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2013 1040ez Tax Form

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2013 1040ez Tax Form

2013 1040ez tax form Publication 969 - Main Content Table of Contents Health Savings Accounts (HSAs)Qualifying for an HSA Contributions to an HSA Distributions From an HSA Balance in an HSA Death of HSA Holder Filing Form 8889 Employer Participation Medical Savings Accounts (MSAs)Archer MSAs Contributions to an MSA Distributions From an MSA Balance in an Archer MSA Death of the Archer MSA Holder Filing Form 8853 Employer Participation Medicare Advantage MSAs Flexible Spending Arrangements (FSAs)Qualifying for an FSA Contributions to an FSA Distributions From an FSA Balance in an FSA Employer Participation Health Reimbursement Arrangements (HRAs)Qualifying for an HRA Contributions to an HRA Distributions From an HRA Balance in an HRA Employer Participation How To Get Tax HelpLow Income Taxpayer Clinics Health Savings Accounts (HSAs) A health savings account (HSA) is a tax-exempt trust or custodial account you set up with a qualified HSA trustee to pay or reimburse certain medical expenses you incur. 2013 1040ez tax form You must be an eligible individual to qualify for an HSA. 2013 1040ez tax form No permission or authorization from the IRS is necessary to establish an HSA. 2013 1040ez tax form You set up an HSA with a trustee. 2013 1040ez tax form A qualified HSA trustee can be a bank, an insurance company, or anyone already approved by the IRS to be a trustee of individual retirement arrangements (IRAs) or Archer MSAs. 2013 1040ez tax form The HSA can be established through a trustee that is different from your health plan provider. 2013 1040ez tax form Your employer may already have some information on HSA trustees in your area. 2013 1040ez tax form If you have an Archer MSA, you can generally roll it over into an HSA tax free. 2013 1040ez tax form See Rollovers, later. 2013 1040ez tax form What are the benefits of an HSA?   You may enjoy several benefits from having an HSA. 2013 1040ez tax form You can claim a tax deduction for contributions you, or someone other than your employer, make to your HSA even if you do not itemize your deductions on Form 1040. 2013 1040ez tax form Contributions to your HSA made by your employer (including contributions made through a cafeteria plan) may be excluded from your gross income. 2013 1040ez tax form The contributions remain in your account until you use them. 2013 1040ez tax form The interest or other earnings on the assets in the account are tax free. 2013 1040ez tax form Distributions may be tax free if you pay qualified medical expenses. 2013 1040ez tax form See Qualified medical expenses , later. 2013 1040ez tax form An HSA is “portable. 2013 1040ez tax form ” It stays with you if you change employers or leave the work force. 2013 1040ez tax form Qualifying for an HSA To be an eligible individual and qualify for an HSA, you must meet the following requirements. 2013 1040ez tax form You must be covered under a high deductible health plan (HDHP), described later, on the first day of the month. 2013 1040ez tax form You have no other health coverage except what is permitted under Other health coverage , later. 2013 1040ez tax form You are not enrolled in Medicare. 2013 1040ez tax form You cannot be claimed as a dependent on someone else's 2013 tax return. 2013 1040ez tax form Under the last-month rule, you are considered to be an eligible individual for the entire year if you are an eligible individual on the first day of the last month of your tax year (December 1 for most taxpayers). 2013 1040ez tax form If you meet these requirements, you are an eligible individual even if your spouse has non-HDHP family coverage, provided your spouse's coverage does not cover you. 2013 1040ez tax form If another taxpayer is entitled to claim an exemption for you, you cannot claim a deduction for an HSA contribution. 2013 1040ez tax form This is true even if the other person does not actually claim your exemption. 2013 1040ez tax form Each spouse who is an eligible individual who wants an HSA must open a separate HSA. 2013 1040ez tax form You cannot have a joint HSA. 2013 1040ez tax form High deductible health plan (HDHP). 2013 1040ez tax form   An HDHP has: A higher annual deductible than typical health plans, and A maximum limit on the sum of the annual deductible and out-of-pocket medical expenses that you must pay for covered expenses. 2013 1040ez tax form Out-of-pocket expenses include copayments and other amounts, but do not include premiums. 