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Tax Planning Us 1040ez

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Tax Planning Us 1040ez

Tax planning us 1040ez 6. Tax planning us 1040ez   Tip Income Table of Contents Introduction Useful Items - You may want to see: Keeping a Daily Tip RecordElectronic tip record. Tax planning us 1040ez Reporting Tips to Your EmployerElectronic tip statement. Tax planning us 1040ez Final report. Tax planning us 1040ez Reporting Tips on Your Tax Return Allocated Tips Introduction This chapter is for employees who receive tips. Tax planning us 1040ez All tips you receive are income and are subject to federal income tax. Tax planning us 1040ez You must include in gross income all tips you receive directly, charged tips paid to you by your employer, and your share of any tips you receive under a tip-splitting or tip-pooling arrangement. Tax planning us 1040ez The value of noncash tips, such as tickets, passes, or other items of value, is also income and subject to tax. Tax planning us 1040ez Reporting your tip income correctly is not difficult. Tax planning us 1040ez You must do three things. Tax planning us 1040ez Keep a daily tip record. Tax planning us 1040ez Report tips to your employer. Tax planning us 1040ez Report all your tips on your income tax return. Tax planning us 1040ez  This chapter will explain these three things and show you what to do on your tax return if you have not done the first two. Tax planning us 1040ez This chapter will also show you how to treat allocated tips. Tax planning us 1040ez For information on special tip programs and agreements, see Publication 531. Tax planning us 1040ez Useful Items - You may want to see: Publication 531 Reporting Tip Income 1244 Employee's Daily Record of Tips and Report to Employer Form (and Instructions) 4137 Social Security and Medicare Tax on Unreported Tip Income 4070 Employee's Report of Tips to Employer Keeping a Daily Tip Record Why keep a daily tip record. Tax planning us 1040ez   You must keep a daily tip record so you can: Report your tips accurately to your employer, Report your tips accurately on your tax return, and Prove your tip income if your return is ever questioned. Tax planning us 1040ez How to keep a daily tip record. Tax planning us 1040ez   There are two ways to keep a daily tip record. Tax planning us 1040ez You can either: Write information about your tips in a tip diary, or Keep copies of documents that show your tips, such as restaurant bills and credit or debit card charge slips. Tax planning us 1040ez You should keep your daily tip record with your tax or other personal records. Tax planning us 1040ez You must keep your records for as long as they are important for administration of the federal tax law. Tax planning us 1040ez For information on how long to keep records, see How long to keep records in chapter 1. Tax planning us 1040ez    If you keep a tip diary, you can use Form 4070A, Employee's Daily Record of Tips. Tax planning us 1040ez To get Form 4070A, ask the Internal Revenue Service (IRS) or your employer for Publication 1244. Tax planning us 1040ez Also, Publication 1244 is available online at www. Tax planning us 1040ez irs. Tax planning us 1040ez gov/pub/irs-pdf/p1244. Tax planning us 1040ez pdf. Tax planning us 1040ez Publication 1244 includes a 1-year supply of Form 4070A. Tax planning us 1040ez Each day, write in the information asked for on the form. Tax planning us 1040ez   In addition to the information asked for on Form 4070A, you also need to keep a record of the date and value of any noncash tips you get, such as tickets, passes, or other items of value. Tax planning us 1040ez Although you do not report these tips to your employer, you must report them on your tax return. Tax planning us 1040ez   If you do not use Form 4070A, start your records by writing your name, your employer's name, and the name of the business (if it is different from your employer's name). Tax planning us 1040ez Then, each workday, write the date and the following information. Tax planning us 1040ez Cash tips you get directly from customers or from other employees. Tax planning us 1040ez Tips from credit and debit card charge customers that your employer pays you. Tax planning us 1040ez The value of any noncash tips you get, such as