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What Is 1040x

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What Is 1040x

What is 1040x Publication 15 - Main Content Table of Contents 1. What is 1040x Employer Identification Number (EIN) 2. What is 1040x Who Are Employees?Relief provisions. What is 1040x Business Owned and Operated by Spouses 3. What is 1040x Family Employees 4. What is 1040x Employee's Social Security Number (SSN)Registering for SSNVS. What is 1040x 5. What is 1040x Wages and Other CompensationAccountable plan. What is 1040x Nonaccountable plan. What is 1040x Per diem or other fixed allowance. What is 1040x 50% test. What is 1040x Health Savings Accounts and medical savings accounts. What is 1040x Nontaxable fringe benefits. What is 1040x When fringe benefits are treated as paid. What is 1040x Valuation of fringe benefits. What is 1040x Withholding on fringe benefits. What is 1040x Depositing taxes on fringe benefits. What is 1040x 6. What is 1040x TipsOrdering rule. What is 1040x 7. What is 1040x Supplemental Wages 8. What is 1040x Payroll Period 9. What is 1040x Withholding From Employees' WagesIncome Tax Withholding Social Security and Medicare Taxes Part-Time Workers 10. What is 1040x Required Notice to Employees About the Earned Income Credit (EIC) 11. What is 1040x Depositing TaxesWhen To Deposit How To Deposit Deposit Penalties 12. What is 1040x Filing Form 941 or Form 944 13. What is 1040x Reporting Adjustments to Form 941 or Form 944Current Period Adjustments Prior Period Adjustments Wage Repayments 14. What is 1040x Federal Unemployment (FUTA) TaxSuccessor employer. What is 1040x Household employees. What is 1040x When to deposit. What is 1040x Household employees. What is 1040x Electronic filing by reporting agents. What is 1040x 16. What is 1040x How To Use the Income Tax Withholding TablesWage Bracket Method Percentage Method Alternative Methods of Income Tax Withholding How To Get Tax Help 1. What is 1040x Employer Identification Number (EIN) If you are required to report employment taxes or give tax statements to employees or annuitants, you need an EIN. What is 1040x The EIN is a nine-digit number the IRS issues. What is 1040x The digits are arranged as follows: 00-0000000. What is 1040x It is used to identify the tax accounts of employers and certain others who have no employees. What is 1040x Use your EIN on all of the items you send to the IRS and SSA. What is 1040x For more information, see Publication 1635, Employer Identification Number: Understanding Your EIN. What is 1040x If you do not have an EIN, you may apply for one online. What is 1040x Go to the IRS. What is 1040x gov and click on the Apply for an EIN Online link under Tools. What is 1040x 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. What is 1040x Do not use an SSN in place of an EIN. What is 1040x You should have only one EIN. What is 1040x 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). What is 1040x Give the numbers you have, the name and address to which each was assigned, and the address of your main place of business. What is 1040x The IRS will tell you which number to use. What is 1040x If you took over another employer's business (see Successor employer in section 9), do not use that employer's EIN. What is 1040x 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. What is 1040x 2. What is 1040x Who Are Employees? Generally, employees are defined either under common law or under statutes for certain situations. What is 1040x See Publication 15-A for details on statutory employees and nonemployees. What is 1040x Employee status under common law. What is 1040x   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. What is 1040x This is so even when you give the employee freedom of action. What is 1040x What matters is that you have the right to control the details of how the services are performed. What is 1040x See Publication 15-A for more information on how to determine whether an individual providing services is an independent contractor or an employee. What is 1040x   Generally, people in business for themselves are not employees. What is 1040x For example, doctors, lawyers, veterinarians, and others in an independent trade in which they offer their services to the public are usually not employees. What is 1040x However, if the business is incorporated, corporate officers who work in the business are employees of the corporation. What is 1040x   If an employer-employee relationship exists, it does not matter what it is called. What is 1040x The employee may be called an agent or independent contractor. What is 1040x It also does not matter how payments are measured or paid, what they are called, or if the employee works full or part time. What is 1040x Statutory employees. What is 1040x   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. What is 1040x 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. What is 1040x An agent (or commission) driver who delivers food, beverages (other than milk), laundry, or dry cleaning for someone else. What is 1040x A full-time life insurance salesperson who sells primarily for one company. What is 1040x 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. What is 1040x 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. What is 1040x The orders must be for merchandise for resale or supplies for use in the customer's business. What is 1040x The customers must be retailers, wholesalers, contractors, or operators of hotels, restaurants, or other businesses dealing with food or lodging. What is 1040x    Statutory nonemployees. What is 1040x   Direct sellers, qualified real estate agents, and certain companion sitters are, by law, considered nonemployees. What is 1040x They are generally treated as self-employed for all federal tax purposes, including income and employment taxes. What is 1040x H-2A agricultural workers. What is 1040x   On Form W-2, do not check box 13 (Statutory employee), as H-2A workers are not statutory employees. What is 1040x Treating employees as nonemployees. What is 1040x   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. What is 1040x 