2013 1040ez tax form   An HDHP may provide preventive care benefits without a deductible or with a deductible less than the minimum annual deductible. 2013 1040ez tax form Preventive care includes, but is not limited to, the following. 2013 1040ez tax form Periodic health evaluations, including tests and diagnostic procedures ordered in connection with routine examinations, such as annual physicals. 2013 1040ez tax form Routine prenatal and well-child care. 2013 1040ez tax form Child and adult immunizations. 2013 1040ez tax form Tobacco cessation programs. 2013 1040ez tax form Obesity weight-loss programs. 2013 1040ez tax form Screening services. 2013 1040ez tax form This includes screening services for the following: Cancer. 2013 1040ez tax form Heart and vascular diseases. 2013 1040ez tax form Infectious diseases. 2013 1040ez tax form Mental health conditions. 2013 1040ez tax form Substance abuse. 2013 1040ez tax form Metabolic, nutritional, and endocrine conditions. 2013 1040ez tax form Musculoskeletal disorders. 2013 1040ez tax form Obstetric and gynecological conditions. 2013 1040ez tax form Pediatric conditions. 2013 1040ez tax form Vision and hearing disorders. 2013 1040ez tax form For more information on screening services, see Notice 2004-23, 2004-15 I. 2013 1040ez tax form R. 2013 1040ez tax form B. 2013 1040ez tax form 725 available at www. 2013 1040ez tax form irs. 2013 1040ez tax form gov/irb/2004-15_IRB/ar10. 2013 1040ez tax form html. 2013 1040ez tax form     The following table shows the minimum annual deductible and maximum annual deductible and other out-of-pocket expenses for HDHPs for 2013. 2013 1040ez tax form      Self-only coverage Family coverage Minimum annual deductible $1,250 $2,500 Maximum annual deductible and other out-of-pocket expenses* $6,250 $12,500 * This limit does not apply to deductibles and expenses for out-of-network services if the plan uses a network of providers. 2013 1040ez tax form Instead, only deductibles and out-of-pocket expenses for services within the network should be used to figure whether the limit applies. 2013 1040ez tax form    The following table shows the minimum annual deductible and maximum annual deductible and other out-of-pocket expenses for HDHPs for 2014. 2013 1040ez tax form      Self-only coverage Family coverage Minimum annual deductible $1,250 $2,500 Maximum annual deductible and other out-of-pocket expenses* $6,350 $12,700 * This limit does not apply to deductibles and expenses for out-of-network services if the plan uses a network of providers. 2013 1040ez tax form Instead, only deductibles and out-of-pocket expenses for services within the network should be used to figure whether the limit applies. 2013 1040ez tax form   Self-only HDHP coverage is an HDHP covering only an eligible individual. 2013 1040ez tax form Family HDHP coverage is an HDHP covering an eligible individual and at least one other individual (whether or not that individual is an eligible individual). 2013 1040ez tax form Example. 2013 1040ez tax form An eligible individual and his dependent child are covered under an “employee plus one” HDHP offered by the individual's employer. 2013 1040ez tax form This is family HDHP coverage. 2013 1040ez tax form Family plans that do not meet the high deductible rules. 2013 1040ez tax form   There are some family plans that have deductibles for both the family as a whole and for individual family members. 2013 1040ez tax form Under these plans, if you meet the individual deductible for one family member, you do not have to meet the higher annual deductible amount for the family. 2013 1040ez tax form If either the deductible for the family as a whole or the deductible for an individual family member is less than the minimum annual deductible for family coverage, the plan does not qualify as an HDHP. 2013 1040ez tax form Example. 2013 1040ez tax form You have family health insurance coverage in 2013. 2013 1040ez tax form The annual deductible for the family plan is $3,500. 2013 1040ez tax form This plan also has an individual deductible of $1,500 for each family member. 2013 1040ez tax form The plan does not qualify as an HDHP because the deductible for an individual family member is less than the minimum annual deductible ($2,500) for family coverage. 2013 1040ez tax form Other health coverage. 