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1040ez Efile

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1040ez Efile

1040ez efile Publication 524 - Main Content Table of Contents Are You Eligible for the Credit?Qualified Individual Income Limits Credit Figured for You Figuring the Credit YourselfStep 1. 1040ez efile Determine Initial Amount Step 2. 1040ez efile Total Certain Nontaxable Pensions and Benefits Step 3. 1040ez efile Determine Excess Adjusted Gross Income Step 4. 1040ez efile Determine the Total of Steps 2 and 3 Step 5. 1040ez efile Determine Your Credit Examples How To Get Tax Help Are You Eligible for the Credit? You can take the credit for the elderly or the disabled if you meet both of the following requirements. 1040ez efile You are a qualified individual. 1040ez efile Your income is not more than certain limits. 1040ez efile You can use Figure A and Table 1 as guides to see if you are eligible for the credit. 1040ez efile Use Figure A first to see if you are a qualified individual. 1040ez efile If you are, go to Table 1 to make sure your income is not too high to take the credit. 1040ez efile You can take the credit only if you file Form 1040 or Form 1040A. 1040ez efile You cannot take the credit if you file Form 1040EZ or Form 1040NR. 1040ez efile Qualified Individual You are a qualified individual for this credit if you are a U. 1040ez efile S. 1040ez efile citizen or resident alien, and either of the following applies. 1040ez efile You were age 65 or older at the end of 2013. 1040ez efile You were under age 65 at the end of 2013 and all three of the following statements are true. 1040ez efile You retired on permanent and total disability (explained later). 1040ez efile You received taxable disability income for 2013. 1040ez efile On January 1, 2013, you had not reached mandatory retirement age (defined later under Disability income ). 1040ez efile Age 65. 1040ez efile   You are considered to be age 65 on the day before your 65th birthday. 1040ez efile As a result, if you were born on January 1, 1949, you are considered to be age 65 at the end of 2013. 1040ez efile U. 1040ez efile S. 1040ez efile Citizen or Resident Alien You must be a U. 1040ez efile S. 1040ez efile citizen or resident alien (or be treated as a resident alien) to take the credit. 1040ez efile Generally, you cannot take the credit if you were a nonresident alien at any time during the tax year. 1040ez efile Exceptions. 1040ez efile   You may be able to take the credit if you are a nonresident alien who is married to a U. 1040ez efile S. 1040ez efile citizen or resident alien at the end of the tax year and you and your spouse choose to treat you as a U. 1040ez efile S. 1040ez efile resident alien. 1040ez efile If you make that choice, both you and your spouse are taxed on your worldwide incomes. 1040ez efile   If you were a nonresident alien at the beginning of the year and a resident alien at the end of the year, and you were married to a U. 1040ez efile S. 1040ez efile citizen or resident alien at the end of the year, you may be able to choose to be treated as a U. 1040ez efile S. 1040ez efile resident alien for the entire year. 1040ez efile In that case, you may be allowed to take the credit. 1040ez efile   For information on these choices, see chapter 1 of Publication 519, U. 1040ez efile S. 1040ez efile Tax Guide for Aliens. 1040ez efile Married Persons Generally, if you are married at the end of the tax year, you and your spouse must file a joint return to take the credit. 1040ez efile However, if you and your spouse did not live in the same household at any time during the tax year, you can file either a joint return or separate returns and still take the credit. 1040ez efile Head of household. 1040ez efile   You can file as head of household and qualify to take the credit, even if your spouse lived with you during the first 6 months of the year, if you meet all the following tests. 1040ez efile You file a separate return. 1040ez efile You paid more than half the cost of keeping up your home during the tax year. 1040ez efile Your spouse did not live in your home at any time during the last 6 months of the tax year and the absence was not temporary. 1040ez efile (See Temporary absences under Head of Household in Publication 501. 1040ez efile ) Your home was the main home of your child, stepchild, or an eligible foster child for more than half the year. 1040ez efile An eligible foster child is a child placed with you by an authorized placement agency or by judgment, decree, or other order of any court of competent jurisdiction. 1040ez efile You can claim an exemption for that child, or you cannot claim the exemption only because the noncustodial parent can claim the child using the rules for children of divorced or separated parents. 1040ez efile For more information, see Publication 501, Exemptions, Standard Deduction, and Filing Information. 1040ez efile Figure A. 1040ez efile Are You a Qualified Individual? Please click here for the text description of the image. 1040ez efile figure a Under Age 65 If you are under age 65 at the end of 2013, you can qualify for the credit only if you are retired on permanent and total disability (discussed next) and have taxable disability income (discussed later under Disability income ). 1040ez efile You are retired on permanent and total disability if: You were permanently and totally disabled when you retired, and You retired on disability before the close of the tax year. 1040ez efile Even if you do not retire formally, you may be considered retired on disability when you have stopped working because of your disability. 1040ez efile If you retired on disability before 1977, and were not permanently and totally disabled at the time, you can qualify for the credit if you were permanently and totally disabled on January 1, 1976, or January 1, 1977. 1040ez efile You are considered to be under age 65 at the end of 2013 if you were born after January 1, 1949. 1040ez efile Permanent and total disability. 1040ez efile    You are permanently and totally disabled if you cannot engage in any substantial gainful activity because of your physical or mental condition. 1040ez efile A qualified physician must certify that the condition has lasted or can be expected to last continuously for 12 months or more, or that the condition can be expected to result in death. 1040ez efile See Physician's statement , later. 1040ez efile Substantial gainful activity. 1040ez efile   Substantial gainful activity is the performance of significant duties over a reasonable period of time while working for pay or profit, or in work generally done for pay or profit. 1040ez efile Full-time work (or part-time work done at your employer's convenience) in a competitive work situation for at least the minimum wage conclusively shows that you are able to engage in substantial gainful activity. 1040ez efile   Substantial gainful activity is not work you do to take care of yourself or your home. 1040ez efile It is not unpaid work on hobbies, institutional therapy or training, school attendance, clubs, social programs, and similar activities. 1040ez efile However, doing this kind of work may show that you are able to engage in substantial gainful activity. 1040ez efile    The fact that you have not worked for some time is not, of itself, conclusive evidence that you cannot engage in substantial gainful activity. 1040ez efile   The following examples illustrate the tests of substantial gainful activity. 1040ez efile Example 1. 1040ez efile Trisha, a sales clerk, retired on disability. 1040ez efile She is 53 years old and now works as a full-time babysitter for the minimum wage. 1040ez efile Even though Trisha is doing different work, she is able to do the duties of her new job in a full-time competitive work situation for the minimum wage. 1040ez efile She cannot take the credit because she is able to engage in substantial gainful activity. 1040ez efile Example 2. 1040ez efile Tom, a bookkeeper, retired on disability. 1040ez efile He is 59 years old and now drives a truck for a charitable organization. 1040ez efile He sets his own hours and is not paid. 1040ez efile Duties of this nature generally are performed for pay or profit. 1040ez efile Some weeks he works 10 hours, and some weeks he works 40 hours. 1040ez efile Over the year he averages 20 hours a week. 1040ez efile The kind of work and his average hours a week conclusively show that Tom is able to engage in substantial gainful activity. 1040ez efile This is true even though Tom is not paid and he sets his own hours. 1040ez efile He cannot take the credit. 1040ez efile Example 3. 1040ez efile John, who retired on disability, took a job with a former employer on a trial basis. 1040ez efile The purpose of the job was to see if John could do the work. 1040ez efile The trial period lasted for 6 months during which John was paid the minimum wage. 1040ez efile Because of John's disability, he was assigned only light duties of a nonproductive “make-work” nature. 1040ez efile The activity was gainful because John was paid at least the minimum wage. 1040ez efile But the activity was not substantial because his duties were nonproductive. 1040ez efile These facts do not, by themselves, show that John is able to engage in substantial gainful activity. 1040ez efile Example 4. 1040ez efile Joan, who retired on disability from a job as a bookkeeper, lives with her sister who manages several motel units. 1040ez efile Joan helps her sister for 1 or 2 hours a day by performing duties such as washing dishes, answering phones, registering guests, and bookkeeping. 1040ez efile Joan can select the time of day when she feels most fit to work. 1040ez efile Work of this nature, performed off and on during the day at Joan's convenience, is not activity of a “substantial and gainful” nature even if she is paid for the work. 1040ez efile The performance of these duties does not, of itself, show that Joan is able to engage in substantial gainful activity. 1040ez efile Sheltered employment. 1040ez efile   Certain work offered at qualified locations to physically or mentally impaired persons is considered sheltered employment. 1040ez efile These qualified locations are in sheltered workshops, hospitals and similar institutions, homebound programs, and Department of Veterans Affairs (VA) sponsored homes. 1040ez efile   Compared to commercial employment, pay is lower for sheltered employment. 1040ez efile Therefore, one usually does not look for sheltered employment if he or she can get other employment. 1040ez efile The fact that one has accepted sheltered employment is not proof of the person's ability to engage in substantial gainful activity. 1040ez efile Physician's statement. 1040ez efile   If you are under age 65, you must have your physician complete a statement certifying that you were permanently and totally disabled on the date you retired. 1040ez efile You can use the statement in the Instructions for Schedule R. 1040ez efile   You do not have to file this statement with your Form 1040 or Form 1040A, but you must keep it for your records. 1040ez efile Veterans. 1040ez efile    If the Department of Veterans Affairs (VA) certifies that you are permanently and totally disabled, you can substitute VA Form 21-0172, Certification of Permanent and Total Disability, for the physician's statement you are required to keep. 1040ez efile VA Form 21-0172 must be signed by a person authorized by the VA to do so. 1040ez efile You can get this form from your local VA regional office. 1040ez efile Physician's statement obtained in earlier year. 1040ez efile   If you got a physician's statement in an earlier year and, due to your continued disabled condition, you were unable to engage in any substantial gainful activity during 2013, you may not need to get another physician's statement for 2013. 1040ez efile For a detailed explanation of the conditions you must meet, see the instructions for Schedule R, Part II. 1040ez efile If you meet the required conditions, check the box on your Schedule R, Part II, line 2. 1040ez efile   If you checked box 4, 5, or 6 in Part I of Schedule R, enter in the space above the box on line 2 in Part II the first name(s) of the spouse(s) for whom the box is checked. 1040ez efile Disability income. 1040ez efile   If you are under age 65, you must also have taxable disability income to qualify for the credit. 1040ez efile Disability income must meet both of the following requirements. 1040ez efile It must be paid under your employer's accident or health plan or pension plan. 1040ez efile It must be included in your income as wages (or payments instead of wages) for the time you are absent from work because of permanent and total disability. 1040ez efile Payments that are not disability income. 1040ez efile    Any payment you receive from a plan that does not provide for disability retirement is not disability income. 1040ez efile Any lump-sum payment for accrued annual leave that you receive when you retire on disability is a salary payment and is not disability income. 1040ez efile    For purposes of the credit for the elderly or the disabled, disability income does not include amounts you receive after you reach mandatory retirement age. 1040ez efile Mandatory retirement age is the age set by your employer at which you would have had to retire, had you not become disabled. 1040ez efile Income Limits To determine if you can claim the credit, you must consider two income limits. 1040ez efile The first limit is the amount of your adjusted gross income (AGI). 1040ez efile The second limit is the amount of nontaxable social security and other nontaxable pensions, annuities, or disability income you received. 1040ez efile The limits are shown in Table 1. 1040ez efile If your AGI and your nontaxable pensions, annuities, or disability income are less than the income limits, you may be able to claim the credit. 