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State Tax Free File

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State Tax Free File

State tax free file Index A Accident benefits, Accident and Health Benefits Achievement awards, Achievement Awards Additional Medicare Tax, Reminders, Additional Medicare Tax withholding. State tax free file Adoption assistance, Adoption Assistance Annual lease value, Annual Lease Value Assistance (see Tax help) Athletic facilities, Athletic Facilities Automobile (see Vehicles) Awards, achievement, Achievement Awards B Bicycle commuting reimbursement, qualified, Qualified bicycle commuting reimbursement. State tax free file C Cafeteria plans, Cafeteria Plans Cents-per-mile rule, What's New, Cents-Per-Mile Rule COBRA premiums, COBRA premiums. State tax free file Comments on publication, Comments and suggestions. State tax free file Commuter highway vehicle, Commuter highway vehicle. State tax free file Commuting rule, Commuting Rule Copying machine use, De Minimis (Minimal) Benefits D Daily lease value, Daily Lease Value De minimis (minimal) benefits In general, De Minimis (Minimal) Benefits Meals, De Minimis Meals Transportation, De Minimis Transportation Benefits Demonstrator cars, Demonstrator cars. State tax free file Dependent care assistance, Dependent Care Assistance Deposit rules, 4. State tax free file Rules for Withholding, Depositing, and Reporting Discounts for employees, Employee Discounts E Educational assistance, Educational Assistance Employee benefit programs Accident and health benefits, Accident and Health Benefits Cafeteria plans, Cafeteria Plans Dependent care assistance, Dependent Care Assistance Educational assistance, Educational Assistance Group-term life insurance, Group-Term Life Insurance Coverage Employee discounts, Employee Discounts Employee stock options, Employee Stock Options Employer-operated eating facility, Employer-operated eating facility for employees. State tax free file Employer-provided cell phones, Employer-Provided Cell Phones Exclusion rules, 2. State tax free file Fringe Benefit Exclusion Rules F Fair market value, Fair market value. State tax free file Fringe benefit overview, 1. State tax free file Fringe Benefit Overview Fringe benefits Special accounting rule, Special accounting rule. State tax free file Valuation rules, 3. State tax free file Fringe Benefit Valuation Rules G General valuation rule, General Valuation Rule Group-term life insurance, Group-Term Life Insurance Coverage H Health benefits, Accident and Health Benefits Health Savings Accounts, Health Savings Accounts Holiday gifts, De Minimis (Minimal) Benefits I Insurance Accident and health, Accident and Health Benefits Group-term life, Group-Term Life Insurance Coverage Long-term care, Exception for certain long-term care benefits. State tax free file L Lease value rule, Lease Value Rule Length of service awards, Achievement Awards Life insurance Group-term, Group-Term Life Insurance Coverage Spouse or dependent, De Minimis (Minimal) Benefits Lodging, Lodging on Your Business Premises Long-term care insurance, Exception for certain long-term care benefits. State tax free file M Meals De minimis, De Minimis Meals On your business premises, Meals on Your Business Premises Medical reimbursement plans, Accident and Health Benefits Minimal benefits, De Minimis (Minimal) Benefits Moving expense reimbursements, Moving Expense Reimbursements N No-additional-cost services, No-Additional-Cost Services Nonpersonal use vehicles, qualified, Qualified nonpersonal use vehicles. State tax free file O Options on stock, Employee Stock Options Outplacement services, Outplacement services. State tax free file P Parking, qualified, Qualified parking. State tax free file Parties, De Minimis (Minimal) Benefits Performance of services, Performance of services. State tax free file Pickup trucks, Pickup trucks. State tax free file Picnics, De Minimis (Minimal) Benefits Prorated annual lease value, Prorated Annual Lease Value Provider defined, Provider of benefit. State tax free file Publications (see Tax help) Q Qualified transportation benefits, Qualified Transportation Benefits R Recipient defined, Recipient of benefit. State tax free file Reimbursements, moving expense, Moving Expense Reimbursements Reporting rules, 4. State tax free file Rules for Withholding, Depositing, and Reporting Retirement planning services, Retirement Planning Services S Safety achievement awards, Achievement Awards Self insurance (medical reimbursement plans), Accident and Health Benefits Services, no-additional-cost, No-Additional-Cost Services Simple Cafeteria Plans, Simple Cafeteria Plans Special accounting rule, Special accounting rule. State tax free file Stock options, employee, Employee Stock Options Suggestions for publication, Comments and suggestions. State tax free file T Tax help, How To Get Tax Help Taxable benefits, Are Fringe Benefits Taxable? Tickets for theater or sporting events, De Minimis (Minimal) Benefits Transit pass, Transit pass. State tax free file Transportation benefits De minimis, De Minimis Transportation Benefits Qualified, Qualified Transportation Benefits TTY/TDD information, How To Get Tax Help Tuition reduction, Tuition Reduction U Unsafe conditions commuting rule, Unsafe Conditions Commuting Rule V Valuation rules, 3. State tax free file Fringe Benefit Valuation Rules Vans, Vans. State tax free file Vehicles Business use of (see Working condition benefits) Commuter highway, Commuter highway vehicle. State tax free file Qualified nonpersonal use, Qualified nonpersonal use vehicles. State tax free file Valuation of, Employer-provided vehicles. State tax free file W Withholding rules, 4. State tax free file Rules for Withholding, Depositing, and Reporting Working condition benefits, Working Condition Benefits Prev  Up     Home   More Online Publications
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SOI Tax Stats - Controlled Foreign Corporations

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  • Data are taken from Form 5471 - Information Return of U.S. Persons With Respect to Certain Foreign Corporations.
  • For U.S. income tax purposes, a foreign corporation is "controlled" if U.S. shareholders own more than 50% of its outstanding voting stock.
  • Data are also available for the One-Time Dividend Received Deduction reported on Form 8895.

Statistical Tables     SOI Bulletin Articles     Metadata   
 


Statistical Tables

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U.S. Corporations and Their Controlled Foreign Corporations
     Data Presented: Number, Assets, Receipts, Earnings, Taxes, Distributions, Subpart F Income, and Related Party Transactions
     Classified by: Selected NAICS Industrial Sector*
     Tax Years: 2008     2006     2004   
 
     Classified by: Selected Country of Incorporation
     Tax Years: 2008     2006     2004   
 
     Classified by: Selected Country of Incorporation and NAICS Industrial Sector*
     Tax Years: 2008     2006     2004   
 
U.S. Corporations with Total Assets of $500 Million or More and Their 7,500 Largest Controlled Foreign Corporations
     Data Presented: Number, Assets, Receipts, Earnings, Taxes, Distributions, and Subpart F Income
     Classified by: Selected NAICS Industrial Sector*
     Tax Years: 2002   2000   1998   1996   1994   1992   1988
 
     Classified by: Selected Country of Incorporation
     Tax Years: 2002   2000   1998   1996   1994   1992   1988
 
     Classified by: Selected Country of Incorporation and NAICS Industrial Sector*
     Tax Years: 2002   2000   1998   1996   1994   1988


 

U.S. Corporations with Total Assets of $500 Million or More and Their 7,500 Largest Controlled Foreign Corporations
     Data Presented: Number, Assets, Receipts, and Earnings, Standard Industrial Classification (SIC) and North American Industry Classification System (NAICS)
     Classified by: Selected NAICS Industrial Sector
     Tax Year: 1998


*Note:  For Tax Years prior to 1998, industry data are presented by Standard Industry Classification (SIC).  Industry data for Tax Years 1998 to present are presented by North American Industry Classification System (NAICS)


SOI Bulletin Articles

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Page Last Reviewed or Updated: 15-Jan-2014