2013 1040ez tax form   You (and your spouse, if you have family coverage) generally cannot have any other health coverage that is not an HDHP. 2013 1040ez tax form However, you can still be an eligible individual even if your spouse has non-HDHP coverage provided you are not covered by that plan. 2013 1040ez tax form    You can have additional insurance that provides benefits only for the following items. 2013 1040ez tax form Liabilities incurred under workers' compensation laws, tort liabilities, or liabilities related to ownership or use of property. 2013 1040ez tax form A specific disease or illness. 2013 1040ez tax form A fixed amount per day (or other period) of hospitalization. 2013 1040ez tax form   You can also have coverage (whether provided through insurance or otherwise) for the following items. 2013 1040ez tax form Accidents. 2013 1040ez tax form Disability. 2013 1040ez tax form Dental care. 2013 1040ez tax form Vision care. 2013 1040ez tax form Long-term care. 2013 1040ez tax form    Plans in which substantially all of the coverage is through the items listed earlier are not HDHPs. 2013 1040ez tax form For example, if your plan provides coverage substantially all of which is for a specific disease or illness, the plan is not an HDHP for purposes of establishing an HSA. 2013 1040ez tax form Prescription drug plans. 2013 1040ez tax form   You can have a prescription drug plan, either as part of your HDHP or a separate plan (or rider), and qualify as an eligible individual if the plan does not provide benefits until the minimum annual deductible of the HDHP has been met. 2013 1040ez tax form If you can receive benefits before that deductible is met, you are not an eligible individual. 2013 1040ez tax form Other employee health plans. 2013 1040ez tax form   An employee covered by an HDHP and a health FSA or an HRA that pays or reimburses qualified medical expenses generally cannot make contributions to an HSA. 2013 1040ez tax form Health FSAs and HRAs are discussed later. 2013 1040ez tax form   However, an employee can make contributions to an HSA while covered under an HDHP and one or more of the following arrangements. 2013 1040ez tax form Limited-purpose health FSA or HRA. 2013 1040ez tax form These arrangements can pay or reimburse the items listed earlier under Other health coverage except long-term care. 2013 1040ez tax form Also, these arrangements can pay or reimburse preventive care expenses because they can be paid without having to satisfy the deductible. 2013 1040ez tax form Suspended HRA. 2013 1040ez tax form Before the beginning of an HRA coverage period, you can elect to suspend the HRA. 2013 1040ez tax form The HRA does not pay or reimburse, at any time, the medical expenses incurred during the suspension period except preventive care and items listed under Other health coverage. 2013 1040ez tax form When the suspension period ends, you are no longer eligible to make contributions to an HSA. 2013 1040ez tax form Post-deductible health FSA or HRA. 2013 1040ez tax form These arrangements do not pay or reimburse any medical expenses incurred before the minimum annual deductible amount is met. 2013 1040ez tax form The deductible for these arrangements does not have to be the same as the deductible for the HDHP, but benefits may not be provided before the minimum annual deductible amount is met. 2013 1040ez tax form Retirement HRA. 2013 1040ez tax form This arrangement pays or reimburses only those medical expenses incurred after retirement. 2013 1040ez tax form After retirement you are no longer eligible to make contributions to an HSA. 2013 1040ez tax form Health FSA – grace period. 2013 1040ez tax form   Coverage during a grace period by a general purpose health FSA is allowed if the balance in the health FSA at the end of its prior year plan is zero. 2013 1040ez tax form See Flexible Spending Arrangements (FSAs) , later. 2013 1040ez tax form Contributions to an HSA Any eligible individual can contribute to an HSA. 2013 1040ez tax form For an employee's HSA, the employee, the employee's employer, or both may contribute to the employee's HSA in the same year. 2013 1040ez tax form For an HSA established by a self-employed (or unemployed) individual, the individual can contribute. 2013 1040ez tax form Family members or any other person may also make contributions on behalf of an eligible individual. 2013 1040ez tax form Contributions to an HSA must be made in cash. 2013 1040ez tax form Contributions of stock or property are not allowed. 2013 1040ez tax form Limit on Contributions The amount you or any other person can contribute to your HSA depends on the type of HDHP coverage you have, your age, the date you become an eligible individual, and the date you cease to be an eligible individual. 