1040ez efile See Figuring the Credit Yourself , later. 1040ez efile Table 1. 1040ez efile Income Limits IF your filing status is THEN, even if you qualify (see Figure A), you CANNOT take the credit if   Your adjusted gross income (AGI)* is equal to or more than. 1040ez efile . 1040ez efile . 1040ez efile     OR the total of your nontaxable social security and other nontaxable pension(s), annuities, or disability income is equal to or more than. 1040ez efile . 1040ez efile . 1040ez efile   single, head of household, or qualifying widow(er) with dependent child   $17,500     $5,000   married filing jointly and only one spouse qualifies in Figure A   $20,000     $5,000   married filing jointly and both spouses qualify in Figure A   $25,000     $7,500   married filing separately and you lived apart from your spouse for all of 2013   $12,500     $3,750   * AGI is the amount on Form 1040A, line 22, or Form 1040, line 38. 1040ez efile If your AGI or your nontaxable pensions, annuities, or disability income are equal to or more than the income limits, you cannot take the credit. 1040ez efile Credit Figured for You You can figure the credit yourself, or the Internal Revenue Service (IRS) will figure it for you. 1040ez efile See Figuring the Credit Yourself , next. 1040ez efile If you can take the credit and you want the IRS to figure the credit for you, attach Schedule R to your return. 1040ez efile Check the appropriate box in Part I of Schedule R and fill in Part II and lines 11, 13a, and 13b of Part III, if they apply to you. 1040ez efile If you file Form 1040A, enter “CFE” in the space to the left of Form 1040A, line 30. 1040ez efile If you file Form 1040, check box c on Form 1040, line 53, and enter “CFE” on the line next to that box. 1040ez efile Attach Schedule R to your return. 1040ez efile Table 2. 1040ez efile Initial Amounts IF your filing status is. 1040ez efile . 1040ez efile . 1040ez efile   THEN enter on line 10 of Schedule R. 1040ez efile . 1040ez efile . 1040ez efile single,head of household, or qualifying widow(er) with dependent child and, by the end of 2013, you were       • 65 or older $5,000   • under 65 and retired on permanent and total disability1 $5,000 married filing a joint return and by the end of 2013       • both of you were 65 or older $7,500   • both of you were under 65 and one of you retired on permanent and total disability1 $5,000   • both of you were under 65 and both of you retired on permanent and total disability2 $7,500   • one of you was 65 or older, and the other was under 65 and retired on permanent  and total disability3 $7,500   • one of you was 65 or older, and the other was under 65 and not retired on permanent  and total disability $5,000 married filing a separate return and you did not live with your spouse at any time during the year and, by the end of 2013, you were       • 65 or older $3,750   • under 65 and retired on permanent and total disability1 $3,750   1 Amount cannot be more than the taxable disability income. 1040ez efile     2 Amount cannot be more than your combined taxable disability income. 1040ez efile     3 Amount is $5,000 plus the taxable disability income of the spouse under age 65, but not more than $7,500. 1040ez efile   Figuring the Credit Yourself If you figure the credit yourself, fill out the front of Schedule R. 1040ez efile Next, fill out Schedule R, Part III. 1040ez efile If you file Form 1040A, enter the amount from Schedule R, line 22 on line 30. 1040ez efile If you file Form 1040, include the amount from Schedule R, line 22 on line 53, check box c, and enter “Sch R” on the line next to that box. 1040ez efile There are five steps in Part III to determine the amount of your credit. 1040ez efile Determine your initial amount (lines 10–12). 1040ez efile Determine the total of any nontaxable social security and certain other nontaxable pensions, annuities, and disability benefits you received (lines 13a, 13b, and 13c). 1040ez efile Determine your excess adjusted gross income (lines 14–17). 1040ez efile Determine the total of steps 2 and 3 (line 18). 1040ez efile Determine your credit (lines 19–22). 1040ez efile These steps are discussed in more detail next. 1040ez efile Step 1. 1040ez efile Determine Initial Amount To figure the credit, you must first determine your initial amount using lines 10 through 12. 1040ez efile See Table 2. 1040ez efile Your initial amount is on line 12. 1040ez efile Initial amounts for persons under age 65. 1040ez efile   If you are a qualified individual under age 65, your initial amount cannot be more than your taxable disability income. 1040ez efile Special rules for joint returns. 1040ez efile   If you are a qualified individual under age 65, and your spouse is also a qualified individual, your initial amount is your taxable disability income plus $5,000. 1040ez efile   If you are a qualified individual, and both you and your spouse are under age 65, your initial amount cannot be more than your combined taxable disability income. 1040ez efile Step 2. 1040ez efile Total Certain Nontaxable Pensions and Benefits Step 2 is to figure the total amount of nontaxable social security and certain other nontaxable payments you received during the year. 1040ez efile You must reduce your initial amount by these payments. 1040ez efile Enter these nontaxable payments on lines 13a or 13b and total them on line 13c. 1040ez efile If you are married filing jointly, you must enter the combined amount of nontaxable payments both you and your spouse received. 1040ez efile Worksheets are provided in the instructions for Forms 1040 and 1040A to help you determine if any of your social security benefits (or equivalent railroad retirement benefits) are taxable. 1040ez efile Include the following nontaxable payments in the amounts you enter on lines 13a and 13b. 1040ez efile Nontaxable social security payments. 1040ez efile This is the nontaxable part of the benefits shown in box 5 of Form SSA-1099, Social Security Benefit Statement, before deducting any amounts withheld to pay premiums on supplementary Medicare insurance, and before any reduction because of benefits received under workers' compensation. 1040ez efile (Do not include a lump-sum death benefit payment you may receive as a surviving spouse, or a surviving child's insurance benefit payments you may receive as a guardian. 1040ez efile ) Nontaxable railroad retirement pension payments treated as social security. 1040ez efile This is the nontaxable part of the benefits shown in box 5 of Form RRB-1099, Payments by the Railroad Retirement Board. 1040ez efile Nontaxable pension or annuity payments or disability benefits that are paid under a law administered by the Department of Veterans Affairs (VA). 1040ez efile (Do not include amounts received as a pension, annuity, or similar allowance for personal injuries or sickness resulting from active service in the armed forces of any country or in the National Oceanic and Atmospheric Administration or the Public Health Service, or as a disability annuity under section 808 of the Foreign Service Act of 1980. 1040ez efile ) Pension or annuity payments or disability benefits that are excluded from income under any provision of federal law other than the Internal Revenue Code. 1040ez efile (Do not include amounts that are a return of your cost of a pension or annuity. 1040ez efile These amounts do not reduce your initial amount. 1040ez efile ) You should be sure to take into account all of the nontaxable amounts you receive. 1040ez efile These amounts are verified by the IRS through information supplied by other government agencies. 1040ez efile Step 3. 1040ez efile Determine Excess Adjusted Gross Income You also must reduce your initial amount by your excess adjusted gross income. 1040ez efile Figure your excess adjusted gross income on lines 14–17. 1040ez efile You figure your excess adjusted gross income as follows. 1040ez efile Subtract from your adjusted gross income (Form 1040A, line 22 or Form 1040, line 38) the amount shown for your filing status. 1040ez efile $7,500 if you are single, a head of household, or a qualifying widow(er) with dependent child, $10,000 if you are married filing jointly, or $5,000 if you are married filing separately and you and your spouse did not live in the same household at any time during the tax year. 1040ez efile Divide the result of (1) by 2. 1040ez efile Step 4. 1040ez efile Determine the Total of Steps 2 and 3 To determine if you can take the credit, you must add (on line 18) the amounts you figured in Step 2 (line 13c) and Step 3 (line 17). 1040ez efile Step 5. 1040ez efile Determine Your Credit Subtract the amount determined in Step 4 (line 18) from the amount determined in Step 1 (line 12), and multiply the result by 15% (. 1040ez efile 15). 1040ez efile In certain cases, the amount of your credit may be limited. 1040ez efile See Limit on credit , later. 1040ez efile Example. 1040ez efile You are 66 years old and your spouse is 64. 1040ez efile Your spouse is not disabled. 1040ez efile You file a joint return on Form 1040. 1040ez efile Your adjusted gross income is $14,630. 1040ez efile Together you received $3,200 from social security, which was nontaxable. 1040ez efile You figure the credit as follows: Example applying the 5 step process Amount (Line references (shown in parentheses) are to the Schedule R)      1. 1040ez efile Initial amount (line 12) $5,000 2. 1040ez efile Total nontaxable social security  and other nontaxable  pensions (line 13c) $3,200   3. 1040ez efile Excess adjusted gross income  ($14,630–$10,000) ÷ 2 (line 17) 2,315   4. 1040ez efile Add (2) and (3) (line 18) 5,515 5. 1040ez efile Subtract (4) from (1) (line 12 – line 18 = line 19) (Do not enter less than -0-) $ -0- You cannot take the credit because your nontaxable social security plus your excess adjusted gross income is more than your initial amount. 1040ez efile Limit on credit. 1040ez efile   The amount of credit you can claim is generally limited to the amount of your tax. 1040ez efile Use the Credit Limit Worksheet in the Instructions for Schedule R to determine if your credit is limited. 1040ez efile Examples The following examples illustrate the credit for the elderly or the disabled. 1040ez efile The initial amounts are taken from Table 2, earlier. 1040ez efile Example 1. 1040ez efile James Davis is 58 years old, single, and files Form 1040A. 1040ez efile In 2011 he retired on permanent and total disability, and he is still permanently and totally disabled. 1040ez efile He got the required physician's statement in 2011 and kept it with his tax records. 1040ez efile His physician signed on line B of the statement. 1040ez efile This year James checks the box in Schedule R, Part II. 1040ez efile He does not need to get another statement for 2013. 1040ez efile He received the following income for the year: Nontaxable social security $1,500 Interest (taxable) 100 Taxable disability pension 11,400       James' adjusted gross income is $11,500 ($11,400 + $100). 1040ez efile He figures the credit on Schedule R as follows: 1. 1040ez efile Initial amount   $5,000 2. 1040ez efile Taxable disability pension   11,400 3. 1040ez efile Smaller of line 1 or line 2   5,000 4. 1040ez efile Nontaxable social security  benefits $1,500     5. 1040ez efile Excess adjusted gross income  ($11,500 − $7,500) ÷ 2 2,000     6. 1040ez efile Add lines 4 and 5   3,500 7. 1040ez efile Subtract line 6 from line 3  (Do not enter less than (-0-))   1,500 8. 1040ez efile Multiply line 7 by 15% (. 1040ez efile 15)   225 9. 1040ez efile Enter the amount from the  Credit Limit Worksheet in the  Instructions for Schedule R, line 21   151 10. 1040ez efile Credit (Enter the smaller of  line 8 or line 9)   $ 151 He enters $151 on line 30 of Form 1040A. 1040ez efile The Schedule R for James Davis is not shown. 1040ez efile Example 2. 1040ez efile William White is 53. 1040ez efile His wife Helen is 49. 1040ez efile William had a stroke 3 years ago and retired on permanent and total disability. 1040ez efile He is still permanently and totally disabled because of the stroke. 1040ez efile In November, Helen was injured in an accident at work and retired on permanent and total disability. 1040ez efile William received nontaxable social security disability benefits of $2,000 during the year and a taxable disability pension of $6,200. 1040ez efile Helen earned $12,500 from her job and received a taxable disability pension of $1,700. 1040ez efile Their joint return on Form 1040 shows adjusted gross income of $20,400 ($6,200 + $12,500 + $1,700). 1040ez efile They do not itemize deductions. 1040ez efile They do not have any amounts that would increase their standard deduction. 1040ez efile Helen's doctor completed the physician's statement in the Instructions for Schedule R. 1040ez efile Helen is not required to include the statement with their return, but she must keep it for her records. 1040ez efile William got a physician's statement for the year he had the stroke. 1040ez efile His doctor had signed on line B of that physician's statement to certify that William was permanently and totally disabled. 1040ez efile William has kept the physician's statement with his records. 1040ez efile He checks the box on Schedule R, Part II and writes his first name in the space above the box on line 2. 1040ez efile William and Helen use Schedule R to figure their $41 credit for the elderly or the disabled. 1040ez efile They attach Schedule R to their Form 1040 and enter $41 on line 53. 1040ez efile They check box c on line 53 and enter “Sch R” on the line next to that box. 1040ez efile See their filled-in Schedule R and Helen's filled-in physician's statement, later. 1040ez efile Instructions for Physician's Statement     Taxpayer Physician If you retired after 1976, enter the date you retired in the space provided on the statement below. 1040ez efile A person is permanently and totally disabled if both of the following apply:   1. 