The State Tax Free File

State tax free file Publication 15 - Main Content Table of Contents 1. State tax free file Employer Identification Number (EIN) 2. State tax free file Who Are Employees?Relief provisions. State tax free file Business Owned and Operated by Spouses 3. State tax free file Family Employees 4. State tax free file Employee's Social Security Number (SSN)Registering for SSNVS. State tax free file 5. State tax free file Wages and Other CompensationAccountable plan. State tax free file Nonaccountable plan. State tax free file Per diem or other fixed allowance. State tax free file 50% test. State tax free file Health Savings Accounts and medical savings accounts. State tax free file Nontaxable fringe benefits. State tax free file When fringe benefits are treated as paid. State tax free file Valuation of fringe benefits. State tax free file Withholding on fringe benefits. State tax free file Depositing taxes on fringe benefits. State tax free file 6. State tax free file TipsOrdering rule. State tax free file 7. State tax free file Supplemental Wages 8. State tax free file Payroll Period 9. State tax free file Withholding From Employees' WagesIncome Tax Withholding Social Security and Medicare Taxes Part-Time Workers 10. State tax free file Required Notice to Employees About the Earned Income Credit (EIC) 11. State tax free file Depositing TaxesWhen To Deposit How To Deposit Deposit Penalties 12. State tax free file Filing Form 941 or Form 944 13. State tax free file Reporting Adjustments to Form 941 or Form 944Current Period Adjustments Prior Period Adjustments Wage Repayments 14. State tax free file Federal Unemployment (FUTA) TaxSuccessor employer. State tax free file Household employees. State tax free file When to deposit. State tax free file Household employees. State tax free file Electronic filing by reporting agents. State tax free file 16. State tax free file How To Use the Income Tax Withholding TablesWage Bracket Method Percentage Method Alternative Methods of Income Tax Withholding How To Get Tax Help 1. State tax free file Employer Identification Number (EIN) If you are required to report employment taxes or give tax statements to employees or annuitants, you need an EIN. State tax free file The EIN is a nine-digit number the IRS issues. State tax free file The digits are arranged as follows: 00-0000000. State tax free file It is used to identify the tax accounts of employers and certain others who have no employees. State tax free file Use your EIN on all of the items you send to the IRS and SSA. State tax free file For more information, see Publication 1635, Employer Identification Number: Understanding Your EIN. State tax free file If you do not have an EIN, you may apply for one online. State tax free file Go to the IRS. State tax free file gov and click on the Apply for an EIN Online link under Tools. State tax free file 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. State tax free file Do not use an SSN in place of an EIN. State tax free file You should have only one EIN. State tax free file If you have more than one and are not sure which one to use, call 1-800-829-4933 or 1-800-829-4059 (TDD/TTY for persons who are deaf, hard of hearing, or have a speech disability). State tax free file Give the numbers you have, the name and address to which each was assigned, and the address of your main place of business. State tax free file The IRS will tell you which number to use. State tax free file If you took over another employer's business (see Successor employer in section 9), do not use that employer's EIN. State tax free file If you have applied for an EIN but do not have your EIN by the time a return is due, file a paper return and write “Applied For” and the date you applied for it in the space shown for the number. State tax free file 2. State tax free file Who Are Employees? Generally, employees are defined either under common law or under statutes for certain situations. State tax free file See Publication 15-A for details on statutory employees and nonemployees. State tax free file Employee status under common law. State tax free file   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. State tax free file This is so even when you give the employee freedom of action. State tax free file What matters is that you have the right to control the details of how the services are performed. State tax free file See Publication 15-A for more information on how to determine whether an individual providing services is an independent contractor or an employee. State tax free file   Generally, people in business for themselves are not employees. State tax free file For example, doctors, lawyers, veterinarians, and others in an independent trade in which they offer their services to the public are usually not employees. State tax free file However, if the business is incorporated, corporate officers who work in the business are employees of the corporation. State tax free file   If an employer-employee relationship exists, it does not matter what it is called. State tax free file The employee may be called an agent or independent contractor. State tax free file It also does not matter how payments are measured or paid, what they are called, or if the employee works full or part time. State tax free file Statutory employees. State tax free file   If someone who works for you is not an employee under the common law rules discussed earlier, do not withhold federal income tax from his or her pay, unless backup withholding applies. State tax free file Although the following persons may not be common law employees, they are considered employees by statute for social security, Medicare, and FUTA tax purposes under certain conditions. State tax free file An agent (or commission) driver who delivers food, beverages (other than milk), laundry, or dry cleaning for someone else. State tax free file A full-time life insurance salesperson who sells primarily for one company. State tax free file A homeworker who works by guidelines of the person for whom the work is done, with materials furnished by and returned to that person or to someone that person designates. State tax free file A traveling or city salesperson (other than an agent-driver or commission-driver) who works full time (except for sideline sales activities) for one firm or person getting orders from customers. State tax free file The orders must be for merchandise for resale or supplies for use in the customer's business. State tax free file The customers must be retailers, wholesalers, contractors, or operators of hotels, restaurants, or other businesses dealing with food or lodging. State tax free file    Statutory nonemployees. State tax free file   Direct sellers, qualified real estate agents, and certain companion sitters are, by law, considered nonemployees. State tax free file They are generally treated as self-employed for all federal tax purposes, including income and employment taxes. State tax free file H-2A agricultural workers. State tax free file   On Form W-2, do not check box 13 (Statutory employee), as H-2A workers are not statutory employees. State tax free file Treating employees as nonemployees. State tax free file   You will generally be liable for social security and Medicare taxes and withheld income tax if you do not deduct and withhold these taxes because you treated an employee as a nonemployee. State tax free file You may be able to calculate your liability using special section 3509 rates for the employee share of social security and Medicare taxes and the federal income tax withholding. State tax free file The applicable rates depend on whether you filed required Forms 1099. State tax free file You cannot recover the employee share of social security, or Medicare tax, or income tax withholding from the employee if the tax is paid under section 3509. State tax free file You are liable for the income tax withholding regardless of whether the employee paid income tax on the wages. State tax free file You continue to owe the full employer share of social security and Medicare taxes. State tax free file The employee remains liable for the employee share of social security and Medicare taxes. State tax free file See Internal Revenue Code section 3509 for details. State tax free file Also see the Instructions for Form 941-X. State tax free file   Section 3509 rates are not available if you intentionally disregard the requirement to withhold taxes from the employee or if you withheld income taxes but not social security or Medicare taxes. State tax free file Section 3509 is not available for reclassifying statutory employees. State tax free file See Statutory employees , earlier in this section. State tax free file   If the employer issued required information returns, the section 3509 rates are: For social security taxes; employer rate of 6. State tax free file 2% plus 20% of the employee rate (see the Instructions for Form 941-X). State tax free file For Medicare taxes; employer rate of 1. State tax free file 45% plus 20% of the employee rate of 1. State tax free file 45%, for a total rate of 1. State tax free file 74% of wages. State tax free file For Additional Medicare Tax; 0. State tax free file 18% (20% of the employee rate of 0. State tax free file 9%) of wages subject to Additional Medicare Tax. State tax free file For income tax withholding, the rate is 1. State tax free file 5% of wages. State tax free file   If the employer did not issue required information returns, the section 3509 rates are: For social security taxes; employer rate of 6. State tax free file 2% plus 40% of the employee rate (see the Instructions for Form 941-X). State tax free file For Medicare taxes; employer rate of 1. State tax free file 45% plus 40% of the employee rate of 1. State tax free file 45%, for a total rate of 2. State tax free file 03% of wages. State tax free file For Additional Medicare Tax; 0. State tax free file 36% (40% of the employee rate of 0. State tax free file 9%) of wages subject to Additional Medicare Tax. State tax free file For income tax withholding, the rate is 3. State tax free file 0% of wages. State tax free file Relief provisions. State tax free file   If you have a reasonable basis for not treating a worker as an employee, you may be relieved from having to pay employment taxes for that worker. State tax free file To get this relief, you must file all required federal tax returns, including information returns, on a basis consistent with your treatment of the worker. State tax free file You (or your predecessor) must not have treated any worker holding a substantially similar position as an employee for any periods beginning after 1977. State tax free file See Publication 1976, Do You Qualify for Relief Under Section 530. State tax free file IRS help. State tax free file   If you want the IRS to determine whether a worker is an employee, file Form SS-8, Determination of Worker Status for Purposes of Federal Employment Taxes and Income Tax Withholding. State tax free file Voluntary Classification Settlement Program (VCSP). State tax free file   Employers who are currently treating their workers (or a class or group of workers) as independent contractors or other nonemployees and want to voluntarily reclassify their workers as employees for future tax periods may be eligible to participate in the VCSP if certain requirements are met. State tax free file To apply, use Form 8952, Application for Voluntary Classification Settlement Program (VCSP). State tax free file For more information visit IRS. State tax free file gov and enter “VCSP” in the search box. State tax free file Business Owned and Operated by Spouses If you and your spouse jointly own and operate a business and share in the profits and losses, you are partners in a partnership, whether or not you have a formal partnership agreement. State tax free file See Publication 541, Partnerships, for more details. State tax free file The partnership is considered the employer of any employees, and is liable for any employment taxes due on wages paid to its employees. State tax free file Exception—Qualified joint venture. State tax free file   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. State tax free file 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). State tax free file   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. State tax free file Each spouse must also file a separate Schedule SE to pay self-employment taxes, as applicable. State tax free file   Spouses using the qualified joint venture rules are treated as sole proprietors for federal tax purposes and generally do not need an EIN. State tax free file 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. State tax free file Generally, filing as a qualified joint venture will not increase the spouses' total tax owed on the joint income tax return. State tax free file 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. State tax free file    Note. State tax free file If your spouse is your employee, not your partner, see One spouse employed by another in section 3. State tax free file   For more information on qualified joint ventures, visit IRS. State tax free file gov and enter “qualified joint venture” in the search box. State tax free file Exception—Community income. State tax free file   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. State tax free file S. State tax free file possession, you can treat the business either as a sole proprietorship (of the spouse who carried on the business) or a partnership. State tax free file You may still make an election to be taxed as a qualified joint venture instead of a partnership. State tax free file See Exception—Qualified joint venture , earlier. State tax free file 3. State tax free file Family Employees Child employed by parents. State tax free file   Payments for the services of a child under age 18 who works for his or her parent in a trade or business are not subject to social security and Medicare taxes if the trade or business is a sole proprietorship or a partnership in which each partner is a parent of the child. State tax free file If these payments are for work other than in a trade or business, such as domestic work in the parent's private home, they are not subject to social security and Medicare taxes until the child reaches age 21. State tax free file However, see Covered services of a child or spouse , later in this section. State tax free file Payments for the services of a child under age 21 who works for his or her parent, whether or not in a trade or business, are not subject to FUTA tax. State tax free file Payments for the services of a child of any age who works for his or her parent are generally subject to income tax withholding unless the payments are for domestic work in the parent's home, or unless the payments are for work other than in a trade or business and are less than $50 in the quarter or the child is not regularly employed to do such work. State tax free file One spouse employed by another. State tax free file   The wages for the services of an individual who works for his or her spouse in a trade or business are subject to income tax withholding and social security and Medicare taxes, but not to FUTA tax. State tax free file However, the payments for services of one spouse employed by another in other than a trade or business, such as domestic service in a private home, are not subject to social security, Medicare, and FUTA taxes. State tax free file Covered services of a child or spouse. State tax free file   The wages for the services of a child or spouse are subject to income tax withholding as well as social security, Medicare, and FUTA taxes if he or she works for: A corporation, even if it is controlled by the child's parent or the individual's spouse; A partnership, even if the child's parent is a partner, unless each partner is a parent of the child; A partnership, even if the individual's spouse is a partner; or An estate, even if it is the estate of a deceased parent. State tax free file Parent employed by son or daughter. State tax free file   When the employer is a son or daughter employing his or her parent the following rules apply. State tax free file Payments for the services of a parent in the son’s or daughter’s (the employer’s) trade or business are subject to income tax withholding and social security and Medicare taxes. State tax free file Payments for the services of a parent not in the son’s or daughter’s (the employer’s) trade or business are generally not subject to social security and Medicare taxes. State tax free file    Social security and Medicare taxes do apply to payments made to a parent for domestic services if all of the following apply: The parent is employed by his or her son or daughter; The son or daughter (the employer) has a child or stepchild living in the home; The son or daughter (the employer) is a widow or widower, divorced, or living with a spouse who, because of a mental or physical condition, cannot care for the child or stepchild for at least 4 continuous weeks in a calendar quarter; and The child or stepchild is either under age 18 or requires the personal care of an adult for at least 4 continuous weeks in a calendar quarter due to a mental or physical condition. State tax free file   Payments made to a parent employed by his or her child are not subject to FUTA tax, regardless of the type of services provided. State tax free file 4. State tax free file Employee's Social Security Number (SSN) You are required to get each employee's name and SSN and to enter them on Form W-2. State tax free file This requirement also applies to resident and nonresident alien employees. State tax free file You should ask your employee to show you his or her social security card. State tax free file The employee may show the card if it is available. State tax free file Do not accept a social security card that says “Not valid for employment. State tax free file ” A social security number issued with this legend does not permit employment. State tax free file You may, but are not required to, photocopy the social security card if the employee provides it. State tax free file If you do not provide the correct employee name and SSN on Form W-2, you may owe a penalty unless you have reasonable cause. State tax free file See Publication 1586, Reasonable Cause Regulations & Requirements for Missing and Incorrect Name/TINs, for information on the requirement to solicit the employee's SSN. State tax free file Applying for a social security card. State tax free file   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. State tax free file You can get Form SS-5 at SSA offices, by calling 1-800-772-1213, or from the SSA website at www. State tax free file socialsecurity. State tax free file gov/online/ss-5. State tax free file html. State tax free file The employee must complete and sign Form SS-5; it cannot be filed by the employer. State tax free file 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. State tax free file Applying for a social security number. State tax free file   If you file Form W-2 on paper and your employee applied for an SSN but does not have one when you must file Form W-2, enter “Applied For” on the form. State tax free file If you are filing electronically, enter all zeros (000-00-000) in the social security number field. State tax free file 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. State tax free file Furnish copies B, C, and 2 of Form W-2c to the employee. State tax free file Up to 25 Forms W-2c for each Form W-3c, Transmittal of Corrected Wage and Tax Statements, may now be filed per session over the Internet, with no limit on the number of sessions. State tax free file For more information, visit the SSA's Employer W-2 Filing Instructions & Information webpage at www. State tax free file socialsecurity. State tax free file gov/employer. State tax free file Advise your employee to correct the SSN on his or her original Form W-2. State tax free file Correctly record the employee's name and SSN. State tax free file   Record the name and number of each employee as they are shown on the employee's social security card. State tax free file 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. State tax free file 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. State tax free file If the SSA issues the employee a replacement card after a name change, or a new card with a different social security number after a change in alien work status, file a Form W-2c to correct the name/SSN reported for the most recently filed Form W-2. State tax free file It is not necessary to correct other years if the previous name and number were used for years before the most recent Form W-2. State tax free file IRS individual taxpayer identification numbers (ITINs) for aliens. State tax free file   Do not accept an ITIN in place of an SSN for employee identification or for work. State tax free file An ITIN is only available to resident and nonresident aliens who are not eligible for U. State tax free file S. State tax