2013 1040ez tax form For 2013, if you have self-only HDHP coverage, you can contribute up to $3,250. 2013 1040ez tax form If you have family HDHP coverage, you can contribute up to $6,450. 2013 1040ez tax form For 2014, if you have self-only HDHP coverage, you can contribute up to $3,300. 2013 1040ez tax form If you have family HDHP coverage you can contribute up to $6,550. 2013 1040ez tax form If you were, or were considered (under the last-month rule, discussed later), an eligible individual for the entire year and did not change your type of coverage, you can contribute the full amount based on your type of coverage. 2013 1040ez tax form However, if you were not an eligible individual for the entire year or changed your coverage during the year, your contribution limit is the greater of: The limitation shown on the Line 3 Limitation Chart and Worksheetin the Instructions for Form 8889, Health Savings Accounts (HSAs), or The maximum annual HSA contribution based on your HDHP coverage (self-only or family) on the first day of the last month of your tax year. 2013 1040ez tax form If you had family HDHP coverage on the first day of the last month of your tax year, your contribution limit for 2013 is $6,450 even if you changed coverage during the year. 2013 1040ez tax form Last-month rule. 2013 1040ez tax form   Under the last-month rule, if you are an eligible individual on the first day of the last month of your tax year (December 1 for most taxpayers), you are considered an eligible individual for the entire year. 2013 1040ez tax form You are treated as having the same HDHP coverage for the entire year as you had on the first day of the last month. 2013 1040ez tax form Testing period. 2013 1040ez tax form   If contributions were made to your HSA based on you being an eligible individual for the entire year under the last-month rule, you must remain an eligible individual during the testing period. 2013 1040ez tax form For the last-month rule, the testing period begins with the last month of your tax year and ends on the last day of the 12th month following that month. 2013 1040ez tax form For example, December 1, 2013, through December 31, 2014. 2013 1040ez tax form   If you fail to remain an eligible individual during the testing period, other than because of death or becoming disabled, you will have to include in income the total contributions made to your HSA that would not have been made except for the last-month rule. 2013 1040ez tax form You include this amount in your income in the year in which you fail to be an eligible individual. 2013 1040ez tax form This amount is also subject to a 10% additional tax. 2013 1040ez tax form The income and additional tax are shown on Form 8889, Part III. 2013 1040ez tax form Example 1. 2013 1040ez tax form Chris, age 53, becomes an eligible individual on December 1, 2013. 2013 1040ez tax form He has family HDHP coverage on that date. 2013 1040ez tax form Under the last-month rule, he contributes $6,450 to his HSA. 2013 1040ez tax form Chris fails to be an eligible individual in June 2014. 2013 1040ez tax form Because Chris did not remain an eligible individual during the testing period (December 1, 2013, through December 31, 2014), he must include in his 2014 income the contributions made in 2013 that would not have been made except for the last-month rule. 2013 1040ez tax form Chris uses the worksheet in the Form 8889 instructions to determine this amount. 2013 1040ez tax form January -0- February -0- March -0- April -0- May -0- June -0- July -0- August -0- September -0- October -0- November -0- December $6,450. 2013 1040ez tax form 00 Total for all months $6,450. 2013 1040ez tax form 00 Limitation. 2013 1040ez tax form Divide the total by 12 $537. 2013 1040ez tax form 50 Chris would include $5,912. 2013 1040ez tax form 50 ($6,450. 2013 1040ez tax form 00 – $537. 2013 1040ez tax form 50) in his gross income on his 2014 tax return. 2013 1040ez tax form Also, a 10% additional tax applies to this amount. 2013 1040ez tax form Example 2. 2013 1040ez tax form Erika, age 39, has self-only HDHP coverage on January 1, 2013. 2013 1040ez tax form Erika changes to family HDHP coverage on November 1, 2013. 2013 1040ez tax form Because Erika has family HDHP coverage on December 1, 2013, she contributes $6,450 for 2013. 2013 1040ez tax form Erika fails to be an eligible individual in March 2014. 