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. What is 1040x The applicable rates depend on whether you filed required Forms 1099. What is 1040x 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. What is 1040x You are liable for the income tax withholding regardless of whether the employee paid income tax on the wages. What is 1040x You continue to owe the full employer share of social security and Medicare taxes. What is 1040x The employee remains liable for the employee share of social security and Medicare taxes. What is 1040x See Internal Revenue Code section 3509 for details. What is 1040x Also see the Instructions for Form 941-X. What is 1040x   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. What is 1040x Section 3509 is not available for reclassifying statutory employees. What is 1040x See Statutory employees , earlier in this section. What is 1040x   If the employer issued required information returns, the section 3509 rates are: For social security taxes; employer rate of 6. What is 1040x 2% plus 20% of the employee rate (see the Instructions for Form 941-X). What is 1040x For Medicare taxes; employer rate of 1. What is 1040x 45% plus 20% of the employee rate of 1. What is 1040x 45%, for a total rate of 1. What is 1040x 74% of wages. What is 1040x For Additional Medicare Tax; 0. What is 1040x 18% (20% of the employee rate of 0. What is 1040x 9%) of wages subject to Additional Medicare Tax. What is 1040x For income tax withholding, the rate is 1. What is 1040x 5% of wages. What is 1040x   If the employer did not issue required information returns, the section 3509 rates are: For social security taxes; employer rate of 6. What is 1040x 2% plus 40% of the employee rate (see the Instructions for Form 941-X). What is 1040x For Medicare taxes; employer rate of 1. What is 1040x 45% plus 40% of the employee rate of 1. What is 1040x 45%, for a total rate of 2. What is 1040x 03% of wages. What is 1040x For Additional Medicare Tax; 0. What is 1040x 36% (40% of the employee rate of 0. What is 1040x 9%) of wages subject to Additional Medicare Tax. What is 1040x For income tax withholding, the rate is 3. What is 1040x 0% of wages. What is 1040x Relief provisions. What is 1040x   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. What is 1040x 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. What is 1040x You (or your predecessor) must not have treated any worker holding a substantially similar position as an employee for any periods beginning after 1977. What is 1040x See Publication 1976, Do You Qualify for Relief Under Section 530. What is 1040x IRS help. What is 1040x   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. What is 1040x Voluntary Classification Settlement Program (VCSP). What is 1040x   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. What is 1040x To apply, use Form 8952, Application for Voluntary Classification Settlement Program (VCSP). What is 1040x For more information visit IRS. What is 1040x gov and enter “VCSP” in the search box. What is 1040x 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. What is 1040x See Publication 541, Partnerships, for more details. What is 1040x The partnership is considered the employer of any employees, and is liable for any employment taxes due on wages paid to its employees. What is 1040x Exception—Qualified joint venture. What is 1040x   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. What is 1040x 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). What is 1040x   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. What is 1040x Each spouse must also file a separate Schedule SE to pay self-employment taxes, as applicable. What is 1040x   Spouses using the qualified joint venture rules are treated as sole proprietors for federal tax purposes and generally do not need an EIN. What is 1040x 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. What is 1040x Generally, filing as a qualified joint venture will not increase the spouses' total tax owed on the joint income tax return. What is 1040x 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. What is 1040x    Note. What is 1040x If your spouse is your employee, not your partner, see One spouse employed by another in section 3. What is 1040x   For more information on qualified joint ventures, visit IRS. What is 1040x gov and enter “qualified joint venture” in the search box. What is 1040x Exception—Community income. What is 1040x   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. What is 1040x S. What is 1040x possession, you can treat the business either as a sole proprietorship (of the spouse who carried on the business) or a partnership. What is 1040x You may still make an election to be taxed as a qualified joint venture instead of a partnership. What is 1040x See Exception—Qualified joint venture , earlier. What is 1040x 3. What is 1040x Family Employees Child employed by parents. What is 1040x   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. What is 1040x 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. What is 1040x However, see Covered services of a child or spouse , later in this section. What is 1040x 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. What is 1040x 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. What is 1040x One spouse employed by another. What is 1040x   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. What is 1040x 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. What is 1040x Covered services of a child or spouse. What is 1040x   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. What is 1040x Parent employed by son or daughter. What is 1040x   When the employer is a son or daughter employing his or her parent the following rules apply. What is 1040x 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. What is 1040x 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. What is 1040x    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. What is 1040x   Payments made to a parent employed by his or her child are not subject to FUTA tax, regardless of the type of services provided. What is 1040x 4. What is 1040x 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. What