1040ez efile He or she cannot engage in any substantial gainful activity because of a physical or mental condition. 1040ez efile   2. 1040ez efile A physician determines that the disability has lasted or can be expected to last continuously for at least a year or can lead to death. 1040ez efile Physician's Statement     I certify that Helen A. 1040ez efile White Name of disabled person was permanently and totally disabled on January 1, 1976, or January 1, 1977, or was permanently and totally disabled on the date he or she retired. 1040ez efile If retired after 1976, enter the date retired ▶ November 1, 2013   Physician: Sign your name on either A or B below. 1040ez efile AThe disability has lasted or can be expected to last continuously for at least a year     Physician's signatureDate BThere is no reasonable probability that the disabled condition will ever improve Ayden D. 1040ez efile Doctor 2/8/14   Physician's signatureDate Physician's name Physician's address Ayden D. 1040ez efile Doctor 1900 Green St. 1040ez efile , Hometown, MD 20000         This image is too large to be displayed in the current screen. 1040ez efile Please click the link to view the image. 1040ez efile Page 1 of Schedule R for the Whites This image is too large to be displayed in the current screen. 1040ez efile Please click the link to view the image. 1040ez efile Page 2 of Schedule R for the Whites How To Get Tax Help Go online, use a smart phone, call or walk in to an office near you. 1040ez efile Whether it's help with a tax issue, preparing your tax return or picking up a free publication or form, get the help you need the way you want it. 1040ez efile Free help with your tax return. 1040ez efile   Free help in preparing your return is available nationwide from IRS-certified volunteers. 1040ez efile The Volunteer Income Tax Assistance (VITA) program is designed to help low-to-moderate income, elderly, persons with disabilities, and limited English proficient taxpayers. 1040ez efile The Tax Counseling for the Elderly (TCE) program is designed to assist taxpayers age 60 and older with their tax returns. 1040ez efile Most VITA and TCE sites offer free electronic filing and all volunteers will let you know about credits and deductions you may be entitled to claim. 1040ez efile Some VITA and TCE sites provide taxpayers the opportunity to prepare their return with the assistance of an IRS-certified volunteer. 1040ez efile To find the nearest VITA or TCE site, visit IRS. 1040ez efile gov or call 1-800-906-9887. 1040ez efile   As part of the TCE program, AARP offers the Tax-Aide counseling program. 1040ez efile To find the nearest AARP Tax-Aide site, visit AARP's website at www. 1040ez efile aarp. 1040ez efile org/money/taxaide or call 1-888-227-7669. 1040ez efile   For more information on these programs, go to IRS. 1040ez efile gov and enter “VITA” in the search box. 1040ez efile Internet. 1040ez efile IRS. 1040ez efile gov and IRS2Go are ready when you are — every day, every night, 24 hours a day, 7 days a week. 1040ez efile Apply for an Employer Identification Number (EIN). 1040ez efile Go to IRS. 1040ez efile gov and enter Apply for an EIN in the search box. 1040ez efile Request an Electronic Filing PIN by going to IRS. 1040ez efile gov and entering Electronic Filing PIN in the search box. 1040ez efile Check the status of your 2013 refund with Where's My Refund? Go to IRS. 1040ez efile gov or the IRS2Go app, and click on Where's My Refund? You'll get a personalized refund date as soon as the IRS processes your tax return and approves your refund. 1040ez efile If you e-file, your refund status is usually available within 24 hours after the IRS receives your tax return or 4 weeks after you've mailed a paper return. 1040ez efile Check the status of your amended return. 1040ez efile Go to IRS. 1040ez efile gov and enter Where's My Amended Return in the search box. 1040ez efile Download forms, instructions, and publications, including some accessible versions. 1040ez efile Order free transcripts of your tax returns or tax account using the Order a Transcript tool on IRS. 1040ez efile gov or IRS2Go. 1040ez efile Tax return and tax account transcripts are generally available for the current year and past three years. 1040ez efile Figure your income tax withholding with the IRS Withholding Calculator on IRS. 1040ez efile gov. 1040ez efile Use it if you've had too much or too little withheld, your personal situation has changed, you're starting a new job or you just want to see if you're having the right amount withheld. 1040ez efile Determine if you might be subject to the Alternative Minimum Tax by using the Alternative Minimum Tax Assistant on IRS. 1040ez efile gov. 1040ez efile Locate the nearest Taxpayer Assistance Center using the Office Locator tool on IRS. 1040ez efile gov or IRS2Go. 1040ez efile Stop by most business days for face-to-face tax help, no appointment necessary — just walk in. 1040ez efile An employee can explain IRS letters, request adjustments to your tax account or help you set up a payment plan. 1040ez efile Before you visit, check the Office Locator for the address, phone number, hours of operation and the services provided. 1040ez efile If you have an ongoing tax account problem or a special need, such as a disability, you can request an appointment. 1040ez efile Call the local number listed in the Office Locator, or look in the phone book under United States Government, Internal Revenue Service. 1040ez efile Locate the nearest volunteer help site with the VITA Locator Tool on IRS. 1040ez efile gov. 1040ez efile Low-to-moderate income, elderly, persons with disabilities, and limited English proficient taxpayers can get free help with their tax return from the nationwide Volunteer Income Tax Assistance (VITA) program. 1040ez efile The Tax Counseling for the Elderly (TCE) program helps taxpayers 60 and older with their tax returns. 1040ez efile Most VITA and TCE sites offer free electronic filing and some provide IRS-certified volunteers who can help prepare your tax return. 1040ez efile AARP offers the Tax-Aide counseling program as part of the TCE program. 1040ez efile Visit AARP's website to find the nearest Tax-Aide location. 1040ez efile Research your tax questions. 1040ez efile Search publications and instructions by topic or keyword. 1040ez efile Read the Internal Revenue Code, regulations, or other official guidance. 1040ez efile Read Internal Revenue Bulletins. 1040ez efile Sign up to receive local and national tax news by email. 1040ez efile Phone. 1040ez efile You can call the IRS, or you can carry it in your pocket with the IRS2Go app on your smart phone or tablet. 1040ez efile Download the free IRS2Go mobile app from the iTunes app store or from Google Play. 1040ez efile Use it to watch the IRS YouTube channel, get IRS news as soon as it's released to the public, order transcripts of your tax returns or tax account, check your refund status, subscribe to filing season updates or daily tax tips, and follow the IRS Twitter news feed, @IRSnews, to get the latest federal tax news, including information about tax law changes and important IRS programs. 1040ez efile Call to locate the nearest volunteer help site, 1-800-906-9887. 1040ez efile Low-to-moderate income, elderly, persons with disabilities, and limited English proficient taxpayers can get free help with their tax return from the nationwide Volunteer Income Tax Assistance (VITA) program. 1040ez efile The Tax Counseling for the Elderly (TCE) program helps taxpayers 60 and older with their tax returns. 1040ez efile Most VITA and TCE sites offer free electronic filing. 1040ez efile Some VITA and TCE sites provide IRS-certified volunteers who can help prepare your tax return. 1040ez efile Through the TCE program, AARP offers the Tax-Aide counseling program; call 1-888-227-7669 to find the nearest Tax-Aide location. 1040ez efile Call to check the status of your 2013 refund, 1-800-829-1954 or 1-800-829-4477. 1040ez efile The automated Where's My Refund? information is available 24 hours a day, 7 days a week. 1040ez efile If you e-file, your refund status is usually available within 24 hours after the IRS receives your tax return or 4 weeks after you've mailed a paper return. 1040ez efile Before you call, have your 2013 tax return handy so you can provide your social security number, your filing status, and the exact whole dollar amount of your refund. 1040ez efile Where's My Refund? can give you a personalized refund date as soon as the IRS processes your tax return and approves your refund. 1040ez efile Where's My Refund? includes information for the most recent return filed in the current year and does not include information about amended returns. 1040ez efile Call the Amended Return Hotline, 1-866-464-2050, to check the status of your amended return. 1040ez efile Call to order forms, instructions and publications, 1-800-TAX-FORM (1-800-829-3676) to order current-year forms, instructions and publications, and prior-year forms and instructions (limited to 5 years). 1040ez efile You should receive your order within 10 business days. 1040ez efile Call to order transcripts of your tax returns or tax account, 1-800-908-9946. 1040ez efile Follow the prompts to provide your Social Security Number or Individual Taxpayer Identification Number, date of birth, street address and ZIP code. 1040ez efile Call for TeleTax topics, 1-800-829-4477, to listen to pre-recorded messages covering various tax topics. 1040ez efile Call to ask tax questions, 1-800-829-1040. 1040ez efile Call using TTY/TDD equipment, 1-800-829-4059 to ask tax questions or order forms and publications. 1040ez efile The TTY/TDD telephone number is for people who are deaf, hard of hearing, or have a speech disability. 1040ez efile These individuals can also contact the IRS through relay services such as the Federal Relay Service available at www. 1040ez efile gsa. 1040ez efile gov/fedrelay. 1040ez efile Walk-in. 1040ez efile You can find a selection of forms, publications and services — in-person, face-to-face. 1040ez efile Products. 1040ez efile You can walk in to some post offices, libraries, and IRS offices to pick up certain forms, instructions, and publications. 1040ez efile Some IRS offices, libraries, and city and county government offices have a collection of products available to photocopy from reproducible proofs. 1040ez efile Services. 1040ez efile You can walk in to your local TAC most business days for personal, face-to-face tax help. 1040ez efile An employee can explain IRS letters, request adjustments to your tax account, or help you set up a payment plan. 1040ez efile If you need to resolve a tax problem, have questions about how the tax law applies to your individual tax return, or you are more comfortable talking with someone in person, visit your local TAC where you can talk with an IRS representative face-to-face. 1040ez efile No appointment is necessary—just walk in. 1040ez efile Before visiting, check www. 1040ez efile irs. 1040ez efile gov/localcontacts for hours of operation and services provided. 1040ez efile Mail. 1040ez efile You can send your order for forms, instructions, and publications to the address below. 1040ez efile You should receive a response within 10 business days after your request is received. 1040ez efile  Internal Revenue Service 1201 N. 1040ez efile Mitsubishi Motorway Bloomington, IL 61705-6613 The Taxpayer Advocate Service Is Here to Help You. 1040ez efile   The Taxpayer Advocate Service (TAS) is your voice at the IRS. 1040ez efile Our job is to ensure that every taxpayer is treated fairly and that you know and understand your rights. 1040ez efile What can TAS do for you?   We can offer you free help with IRS problems that you can't resolve on your own. 1040ez efile We know this process can be confusing, but the worst thing you can do is nothing at all! TAS can help if you can't resolve your tax problem and: Your problem is causing financial difficulties for you, your family, or your business. 1040ez efile You face (or your business is facing) an immediate threat of adverse action. 1040ez efile You've tried repeatedly to contact the IRS but no one has responded, or the IRS hasn't responded by the date promised. 1040ez efile   If you qualify for our help, you'll be assigned to one advocate who'll be with you at every turn and will do everything possible to resolve your problem. 1040ez efile Here's why we can help: TAS is an independent organization within the IRS. 1040ez efile Our advocates know how to work with the IRS. 1040ez efile Our services are free and tailored to meet your needs. 1040ez efile We have offices in every state, the District of Columbia, and Puerto Rico. 1040ez efile How can you reach us?   If you think TAS can help you, call your local advocate, whose number is in your local directory and at www. 1040ez efile irs. 1040ez efile gov/advocate, or call us toll-free at 1-877-777-4778. 1040ez efile How else does TAS help taxpayers?   TAS also works to resolve large-scale, systemic problems that affect many taxpayers. 1040ez efile If you know of one of these broad issues, please report it to us through our Systemic Advocacy Management System at www. 1040ez efile irs. 1040ez efile gov/sams. 1040ez efile Low Income Taxpayer Clinics. 1040ez efile   Low Income Taxpayer Clinics (LITCs) serve individuals whose income is below a certain level and need to resolve tax problems such as audits, appeals, and tax collection disputes. 1040ez efile Some clinics can provide information about taxpayer rights and responsibilities in different languages for individuals who speak English as a second language. 1040ez efile Visit www. 1040ez efile TaxpayerAdvocate. 1040ez efile irs. 1040ez efile gov or see IRS Publication 4134, Low Income Taxpayer Clinic List. 1040ez efile Prev  Up  Next   Home   More Online Publications
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The International Tax Gap