tickets, passes, or other items of value. Tax planning us 1040ez The amount of tips you paid out to other employees through tip pools or tip splitting, or other arrangements, and the names of the employees to whom you paid the tips. Tax planning us 1040ez Electronic tip record. Tax planning us 1040ez   You can use an electronic system provided by your employer to record your daily tips. Tax planning us 1040ez If you do, you must receive and keep a paper copy of this record. Tax planning us 1040ez Service charges. Tax planning us 1040ez    Do not write in your tip diary the amount of any service charge that your employer adds to a customer's bill and then pays to you and treats as wages. Tax planning us 1040ez This is part of your wages, not a tip. Tax planning us 1040ez See examples below. Tax planning us 1040ez Example 1. Tax planning us 1040ez Good Food Restaurant adds an 18% charge to the bill for parties of 6 or more customers. Tax planning us 1040ez Jane’s bill for food and beverages for her party of 8 includes an amount on the tip line equal to 18% of the charges for food and beverages, and the total includes this amount. Tax planning us 1040ez Because Jane did not have an unrestricted right to determine the amount on the “tip line,” the 18% charge is considered a service charge. Tax planning us 1040ez Do not include the 18% charge in your tip diary. Tax planning us 1040ez Service charges that are paid to you are considered wages, not tips. Tax planning us 1040ez Example 2. Tax planning us 1040ez Good Food Restaurant also includes sample calculations of tip amounts at the bottom of its bills for food and beverages provided to customers. Tax planning us 1040ez David’s bill includes a blank “tip line,” with sample tip calculations of 15%, 18%, and 20% of his charges for food and beverages at the bottom of the bill beneath the signature line. Tax planning us 1040ez Because David is free to enter any amount on the “tip line” or leave it blank, any amount he includes is considered a tip. Tax planning us 1040ez Be sure to include this amount in your tip diary. Tax planning us 1040ez Reporting Tips to Your Employer Why report tips to your employer. Tax planning us 1040ez   You must report tips to your employer so that: Your employer can withhold federal income tax and social security, Medicare, Additional Medicare, or railroad retirement taxes, Your employer can report the correct amount of your earnings to the Social Security Administration or Railroad Retirement Board (which affects your benefits when you retire or if you become disabled, or your family's benefits if you die), and You can avoid the penalty for not reporting tips to your employer (explained later). Tax planning us 1040ez What tips to report. Tax planning us 1040ez   Report to your employer only cash, check, and debit and credit card tips you receive. Tax planning us 1040ez   If your total tips for any 1 month from any one job are less than $20, do not report the tips for that month to that employer. Tax planning us 1040ez   If you participate in a tip-splitting or tip-pooling arrangement, report only the tips you receive and retain. Tax planning us 1040ez Do not report to your employer any portion of the tips you receive that you pass on to other employees. Tax planning us 1040ez However, you must report tips you receive from other employees. Tax planning us 1040ez    Do not report the value of any noncash tips, such as tickets or passes, to your employer. Tax planning us 1040ez You do not pay social security, Medicare, Additional Medicare or railroad retirement taxes on these tips. Tax planning us 1040ez How to report. Tax planning us 1040ez    If your employer does not give you any other way to report tips, you can use Form 4070. Tax planning us 1040ez Fill in the information asked for on the form, sign and date the form, and give it to your employer. Tax planning us 1040ez To get a 1-year supply of the form, ask the IRS or your employer for Publication 1244. Tax planning us 1040ez   If you do not use Form 4070, give your employer a statement with the following information. Tax planning us 1040ez Your name, address, and social security number. Tax planning us 1040ez Your employer's name, address, and business name (if it is different from your employer's name). Tax planning us 1040ez The month (or the dates