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Www handrblock com Index A Activities not for profit, Hobby Expenses Adjustments to gross income Armed forces reservists' travel expenses, Armed Forces reservists traveling more than 100 miles from home. Www handrblock com Performing artists, Performing Artists State or local government officials paid on fee basis, Officials Paid on a Fee Basis Unlawful discrimination claims, Unlawful discrimination claims. Www handrblock com Administrative fees IRA trustees, Trustee's Administrative Fees for IRA Adoption expenses, Adoption Expenses Amortizable bond premium, Amortizable Premium on Taxable Bonds, More information. Www handrblock com Appraisal fees, Appraisal Fees Armed forces Military uniforms, Military uniforms. Www handrblock com Reservists, travel expenses, Armed Forces reservists traveling more than 100 miles from home. Www handrblock com Assistance (see Tax help) B Bad debts, Business Bad Debt Bank accounts Check-writing fees, Check-Writing Fees on Personal Account Losses on deposits, Loss on Deposits Bonds Amortizable premium, Amortizable Premium on Taxable Bonds Breach of contract Damages, Damages for Breach of Employment Contract Bribes, List of Nondeductible Expenses Burial expenses, List of Nondeductible Expenses Business expenses (see Employee business expenses) Business gifts, Gift expenses. Www handrblock com C Campaign contributions, Lobbying and political activities. Www handrblock com , Political Contributions Campaign expenses, Campaign Expenses Capital expenditures, Capital Expenses Casualty losses, Casualty and Theft Losses, Casualty and Theft Losses of Income-Producing Property Cell phones, Depreciation on Computers Chambers of Commerce dues, Lobbying and political activities. Www handrblock com Check-writing fees, Check-Writing Fees on Personal Account Claim of right repayments, Repayments Under Claim of Right Clerical help, deductibility of, Clerical Help and Office Rent Clothes Protective, Protective clothing. Www handrblock com Work, Work Clothes and Uniforms Club dues, Club Dues Commissions, Commissions Commuting expenses, Commuting Expenses Computers Depreciation, Depreciation on Computers, Depreciation on Home Computer, Excess Deductions of an Estate Convenience fees, Credit or Debit Card Convenience Fees Criminal prosecutions Travel expenses for federal staff, Federal crime investigation and prosecution. Www handrblock com D Damages Breach of employment contract, Damages for Breach of Employment Contract Deposits Losses on, Loss on Deposits Depreciation Computers, Depreciation on Computers, Depreciation on Home Computer, Excess Deductions of an Estate Disabilities, persons with Work-related expenses, Impairment-Related Work Expenses Dividends Fees to collect, Fees To Collect Interest and Dividends Service charges on reinvestment plans, Service Charges on Dividend Reinvestment Plans Dues, Dues to Chambers of Commerce and Professional Societies (see also Expenses) (see also Fees) Chambers of Commerce, Dues to Chambers of Commerce and Professional Societies Club, Club Dues Lobbying, Dues used for lobbying. Www handrblock com Professional societies, Dues to Chambers of Commerce and Professional Societies Union, Union Dues and Expenses E Education, Educator Expenses, Education Expenses During Unemployment Education expenses, Work-Related Education, More information. Www handrblock com Employee business expenses Form 2106 and Form 2106-EZ, Form 2106 and Form 2106-EZ. Www handrblock com Performing artists, Performing Artists Unreimbursed, Unreimbursed Employee Expenses Employment Agency fees, Employment and outplacement agency fees. Www handrblock com Breach of contract, Damages for Breach of Employment Contract Entertainers and musicians (see Performing artists) Entertainment expenses, Meals and entertainment. Www handrblock com Estates Federal estate tax, Federal Estate Tax on Income in Respect of a Decedent Expenses, Dues to Chambers of Commerce and Professional Societies, Education Expenses During Unemployment (see also Dues) (see also Fees) Adoption, Adoption Expenses Campaign, Campaign Expenses Capital, Capital Expenses Commuting, Commuting Expenses Education Work-related, Work-Related Education Educator, Educator Expenses Qualified, Qualified expenses. Www handrblock com Educator Expenses, Eligible educator. Www handrblock com Employee business (see Employee business expenses) Entertainment, Meals and entertainment. Www handrblock com Funeral and burial, List of Nondeductible Expenses Gifts, Travel, Transportation, Meals, Entertainment, Gifts, and Local Lodging, Gift expenses. Www handrblock com Health spa, Health Spa Expenses Hobby, Hobby Expenses Home office, Home Office Impairment-related, Impairment-Related Work Expenses Investment, Investment Fees and Expenses, Investment-Related Seminars Job search, Job Search Expenses Legal (see Legal expenses) Local lodging, Travel, Transportation, Meals, Entertainment, Gifts, and Local Lodging Meals, Meals and entertainment. Www handrblock com , Lunches With Co-workers Meals and entertainment, Travel, Transportation, Meals, Entertainment, Gifts, and Local Lodging Nondeductible, Nondeductible Expenses Over limit, educator, Educator expenses over limit. Www handrblock com Personal, Nondeductible Expenses Production of income, Other Expenses Professional promotion, Professional Reputation Tax-exempt income, Tax-Exempt Income Expenses Travel and transportation, Travel, Transportation, Meals, Entertainment, Gifts, and Local Lodging Travel as education, Travel as education. Www handrblock com F Federal estate tax, Federal Estate Tax on Income in Respect of a Decedent Fees, Dues to Chambers of Commerce and Professional Societies (see also Dues) (see also Expenses) Appraisal, Appraisal Fees Check-writing, Check-Writing Fees on Personal Account Employment and outplacement agency, Employment and outplacement agency fees. Www handrblock com Investment, Fees To Collect Interest and Dividends, Investment Fees and Expenses IRA trustee, Trustee's