Find resources on this page pertaining to the international tax gap — the difference between the amount of tax that taxpayers should pay and the amount that is paid voluntarily and on time. The tax gap can also be thought of as the sum of non-compliance with the tax law.

International Tax Gap Series

December 2009 Filing Extensions and Tax Return Preparation Assistance for Military Personnel Stationed Abroad or In a Combat Zone
August 2009

Self-Employment Tax for Businesses Abroad

June 2009 U.S. Citizens Performing Services in Foreign and International Airspace
May 2009 Departing Aliens and the Sailing Permit
April 2009 Reaching Out to Americans Abroad
February 2009 Taxation of Nonresident Aliens

January 2009

Foreign Housing Exclusion or Deduction

December 2008

Gifts from Foreign Persons

November 2008

Tax Treaties Can Affect Your Income Tax

October 2008

Taxation of International Pensions and Annuities

September 2008

U.S. Tax Withholding on Effectively Connected Income Allocable to Foreign Partners

August 2008

Foreign Trust Reporting Requirements

July 2008

Withholding of Tax on Dispositions of U.S. Real Property Interests

June 2008

Foreign Tax Credit

May 2008

Foreign Earned Income Exclusion

April 2008

Moving To or From a United States (U.S.) Territory/Possession

March 2008

U.S. Tax Withholding on Payments to Foreign Persons

February 2008

The Tax Gap and International Taxpayers - Filing Requirements


The Tax Gap - News, facts, figures and a fact sheet series on the tax gap in general.
Page Last Reviewed or Updated: 13-Mar-2014