2013 1040ez tax form Because she did not remain an eligible individual during the testing period (December 1, 2013, through December 31, 2014), she must include in income the contribution made that would not have been made except for the last-month rule. 2013 1040ez tax form Erika uses the worksheet in the Form 8889 instructions to determine this amount. 2013 1040ez tax form January $3,250. 2013 1040ez tax form 00 February $3,250. 2013 1040ez tax form 00 March $3,250. 2013 1040ez tax form 00 April $3,250. 2013 1040ez tax form 00 May $3,250. 2013 1040ez tax form 00 June $3,250. 2013 1040ez tax form 00 July $3,250. 2013 1040ez tax form 00 August $3,250. 2013 1040ez tax form 00 September $3,250. 2013 1040ez tax form 00 October $3,250. 2013 1040ez tax form 00 November $6,450. 2013 1040ez tax form 00 December $6,450. 2013 1040ez tax form 00 Total for all months $45,400. 2013 1040ez tax form 00 Limitation. 2013 1040ez tax form Divide the total by 12 $3,783. 2013 1040ez tax form 34 Erika would include $2,666. 2013 1040ez tax form 67 ($6,450 – $3,783. 2013 1040ez tax form 34) in her gross income on her 2014 tax return. 2013 1040ez tax form Also, a 10% additional tax applies to this amount. 2013 1040ez tax form Additional contribution. 2013 1040ez tax form   If you are an eligible individual who is age 55 or older at the end of your tax year, your contribution limit is increased by $1,000. 2013 1040ez tax form For example, if you have self-only coverage, you can contribute up to $4,250 (the contribution limit for self-only coverage ($3,250) plus the additional contribution of $1,000). 2013 1040ez tax form However, see Enrolled in Medicare , later. 2013 1040ez tax form If you have more than one HSA in 2013, your total contributions to all the HSAs cannot be more than the limits discussed earlier. 2013 1040ez tax form Reduction of contribution limit. 2013 1040ez tax form   You must reduce the amount that can be contributed (including any additional contribution) to your HSA by the amount of any contribution made to your Archer MSA (including employer contributions) for the year. 2013 1040ez tax form A special rule applies to married people, discussed next, if each spouse has family coverage under an HDHP. 2013 1040ez tax form Rules for married people. 2013 1040ez tax form   If either spouse has family HDHP coverage, both spouses are treated as having family HDHP coverage. 2013 1040ez tax form If each spouse has family coverage under a separate plan, the contribution limit for 2013 is $6,450. 2013 1040ez tax form You must reduce the limit on contributions, before taking into account any additional contributions, by the amount contributed to both spouses' Archer MSAs. 2013 1040ez tax form After that reduction, the contribution limit is split equally between the spouses unless you agree on a different division. 2013 1040ez tax form The rules for married people apply only if both spouses are eligible individuals. 2013 1040ez tax form If both spouses are 55 or older and not enrolled in Medicare, each spouse's contribution limit is increased by the additional contribution. 2013 1040ez tax form If both spouses meet the age requirement, the total contributions under family coverage cannot be more than $8,450. 2013 1040ez tax form Each spouse must make the additional contribution to his or her own HSA. 2013 1040ez tax form Example. 2013 1040ez tax form For 2013, Mr. 2013 1040ez tax form Auburn and his wife are both eligible individuals. 2013 1040ez tax form They each have family coverage under separate HDHPs. 2013 1040ez tax form Mr. 2013 1040ez tax form Auburn is 58 years old and Mrs. 2013 1040ez tax form Auburn is 53. 2013 1040ez tax form Mr. 2013 1040ez tax form and Mrs. 2013 1040ez tax form Auburn can split the family contribution limit ($6,450) equally or they can agree on a different division. 2013 1040ez tax form If they split it equally, Mr. 2013 1040ez tax form Auburn can contribute $4,225 to an HSA (one-half the maximum contribution for family coverage ($3,225) + $1,000 additional contribution) and Mrs. 2013 1040ez tax form Auburn can contribute $3,225 to an HSA. 2013 1040ez tax form Employer contributions. 2013 1040ez tax form   You must reduce the amount you, or any other person, can contribute to your HSA by the amount of any contributions made by your employer that are excludable from your income. 2013 1040ez tax form This includes amounts contributed to your account by your employer through a cafeteria plan. 2013 1040ez tax form Enrolled in Medicare. 2013 1040ez tax form   Beginning with the first month you are enrolled in Medicare, your contribution limit is zero. 2013 1040ez tax form Example. 