Administrative Fees for IRA Legal (see Legal expenses) License, Licenses and Regulatory Fees Professional accreditation, Professional Accreditation Fees Fines, Fines or Penalties Form 2106 Employee business expenses, Form 2106 and Form 2106-EZ. Www handrblock com Form 2106-EZ Employee business expenses, Form 2106 and Form 2106-EZ. Www handrblock com Form 4562 Depreciation and amortization, Reporting your depreciation deduction. Www handrblock com , Depreciation. Www handrblock com , Computer used in a home office. Www handrblock com Free tax services, Free help with your tax return. Www handrblock com Funeral expenses, List of Nondeductible Expenses G Gambling winnings and losses, Gambling Losses Up to the Amount of Gambling Winnings Government employees Federal criminal investigation and prosecution travel expenses, Federal crime investigation and prosecution. Www handrblock com State or local government officials paid on fee basis, Officials Paid on a Fee Basis H Health spa, Health Spa Expenses Help (see Tax help) Hobbies, Hobby Expenses Home Security system, Home Security System Telephone service, Residential Telephone Service Home office Computers, Computer used in a home office. Www handrblock com Expenses, Home Office Principal place of business, Principal place of business. Www handrblock com Travel and transportation expenses, Home office. Www handrblock com I Impairment-related work expenses, Impairment-Related Work Expenses Income aid payment, Repayment of Income Aid Payment Income in respect of decedent Estate tax, Federal Estate Tax on Income in Respect of a Decedent Individual retirement arrangements (IRAs) Trustees' fees, Trustee's Administrative Fees for IRA Insurance Business liability, Business Liability Insurance Life insurance, Life Insurance Premiums Malpractice, Unreimbursed Employee Expenses Personal disability, List of Nondeductible Expenses Interest income Fees to collect, Fees To Collect Interest and Dividends Investments Annuity, unrecovered investment in, Unrecovered Investment in Annuity Deposits, losses on, Loss on Deposits Fees and expenses, Investment Fees and Expenses Seminars, Investment-Related Seminars Itemized deductions Deductions not subject to 2% limit, Deductions Not Subject to the 2% Limit Deductions subject to 2% limit, Introduction, Deductions Subject to the 2% Limit How to report, How To Report J Job search, Job Search Expenses, Travel and transportation expenses. Www handrblock com K Kickbacks, List of Nondeductible Expenses L Legal expenses Job-related, Legal Fees Personal, Personal Legal Expenses Political campaigns, Legal fees. Www handrblock com Production of income, Legal Expenses Unlawful discrimination claims, Legal Expenses Licenses Fees, Licenses and Regulatory Fees Life insurance, Life Insurance Premiums Lobbying, Lobbying and political activities. Www handrblock com , Lobbying Expenses, Exceptions. Www handrblock com Local transportation, Local transportation expenses. Www handrblock com Losses Casualties and thefts, Casualty and Theft Losses, Casualty and Theft Losses of Income-Producing Property Deposits, Loss on Deposits Gambling, Gambling Losses Up to the Amount of Gambling Winnings IRA, Loss on IRA Mislaid cash or property, Lost or Mislaid Cash or Property Partnership, Loss From Other Activities From Schedule K-1 (Form 1065-B), Box 2 Roth IRA, Loss on IRA M Mail carriers, rural, Rural Mail Carriers' Vehicle Expenses Malpractice insurance, Unreimbursed Employee Expenses Meal and lodging expenses, Meals and entertainment. Www handrblock com Lunches with coworkers, Lunches With Co-workers Working late, Meals While Working Late Medical examinations, Unreimbursed Employee Expenses Mileage rate, What's New Missing children, photographs of, Reminders Mutual funds Indirect deductions, Indirect Deductions of Pass-Through Entities N Nondeductible expenses, Nondeductible Expenses, Wristwatches Not-for-profit activities, Hobby Expenses O Occupational taxes, Occupational Taxes Office Home (see Home office) Rent, Clerical Help and Office Rent Outplacement agency fees, Employment and outplacement agency fees. Www handrblock com P Partnerships Indirect deductions, Indirect Deductions of Pass-Through Entities Pass-through entities, Indirect Deductions of Pass-Through Entities Passport expense, Unreimbursed Employee Expenses Penalties, Fines or Penalties Performing artists, Performing Artists Work clothes, Work Clothes and Uniforms Personal expenses, Nondeductible Expenses, Wristwatches Political contributions, Lobbying and political activities. Www handrblock com , Political Contributions Campaign expenses, Campaign Expenses Ponzi-type investment schemes, Losses From Ponzi-type Investment Schemes Postal workers, Rural Mail Carriers' Vehicle Expenses Production of income expenses, Other Expenses, Loss on IRA Professional accreditation fees, Professional Accreditation Fees Professional journals, Unreimbursed Employee Expenses Professional reputation and marketing, Professional Reputation Professional societies dues, Lobbying and political activities. Www handrblock com Prosecution travel expenses, Federal crime investigation and prosecution. Www handrblock com Protective clothing, Protective clothing. Www handrblock com Publications (see Tax help) R Recordkeeping requirements Computer used for home and business, Depreciation on Computers Deductions, to verify, Introduction Gambling winnings and losses, Gambling Losses Up to the Amount of Gambling Winnings Home office, Home Office Relief fund contributions, Relief Fund Contributions Rent Office, Clerical Help and Office Rent Safe deposit box, Safe Deposit Box Rent Repayments Claim of right, Repayments Under Claim of Right Income, Repayments of Income Income aid payments, Unreimbursed Employee Expenses Social Security benefits, Repayments of Social Security Benefits Reporting requirements Armed Forces reservists, Armed Forces reservists. Www handrblock com Computer used in a home office, Computer used in a home office. Www handrblock com Depreciation, Depreciation. Www