The 1040ez Efile

1040ez efile Publication 517 - Main Content Table of Contents Social Security CoverageCoverage of Members of the Clergy Coverage of Religious Workers (Church Employees) U. 1040ez efile S. 1040ez efile Citizens and Resident and Nonresident Aliens Ministerial ServicesMinisters Members of Religious Orders Christian Science Practitioners and Readers Exemption From Self-Employment (SE) TaxMembers of the Clergy Members of Recognized Religious Sects Self-Employment Tax: Figuring Net EarningsRegular Method Nonfarm Optional Method Income Tax: Income and ExpensesIncome Items Expense Items Income Tax Withholding and Estimated Tax Filing Your Return Retirement Savings ArrangementsDeducting contributions to tax-sheltered annuity plans. 1040ez efile Full-time student. 1040ez efile Adjusted gross income. 1040ez efile More information. 1040ez efile Earned Income Credit Comprehensive ExampleForm W-2 From Church Form W-2 From College Schedule C-EZ (Form 1040) Form 2106-EZ Schedule A (Form 1040) Schedule SE (Form 1040) Form 1040 Attachment 1 Attachment 2 How To Get Tax HelpLow Income Taxpayer Clinics Social Security Coverage This section gives information about which system (SECA or FICA) is used to collect social security and Medicare taxes from members of the clergy (ministers, members of a religious order, and Christian Science practitioners and readers) and religious workers (church employees). 1040ez efile Coverage of Members of the Clergy The services you perform in the exercise of your ministry, of the duties required by your religious order, or of your profession as a Christian Science practitioner or reader are covered by social security and Medicare under SECA. 1040ez efile Your earnings for these ministerial services (defined later) are subject to self-employment (SE) tax unless one of the following applies. 1040ez efile You are a member of a religious order who has taken a vow of poverty. 1040ez efile You ask the Internal Revenue Service (IRS) for an exemption from SE tax for your services and the IRS approves your request. 1040ez efile See Exemption From Self-Employment (SE) Tax , later. 1040ez efile You are subject only to the social security laws of a foreign country under the provisions of a social security agreement between the United States and that country. 1040ez efile For more information, see Bilateral Social Security (Totalization) Agreements in Publication 54. 1040ez efile Your earnings that are not from ministerial services may be subject to social security tax under FICA or SECA according to the rules that apply to taxpayers in general. 1040ez efile See Ministerial Services , later. 1040ez efile Ministers If you are a minister of a church, your earnings for the services you perform in your capacity as a minister are subject to SE tax, even if you perform these services as an employee of that church. 1040ez efile However, you can request that the IRS grant you an exemption, as discussed under Exemption From Self-Employment (SE) Tax , later. 1040ez efile For the specific services covered, see Ministerial Services , later. 1040ez efile Ministers defined. 1040ez efile   Ministers are individuals who are duly ordained, commissioned, or licensed by a religious body constituting a church or church denomination. 1040ez efile Ministers have the authority to conduct religious worship, perform sacerdotal functions, and administer ordinances or sacraments according to the prescribed tenets and practices of that church or denomination. 1040ez efile   If a church or denomination ordains some ministers and licenses or commissions others, anyone licensed or commissioned must be able to perform substantially all the religious functions of an ordained minister to be treated as a minister for social security purposes. 1040ez efile Employment status for other tax purposes. 1040ez efile   Even though all of your income from performing ministerial services is subject to self-employment tax for social security tax purposes, you may be an employee for income tax or retirement plan purposes in performing those same services. 1040ez efile For income tax or retirement plan purposes, your income earned as an employee will be considered wages. 1040ez efile Common-law employee. 1040ez efile   Under common-law rules, you are considered either an employee or a self-employed person. 1040ez efile Generally, you are an employee if you perform services for someone who has the legal right to control both what you do and how you do it, even if you have considerable discretion and freedom of action. 1040ez efile For more information about the common-law rules, see Publication 15-A, Employer's Supplemental Tax Guide. 1040ez efile   If a congregation employs you and pays you a salary, you are generally a common-law employee and income from the exercise of your ministry is wages for income tax purposes. 1040ez efile However, amounts received directly from members of the congregation, such as fees for performing marriages, baptisms, or other personal services, are not wages; such amounts are self-employment income for both income tax purposes and social security tax purposes. 1040ez efile Example. 1040ez efile A church hires and pays you a salary to perform ministerial services subject to its control. 1040ez efile Under the common-law rules, you are an employee of the church while performing those services. 1040ez efile Form SS-8. 1040ez efile   If you are not certain whether you are an employee or a self-employed person, you can get a determination from the IRS by filing Form SS-8. 1040ez efile Members of Religious Orders If you are a member of a religious order who has not taken a vow of poverty, your earnings for ministerial services you perform as a member of the order are subject to SE tax. 1040ez efile See Ministerial Services , later. 1040ez efile However, you can request that the IRS grant you an exemption as discussed under Exemption From Self-Employment (SE) Tax , later. 1040ez efile Vow of poverty. 1040ez efile   If you are a member of a religious order and have taken a vow of poverty, you are already exempt from paying SE tax on your earnings for ministerial services you perform as an agent of your church or its agencies. 1040ez efile You do not need to request a separate exemption. 1040ez efile For income tax purposes, the earnings are tax free to you. 1040ez efile Your earnings are considered the income of the religious order. 1040ez efile Services covered under FICA at the election of the order. 1040ez efile   However, even if you have taken a vow of poverty, the services you perform for your church or its agencies may be covered under social security. 1040ez efile Your services are covered if your order, or an autonomous subdivision of the order, elects social security coverage for its current and future vow-of-poverty members. 1040ez efile   The order or subdivision elects coverage by filing Form SS-16. 1040ez efile The election may cover certain vow-of-poverty members for a retroactive period of up to 20 calendar quarters before the quarter in which it files the certificate. 1040ez efile If the election is made, the order or subdivision pays both the employer's and employee's share of the tax. 1040ez efile You do not pay any of the FICA tax. 1040ez efile Services performed outside the order. 1040ez efile   Even if you are a member of a religious order who has taken a vow of poverty and the order requires you to turn over amounts you earn, your earnings are subject to federal income tax and either SE tax or FICA tax (including estimated tax payments and/or withholding) if you: Are self-employed or an employee of an organization outside your religious community, and Perform work not required by, or done on behalf of, the order. 1040ez efile   In these cases, your income from self-employment or as an employee of that outside organization is taxable to you directly. 1040ez efile You may, however, be able to take a charitable deduction for the amount you turn over to the order. 1040ez efile See Publication 526, Charitable Contributions. 1040ez efile Rulings. 1040ez efile   Organizations and individuals may request rulings from the IRS on whether they are religious orders, or members of a religious order, respectively, for FICA tax, SE tax, and federal income tax withholding purposes. 1040ez efile To request a ruling, follow the procedures in Revenue Procedure 2014-1, 2014-1 I. 1040ez efile R. 1040ez efile B. 1040ez efile 1, available at www. 1040ez efile irs. 1040ez efile gov/irb/2014-1_IRB/ar05. 1040ez efile html. 1040ez efile Christian Science Practitioners and Readers Generally, your earnings from services you perform in your profession as a Christian Science practitioner or reader are subject to SE tax. 1040ez efile However, you can request an exemption as discussed under Exemption From Self-Employment (SE) Tax , later. 1040ez efile Practitioners. 1040ez efile   Christian Science practitioners are members in good standing of the Mother Church, The First Church of Christ, Scientist, in Boston, Massachusetts, who practice healing according to the teachings of Christian Science. 1040ez efile State law specifically exempts Christian Science practitioners from licensing requirements. 1040ez efile   Some Christian Science practitioners also are Christian Science teachers or lecturers. 1040ez efile Income from teaching or lecturing is considered the same as income from their work as practitioners. 1040ez efile Readers. 1040ez efile   For tax purposes, Christian Science readers are considered the same as ordained, commissioned, or licensed ministers. 1040ez efile Coverage of Religious Workers (Church Employees) If you are a religious worker (a church employee) and are not in one of the classes already discussed, your wages are generally subject to social security and Medicare tax under FICA, not SECA. 1040ez efile Some exceptions are discussed next. 1040ez efile Election by Church To Exclude Its Employees From FICA Coverage Churches and qualified church-controlled organizations (church organizations) that are opposed for religious reasons to the payment of social security and Medicare taxes can elect to exclude their employees from FICA coverage. 1040ez efile If your employer makes this election, it does not pay the employer's portion of the FICA taxes or withhold from your pay your portion of the FICA taxes. 1040ez efile Instead, your wages are subject to SECA and you must pay SE tax on your wages if they exceed $108. 1040ez efile 28 during the tax year. 1040ez efile However, you can request an exemption from SE tax if you are a member of a recognized religious sect, as discussed below. 1040ez efile Churches and church organizations make this election by filing two copies of Form 8274. 1040ez efile For more information about making this election, see Form 8274. 1040ez efile Election by Certain Church Employees Who Are Opposed to Social Security and Medicare You may be able to choose to be exempt from social security and Medicare taxes, including the SE tax, if you are a member of a recognized religious sect or division and work for a church (or church-controlled nonprofit division) that does not pay the employer's part of the social security tax on wages. 1040ez efile This exemption does not apply to your service, if any, as a minister of a church or as a member of a religious order. 1040ez efile Make this choice by filing Form 4029. 1040ez efile See Requesting Exemption—Form 4029 , later, under Members of Recognized Religious Sects. 1040ez efile U. 1040ez efile S. 1040ez efile Citizens and Resident and Nonresident Aliens To be covered under the SE tax provisions (SECA), individuals generally must be citizens or resident aliens of the United States. 1040ez efile Nonresident aliens are not covered under SECA unless a social security agreement in effect between the United States and the foreign country determines that you are covered under the U. 1040ez efile S. 1040ez efile social security system. 1040ez efile To determine your alien status, see Publication 519, U. 1040ez efile S. 1040ez efile Tax Guide for Aliens. 1040ez efile Residents of Puerto Rico, the U. 1040ez efile S. 1040ez efile Virgin Islands, Guam, the CNMI, and American Samoa. 1040ez efile   If you are a resident of one of these U. 1040ez efile S. 1040ez efile possessions but not a U. 1040ez efile S. 1040ez efile citizen, for SE tax purposes you are treated the same as a citizen or resident alien of the United States. 1040ez efile For information on figuring the tax, see Self-Employment Tax: Figuring Net Earnings , later. 1040ez efile Ministerial Services Ministerial services, in general, are the services you perform in the exercise of your ministry, in the exercise of your duties as required by your religious order, or in the exercise of your profession as a Christian Science practitioner or reader. 1040ez efile Income you receive for performing ministerial services is subject to SE tax unless you have an exemption as explained later. 1040ez efile Even if you have an exemption, only the income you receive for performing ministerial services is exempt. 1040ez efile The exemption does not apply to any other income. 1040ez efile The following discussions provide more detailed information on ministerial services of ministers, members of a religious order, and Christian Science practitioners and readers. 1040ez efile Ministers Most services you perform as a minister, priest, rabbi, etc. 1040ez efile , are ministerial services. 1040ez efile These services include: Performing sacerdotal functions, Conducting religious worship, and Controlling, conducting, and maintaining religious organizations (including the religious boards, societies, and other integral agencies of such organizations) that are under the authority of a religious body that is a church or denomination. 1040ez efile You are considered to control, conduct, and maintain a religious organization if you direct, manage, or promote the organization's activities. 1040ez efile A religious organization is under the authority of a religious body that is a church or denomination if it is organized for and dedicated to carrying out the principles of a faith according to the requirements governing the creation of institutions of the faith. 1040ez efile Services for nonreligious organizations. 1040ez efile   Your services for a nonreligious organization are ministerial services if the services are assigned or designated by your church. 1040ez efile Assigned or designated services qualify even if they do not involve performing sacerdotal functions or conducting religious worship. 1040ez efile   If your services are not assigned or designated by your church, they are ministerial services only if they involve performing sacerdotal functions or conducting religious worship. 1040ez efile Services that are not part of your ministry. 1040ez efile   Income from services you perform as an employee that are not ministerial services is subject to social security and Medicare tax withholding under FICA (not SECA) under the rules that apply to employees in general. 1040ez efile The following are not ministerial services. 1040ez efile Services you perform for nonreligious organizations other than the services stated above. 1040ez efile Services you perform as a duly ordained, commissioned, or licensed minister of a church as an employee of the United States, the District of Columbia, a foreign government, or any of their political subdivisions. 1040ez efile These services are not ministerial services even if you are performing sacerdotal functions or conducting religious worship. 1040ez efile (For example, if you perform services as a chaplain in the Armed Forces of the United States, those services are not ministerial services. 1040ez efile ) Services you perform in a government-owned and operated hospital. 1040ez efile (These services are considered performed by a government employee, not by a minister as part of the ministry. 1040ez efile ) However, services that you perform at a church-related hospital or health and welfare institution, or a private nonprofit hospital, are considered to be part of the ministry and are considered ministerial services. 1040ez efile Books or articles. 1040ez efile   Writing religious books or articles is considered to be in the exercise of your ministry and is considered a ministerial service. 1040ez efile   This rule also applies to members of religious orders and to Christian Science practitioners and readers. 1040ez efile Members of Religious Orders Services you perform as a member of a religious order in the exercise of duties required by the order are ministerial services. 1040ez efile The services are considered ministerial because you perform them as an agent of the order. 1040ez efile For example, if the order directs you to perform services for another agency of the supervising church or an associated institution, you are considered to perform the services as an agent of the order. 1040ez efile However, if the order directs you to work outside the order, this employment will not be considered a duty required by the order unless: Your services are the kind that are ordinarily performed by members of the order, and Your services are part of the duties that must be exercised for, or on behalf of, the religious order as its agent. 1040ez efile Effect of employee status. 1040ez efile   Ordinarily, if your services are not considered directed or required of you by the order, you and the outside party for whom you work are considered employee and employer. 1040ez efile In this case, your earnings from the services are taxed under the rules that apply to employees in general, not under the rules for services provided as agent for the order. 1040ez efile This result is true even if you have taken a vow of poverty. 1040ez efile Example. 1040ez efile Pat Brown and Chris Green are members of a religious order and have taken vows of poverty. 1040ez efile They renounce all claims to their earnings. 1040ez efile The earnings belong to the order. 1040ez efile Pat is a licensed attorney. 