   The term “deposit period” refers to the period during which tax liabilities are accumulated for each required deposit due date. Irs gov org For monthly schedule depositors, the deposit period is a calendar month. Irs gov org The deposit periods for semiweekly schedule depositors are Wednesday through Friday and Saturday through Tuesday. Irs gov org 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 gov org You must deposit Form 943 taxes on payments made during a calendar month by the 15th day of the following month. Irs gov org Monthly schedule example. Irs gov org   Red Co. Irs gov org is a seasonal employer and a monthly schedule depositor. Irs gov org It pays wages each Friday. Irs gov org It paid wages during August 2014, but did not pay any wages during September. Irs gov org Red Co. Irs gov org must deposit the combined tax liabilities for the August paydays by September 15. Irs gov org Red Co. Irs gov org 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 gov org New employers. Irs gov org   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 gov org 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 gov org 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 gov org Under the semiweekly deposit schedule, deposit Form 943 taxes for payments made on Wednesday, Thursday, and/or Friday by the following Wednesday. Irs gov org Deposit amounts accumulated for payments made on Saturday, Sunday, Monday, and/or Tuesday by the following Friday. Irs gov org 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 gov org 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 gov org If you made no additional payments on Saturday through Tuesday, no deposit is due on Friday. Irs gov org Semiweekly schedule depositors must complete Form 943-A, Agricultural Employer's Record of Federal Tax Liability, and submit it with Form 943. Irs gov org Semiweekly Deposit Schedule IF the payday falls on a. Irs gov org . Irs gov org . Irs gov org THEN deposit taxes by the following. Irs gov org . Irs gov org . Irs gov org Wednesday, Thursday, and/or Friday Wednesday Saturday, Sunday, Monday, and/or Tuesday Friday Semiweekly schedule example. Irs gov org   Green, Inc. Irs gov org , is a semiweekly schedule depositor and pays wages once each month on the last Friday of the month. Irs gov org Green, Inc. Irs gov org , will deposit only once a month, but the deposit will be made under the semiweekly deposit schedule as follows. Irs gov org Green, Inc. Irs gov org 's tax liability for the April 25, 2014 (Friday), wage payment must be deposited by April 30, 2014 (Wednesday). Irs gov org Semiweekly deposit period spanning two quarters. Irs gov org   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 gov org 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 gov org Both deposits will be due Friday, April 4, 2014 (3 business days from the end of the semiweekly deposit period). Irs gov org 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 gov org A business day is any day other than a Saturday, Sunday, or legal holiday. Irs gov org 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 gov org Semiweekly schedule depositors   will always have 3 business days to make a deposit. Irs gov org 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 gov org 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 gov org Legal holiday. Irs gov org   The term “legal holiday” means any legal holiday in the District of Columbia. Irs gov org Legal holidays for 2014 are listed below. Irs gov org January 1— New Year's Day January 20— Birthday of Martin Luther King, Jr. Irs gov org 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 gov org For purposes of the $100,000 rule, do not continue accumulating a tax liability after the end of a deposit period. Irs gov org 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 gov org Thus, $95,000 must be deposited by Friday and $10,000 must be deposited by the following Wednesday. Irs gov org 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 gov org For example, Fir Co. Irs gov org is a semiweekly schedule depositor. Irs gov org On Monday, Fir Co. Irs gov org accumulates taxes of $110,000 and must deposit this amount on Tuesday, the next business day. Irs gov org On Tuesday, Fir Co. Irs gov org accumulates additional taxes of $30,000. Irs gov org Because the $30,000 is not added to the previous $110,000 and is less than $100,000, Fir Co. Irs gov org does not have to deposit the $30,000 until Friday (following the semiweekly deposit schedule). Irs gov org 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 gov org Example of the $100,000 next-day deposit rule. Irs gov org   Elm, Inc. Irs gov org , started its business on May 1, 2014. Irs gov org Because Elm, Inc. Irs gov org , is a new employer, the taxes for its lookback period are considered to be zero; therefore, Elm, Inc. Irs gov org , is a monthly schedule depositor. Irs gov org On May 8, Elm, Inc. Irs gov org , paid wages for the first time and accumulated taxes of $50,000. Irs gov org On May 9 (Friday), Elm, Inc. Irs gov org , paid wages and accumulated taxes of $60,000, for a total of $110,000. Irs gov org Because Elm, Inc. Irs gov org , accumulated $110,000 on May 9, it must deposit $110,000 by May 12 (Monday), the next business day. Irs gov org Elm, Inc. Irs gov org , became a semiweekly schedule depositor on May 10. Irs gov org It will be a semiweekly schedule depositor for the remainder of 2014 and for 2015. Irs gov org Accuracy of Deposits Rule You are required to deposit 100% of your tax liability on or before the deposit due date. Irs gov org However, penalties will not be applied for depositing less than 100% if both of the following conditions are met. Irs gov org Any deposit shortfall does not exceed the greater of $100 or 2% of the amount of taxes otherwise required to be deposited. Irs gov org The deposit shortfall is paid or deposited by the shortfall makeup date as described below. Irs gov org 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 gov org You may pay the shortfall with your Form 943 even if the amount is $2,500 or more. Irs gov org 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 gov org For example, if a semiweekly schedule depositor has a deposit shortfall during February 2014, the shortfall