is 1040x This requirement also applies to resident and nonresident alien employees. What is 1040x You should ask your employee to show you his or her social security card. What is 1040x The employee may show the card if it is available. What is 1040x Do not accept a social security card that says “Not valid for employment. What is 1040x ” A social security number issued with this legend does not permit employment. What is 1040x You may, but are not required to, photocopy the social security card if the employee provides it. What is 1040x 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. What is 1040x See Publication 1586, Reasonable Cause Regulations & Requirements for Missing and Incorrect Name/TINs, for information on the requirement to solicit the employee's SSN. What is 1040x Applying for a social security card. What is 1040x   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. What is 1040x You can get Form SS-5 at SSA offices, by calling 1-800-772-1213, or from the SSA website at www. What is 1040x socialsecurity. What is 1040x gov/online/ss-5. What is 1040x html. What is 1040x The employee must complete and sign Form SS-5; it cannot be filed by the employer. What is 1040x 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. What is 1040x Applying for a social security number. What is 1040x   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. What is 1040x If you are filing electronically, enter all zeros (000-00-000) in the social security number field. What is 1040x 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. What is 1040x Furnish copies B, C, and 2 of Form W-2c to the employee. What is 1040x 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. What is 1040x For more information, visit the SSA's Employer W-2 Filing Instructions & Information webpage at www. What is 1040x socialsecurity. What is 1040x gov/employer. What is 1040x Advise your employee to correct the SSN on his or her original Form W-2. What is 1040x Correctly record the employee's name and SSN. What is 1040x   Record the name and number of each employee as they are shown on the employee's social security card. What is 1040x 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. What is 1040x 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. What is 1040x 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. What is 1040x 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. What is 1040x IRS individual taxpayer identification numbers (ITINs) for aliens. What is 1040x   Do not accept an ITIN in place of an SSN for employee identification or for work. What is 1040x An ITIN is only available to resident and nonresident aliens who are not eligible for U. What is 1040x S. What is 1040x employment and need identification for other tax purposes. What is 1040x 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). What is 1040x    An individual with an ITIN who later becomes eligible to work in the United States must obtain an SSN. What is 1040x 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. What is 1040x Do not use an ITIN in place of an SSN on Form W-2. What is 1040x Verification of social security numbers. What is 1040x   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. What is 1040x Visit www. What is 1040x socialsecurity. What is 1040x gov/employer/ssnv. What is 1040x htm for more information. What is 1040x Registering for SSNVS. What is 1040x   You must register online and receive authorization from your employer to use SSNVS. What is 1040x To register, visit SSA's website at www. What is 1040x ssa. What is 1040x gov/employer and click on the Business Services Online link. What is 1040x Follow the registration instructions to obtain a user identification (ID) and password. What is 1040x You will need to provide the following information about yourself and your company. What is 1040x Name. What is 1040x SSN. What is 1040x Date of birth. What is 1040x Type of employer. What is 1040x EIN. What is 1040x Company name, address, and telephone number. What is 1040x Email address. What is 1040x   When you have completed the online registration process, SSA will mail a one-time activation code to your employer. What is 1040x You must enter the activation code online to use SSNVS. What is 1040x 5. What is 1040x Wages and Other Compensation Wages subject to federal employment taxes generally include all pay you give to an employee for services performed. What is 1040x The pay may be in cash or in other forms. What is 1040x It includes salaries, vacation allowances, bonuses, commissions, and fringe benefits. What is 1040x It does not matter how you measure or make the payments. What is 1040x 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. What is 1040x Also, compensation paid to a former employee for services performed while still employed is wages subject to employment taxes. What is 1040x More information. What is 1040x   See section 6 for a discussion of tips and section 7 for a discussion of supplemental wages. What is 1040x Also, see section 15 for exceptions to the general rules for wages. What is 1040x Publication 15-A provides additional information on wages, including nonqualified deferred compensation, and other compensation. What is 1040x 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. What is 1040x Employee business expense reimbursements. What is 1040x   A reimbursement or allowance arrangement is a system by which you pay the advances, reimbursements, and charges for your employees' business expenses. What is 1040x How you report a reimbursement or allowance amount depends on whether you have an accountable or a nonaccountable plan. What is 1040x If a single payment includes both wages and an expense reimbursement, you must specify the amount of the reimbursement. What is 1040x   These rules apply to all ordinary and necessary employee business expenses that would otherwise qualify for a deduction by the employee. What is 1040x Accountable plan. What is 1040x   To be an accountable plan, your reimbursement or allowance arrangement must require your employees to meet all three of the following rules. What is 1040x