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Www h&rblock com 19. Www h&rblock com   Education- Related Adjustments Table of Contents Introduction Useful Items - You may want to see: Student Loan Interest DeductionStudent Loan Interest Defined Can You Claim the Deduction How Much Can You Deduct How Do You Figure the Deduction Tuition and Fees DeductionCan You Claim the Deduction What Expenses Qualify Who Is an Eligible Student Who Can Claim a Dependent's Expenses How Much Can You Deduct Educator Expenses Introduction This chapter discusses the education-related adjustment you can deduct in figuring your adjusted gross income. Www h&rblock com This chapter covers the student loan interest deduction, tuition and fees deduction, and the deduction for educator expenses. Www h&rblock com Useful Items - You may want to see: Publication 970 Tax Benefits for Education Student Loan Interest Deduction Generally, personal interest you pay, other than certain mortgage interest, is not deductible on your tax return. Www h&rblock com However, if your modified adjusted gross income (MAGI) is less than $75,000 ($155,000 if filing a joint return) there is a special deduction allowed for paying interest on a student loan (also known as an education loan) used for higher education. Www h&rblock com For most taxpayers, MAGI is the adjusted gross income as figured on their federal income tax return before subtracting any deduction for student loan interest. Www h&rblock com This deduction can reduce the amount of your income subject to tax by up to $2,500 in 2013. Www h&rblock com Table 19-1 summarizes the features of the student loan interest deduction. Www h&rblock com Table 19-1. Www h&rblock com Student Loan Interest Deduction at a Glance Do not rely on this table alone. Www h&rblock com Refer to the text for more details. Www h&rblock com Feature Description Maximum benefit You can reduce your income subject to tax by up to $2,500. Www h&rblock com Loan qualifications Your student loan: •  must have been taken out solely to pay qualified education expenses, and   • cannot be from a related person or made under a qualified employer plan. Www h&rblock com Student qualifications The student must be: • you, your spouse, or your dependent, and   • enrolled at least half-time in a program leading to a degree, certificate, or other recognized educational credential at an eligible educational institution. Www h&rblock com Time limit on deduction You can deduct interest paid during the remaining period of your student loan. Www h&rblock com Phaseout The amount of your deduction depends on your income level. Www h&rblock com Student Loan Interest Defined Student loan interest is interest you paid during the year on a qualified student loan. Www h&rblock com It includes both required and voluntary interest payments. Www h&rblock com Qualified Student Loan This is a loan you took out solely to pay qualified education expenses (defined later) that were: For you, your spouse, or a person who was your dependent (defined in chapter 3) when you took out the loan, Paid or incurred within a reasonable period of time before or after you took out the loan, and For education provided during an academic period when the student is an eligible student. Www h&rblock com Loans from the following sources are not qualified student loans. Www h&rblock com A related person. Www h&rblock com A qualified employer plan. Www h&rblock com Exceptions. Www h&rblock com   For purposes of the student loan interest deduction, the following are exceptions to the general rules for dependents. Www h&rblock com An individual can be your dependent even if you are the dependent of another taxpayer. Www h&rblock com An individual can be your dependent even if the individual files a joint return with a spouse. Www h&rblock com An individual can be your dependent even if the individual had gross income for the year that was equal to or more than the exemption amount for the year ($3,900 for 2013). Www h&rblock com    Reasonable period of time. Www h&rblock com   Qualified education expenses are treated as paid or incurred within a reasonable period of time before or after you take out the loan if they are paid with the proceeds of student loans that are part of a federal postsecondary education loan program. Www h&rblock com   Even if not paid with the proceeds of that type of loan, the expenses are treated as paid or incurred within a reasonable period of time if both of the following requirements are met. Www h&rblock com The expenses relate to a specific academic period. Www h&rblock com The loan proceeds are disbursed within a period that begins 90 days before the start of that academic period and ends 90 days after the end of that academic period. Www h&rblock com   If neither of the above situations applies, the reasonable period of time is determined based on all the relevant facts and circumstances. Www h&rblock com Academic period. Www h&rblock com   An academic period includes a semester, trimester, quarter, or other period of study (such as a summer school session) as reasonably determined by an educational institution. Www h&rblock com In the case of an educational institution that uses credit hours or clock hours and does not have academic terms, each payment period can be treated as an academic period. Www h&rblock com Eligible student. Www h&rblock com   This is a student who was enrolled at least half-time in a program leading to a degree, certificate, or other recognized educational credential. Www h&rblock com Enrolled at least half-time. Www h&rblock com   A student was enrolled at least half-time if the student was taking at least half the normal full-time work load for his or her course of study. Www h&rblock com   The standard for what is half of the normal full-time work load is determined by each eligible educational institution. Www h&rblock com However, the standard may not be lower than any of those established by the U. Www h&rblock com S. Www h&rblock com Department of Education under the Higher Education Act of 1965. Www h&rblock com Related person. Www h&rblock com   You cannot deduct interest on a loan you get from a related person. Www h&rblock com Related persons include: Your spouse, Your brothers and sisters, Your half brothers and half sisters, Your ancestors (parents, grandparents, etc. Www h&rblock com ), Your lineal descendants (children, grandchildren, etc. Www h&rblock com ), and Certain corporations, partnerships, trusts, and exempt organizations. Www h&rblock com Qualified employer plan. Www h&rblock com   You cannot deduct interest on a loan made under a qualified employer plan or under a contract purchased under such a plan. Www h&rblock com Qualified Education Expenses For purposes of the student loan interest deduction, these expenses are the total costs of attending an eligible educational institution, including graduate school. Www h&rblock com They include amounts paid for the following items. Www h&rblock com Tuition and fees. Www h&rblock com Room and board. Www h&rblock com Books, supplies, and equipment. Www h&rblock com Other necessary expenses (such as transportation). Www h&rblock com The cost of room and board qualifies only to the extent that it is not more than: The allowance for room and board, as determined by the eligible educational institution, that was included in the cost of attendance (for federal financial aid purposes) for a particular academic period and living arrangement of the student, or If greater, the actual amount charged if the student is residing in housing owned or operated by the eligible educational institution. Www h&rblock com Eligible educational institution. Www h&rblock com   An eligible educational institution is any college, university, vocational school, or other postsecondary educational institution eligible to participate in a student aid program administered by the U. Www h&rblock com S. Www h&rblock com Department of Education. Www h&rblock com It includes virtually all accredited public, nonprofit, and proprietary (privately owned profit-making) postsecondary institutions. Www h&rblock com   Certain educational institutions located outside the United States also participate in the U. Www h&rblock com S. Www h&rblock com Department of Education's Federal Student Aid (FSA) programs. Www h&rblock com   For purposes of the student loan interest deduction, an eligible educational institution also includes an institution conducting an internship or residency program leading to a degree or certificate from an institution of higher education, a hospital, or a health care facility that offers postgraduate training. Www h&rblock com   An educational institution must meet the above criteria only during the academic period(s) for which the student loan was incurred. Www h&rblock com The deductibility of interest on the loan is not affected by the institution's subsequent loss of eligibility. Www h&rblock com    The educational institution should be able to tell you if it is an eligible educational institution. Www h&rblock com Adjustments to qualified education expenses. Www h&rblock com   You must reduce your qualified education expenses by certain tax-free items (such as the tax-free part of scholarships and fellowships). Www h&rblock com See chapter 4 of Publication 970 for details. Www h&rblock com Include as Interest In addition to simple interest on the loan, certain loan origination fees, capitalized interest, interest on revolving lines of credit, and interest on refinanced student loans can be student loan interest if all other requirements are met. Www h&rblock com Loan origination fee. Www h&rblock com   In general, this is a one-time fee charged by the lender when a loan is made. Www h&rblock com To be deductible as interest, the fee must be for the use of money rather than for property or services (such as commitment fees or processing costs) provided by the lender. Www h&rblock com A loan origination fee treated as interest accrues over the life of the loan. Www h&rblock com Capitalized interest. Www h&rblock com    This is unpaid interest on a student loan that is added by the lender to the outstanding principal balance of the loan. Www h&rblock com Interest on revolving lines of credit. Www h&rblock com   This interest, which includes interest on credit card debt, is student loan interest if the borrower uses the line of credit (credit card) only to pay qualified education expenses. Www h&rblock com See Qualified Education Expenses , earlier. Www h&rblock com Interest on refinanced student loans. Www h&rblock com   This includes interest on both: Consolidated loans—loans used to refinance more than one student loan of the same borrower, and Collapsed loans—two or more loans of the same borrower that are treated by both the lender and the borrower as one loan. Www h&rblock com If you refinance a qualified student loan for more than your original loan and you use the additional amount for any purpose other than qualified education expenses, you cannot deduct any interest paid on the refinanced loan. Www h&rblock com Voluntary interest payments. Www h&rblock com   These are payments made on a qualified student loan during a period when interest payments are not required, such as when the borrower has been granted a deferment or the loan has not yet entered repayment status. Www h&rblock com Do Not Include as Interest You cannot claim a student loan interest deduction for any of the following items. Www h&rblock com Interest you paid on a loan if, under the terms of the loan, you are not legally obligated to make interest payments. Www h&rblock com Loan origination fees that are payments for property or services provided by the lender, such as commitment fees or processing costs. Www h&rblock com Interest you paid on a loan to the extent payments were made through your participation in the National Health Service Corps Loan Repayment Program (the “NHSC Loan Repayment Program”) or certain other loan repayment assistance programs. Www h&rblock com For more information, see Student Loan Repayment Assistance in chapter 5 of Publication 970. Www h&rblock com Can You Claim the Deduction Generally, you can claim the deduction if all of the following requirements are met. Www h&rblock com Your filing status is any filing status except married filing separately. Www h&rblock com No one else is claiming an exemption for you on his or her tax return. Www h&rblock com You are legally obligated to pay interest on a qualified student loan. Www h&rblock com You paid interest on a qualified student loan. Www h&rblock com Interest paid by others. Www h&rblock com   If you are the person legally obligated to make interest payments and someone else makes a payment of interest on your