free file employment and need identification for other tax purposes. State tax free file You can identify an ITIN because it is a nine-digit number, beginning with the number “9” with either a “7” or “8” as the fourth digit and is formatted like an SSN (for example, 9NN-7N-NNNN). State tax free file    An individual with an ITIN who later becomes eligible to work in the United States must obtain an SSN. State tax free file 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. State tax free file Do not use an ITIN in place of an SSN on Form W-2. State tax free file Verification of social security numbers. State tax free file   Employers and authorized reporting agents can use the Social Security Number Verification Service (SSNVS) to instantly verify up to 10 names and SSNs (per screen) at a time, or submit an electronic file of up to 250,000 names and SSNs and usually receive the results the next business day. State tax free file Visit www. State tax free file socialsecurity. State tax free file gov/employer/ssnv. State tax free file htm for more information. State tax free file Registering for SSNVS. State tax free file   You must register online and receive authorization from your employer to use SSNVS. State tax free file To register, visit SSA's website at www. State tax free file ssa. State tax free file gov/employer and click on the Business Services Online link. State tax free file Follow the registration instructions to obtain a user identification (ID) and password. State tax free file You will need to provide the following information about yourself and your company. State tax free file Name. State tax free file SSN. State tax free file Date of birth. State tax free file Type of employer. State tax free file EIN. State tax free file Company name, address, and telephone number. State tax free file Email address. State tax free file   When you have completed the online registration process, SSA will mail a one-time activation code to your employer. State tax free file You must enter the activation code online to use SSNVS. State tax free file 5. State tax free file Wages and Other Compensation Wages subject to federal employment taxes generally include all pay you give to an employee for services performed. State tax free file The pay may be in cash or in other forms. State tax free file It includes salaries, vacation allowances, bonuses, commissions, and fringe benefits. State tax free file It does not matter how you measure or make the payments. State tax free file Amounts an employer pays as a bonus for signing or ratifying a contract in connection with the establishment of an employer-employee relationship and an amount paid to an employee for cancellation of an employment contract and relinquishment of contract rights are wages subject to social security, Medicare, and FUTA taxes and income tax withholding. State tax free file Also, compensation paid to a former employee for services performed while still employed is wages subject to employment taxes. State tax free file More information. State tax free file   See section 6 for a discussion of tips and section 7 for a discussion of supplemental wages. State tax free file Also, see section 15 for exceptions to the general rules for wages. State tax free file Publication 15-A provides additional information on wages, including nonqualified deferred compensation, and other compensation. State tax free file Publication 15-B provides information on other forms of compensation, including: Accident and health benefits, Achievement awards, Adoption assistance, Athletic facilities, De minimis (minimal) benefits, Dependent care assistance, Educational assistance, Employee discounts, Employee stock options, Employer-provided cell phones, Group-term life insurance coverage, Health Savings Accounts, Lodging on your business premises, Meals, Moving expense reimbursements, No-additional-cost services, Retirement planning services, Transportation (commuting) benefits, Tuition reduction, and Working condition benefits. State tax free file Employee business expense reimbursements. State tax free file   A reimbursement or allowance arrangement is a system by which you pay the advances, reimbursements, and charges for your employees' business expenses. State tax free file How you report a reimbursement or allowance amount depends on whether you have an accountable or a nonaccountable plan. State tax free file If a single payment includes both wages and an expense reimbursement, you must specify the amount of the reimbursement. State tax free file   These rules apply to all ordinary and necessary employee business expenses that would otherwise qualify for a deduction by the employee. State tax free file Accountable plan. State tax free file   To be an accountable plan, your reimbursement or allowance arrangement must require your employees to meet all three of the following rules. State tax free file They must have paid or incurred deductible expenses while performing services as your employees. State tax free file The reimbursement or advance must be paid for the expense and must not be an amount that would have otherwise been paid by the employee. State tax free file They must substantiate these expenses to you within a reasonable period of time. State tax free file They must return any amounts in excess of substantiated expenses within a reasonable period of time. State tax free file   Amounts paid under an accountable plan are not wages and are not subject to income, social security, Medicare, and FUTA taxes. State tax free file   If the expenses covered by this arrangement are not substantiated (or amounts in excess of substantiated expenses are not returned within a reasonable period of time), the amount paid under the arrangement in excess of the substantiated expenses is treated as paid under a nonaccountable plan. State tax free file This amount is subject to income, social security, Medicare, and FUTA taxes for the first payroll period following the end of the reasonable period of time. State tax free file   A reasonable period of time depends on the facts and circumstances. State tax free file Generally, it is considered reasonable if your employees receive their advance within 30 days of the time they incur the expenses, adequately account for the expenses within 60 days after the expenses were paid or incurred, and return any amounts in excess of expenses within 120 days after the expenses were paid or incurred. State tax free file Also, it is considered reasonable if you give your employees a periodic statement (at least quarterly) that asks them to either return or adequately account for outstanding amounts and they do so within 120 days. State tax free file Nonaccountable plan. State tax free file   Payments to your employee for travel and other necessary expenses of your business under a nonaccountable plan are wages and are treated as supplemental wages and subject to income, social security, Medicare, and FUTA taxes. State tax free file Your payments are treated as paid under a nonaccountable plan if: Your employee is not required to or does not substantiate timely those expenses to you with receipts or other documentation, You advance an amount to your employee for business expenses and your employee is not required to or does not return timely any amount he or she does not use for business expenses, You advance or pay an amount to your employee regardless of whether you reasonably expect the employee to have business expenses related to your business, or You pay an amount as a reimbursement you would have otherwise paid as wages. State tax free file   See section 7 for more information on supplemental wages. State tax free file Per diem or other fixed allowance. State tax free file   You may reimburse your employees by travel days, miles, or some other fixed allowance under the applicable revenue procedure. State tax free file In these cases, your employee is considered to have accounted to you if your reimbursement does not exceed rates established by the Federal Government. State tax free file The 2013 standard mileage rate for auto expenses was 56. State tax free file 5 cents per mile. State tax free file The rate for 2014 is 56 cents per mile. State tax free file   The government per diem rates for meals and lodging in the continental United States are listed in Publication 1542, Per Diem Rates. State tax free file Other than the amount of these expenses, your employees' business expenses must be substantiated (for example, the business purpose of the travel or the number of business miles driven). State tax free file   If the per diem or allowance paid exceeds the amounts substantiated, you must report the excess amount as wages. State tax free file This excess amount is subject to income tax withholding and payment of social security, Medicare, and FUTA taxes. State tax free file Show the amount equal to the substantiated amount (for example, the nontaxable portion) in box 12 of Form W-2 using code “L. State tax free file ” Wages not paid in money. State tax free file   If in the course of your trade or business you pay your employees in a medium that is neither cash nor a readily negotiable instrument, such as a check, you are said to pay them “in kind. State tax free file ” Payments in kind may be in the form of goods, lodging, food, clothing, or services. State tax free file Generally, the fair market value of such payments at the time they are provided is subject to federal income tax withholding and social security, Medicare, and FUTA taxes. State tax free file   However, noncash payments for household work, agricultural labor, and service not in the employer's trade or business are exempt from social security, Medicare, and FUTA taxes. State tax free file Withhold income tax on these payments only if you and the employee agree to do so. State tax free file Nonetheless, noncash payments for agricultural labor, such as commodity wages, are treated as cash payments subject to employment taxes if the substance of the transaction is a cash payment. State tax free file Moving expenses. State tax free file   Reimbursed and employer-paid qualified moving expenses (those that would otherwise be deductible by the employee) paid under an accountable plan are not includible in an employee's income unless you have knowledge the employee deducted the expenses in a prior year. State tax free file Reimbursed and employer-paid nonqualified moving expenses are includible in income and are subject to employment taxes and income tax withholding. State tax