handrblock com Form 2106 and Form 2106-EZ, Form 2106 and Form 2106-EZ. Www handrblock com Impairment-related work expenses, Impairment-related work expenses. Www handrblock com Itemized deductions, How To Report Tax preparation fees, Tax preparation fees. Www handrblock com Research expenses, Research Expenses of a College Professor Résumé, Résumé. Www handrblock com Rural mail carriers, Rural Mail Carriers' Vehicle Expenses S S corporations Indirect deductions, Indirect Deductions of Pass-Through Entities Safe deposit box, Safe Deposit Box Rent Security systems, home, Home Security System Seminars, investment-related, Investment-Related Seminars Service charges on dividend reinvestment plans, Service Charges on Dividend Reinvestment Plans Social Security repayments, Repayments of Social Security Benefits State or local governments Officials paid on fee basis, Officials Paid on a Fee Basis Stockholders' meeting expenses, Stockholders' Meetings T Tax help, How To Get Tax Help Tax-exempt income expenses, Tax-Exempt Income Expenses Taxes Estate tax, Federal Estate Tax on Income in Respect of a Decedent Occupational, Occupational Taxes Telephones Cell phone, Depreciation on Computers Residential service, Residential Telephone Service Theft losses, Casualty and Theft Losses, Casualty and Theft Losses of Income-Producing Property Tools, Tools Used in Your Work Travel and transportation expenses, Local lodging. Www handrblock com , Additional information. Www handrblock com Another individual, paid by taxpayer, Travel Expenses for Another Individual Armed forces reservists, Armed Forces reservists traveling more than 100 miles from home. Www handrblock com Commuting, Commuting Expenses Criminal investigations and prosecutions, Federal crime investigation and prosecution. Www handrblock com Education, Travel as education. Www handrblock com Indefinite work assignments, Indefinite work assignment. Www handrblock com Job search, Travel and transportation expenses. Www handrblock com Local transportation, Local transportation expenses. Www handrblock com Research, Research Expenses of a College Professor Temporary work assignments, Temporary work assignment. Www handrblock com Trustees IRA administrative fees, Trustee's Administrative Fees for IRA TTY/TDD information, How To Get Tax Help U Unemployment and education expenses, Education Expenses During Unemployment Unemployment benefit fund contributions, Voluntary Unemployment Benefit Fund Contributions Uniforms, military, Military uniforms. Www handrblock com Union dues, Union Dues and Expenses Unreimbursed employee expenses, Unreimbursed Employee Expenses, Military uniforms. Www handrblock com W Wagering winnings and losses, Gambling Losses Up to the Amount of Gambling Winnings Work Clothes and uniforms, Work Clothes and Uniforms Impairment-related expenses, Impairment-Related Work Expenses Supplies, Unreimbursed Employee Expenses Tools, Unreimbursed Employee Expenses, Tools Used in Your Work Travel and transportation expenses, Travel, Transportation, Meals, Entertainment, Gifts, and Local Lodging Wristwatches, List of Nondeductible Expenses, Wristwatches Prev  Up     Home   More Online Publications
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Start Saving Now

If you think it’s too late to start saving for retirement, think again. By setting some realistic goals and creating a plan, even for a few years, you can create a nest egg that can help you live a more comfortable retirement.

"Time is money" may be a trite expression, but when it comes to saving, it’s still very true. Just remember the compound interest lesson calculations you learned in math class. That lesson still applies. In a few years, you can make a significant contribution to your nest egg with a disciplined savings strategy.

Put every possible dollar into tax-advantageous retirement savings plans, a skilled financial planner can help you get the most for your money. If your employer offers to match your contribution to a 401(k), take advantage of that important retirement savings vehicle. Don’t leave money on the table! Look for other tax deductible savings plans if you still have a little extra to save. Your employer may offer additional pre-tax saving plans or you could open your own IRA. In addition, special provisions in federal retirement savings law allow employees 50 and older to save even more due to special catch-up provisions.

Cost-Cutting Strategies

Remember, a little cost-cutting now will help ensure that you enjoy a more comfortable retirement later. If you were planning to treat yourself to a new car, consider making due with your current vehicle for a few more years. Reallocate the money you’d use for a down payment toward your savings strategy. Also, take a look at your auto insurance coverage. If you’re paying for collision coverage for an older vehicle, consider dropping it. Take a look at your deductible, too. If you have a low deductible, perhaps $250, consider raising it to at least $500 or even $1,000. These two strategies could significantly reduce your auto insurance premium.

If you were considering taking an out-of-town vacation, vacation at home. You might be surprised by the interesting activities you have in town or a short drive away. Downsizing into a smaller home, hopefully with a smaller mortgage or none at all, may be an option. Even small changes like skipping the daily $4.00 cup of boutique coffee or packing your own lunch for work it can save you hundreds of dollars each year.

Redefine Retirement

Consider working longer. Postponing retirement by just a year or two can help you save thousands toward your goal and also allow more time for investment strategies to pay off, it can also increase your Social Security benefit. Also give thought to what your definition of retirement is. Many people who fully retire find themselves looking for a part-time job because they’re bored. Instead of leaving your employer entirely, consider a phased retirement and continue to working part time for several years.