of any shorter period) in which you received tips. Tax planning us 1040ez The total tips required to be reported for that period. Tax planning us 1040ez You must sign and date the statement. Tax planning us 1040ez Be sure to keep a copy with your tax or other personal records. Tax planning us 1040ez   Your employer may require you to report your tips more than once a month. Tax planning us 1040ez However, the statement cannot cover a period of more than 1 calendar month. Tax planning us 1040ez Electronic tip statement. Tax planning us 1040ez   Your employer can have you furnish your tip statements electronically. Tax planning us 1040ez When to report. Tax planning us 1040ez   Give your report for each month to your employer by the 10th of the next month. Tax planning us 1040ez If the 10th falls on a Saturday, Sunday, or legal holiday, give your employer the report by the next day that is not a Saturday, Sunday, or legal holiday. Tax planning us 1040ez Example. Tax planning us 1040ez You must report your tips received in September 2014 by October 10, 2014. Tax planning us 1040ez Final report. Tax planning us 1040ez   If your employment ends during the month, you can report your tips when your employment ends. Tax planning us 1040ez Penalty for not reporting tips. Tax planning us 1040ez   If you do not report tips to your employer as required, you may be subject to a penalty equal to 50% of the social security, Medicare, and Additional Medicare taxes or railroad retirement tax you owe on the unreported tips. Tax planning us 1040ez (For information about these taxes, see Reporting social security, Medicare, Additional Medicare, or railroad retirement taxes on tips not reported to your employer under Reporting Tips on Your Tax Return, later. Tax planning us 1040ez ) The penalty amount is in addition to the taxes you owe. Tax planning us 1040ez   You can avoid this penalty if you can show reasonable cause for not reporting the tips to your employer. Tax planning us 1040ez To do so, attach a statement to your return explaining why you did not report them. Tax planning us 1040ez Giving your employer money for taxes. Tax planning us 1040ez   Your regular pay may not be enough for your employer to withhold all the taxes you owe on your regular pay plus your reported tips. Tax planning us 1040ez If this happens, you can give your employer money until the close of the calendar year to pay the rest of the taxes. Tax planning us 1040ez   If you do not give your employer enough money, your employer will apply your regular pay and any money you give in the following order. Tax planning us 1040ez All taxes on your regular pay. Tax planning us 1040ez Social security, Medicare, and Additional Medicare taxes or railroad retirement taxes on your reported tips. Tax planning us 1040ez Federal, state, and local income taxes on your reported tips. Tax planning us 1040ez    Any taxes that remain unpaid can be collected by your employer from your next paycheck. Tax planning us 1040ez If withholding taxes remain uncollected at the end of the year, you may be subject to a penalty for underpayment of estimated taxes. Tax planning us 1040ez See Publication 505, Tax Withholding and Estimated Tax, for more information. Tax planning us 1040ez    Uncollected taxes. Tax planning us 1040ez You must report on your tax return any social security and Medicare taxes or railroad retirement tax that remained uncollected at the end of 2013. Tax planning us 1040ez These uncollected taxes will be shown on your 2013 Form W-2. Tax planning us 1040ez See Reporting uncollected social security, Medicare, or railroad retirement taxes on tips reported to your employer under Reporting Tips on Your Tax Return, later. Tax planning us 1040ez Reporting Tips on Your Tax Return How to report tips. Tax planning us 1040ez    Report your tips with your wages on Form 1040, line 7; Form 1040A, line 7; or Form 1040EZ, line 1. Tax planning us 1040ez What tips to report. Tax planning us 1040ez   You must report all tips you received in 2013 on your tax return, including both cash tips and noncash tips. Tax planning us 1040ez Any tips you reported to your employer for 2013 are included in the wages shown in box 1 of your Form W-2. Tax planning us 1040ez Add to the amount in box 1 only the tips you did not report to your employer. Tax