They must have paid or incurred deductible expenses while performing services as your employees. What is 1040x 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. What is 1040x They must substantiate these expenses to you within a reasonable period of time. What is 1040x They must return any amounts in excess of substantiated expenses within a reasonable period of time. What is 1040x   Amounts paid under an accountable plan are not wages and are not subject to income, social security, Medicare, and FUTA taxes. What is 1040x   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. What is 1040x 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. What is 1040x   A reasonable period of time depends on the facts and circumstances. What is 1040x 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. What is 1040x 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. What is 1040x Nonaccountable plan. What is 1040x   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. What is 1040x 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. What is 1040x   See section 7 for more information on supplemental wages. What is 1040x Per diem or other fixed allowance. What is 1040x   You may reimburse your employees by travel days, miles, or some other fixed allowance under the applicable revenue procedure. What is 1040x In these cases, your employee is considered to have accounted to you if your reimbursement does not exceed rates established by the Federal Government. What is 1040x The 2013 standard mileage rate for auto expenses was 56. What is 1040x 5 cents per mile. What is 1040x The rate for 2014 is 56 cents per mile. What is 1040x   The government per diem rates for meals and lodging in the continental United States are listed in Publication 1542, Per Diem Rates. What is 1040x 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). What is 1040x   If the per diem or allowance paid exceeds the amounts substantiated, you must report the excess amount as wages. What is 1040x This excess amount is subject to income tax withholding and payment of social security, Medicare, and FUTA taxes. What is 1040x Show the amount equal to the substantiated amount (for example, the nontaxable portion) in box 12 of Form W-2 using code “L. What is 1040x ” Wages not paid in money. What is 1040x   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. What is 1040x ” Payments in kind may be in the form of goods, lodging, food, clothing, or services. What is 1040x 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. What is 1040x   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. What is 1040x Withhold income tax on these payments only if you and the employee agree to do so. What is 1040x 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. What is 1040x Moving expenses. What is 1040x   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. What is 1040x Reimbursed and employer-paid nonqualified moving expenses are includible in income and are subject to employment taxes and income tax withholding. What is 1040x For more information on moving expenses, see Publication 521, Moving Expenses. What is 1040x Meals and lodging. What is 1040x   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. What is 1040x 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. What is 1040x    “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. What is 1040x 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. What is 1040x   However, whether meals or lodging are provided for the convenience of the employer depends on all of the facts and circumstances. What is 1040x A written statement that the meals or lodging are for your convenience is not sufficient. What is 1040x 50% test. What is 1040x   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. What is 1040x 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. What is 1040x For more information, see Publication 15-B. What is 1040x Health insurance plans. What is 1040x   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. What is 1040x Generally, this exclusion also applies to qualified long-term care insurance contracts. What is 1040x 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). What is 1040x 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. What is 1040x See Announcement 92-16 for more information. What is 1040x You can find Announcement 92-16 on page 53 of Internal Revenue Bulletin 1992-5. What is 1040x Health Savings Accounts and medical savings accounts. What is 1040x   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. What is 1040x To the extent it is not reasonable to believe they will be excludable, your contributions are subject to these taxes. What is 1040x 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. What is 1040x 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. What is 1040x For more information, see the Instructions for Form 8889, Health Savings Accounts (HSAs). What is 1040x Medical care reimbursements. What is 1040x   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. What is 1040x See Publication 15-B for an exception for highly compensated employees. What is 1040x Differential wage payments. What is 1040x   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. What is 1040x   Differential wage payments are wages for income tax withholding, but are not subject to social security, Medicare, or FUTA taxes. What is 1040x Employers should report differential wage payments in box 1 of Form W-2. What is 1040x For more information about the tax treatment of differential wage payments, visit IRS. What is 1040x gov and enter “employees in a combat zone” in the search box. What is 1040x Fringe benefits. What is 1040x   You generally must include fringe benefits in an employee's gross income (but see Nontaxable fringe benefits next). What is 1040x The benefits are subject to income tax withholding and employment taxes. What is 1040x 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. What is 1040x 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. What is 1040x There are other special rules you and your employees may use to value certain fringe benefits. What is 1040x See Publication 