behalf, you are treated as receiving the payments from the other person and, in turn, paying the interest. Www h&rblock com See chapter 4 of Publication 970 for more information. Www h&rblock com No Double Benefit Allowed You cannot deduct as interest on a student loan any amount that is an allowable deduction under any other provision of the tax law (for example, home mortgage interest). Www h&rblock com How Much Can You Deduct Your student loan interest deduction for 2013 is generally the smaller of: $2,500, or The interest you paid in 2013. Www h&rblock com However, the amount determined above is phased out (gradually reduced) if your MAGI is between $60,000 and $75,000 ($125,000 and $155,000 if you file a joint return). Www h&rblock com You cannot take a student loan interest deduction if your MAGI is $75,000 or more ($155,000 or more if you file a joint return). Www h&rblock com For details on figuring your MAGI, see chapter 4 of Publication 970. Www h&rblock com How Do You Figure the Deduction Generally, you figure the deduction using the Student Loan Interest Deduction Worksheet in the Form 1040 or Form 1040A instructions. Www h&rblock com However, if you are filing Form 2555, 2555-EZ, or 4563, or you are excluding income from sources within Puerto Rico, you must complete Worksheet 4-1 in chapter 4 of Publication 970. Www h&rblock com To help you figure your student loan interest deduction, you should receive Form 1098-E, Student Loan Interest Statement. Www h&rblock com Generally, an institution (such as a bank or governmental agency) that received interest payments of $600 or more during 2013 on one or more qualified student loans must send Form 1098-E (or acceptable substitute) to each borrower by January 31, 2014. Www h&rblock com For qualified student loans taken out before September 1, 2004, the institution is required to include on Form 1098-E only payments of stated interest. Www h&rblock com Other interest payments, such as certain loan origination fees and capitalized interest, may not appear on the form you receive. Www h&rblock com However, if you pay qualifying interest that is not included on Form 1098-E, you can also deduct those amounts. Www h&rblock com For information on allocating payments between interest and principal, see chapter 4 of Publication 970. Www h&rblock com To claim the deduction, enter the allowable amount on Form 1040, line 33, or Form 1040A, line 18. Www h&rblock com Tuition and Fees Deduction You may be able to deduct qualified education expenses paid during the year for yourself, your spouse, or your dependent(s). Www h&rblock com You cannot claim this deduction if your filing status is married filing separately or if another person can claim an exemption for you as a dependent on his or her tax return. Www h&rblock com The qualified expenses must be for higher education, as explained later under What Expenses Qualify . Www h&rblock com The tuition and fees deduction can reduce the amount of your income subject to tax by up to $4,000. Www h&rblock com Table 19-2 summarizes the features of the tuition and fees deduction. Www h&rblock com You may be able to take a credit for your education expenses instead of a deduction. Www h&rblock com You can choose the one that will give you the lower tax. Www h&rblock com See chapter 35, Education Credits, for details about the credits. Www h&rblock com Can You Claim the Deduction The following rules will help you determine if you can claim the tuition and fees deduction. Www h&rblock com Who Can Claim the Deduction Generally, you can claim the tuition and fees deduction if all three of the following requirements are met. Www h&rblock com You paid qualified education expenses of higher education in 2013 for academic periods beginning in 2013 and those beginning in the first three months of 2014. Www h&rblock com You paid the education expenses for an eligible student. Www h&rblock com The eligible student is yourself, your spouse, or your dependent for whom you claim an exemption (defined in chapter 3) on your tax return. Www h&rblock com Qualified education expenses are defined under What Expenses Qualify . Www h&rblock com Eligible students are defined later under Who Is an Eligible Student . Www h&rblock com Who Cannot Claim the Deduction You cannot claim the tuition and fees deduction if any of the following apply. Www h&rblock com Your filing status is married filing separately. Www h&rblock com Another person can claim an exemption for you as a dependent on his or her tax return. Www h&rblock com You cannot take the deduction even if the other person does not actually claim that exemption. Www h&rblock com Your modified adjusted gross income (MAGI) is more than $80,000 ($160,000 if filing a joint return). Www h&rblock com You (or your spouse) were a nonresident alien for any part of 2013 and the nonresident alien did not elect to be treated as a resident alien for tax purposes. Www h&rblock com More information on nonresident aliens can be found in Publication 519, U. Www h&rblock com S. Www h&rblock com Tax Guide for Aliens. Www h&rblock com You or anyone else claims an American opportunity or lifetime learning credit in 2013 with respect to expenses of the student for whom the qualified education expenses were paid. Www h&rblock com However, a state tax credit will not disqualify you from claiming a tuition and fees deduction. Www h&rblock com Table 19-2. Www h&rblock com Tuition and Fees Deduction at a Glance Do not rely on this table alone. Www h&rblock com Refer to the text for more details. Www h&rblock com Question   Answer What is the maximum benefit?   You can reduce your income subject to tax by up to $4,000. Www h&rblock com Where is the deduction taken?   As an adjustment to income on Form 1040, line 34, or Form 1040A, line 19. Www h&rblock com For whom must the expenses be paid?   A student enrolled in an eligible educational institution who is either: you, your spouse, or your dependent for whom you claim an exemption. Www h&rblock com What tuition and fees are deductible?   Tuition and fees required for enrollment or attendance at an eligible postsecondary educational institution, but not including personal, living, or family expenses, such as room and board. Www h&rblock com What Expenses Qualify The tuition and fees deduction is based on qualified education expenses you pay for yourself, your spouse, or a dependent for whom you claim an exemption on your tax return. Www h&rblock com Generally, the deduction is allowed for qualified education expenses paid in 2013 in connection with enrollment at an institution of higher education during 2013 or for an academic period (defined earlier under Student Loan Interest Deduction ) beginning in 2013 or in the first 3 months of 2014. Www h&rblock com Payments with borrowed funds. Www h&rblock com   You can claim a tuition and fees deduction for qualified education expenses paid with the proceeds of a loan. Www h&rblock com Use the expenses to figure the deduction for the year in which the expenses are paid, not the year in which the loan is repaid. Www h&rblock com Treat loan payments sent directly to the educational institution as paid on the date the institution credits the student's account. Www h&rblock com Student withdraws from class(es). Www h&rblock com   You can claim a tuition and fees deduction for qualified education expenses not refunded when a student withdraws. Www h&rblock com Qualified Education Expenses For purposes of the tuition and fees deduction, qualified education expenses are tuition and certain related expenses required for enrollment or attendance at an eligible educational institution. Www h&rblock com Eligible educational institution. Www h&rblock com   An eligible educational institution is any college, university, vocational school, or other postsecondary educational institution eligible to participate in a student aid program administered by the U. Www h&rblock com S. Www h&rblock com Department of Education. Www h&rblock com It includes virtually all accredited public, nonprofit, and proprietary (privately owned profit-making) postsecondary institutions. Www h&rblock com The educational institution should be able to tell you if it is an eligible educational institution. Www h&rblock com   Certain educational institutions located outside the United States also participate in the U. Www h&rblock com S. Www h&rblock com Department of Education's Federal Student Aid (FSA) programs. Www h&rblock com Academic period. Www h&rblock com    An academic period is any quarter, semester, trimester, or any other period of study as reasonably determined by an eligible educational institution. Www h&rblock com If an eligible educational institution uses credit hours and does not have academic terms, each payment period may be treated as an academic period. Www h&rblock com Related expenses. Www h&rblock com   Student-activity fees and expenses for course-related books, supplies, and equipment are included in qualified education expenses for the tuition and fees deduction only if the fees and expenses must be paid to the institution as a condition of enrollment or attendance. Www h&rblock com Prepaid expenses. Www h&rblock com   Qualified education expenses paid in 2013 for an academic period that begins in the first three months of 2014 can be used in figuring the tuition and fees deduction. Www h&rblock com See Academic period, earlier. Www h&rblock com For example, if you pay $2,000 in December 2013 for qualified tuition for the 2014 winter quarter that begins in January 2014, you can use that $2,000 in figuring the tuition and fees deduction for 2013 only if you meet all the other requirements. Www h&rblock com    You cannot use any amount you paid in 2012 or 2014 to figure the qualified education expenses you use to figure your 2013 tuition and fees deduction. Www h&rblock com No Double Benefit Allowed You cannot do any of the following. Www h&rblock com Deduct qualified education expenses you deduct under any other provision of the law, for example, as a business expense. Www h&rblock com Deduct qualified education expenses for a student on your income tax return if you or anyone else claims an American opportunity or lifetime learning credit for that same student in the same year. Www h&rblock com Deduct qualified education expenses that have been used to figure the tax-free portion of a distribution from a Coverdell education savings account (ESA) or a qualified tuition program (QTP). Www h&rblock com For a QTP, this applies only to the amount of tax-free earnings that were distributed, not to the recovery of contributions to the program. Www h&rblock com See Figuring the Taxable Portion of a Distribution in chapter 7 (Coverdell ESA) and chapter 8 (QTP) of Publication 970. Www h&rblock com Deduct qualified education expenses that have been paid with tax-free interest on U. Www h&rblock com S. Www h&rblock com savings bonds (Form 8815). Www h&rblock com See Figuring the Tax-Free Amount in chapter 10 of Publication 970. Www h&rblock com Deduct qualified education expenses that have been paid with tax-free educational assistance such as a scholarship, grant, or employer-provided educational assistance. Www h&rblock com See Adjustments to qualified education expenses, later. Www h&rblock com Adjustments to qualified education expenses. Www h&rblock com   For each student, reduce the qualified education expenses paid by or on behalf of that student under the following rules. Www h&rblock com The result is the amount of adjusted qualified education expenses for each student. Www h&rblock com Tax-free educational assistance. Www h&rblock com   For tax-free educational assistance you received in 2013, reduce the qualified educational expenses for each academic period by the amount of tax-free educational assistance to that academic period. Www h&rblock com See Academic period, earlier. Www h&rblock com   This includes: The tax-free part of scholarships and fellowships, including Pell grants (see chapter 1 of Publication 970), The tax-free part of any employer-provided educational assistance (see chapter 11 of Publication 970), Veterans' educational assistance (see chapter 1 of Publication 970), and Any other nontaxable (tax-free) payments (other than gifts or inheritances) received as educational assistance. Www h&rblock com Generally, any scholarship or fellowship you receive is treated as tax-free educational assistance. Www h&rblock com However, a scholarship or fellowship is not treated as tax-free educational assistance to the extent you include it in gross income (if you are required to file a tax return) for the year the scholarship or fellowship is received and either: The scholarship or fellowship (or any part of it) must be applied (by its terms) to expenses (such as room and board) other than qualified education expenses as defined in Qualified education expenses in Pub. Www h&rblock com 970, chapter 1. Www h&rblock com The scholarship or fellowship (or any part of it) may be applied (by its terms) to expenses (such as room and board) other than qualified education expenses as defined in Qualified education expenses in Pub. Www h&rblock com 970, chapter 1. Www h&rblock com You may be able to increase the combined value of your tuition and fees deduction and certain educational assistance if you include some or all of the educational assistance in income in the year it is received. Www h&rblock com For details, see Adjustments to Qualified Education Expenses in chapter 6 of Pub. Www h&rblock com 970. Www h&rblock com Some tax-free educational assistance received in 2013 may be treated as a refund of qualified education expenses paid in 2013. Www h&rblock com This tax-free educational assistance is any tax-free educational assistance received by you or anyone else after 2013 for qualified education expenses paid on behalf of a student in 2013 (or attributable to enrollment at an eligible educational institution during 2013). Www h&rblock com If this tax-free educational assistance is received after 2013 but before you file your 2013 income tax return, see Refunds received after 2013 but before your income tax return is filed, later. Www h&rblock com If this tax-free educational assistance is received after 2013 and after you file your 2013 income tax return, see Refunds received after 2013 and after your income tax return is filed, later. Www h&rblock com Refunds. Www h&rblock com   A refund of qualified education expenses may reduce adjusted qualified education expenses for the tax year or may require you to include some or all of the refund in your gross income for the year the refund is received. Www h&rblock com See chapter 6 of Pub. Www h&rblock com 970 for more information. Www h&rblock com Some tax-free educational assistance received after 2013 may be treated as a refund. Www h&rblock com See Tax-free educational assistance, earlier. Www h&rblock com Refunds received in 2013. Www h&rblock com    For each student, figure the adjusted qualified education expenses for 2013 by adding all the qualified education expenses paid in 2013 and subtracting any refunds of those expenses received from the eligible educational institution during 2013. Www h&rblock com Refunds received after 2013 but before your income tax return is filed. Www h&rblock com   If you receive a refund after 2013 of qualified education expenses you paid in 2013 and the refund is received before you file your 2013 income tax return, reduce the amount of qualified education expenses for 2013 by the amount of the refund. Www h&rblock com Refunds received after 2013 and after your income tax return is filed. Www h&rblock com   If you receive a refund after 2013 of qualified education expenses you paid in 2013 and the refund is received after you file your 2013 income tax return, you may need to include some or all of the refund in your gross income for the year the refund is received. Www h&rblock com See chapter 6 of Pub. Www h&rblock com 970 for more information. Www h&rblock com Coordination with Coverdell education savings accounts and qualified tuition programs. Www h&rblock com    Reduce your qualified education expenses by any qualified education expenses used to figure the exclusion from gross income of (a) interest received under an education savings bond program, or (b) any distribution from a Coverdell education savings account or qualified tuition program (QTP). Www h&rblock com For a QTP, this applies only to the amount of tax-free earnings that were distributed, not to the recovery of contributions to the program. Www h&rblock com Amounts that do not reduce qualified education expenses. Www h&rblock com   Do not reduce qualified education expenses by amounts paid with funds the student receives as: Payment for services, such as wages, A loan, A gift, An inheritance, or A withdrawal from the student's personal savings. Www h&rblock com   Do not reduce the qualified education expenses by any scholarship or fellowship reported as income on the student's tax return in the following situations. Www h&rblock com The use of the money is restricted, by the terms of the scholarship or fellowship, to costs of attendance (such as room and board) other than qualified education expenses. Www h&rblock com The use of the money is not restricted. Www h&rblock com Expenses That Do Not Qualify Qualified education expenses do not include amounts paid for: Insurance, Medical expenses (including student health fees), Room and board, Transportation, or Similar personal, living, or family expenses. Www h&rblock com This is true even if the amount must be paid to the institution as a condition of enrollment or attendance. Www h&rblock com Sports, games, hobbies, and noncredit courses. Www h&rblock com   Qualified education expenses generally do not include expenses that relate to any course of instruction or other education that involves sports, games or hobbies, or any noncredit course. Www h&rblock com However, if the course of instruction or other education is part of the student's degree program, these expenses can qualify. Www h&rblock com Comprehensive or bundled fees. Www h&rblock com   Some eligible educational institutions combine all of their fees for an academic period into one amount. Www h&rblock com If you do not receive, or do not have access to, an allocation showing how much you paid for qualified education expenses and how much you paid for personal expenses, such as those listed above, contact the institution. Www h&rblock com The institution is required to make this allocation and provide you with the amount you paid (or were billed) for qualified education expenses on Form 1098-T, Tuition Statement. Www h&rblock com See How Do You Figure the Deduction , later, for more information about Form 1098-T. Www h&rblock com Who Is an Eligible Student For purposes of the tuition and fees deduction, an eligible student is a student who is enrolled in one or more courses at an eligible educational institution (defined earlier). Www h&rblock com Who Can Claim a Dependent's Expenses Generally, in order to claim the tuition and fees deduction for qualified education expenses for a dependent, you must: Have paid the expenses, and Claim an exemption for the student as a dependent. Www h&rblock com Table 19-3 summarizes who can claim the deduction. Www h&rblock com How Much Can You Deduct The maximum tuition and fees deduction in 2013 is $4,000, $2,000, or $0, depending on the amount of your MAGI. Www h&rblock com For details on figuring your MAGI, see chapter 6 of Publication 970. Www h&rblock com How Do You Figure the Deduction Figure the deduction using Form 8917. Www h&rblock com To help you figure your tuition and fees deduction, you should receive Form 1098-T, Tuition Statement. Www h&rblock com Generally, an eligible educational institution (such as a college or university) must send Form 1098-T (or acceptable substitute) to each enrolled student by January 31, 2014. Www h&rblock com To claim the deduction, enter the allowable amount on Form 1040, line 34, or Form 1040A, line 19, and attach your completed Form 8917. Www h&rblock com Table 19-3. Www h&rblock com Who Can Claim a Dependent's Expenses Do not rely on this table alone. Www h&rblock com See Who Can Claim a Dependent's Expenses in chapter 6 of Publication 970. Www h&rblock com IF your dependent is an eligible student and you. Www h&rblock com . Www h&rblock com . Www h&rblock com AND. Www h&rblock com . Www h&rblock com . Www h&rblock com THEN. Www h&rblock com . Www h&rblock com . Www h&rblock com claim an exemption for your dependent you paid all qualified education expenses for your dependent only you can deduct the qualified education expenses that you paid. Www h&rblock com Your dependent cannot take a deduction. Www h&rblock com claim an exemption for your dependent your dependent paid all qualified education expenses no one is allowed to take a deduction. Www h&rblock com do not claim an exemption for your dependent you paid all qualified education expenses no one is allowed to take a deduction. Www h&rblock com do not claim an exemption for your dependent your dependent paid all qualified education expenses no one is allowed to take a deduction. Www h&rblock com Educator Expenses If you were an eligible educator in 2013, you can deduct on Form 1040, line 23, or Form 1040A, line 16, up to $250 of qualified expenses you paid in 2013. Www h&rblock com If you and your spouse are filing jointly and both of you were eligible educators, the maximum deduction is $500. Www h&rblock com However, neither spouse can deduct more than $250 of his or her qualified expenses on Form 1040, line 23, or Form 1040A, line 16. Www h&rblock com You may be able to deduct expenses that are more than the $250 (or $500) limit on Schedule A (Form 1040), line 21. Www h&rblock com Eligible educator. Www h&rblock com   An eligible educator is a kindergarten through grade 12 teacher, instructor, counselor, principal, or aide who worked in a school for at least 900 hours during a school year. Www h&rblock com Qualified expenses. Www h&rblock com   Qualified expenses include ordinary and necessary expenses paid in connection with books, supplies, equipment (including computer equipment, software, and services), and other materials used in the classroom. Www h&rblock com An ordinary expense is one that is common and accepted in your educational field. Www h&rblock com A necessary expense is one that is helpful and appropriate for your profession as an educator. Www h&rblock com An expense does not have to be required to be considered necessary. Www h&rblock com   Qualified expenses do not include expenses for home schooling or for nonathletic supplies for courses in health or physical education. Www h&rblock com   You must reduce your qualified expenses by the following amounts. Www h&rblock com Excludable U. Www h&rblock com S. Www h&rblock com series EE and I savings bond interest from Form 8815. Www h&rblock com See Figuring the Tax-Free Amount in chapter 10 of Publication 970. Www h&rblock com Nontaxable qualified tuition program earnings or distributions. Www h&rblock com See Figuring the Taxable Portion of a Distribution in chapter 8 of Publication 970. Www h&rblock com Nontaxable distribution of earnings from a Coverdell education savings account. Www h&rblock com See Figuring the Taxable Portion of a Distribution in chapter 7 of Publication 970. Www h&rblock com Any reimbursements you received for these expenses that were not reported to you in box 1 of your Form W-2. 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Www h&rblock com 4. Www h&rblock com   Tax Withholding and Estimated Tax Table of Contents What's New for 2014 Reminders Introduction Useful Items - You may want to see: Tax Withholding for 2014Salaries and Wages Tips Taxable Fringe Benefits Sick Pay Pensions and Annuities Gambling Winnings Unemployment Compensation Federal Payments Backup Withholding Estimated Tax for 2014Who Does Not Have To Pay Estimated Tax Who Must Pay Estimated Tax How To Figure Estimated Tax When To Pay Estimated Tax How To Figure Each Payment How To Pay Estimated Tax Credit for Withholding and Estimated Tax for 2013Withholding Estimated Tax Underpayment Penalty for 2013 What's New for 2014 Tax law changes for 2014. Www h&rblock com  When you figure how much income tax you want withheld from your pay and when you figure your estimated tax, consider tax law changes effective in 2014. Www h&rblock com For more information, see Publication 505. Www h&rblock com Reminders Estimated tax safe harbor for higher income taxpayers. Www h&rblock com  If your 2013 adjusted gross income was more than $150,000 ($75,000 if you are married filing a separate return), you must pay the smaller of 90% of your expected tax for 2014 or 110% of the tax shown on your 2013 return to avoid an estimated tax penalty. Www h&rblock com Introduction This chapter discusses how to pay your tax as you earn or receive income during the year. Www h&rblock com In general, the federal income tax is a pay-as-you-go tax. Www h&rblock com There are two ways to pay as you go. Www h&rblock com Withholding. Www h&rblock com If you are an employee, your employer probably withholds income tax from your pay. Www h&rblock com Tax also may be withheld from certain other income, such as pensions, bonuses, commissions, and gambling winnings. Www h&rblock com The amount withheld is paid to the IRS in your name. Www h&rblock com Estimated tax. Www h&rblock com If you do not pay your tax