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Www handrblock com 4. Www handrblock 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 handrblock 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 handrblock com For more information, see Publication 505. Www handrblock com Reminders Estimated tax safe harbor for higher income taxpayers. Www handrblock 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 handrblock com Introduction This chapter discusses how to pay your tax as you earn or receive income during the year. Www handrblock com In general, the federal income tax is a pay-as-you-go tax. Www handrblock com There are two ways to pay as you go. Www handrblock com Withholding. Www handrblock com If you are an employee, your employer probably withholds income tax from your pay. Www handrblock com Tax also may be withheld from certain other income, such as pensions, bonuses, commissions, and gambling winnings. Www handrblock com The amount withheld is paid to the IRS in your name. Www handrblock com Estimated tax. Www handrblock 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 handrblock com People who are in business for themselves generally will have to pay their tax this way. Www handrblock com Also, you may have to pay estimated tax if you receive income such as dividends, interest, capital gains, rent, and royalties. Www handrblock com Estimated tax is used to pay not only income tax, but self-employment tax and alternative minimum tax as well. Www handrblock com This chapter explains these methods. Www handrblock com In addition, it also explains the following. Www handrblock com Credit for withholding and estimated tax. Www handrblock com When you file your 2013 income tax return, take credit for all the income tax withheld from your salary, wages, pensions, etc. Www handrblock com , and for the estimated tax you paid for 2013. Www handrblock com Also take credit for any excess social security or railroad retirement tax withheld (discussed in chapter 37). Www handrblock com Underpayment penalty. Www handrblock 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 handrblock com In most cases, the IRS can figure this penalty for you. Www handrblock com See Underpayment Penalty for 2013 at the end of this chapter. Www handrblock 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 handrblock com This section explains the rules for withholding tax from each of these types of income. Www handrblock com This section also covers backup withholding on interest, dividends, and other payments. Www handrblock com Salaries and Wages Income tax is withheld from the pay of most employees. Www handrblock com Your pay includes your regular pay, bonuses, commissions, and vacation allowances. Www handrblock com It also includes reimbursements and other expense allowances paid under a nonaccountable plan. Www handrblock com See Supplemental Wages , later, for more information about reimbursements and allowances paid under a nonaccountable plan. Www handrblock 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 handrblock com This is explained under Exemption From Withholding , later. Www handrblock com You can ask your employer to withhold income tax from noncash wages and other wages not subject to withholding. Www handrblock 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 handrblock com Military retirees. Www handrblock 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 handrblock com Household workers. Www handrblock com   If you are a household worker, you can ask your employer to withhold income tax from your pay. Www handrblock 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 handrblock com   Tax is withheld only if you want it withheld and your employer agrees to withhold it. Www handrblock 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 handrblock com Farmworkers. Www handrblock 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 handrblock com Differential wage payments. Www handrblock 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 handrblock 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 handrblock com The wages and withholding will be reported on Form W-2, Wage and Tax Statement. Www handrblock 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 handrblock 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 handrblock com The amount you earn in each payroll period. Www handrblock com The information you give your employer on Form W-4. Www handrblock com Form W-4 includes four types of information that your employer will use to figure your withholding. Www handrblock com Whether to withhold at the single rate or at the lower married rate. Www handrblock com How many withholding allowances you claim (each allowance reduces the amount withheld). Www handrblock com Whether you want an additional amount withheld. Www handrblock com Whether you are claiming an exemption from withholding in 2014. Www handrblock com See Exemption From Withholding , later. Www handrblock com Note. Www handrblock com You must specify a filing status and a number of withholding allowances on Form W-4. Www handrblock com You cannot specify only a dollar amount of withholding. Www handrblock com New Job When you start a new job, you must fill out Form W-4 and give it to your employer. Www handrblock com Your employer should have copies of the form. Www handrblock com If you need to change the information later, you must fill out a new form. Www handrblock 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 handrblock com You may be able to avoid overwithholding if your employer agrees to use the part-year method. Www handrblock com See Part-Year Method in chapter 1 of Publication 505 for more information. Www handrblock com Employee also receiving pension income. Www handrblock 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 handrblock com However, you can choose to split your withholding allowances between your pension and job in any manner. Www handrblock 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 handrblock 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 handrblock 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 handrblock 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 handrblock com Changing your withholding for 2015. Www handrblock 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 handrblock com If the event occurs in December 2014, submit a new Form W-4 within 10 days. Www handrblock 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 handrblock 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 handrblock com You should try to have your withholding match your actual tax liability. Www handrblock 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 handrblock com If too much tax is withheld, you will lose the use of that money until you get your refund. Www handrblock 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 handrblock com Note. Www handrblock 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 handrblock com Completing Form W-4 and Worksheets Form W-4 has worksheets to help you figure how many withholding allowances you can claim. Www handrblock com The worksheets are for your own records. Www handrblock com Do not give them to your employer. Www handrblock com Multiple jobs. Www handrblock com   If you have income from more than one job at the same time, complete only one set of Form W-4 worksheets. Www handrblock com Then split your allowances between the Forms W-4 for each job. Www handrblock com You cannot claim the same allowances with more than one employer at the same time. Www handrblock com You can claim all your allowances with one employer and none with the other(s), or divide them any other way. Www handrblock com Married individuals. Www handrblock 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 handrblock com Use only one set of worksheets. Www handrblock com You can divide your total allowances any way, but you cannot claim an allowance that your spouse also claims. Www handrblock 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 handrblock com Alternative method of figuring withholding allowances. Www handrblock 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 handrblock com For more information, see Alternative method of figuring withholding allowances under Completing Form W-4 and Worksheets in Publication 505, chapter 1. Www handrblock com Personal Allowances Worksheet. Www handrblock 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 handrblock com Deduction and Adjustments Worksheet. Www handrblock 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 handrblock com Also, complete this worksheet when you have changes to these items to see if you need to change your withholding. Www handrblock com Two-Earners/Multiple Jobs Worksheet. Www handrblock 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 handrblock 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 handrblock 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 handrblock com You accurately complete all the Form W-4 worksheets that apply