planning us 1040ez    If you received $20 or more in cash and charge tips in a month and did not report all of those tips to your employer, see Reporting social security, Medicare, Additional Medicare, or railroad retirement taxes on tips not reported to your employer, later. Tax planning us 1040ez    If you did not keep a daily tip record as required and an amount is shown in box 8 of your Form W-2, see Allocated Tips, later. Tax planning us 1040ez   If you kept a daily tip record and reported tips to your employer as required under the rules explained earlier, add the following tips to the amount in box 1 of your Form W-2. Tax planning us 1040ez Cash and charge tips you received that totaled less than $20 for any month. Tax planning us 1040ez The value of noncash tips, such as tickets, passes, or other items of value. Tax planning us 1040ez Example. Tax planning us 1040ez Ben Smith began working at the Blue Ocean Restaurant (his only employer in 2013) on June 30 and received $10,000 in wages during the year. Tax planning us 1040ez Ben kept a daily tip record showing that his tips for June were $18 and his tips for the rest of the year totaled $7,000. Tax planning us 1040ez He was not required to report his June tips to his employer, but he reported all of the rest of his tips to his employer as required. Tax planning us 1040ez Ben's Form W-2 from Blue Ocean Restaurant shows $17,000 ($10,000 wages plus $7,000 reported tips) in box 1. Tax planning us 1040ez He adds the $18 unreported tips to that amount and reports $17,018 as wages on his tax return. Tax planning us 1040ez Reporting social security, Medicare, Additional Medicare, or railroad retirement taxes on tips not reported to your employer. Tax planning us 1040ez    If you received $20 or more in cash and charge tips in a month from any one job and did not report all of those tips to your employer, you must report the social security, Medicare, and Additional Medicare taxes on the unreported tips as additional tax on your return. Tax planning us 1040ez To report these taxes, you must file a return even if you would not otherwise have to file. Tax planning us 1040ez You must use Form 1040. Tax planning us 1040ez (You cannot file Form 1040EZ or Form 1040A. Tax planning us 1040ez )    Use Form 4137 to figure social security and Medicare taxes. Tax planning us 1040ez Enter the tax on your return as instructed, and attach the completed Form 4137 to your return. Tax planning us 1040ez Use Form 8959 to figure Additional Medicare Tax. Tax planning us 1040ez    If you are subject to the Railroad Retirement Tax Act, you cannot use Form 4137 to pay railroad retirement tax on unreported tips. Tax planning us 1040ez To get railroad retirement credit, you must report tips to your employer. Tax planning us 1040ez Reporting uncollected social security, Medicare, or railroad retirement taxes on tips reported to your employer. Tax planning us 1040ez   You may have uncollected taxes if your regular pay was not enough for your employer to withhold all the taxes you owe and you did not give your employer enough money to pay the rest of the taxes. Tax planning us 1040ez For more information, see Giving your employer money for taxes , under Reporting Tips to Your Employer, earlier. Tax planning us 1040ez   If your employer could not collect all the social security and Medicare taxes or railroad retirement tax you owe on tips reported for 2013, the uncollected taxes will be shown in box 12 of your Form W-2 (codes A and B). Tax planning us 1040ez You must report these amounts as additional tax on your return. Tax planning us 1040ez Unlike the uncollected portion of the regular (1. Tax planning us 1040ez 45%) Medicare tax, the uncollected Additional Medicare Tax is not reported in box 12 of Form W-2 with code B. Tax planning us 1040ez    To report these uncollected taxes, you must file a return even if you would not otherwise have to file. Tax planning us 1040ez You must report these taxes on Form 1040, line 60. Tax planning us 1040ez See the instructions for Form 1040, line 60. Tax planning us 1040ez (You cannot file Form 1040EZ or Form 1040A. Tax planning us 1040ez ) Allocated Tips If your employer allocated tips to you, they are shown separately in box 8 of your Form W-2. Tax planning us 1040ez They are not included in box 1 with