1040ez efile The superiors of the order instructed her to get a job with a law firm. 1040ez efile Pat joined a law firm as an employee and, as she requested, the firm made the salary payments directly to the order. 1040ez efile Chris is a secretary. 1040ez efile The superiors of the order instructed him to accept a job with the business office of the church that supervises the order. 1040ez efile Chris took the job and gave all his earnings to the order. 1040ez efile Pat's services are not duties required by the order. 1040ez efile Her earnings are subject to social security and Medicare tax under FICA and to federal income tax. 1040ez efile Chris' services are duties required by the order. 1040ez efile He is acting as an agent of the order and not as an employee of a third party. 1040ez efile He does not include the earnings in gross income, and they are not subject to income tax withholding or to social security and Medicare tax under FICA or SECA. 1040ez efile Christian Science Practitioners and Readers Services you perform as a Christian Science practitioner or reader in the exercise of your profession are ministerial services. 1040ez efile Amounts you receive for performing these services are generally subject to SE tax. 1040ez efile You may request an exemption from SE tax, discussed next, which applies only to those services. 1040ez efile Exemption From Self-Employment (SE) Tax You can request an exemption from SE tax if you are a member of the clergy (minister, member of a religious order, or Christian Science practitioner or reader) or a member of a recognized religious sect. 1040ez efile Generally, members of religious orders who have taken a vow of poverty are already exempt from paying SE tax, as discussed earlier under Members of Religious Orders under Social Security Coverage. 1040ez efile They do not have to request the exemption. 1040ez efile Who cannot be exempt. 1040ez efile   You cannot be exempt from SE tax if you made one of the following elections to be covered under social security. 1040ez efile These elections are irrevocable. 1040ez efile You elected to be covered under social security by filing Form 2031, Revocation of Exemption From Self-Employment Tax for Use by Ministers, Members of Religious Orders, and Christian Science Practitioners, for your 1986, 1987, 2000, or 2001 tax year. 1040ez efile You elected before 1968 to be covered under social security for your ministerial services. 1040ez efile Requesting exemption. 1040ez efile    Table 2, earlier, briefly summarizes the procedure for requesting exemption from the SE tax. 1040ez efile More detailed explanations follow. 1040ez efile If you are a minister, member of a religious order, or Christian Science practitioner, an approved exemption only applies to earnings you receive for ministerial services, discussed earlier. 1040ez efile It does not apply to any other self-employment income. 1040ez efile Table 2. 1040ez efile The Self-Employment Tax Exemption Application and Approval Process   Who Can Apply Members of the Clergy Members of Recognized  Religious Sects How File Form 4361 File Form 4029 When File by the due date (including extensions) of your income tax return for the second tax year in which you had at least $400 of net earnings from self-employment (at least part from ministerial services) File anytime Approval If approved, you will receive an approved copy of Form 4361 If approved, you will receive an approved copy of Form 4029 Effective Date For all tax years after 1967 in which you have at least $400 of net earnings from self-employment For all tax years beginning with the first year you meet the eligibility requirements discussed later Members of the Clergy To claim the exemption from SE tax, you must meet all of the following conditions. 1040ez efile You file Form 4361, described below under Requesting Exemption—Form 4361 . 1040ez efile You are conscientiously opposed to public insurance because of your individual religious considerations (not because of your general conscience), or you are opposed because of the principles of your religious denomination. 1040ez efile You file for other than economic reasons. 1040ez efile You inform the ordaining, commissioning, or licensing body of your church or order that you are opposed to public insurance if you are a minister or a member of a religious order (other than a vow-of-poverty member). 1040ez efile This requirement does not apply to Christian Science practitioners or readers. 1040ez efile You establish that the organization that ordained, commissioned, or licensed you, or your religious order, is a tax-exempt religious organization. 1040ez efile You establish that the organization is a church or a convention or association of churches. 1040ez efile You did not make an election discussed earlier under Who cannot be exempt . 1040ez efile You sign and return the statement the IRS mails to you to certify that you are requesting an exemption based on the grounds listed on the statement. 1040ez efile Requesting Exemption—Form 4361 To request exemption from SE tax, file Form 4361 in triplicate (original and two copies) with the IRS. 1040ez efile The IRS will return to you a copy of the Form 4361 that you filed indicating whether it has approved your exemption. 1040ez efile If it is approved, keep the approved copy of Form 4361 in your permanent records. 1040ez efile When to file. 1040ez efile   File Form 4361 by the date your income tax return is due, including extensions, for the second tax year in which both of the following are true. 1040ez efile You have net earnings from self-employment of at least $400. 1040ez efile Any part of those net earnings was from ministerial services you performed as a: Minister, Member of a religious order, or Christian Science practitioner or reader. 1040ez efile The 2 years do not have to be consecutive tax years. 1040ez efile    The approval process can take some time, so you should file Form 4361 as soon as possible. 1040ez efile Example 1. 1040ez efile Rev. 1040ez efile Lawrence Jaeger, a clergyman ordained in 2013, has net self-employment earnings as a minister of $450 in 2013 and $500 in 2014. 1040ez efile He must file his application for exemption by the due date, including extensions, for his 2014 income tax return. 1040ez efile However, if Rev. 1040ez efile Jaeger does not receive IRS approval for an exemption by April 15, 2015, his SE tax for 2014 is due by that date. 1040ez efile Example 2. 1040ez efile Rev. 1040ez efile Louise Wolfe has only $300 in net self-employment earnings as a minister in 2013, but earned more than $400 in 2012 and expects to earn more than $400 in 2014. 1040ez efile She must file her application for exemption by the due date, including extensions, for her 2014 income tax return. 1040ez efile However, if she does not receive IRS approval for an exemption by April 15, 2015, her SE tax for 2014 is due by that date. 1040ez efile Example 3. 1040ez efile In 2011, Rev. 1040ez efile David Moss was ordained a minister and had $700 in net self-employment earnings as a minister. 1040ez efile In 2012, he received $1,000 as a minister, but his related expenses were over $1,000. 1040ez efile Therefore, he had no net self-employment earnings as a minister in 2012. 1040ez efile Also in 2012, he opened a book store and had $8,000 in net self-employment earnings from the store. 1040ez efile In 2013, he had net self-employment earnings of $1,500 as a minister and $10,000 net self-employment earnings from the store. 1040ez efile Rev. 1040ez efile Moss had net earnings from self-employment in 2011 and 2013 that were $400 or more each year, and part of the self-employment earnings in each of those years was for his services as a minister. 1040ez efile Thus, he must file his application for exemption by the due date, including extensions, for his 2013 income tax return. 1040ez efile Death of individual. 1040ez efile   The right to file an application for exemption ends with an individual's death. 1040ez efile A surviving spouse, executor, or administrator cannot file an exemption application for a deceased clergy member. 1040ez efile Effective date of exemption. 1040ez efile   An approved exemption is effective for all tax years after 1967 in which you have $400 or more of net earnings from self-employment and any part of those earnings is for services as a member of the clergy. 1040ez efile Once the exemption is approved, it is irrevocable. 1040ez efile Example. 1040ez efile Rev. 1040ez efile Trudy Austin, ordained in 2010, had $400 or more in net self-employment earnings as a minister in both 2010 and 2013. 1040ez efile She files an application for exemption on February 20, 2014. 1040ez efile If an exemption is granted, it is effective for 2010 and the following years. 1040ez efile Refunds of SE tax. 1040ez efile   If, after receiving an approved Form 4361, you find that you overpaid SE tax, you can file a claim for refund on Form 1040X. 1040ez efile Generally, for a refund, you must file Form 1040X within 3 years from the date you filed the return or within 2 years from the date you paid the tax, whichever is later. 1040ez efile A return you filed, or tax you paid, before the due date is considered to have been filed or paid on the due date. 1040ez efile   If you file a claim after the 3-year period but within 2 years from the time you paid the tax, the credit or refund will not be more than the tax you paid within the 2 years immediately before you file the claim. 1040ez efile Members of Recognized Religious Sects If you are a member of a recognized religious sect, or a division of a recognized religious sect, you can apply for an exemption from payment of social security and Medicare taxes on both your self-employment income and the wages you earn from an employer who also has an exemption. 1040ez efile Exception. 1040ez efile   If you received social security benefits or payments, or anyone else received these benefits or payments based on your wages or self-employment income, you cannot apply. 1040ez efile However, if you pay your benefits back, you may be considered for exemption. 1040ez efile Contact your local Social Security Administration office to find out the amount you must pay back. 1040ez efile Eligibility requirements. 1040ez efile   To claim this exemption from SE tax, all the following requirements must be met. 1040ez efile You must file Form 4029, discussed later under Requesting Exemption—Form 4029 . 1040ez efile As a follower of the established teachings of the sect or division, you must be conscientiously opposed to accepting benefits of any private or public insurance that makes payments for death, disability, old age, retirement, or medical care, or provides services for medical care. 1040ez efile You must waive all rights to receive any social security payment or benefit and agree that no benefits or payments will be made to anyone else based on your wages and self-employment income. 1040ez efile The Commissioner of Social Security must determine that: Your sect or division has the established teachings as described in (2) above, It is the practice, and has been for a substantial period of time, for members of the sect or division to provide for their dependent members in a manner that is reasonable in view of the members' general level of living, and The sect or division has existed at all times since December 31, 1950. 1040ez efile Requesting Exemption—Form 4029 To request the exemption, file Form 4029 in triplicate (original and two copies) with the Social Security Administration at the address shown on the form. 1040ez efile The sect or division must complete part of the form. 1040ez efile The IRS will return to you a copy of the Form 4029 that you filed indicating whether it has approved your exemption. 1040ez efile If it is approved, keep the approved copy of Form 4029 in your permanent records. 1040ez efile When to file. 1040ez efile   You can file Form 4029 at any time. 1040ez efile   If you have an approved exemption from SE tax and for some reason that approved exemption ended, you must file a new Form 4029 if you subsequently meet the eligibility requirements, discussed earlier. 1040ez efile See Effective date of exemption next for information on when the newly approved exemption would become effective. 1040ez efile    If you have a previously approved exemption from SE tax and you change membership to another recognized religious sect, without any change to your eligibility requirements, then you do not need to file a new Form 4029. 1040ez efile Effective date of exemption. 1040ez efile   An approved exemption from SE tax generally is effective for all tax years beginning with the first year you meet the eligibility requirements discussed earlier. 1040ez efile (For example, if you meet the eligibility requirements in 2011, you file Form 4029 in 2012, and the IRS approves your exemption in 2013, your exemption is effective for tax year 2011 and all later years. 1040ez efile )   The exemption will end if you fail to meet the eligibility requirements or if the Commissioner of Social Security determines that the sect or division fails to meet them. 1040ez efile You must notify the IRS within 60 days if you are no longer a member of the religious group, or if you no longer follow the established teachings of this group. 1040ez efile The exemption will end for the tax year where you or your sect/division first fails to meet the eligibility requirements. 1040ez efile Refunds of SE tax paid. 1040ez efile    To get a refund of any SE tax you paid while the exemption was in effect, file Form 1040X. 1040ez efile For information on filing this form, see Refunds of SE tax under Requesting Exemption—Form 4361, earlier. 1040ez efile Exemption From FICA Taxes Generally, under FICA, the employer and the employee each pay half of the social security and Medicare tax. 1040ez efile Both the employee and the employer, if they meet the eligibility requirements discussed earlier, can apply to be exempt from their share of FICA taxes on wages paid by the employer to the employee. 1040ez efile A partnership in which each partner holds a religious exemption from social security and Medicare is an employer for this purpose. 1040ez efile If the employer's application is approved, the exemption will apply only to FICA taxes on wages paid to employees who also received an approval of identical applications. 1040ez efile Information for employers. 1040ez efile   If you have an approved Form 4029 and you have an employee who has an approved Form 4029, do not report wages you paid to the employee as social security and Medicare wages. 1040ez efile   If you have an employee who does not have an approved Form 4029, you must withhold the employee's share of social security and Medicare taxes and pay the employer's share. 1040ez efile Form W-2. 1040ez efile   When preparing a Form W-2 for an employee with an approved Form 4029, enter “Form 4029” in box 14, “Other. 1040ez efile ” Do not make any entries in boxes 3, 4, 5, or 6. 1040ez efile Forms 941, 943, and 944. 1040ez efile   If both you and your employee have received approved Forms 4029, do not include these exempt wages on the following forms. 1040ez efile Instead, follow the instructions given below. 1040ez efile Form 941, Employer's QUARTERLY Federal Tax Return: check the box on line 4 and enter “Form 4029” in the empty space below the check box. 1040ez efile Form 943, Employer's Annual Federal Tax Return for Agricultural Employees: enter “Form 4029” on the dotted line next to the lines 2 and 4 entry spaces. 1040ez efile Form 944, Employer's ANNUAL Federal Tax Return: check the box on line 3 and enter “Form 4029” in the empty space below the check box. 1040ez efile Effective date. 1040ez efile   An approved exemption from FICA becomes effective on the first day of the first calendar quarter after the quarter in which you file Form 4029. 1040ez efile The exemption will end on the last day of the calendar quarter before the quarter in which the employer, employee, sect, or division fails to meet the requirements. 1040ez efile Self-Employment Tax: Figuring Net Earnings There are two methods for figuring your net earnings from self-employment as a member of the clergy or a religious worker. 1040ez efile Regular method. 1040ez efile Nonfarm optional method. 1040ez efile You may find Worksheets 1 through 4 helpful in figuring your net earnings from self-employment. 1040ez efile Blank worksheets are in the back of this publication, after the Comprehensive Example. 1040ez efile Regular Method Most people use the regular method. 1040ez efile Under this method, figure your net earnings from self-employment by totaling your gross income for services you performed as a minister, a member of a religious order who has not taken a vow of poverty, or a Christian Science practitioner or reader. 1040ez efile Then, subtract your allowable business deductions and multiply the difference by 92. 1040ez efile 35% (. 1040ez efile 9235). 1040ez efile Use Schedule SE (Form 1040) to figure your net earnings and SE tax. 1040ez efile If you are an employee of a church that elected to exclude you from FICA coverage, figure net earnings by multiplying your church wages shown on Form W-2 by 92. 1040ez efile 35% (. 1040ez efile 9235). 1040ez efile Do not reduce your wages by any business deductions when making this computation. 1040ez efile Use Schedule SE (Form 1040), Section B, to figure your net earnings and SE tax. 1040ez efile If you have an approved exemption, or you are automatically exempt, do not include the income or deductions from ministerial services in figuring your net earnings from self-employment. 1040ez efile Amounts included in gross income. 1040ez efile   To figure your net earnings from self-employment (on Schedule SE (Form 1040)), include in gross income: Salaries and fees for your ministerial services (discussed earlier), Offerings you receive for marriages, baptisms, funerals, masses, etc. 1040ez efile , The value of meals and lodging provided to you, your spouse, and your dependents for your employer's convenience, The fair rental value of a parsonage provided to you (including the cost of utilities that are furnished) and the rental allowance (including an amount for payment of utilities) paid to you, and Any amount a church pays toward your income tax or SE tax, other than withholding the amount from your salary. 