to you. Www handrblock com You give your employer a new Form W-4 when changes occur. Www handrblock 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 handrblock com This is most likely to happen in the following situations. Www handrblock com You are married and both you and your spouse work. Www handrblock com You have more than one job at a time. Www handrblock com You have nonwage income, such as interest, dividends, alimony, unemployment compensation, or self-employment income. Www handrblock com You will owe additional amounts with your return, such as self-employment tax. Www handrblock com Your withholding is based on obsolete Form W-4 information for a substantial part of the year. Www handrblock 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 handrblock com You work only part of the year. Www handrblock com You change the number of your withholding allowances during the year. Www handrblock com Cumulative wage method. Www handrblock 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 handrblock 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 handrblock com You must ask your employer in writing to use this method. Www handrblock com   To be eligible, you must have been paid for the same kind of payroll period (weekly, biweekly, etc. Www handrblock com ) since the beginning of the year. Www handrblock com Publication 505 To make sure you are getting the right amount of tax withheld, get Publication 505. Www handrblock 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 handrblock 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 handrblock 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 handrblock com You can use the IRS Withholding Calculator at www. Www handrblock com irs. Www handrblock 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 handrblock com Rules Your Employer Must Follow It may be helpful for you to know some of the withholding rules your employer must follow. Www handrblock com These rules can affect how to fill out your Form W-4 and how to handle problems that may arise. Www handrblock com New Form W-4. Www handrblock com   When you start a new job, your employer should have you complete a Form W-4. Www handrblock com Beginning with your first payday, your employer will use the information you give on the form to figure your withholding. Www handrblock com   If you later fill out a new Form W-4, your employer can put it into effect as soon as possible. Www handrblock 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 handrblock com No Form W-4. Www handrblock 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 handrblock com Repaying withheld tax. Www handrblock 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 handrblock com Your employer cannot repay any of the tax previously withheld. Www handrblock com Instead, claim the full amount withheld when you file your tax return. Www handrblock 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 handrblock com Your employer can repay the amount that was withheld incorrectly. Www handrblock 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 handrblock com Exemption From Withholding If you claim exemption from withholding, your employer will not withhold federal income tax from your wages. Www handrblock com The exemption applies only to income tax, not to social security or Medicare tax. Www handrblock com You can claim exemption from withholding for 2014 only if both of the following situations apply. Www handrblock com For 2013 you had a right to a refund of all federal income tax withheld because you had no tax liability. Www handrblock com For 2014 you expect a refund of all federal income tax withheld because you expect to have no tax liability. Www handrblock com Students. Www handrblock com   If you are a student, you are not automatically exempt. Www handrblock com See chapter 1 to find out if you must file a return. Www handrblock com If you work only part time or only during the summer, you may qualify for exemption from withholding. Www handrblock com Age 65 or older or blind. Www handrblock 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 handrblock com Do not use either worksheet if you will itemize deductions, claim exemptions for dependents, or claim tax credits on your 2014 return. Www handrblock com Instead, see Itemizing deductions or claiming exemptions or credits in chapter 1 of Publication 505. Www handrblock com Claiming exemption from withholding. Www handrblock com   To claim exemption, you must give your employer a Form W-4. Www handrblock com Do not complete lines 5 and 6. Www handrblock com Enter “Exempt” on line 7. Www handrblock 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 handrblock 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 handrblock com   Your claim of exempt status may be reviewed by the IRS. Www handrblock com An exemption is good for only 1 year. Www handrblock com   You must give your employer a new Form W-4 by February 15 each year to continue your exemption. Www handrblock com Supplemental Wages Supplemental wages include bonuses, commissions, overtime pay, vacation allowances, certain sick pay, and expense allowances under certain plans. Www handrblock com The payer can figure withholding on supplemental wages using the same method used for your regular wages. Www handrblock 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 handrblock com Expense allowances. Www handrblock com   Reimbursements or other expense allowances paid by your employer under a nonaccountable plan are treated as supplemental wages. Www handrblock 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 handrblock com   For more information about accountable and nonaccountable expense allowance plans, see Reimbursements in chapter 26. Www handrblock com Penalties You may have to pay a penalty of $500 if both of the following apply. Www handrblock com You make statements or claim withholding allowances on your Form W-4 that reduce the amount of tax withheld. Www handrblock com You have no reasonable basis for those statements or allowances at the time you prepare your Form W-4. Www handrblock 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 handrblock 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 handrblock 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 handrblock com A simple error or an honest mistake will not result in one of these penalties. Www handrblock 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 handrblock com Tips The tips you receive while working on your job are considered part of your pay. Www handrblock com You must include your tips on your tax return on the same line as your regular pay. Www handrblock com However, tax is not withheld directly from tip income, as it is from your regular pay. Www handrblock com Nevertheless, your employer will take into account the tips you report when figuring how much to withhold from your regular pay. Www handrblock com See chapter 6 for information on reporting your tips to your employer. Www handrblock com For more information on the withholding rules for tip income, see Publication 531, Reporting Tip Income. Www handrblock com How employer figures amount to withhold. Www handrblock com   The tips you report to your employer are counted as part of your income for the month you report them. Www handrblock com Your employer can figure your withholding in either of two ways. Www handrblock com By withholding at the regular rate on the sum of your pay plus your reported tips. Www handrblock com By withholding at the regular rate on your pay plus a percentage of your reported tips. Www handrblock com Not enough pay to cover taxes. Www handrblock 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 handrblock com See Giving your employer money for taxes in chapter 6. Www handrblock com Allocated tips. Www handrblock com   Your employer should not withhold income tax, Medicare tax, social security tax, or railroad retirement tax on any allocated tips. Www handrblock com Withholding is based only on your pay plus your reported tips. Www handrblock com Your employer should refund to you any incorrectly withheld tax. Www handrblock com See Allocated Tips in chapter 6 for more information. Www handrblock com Taxable Fringe Benefits The value of certain noncash fringe benefits you receive from your employer is considered part of your pay. Www handrblock com Your employer generally must withhold income tax on these benefits from your regular pay. Www handrblock com For information on fringe benefits, see Fringe Benefits under Employee Compensation in chapter 5. Www handrblock 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 handrblock com Your employer must notify you if this choice is made. Www handrblock com For more information on withholding on taxable fringe benefits, see chapter 1 of Publication 505. Www handrblock 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 handrblock com To qualify as sick pay, it must be paid under a plan to which your employer is a party. Www handrblock com If you receive sick pay