your wages and reported tips. Tax planning us 1040ez If box 8 is blank, this discussion does not apply to you. Tax planning us 1040ez What are allocated tips. Tax planning us 1040ez   These are tips that your employer assigned to you in addition to the tips you reported to your employer for the year. Tax planning us 1040ez Your employer will have done this only if: You worked in an establishment (restaurant, cocktail lounge, or similar business) that must allocate tips to employees, and The tips you reported to your employer were less than your share of 8% of food and drink sales. Tax planning us 1040ez No income, social security, Medicare, Additional Medicare or railroad retirement taxes are withheld on allocated tips. Tax planning us 1040ez How were your allocated tips figured. Tax planning us 1040ez   The tips allocated to you are your share of an amount figured by subtracting the reported tips of all employees from 8% (or an approved lower rate) of food and drink sales (other than carryout sales and sales with a service charge of 10% or more). Tax planning us 1040ez Your share of that amount was figured using either a method provided by an employer-employee agreement or a method provided by IRS regulations based on employees' sales or hours worked. Tax planning us 1040ez For information about the exact allocation method used, ask your employer. Tax planning us 1040ez Must you report your allocated tips on your tax return. Tax planning us 1040ez   You must report all tips you received in 2013 on your tax return, including both cash tips and noncash tips. Tax planning us 1040ez Any tips you reported to your employer for 2013 are included in the wages shown in box 1 of your Form W-2. Tax planning us 1040ez Add to the amount in box 1 only the tips you did not report to your employer. Tax planning us 1040ez This should include any allocated tips shown in box 8 on your Form(s) W-2, unless you have adequate records to show that you received less tips in the year than the allocated figures. Tax planning us 1040ez   See What tips to report under Reporting Tips on Your Tax Return, and Keeping a Daily Tip Record , earlier. Tax planning us 1040ez How to report allocated tips. Tax planning us 1040ez   Report the amount in box 1 and the allocated tips in box 8 of your Form(s) W-2 as wages on Form 1040, line 7; Form 1040NR, line 8; or Form 1040NR-EZ, line 3. Tax planning us 1040ez (You cannot file Form 1040A or Form 1040EZ when you have allocated tips. Tax planning us 1040ez )    Because social security, Medicare, and Additional Medicare taxes were not withheld from the allocated tips, you must report those taxes as additional tax on your return. Tax planning us 1040ez Complete Form 4137, and include the allocated tips on line 1 of the form. Tax planning us 1040ez See Reporting social security, Medicare, Additional Medicare, or railroad retirement taxes on tips not reported to your employer under Reporting Tips on Your Tax Return, earlier. Tax planning us 1040ez Prev  Up  Next   Home   More Online Publications
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The Tax Planning Us 1040ez

Tax planning us 1040ez Index A Aircraft, Cars, Boats, and Aircraft Annuities, Annuities, Interests for Life or Terms of Years, Remainders, and Reversions Annuity contracts, Certain Life Insurance and Annuity Contracts Antiques, Paintings, Antiques, and Other Objects of Art Appraisals, Appraisals Cost of, Cost of appraisals. Tax planning us 1040ez IRS review of, Internal Revenue Service Review of Appraisals Qualified appraisal, Qualified Appraisal Appraiser, Qualified appraiser. Tax planning us 1040ez Art objects, Paintings, Antiques, and Other Objects of Art Valued at $20,000 or more, Art valued at $20,000 or more. Tax planning us 1040ez Valued at $50,000 or more, Art valued at $50,000 or more. Tax planning us 1040ez Assistance (see Tax help) B Boats, Cars, Boats, and Aircraft Bonds, Stocks and Bonds Books, Books. Tax planning us 1040ez Business, interest in, Interest in a Business C Cars, Cars, Boats, and Aircraft Clothing, used, Used Clothing, Deduction over $500 for certain clothing or household items. Tax planning us 1040ez Coins, Coin collections. Tax planning us 1040ez Collections, Collections Books, Books. Tax planning us 1040ez Coins, Coin collections. Tax planning us 1040ez Stamps, Stamp