through withholding, or do not pay enough tax that way, you may have to pay estimated tax. Www h&rblock com People who are in business for themselves generally will have to pay their tax this way. Www h&rblock com Also, you may have to pay estimated tax if you receive income such as dividends, interest, capital gains, rent, and royalties. Www h&rblock com Estimated tax is used to pay not only income tax, but self-employment tax and alternative minimum tax as well. Www h&rblock com This chapter explains these methods. Www h&rblock com In addition, it also explains the following. Www h&rblock com Credit for withholding and estimated tax. Www h&rblock com When you file your 2013 income tax return, take credit for all the income tax withheld from your salary, wages, pensions, etc. Www h&rblock com , and for the estimated tax you paid for 2013. Www h&rblock com Also take credit for any excess social security or railroad retirement tax withheld (discussed in chapter 37). Www h&rblock com Underpayment penalty. Www h&rblock com If you did not pay enough tax during the year, either through withholding or by making estimated tax payments, you may have to pay a penalty. Www h&rblock com In most cases, the IRS can figure this penalty for you. Www h&rblock com See Underpayment Penalty for 2013 at the end of this chapter. Www h&rblock com Useful Items - You may want to see: Publication 505 Tax Withholding and Estimated Tax Form (and Instructions) W-4 Employee's Withholding Allowance Certificate W-4P Withholding Certificate for Pension or Annuity Payments W-4S Request for Federal Income Tax Withholding From Sick Pay W-4V Voluntary Withholding Request 1040-ES Estimated Tax for Individuals 2210 Underpayment of Estimated Tax by Individuals, Estates, and Trusts 2210-F Underpayment of Estimated Tax by Farmers and Fishermen Tax Withholding for 2014 This section discusses income tax withholding on: Salaries and wages, Tips, Taxable fringe benefits, Sick pay, Pensions and annuities, Gambling winnings, Unemployment compensation, and Certain federal payments. Www h&rblock com This section explains the rules for withholding tax from each of these types of income. Www h&rblock com This section also covers backup withholding on interest, dividends, and other payments. Www h&rblock com Salaries and Wages Income tax is withheld from the pay of most employees. Www h&rblock com Your pay includes your regular pay, bonuses, commissions, and vacation allowances. Www h&rblock com It also includes reimbursements and other expense allowances paid under a nonaccountable plan. Www h&rblock com See Supplemental Wages , later, for more information about reimbursements and allowances paid under a nonaccountable plan. Www h&rblock com If your income is low enough that you will not have to pay income tax for the year, you may be exempt from withholding. Www h&rblock com This is explained under Exemption From Withholding , later. Www h&rblock com You can ask your employer to withhold income tax from noncash wages and other wages not subject to withholding. Www h&rblock com If your employer does not agree to withhold tax, or if not enough is withheld, you may have to pay estimated tax, as discussed later under Estimated Tax for 2014 . Www h&rblock com Military retirees. Www h&rblock com   Military retirement pay is treated in the same manner as regular pay for income tax withholding purposes, even though it is treated as a pension or annuity for other tax purposes. Www h&rblock com Household workers. Www h&rblock com   If you are a household worker, you can ask your employer to withhold income tax from your pay. Www h&rblock com A household worker is an employee who performs household work in a private home, local college club, or local fraternity or sorority chapter. Www h&rblock com   Tax is withheld only if you want it withheld and your employer agrees to withhold it. Www h&rblock com If you do not have enough income tax withheld, you may have to pay estimated tax, as discussed later under Estimated Tax for 2014 . Www h&rblock com Farmworkers. Www h&rblock com   Generally, income tax is withheld from your cash wages for work on a farm unless your employer does both of these: Pays you cash wages of less than $150 during the year, and Has expenditures for agricultural labor totaling less than $2,500 during the year. Www h&rblock com Differential wage payments. Www h&rblock com    When employees are on leave from employment for military duty, some employers make up the difference between the military pay and civilian pay. Www h&rblock com Payments to an employee who is on active duty for a period of more than 30 days will be subject to income tax withholding, but not subject to social security or Medicare taxes. Www h&rblock com The wages and withholding will be reported on Form W-2, Wage and Tax Statement. Www h&rblock com   The credit employers can claim for differential wages paid to activated military reservists is scheduled to expire for wages paid after December 31, 2013. Www h&rblock com Determining Amount of Tax Withheld Using Form W-4 The amount of income tax your employer withholds from your regular pay depends on two things. Www h&rblock com The amount you earn in each payroll period. Www h&rblock com The information you give your employer on Form W-4. Www h&rblock com Form W-4 includes four types of information that your employer will use to figure your withholding. Www h&rblock com Whether to withhold at the single rate or at the lower married rate. Www h&rblock com How many withholding allowances you claim (each allowance reduces the amount withheld). Www h&rblock com Whether you want an additional amount withheld. Www h&rblock com Whether you are claiming an exemption from withholding in 2014. Www h&rblock com See Exemption From Withholding , later. Www h&rblock com Note. Www h&rblock com You must specify a filing status and a number of withholding allowances on Form W-4. Www h&rblock com You cannot specify only a dollar amount of withholding. Www h&rblock com New Job When you start a new job, you must fill out Form W-4 and give it to your employer. Www h&rblock com Your employer should have copies of the form. Www h&rblock com If you need to change the information later, you must fill out a new form. Www h&rblock com If you work only part of the year (for example, you start working after the beginning of the year), too much tax may be withheld. Www h&rblock com You may be able to avoid overwithholding if your employer agrees to use the part-year method. Www h&rblock com See Part-Year Method in chapter 1 of Publication 505 for more information. Www h&rblock com Employee also receiving pension income. Www h&rblock com   If you receive pension or annuity income and begin a new job, you will need to file Form W-4 with your new employer. Www h&rblock com However, you can choose to split your withholding allowances between your pension and job in any manner. Www h&rblock com Changing Your Withholding During the year changes may occur to your marital status, exemptions, adjustments, deductions, or credits you expect to claim on your tax return. Www h&rblock com When this happens, you may need to give your employer a new Form W-4 to change your withholding status or your number of allowances. Www h&rblock com If the changes reduce the number of allowances you are claiming or changes your marital status from married to single, you must give your employer a new Form W-4 within 10 days. Www h&rblock com Generally, you can submit a new Form W-4 whenever you wish to change the number of your withholding allowances for any other reason. Www h&rblock com Changing your withholding for 2015. Www h&rblock com   If events in 2014 will decrease the number of your withholding allowances for 2015, you must give your employer a new Form W-4 by December 1, 2014. Www h&rblock com If the event occurs in December 2014, submit a new Form W-4 within 10 days. Www h&rblock com Checking Your Withholding After you have given your employer a Form W-4, you can check to see whether the amount of tax withheld from your pay is too little or too much. Www h&rblock com If too much or too little tax is being withheld, you should give your employer a new Form W-4 to change your withholding. Www h&rblock com You should try to have your withholding match your actual tax liability. Www h&rblock com If not enough tax is withheld, you will owe tax at the end of the year and may have to pay interest and a penalty. Www h&rblock com If too much tax is withheld, you will lose the use of that money until you get your refund. Www h&rblock com Always check your withholding if there are personal or financial changes in your life or changes in the law that might change your tax liability. Www h&rblock com Note. Www h&rblock com You cannot give your employer a payment to cover withholding on salaries and wages for past pay periods or a payment for estimated tax. Www h&rblock com Completing Form W-4 and Worksheets Form W-4 has worksheets to help you figure how many withholding allowances you can claim. Www h&rblock com The worksheets are for your own records. Www h&rblock com Do not give them to your employer. Www h&rblock com Multiple jobs. Www h&rblock com   If you have income from more than one job at the same time, complete only one set of Form W-4 worksheets. Www h&rblock com Then split your allowances between the Forms W-4 for each job. Www h&rblock com You cannot claim the same allowances with more than one employer at the same time. Www h&rblock com You can claim all your allowances with one employer and none with the other(s), or divide them any other way. Www h&rblock com Married individuals. Www h&rblock com   If both you and your spouse are employed and expect to file a joint return, figure your withholding allowances using your combined income, adjustments, deductions, exemptions, and credits. Www h&rblock com Use only one set of worksheets. Www h&rblock com You can divide your total allowances any way, but you cannot claim an allowance that your spouse also claims. Www h&rblock com   If you and your spouse expect to file separate returns, figure your allowances using separate worksheets based on your own individual income, adjustments, deductions, exemptions, and credits. Www h&rblock com Alternative method of figuring withholding allowances. Www h&rblock com   You do not have to use the Form W-4 worksheets if you use a more accurate method of figuring the number of withholding allowances. Www h&rblock com For more information, see Alternative method of figuring withholding allowances under Completing Form W-4 and Worksheets in Publication 505, chapter 1. Www h&rblock com Personal Allowances Worksheet. Www h&rblock com   Use the Personal Allowances Worksheet on Form W-4 to figure your withholding allowances based on exemptions and any special allowances that apply. Www h&rblock com Deduction and Adjustments Worksheet. Www h&rblock com   Use the Deduction and Adjustments Worksheet on Form W-4 if you plan to itemize your deductions, claim certain credits, or claim adjustments to the income on your 2014 tax return and you want to reduce your withholding. Www h&rblock com Also, complete this worksheet when you have changes to these items to see if you need to change your withholding. Www h&rblock com Two-Earners/Multiple Jobs Worksheet. Www h&rblock com   You may need to complete the Two-Earners/Multiple Jobs Worksheet on Form W-4 if you have more than one job, a working spouse, or are also receiving a pension. Www h&rblock com Also, on this worksheet you can add any additional withholding necessary to cover any amount you expect to owe other than income tax, such as self-employment tax. Www h&rblock com Getting the Right Amount of Tax Withheld In most situations, the tax withheld from your pay will be close to the tax you figure on your return if you follow these two rules. Www h&rblock com You accurately complete all the Form W-4 worksheets that apply to you. Www h&rblock com You give your employer a new Form W-4 when changes occur. Www h&rblock com But because the worksheets and withholding methods do not account for all possible situations, you may not be getting the right amount withheld. Www h&rblock com This is most likely to happen in the following situations. Www h&rblock com You are married and both you and your spouse work. Www h&rblock com You have more than one job at a time. Www h&rblock com You have nonwage income, such as interest, dividends, alimony, unemployment compensation, or self-employment income. Www h&rblock com You will owe additional amounts with your return, such as self-employment tax. Www h&rblock com Your withholding is based on obsolete Form W-4 information for a substantial part of the year. Www h&rblock com Your earnings are more than the amount