15-B for more information. What is 1040x Nontaxable fringe benefits. What is 1040x   Some fringe benefits are not taxable (or are minimally taxable) if certain conditions are met. What is 1040x See Publication 15-B for details. What is 1040x The following are some examples of nontaxable fringe benefits. What is 1040x Services provided to your employees at no additional cost to you. What is 1040x Qualified employee discounts. What is 1040x Working condition fringes that are property or services the employee could deduct as a business expense if he or she had paid for it. What is 1040x Examples include a company car for business use and subscriptions to business magazines. What is 1040x 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). What is 1040x Qualified transportation fringes subject to specified conditions and dollar limitations (including transportation in a commuter highway vehicle, any transit pass, and qualified parking). What is 1040x Qualified moving expense reimbursement. What is 1040x See Moving expenses , earlier in this section, for details. What is 1040x The use of on-premises athletic facilities, if substantially all of the use is by employees, their spouses, and their dependent children. What is 1040x Qualified tuition reduction an educational organization provides to its employees for education. What is 1040x For more information, see Publication 970, Tax Benefits for Education. What is 1040x Employer-provided cell phones provided primarily for a noncompensatory business reason. What is 1040x   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. What is 1040x No-additional-cost services. What is 1040x Qualified employee discounts. What is 1040x Meals provided at an employer operated eating facility. What is 1040x Reduced tuition for education. What is 1040x  For more information, including the definition of a highly compensated employee, see Publication 15-B. What is 1040x When fringe benefits are treated as paid. What is 1040x   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. What is 1040x You do not have to make a formal choice of payment dates or notify the IRS of the dates you choose. What is 1040x You do not have to make this choice for all employees. What is 1040x 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. What is 1040x See Publication 15-B for more information, including a discussion of the special accounting rule for fringe benefits provided during November and December. What is 1040x Valuation of fringe benefits. What is 1040x   Generally, you must determine the value of fringe benefits no later than January 31 of the next year. What is 1040x Before January 31, you may reasonably estimate the value of the fringe benefits for purposes of withholding and depositing on time. What is 1040x Withholding on fringe benefits. What is 1040x   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. What is 1040x However, see Withholding on supplemental wages when an employee receives more than $1 million of supplemental wages during the calendar year in section 7. What is 1040x   You may choose not to withhold income tax on the value of an employee's personal use of a vehicle you provide. What is 1040x You must, however, withhold social security and Medicare taxes on the use of the vehicle. What is 1040x See Publication 15-B for more information on this election. What is 1040x Depositing taxes on fringe benefits. What is 1040x   Once you choose when fringe benefits are paid, you must deposit taxes in the same deposit period you treat the fringe benefits as paid. What is 1040x To avoid a penalty, deposit the taxes following the general deposit rules for that deposit period. What is 1040x   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. What is 1040x See Valuation of fringe benefits , earlier. What is 1040x If you underestimated the value and deposited too little, you may be subject to a failure-to-deposit penalty. What is 1040x See section 11 for information on deposit penalties. What is 1040x   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. What is 1040x However, you must recover the income taxes before April 1 of the following year. What is 1040x Sick pay. What is 1040x   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. What is 1040x These amounts are sometimes paid by a third party, such as an insurance company or an employees' trust. What is 1040x In either case, these payments are subject to social security, Medicare, and FUTA taxes. What is 1040x 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. What is 1040x The payments are always subject to federal income tax. What is 1040x See Publication 15-A for more information. What is 1040x 6. What is 1040x Tips Tips your employee receives from customers are generally subject to withholding. What is 1040x Your employee must report cash tips to you by the 10th of the month after the month the tips are received. What is 1040x 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. What is 1040x Both directly and indirectly tipped employees must report tips to you. What is 1040x No report is required for months when tips are less than $20. What is 1040x Your employee reports the tips on Form 4070, Employee's Report of Tips to Employer, or on a similar statement. What is 1040x 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. What is 1040x 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. What is 1040x You are permitted to establish a system for electronic tip reporting by employees. What is 1040x See Regulations section 31. What is 1040x 6053-1(d). What is 1040x Collecting taxes on tips. What is 1040x   You must collect income tax, employee social security tax, and employee Medicare tax on the employee's tips. What is 1040x 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. What is 1040x If an employee reports to you in writing $20 or more of tips in a month, the tips are also subject to FUTA tax. What is 1040x   You can collect these taxes from the employee's wages or from other funds he or she makes available. What is 1040x See Tips treated as supplemental wages in section 7 for more information. What is 1040x 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. What