collections. Tax planning us 1040ez Comments on publication, Comments and suggestions. Tax planning us 1040ez Comparable properties, sales of, Sales of Comparable Properties, Selection of Comparable Sales Conservation contribution, Conservation purposes. Tax planning us 1040ez Cost, Cost or Selling Price of the Donated Property Rate of increase or decrease, Rate of increase or decrease in value. Tax planning us 1040ez Terms of purchase or sale, Terms of the purchase or sale. Tax planning us 1040ez D Date of contribution, Date of contribution. Tax planning us 1040ez Deductions of more than $5,000, Deductions of More Than $5,000 Deductions of more than $500,000, Deductions of More Than $500,000 F Fair market value, What Is Fair Market Value (FMV)? Comparable properties, sales of, Sales of Comparable Properties Cost, Cost or Selling Price of the Donated Property Date of contribution, Date of contribution. Tax planning us 1040ez Determining FMV, Determining Fair Market Value Opinions of experts, Opinions of Experts Problems in determining FMV, Problems in Determining Fair Market Value Replacement cost, Replacement Cost Form 8283, Form 8283 Formulas, use in valuing property, Determining Fair Market Value Free tax services, How To Get Tax Help Future events, effect on value, Future Events H Help (see Tax help) Historic building, Building in registered historic district. Tax planning us 1040ez Household goods, Household Goods, Deduction over $500 for certain clothing or household items. Tax planning us 1040ez I Interest in a business, Interest in a Business Inventory, Inventory IRS review of appraisals, Internal Revenue Service Review of Appraisals Exception, Exception. Tax planning us 1040ez J Jewelry and gems, Jewelry and Gems L Life insurance, Certain Life Insurance and Annuity Contracts M Market conditions, effect on value, Unusual Market Conditions More information (see Tax help) O Opinions of experts, Opinions of Experts P Paintings, Paintings, Antiques, and Other Objects of Art Partial interest, Partial Interest in Property Not in Trust Past events, effect on value, Using Past Events to Predict the Future Patents, Patents Penalties: Imposed on appraiser, Appraiser penalties. Tax planning us 1040ez Imposed on taxpayer, Penalty Publications (see Tax help) Publicly traded securities, Publicly traded securities. Tax planning us 1040ez Q Qualified appraisal, Qualified Appraisal Qualified appraiser, Qualified appraiser. Tax planning us 1040ez Qualified conservation contribution, Qualified Conservation Contribution R Real estate, Real Estate Remainder interests, Annuities, Interests for Life or Terms of Years, Remainders, and Reversions Replacement cost, Replacement Cost Reversion interests, Annuities, Interests for Life or Terms of Years, Remainders, and Reversions S Stamps, Stamp collections. Tax planning us 1040ez Statement of Value, Exception. Tax planning us 1040ez Stocks, Stocks and Bonds Suggestions for publication, Comments and suggestions. Tax planning us 1040ez T Tax help, How To Get Tax Help Taxpayer Advocate, Contacting your Taxpayer Advocate. Tax planning us 1040ez TTY/TDD information, How To Get Tax Help U Used clothing, Used Clothing, Deduction over $500 for certain clothing or household items. Tax planning us 1040ez V Valuation of property, Valuation of Various Kinds of Property Annuities, Annuities, Interests for Life or Terms of Years, Remainders, and Reversions Cars, boats, and aircraft, Cars, Boats, and Aircraft Collections, Collections Household goods, Household Goods Interest in a business, Interest in a Business Inventory, Inventory Jewelry and gems, Jewelry and Gems Life insurance and annuity contracts, Certain Life Insurance and Annuity Contracts Paintings, antiques, art objects, Paintings, Antiques, and Other Objects of Art Partial interest in property, Partial Interest in Property Not in Trust Real estate, Real Estate Remainder interests, Annuities, Interests for Life or Terms of Years, Remainders, and Reversions Reversion interests, Annuities, Interests for Life or Terms of Years, Remainders, and Reversions Stocks and bonds, Stocks and Bonds Terms of years, Annuities, Interests for Life or Terms of Years, Remainders, and Reversions Used clothing, Used Clothing Valuation of property: Patents, Patents Prev  Up     Home   More Online Publications