1040ez efile This amount is also subject to income tax. 1040ez efile   For the income tax treatment of items (2) and (4), see Income Tax: Income and Expenses , later. 1040ez efile Example. 1040ez efile Pastor Roger Adams receives an annual salary of $39,000 as a full-time minister. 1040ez efile The $39,000 includes $5,000 that is designated as a rental allowance to pay utilities. 1040ez efile His church owns a parsonage that has a fair rental value of $12,000 per year. 1040ez efile The church gives Pastor Adams the use of the parsonage. 1040ez efile He is not exempt from SE tax. 1040ez efile He must include $51,000 ($39,000 plus $12,000) when figuring his net earnings for SE tax purposes. 1040ez efile The results would be the same if, instead of the use of the parsonage and receipt of the rental allowance for utilities, Pastor Adams had received an annual salary of $51,000 of which $17,000 ($5,000 plus $12,000) per year was designated as a rental allowance. 1040ez efile Overseas duty. 1040ez efile   Your net earnings from self-employment are determined without any foreign earned income exclusion or the foreign housing exclusion or deduction if you are a U. 1040ez efile S. 1040ez efile citizen or resident alien serving abroad and living in a foreign country. 1040ez efile   For information on excluding foreign earned income or the foreign housing amount, see Publication 54. 1040ez efile Example. 1040ez efile Diane Jones was the minister of a U. 1040ez efile S. 1040ez efile church in Mexico. 1040ez efile She earned $35,000 in that position and was able to exclude it all for income tax purposes under the foreign earned income exclusion. 1040ez efile The United States does not have a social security agreement with Mexico, so Mrs. 1040ez efile Jones is subject to U. 1040ez efile S. 1040ez efile SE tax and must include $35,000 when figuring net earnings from self-employment. 1040ez efile Specified U. 1040ez efile S. 1040ez efile possessions. 1040ez efile    The exclusion from gross income for amounts derived from American Samoa or Puerto Rico does not apply in computing net earnings from self-employment. 1040ez efile Also see Residents of Puerto Rico, the U. 1040ez efile S. 1040ez efile Virgin Islands, Guam, the CNMI, and American Samoa , earlier, under U. 1040ez efile S. 1040ez efile Citizens and Resident and Nonresident Aliens. 1040ez efile Amounts not included in gross income. 1040ez efile   Do not include the following amounts in gross income when figuring your net earnings from self-employment. 1040ez efile Offerings that others made to the church. 1040ez efile Contributions by your church to a tax-sheltered annuity plan set up for you, including any salary reduction contributions (elective deferrals) that are not included in your gross income. 1040ez efile Pension payments or retirement allowances you receive for your past ministerial services. 1040ez efile The rental value of a parsonage or a parsonage allowance provided to you after you retire. 1040ez efile Allowable deductions. 1040ez efile   When figuring your net earnings from self-employment, deduct all your expenses related to your ministerial services performed as a self-employed person. 1040ez efile These are ministerial expenses you incurred while working other than as a common-law employee of the church. 1040ez efile They include expenses incurred in performing marriages and baptisms, and in delivering speeches. 1040ez efile Deduct these expenses on Schedule C or C-EZ (Form 1040), and carry the net amount to line 2 of Schedule SE (Form 1040), Section A or B. 1040ez efile   Wages earned as a common-law employee (explained earlier) of a church are generally subject to self-employment tax unless an exemption is requested, as discussed earlier under Exemption From Self-Employment (SE) Tax . 1040ez efile Subtract any allowable expenses (including unreimbursed employee business expenses) from those wages, include the net amount on line 2 of Schedule SE (Form 1040), Section A or B, and attach an explanation. 1040ez efile Do not complete Schedule C or C-EZ (Form 1040). 1040ez efile However, for income tax purposes, the expenses are allowed only as an itemized deduction on Schedule A (Form 1040) to the extent they exceed 2% of adjusted gross income. 1040ez efile Employee reimbursement arrangements. 1040ez efile   If you received an advance, allowance, or reimbursement for your employee expenses, how you report this amount and your employee expenses depends on whether your employer reimbursed you under an accountable plan or a nonaccountable plan. 1040ez efile Ask your employer if you are not sure if it reimburses you using an accountable or a nonaccountable plan. 1040ez efile Accountable plans. 1040ez efile   To be an accountable plan, your employer's reimbursement arrangement must include all three of the following rules. 1040ez efile Your expenses must have a business connection—that is, you must have paid or incurred deductible expenses while performing services as an employee of your employer. 1040ez efile You must adequately account to your employer for these expenses within a reasonable period of time. 1040ez efile You must return any excess reimbursement or allowance within a reasonable period of time. 1040ez efile   The reimbursement is not reported on your Form W-2. 1040ez efile Generally, if your expenses equal your reimbursement, you have no deduction. 1040ez efile If your expenses are more than your reimbursement, you can deduct your excess expenses for SE tax and income tax purposes. 1040ez efile Nonaccountable plan. 1040ez efile   A nonaccountable plan is a reimbursement arrangement that does not meet all three of the rules listed under Accountable plans above. 1040ez efile In addition, even if your employer has an accountable plan, the following payments will be treated as being paid under a nonaccountable plan. 1040ez efile Excess reimbursements you fail to return to your employer. 1040ez efile Reimbursement of nondeductible expenses related to your employer's business. 1040ez efile   Your employer will combine any reimbursement paid to you under a nonaccountable plan with your wages, salary, or other compensation and report the combined total in box 1 of your Form W-2. 1040ez efile Since reimbursements under a nonaccountable plan are included in your gross income, you can deduct your related expenses (for SE tax and income tax purposes) regardless of whether they are more than, less than, or equal to your reimbursement. 1040ez efile   For more information on accountable and nonaccountable plans, see Publication 463, Travel, Entertainment, Gift, and Car Expenses. 1040ez efile Married Couple Missionary Team If both spouses are duly ordained, commissioned, or licensed ministers of a church and have an agreement that each will perform specific services for which they are paid jointly or separately, they must divide the self-employment income according to the agreement. 1040ez efile If the agreement is with one spouse only and the other spouse is not paid for any specific duties, amounts received for their services are included only in the self-employment income of the spouse having the agreement. 1040ez efile Earnings Subject to SE Tax For 2013, the maximum net earnings from self-employment subject to social security (old age, survivors, and disability insurance) tax is $113,700 minus any wages and tips you earned that were subject to social security tax. 1040ez efile The tax rate for the social security part is 12. 1040ez efile 4%. 1040ez efile In addition, all of your net earnings are subject to the Medicare (hospital insurance) part of the SE tax. 1040ez efile This tax rate is 2. 1040ez efile 9%. 1040ez efile The combined self-employment tax rate is 15. 1040ez efile 3%. 1040ez efile Additional Medicare Tax. 1040ez efile   Beginning in 2013, a 0. 1040ez efile 9% Additional Medicare Tax applies to Medicare wages, railroad retirement (RRTA) compensation, and self-employment income that are more than: $125,000 if married filing separately, $250,000 if married filing jointly, or $200,000 for any other filing status. 1040ez efile Medicare wages and self-employment income are combined to determine if income exceeds the threshold. 1040ez efile A self-employment loss is not considered for purposes of this tax. 1040ez efile RRTA compensation is separately compared to the threshold. 1040ez efile For more information, see Form 8959, Additional Medicare Tax, and its separate instructions. 1040ez efile Nonfarm Optional Method You may be able to use the nonfarm optional method for figuring your net earnings from self-employment. 1040ez efile In general, the nonfarm optional method is intended to permit continued coverage for social security and Medicare purposes when your income for the tax year is low. 1040ez efile You may use the nonfarm optional method if you meet all the following tests. 1040ez efile You are self-employed on a regular basis. 1040ez efile You meet this test if your actual net earnings from self-employment were $400 or more in at least 2 of the 3 tax years before the one for which you use this method. 1040ez efile The net earnings can be from either farm or nonfarm earnings or both. 1040ez efile You have used this method less than 5 prior years. 1040ez efile (There is a 5-year lifetime limit. 1040ez efile ) The years do not have to be consecutive. 1040ez efile Your net nonfarm profits were: Less than $5,024, and Less than 72. 1040ez efile 189% of your gross nonfarm income. 1040ez efile If you meet all three tests, use Table 3 to figure your net earnings from self-employment under the nonfarm optional method. 1040ez efile Table 3. 1040ez efile Figuring Nonfarm Net Earnings IF your gross nonfarm income is . 1040ez efile . 1040ez efile . 1040ez efile THEN your net earnings are equal to . 1040ez efile . 1040ez efile . 1040ez efile $6,960 or less Two-thirds of your gross nonfarm income. 1040ez efile More than $6,960 $4,640. 1040ez efile Actual net earnings. 1040ez efile   Multiply your total earnings subject to SE tax by 92. 1040ez efile 35% (. 1040ez efile 9235) to get actual net earnings. 1040ez efile Actual net earnings are equivalent to net earnings under the “Regular Method. 1040ez efile ” More information. 1040ez efile   For more information on the nonfarm optional method, see Publication 334, Tax Guide for Small Business, and the Schedule SE (Form 1040) instructions. 1040ez efile Income Tax: Income and Expenses Some income and expense items are treated the same for both income tax and SE tax purposes and some are treated differently. 1040ez efile Note. 1040ez efile For purposes of this section, references to members of the clergy are only to ministers or members of a religious order. 1040ez efile Income Items The tax treatment of offerings and fees, outside earnings, rental allowances, rental value of a parsonage, earnings of members of religious orders, and foreign earned income is discussed here. 1040ez efile Offerings and Fees If you are a member of the clergy, you must include in your income offerings and fees you receive for marriages, baptisms, funerals, masses, etc. 1040ez efile , in addition to your salary. 1040ez efile If the offering is made to the religious institution, it is not taxable to you. 1040ez efile Outside Earnings If you are a member of a religious organization and you give your outside earnings to the organization, you still must include the earnings in your income. 1040ez efile However, you may be entitled to a charitable contribution deduction for the amount paid to the organization. 1040ez efile For more information, see Publication 526. 1040ez efile Exclusion of Rental Allowance and Fair Rental Value of a Parsonage Ordained, commissioned, or licensed ministers of the gospel may be able to exclude from income tax the rental allowance or fair rental value of a parsonage that is provided to them as pay for their services. 1040ez efile Services include: Ministerial services, discussed earlier, Administrative duties and teaching at theological seminaries, and The ordinary duties of a minister performed as an employee of the United States (other than as a chaplain in the Armed Forces), a state, possession, political subdivision, or the District of Columbia. 1040ez efile This exclusion applies only for income tax purposes. 1040ez efile It does not apply for SE tax purposes, as discussed earlier under Amounts included in gross income under Self-Employment Tax: Figuring Net Earnings. 1040ez efile Designation requirement. 1040ez efile   The church or organization that employs you must officially designate the payment as a housing allowance before it makes the payment. 1040ez efile It must designate a definite amount. 1040ez efile It cannot determine the amount of the housing allowance at a later date. 1040ez efile If the church or organization does not officially designate a definite amount as a housing allowance, you must include your total salary in your income. 1040ez efile   If you are employed and paid by a local congregation, a resolution by a national church agency of your denomination does not effectively designate a housing allowance for you. 1040ez efile The local congregation must officially designate the part of your salary that is a housing allowance. 1040ez efile However, a resolution of a national church agency can designate your housing allowance if you are directly employed by the national agency. 1040ez efile Rental allowances. 1040ez efile   If you receive in your salary an amount officially designated as a rental allowance (including an amount to pay utility costs), you can exclude the allowance from your gross income if: You use the amount to provide or rent a home, and The amount is not more than reasonable pay for your services. 1040ez efile   The amount you exclude cannot be more than the fair rental value of the home, including furnishings, plus the cost of utilities. 1040ez efile Fair rental value of parsonage. 1040ez efile   You can exclude from gross income the fair rental value of a house or parsonage, including utilities, furnished to you as part of your earnings. 1040ez efile However, the exclusion cannot be more than the reasonable pay for your services. 1040ez efile If you pay for the utilities, you can exclude any allowance designated for utility costs, up to your actual cost. 1040ez efile Example. 1040ez efile Rev. 1040ez efile Joanna Baker is a full-time minister. 1040ez efile The church allows her to use a parsonage that has an annual fair rental value of $24,000. 1040ez efile The church pays her an annual salary of $67,000, of which $7,500 is designated for utility costs. 1040ez efile Her actual utility costs during the year were $7,000. 1040ez efile For income tax purposes, Rev. 1040ez efile Baker excludes $31,000 from gross income ($24,000 fair rental value of the parsonage plus $7,000 from the allowance for utility costs). 1040ez efile She will report $60,000 ($59,500 salary plus $500 of unused utility allowance). 1040ez efile Her income for SE tax purposes, however, is $91,000 ($67,000 salary + $24,000 fair rental value of the parsonage). 1040ez efile Home ownership. 1040ez efile   If you own your home and you receive as part of your salary a housing or rental allowance, you may exclude from gross income the smallest of: The amount actually used to provide a home, The amount officially designated as a rental allowance, or The fair rental value of the home, including furnishings, utilities, garage, etc. 1040ez efile Excess rental allowance. 1040ez efile   You must include in gross income the amount of any rental allowance that is more than the smallest of: Your reasonable salary, The fair rental value of the home plus utilities, or The amount actually used to provide a home. 1040ez efile   Include in the total on Form 1040, line 7. 1040ez efile On the dotted line next to line 7, enter “Excess allowance” and the amount. 1040ez efile You may deduct the home mortgage interest and real estate taxes paid on your home even though you pay all or part of those expenses with funds you get through a tax-free rental or parsonage allowance. 1040ez efile However, you can only deduct these expenses as itemized deductions on Schedule A (Form 1040). 1040ez efile Retired ministers. 1040ez efile   If you are a retired minister, you can exclude from your gross income the rental value of a home (plus utilities) furnished to you by your church as a part of your pay for past services, or the part of your pension that was designated as a rental allowance. 1040ez efile However, a minister's surviving spouse cannot exclude the rental value unless the rental value is for ministerial services he or she performs or performed. 1040ez efile Teachers or administrators. 1040ez efile   If you are a minister employed as a teacher or administrator by a church school, college, or university, you are performing ministerial services for purposes of the housing exclusion. 1040ez efile However, if you perform services as a teacher or administrator on the faculty of a nonchurch college, you cannot exclude from your income a housing allowance or the value of a home that the college provides to you. 1040ez efile    If you live in faculty lodging as an employee of an educational institution or academic health center, all or part of the value of that lodging may be nontaxable under a different rule. 1040ez efile In Publication 525, see Faculty lodging in the discussion on meals and lodging under Fringe Benefits. 1040ez efile   If you serve as a minister of music or minister of education, or serve in an administrative or other function of your religious organization, but are not authorized to perform substantially all of the religious duties of an ordained minister in your church (even if you are commissioned as a minister of the gospel), the housing exclusion does not apply to you. 1040ez efile Theological students. 