2013 1040ez tax form You turned age 65 in July 2013 and enrolled in Medicare. 2013 1040ez tax form You had an HDHP with self-only coverage and are eligible for an additional contribution of $1,000. 2013 1040ez tax form Your contribution limit is $2,125 ($4,250 × 6 ÷ 12). 2013 1040ez tax form Qualified HSA funding distribution. 2013 1040ez tax form   A qualified HSA funding distribution may be made from your traditional IRA or Roth IRA to your HSA. 2013 1040ez tax form This distribution cannot be made from an ongoing SEP IRA or SIMPLE IRA. 2013 1040ez tax form For this purpose, a SEP IRA or SIMPLE IRA is ongoing if an employer contribution is made for the plan year ending with or within your tax year in which the distribution would be made. 2013 1040ez tax form   The maximum qualified HSA funding distribution depends on the HDHP coverage (self-only or family) you have on the first day of the month in which the contribution is made and your age as of the end of the tax year. 2013 1040ez tax form The distribution must be made directly by the trustee of the IRA to the trustee of the HSA. 2013 1040ez tax form The distribution is not included in your income, is not deductible, and reduces the amount that can be contributed to your HSA. 2013 1040ez tax form The qualified HSA funding distribution is shown on Form 8889 for the year in which the distribution is made. 2013 1040ez tax form   You can make only one qualified HSA funding distribution during your lifetime. 2013 1040ez tax form However, if you make a distribution during a month when you have self-only HDHP coverage, you can make another qualified HSA funding distribution in a later month in that tax year if you change to family HDHP coverage. 2013 1040ez tax form The total qualified HSA funding distribution cannot be more than the contribution limit for family HDHP coverage plus any additional contribution to which you are entitled. 2013 1040ez tax form Example. 2013 1040ez tax form In 2013, you are an eligible individual, age 57, with self-only HDHP coverage. 2013 1040ez tax form You can make a qualified HSA funding distribution of $4,250 ($3,250 plus $1,000 additional contribution). 2013 1040ez tax form Funding distribution – testing period. 2013 1040ez tax form   You must remain an eligible individual during the testing period. 2013 1040ez tax form For a qualified HSA funding distribution, the testing period begins with the month in which the qualified HSA funding distribution is contributed and ends on the last day of the 12th month following that month. 2013 1040ez tax form For example, if a qualified HSA funding distribution is contributed to your HSA on August 10, 2013, your testing period begins in August 2013, and ends on August 31, 2014. 2013 1040ez tax form   If you fail to remain an eligible individual during the testing period, other than because of death or becoming disabled, you will have to include in income the qualified HSA funding distribution. 2013 1040ez tax form You include this amount in income in the year in which you fail to be an eligible individual. 2013 1040ez tax form This amount is also subject to a 10% additional tax. 2013 1040ez tax form The income and the additional tax are shown on Form 8889, Part III. 2013 1040ez tax form   Each qualified HSA funding distribution allowed has its own testing period. 2013 1040ez tax form For example, you are an eligible individual, age 45, with self-only HDHP coverage. 2013 1040ez tax form On June 18, 2013, you make a qualified HSA funding distribution of $3,250. 2013 1040ez tax form On July 27, 2013, you enroll in family HDHP coverage and on August 17, 2013, you make a qualified HSA funding distribution of $3,200. 2013 1040ez tax form Your testing period for the first distribution begins in June 2013 and ends on June 30, 2014. 2013 1040ez tax form Your testing period for the second distribution begins in August 2013 and ends on August 31, 2014. 2013 1040ez tax form   The testing period rule that applies under the last-month rule (discussed earlier) does not apply to amounts contributed to an HSA through a qualified HSA funding distribution. 2013 1040ez tax form If you remain an eligible individual during the entire funding distribution testing period, then no amount of that distribution is included in income and will not be subject to the additional tax for failing to meet the last-month rule testing period. 2013 1040ez tax form Rollovers A rollover contribution is not included in your income, is not deductible, and does not reduce your contribution limit. 