from your employer or an agent of your employer, income tax must be withheld. Www handrblock com An agent who does not pay regular wages to you may choose to withhold income tax at a flat rate. Www handrblock 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 handrblock com See Form W-4S , later. Www handrblock 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 handrblock com Union agreements. Www handrblock 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 handrblock com See your union representative or your employer for more information. Www handrblock com Form W-4S. Www handrblock 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 handrblock com Its instructions contain a worksheet you can use to figure the amount you want withheld. Www handrblock com They also explain restrictions that may apply. Www handrblock com   Give the completed form to the payer of your sick pay. Www handrblock com The payer must withhold according to your directions on the form. Www handrblock com Estimated tax. Www handrblock 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 handrblock 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 handrblock com See Underpayment Penalty for 2013 at the end of this chapter. Www handrblock 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 handrblock 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 handrblock 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 handrblock com Income tax withholding from an ERD is mandatory. Www handrblock com More information. Www handrblock com   For more information on taxation of annuities and distributions (including ERDs) from qualified retirement plans, see chapter 10. Www handrblock com For information on IRAs, see chapter 17. Www handrblock 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 handrblock com Gambling Winnings Income tax is withheld at a flat 25% rate from certain kinds of gambling winnings. Www handrblock com Gambling winnings of more than $5,000 from the following sources are subject to income tax withholding. Www handrblock com Any sweepstakes; wagering pool, including payments made to winners of poker tournaments; or lottery. Www handrblock com Any other wager, if the proceeds are at least 300 times the amount of the bet. Www handrblock com It does not matter whether your winnings are paid in cash, in property, or as an annuity. Www handrblock com Winnings not paid in cash are taken into account at their fair market value. Www handrblock com Exception. Www handrblock com   Gambling winnings from bingo, keno, and slot machines generally are not subject to income tax withholding. Www handrblock com However, you may need to provide the payer with a social security number to avoid withholding. Www handrblock com See Backup withholding on gambling winnings in chapter 1 of Publication 505. Www handrblock com If you receive gambling winnings not subject to withholding, you may need to pay estimated tax. Www handrblock com See Estimated Tax for 2014 , later. Www handrblock 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 handrblock com See Underpayment Penalty for 2013 at the end of this chapter. Www handrblock com Form W-2G. Www handrblock 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 handrblock com Report the tax withheld on line 62 of Form 1040. Www handrblock com Unemployment Compensation You can choose to have income tax withheld from unemployment compensation. Www handrblock 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 handrblock com All unemployment compensation is taxable. Www handrblock com So, if you do not have income tax withheld, you may have to pay estimated tax. Www handrblock com See Estimated Tax for 2014 , later. Www handrblock 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 handrblock com For information, see Underpayment Penalty for 2013 at the end of this chapter. Www handrblock com Federal Payments You can choose to have income tax withheld from certain federal payments you receive. Www handrblock 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 handrblock com S. Www handrblock com C. Www handrblock com 1421 et. Www handrblock com seq. Www handrblock 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 handrblock 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 handrblock com If you do not choose to have income tax withheld, you may have to pay estimated tax. Www handrblock com See Estimated Tax for 2014 , later. Www handrblock 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 handrblock com For information, see Underpayment Penalty for 2013 at the end of this chapter. Www handrblock com More information. Www handrblock com   For more information about the tax treatment of social security and railroad retirement benefits, see chapter 11. Www handrblock com Get Publication 225, Farmer's Tax Guide, for information about the tax treatment of commodity credit corporation loans or crop disaster payments. Www handrblock 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 handrblock com The information return shows how much you were paid during the year. Www handrblock com It also includes your name and taxpayer identification number (TIN). Www handrblock com TINs are explained in chapter 1 under Social Security Number (SSN) . Www handrblock com These payments generally are not subject to withholding. Www handrblock com However, “backup” withholding is required in certain situations. Www handrblock com Backup withholding can apply to most kinds of payments that are reported on Form 1099. Www handrblock com The payer must withhold at a flat 28% rate in the following situations. Www handrblock com You do not give the payer your TIN in the required manner. Www handrblock com The IRS notifies the payer that the TIN you gave is incorrect. Www handrblock com You are required, but fail, to certify that you are not subject to backup withholding. Www handrblock 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 handrblock com The IRS will do this only after it has mailed you four notices over at least a 210-day period. Www handrblock com See Backup Withholding in chapter 1 of Publication 505 for more information. Www handrblock com Penalties. Www handrblock com   There are civil and criminal penalties for giving false information to avoid backup withholding. Www handrblock com The civil penalty is $500. Www handrblock com The criminal penalty, upon conviction, is a fine of up to $1,000 or imprisonment of up to 1 year, or both. Www handrblock com Estimated Tax for 2014 Estimated tax is the method used to pay tax on income that is not subject to withholding. Www handrblock com This includes income from self-employment, interest, dividends, alimony, rent, gains from the sale of assets, prizes, and awards. Www handrblock 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 handrblock 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 handrblock 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 handrblock 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 handrblock com For information on when the penalty applies, see Underpayment Penalty for 2013 at the end of this chapter. Www handrblock 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 handrblock com To do this, give a new Form W-4 to your employer. Www handrblock com See chapter 1 of Publication 505. Www handrblock com Estimated tax not required. Www handrblock com   You do not have to pay estimated tax for 2014 if you meet all three of the following conditions. Www handrblock com You had no tax liability for 2013. Www handrblock com You were a U. Www handrblock com S. Www handrblock com citizen or resident alien for the whole year. Www handrblock com Your 2013 tax year covered a 12-month period. Www handrblock 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 handrblock com For the definition of “total tax” for 2013, see Publication 505, chapter 2. Www handrblock com Who Must Pay Estimated Tax If you owe additional tax for 2013, you may have to pay estimated tax for 2014. Www handrblock 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 handrblock com General rule. Www handrblock com   In most cases, you must pay estimated tax for 2014 if both of the following apply. Www handrblock com You expect to owe at least $1,000 in tax for 2014, after subtracting your withholding and refundable credits. Www handrblock 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 handrblock com Your 2013 tax return must cover all 12 months. Www handrblock 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 handrblock com Special rules for farmers, fishermen, and higher income taxpayers. Www handrblock 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 handrblock 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 handrblock com See Figure 4-A and Publication 505, chapter 2 for more information. Www handrblock com Figure 4-A. Www handrblock com Do You Have To Pay Estimated Tax? Please click here for the text description of the image. Www handrblock com Figure 4-A Do You Have To Pay Estimated Tax? Aliens. Www handrblock com   Resident and