shown under Check your withholding in the instructions at the top of page 1 of Form W-4. Www h&rblock com You work only part of the year. Www h&rblock com You change the number of your withholding allowances during the year. Www h&rblock com Cumulative wage method. Www h&rblock com   If you change the number of your withholding allowances during the year, too much or too little tax may have been withheld for the period before you made the change. Www h&rblock com You may be able to compensate for this if your employer agrees to use the cumulative wage withholding method for the rest of the year. Www h&rblock com You must ask your employer in writing to use this method. Www h&rblock com   To be eligible, you must have been paid for the same kind of payroll period (weekly, biweekly, etc. Www h&rblock com ) since the beginning of the year. Www h&rblock com Publication 505 To make sure you are getting the right amount of tax withheld, get Publication 505. Www h&rblock com It will help you compare the total tax to be withheld during the year with the tax you can expect to figure on your return. Www h&rblock com It also will help you determine how much, if any, additional withholding is needed each payday to avoid owing tax when you file your return. Www h&rblock com If you do not have enough tax withheld, you may have to pay estimated tax, as explained under Estimated Tax for 2014 , later. Www h&rblock com You can use the IRS Withholding Calculator at www. Www h&rblock com irs. Www h&rblock com gov/Individuals, instead of Publication 505 or the worksheets included with Form W-4, to determine whether you need to have your withholding increased or decreased. Www h&rblock com Rules Your Employer Must Follow It may be helpful for you to know some of the withholding rules your employer must follow. Www h&rblock com These rules can affect how to fill out your Form W-4 and how to handle problems that may arise. Www h&rblock com New Form W-4. Www h&rblock com   When you start a new job, your employer should have you complete a Form W-4. Www h&rblock com Beginning with your first payday, your employer will use the information you give on the form to figure your withholding. Www h&rblock com   If you later fill out a new Form W-4, your employer can put it into effect as soon as possible. Www h&rblock com The deadline for putting it into effect is the start of the first payroll period ending 30 or more days after you turn it in. Www h&rblock com No Form W-4. Www h&rblock com   If you do not give your employer a completed Form W-4, your employer must withhold at the highest rate, as if you were single and claimed no withholding allowances. Www h&rblock com Repaying withheld tax. Www h&rblock com   If you find you are having too much tax withheld because you did not claim all the withholding allowances you are entitled to, you should give your employer a new Form W-4. Www h&rblock com Your employer cannot repay any of the tax previously withheld. Www h&rblock com Instead, claim the full amount withheld when you file your tax return. Www h&rblock com   However, if your employer has withheld more than the correct amount of tax for the Form W-4 you have in effect, you do not have to fill out a new Form W-4 to have your withholding lowered to the correct amount. Www h&rblock com Your employer can repay the amount that was withheld incorrectly. Www h&rblock com If you are not repaid, your Form W-2 will reflect the full amount actually withheld, which you would claim when you file your tax return. Www h&rblock com Exemption From Withholding If you claim exemption from withholding, your employer will not withhold federal income tax from your wages. Www h&rblock com The exemption applies only to income tax, not to social security or Medicare tax. Www h&rblock com You can claim exemption from withholding for 2014 only if both of the following situations apply. Www h&rblock com For 2013 you had a right to a refund of all federal income tax withheld because you had no tax liability. Www h&rblock com For 2014 you expect a refund of all federal income tax withheld because you expect to have no tax liability. Www h&rblock com Students. Www h&rblock com   If you are a student, you are not automatically exempt. Www h&rblock com See chapter 1 to find out if you must file a return. Www h&rblock com If you work only part time or only during the summer, you may qualify for exemption from withholding. Www h&rblock com Age 65 or older or blind. Www h&rblock com   If you are 65 or older or blind, use Worksheet 1-3 or 1-4 in chapter 1 of Publication 505, to help you decide if you qualify for exemption from withholding. Www h&rblock com Do not use either worksheet if you will itemize deductions, claim exemptions for dependents, or claim tax credits on your 2014 return. Www h&rblock com Instead, see Itemizing deductions or claiming exemptions or credits in chapter 1 of Publication 505. Www h&rblock com Claiming exemption from withholding. Www h&rblock com   To claim exemption, you must give your employer a Form W-4. Www h&rblock com Do not complete lines 5 and 6. Www h&rblock com Enter “Exempt” on line 7. Www h&rblock com   If you claim exemption, but later your situation changes so that you will have to pay income tax after all, you must file a new Form W-4 within 10 days after the change. Www h&rblock com If you claim exemption in 2014, but you expect to owe income tax for 2015, you must file a new Form W-4 by December 1, 2014. Www h&rblock com   Your claim of exempt status may be reviewed by the IRS. Www h&rblock com An exemption is good for only 1 year. Www h&rblock com   You must give your employer a new Form W-4 by February 15 each year to continue your exemption. Www h&rblock com Supplemental Wages Supplemental wages include bonuses, commissions, overtime pay, vacation allowances, certain sick pay, and expense allowances under certain plans. Www h&rblock com The payer can figure withholding on supplemental wages using the same method used for your regular wages. Www h&rblock com However, if these payments are identified separately from your regular wages, your employer or other payer of supplemental wages can withhold income tax from these wages at a flat rate. Www h&rblock com Expense allowances. Www h&rblock com   Reimbursements or other expense allowances paid by your employer under a nonaccountable plan are treated as supplemental wages. Www h&rblock com   Reimbursements or other expense allowances paid under an accountable plan that are more than your proven expenses are treated as paid under a nonaccountable plan if you do not return the excess payments within a reasonable period of time. Www h&rblock com   For more information about accountable and nonaccountable expense allowance plans, see Reimbursements in chapter 26. Www h&rblock com Penalties You may have to pay a penalty of $500 if both of the following apply. Www h&rblock com You make statements or claim withholding allowances on your Form W-4 that reduce the amount of tax withheld. Www h&rblock com You have no reasonable basis for those statements or allowances at the time you prepare your Form W-4. Www h&rblock com There is also a criminal penalty for willfully supplying false or fraudulent information on your Form W-4 or for willfully failing to supply information that would increase the amount withheld. Www h&rblock com The penalty upon conviction can be either a fine of up to $1,000 or imprisonment for up to 1 year, or both. Www h&rblock com These penalties will apply if you deliberately and knowingly falsify your Form W-4 in an attempt to reduce or eliminate the proper withholding of taxes. Www h&rblock com A simple error or an honest mistake will not result in one of these penalties. Www h&rblock com For example, a person who has tried to figure the number of withholding allowances correctly, but claims seven when the proper number is six, will not be charged a W-4 penalty. Www h&rblock com Tips The tips you receive while working on your job are considered part of your pay. Www h&rblock com You must include your tips on your tax return on the same line as your regular pay. Www h&rblock com However, tax is not withheld directly from tip income, as it is from your regular pay. Www h&rblock com Nevertheless, your employer will take into account the tips you report when figuring how much to withhold from your regular pay. Www h&rblock com See chapter 6 for information on reporting your tips to your employer. Www h&rblock com For more information on the withholding rules for tip income, see Publication 531, Reporting Tip Income. Www h&rblock com How employer figures amount to withhold. Www h&rblock com   The tips you report to your employer are counted as part of your income for the month you report them. Www h&rblock com Your employer can figure your withholding in either of two ways. Www h&rblock com By withholding at the regular rate on the sum of your pay plus your reported tips. Www h&rblock com By withholding at the regular rate on your pay plus a percentage of your reported tips. Www h&rblock com Not enough pay to cover taxes. Www h&rblock com   If your regular pay is not enough for your employer to withhold all the tax (including income tax and social security and Medicare taxes (or the equivalent railroad retirement tax)) due on your pay plus your tips, you can give your employer money to cover the shortage. Www h&rblock com See Giving your employer money for taxes in chapter 6. Www h&rblock com Allocated tips. Www h&rblock com   Your employer should not withhold income tax, Medicare tax, social security tax, or railroad retirement tax on any allocated tips. Www h&rblock com Withholding is based only on your pay plus your reported tips. Www h&rblock com Your employer should refund to you any incorrectly withheld tax. Www h&rblock com See Allocated Tips in chapter 6 for more information. Www h&rblock com Taxable Fringe Benefits The value of certain noncash fringe benefits you receive from your employer is considered part of your pay. Www h&rblock com Your employer generally must withhold income tax on these benefits from your regular pay. Www h&rblock com For information on fringe benefits, see Fringe Benefits under Employee Compensation in chapter 5. Www h&rblock com Although the value of your personal use of an employer-provided car, truck, or other highway motor vehicle is taxable, your employer can choose not to withhold income tax on that amount. Www h&rblock com Your employer must notify you if this choice is made. Www h&rblock com For more information on withholding on taxable fringe benefits, see chapter 1 of Publication 505. Www h&rblock com Sick Pay Sick pay is a payment to you to replace your regular wages while you are temporarily absent from work due to sickness or personal injury. Www h&rblock com To qualify as sick pay, it must be paid under a plan to which your employer is a party. Www h&rblock com If you receive sick pay from your employer or an agent of your employer, income tax must be withheld. Www h&rblock com An agent who does not pay regular wages to you may choose to withhold income tax at a flat rate. Www h&rblock com However, if you receive sick pay from a third party who is not acting as an agent of your employer, income tax will be withheld only if you choose to have it withheld. Www h&rblock com See Form W-4S , later. Www h&rblock com If you receive payments under a plan in which your employer does not participate (such as an accident or health plan where you paid all the premiums), the payments are not sick pay and usually are not taxable. Www h&rblock com Union agreements. Www h&rblock com   If you receive sick pay under a collective bargaining agreement between your union and your employer, the agreement may determine the amount of income tax withholding. Www h&rblock com See your union representative or your employer for more information. Www h&rblock com Form W-4S. Www h&rblock com   If you choose to have income tax withheld from sick pay paid by a third party, such as an insurance company, you must fill out Form W-4S. Www h&rblock com Its instructions contain a worksheet you can use to figure the amount you want withheld. Www h&rblock com They also explain restrictions that may apply. Www h&rblock com   Give the completed form to the payer of your sick pay. Www h&rblock com The payer must withhold according to your directions on the form. Www h&rblock com Estimated tax. Www h&rblock com   If you do not request withholding on Form W-4S, or if you do not have enough tax withheld, you may have to make estimated tax payments. Www h&rblock com If you do not pay enough tax, either through estimated tax or withholding, or a combination of both, you may have to pay a penalty. Www h&rblock com See Underpayment Penalty for 2013 at the end of