is 1040x You are responsible for the employer social security tax on wages and tips until the wages (including tips) reach the limit. What is 1040x You are responsible for the employer Medicare tax for the whole year on all wages and tips. What is 1040x File Form 941 or Form 944 to report withholding and employment taxes on tips. What is 1040x Ordering rule. What is 1040x   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. What is 1040x If there are not enough funds available, withhold taxes in the following order. What is 1040x Withhold on regular wages and other compensation. What is 1040x Withhold social security and Medicare taxes on tips. What is 1040x Withhold income tax on tips. What is 1040x Reporting tips. What is 1040x   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). What is 1040x Report an adjustment on Form 941, line 9 (Form 944, line 6), for the uncollected social security and Medicare taxes. What is 1040x Enter the amount of uncollected social security tax and Medicare tax on Form W-2, box 12, with codes “A” and “B. What is 1040x ” Do not include any uncollected Additional Medicare Tax in box 12 of Form W-2. What is 1040x See section 13 and the General Instructions for Forms W-2 and W-3. What is 1040x   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. What is 1040x See Revenue Ruling 2012-18, 2012-26 I. What is 1040x R. What is 1040x B. What is 1040x 1032, available at www. What is 1040x irs. What is 1040x gov/irb/2012-26_IRB/ar07. What is 1040x html. What is 1040x Allocated tips. What is 1040x   If you operate a large food or beverage establishment, you must report allocated tips under certain circumstances. What is 1040x However, do not withhold income, social security, or Medicare taxes on allocated tips. What is 1040x   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. What is 1040x   The tips may be allocated by one of three methods—hours worked, gross receipts, or good faith agreement. What is 1040x 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. What is 1040x For information on filing Form 8027 electronically with the IRS, see Publication 1239. What is 1040x Tip Rate Determination and Education Program. What is 1040x   Employers may participate in the Tip Rate Determination and Education Program. What is 1040x 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. What is 1040x The two agreements are the Tip Rate Determination Agreement (TRDA) and the Tip Reporting Alternative Commitment (TRAC). What is 1040x A tip agreement, the Gaming Industry Tip Compliance Agreement (GITCA), is available for the gaming (casino) industry. What is 1040x To get more information about TRDA and TRAC agreements, see Publication 3144, Tips on Tips. What is 1040x Additionally, visit IRS. What is 1040x gov and enter “MSU tips” in the search box to get more information about GITCA, TRDA, or TRAC agreements. What is 1040x 7. What is 1040x Supplemental Wages Supplemental wages are wage payments to an employee that are not regular wages. What is 1040x 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. What is 1040x Other payments subject to the supplemental wage rules include taxable fringe benefits and expense allowances paid under a nonaccountable plan. What is 1040x How you withhold on supplemental wages depends on whether the supplemental payment is identified as a separate payment from regular wages. What is 1040x See Regulations section 31. What is 1040x 3402(g)-1 for additional guidance for wages paid after January 1, 2007. What is 1040x Also see Revenue Ruling 2008-29, 2008-24 I. What is 1040x R. What is 1040x B. What is 1040x 1149, available at www. What is 1040x irs. What is 1040x gov/irb/2008-24_IRB/ar08. What is 1040x html. What is 1040x Withholding on supplemental wages when an employee receives more than $1 million of supplemental wages from you during the calendar year. What is 1040x   Special rules apply to the extent supplemental wages paid to any one employee during the calendar year exceed $1 million. What is 1040x 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. What is 1040x 6% (or the highest rate of income tax for the year). What is 1040x Withhold using the 39. What is 1040x 6% rate without regard to the employee's Form W-4. What is 1040x In determining supplemental wages paid to the employee during the year, include payments from all businesses under common control. What is 1040x For more information, see Treasury Decision 9276, 2006-37 I. What is 1040x R. What is 1040x B. What is 1040x 423, available at www. What is 1040x irs. What is 1040x gov/irb/2006-37_IRB/ar09. What is 1040x html. What is 1040x Withholding on supplemental wage payments to an employee who does not receive $1 million of supplemental wages during the calendar year. What is 1040x   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. What is 1040x Supplemental wages combined with regular wages. What is 1040x   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. What is 1040x Supplemental wages identified separately from regular wages. What is 1040x   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. What is 1040x 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. What is 1040x Withhold a flat 25% (no other percentage allowed). What is 1040x If the supplemental wages are paid concurrently with regular wages, add the supplemental wages to the concurrently paid regular wages. What is 1040x 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. What is 1040x Figure the income tax withholding as if the total of the regular wages and supplemental wages is a single payment. What is 1040x Subtract the tax withheld from the regular wages. What is 1040x Withhold the remaining tax from the supplemental wages. What is 1040x 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. What is 1040x 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. What is 1040x This would occur, for example, when the value of the employee's withholding allowances claimed on Form W-4 is more than the wages. What is 1040x Regardless of the method you use to withhold income tax on supplemental wages, they are subject to social