2013 1040ez tax form Archer MSAs and other HSAs. 2013 1040ez tax form   You can roll over amounts from Archer MSAs and other HSAs into an HSA. 2013 1040ez tax form You do not have to be an eligible individual to make a rollover contribution from your existing HSA to a new HSA. 2013 1040ez tax form Rollover contributions do not need to be in cash. 2013 1040ez tax form Rollovers are not subject to the annual contribution limits. 2013 1040ez tax form   You must roll over the amount within 60 days after the date of receipt. 2013 1040ez tax form You can make only one rollover contribution to an HSA during a 1-year period. 2013 1040ez tax form Note. 2013 1040ez tax form If you instruct the trustee of your HSA to transfer funds directly to the trustee of another of your HSAs, the transfer is not considered a rollover. 2013 1040ez tax form There is no limit on the number of these transfers. 2013 1040ez tax form Do not include the amount transferred in income, deduct it as a contribution, or include it as a distribution on Form 8889. 2013 1040ez tax form When To Contribute You can make contributions to your HSA for 2013 until April 15, 2014. 2013 1040ez tax form If you fail to be an eligible individual during 2013, you can still make contributions, up until April 15, 2014, for the months you were an eligible individual. 2013 1040ez tax form Your employer can make contributions to your HSA between January 1, 2014, and April 15, 2014, that are allocated to 2013. 2013 1040ez tax form Your employer must notify you and the trustee of your HSA that the contribution is for 2013. 2013 1040ez tax form The contribution will be reported on your 2014 Form W-2. 2013 1040ez tax form Reporting Contributions on Your Return Contributions made by your employer are not included in your income. 2013 1040ez tax form Contributions to an employee's account by an employer using the amount of an employee's salary reduction through a cafeteria plan are treated as employer contributions. 2013 1040ez tax form Generally, you can claim contributions you made and contributions made by any other person, other than your employer, on your behalf, as an adjustment to income. 2013 1040ez tax form Contributions by a partnership to a bona fide partner's HSA are not contributions by an employer. 2013 1040ez tax form The contributions are treated as a distribution of money and are not included in the partner's gross income. 2013 1040ez tax form Contributions by a partnership to a partner's HSA for services rendered are treated as guaranteed payments that are deductible by the partnership and includible in the partner's gross income. 2013 1040ez tax form In both situations, the partner can deduct the contribution made to the partner's HSA. 2013 1040ez tax form Contributions by an S corporation to a 2% shareholder-employee's HSA for services rendered are treated as guaranteed payments and are deductible by the S corporation and includible in the shareholder-employee's gross income. 2013 1040ez tax form The shareholder-employee can deduct the contribution made to the shareholder-employee's HSA. 2013 1040ez tax form Form 8889. 2013 1040ez tax form   Report all contributions to your HSA on Form 8889 and file it with your Form 1040 or Form 1040NR. 2013 1040ez tax form You should include all contributions made for 2013, including those made by April 15, 2014, that are designated for 2013. 2013 1040ez tax form Contributions made by your employer and qualified HSA funding distributions are also shown on the form. 2013 1040ez tax form   You should receive Form 5498-SA, HSA, Archer MSA, or Medicare Advantage MSA Information, from the trustee showing the amount contributed to your HSA during the year. 2013 1040ez tax form Your employer's contributions also will be shown in box 12 of Form W-2, Wage and Tax Statement, with code W. 2013 1040ez tax form Follow the instructions for Form 8889. 2013 1040ez tax form Report your HSA deduction on Form 1040 or Form 1040NR. 2013 1040ez tax form Excess contributions. 2013 1040ez tax form   You will have excess contributions if the contributions to your HSA for the year are greater than the limits discussed earlier. 2013 1040ez tax form Excess contributions are not deductible. 2013 1040ez tax form Excess contributions made by your employer are included in your gross income. 2013 1040ez tax form If the excess contribution is not included in box 1 of Form W-2, you must report the excess as “Other income” on your tax return. 2013 1040ez tax form   Generally, you must pay a 6% excise tax on excess contributions. 