free file For more information on moving expenses, see Publication 521, Moving Expenses. State tax free file Meals and lodging. State tax free file   The value of meals is not taxable income and is not subject to income tax withholding and social security, Medicare, and FUTA taxes if the meals are furnished for the employer's convenience and on the employer's premises. State tax free file The value of lodging is not subject to income tax withholding and social security, Medicare, and FUTA taxes if the lodging is furnished for the employer's convenience, on the employer's premises, and as a condition of employment. State tax free file    “For the convenience of the employer” means you have a substantial business reason for providing the meals and lodging other than to provide additional compensation to the employee. State tax free file For example, meals you provide at the place of work so that an employee is available for emergencies during his or her lunch period are generally considered to be for your convenience. State tax free file   However, whether meals or lodging are provided for the convenience of the employer depends on all of the facts and circumstances. State tax free file A written statement that the meals or lodging are for your convenience is not sufficient. State tax free file 50% test. State tax free file   If over 50% of the employees who are provided meals on an employer's business premises receive these meals for the convenience of the employer, all meals provided on the premises are treated as furnished for the convenience of the employer. State tax free file If this 50% test is met, the value of the meals is excludable from income for all employees and is not subject to federal income tax withholding or employment taxes. State tax free file For more information, see Publication 15-B. State tax free file Health insurance plans. State tax free file   If you pay the cost of an accident or health insurance plan for your employees, including an employee's spouse and dependents, your payments are not wages and are not subject to social security, Medicare, and FUTA taxes, or federal income tax withholding. State tax free file Generally, this exclusion also applies to qualified long-term care insurance contracts. State tax free file However, for income tax withholding, the value of health insurance benefits must be included in the wages of S corporation employees who own more than 2% of the S corporation (2% shareholders). State tax free file For social security, Medicare, and FUTA taxes, the health insurance benefits are excluded from the wages only for employees and their dependents or for a class or classes of employees and their dependents. State tax free file See Announcement 92-16 for more information. State tax free file You can find Announcement 92-16 on page 53 of Internal Revenue Bulletin 1992-5. State tax free file Health Savings Accounts and medical savings accounts. State tax free file   Your contributions to an employee's Health Savings Account (HSA) or Archer medical savings account (MSA) are not subject to social security, Medicare, or FUTA taxes, or federal income tax withholding if it is reasonable to believe at the time of payment of the contributions they will be excludable from the income of the employee. State tax free file To the extent it is not reasonable to believe they will be excludable, your contributions are subject to these taxes. State tax free file Employee contributions to their HSAs or MSAs through a payroll deduction plan must be included in wages and are subject to social security, Medicare, and FUTA taxes and income tax withholding. State tax free file However, HSA contributions made under a salary reduction arrangement in a section 125 cafeteria plan are not wages and are not subject to employment taxes or withholding. State tax free file For more information, see the Instructions for Form 8889, Health Savings Accounts (HSAs). State tax free file Medical care reimbursements. State tax free file   Generally, medical care reimbursements paid for an employee under an employer's self-insured medical reimbursement plan are not wages and are not subject to social security, Medicare, and FUTA taxes, or income tax withholding. State tax free file See Publication 15-B for an exception for highly compensated employees. State tax free file Differential wage payments. State tax free file   Differential wage payments are any payments made by an employer to an individual for a period during which the individual is performing service in the uniformed services while on active duty for a period of more than 30 days and represent all or a portion of the wages the individual would have received from the employer if the individual were performing services for the employer. State tax free file   Differential wage payments are wages for income tax withholding, but are not subject to social security, Medicare, or FUTA taxes. State tax free file Employers should report differential wage payments in box 1 of Form W-2. State tax free file For more information about the tax treatment of differential wage payments, visit IRS. State tax free file gov and enter “employees in a combat zone” in the search box. State tax free file Fringe benefits. State tax free file   You generally must include fringe benefits in an employee's gross income (but see Nontaxable fringe benefits next). State tax free file The benefits are subject to income tax withholding and employment taxes. State tax free file Fringe benefits include cars you provide, flights on aircraft you provide, free or discounted commercial flights, vacations, discounts on property or services, memberships in country clubs or other social clubs, and tickets to entertainment or sporting events. State tax free file In general, the amount you must include is the amount by which the fair market value of the benefits is more than the sum of what the employee paid for it plus any amount the law excludes. State tax free file There are other special rules you and your employees may use to value certain fringe benefits. State tax free file See Publication 15-B for more information. State tax free file Nontaxable fringe benefits. State tax free file   Some fringe benefits are not taxable (or are minimally taxable) if certain conditions are met. State tax free file See Publication 15-B for details. State tax free file The following are some examples of nontaxable fringe benefits. State tax free file Services provided to your employees at no additional cost to you. State tax free file Qualified employee discounts. State tax free file Working condition fringes that are property or services the employee could deduct as a business expense if he or she had paid for it. State tax free file Examples include a company car for business use and subscriptions to business magazines. State tax free file Certain minimal value fringes (including an occasional cab ride when an employee must work overtime and meals you provide at eating places you run for your employees if the meals are not furnished at below cost). State tax free file Qualified transportation fringes subject to specified conditions and dollar limitations (including transportation in a commuter highway vehicle, any transit pass, and qualified parking). State tax free file Qualified moving expense reimbursement. State tax free file See Moving expenses , earlier in this section, for details. State tax free file The use of on-premises athletic facilities, if substantially all of the use is by employees, their spouses, and their dependent children. State tax free file Qualified tuition reduction an educational organization provides to its employees for education. State tax free file For more information, see Publication 970, Tax Benefits for Education. State tax free file Employer-provided cell phones provided primarily for a noncompensatory business reason. State tax free file   However, do not exclude the following fringe benefits from the income of highly compensated employees unless the benefit is available to other employees on a nondiscriminatory basis. State tax free file No-additional-cost services. State tax free file Qualified employee discounts. State tax free file Meals provided at an employer operated eating facility. State tax free file Reduced tuition for education. State tax free file  For more information, including the definition of a highly compensated employee, see Publication 15-B. State tax free file When fringe benefits are treated as paid. State tax free file   You may choose to treat certain noncash fringe benefits as paid by the pay period, by the quarter, or on any other basis you choose as long as you treat the benefits as paid at least once a year. State tax free file You do not have to make a formal choice of payment dates or notify the IRS of the dates you choose. State tax free file You do not have to make this choice for all employees. State tax free file You may change methods as often as you like, as long as you treat all benefits provided in a calendar year as paid by December 31 of the calendar year. State tax free file See Publication 15-B for more information, including a discussion of the special accounting rule for fringe benefits provided during November and December. State tax free file Valuation of fringe benefits. State tax free file   Generally, you must determine the value of fringe benefits no later than January 31 of the next year. State tax free file Before January 31, you may reasonably estimate the value of the fringe benefits for purposes of withholding and depositing on time. State tax free file Withholding on fringe benefits. State tax free file   You may add the value of fringe benefits to regular wages for a payroll period and figure withholding taxes on the total, or you may withhold federal income tax on the value of the fringe benefits at the optional flat 25% supplemental wage rate. State tax free file However, see Withholding on supplemental wages when an employee receives more than $1 million of supplemental wages during the calendar year in section 7. State tax free file   You may choose not to withhold income tax on the value of an employee's personal use of a vehicle you provide. State tax free file You must, however, withhold social security and Medicare taxes on the use of the vehicle. State tax free file See Publication 15-B for more information on this election. State tax free file Depositing taxes on fringe benefits. State tax free file   Once you choose when fringe benefits are paid, you must deposit taxes in the same deposit