this chapter. Www h&rblock com Pensions and Annuities Income tax usually will be withheld from your pension or annuity distributions unless you choose not to have it withheld. Www h&rblock com This rule applies to distributions from: A traditional individual retirement arrangement (IRA); A life insurance company under an endowment, annuity, or life insurance contract; A pension, annuity, or profit-sharing plan; A stock bonus plan; and Any other plan that defers the time you receive compensation. Www h&rblock com The amount withheld depends on whether you receive payments spread out over more than 1 year (periodic payments), within 1 year (nonperiodic payments), or as an eligible rollover distribution (ERD). Www h&rblock com Income tax withholding from an ERD is mandatory. Www h&rblock com More information. Www h&rblock com   For more information on taxation of annuities and distributions (including ERDs) from qualified retirement plans, see chapter 10. Www h&rblock com For information on IRAs, see chapter 17. Www h&rblock com For more information on withholding on pensions and annuities, including a discussion of Form W-4P, see Pensions and Annuities in chapter 1 of Publication 505. Www h&rblock com Gambling Winnings Income tax is withheld at a flat 25% rate from certain kinds of gambling winnings. Www h&rblock com Gambling winnings of more than $5,000 from the following sources are subject to income tax withholding. Www h&rblock com Any sweepstakes; wagering pool, including payments made to winners of poker tournaments; or lottery. Www h&rblock com Any other wager, if the proceeds are at least 300 times the amount of the bet. Www h&rblock com It does not matter whether your winnings are paid in cash, in property, or as an annuity. Www h&rblock com Winnings not paid in cash are taken into account at their fair market value. Www h&rblock com Exception. Www h&rblock com   Gambling winnings from bingo, keno, and slot machines generally are not subject to income tax withholding. Www h&rblock com However, you may need to provide the payer with a social security number to avoid withholding. Www h&rblock com See Backup withholding on gambling winnings in chapter 1 of Publication 505. Www h&rblock com If you receive gambling winnings not subject to withholding, you may need to pay estimated tax. Www h&rblock com See Estimated Tax for 2014 , later. Www h&rblock com If you do not pay enough tax, either through withholding or estimated tax, or a combination of both, you may have to pay a penalty. Www h&rblock com See Underpayment Penalty for 2013 at the end of this chapter. Www h&rblock com Form W-2G. Www h&rblock com   If a payer withholds income tax from your gambling winnings, you should receive a Form W-2G, Certain Gambling Winnings, showing the amount you won and the amount withheld. Www h&rblock com Report the tax withheld on line 62 of Form 1040. Www h&rblock com Unemployment Compensation You can choose to have income tax withheld from unemployment compensation. Www h&rblock com To make this choice, fill out Form W-4V (or a similar form provided by the payer) and give it to the payer. Www h&rblock com All unemployment compensation is taxable. Www h&rblock com So, if you do not have income tax withheld, you may have to pay estimated tax. Www h&rblock com See Estimated Tax for 2014 , later. Www h&rblock com If you do not pay enough tax, either through withholding or estimated tax, or a combination of both, you may have to pay a penalty. Www h&rblock com For information, see Underpayment Penalty for 2013 at the end of this chapter. Www h&rblock com Federal Payments You can choose to have income tax withheld from certain federal payments you receive. Www h&rblock com These payments are: Social security benefits, Tier 1 railroad retirement benefits, Commodity credit corporation loans you choose to include in your gross income, Payments under the Agricultural Act of 1949 (7 U. Www h&rblock com S. Www h&rblock com C. Www h&rblock com 1421 et. Www h&rblock com seq. Www h&rblock com ), as amended, or title II of the Disaster Assistance Act of 1988, that are treated as insurance proceeds and that you receive because: Your crops were destroyed or damaged by drought, flood, or any other natural disaster, or You were unable to plant crops because of a natural disaster described in (a), and Any other payment under Federal law as determined by the Secretary. Www h&rblock com To make this choice, fill out Form W-4V (or a similar form provided by the payer) and give it to the payer. Www h&rblock com If you do not choose to have income tax withheld, you may have to pay estimated tax. Www h&rblock com See Estimated Tax for 2014 , later. Www h&rblock com If you do not pay enough tax, either through withholding or estimated tax, or a combination of both, you may have to pay a penalty. Www h&rblock com For information, see Underpayment Penalty for 2013 at the end of this chapter. Www h&rblock com More information. Www h&rblock com   For more information about the tax treatment of social security and railroad retirement benefits, see chapter 11. Www h&rblock com Get Publication 225, Farmer's Tax Guide, for information about the tax treatment of commodity credit corporation loans or crop disaster payments. Www h&rblock com Backup Withholding Banks or other businesses that pay you certain kinds of income must file an information return (Form 1099) with the IRS. Www h&rblock com The information return shows how much you were paid during the year. Www h&rblock com It also includes your name and taxpayer identification number (TIN). Www h&rblock com TINs are explained in chapter 1 under Social Security Number (SSN) . Www h&rblock com These payments generally are not subject to withholding. Www h&rblock com However, “backup” withholding is required in certain situations. Www h&rblock com Backup withholding can apply to most kinds of payments that are reported on Form 1099. Www h&rblock com The payer must withhold at a flat 28% rate in the following situations. Www h&rblock com You do not give the payer your TIN in the required manner. Www h&rblock com The IRS notifies the payer that the TIN you gave is incorrect. Www h&rblock com You are required, but fail, to certify that you are not subject to backup withholding. Www h&rblock com The IRS notifies the payer to start withholding on interest or dividends because you have underreported interest or dividends on your income tax return. Www h&rblock com The IRS will do this only after it has mailed you four notices over at least a 210-day period. Www h&rblock com See Backup Withholding in chapter 1 of Publication 505 for more information. Www h&rblock com Penalties. Www h&rblock com   There are civil and criminal penalties for giving false information to avoid backup withholding. Www h&rblock com The civil penalty is $500. Www h&rblock com The criminal penalty, upon conviction, is a fine of up to $1,000 or imprisonment of up to 1 year, or both. Www h&rblock com Estimated Tax for 2014 Estimated tax is the method used to pay tax on income that is not subject to withholding. Www h&rblock com This includes income from self-employment, interest, dividends, alimony, rent, gains from the sale of assets, prizes, and awards. Www h&rblock com You also may have to pay estimated tax if the amount of income tax being withheld from your salary, pension, or other income is not enough. Www h&rblock com Estimated tax is used to pay both income tax and self-employment tax, as well as other taxes and amounts reported on your tax return. Www h&rblock com If you do not pay enough tax, either through withholding or estimated tax, or a combination of both, you may have to pay a penalty. Www h&rblock com If you do not pay enough by the due date of each payment period (see When To Pay Estimated Tax , later), you may be charged a penalty even if you are due a refund when you file your tax return. Www h&rblock com For information on when the penalty applies, see Underpayment Penalty for 2013 at the end of this chapter. Www h&rblock com Who Does Not Have To Pay Estimated Tax If you receive salaries or wages, you can avoid having to pay estimated tax by asking your employer to take more tax out of your earnings. Www h&rblock com To do this, give a new Form W-4 to your employer. Www h&rblock com See chapter 1 of Publication 505. Www h&rblock com Estimated tax not required. Www h&rblock com   You do not have to pay estimated tax for 2014 if you meet all three of the following conditions. Www h&rblock com You had no tax liability for 2013. Www h&rblock com You were a U. Www h&rblock com S. Www h&rblock com citizen or resident alien for the whole year. Www h&rblock com Your 2013 tax year covered a 12-month period. Www h&rblock com   You had no tax liability for 2013 if your total tax was zero or you did not have to file an income tax return. Www h&rblock com For the definition of “total tax” for 2013, see Publication 505, chapter 2. Www h&rblock com Who Must Pay Estimated Tax If you owe additional tax for 2013, you may have to pay estimated tax for 2014. Www h&rblock com You can use the following general rule as a guide during the year to see if you will have enough withholding, or if you should increase your withholding or make estimated tax payments. Www h&rblock com General rule. Www h&rblock com   In most cases, you must pay estimated tax for 2014 if both of the following apply. Www h&rblock com You expect to owe at least $1,000 in tax for 2014, after subtracting your withholding and refundable credits. Www h&rblock com You expect your withholding plus your refundable credits to be less than the smaller of: 90% of the tax to be shown on your 2014 tax return, or 100% of the tax shown on your 2013 tax return (but see Special rules for farmers, fishermen, and higher income taxpayers, later). Www h&rblock com Your 2013 tax return must cover all 12 months. Www h&rblock com    If the result from using the general rule above suggests that you will not have enough withholding, complete the 2014 Estimated Tax Worksheet in Publication 505 for a more accurate calculation. Www h&rblock com Special rules for farmers, fishermen, and higher income taxpayers. Www h&rblock com   If at least two-thirds of your gross income for tax year 2013 or 2014 is from farming or fishing, substitute 662/3% for 90% in (2a) under the General rule, earlier. Www h&rblock com If your AGI for 2013 was more than $150,000 ($75,000 if your filing status for 2014 is married filing a separate return), substitute 110% for 100% in (2b) under General rule , earlier. Www h&rblock com See Figure 4-A and Publication 505, chapter 2 for more information. Www h&rblock com Figure 4-A. Www h&rblock com Do You Have To Pay Estimated Tax? Please click here for the text description of the image. Www h&rblock com Figure 4-A Do You Have To Pay Estimated Tax? Aliens. Www h&rblock com   Resident and nonresident aliens also may have to pay estimated tax. Www h&rblock com Resident aliens should follow the rules in this chapter unless noted otherwise. Www h&rblock com Nonresident aliens should get Form 1040-ES (NR), U. Www h&rblock com S. Www h&rblock com Estimated Tax for Nonresident Alien Individuals. Www h&rblock com   You are an alien if you are not a citizen or national of the United States. Www h&rblock com You are a resident alien if you either have a green card or meet the substantial presence test. Www h&rblock com For more information about the substantial presence test, see Publication 519, U. Www h&rblock com S. Www h&rblock com Tax Guide for Aliens. Www h&rblock com Married taxpayers. Www h&rblock com   If you qualify to make joint estimated tax payments, apply the rules discussed here to your joint estimated income. Www h&rblock com   You and your spouse can make joint estimated tax payments even if you are not living together. Www h&rblock com   However, you and your spouse cannot make joint estimated tax payments if:  You are legally separated under a decree of divorce or separate maintenance, You and your spouse have different tax years, or Either spouse is a nonresident alien (unless that spouse elected to be treated as a resident alien for tax purposes (see chapter 1 of Publication 519)). Www h&rblock com   If you do not qualify to make joint estimated tax payments, apply these rules to your separate estimated income. Www h&rblock com Making joint or separate estimated tax payments will not affect your choice of filing a joint tax return or separate returns for 2014. Www h&rblock com 2013 separate returns and 2014 joint return. Www h&rblock com   If you plan to file a joint return with your spouse for 2014, but you filed separate returns for 2013, your 2013 tax is the total of the tax shown on your separate returns. Www h&rblock com You filed a separate return if