nonresident aliens also may have to pay estimated tax. Www handrblock com Resident aliens should follow the rules in this chapter unless noted otherwise. Www handrblock com Nonresident aliens should get Form 1040-ES (NR), U. Www handrblock com S. Www handrblock com Estimated Tax for Nonresident Alien Individuals. Www handrblock com   You are an alien if you are not a citizen or national of the United States. Www handrblock com You are a resident alien if you either have a green card or meet the substantial presence test. Www handrblock com For more information about the substantial presence test, see Publication 519, U. Www handrblock com S. Www handrblock com Tax Guide for Aliens. Www handrblock com Married taxpayers. Www handrblock com   If you qualify to make joint estimated tax payments, apply the rules discussed here to your joint estimated income. Www handrblock com   You and your spouse can make joint estimated tax payments even if you are not living together. Www handrblock 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 handrblock com   If you do not qualify to make joint estimated tax payments, apply these rules to your separate estimated income. Www handrblock 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 handrblock com 2013 separate returns and 2014 joint return. Www handrblock 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 handrblock com You filed a separate return if you filed as single, head of household, or married filing separately. Www handrblock com 2013 joint return and 2014 separate returns. Www handrblock 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 handrblock com You file a separate return if you file as single, head of household, or married filing separately. Www handrblock 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 handrblock com Then multiply the tax on the joint return by the following fraction. Www handrblock 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 handrblock com Joe and Heather filed a joint return for 2013 showing taxable income of $48,500 and a tax of $6,386. Www handrblock com Of the $48,500 taxable income, $40,100 was Joe's and the rest was Heather's. Www handrblock com For 2014, they plan to file married filing separately. Www handrblock com Joe figures his share of the tax on the 2013 joint return as follows. Www handrblock 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 handrblock com 6%     Joe's share of tax on joint return  ($6,386 × 87. Www handrblock 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 handrblock 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 handrblock com Use your 2013 federal tax return as a guide. Www handrblock com You can use Form 1040-ES and Publication 505 to figure your estimated tax. Www handrblock 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 handrblock com You must make adjustments both for changes in your own situation and for recent changes in the tax law. Www handrblock com For a discussion of these changes, visit IRS. Www handrblock com gov. Www handrblock com For more complete information on how to figure your estimated tax for 2014, see chapter 2 of Publication 505. Www handrblock com When To Pay Estimated Tax For estimated tax purposes, the tax year is divided into four payment periods. Www handrblock com Each period has a specific payment due date. Www handrblock 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 handrblock com The payment periods and due dates for estimated tax payments are shown next. Www handrblock com   For the period: Due date:*     Jan. Www handrblock com 1 – March 31 April 15     April 1 – May 31 June 16     June 1 – August 31 Sept. Www handrblock com 15     Sept. Www handrblock com 1– Dec. Www handrblock com 31 Jan. Www handrblock com 15, next year     *See Saturday, Sunday, holiday rule and January payment . Www handrblock com Saturday, Sunday, holiday rule. Www handrblock 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 handrblock com January payment. Www handrblock 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 handrblock com Fiscal year taxpayers. Www handrblock com   If your tax year does not start on January 1, see the Form 1040-ES instructions for your payment due dates. Www handrblock 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 handrblock 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 handrblock com You can pay all your estimated tax at that time, or you can pay it in installments. Www handrblock com If you choose to pay in installments, make your first payment by the due date for the first payment period. Www handrblock com Make your remaining installment payments by the due dates for the later periods. Www handrblock com No income subject to estimated tax during first period. Www handrblock 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 handrblock 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 handrblock com The following chart shows when to make installment payments. Www handrblock 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 handrblock com 15 Jan. Www handrblock com 15 next year April 1–May 31 June 16 Sept. Www handrblock com 15 Jan. Www handrblock com 15 next year June 1–Aug. Www handrblock com 31 Sept. Www handrblock com 15 Jan. Www handrblock com 15 next year After Aug. Www handrblock com 31 Jan. Www handrblock com 15 next year (None) *See Saturday, Sunday, holiday rule and January payment . Www handrblock com How much to pay to avoid a penalty. Www handrblock com   To determine how much you should pay by each payment due date, see How To Figure Each Payment, next. Www handrblock 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 handrblock com You can figure your required payment for each period by using either the regular installment method or the annualized income installment method. Www handrblock com These methods are described in chapter 2 of Publication 505. Www handrblock 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 handrblock 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 handrblock com Underpayment penalty. Www handrblock 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 handrblock 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 handrblock com See chapter 4 of Publication 505 for more information. Www handrblock com Change in estimated tax. Www handrblock 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 handrblock 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 handrblock 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 handrblock 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 handrblock com How To Pay Estimated Tax There are several ways to pay estimated tax. Www handrblock com Credit an overpayment on your 2013 return to your 2014 estimated tax. Www handrblock 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 handrblock com Send in your payment (check or money order) with a payment voucher from Form 1040-ES. Www handrblock 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 handrblock 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 handrblock com Take the amount you have credited into account when figuring your estimated tax payments. Www handrblock 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 handrblock com You also cannot use that overpayment in any other way. Www handrblock com Pay Online Paying online is convenient and secure and helps make sure we get your payments on time. Www handrblock com You can pay using either of the following electronic payment methods. Www handrblock com Direct transfer from your bank account. Www handrblock com Credit or debit card. Www handrblock com To pay your taxes online or for more information, go to www. Www handrblock com irs. Www handrblock com gov/e-pay. Www handrblock com Pay by Phone Paying by phone is another safe and secure method of paying electronically. Www handrblock com Use one of the following methods. Www handrblock com Direct transfer from your bank account. Www handrblock com Credit or debit card. Www handrblock com To pay by direct transfer from your bank account, call 1-800-555-4477 (English), 1-800-244-4829 (Espanol). Www handrblock 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 handrblock com To pay using a credit or debit card, you can call one of the following service providers. Www handrblock com There is a convenience fee charged by these providers that varies by provider, card type, and payment amount. Www handrblock com WorldPay 1-888-9-PAY-TAXTM(1-888-972-9829) www. Www handrblock com payUSAtax. Www handrblock com com Official Payments Corporation 1-888-UPAY-TAXTM (1-888-872-9829) www. Www handrblock com officialpayments. Www handrblock com com Link2Gov Corporation 1-888-PAY-1040TM (1-888-729-1040) www. Www handrblock com PAY1040. Www handrblock com com For the latest details on how to pay by phone, go to www. Www handrblock com irs. Www handrblock com gov/e-pay. Www handrblock 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 handrblock 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 handrblock com The enclosed payment vouchers will