period you treat the fringe benefits as paid. State tax free file To avoid a penalty, deposit the taxes following the general deposit rules for that deposit period. State tax free file   If you determine by January 31 you overestimated the value of a fringe benefit at the time you withheld and deposited for it, you may claim a refund for the overpayment or have it applied to your next employment tax return. State tax free file See Valuation of fringe benefits , earlier. State tax free file If you underestimated the value and deposited too little, you may be subject to a failure-to-deposit penalty. State tax free file See section 11 for information on deposit penalties. State tax free file   If you deposited the required amount of taxes but withheld a lesser amount from the employee, you can recover from the employee the social security, Medicare, or income taxes you deposited on his or her behalf, and included in the employee's Form W-2. State tax free file However, you must recover the income taxes before April 1 of the following year. State tax free file Sick pay. State tax free file   In general, sick pay is any amount you pay under a plan to an employee who is unable to work because of sickness or injury. State tax free file These amounts are sometimes paid by a third party, such as an insurance company or an employees' trust. State tax free file In either case, these payments are subject to social security, Medicare, and FUTA taxes. State tax free file Sick pay becomes exempt from these taxes after the end of 6 calendar months after the calendar month the employee last worked for the employer. State tax free file The payments are always subject to federal income tax. State tax free file See Publication 15-A for more information. State tax free file 6. State tax free file Tips Tips your employee receives from customers are generally subject to withholding. State tax free file Your employee must report cash tips to you by the 10th of the month after the month the tips are received. State tax free file The report should include tips you paid over to the employee for charge customers, tips the employee received directly from customers, and tips received from other employees under any tip-sharing arrangement. State tax free file Both directly and indirectly tipped employees must report tips to you. State tax free file No report is required for months when tips are less than $20. State tax free file Your employee reports the tips on Form 4070, Employee's Report of Tips to Employer, or on a similar statement. State tax free file The statement must be signed by the employee and must include: The employee's name, address, and SSN, Your name and address, The month or period the report covers, and The total of tips received during the month or period. State tax free file Both Forms 4070 and 4070-A, Employee's Daily Record of Tips, are included in Publication 1244, Employee's Daily Record of Tips and Report to Employer. State tax free file You are permitted to establish a system for electronic tip reporting by employees. State tax free file See Regulations section 31. State tax free file 6053-1(d). State tax free file Collecting taxes on tips. State tax free file   You must collect income tax, employee social security tax, and employee Medicare tax on the employee's tips. State tax free file The withholding rules for withholding an employee's share of Medicare tax on tips also apply to withholding the Additional Medicare Tax once wages and tips exceed $200,000 in the calendar year. State tax free file If an employee reports to you in writing $20 or more of tips in a month, the tips are also subject to FUTA tax. State tax free file   You can collect these taxes from the employee's wages or from other funds he or she makes available. State tax free file See Tips treated as supplemental wages in section 7 for more information. State tax free file Stop collecting the employee social security tax when his or her wages and tips for tax year 2014 reach $117,000; collect the income and employee Medicare taxes for the whole year on all wages and tips. State tax free file You are responsible for the employer social security tax on wages and tips until the wages (including tips) reach the limit. State tax free file You are responsible for the employer Medicare tax for the whole year on all wages and tips. State tax free file File Form 941 or Form 944 to report withholding and employment taxes on tips. State tax free file Ordering rule. State tax free file   If, by the 10th of the month after the month for which you received an employee's report on tips, you do not have enough employee funds available to deduct the employee tax, you no longer have to collect it. State tax free file If there are not enough funds available, withhold taxes in the following order. State tax free file Withhold on regular wages and other compensation. State tax free file Withhold social security and Medicare taxes on tips. State tax free file Withhold income tax on tips. State tax free file Reporting tips. State tax free file   Report tips and any collected and uncollected social security and Medicare taxes on Form W-2 and on Form 941, lines 5b, 5c, and 5d (Form 944, lines 4b, 4c, and 4d). State tax free file Report an adjustment on Form 941, line 9 (Form 944, line 6), for the uncollected social security and Medicare taxes. State tax free file Enter the amount of uncollected social security tax and Medicare tax on Form W-2, box 12, with codes “A” and “B. State tax free file ” Do not include any uncollected Additional Medicare Tax in box 12 of Form W-2. State tax free file See section 13 and the General Instructions for Forms W-2 and W-3. State tax free file   Revenue Ruling 2012-18 provides guidance for employers regarding social security and Medicare taxes imposed on tips, including information on the reporting of the employer share of social security and Medicare taxes under section 3121(q), the difference between tips and service charges, and the section 45B credit. State tax free file See Revenue Ruling 2012-18, 2012-26 I. State tax free file R. State tax free file B. State tax free file 1032, available at www. State tax free file irs. State tax free file gov/irb/2012-26_IRB/ar07. State tax free file html. State tax free file Allocated tips. State tax free file   If you operate a large food or beverage establishment, you must report allocated tips under certain circumstances. State tax free file However, do not withhold income, social security, or Medicare taxes on allocated tips. State tax free file   A large food or beverage establishment is one that provides food or beverages for consumption on the premises, where tipping is customary, and where there were normally more than 10 employees on a typical business day during the preceding year. State tax free file   The tips may be allocated by one of three methods—hours worked, gross receipts, or good faith agreement. State tax free file For information about these allocation methods, including the requirement to file Forms 8027 electronically if 250 or more forms are filed, see the Instructions for Form 8027. State tax free file For information on filing Form 8027 electronically with the IRS, see Publication 1239. State tax free file Tip Rate Determination and Education Program. State tax free file   Employers may participate in the Tip Rate Determination and Education Program. State tax free file The program primarily consists of two voluntary agreements developed to improve tip income reporting by helping taxpayers to understand and meet their tip reporting responsibilities. State tax free file The two agreements are the Tip Rate Determination Agreement (TRDA) and the Tip Reporting Alternative Commitment (TRAC). State tax free file A tip agreement, the Gaming Industry Tip Compliance Agreement (GITCA), is available for the gaming (casino) industry. State tax free file To get more information about TRDA and TRAC agreements, see Publication 3144, Tips on Tips. State tax free file Additionally, visit IRS. State tax free file gov and enter “MSU tips” in the search box to get more information about GITCA, TRDA, or TRAC agreements. State tax free file 7. State tax free file Supplemental Wages Supplemental wages are wage payments to an employee that are not regular wages. State tax free file They include, but are not limited to, bonuses, commissions, overtime pay, payments for accumulated sick leave, severance pay, awards, prizes, back pay, retroactive pay increases, and payments for nondeductible moving expenses. State tax free file Other payments subject to the supplemental wage rules include taxable fringe benefits and expense allowances paid under a nonaccountable plan. State tax free file How you withhold on supplemental wages depends on whether the supplemental payment is identified as a separate payment from regular wages. State tax free file See Regulations section 31. State tax free file 3402(g)-1 for additional guidance for wages paid after January 1, 2007. State tax free file Also see Revenue Ruling 2008-29, 2008-24 I. State tax free file R. State tax free file B. State tax free file 1149, available at www. State tax free file irs. State tax free file gov/irb/2008-24_IRB/ar08. State tax free file html. State tax free file Withholding on supplemental wages when an employee receives more than $1 million of supplemental wages from you during the calendar year. State tax free file   Special rules apply to the extent supplemental wages paid to any one employee during the calendar year exceed $1 million. State tax free file If a supplemental wage payment, together with other supplemental wage payments made to the employee during the calendar year, exceeds $1 million, the excess is subject to withholding at 39. State tax free file 6% (or the highest rate of income tax for the year). State tax free file Withhold using the 39. State tax free file 6% rate without regard to the employee's Form W-4. State tax free file In determining supplemental wages paid to the employee during the year, include payments from all businesses under common control. State tax free file For more information, see Treasury Decision 9276, 2006-37 I. State tax free file R. State tax free file B. State tax free file 423, available at www. State tax free file irs. State tax free file gov/irb/2006-37_IRB/ar09. State tax free file html. State tax free file Withholding on supplemental wage payments to an employee who does not receive $1 million of supplemental wages during the calendar year. State tax free file   If the supplemental wages