you filed as single, head of household, or married filing separately. Www h&rblock com 2013 joint return and 2014 separate returns. Www h&rblock com   If you plan to file a separate return for 2014 but you filed a joint return for 2013, your 2013 tax is your share of the tax on the joint return. Www h&rblock com You file a separate return if you file as single, head of household, or married filing separately. Www h&rblock com   To figure your share of the tax on the joint return, first figure the tax both you and your spouse would have paid had you filed separate returns for 2013 using the same filing status as for 2014. Www h&rblock com Then multiply the tax on the joint return by the following fraction. Www h&rblock com     The tax you would have paid had you filed a separate return   The total tax you and your spouse would have paid had you filed separate returns Example. Www h&rblock com Joe and Heather filed a joint return for 2013 showing taxable income of $48,500 and a tax of $6,386. Www h&rblock com Of the $48,500 taxable income, $40,100 was Joe's and the rest was Heather's. Www h&rblock com For 2014, they plan to file married filing separately. Www h&rblock com Joe figures his share of the tax on the 2013 joint return as follows. Www h&rblock com   Tax on $40,100 based on a separate return $5,960     Tax on $8,400 based on a separate return 843     Total $6,803     Joe's percentage of total ($5,960 ÷ $6,803) 87. Www h&rblock com 6%     Joe's share of tax on joint return  ($6,386 × 87. Www h&rblock com 6%) $5,594   How To Figure Estimated Tax To figure your estimated tax, you must figure your expected adjusted gross income (AGI), taxable income, taxes, deductions, and credits for the year. Www h&rblock com When figuring your 2014 estimated tax, it may be helpful to use your income, deductions, and credits for 2013 as a starting point. Www h&rblock com Use your 2013 federal tax return as a guide. Www h&rblock com You can use Form 1040-ES and Publication 505 to figure your estimated tax. Www h&rblock com Nonresident aliens use Form 1040-ES (NR) and Publication 505 to figure estimated tax (see chapter 8 of Publication 519 for more information). Www h&rblock com You must make adjustments both for changes in your own situation and for recent changes in the tax law. Www h&rblock com For a discussion of these changes, visit IRS. Www h&rblock com gov. Www h&rblock com For more complete information on how to figure your estimated tax for 2014, see chapter 2 of Publication 505. Www h&rblock com When To Pay Estimated Tax For estimated tax purposes, the tax year is divided into four payment periods. Www h&rblock com Each period has a specific payment due date. Www h&rblock com If you do not pay enough tax by the due date of each payment period, you may be charged a penalty even if you are due a refund when you file your income tax return. Www h&rblock com The payment periods and due dates for estimated tax payments are shown next. Www h&rblock com   For the period: Due date:*     Jan. Www h&rblock com 1 – March 31 April 15     April 1 – May 31 June 16     June 1 – August 31 Sept. Www h&rblock com 15     Sept. Www h&rblock com 1– Dec. Www h&rblock com 31 Jan. Www h&rblock com 15, next year     *See Saturday, Sunday, holiday rule and January payment . Www h&rblock com Saturday, Sunday, holiday rule. Www h&rblock com   If the due date for an estimated tax payment falls on a Saturday, Sunday, or legal holiday, the payment will be on time if you make it on the next day that is not a Saturday, Sunday, or legal holiday. Www h&rblock com January payment. Www h&rblock com   If you file your 2014 Form 1040 or Form 1040A by January 31, 2015, and pay the rest of the tax you owe, you do not need to make the payment due on January 15, 2015. Www h&rblock com Fiscal year taxpayers. Www h&rblock com   If your tax year does not start on January 1, see the Form 1040-ES instructions for your payment due dates. Www h&rblock com When To Start You do not have to make estimated tax payments until you have income on which you will owe income tax. Www h&rblock com If you have income subject to estimated tax during the first payment period, you must make your first payment by the due date for the first payment period. Www h&rblock com You can pay all your estimated tax at that time, or you can pay it in installments. Www h&rblock com If you choose to pay in installments, make your first payment by the due date for the first payment period. Www h&rblock com Make your remaining installment payments by the due dates for the later periods. Www h&rblock com No income subject to estimated tax during first period. Www h&rblock com    If you do not have income subject to estimated tax until a later payment period, you must make your first payment by the due date for that period. Www h&rblock com You can pay your entire estimated tax by the due date for that period or you can pay it in installments by the due date for that period and the due dates for the remaining periods. Www h&rblock com The following chart shows when to make installment payments. Www h&rblock com If you first have income on which you must pay estimated tax: Make a payment  by:* Make later installments by:* Before April 1 April 15 June 16 Sept. Www h&rblock com 15 Jan. Www h&rblock com 15 next year April 1–May 31 June 16 Sept. Www h&rblock com 15 Jan. Www h&rblock com 15 next year June 1–Aug. Www h&rblock com 31 Sept. Www h&rblock com 15 Jan. Www h&rblock com 15 next year After Aug. Www h&rblock com 31 Jan. Www h&rblock com 15 next year (None) *See Saturday, Sunday, holiday rule and January payment . Www h&rblock com How much to pay to avoid a penalty. Www h&rblock com   To determine how much you should pay by each payment due date, see How To Figure Each Payment, next. Www h&rblock com How To Figure Each Payment You should pay enough estimated tax by the due date of each payment period to avoid a penalty for that period. Www h&rblock com You can figure your required payment for each period by using either the regular installment method or the annualized income installment method. Www h&rblock com These methods are described in chapter 2 of Publication 505. Www h&rblock com If you do not pay enough during each payment period, you may be charged a penalty even if you are due a refund when you file your tax return. Www h&rblock com If the earlier discussion of No income subject to estimated tax during first period or the later discussion of Change in estimated tax applies to you, you may benefit from reading Annualized Income Installment Method in chapter 2 of Publication 505 for information on how to avoid a penalty. Www h&rblock com Underpayment penalty. Www h&rblock com   Under the regular installment method, if your estimated tax payment for any period is less than one-fourth of your estimated tax, you may be charged a penalty for underpayment of estimated tax for that period when you file your tax return. Www h&rblock com Under the annualized income installment method, your estimated tax payments vary with your income, but the amount required must be paid each period. Www h&rblock com See chapter 4 of Publication 505 for more information. Www h&rblock com Change in estimated tax. Www h&rblock com   After you make an estimated tax payment, changes in your income, adjustments, deductions, credits, or exemptions may make it necessary for you to refigure your estimated tax. Www h&rblock com Pay the unpaid balance of your amended estimated tax by the next payment due date after the change or in installments by that date and the due dates for the remaining payment periods. Www h&rblock com Estimated Tax Payments Not Required You do not have to pay estimated tax if your withholding in each payment period is at least as much as: One-fourth of your required annual payment, or Your required annualized income installment for that period. Www h&rblock com You also do not have to pay estimated tax if you will pay enough through withholding to keep the amount you owe with your return under $1,000. Www h&rblock com How To Pay Estimated Tax There are several ways to pay estimated tax. Www h&rblock com Credit an overpayment on your 2013 return to your 2014 estimated tax. Www h&rblock com Pay by direct transfer from your bank account, or pay by credit or debit card using a pay-by-phone system or the Internet. Www h&rblock com Send in your payment (check or money order) with a payment voucher from Form 1040-ES. Www h&rblock com Credit an Overpayment If you show an overpayment of tax after completing your Form 1040 or Form 1040A for 2013, you can apply part or all of it to your estimated tax for 2014. Www h&rblock com On line 75 of Form 1040, or line 44 of Form 1040A, enter the amount you want credited to your estimated tax rather than refunded. Www h&rblock com Take the amount you have credited into account when figuring your estimated tax payments. Www h&rblock com You cannot have any of the amount you credited to your estimated tax refunded to you until you file your tax return for the following year. Www h&rblock com You also cannot use that overpayment in any other way. Www h&rblock com Pay Online Paying online is convenient and secure and helps make sure we get your payments on time. Www h&rblock com You can pay using either of the following electronic payment methods. Www h&rblock com Direct transfer from your bank account. Www h&rblock com Credit or debit card. Www h&rblock com To pay your taxes online or for more information, go to www. Www h&rblock com irs. Www h&rblock com gov/e-pay. Www h&rblock com Pay by Phone Paying by phone is another safe and secure method of paying electronically. Www h&rblock com Use one of the following methods. Www h&rblock com Direct transfer from your bank account. Www h&rblock com Credit or debit card. Www h&rblock com To pay by direct transfer from your bank account, call 1-800-555-4477 (English), 1-800-244-4829 (Espanol). Www h&rblock com People who are deaf, hard of hearing, or have a speech disability and who have access to TTY/TDD can call 1-800-733-4829. Www h&rblock com To pay using a credit or debit card, you can call one of the following service providers. Www h&rblock com There is a convenience fee charged by these providers that varies by provider, card type, and payment amount. Www h&rblock com WorldPay 1-888-9-PAY-TAXTM(1-888-972-9829) www. Www h&rblock com payUSAtax. Www h&rblock com com Official Payments Corporation 1-888-UPAY-TAXTM (1-888-872-9829) www. Www h&rblock com officialpayments. Www h&rblock com com Link2Gov Corporation 1-888-PAY-1040TM (1-888-729-1040) www. Www h&rblock com PAY1040. Www h&rblock com com For the latest details on how to pay by phone, go to www. Www h&rblock com irs. Www h&rblock com gov/e-pay. Www h&rblock com Pay by Check or Money Order Using the Estimated Tax Payment Voucher Each payment of estimated tax by check or money order must be accompanied by a payment voucher from Form 1040-ES. Www h&rblock com During 2013, if you: made at least one estimated tax payment but not by electronic means, did not use software or a paid preparer to prepare or file your return,  then you should receive a copy of the 2014 Form 1040-ES/V. Www h&rblock com The enclosed payment vouchers will be preprinted with your name, address, and social security number. Www h&rblock com Using the preprinted vouchers will speed processing, reduce the chance of error, and help save processing costs. Www h&rblock com Use the window envelopes that came with your Form 1040-ES package. Www h&rblock com If you use your own envelopes, make sure you mail your payment vouchers to the address shown in the Form 1040-ES instructions for the place where you live. Www h&rblock com Note. Www h&rblock com These criteria can change without notice. Www h&rblock com If you do not receive a Form 1040-ES/V package and you are required to make an estimated tax payment, you should go to www. Www h&rblock com irs. Www h&rblock com gov and print a copy of Form 1040-ES which includes four blank payment vouchers. Www h&rblock com Complete one of these and make your payment timely to avoid penalties for paying late. Www h&rblock com Do not use the address shown in the Form 1040 or Form 1040A instructions for your estimated tax payments. Www h&rblock com If you did not pay estimated tax last year, you can order Form 1040-ES from the IRS (see inside back cover of this publication) or download it from IRS. Www h&rblock com gov. Www h&rblock com Follow the instructions to make sure you use the vouchers correctly. Www h&rblock com Joint estimated tax payments. Www h&rblock com   If you file a joint return and are making joint estimated tax payments, enter the names and social security numbers on the payment voucher in the same order as they will appear on the joint return. Www