1040ez efile   If you are a theological student serving a required internship as a part-time or assistant pastor, you cannot exclude a parsonage or rental allowance from your income unless you are ordained, commissioned, or licensed as a minister. 1040ez efile Traveling evangelists. 1040ez efile   You can exclude a designated rental allowance from out-of-town churches if you meet all of the following requirements. 1040ez efile You are an ordained minister. 1040ez efile You perform ministerial services at churches located away from your community. 1040ez efile You actually use the rental allowance to maintain your permanent home. 1040ez efile Cantors. 1040ez efile   If you have a bona fide commission and your congregation employs you on a full-time basis to perform substantially all the religious functions of the Jewish faith, you can exclude a rental allowance from your gross income. 1040ez efile Earnings—Members of Religious Orders Your earnings may be exempt from both income tax and SE tax if you are a member of a religious order who: Has taken a vow of poverty, Receives earnings for services performed as an agent of the order and in the exercise of duties required by the order, and Renounces the earnings and gives them to the order. 1040ez efile See Members of Religious Orders , earlier, under Social Security Coverage. 1040ez efile Foreign Earned Income Certain income may be exempt from income tax if you work in a foreign country or in a specified U. 1040ez efile S. 1040ez efile possession. 1040ez efile Publication 54 discusses the foreign earned income exclusion. 1040ez efile Publication 570, Tax Guide for Individuals With Income From U. 1040ez efile S. 1040ez efile Possessions, covers the rules for taxpayers with income from U. 1040ez efile S. 1040ez efile possessions. 1040ez efile You can get these free publications from the Internal Revenue Service at IRS. 1040ez efile gov or from most U. 1040ez efile S. 1040ez efile Embassies or consulates. 1040ez efile Expense Items The tax treatment of ministerial trade or business expenses, expenses allocable to tax-free income, and health insurance costs is discussed here. 1040ez efile Ministerial Trade or Business Expenses as an Employee When you figure your income tax, you must itemize your deductions on Schedule A (Form 1040) to claim allowable deductions for ministerial trade or business expenses incurred while working as an employee. 1040ez efile You also may have to file Form 2106, Employee Business Expenses (or Form 2106-EZ, Unreimbursed Employee Business Expenses). 1040ez efile You claim these expenses as miscellaneous itemized deductions that are subject to the 2%-of-adjusted-gross-income (AGI) limit. 1040ez efile See Publication 529 for more information on this limit. 1040ez efile However, you cannot deduct any of your employee business expenses that are allocable to tax-free income (discussed next). 1040ez efile Expenses Allocable to Tax-Free Income If you receive a rental or parsonage allowance that is exempt from income tax (tax free), you must allocate a portion of the expenses of operating your ministry to that tax-free income. 1040ez efile You cannot deduct the portion of your expenses that you allocate to your tax-free rental or parsonage allowance. 1040ez efile Exception. 1040ez efile   This rule does not apply to your deductions for home mortgage interest or real estate taxes on your home. 1040ez efile Figuring the allocation. 1040ez efile   Figure the portion of your otherwise deductible expenses that you cannot deduct (because you must allocate that portion to tax-free income) by multiplying the expenses by the following fraction:      Tax-free rental or parsonage allowance     All income (taxable and tax free) earned from your ministry           When figuring the allocation, include the income and expenses related to the ministerial duties you perform both as an employee and as a self-employed person. 1040ez efile    Reduce your otherwise deductible expenses only in figuring your income tax, not your SE tax. 1040ez efile Example. 1040ez efile Rev. 1040ez efile Charles Ashford received $40,000 in earnings for ministerial services consisting of a $28,000 salary for ministerial services performed as an employee, $2,000 for weddings and baptisms performed as a self-employed person, and a $10,000 tax-free parsonage allowance. 1040ez efile He incurred $4,000 of unreimbursed expenses connected with his earnings for ministerial services. 1040ez efile $3,500 of the $4,000 is for employee expenses related to his ministerial salary, and $500 is related to the weddings and baptisms he performed as a self-employed person. 1040ez efile Rev. 1040ez efile Ashford figures the nondeductible (tax-free) portion of expenses related to his ministerial salary as follows: ($10,000 ÷ $40,000) x $3,500 = $875   Rev. 1040ez efile Ashford figures the nondeductible (tax-free) portion of expenses related to his wedding and baptism income as follows: ($10,000 ÷ $40,000) x $500 = $125 Required statement. 1040ez efile   If you receive a tax-free rental or parsonage allowance and have ministerial expenses, attach a statement to your tax return. 1040ez efile The statement must contain all of the following information. 1040ez efile A list of each item of taxable ministerial income by source (such as wages, salary, weddings, baptisms, etc. 1040ez efile ) plus the amount. 1040ez efile A list of each item of tax-free ministerial income by source (parsonage allowance) plus the amount. 1040ez efile A list of each item of otherwise deductible ministerial expenses plus the amount. 1040ez efile How you figured the nondeductible part of your otherwise deductible expenses. 1040ez efile A statement that the other deductions claimed on your tax return are not allocable to your tax-free income. 1040ez efile   See the attachments prepared for the Comprehensive Example , later. 1040ez efile Following the example, you will find blank worksheets for your own use. 1040ez efile Health Insurance Costs of Self-Employed Ministers If you are self-employed, you may be able to deduct the amount you paid in 2013 for medical and dental insurance and qualified long-term care insurance for you, your spouse, and your dependents. 1040ez efile If you qualify, you can take this deduction as an adjustment to income on Form 1040, line 29. 1040ez efile See the Instructions for Form 1040 to figure your deduction. 1040ez efile The following special rules apply to the self-employed health insurance deduction. 1040ez efile You cannot take a medical expense deduction on Schedule A (Form 1040) for any expenses you claim for purposes of the self-employed health insurance deduction. 1040ez efile You cannot take the deduction for any month you are eligible to participate in a subsidized plan of your (or your spouse's) employer. 1040ez efile The deduction cannot exceed your net earnings from the business under which the insurance plan is established. 1040ez efile Your net earnings under this rule do not include the income you earned as a common-law employee (discussed earlier) of a church. 1040ez efile More information. 1040ez efile   For more information about the self-employed health insurance deduction, see chapter 6 in Publication 535. 1040ez efile Deduction for SE Tax You can deduct one-half of your SE tax in figuring adjusted gross income. 1040ez efile This is an income tax deduction only, on Form 1040, line 27. 1040ez efile Do not claim this deduction in figuring net earnings from self-employment subject to SE tax. 1040ez efile Income Tax Withholding and Estimated Tax The federal income tax is a pay-as-you-go tax. 1040ez efile You must pay the tax as you earn or receive income during the year. 1040ez efile An employee usually has income tax withheld from his or her wages or salary. 1040ez efile However, your salary is not subject to federal income tax withholding if both of the following conditions apply. 1040ez efile You are a duly ordained, commissioned, or licensed minister, a member of a religious order (who has not taken a vow of poverty), or a Christian Science practitioner or reader. 1040ez efile Your salary is for ministerial services (see Ministerial Services , earlier). 1040ez efile If your salary is not subject to withholding, or if you do not pay enough tax through withholding, you may need to make estimated tax payments to avoid penalties for not paying enough tax as you earn your income. 1040ez efile You generally must make estimated tax payments if you expect to owe taxes, including SE tax, of $1,000 or more, when you file your return. 1040ez efile Determine your estimated tax by using the worksheets in Publication 505, Tax Withholding and Estimated Tax. 1040ez efile Pay the entire estimated tax for 2014 or the first installment by April 15, 2014. 1040ez efile See Form 1040-ES for the different payment methods. 1040ez efile The April 15 date applies whether or not your tax home and your abode are outside the United States and Puerto Rico. 1040ez efile For more information, see chapter 2 of Publication 505. 1040ez efile If you perform your services as a common-law employee of the church and your salary is not subject to income tax withholding, you can enter into a voluntary withholding agreement with the church to cover any income and SE tax that may be due. 1040ez efile Filing Your Return You must file an income tax return for 2013 if your gross income was at least the amount shown in the third column of Table 4 above. 1040ez efile Table 4. 1040ez efile 2013 Filing Requirements for Most Taxpayers IF your filing status is . 1040ez efile . 1040ez efile . 1040ez efile AND at the end of 2013 you were* . 1040ez efile . 1040ez efile . 1040ez efile THEN file a return if your gross income** was at least . 1040ez efile . 1040ez efile . 1040ez efile single under age 65 65 or older   $10,000 $11,500   married filing jointly*** under 65 (both spouses) 65 or older (one spouse) 65 or older (both spouses)   $20,000  $21,200  $22,400   married filing separately any age   $3,900   head of household under 65 65 or older   $12,850 $14,350   qualifying widow(er) with dependent child under 65 65 or older   $16,100  $17,300   * If you were born on January 1, 1949, you are considered to be age 65 at the end of 2013. 1040ez efile ** Gross income means all income you received in the form of money, goods, property, and services that is not exempt from tax, including any income from sources outside the United States or from the sale of your main home (even if you can exclude part or all of it). 1040ez efile Do not include any social security benefits unless (a) you are married filing a separate return and you lived with your spouse at any time in 2013, or (b) one-half of your social security benefits plus your other gross income and any tax-exempt interest is more than $25,000 ($32,000 if married filing jointly). 1040ez efile If (a) or (b) applies, see the instructions for Form 1040, lines 20a and 20b, to figure the taxable part of social security benefits you must include in gross income. 1040ez efile Gross income includes gains, but not losses, reported on Form 8949 or Schedule D (Form 1040). 1040ez efile Gross income from a business means, for example, the amount on Schedule C (Form 1040), line 7, or Schedule F (Form 1040), line 9. 1040ez efile But, in figuring gross income, do not reduce your income by any losses, including any loss on Schedule C (Form 1040), line 7, or Schedule F (Form 1040), line 9. 1040ez efile *** If you did not live with your spouse at the end of 2013 (or on the date your spouse died) and your gross income was at least $3,900, you must file a return regardless of your age. 1040ez efile Additional requirements. 1040ez efile   Even if your income was less than the amount shown in Table 4, you must file an income tax return on Form 1040, and attach a completed Schedule SE (Form 1040), if:    You are not exempt from SE tax, and you have net earnings from self-employment (discussed earlier under Self-Employment Tax: Figuring Net Earnings ) of $400 or more in the tax year, You are exempt from SE tax on earnings from ministerial services and you have $400 or more of other net earnings subject to SE tax, or You had wages of $108. 1040ez efile 28 or more from an electing church or church-controlled organization (see Coverage of Religious Workers (Church Employees) , earlier, under Social Security Coverage). 1040ez efile Self-employment tax. 1040ez efile   If you are liable for SE tax, you must file Schedule SE (Form 1040) with your return. 1040ez efile   If you filed Form 4361 and did not receive approval from the IRS, you must pay SE tax on your ministerial earnings, as explained earlier. 1040ez efile You should report ministerial earnings and expenses from nonemployee ministerial services on Schedule C or C-EZ (Form 1040). 1040ez efile You should then carry the net amount over to line 2 of Schedule SE (Form 1040), Section A or B. 1040ez efile However, if you were a duly ordained minister who was an employee of a church and you must pay SE tax on the wages you earned for those services, do not report those wages on Schedule C or C-EZ (Form 1040). 1040ez efile Instead, report those wages less any allowable expenses (including any unreimbursed employee business expenses), on line 2 of Schedule SE (Form 1040), Section A or B, and attach an explanation. 1040ez efile Note. 1040ez efile For income tax purposes, the unreimbursed employee business expenses that you incurred as an employee of the church and subtracted from your wages on line 2 of Schedule SE (Form 1040) are allowed only as an itemized deduction on Schedule A (Form 1040) if they exceed 2% of your adjusted gross income. 1040ez efile You cannot deduct these expenses on Schedule C or C-EZ (Form 1040) as a trade or business expense. 1040ez efile Exemption from SE tax. 1040ez efile   If you filed Form 4361 and received IRS approval not to be taxed on your ministerial earnings, and you do not have any other income subject to SE tax, do not file Schedule SE (Form 1040). 1040ez efile Instead, enter “Exempt—Form 4361” on the dotted line next to Form 1040, line 56. 1040ez efile However, if you had net earnings from another trade or business of $400 or more subject to SE tax, see line A at the top of Schedule SE (Form 1040), Section B. 1040ez efile    If you filed Form 4029 and received IRS approval not to be taxed on those earnings, and you do not have any other income subject to SE tax, do not file Schedule SE (Form 1040). 1040ez efile Instead, enter “Exempt—Form 4029” on the dotted line next to Form 1040, line 56. 1040ez efile More information. 1040ez efile   For more information on filing your return, including when and where to file it, see the Instructions for Form 1040. 1040ez efile Retirement Savings Arrangements Retirement savings arrangements are plans that offer you a tax-favored way to save for your retirement. 1040ez efile You generally can deduct your contributions to the plan. 1040ez efile Your contributions and the earnings on them are not taxed until they are distributed. 1040ez efile Retirement plans for the self-employed. 1040ez efile   To set up one of the following plans you must be self-employed. 1040ez efile SEP (simplified employee pension) plan. 1040ez efile SIMPLE (savings incentive match plan for employees) plan. 1040ez efile Qualified retirement plan (also called a Keogh or H. 1040ez efile R. 1040ez efile 10 plan). 1040ez efile   The common-law rules determine whether you are an employee or a self-employed person for purposes of setting up a retirement plan. 1040ez efile See Employment status for other tax purposes under Coverage of Members of the Clergy, earlier. 1040ez efile This result is true even if your compensation for ministerial services (defined earlier) is subject to SE tax. 1040ez efile   For example, if a congregation pays you a salary for performing ministerial services and you are subject to the congregation's control, you generally are a common-law employee. 1040ez efile You are not a self-employed person for purposes of setting up a retirement plan. 1040ez efile This result is true even if your salary is subject to SE tax. 1040ez efile   On the other hand, amounts received directly from members of the congregation, such as fees for performing marriages, baptisms, or other personal services that you report on Schedule C or C-EZ (Form 1040), are earnings from self-employment for all tax purposes. 1040ez efile   For more information on establishing a SEP, SIMPLE, or qualified retirement plan, see Publication 560, Retirement Plans for Small Business (SEP, SIMPLE, and Qualified Plans). 1040ez efile Individual retirement arrangements (IRAs). 1040ez efile   The traditional IRA and the Roth IRA are two individual retirement arrangements you can use to save money for your retirement. 1040ez efile Generally, your maximum contribution for 2013 to either of these plans (or to a combination of the two) is the smaller of your taxable compensation or $5,500 ($6,500 if you are age 50 or older). 1040ez efile   However, your maximum contribution to a Roth IRA will be further reduced or eliminated if your adjusted gross income is above a certain amount. 1040ez efile You cannot deduct Roth IRA contributions, but if you satisfy certain requirements, all earnings in the Roth IRA are tax free and neither your nondeductible contributions nor any earnings on them are taxable when distributed. 1040ez efile   If you contribute to a traditional IRA, your contribution may be deductible. 1040ez efile However, your deduction may be reduced or eliminated if you or your spouse is covered by an employer retirement plan (including, but not limited to, a SEP, SIMPLE, or qualified retirement plan). 1040ez efile   For more information on IRAs, see Publication 590. 1040ez efile Tax-sheltered annuity plans. 1040ez efile   Church employees, members of religious orders, and duly ordained, commissioned, or licensed ministers working as ministers or chaplains can participate in tax-sheltered annuity (403(b)) plans. 1040ez efile For more