paid to the employee during the calendar year are less than or equal to $1 million, the following rules apply in determining the amount of income tax to be withheld. State tax free file Supplemental wages combined with regular wages. State tax free file   If you pay supplemental wages with regular wages but do not specify the amount of each, withhold federal income tax as if the total were a single payment for a regular payroll period. State tax free file Supplemental wages identified separately from regular wages. State tax free file   If you pay supplemental wages separately (or combine them in a single payment and specify the amount of each), the federal income tax withholding method depends partly on whether you withhold income tax from your employee's regular wages. State tax free file If you withheld income tax from an employee's regular wages in the current or immediately preceding calendar year, you can use one of the following methods for the supplemental wages. State tax free file Withhold a flat 25% (no other percentage allowed). State tax free file If the supplemental wages are paid concurrently with regular wages, add the supplemental wages to the concurrently paid regular wages. State tax free file 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. State tax free file Figure the income tax withholding as if the total of the regular wages and supplemental wages is a single payment. State tax free file Subtract the tax withheld from the regular wages. State tax free file Withhold the remaining tax from the supplemental wages. State tax free file If there were other payments of supplemental wages paid during the payroll period made before the current payment of supplemental wages, aggregate all the payments of supplemental wages paid during the payroll period with the regular wages paid during the payroll period, calculate the tax on the total, subtract the tax already withheld from the regular wages and the previous supplemental wage payments, and withhold the remaining tax. State tax free file If you did not withhold income tax from the employee's regular wages in the current or immediately preceding calendar year, use method 1-b. State tax free file This would occur, for example, when the value of the employee's withholding allowances claimed on Form W-4 is more than the wages. State tax free file Regardless of the method you use to withhold income tax on supplemental wages, they are subject to social security, Medicare, and FUTA taxes. State tax free file Example 1. State tax free file You pay John Peters a base salary on the 1st of each month. State tax free file He is single and claims one withholding allowance. State tax free file In January he is paid $1,000. State tax free file Using the wage bracket tables, you withhold $50 from this amount. State tax free file In February, he receives salary of $1,000 plus a commission of $2,000, which you combine with regular wages and do not separately identify. State tax free file You figure the withholding based on the total of $3,000. State tax free file The correct withholding from the tables is $338. State tax free file Example 2. State tax free file You pay Sharon Warren a base salary on the 1st of each month. State tax free file She is single and claims one allowance. State tax free file Her May 1 pay is $2,000. State tax free file Using the wage bracket tables, you withhold $188. State tax free file On May 14 she receives a bonus of $1,000. State tax free file Electing to use supplemental wage withholding method 1-b, you: Add the bonus amount to the amount of wages from the most recent base salary pay date (May 1) ($2,000 + $1,000 = $3,000). State tax free file Determine the amount of withholding on the combined $3,000 amount to be $338 using the wage bracket tables. State tax free file Subtract the amount withheld from wages on the most recent base salary pay date (May 1) from the combined withholding amount ($338 – $188 = $150). State tax free file Withhold $150 from the bonus payment. State tax free file Example 3. State tax free file The facts are the same as in Example 2, except you elect to use the flat rate method of withholding on the bonus. State tax free file You withhold 25% of $1,000, or $250, from Sharon's bonus payment. State tax free file Example 4. State tax free file The facts are the same as in Example 2, except you elect to pay Sharon a second bonus of $2,000 on May 28. State tax free file Using supplemental wage withholding method 1-b, you: Add the first and second bonus amounts to the amount of wages from the most recent base salary pay date (May 1) ($2,000 + $1,000 + $2,000 = $5,000). State tax free file Determine the amount of withholding on the combined $5,000 amount to be $781 using the wage bracket tables. State tax free file Subtract the amounts withheld from wages on the most recent base salary pay date (May 1) and the amounts withheld from the first bonus payment from the combined withholding amount ($781 – $188 – $150 = $443). State tax free file Withhold $443 from the second bonus payment. State tax free file Tips treated as supplemental wages. State tax free file   Withhold income tax on tips from wages earned by the employee or from other funds the employee makes available. State tax free file If an employee receives regular wages and reports tips, figure income tax withholding as if the tips were supplemental wages. State tax free file If you have not withheld income tax from the regular wages, add the tips to the regular wages. State tax free file Then withhold income tax on the total. State tax free file If you withheld income tax from the regular wages, you can withhold on the tips by method 1-a or 1-b discussed earlier in this section under Supplemental wages identified separately from regular wages. State tax free file Vacation pay. State tax free file   Vacation pay is subject to withholding as if it were a regular wage payment. State tax free file When vacation pay is in addition to regular wages for the vacation period, treat it as a supplemental wage payment. State tax free file If the vacation pay is for a time longer than your usual payroll period, spread it over the pay periods for which you pay it. State tax free file 8. State tax free file Payroll Period Your payroll period is a period of service for which you usually pay wages. State tax free file When you have a regular payroll period, withhold income tax for that time period even if your employee does not work the full period. State tax free file No regular payroll period. State tax free file   When you do not have a regular payroll period, withhold the tax as if you paid wages for a daily or miscellaneous payroll period. State tax free file Figure the number of days (including Sundays and holidays) in the period covered by the wage payment. State tax free file If the wages are unrelated to a specific length of time (for example, commissions paid on completion of a sale), count back the number of days from the payment period to the latest of: The last wage payment made during the same calendar year, The date employment began, if during the same calendar year, or January 1 of the same year. State tax free file Employee paid for period less than 1 week. State tax free file   When you pay an employee for a period of less than one week, and the employee signs a statement under penalties of perjury indicating he or she is not working for any other employer during the same week for wages subject to withholding, figure withholding based on a weekly payroll period. State tax free file If the employee later begins to work for another employer for wages subject to withholding, the employee must notify you within 10 days. State tax free file You then figure withholding based on the daily or miscellaneous period. State tax free file 9. State tax free file Withholding From Employees' Wages Income Tax Withholding Using Form W-4 to figure withholding. State tax free file   To know how much federal income tax to withhold from employees' wages, you should have a Form W-4 on file for each employee. State tax free file 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. State tax free file Advise your employees to use the IRS Withholding Calculator on the IRS website at www. State tax free file irs. State tax free file gov/individuals for help in determining how many withholding allowances to claim on their Forms W-4. State tax free file   Ask all new employees to give you a signed Form W-4 when they start work. State tax free file Make the form effective with the first wage payment. State tax free file If a new employee does not give you a completed Form W-4, withhold income tax as if he or she is single, with no withholding allowances. State tax free file Form in Spanish. State tax free file   You can provide Formulario W-4(SP), Certificado de Exención de Retenciones del Empleado, in place of Form W-4, to your Spanish-speaking employees. State tax free file For more information, see Publicación 17(SP), El Impuesto Federal sobre los Ingresos (Para Personas Físicas). State tax free file The rules discussed in this section that apply to Form W-4 also apply to Formulario W-4(SP). State tax free file Electronic system to receive Form W-4. State tax free file   You may establish a system to electronically receive Forms W-4 from your employees. State tax free file See Regulations section 31. State tax free file 3402(f)(5)-1(c) for more information. State tax free file Effective date of Form W-4. State tax free file   A Form W-4 remains in effect until the employee gives you a new one. State tax free file When you receive a new Form W-4 from an employee, do not adjust withholding for pay periods before the effective date of the new form. State tax free file If an employee gives you a Form W-4 that replaces an existing Form W-4, begin withholding no later than the start of the first payroll period ending on or after the 30th day from the date when you received the replacement Form W-4. State tax free file 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. State tax free file A Form W-4 that makes a change for the next calendar year will not take effect in the current calendar year. State tax free file Successor employer. State tax free file   If you are a successor employer (see Successor employer , later in this section), secure new Forms W-4 from the transferred employees unless the “Alternative Procedure” in section 5 of Revenue Procedure 2004-53 applies. State tax free file See Revenue Procedure 2004-53, 2004-34 I. State tax free file R. State tax free file