makeup date is March 19, 2014 (Wednesday). Irs gov org How To Deposit You must deposit employment taxes by electronic funds transfer. Irs gov org 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 gov org Electronic deposit requirement. Irs gov org   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 gov org Generally, electronic funds transfers are made using the Electronic Federal Tax Payment System (EFTPS). Irs gov org 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 gov org   EFTPS is a free service provided by the Department of Treasury. Irs gov org 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 gov org You can also visit the EFTPS website at www. Irs gov org eftps. Irs gov org gov. Irs gov org Additional information about EFTPS is also available in Publication 966. Irs gov org New employers that have a federal tax obligation will be pre-enrolled in EFTPS. Irs gov org 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 gov org See When you receive your EIN in section 1 for more information. Irs gov org Deposit record. Irs gov org   For your records, an Electronic Funds Transfer (EFT) Trace Number will be provided with each successful payment. Irs gov org The number can be used as a receipt or to trace the payment. Irs gov org Depositing on time. Irs gov org   For deposits made by EFTPS to be on time, you must initiate the deposit by 8 p. Irs gov org m. Irs gov org Eastern time the day before the date a deposit is due. Irs gov org If you use a third party to make a deposit on your behalf, they may have different cutoff times. Irs gov org Same-day payment option. Irs gov org   If you fail to initiate a deposit transaction on EFTPS by 8 p. Irs gov org m. Irs gov org 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 gov org To use the same-day payment method, you will need to make arrangements with your financial institution ahead of time. Irs gov org Please check with your financial institution regarding availability, deadlines, and costs. Irs gov org Your financial institution may charge you a fee for payments made this way. Irs gov org 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 gov org eftps. Irs gov org gov to download the Same-Day Payment Worksheet. Irs gov org 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 gov org 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 gov org 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 gov org For amounts not properly deposited or not deposited on time, the penalty rates are shown next. Irs gov org Penalty Charged for. Irs gov org . Irs gov org . Irs gov org 2% Deposits made 1 to 5 days late. Irs gov org 5% Deposits made 6 to 15 days late. Irs gov org 10% Deposits made 16 or more days late. Irs gov org Also applies to amounts paid within 10 days of the date of the first notice the IRS sent asking for the tax due. Irs gov org 10% Amounts (that should have been deposited) paid directly to the IRS or paid with your tax return. Irs gov org See Payment with return , earlier in this section, for exceptions. Irs gov org 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 gov org Late deposit penalty amounts are determined using calendar days, starting from the due date of the liability. Irs gov org Order in which deposits are applied. Irs gov org   Deposits generally are applied to the most recent tax liability within the year. Irs gov org 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 gov org Follow the instructions on the penalty notice that you received. Irs gov org For examples on how the IRS will apply deposits and more information on designating deposits, see Revenue Procedure 2001-58. Irs gov org You can find Revenue Procedure 2001-58 on page 579 of Internal Revenue Bulletin 2001-50 at www. Irs gov org irs. Irs gov org gov/pub/irs-irbs/irb01-50. Irs gov org pdf. Irs gov org Example. Irs gov org Cedar, Inc. Irs gov org , is required to make a deposit of $1,000 on July 15 and $1,500 on August 15. Irs gov org It does not make the deposit on July 15. Irs gov org On August 15, Cedar, Inc. Irs gov org , deposits $2,000. Irs gov org 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 gov org Accordingly, $500 of the July 15 liability remains undeposited. Irs gov org The penalty on this underdeposit will apply as explained above. Irs gov org Trust fund recovery penalty. Irs gov org   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 gov org The penalty is the full amount of the unpaid trust fund tax. Irs gov org This penalty may apply to you if these unpaid taxes cannot be immediately collected from the employer or business. Irs gov org   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 gov org   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 gov org 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 gov org    Willfully means voluntarily, consciously, and intentionally. Irs gov org 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 gov org “Average” failure-to-deposit penalty. Irs gov org   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 gov org 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 gov org Completed Form 943, line 17, instead of Form 943-A. Irs gov org Failed to attach a properly completed Form 943-A. Irs gov org Completed Form 943-A incorrectly, for example, by entering tax deposits instead of tax liabilities in the numbered spaces. Irs gov org   IRS figures the penalty by allocating your tax liability on Form 943, line 11, equally throughout the tax period. Irs gov org Your deposits and payments may not be counted as timely because IRS does not know the actual dates of your tax liabilities. Irs gov org   You can avoid the penalty by reviewing your return before filing it. Irs gov org Follow these steps before filing your Form 943. Irs gov org 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 gov org 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 gov org 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 gov org Do not show negative amounts on Form 943, line 17, or Form 943-A. Irs gov org 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 gov org 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 gov org Form 943 taxes and Form 941/944 taxes are not combined for purposes of applying any of the deposit schedule rules. Irs gov org If a deposit is due, deposi