security, Medicare, and FUTA taxes. What is 1040x Example 1. What is 1040x You pay John Peters a base salary on the 1st of each month. What is 1040x He is single and claims one withholding allowance. What is 1040x In January he is paid $1,000. What is 1040x Using the wage bracket tables, you withhold $50 from this amount. What is 1040x 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. What is 1040x You figure the withholding based on the total of $3,000. What is 1040x The correct withholding from the tables is $338. What is 1040x Example 2. What is 1040x You pay Sharon Warren a base salary on the 1st of each month. What is 1040x She is single and claims one allowance. What is 1040x Her May 1 pay is $2,000. What is 1040x Using the wage bracket tables, you withhold $188. What is 1040x On May 14 she receives a bonus of $1,000. What is 1040x 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). What is 1040x Determine the amount of withholding on the combined $3,000 amount to be $338 using the wage bracket tables. What is 1040x Subtract the amount withheld from wages on the most recent base salary pay date (May 1) from the combined withholding amount ($338 – $188 = $150). What is 1040x Withhold $150 from the bonus payment. What is 1040x Example 3. What is 1040x The facts are the same as in Example 2, except you elect to use the flat rate method of withholding on the bonus. What is 1040x You withhold 25% of $1,000, or $250, from Sharon's bonus payment. What is 1040x Example 4. What is 1040x The facts are the same as in Example 2, except you elect to pay Sharon a second bonus of $2,000 on May 28. What is 1040x 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). What is 1040x Determine the amount of withholding on the combined $5,000 amount to be $781 using the wage bracket tables. What is 1040x 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). What is 1040x Withhold $443 from the second bonus payment. What is 1040x Tips treated as supplemental wages. What is 1040x   Withhold income tax on tips from wages earned by the employee or from other funds the employee makes available. What is 1040x If an employee receives regular wages and reports tips, figure income tax withholding as if the tips were supplemental wages. What is 1040x If you have not withheld income tax from the regular wages, add the tips to the regular wages. What is 1040x Then withhold income tax on the total. What is 1040x 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. What is 1040x Vacation pay. What is 1040x   Vacation pay is subject to withholding as if it were a regular wage payment. What is 1040x When vacation pay is in addition to regular wages for the vacation period, treat it as a supplemental wage payment. What is 1040x 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. What is 1040x 8. What is 1040x Payroll Period Your payroll period is a period of service for which you usually pay wages. What is 1040x When you have a regular payroll period, withhold income tax for that time period even if your employee does not work the full period. What is 1040x No regular payroll period. What is 1040x   When you do not have a regular payroll period, withhold the tax as if you paid wages for a daily or miscellaneous payroll period. What is 1040x Figure the number of days (including Sundays and holidays) in the period covered by the wage payment. What is 1040x 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. What is 1040x Employee paid for period less than 1 week. What is 1040x   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. What is 1040x If the employee later begins to work for another employer for wages subject to withholding, the employee must notify you within 10 days. What is 1040x You then figure withholding based on the daily or miscellaneous period. What is 1040x 9. What is 1040x Withholding From Employees' Wages Income Tax Withholding Using Form W-4 to figure withholding. What is 1040x   To know how much federal income tax to withhold from employees' wages, you should have a Form W-4 on file for each employee. What is 1040x 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. What is 1040x Advise your employees to use the IRS Withholding Calculator on the IRS website at www. What is 1040x irs. What is 1040x gov/individuals for help in determining how many withholding allowances to claim on their Forms W-4. What is 1040x   Ask all new employees to give you a signed Form W-4 when they start work. What is 1040x Make the form effective with the first wage payment. What is 1040x 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. What is 1040x Form in Spanish. What is 1040x   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. What is 1040x For more information, see Publicación 17(SP), El Impuesto Federal sobre los Ingresos (Para Personas Físicas). What is 1040x The rules discussed in this section that apply to Form W-4 also apply to Formulario W-4(SP). What is 1040x Electronic system to receive Form W-4. What is 1040x   You may establish a system to electronically receive Forms W-4 from your employees. What is 1040x See Regulations section 31. What is 1040x 3402(f)(5)-1(c) for more information. What is 1040x Effective date of Form W-4. What is 1040x   A Form W-4 remains in effect until the employee gives you a new one. What is 1040x 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. What is 1040x 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. What is 1040x 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. What is 1040x A Form W-4 that makes a change for the next calendar year will not take effect in the current calendar year. What is 1040x Successor employer. What is 1040x   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. What is 1040x See Revenue Procedure 2004-53, 2004-34 I. What is 1040x R. What is 1040x B. What is 1040x 320, available at www. What is 1040x irs. What is 1040x gov/irb/2004-34_IRB/ar13. What is 1040x html. What is 1040x Completing Form W-4. What is 1040x   The amount of any federal income tax withholding must be based on marital status and withholding allowances. What is 1040x Your employees may not base their withholding amounts on a