B. State tax free file 320, available at www. State tax free file irs. State tax free file gov/irb/2004-34_IRB/ar13. State tax free file html. State tax free file Completing Form W-4. State tax free file   The amount of any federal income tax withholding must be based on marital status and withholding allowances. State tax free file Your employees may not base their withholding amounts on a fixed dollar amount or percentage. State tax free file However, an employee may specify a dollar amount to be withheld in addition to the amount of withholding based on filing status and withholding allowances claimed on Form W-4. State tax free file Employees may claim fewer withholding allowances than they are entitled to claim. State tax free file They may wish to claim fewer allowances to ensure they have enough withholding or to offset the tax on other sources of taxable income not subject to withholding. State tax free file See Publication 505, Tax Withholding and Estimated Tax, for more information about completing Form W-4. State tax free file Along with Form W-4, you may wish to order Publication 505 for use by your employees. State tax free file Do not accept any withholding or estimated tax payments from your employees in addition to withholding based on their Form W-4. State tax free file If they require additional withholding, they should submit a new Form W-4 and, if necessary, pay estimated tax by filing Form 1040-ES, Estimated Tax for Individuals, or by using the Electronic Federal Tax Payment System (EFTPS) to make estimated tax payments. State tax free file Exemption from federal income tax withholding. State tax free file   Generally, an employee may claim exemption from federal income tax withholding because he or she had no income tax liability last year and expects none this year. State tax free file See the Form W-4 instructions for more information. State tax free file However, the wages are still subject to social security and Medicare taxes. State tax free file See also Invalid Forms W-4 , later in this section. State tax free file   A Form W-4 claiming exemption from withholding is effective when it is filed with the employer and only for that calendar year. State tax free file 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. State tax free file If the employee does not give you a new Form W-4 by February 15, begin withholding based on the last Form W-4 for the employee that did not claim an exemption from withholding or, if one was not filed, then withhold tax as if he or she is single with zero withholding allowances. State tax free file If the employee provides a new Form W-4 claiming exemption from withholding on February 16 or later, you may apply it to future wages but do not refund any taxes already withheld. State tax free file Withholding income taxes on the wages of nonresident alien employees. State tax free file   In general, you must withhold federal income taxes on the wages of nonresident alien employees. State tax free file However, see Publication 515, Withholding of Tax on Nonresident Aliens and Foreign Entities, for exceptions to this general rule. State tax free file Also see section 3 of Publication 51 (Circular A), Agricultural Employer's Tax Guide, for guidance on H-2A visa workers. State tax free file Withholding adjustment for nonresident alien employees. State tax free file   For 2014, apply the procedure discussed next to figure the amount of income tax to withhold from the wages of nonresident alien employees performing services within the United States. State tax free file Nonresident alien students from India and business apprentices from India are not subject to this procedure. State tax free file Instructions. State tax free file   To figure how much income tax to withhold from the wages paid to a nonresident alien employee performing services in the United States, use the following steps. State tax free file Step 1. State tax free file   Add to the wages paid to the nonresident alien employee for the payroll period the amount shown in the chart below for the applicable payroll period. State tax free file    Amount to Add to Nonresident Alien Employee's Wages for Calculating Income Tax Withholding Only   Payroll Period Add Additional     Weekly $ 43. State tax free file 30     Biweekly 86. State tax free file 50     Semimonthly 93. State tax free file 80     Monthly 187. State tax free file 50     Quarterly 562. State tax free file 50     Semiannually 1,125. State tax free file 00     Annually 2,250. State tax free file 00     Daily or Miscellaneous (each day of the payroll period) 8. State tax free file 70   Step 2. State tax free file   Use the amount figured in Step 1 and the number of withholding allowances claimed (generally limited to one allowance) to figure income tax withholding. State tax free file Determine the value of withholding allowances by multiplying the number of withholding allowances claimed by the appropriate amount from Table 5. State tax free file Percentage Method—2014 Amount for One Withholding Allowance shown on page 41. State tax free file If you are using the Percentage Method Tables for Income Tax Withholding, provided on pages 43–44, reduce the amount figured in Step 1 by the value of withholding allowances and use that reduced amount to figure the income tax withholding. State tax free file If you are using the Wage Bracket Method for Income Tax Withholding, provided on pages 45–64, use the amount figured in Step 1 and the number of withholding allowances to figure income tax withholding. State tax free file The amounts from the chart above are added to wages solely for calculating income tax withholding on the wages of the nonresident alien employee. State tax free file The amounts from the chart should not be included in any box on the employee's Form W-2 and do not increase the income tax liability of the employee. State tax free file Also, the amounts from the chart do not increase the social security tax or Medicare tax liability of the employer or the employee, or the FUTA tax liability of the employer. State tax free file This procedure only applies to nonresident alien employees who have wages subject to income tax withholding. State tax free file Example. State tax free file An employer using the percentage method of withholding pays wages of $500 for a biweekly payroll period to a married nonresident alien employee. State tax free file The nonresident alien has properly completed Form W-4, entering marital status as “single” with one withholding allowance and indicating status as a nonresident alien on Form W-4, line 6 (see Nonresident alien employee's Form W-4 , later in this section). State tax free file The employer determines the wages to be used in the withholding tables by adding to the $500 amount of wages paid the amount of $86. State tax free file 50 from the chart under Step 1 ($586. State tax free file 50 total). State tax free file The employer then applies the applicable tables to determine the income tax withholding for nonresident aliens (see Step 2 ). State tax free file Reminder: If you use the Percentage Method Tables for Income Tax Withholding, reduce the amount figured in Step 1 by the value of withholding allowances and use that reduced amount to figure income tax withholding. State tax free file The $86. State tax free file 50 added to wages for calculating income tax withholding is not reported on Form W-2, and does not increase the income tax liability of the employee. State tax free file Also, the $86. State tax free file 50 added to wages does not affect the social security tax or Medicare tax liability of the employer or the employee, or the FUTA tax liability of the employer. State tax free file Supplemental wage payment. State tax free file   This procedure for determining the amount of income tax withholding does not apply to a supplemental wage payment (see section 7) if the 39. State tax free file 6% mandatory flat rate withholding applies or if the 25% optional flat rate withholding is being used to calculate income tax withholding on the supplemental wage payment. State tax free file Nonresident alien employee's Form W-4. State tax free file   When completing Forms W-4, nonresident aliens are required to: Not claim exemption from income tax withholding, Request withholding as if they are single, regardless of their actual marital status, Claim only one allowance (if the nonresident alien is a resident of Canada, Mexico, or South Korea, or a student or business apprentice from India, he or she may claim more than one allowance), and Write “Nonresident Alien” or “NRA” above the dotted line on line 6 of Form W-4. State tax free file   If you maintain an electronic Form W-4 system, you should provide a field for nonresident aliens to enter nonresident alien status in lieu of writing “Nonresident Alien” or “NRA” above the dotted line on line 6. State tax free file 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. State tax free file Form 8233. State tax free file   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. State tax free file See Publication 515 for details. State tax free file IRS review of requested Forms W-4. State tax free file   When requested by the IRS, you must make original Forms W-4 available for inspection by an IRS employee. State tax free file You may also be directed to send certain Forms W-4 to the IRS. State tax free file 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. State tax free file 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. State tax free file The IRS may also require you to submit copies of Form W-4 to the IRS as directed by Treasury Decision 9337, 2007-35 I. State tax free file R. State tax free file B. State tax free file 455, which is available at www. State tax free file irs. State tax free file gov/irb/2007-35_IRB/ar10. State tax free file html. State tax free file When we refer to Form W-4, the same rules apply to Formulario W-4(SP), its Spanish translation. State tax free file After submitting a copy of a requested Form W-4 to the IRS, continue to withhold federal income tax based on that Form W-4 if it is valid (see Invalid Forms W-4 , later in this section). State tax free file However, if the IRS later notifies you in writing the employee is not entitled to claim exemption from withholding or a claimed number of withholding allowances, withhold federal income tax based on the effective date, marital status, and maximum number of withholding allowances specified in the IRS notice (commonly referred to as a "lock-in letter