be preprinted with your name, address, and social security number. Www handrblock com Using the preprinted vouchers will speed processing, reduce the chance of error, and help save processing costs. Www handrblock com Use the window envelopes that came with your Form 1040-ES package. Www handrblock 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 handrblock com Note. Www handrblock com These criteria can change without notice. Www handrblock 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 handrblock com irs. Www handrblock com gov and print a copy of Form 1040-ES which includes four blank payment vouchers. Www handrblock com Complete one of these and make your payment timely to avoid penalties for paying late. Www handrblock com Do not use the address shown in the Form 1040 or Form 1040A instructions for your estimated tax payments. Www handrblock 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 handrblock com gov. Www handrblock com Follow the instructions to make sure you use the vouchers correctly. Www handrblock com Joint estimated tax payments. Www handrblock 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 handrblock com Change of address. Www handrblock com   You must notify the IRS if you are making estimated tax payments and you changed your address during the year. Www handrblock com Complete Form 8822, Change of Address, and mail it to the address shown in the instructions for that form. Www handrblock 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 handrblock com Also take credit for the estimated tax you paid for 2013. Www handrblock com These credits are subtracted from your total tax. Www handrblock com Because these credits are refundable, you should file a return and claim these credits, even if you do not owe tax. Www handrblock com Two or more employers. Www handrblock 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 handrblock com You may be able to claim the excess as a credit against your income tax when you file your return. Www handrblock com See Credit for Excess Social Security Tax or Railroad Retirement Tax Withheld in chapter 37. Www handrblock 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 handrblock 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 handrblock com Forms W-2 and W-2G. Www handrblock com   If you file a paper return, always file Form W-2 with your income tax return. Www handrblock com File Form W-2G with your return only if it shows any federal income tax withheld from your winnings. Www handrblock com   You should get at least two copies of each form. Www handrblock com If you file a paper return, attach one copy to the front of your federal income tax return. Www handrblock com Keep one copy for your records. Www handrblock com You also should receive copies to file with your state and local returns. Www handrblock com Form W-2 Your employer is required to provide or send Form W-2 to you no later than January 31, 2014. Www handrblock com You should receive a separate Form W-2 from each employer you worked for. Www handrblock 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 handrblock com However, your employer must provide or send it to you by January 31, 2014. Www handrblock 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 handrblock com If you have not received your Form W-2 by January 31, you should ask your employer for it. Www handrblock com If you do not receive it by February 15, call the IRS. Www handrblock 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 handrblock 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 handrblock 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 handrblock com Form W-2G If you had gambling winnings in 2013, the payer may have withheld income tax. Www handrblock 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 handrblock com Report the amounts you won on line 21 of Form 1040. Www handrblock com Take credit for the tax withheld on line 62 of Form 1040. Www handrblock com If you had gambling winnings, you must use Form 1040; you cannot use Form 1040A or Form 1040EZ. Www handrblock com The 1099 Series Most forms in the 1099 series are not filed with your return. Www handrblock 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 handrblock com Unless instructed to file any of these forms with your return, keep them for your records. Www handrblock 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 handrblock com ; Form 1099-S, Proceeds From Real Estate Transactions; Form RRB-1099, Payments by the Railroad Retirement Board. Www handrblock 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 handrblock com See the instructions to these forms for details. Www handrblock com Form 1099-R. Www handrblock com   Attach Form 1099-R to your paper return if box 4 shows federal income tax withheld. Www handrblock com Include the amount withheld in the total on line 62 of Form 1040 or line 36 of Form 1040A. Www handrblock com You cannot use Form 1040EZ if you received payments reported on Form 1099-R. Www handrblock com Backup withholding. Www handrblock 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 handrblock com Form Not Correct If you receive a form with incorrect information on it, you should ask the payer for a corrected form. Www handrblock com Call the telephone number or write to the address given for the payer on the form. Www handrblock 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 handrblock com A special form, Form W-2c, Corrected Wage and Tax Statement, is used to correct a Form W-2. Www handrblock com In certain situations, you will receive two forms in place of the original incorrect form. Www handrblock 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 handrblock 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 handrblock com This form will have an “X” in the “CORRECTED” box at the top of the form. Www handrblock 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 handrblock 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 handrblock com S. Www handrblock com Individual Income Tax Return. Www handrblock 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 handrblock com Do not include any amount withheld from your spouse's income. Www handrblock com However, different rules may apply if you live in a community property state. Www handrblock com Community property states are listed in chapter 2. Www handrblock com For more information on these rules, and some exceptions, see Publication 555, Community Property. Www handrblock 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 handrblock 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 handrblock 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 handrblock com Include any overpayment from 2012 that you had credited to your 2013 estimated tax. Www handrblock com You must use Form 1040 or Form 1040A if you paid estimated tax. Www handrblock com You cannot use Form 1040EZ. Www handrblock com Name changed. Www handrblock 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 handrblock com The statement should cover payments you made jointly with your spouse as well as any you made separately. Www handrblock com   Be sure to report the change to the Social Security Administration. Www handrblock com This prevents delays in processing your return and issuing any refunds. Www handrblock 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 handrblock com If you made joint estimated tax payments, you must decide how to divide the payments between your returns. Www handrblock 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 handrblock 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 handrblock 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 handrblock 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 handrblock 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 handrblock 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 handrblock 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 handrblock com Generally, you will not have to pay a penalty for 2013 if any of the following apply. Www handrblock 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 handrblock 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 handrblock com Your total 2013 tax minus your withholding and refundable credits is less than $1,000. Www handrblock 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 handrblock com See Publication 505, chapter 4, for a definition of “total tax” for 2012 and 2013. Www handrblock com Farmers and fishermen. Www handrblock com   Special rules apply if you are a farmer or fisherman. Www handrblock com See Farmers and Fishermen in chapter 4 of Publication 505 for more information. Www handrblock com IRS can figure the penalty for you. Www handrblock 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 handrblock com Generally, the IRS will figure the penalty for you and send you a bill. Www handrblock 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 handrblock com See chapter 4 of Publication 505. Www handrblock com Prev  Up  Next   Home   More Online Publications