h&rblock com Change of address. Www h&rblock com   You must notify the IRS if you are making estimated tax payments and you changed your address during the year. Www h&rblock com Complete Form 8822, Change of Address, and mail it to the address shown in the instructions for that form. Www h&rblock com Credit for Withholding and Estimated Tax for 2013 When you file your 2013 income tax return, take credit for all the income tax and excess social security or railroad retirement tax withheld from your salary, wages, pensions, etc. Www h&rblock com Also take credit for the estimated tax you paid for 2013. Www h&rblock com These credits are subtracted from your total tax. Www h&rblock com Because these credits are refundable, you should file a return and claim these credits, even if you do not owe tax. Www h&rblock com Two or more employers. Www h&rblock com   If you had two or more employers in 2013 and were paid wages of more than $113,700, too much social security or tier 1 railroad retirement tax may have been withheld from your pay. Www h&rblock com You may be able to claim the excess as a credit against your income tax when you file your return. Www h&rblock com See Credit for Excess Social Security Tax or Railroad Retirement Tax Withheld in chapter 37. Www h&rblock com Withholding If you had income tax withheld during 2013, you should be sent a statement by January 31, 2014, showing your income and the tax withheld. Www h&rblock com Depending on the source of your income, you should receive: Form W-2, Wage and Tax Statement, Form W-2G, Certain Gambling Winnings, or A form in the 1099 series. Www h&rblock com Forms W-2 and W-2G. Www h&rblock com   If you file a paper return, always file Form W-2 with your income tax return. Www h&rblock com File Form W-2G with your return only if it shows any federal income tax withheld from your winnings. Www h&rblock com   You should get at least two copies of each form. Www h&rblock com If you file a paper return, attach one copy to the front of your federal income tax return. Www h&rblock com Keep one copy for your records. Www h&rblock com You also should receive copies to file with your state and local returns. Www h&rblock com Form W-2 Your employer is required to provide or send Form W-2 to you no later than January 31, 2014. Www h&rblock com You should receive a separate Form W-2 from each employer you worked for. Www h&rblock com If you stopped working before the end of 2013, your employer could have given you your Form W-2 at any time after you stopped working. Www h&rblock com However, your employer must provide or send it to you by January 31, 2014. Www h&rblock com If you ask for the form, your employer must send it to you within 30 days after receiving your written request or within 30 days after your final wage payment, whichever is later. Www h&rblock com If you have not received your Form W-2 by January 31, you should ask your employer for it. Www h&rblock com If you do not receive it by February 15, call the IRS. Www h&rblock com Form W-2 shows your total pay and other compensation and the income tax, social security tax, and Medicare tax that was withheld during the year. Www h&rblock com Include the federal income tax withheld (as shown in box 2 of Form W-2) on: Line 62 if you file Form 1040, Line 36 if you file Form 1040A, or Line 7 if you file Form 1040EZ. Www h&rblock com In addition, Form W-2 is used to report any taxable sick pay you received and any income tax withheld from your sick pay. Www h&rblock com Form W-2G If you had gambling winnings in 2013, the payer may have withheld income tax. Www h&rblock com If tax was withheld, the payer will give you a Form W-2G showing the amount you won and the amount of tax withheld. Www h&rblock com Report the amounts you won on line 21 of Form 1040. Www h&rblock com Take credit for the tax withheld on line 62 of Form 1040. Www h&rblock com If you had gambling winnings, you must use Form 1040; you cannot use Form 1040A or Form 1040EZ. Www h&rblock com The 1099 Series Most forms in the 1099 series are not filed with your return. Www h&rblock com These forms should be furnished to you by January 31, 2014 (or, for Forms 1099-B, 1099-S, and certain Forms 1099-MISC, by February 15, 2014). Www h&rblock com Unless instructed to file any of these forms with your return, keep them for your records. Www h&rblock com There are several different forms in this series, including: Form 1099-B, Proceeds From Broker and Barter Exchange Transactions; Form 1099-DIV, Dividends and Distributions; Form 1099-G, Certain Government Payments; Form 1099-INT, Interest Income; Form 1099-K, Payment Card and Third Party Network Transactions; Form 1099-MISC, Miscellaneous Income; Form 1099-OID, Original Issue Discount; Form 1099-PATR, Taxable Distributions Received from Cooperatives; Form 1099-Q, Payments From Qualified Education Programs; Form 1099-R, Distributions From Pensions, Annuities, Retirement or Profit-Sharing Plans, IRAs, Insurance Contracts, etc. Www h&rblock com ; Form 1099-S, Proceeds From Real Estate Transactions; Form RRB-1099, Payments by the Railroad Retirement Board. Www h&rblock com If you received the types of income reported on some forms in the 1099 series, you may not be able to use Form 1040A or Form 1040EZ. Www h&rblock com See the instructions to these forms for details. Www h&rblock com Form 1099-R. Www h&rblock com   Attach Form 1099-R to your paper return if box 4 shows federal income tax withheld. Www h&rblock com Include the amount withheld in the total on line 62 of Form 1040 or line 36 of Form 1040A. Www h&rblock com You cannot use Form 1040EZ if you received payments reported on Form 1099-R. Www h&rblock com Backup withholding. Www h&rblock com   If you were subject to backup withholding on income you received during 2013, include the amount withheld, as shown on your Form 1099, in the total on line 62 of Form 1040, line 36 of Form 1040A, or line 7 of Form 1040EZ. Www h&rblock com Form Not Correct If you receive a form with incorrect information on it, you should ask the payer for a corrected form. Www h&rblock com Call the telephone number or write to the address given for the payer on the form. Www h&rblock com The corrected Form W-2G or Form 1099 you receive will have an “X” in the “CORRECTED” box at the top of the form. Www h&rblock com A special form, Form W-2c, Corrected Wage and Tax Statement, is used to correct a Form W-2. Www h&rblock com In certain situations, you will receive two forms in place of the original incorrect form. Www h&rblock com This will happen when your taxpayer identification number is wrong or missing, your name and address are wrong, or you received the wrong type of form (for example, a Form 1099-DIV instead of a Form 1099-INT). Www h&rblock com One new form you receive will be the same incorrect form or have the same incorrect information, but all money amounts will be zero. Www h&rblock com This form will have an “X” in the “CORRECTED” box at the top of the form. Www h&rblock com The second new form should have all the correct information, prepared as though it is the original (the “CORRECTED” box will not be checked). Www h&rblock com Form Received After Filing If you file your return and you later receive a form for income that you did not include on your return, you should report the income and take credit for any income tax withheld by filing Form 1040X, Amended U. Www h&rblock com S. Www h&rblock com Individual Income Tax Return. Www h&rblock com Separate Returns If you are married but file a separate return, you can take credit only for the tax withheld from your own income. Www h&rblock com Do not include any amount withheld from your spouse's income. Www h&rblock com However, different rules may apply if you live in a community property state. Www h&rblock com Community property states are listed in chapter 2. Www h&rblock com For more information on these rules, and some exceptions, see Publication 555, Community Property. Www h&rblock com Fiscal Years If you file your tax return on the basis of a fiscal year (a 12-month period ending on the last day of any month except December), you must follow special rules to determine your credit for federal income tax withholding. Www h&rblock com For a discussion of how to take credit for withholding on a fiscal year return, see Fiscal Years (FY) in chapter 3 of Publication 505. Www h&rblock com Estimated Tax Take credit for all your estimated tax payments for 2013 on line 63 of Form 1040 or line 37 of Form 1040A. Www h&rblock com Include any overpayment from 2012 that you had credited to your 2013 estimated tax. Www h&rblock com You must use Form 1040 or Form 1040A if you paid estimated tax. Www h&rblock com You cannot use Form 1040EZ. Www h&rblock com Name changed. Www h&rblock com   If you changed your name, and you made estimated tax payments using your old name, attach a brief statement to the front of your paper tax return indicating: When you made the payments, The amount of each payment, Your name when you made the payments, and Your social security number. Www h&rblock com The statement should cover payments you made jointly with your spouse as well as any you made separately. Www h&rblock com   Be sure to report the change to the Social Security Administration. Www h&rblock com This prevents delays in processing your return and issuing any refunds. Www h&rblock com Separate Returns If you and your spouse made separate estimated tax payments for 2013 and you file separate returns, you can take credit only for your own payments. Www h&rblock com If you made joint estimated tax payments, you must decide how to divide the payments between your returns. Www h&rblock com One of you can claim all of the estimated tax paid and the other none, or you can divide it in any other way you agree on. Www h&rblock com If you cannot agree, you must divide the payments in proportion to each spouse's individual tax as shown on your separate returns for 2013. Www h&rblock com Divorced Taxpayers If you made joint estimated tax payments for 2013, and you were divorced during the year, either you or your former spouse can claim all of the joint payments, or you each can claim part of them. Www h&rblock com If you cannot agree on how to divide the payments, you must divide them in proportion to each spouse's individual tax as shown on your separate returns for 2013. Www h&rblock com If you claim any of the joint payments on your tax return, enter your former spouse's social security number (SSN) in the space provided on the front of Form 1040 or Form 1040A. Www h&rblock com If you divorced and remarried in 2013, enter your present spouse's SSN in that space and write your former spouse's SSN, followed by “DIV,” to the left of Form 1040, line 63, or Form 1040A, line 37. Www h&rblock com Underpayment Penalty for 2013 If you did not pay enough tax, either through withholding or by making timely estimated tax payments, you will have an underpayment of estimated tax and you may have to pay a penalty. Www h&rblock com Generally, you will not have to pay a penalty for 2013 if any of the following apply. Www h&rblock com The total of your withholding and estimated tax payments was at least as much as your 2012 tax (or 110% of your 2012 tax if your AGI was more than $150,000, $75,000 if your 2013 filing status is married filing separately) and you paid all required estimated tax payments on time. Www h&rblock com The tax balance due on your 2013 return is no more than 10% of your total 2013 tax, and you paid all required estimated tax payments on time. Www h&rblock com Your total 2013 tax minus your withholding and refundable credits is less than $1,000. Www h&rblock com You did not have a tax liability for 2012 and your 2012 tax year was 12 months, or You did not have any withholding taxes and your current year tax less any household employment taxes is less than $1,000. Www h&rblock com See Publication 505, chapter 4, for a definition of “total tax” for 2012 and 2013. Www h&rblock com Farmers and fishermen. Www h&rblock com   Special rules apply if you are a farmer or fisherman. Www h&rblock com See Farmers and Fishermen in chapter 4 of Publication 505 for more information. Www h&rblock com IRS can figure the penalty for you. Www h&rblock com   If you think you owe the penalty but you do not want to figure it yourself when you file your tax return, you may not have to. Www h&rblock com Generally, the IRS will figure the penalty for you and send you a bill. Www h&rblock com However, if you think you are able to lower or eliminate your penalty, you must complete Form 2210 or Form 2210-F and attach it to your paper return. Www h&rblock com See chapter 4 of Publication 505. Www h&rblock com Prev  Up  Next   Home   More Online Publications