fixed dollar amount or percentage. What is 1040x 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. What is 1040x Employees may claim fewer withholding allowances than they are entitled to claim. What is 1040x 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. What is 1040x See Publication 505, Tax Withholding and Estimated Tax, for more information about completing Form W-4. What is 1040x Along with Form W-4, you may wish to order Publication 505 for use by your employees. What is 1040x Do not accept any withholding or estimated tax payments from your employees in addition to withholding based on their Form W-4. What is 1040x 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. What is 1040x Exemption from federal income tax withholding. What is 1040x   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. What is 1040x See the Form W-4 instructions for more information. What is 1040x However, the wages are still subject to social security and Medicare taxes. What is 1040x See also Invalid Forms W-4 , later in this section. What is 1040x   A Form W-4 claiming exemption from withholding is effective when it is filed with the employer and only for that calendar year. What is 1040x 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. What is 1040x 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. What is 1040x 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. What is 1040x Withholding income taxes on the wages of nonresident alien employees. What is 1040x   In general, you must withhold federal income taxes on the wages of nonresident alien employees. What is 1040x However, see Publication 515, Withholding of Tax on Nonresident Aliens and Foreign Entities, for exceptions to this general rule. What is 1040x Also see section 3 of Publication 51 (Circular A), Agricultural Employer's Tax Guide, for guidance on H-2A visa workers. What is 1040x Withholding adjustment for nonresident alien employees. What is 1040x   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. What is 1040x Nonresident alien students from India and business apprentices from India are not subject to this procedure. What is 1040x Instructions. What is 1040x   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. What is 1040x Step 1. What is 1040x   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. What is 1040x    Amount to Add to Nonresident Alien Employee's Wages for Calculating Income Tax Withholding Only   Payroll Period Add Additional     Weekly $ 43. What is 1040x 30     Biweekly 86. What is 1040x 50     Semimonthly 93. What is 1040x 80     Monthly 187. What is 1040x 50     Quarterly 562. What is 1040x 50     Semiannually 1,125. What is 1040x 00     Annually 2,250. What is 1040x 00     Daily or Miscellaneous (each day of the payroll period) 8. What is 1040x 70   Step 2. What is 1040x   Use the amount figured in Step 1 and the number of withholding allowances claimed (generally limited to one allowance) to figure income tax withholding. What is 1040x Determine the value of withholding allowances by multiplying the number of withholding allowances claimed by the appropriate amount from Table 5. What is 1040x Percentage Method—2014 Amount for One Withholding Allowance shown on page 41. What is 1040x 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. What is 1040x 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. What is 1040x The amounts from the chart above are added to wages solely for calculating income tax withholding on the wages of the nonresident alien employee. What is 1040x 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. What is 1040x 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. What is 1040x This procedure only applies to nonresident alien employees who have wages subject to income tax withholding. What is 1040x Example. What is 1040x An employer using the percentage method of withholding pays wages of $500 for a biweekly payroll period to a married nonresident alien employee. What is 1040x 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). What is 1040x 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. What is 1040x 50 from the chart under Step 1 ($586. What is 1040x 50 total). What is 1040x The employer then applies the applicable tables to determine the income tax withholding for nonresident aliens (see Step 2 ). What is 1040x 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. What is 1040x The $86. What is 1040x 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. What is 1040x Also, the $86. What is 1040x 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. What is 1040x Supplemental wage payment. What is 1040x   This procedure for determining the amount of income tax withholding does not apply to a supplemental wage payment (see section 7) if the 39. What is 1040x 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. What is 1040x Nonresident alien employee's Form W-4. What is 1040x   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. What is 1040x   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. What is 1040x 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. What is 1040x Form 8233. What is 1040x   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. What is 1040x See Publication 515 for details. What is 1040x IRS review of requested Forms W-4. What is 1040x   When requested by the IRS, you must make original Forms W-4 available for inspection by an IRS employee. What is 1040x You may also be directed to send certain Forms W-4 to the IRS. What is 1040x 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. What is 1040x 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. What is 1040x 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. What is 1040x R. What is 1040x B. What is 1040x 455, which is available at www. What is 1040x irs. What is 1040x gov/irb/2007-35_IRB/ar10. What is 1040x html. What is 1040x When we refer to Form W-4, the same rules apply to Formulario W-4(SP), its Spanish translation. What is 1040x 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). What is 1040x 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
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