2013 1040ez tax form See Form 5329, Additional Taxes on Qualified Plans (including IRAs) and Other Tax-Favored Accounts, to figure the excise tax. 2013 1040ez tax form The excise tax applies to each tax year the excess contribution remains in the account. 2013 1040ez tax form   You may withdraw some or all of the excess contributions and not pay the excise tax on the amount withdrawn if you meet the following conditions. 2013 1040ez tax form You withdraw the excess contributions by the due date, including extensions, of your tax return for the year the contributions were made. 2013 1040ez tax form You withdraw any income earned on the withdrawn contributions and include the earnings in “Other income” on your tax return for the year you withdraw the contributions and earnings. 2013 1040ez tax form If you fail to remain an eligible individual during any of the testing periods, discussed earlier, the amount you have to include in income is not an excess contribution. 2013 1040ez tax form If you withdraw any of those amounts, the amount is treated the same as any other distribution from an HSA, discussed later. 2013 1040ez tax form Deducting an excess contribution in a later year. 2013 1040ez tax form   You may be able to deduct excess contributions for previous years that are still in your HSA. 2013 1040ez tax form The excess contribution you can deduct for the current year is the lesser of the following two amounts. 2013 1040ez tax form Your maximum HSA contribution limit for the year minus any amounts contributed to your HSA for the year. 2013 1040ez tax form The total excess contributions in your HSA at the beginning of the year. 2013 1040ez tax form   Amounts contributed for the year include contributions by you, your employer, and any other person. 2013 1040ez tax form They also include any qualified HSA funding distribution made to your HSA. 2013 1040ez tax form Any excess contribution remaining at the end of a tax year is subject to the excise tax. 2013 1040ez tax form See Form 5329. 2013 1040ez tax form Distributions From an HSA You will generally pay medical expenses during the year without being reimbursed by your HDHP until you reach the annual deductible for the plan. 2013 1040ez tax form When you pay medical expenses during the year that are not reimbursed by your HDHP, you can ask the trustee of your HSA to send you a distribution from your HSA. 2013 1040ez tax form You can receive tax-free distributions from your HSA to pay or be reimbursed for qualified medical expenses you incur after you establish the HSA. 2013 1040ez tax form If you receive distributions for other reasons, the amount you withdraw will be subject to income tax and may be subject to an additional 20% tax. 2013 1040ez tax form You do not have to make distributions from your HSA each year. 2013 1040ez tax form If you are no longer an eligible individual, you can still receive tax-free distributions to pay or reimburse your qualified medical expenses. 2013 1040ez tax form Generally, a distribution is money you get from your health savings account. 2013 1040ez tax form Your total distributions include amounts paid with a debit card that restricts payments to health care and amounts withdrawn from the HSA by other individuals that you have designated. 2013 1040ez tax form The trustee will report any distribution to you and the IRS on Form 1099-SA, Distributions From an HSA, Archer MSA, or Medicare Advantage MSA. 2013 1040ez tax form Qualified medical expenses. 2013 1040ez tax form   Qualified medical expenses are those expenses that would generally qualify for the medical and dental expenses deduction. 2013 1040ez tax form These are explained in Publication 502, Medical and Dental Expenses. 2013 1040ez tax form   Also, non-prescription medicines (other than insulin) are not considered qualified medical expenses for HSA purposes. 2013 1040ez tax form A medicine or drug will be a qualified medical expense for HSA purposes only if the medicine or drug: Requires a prescription, Is available without a prescription (an over-the-counter medicine or drug) and you get a prescription for it, or Is insulin. 2013 1040ez tax form   For HSA purposes, expenses incurred before you establish your HSA are not qualified medical expenses. 2013 1040ez tax form State law determines when an HSA is established. 2013 1040ez tax form An HSA that is funded by amounts rolled over from an Archer MSA or another HSA is established on the date the prior account was established. 2013 1040ez tax form   If, under the last-month rule, you are considered to be an eligible individual for the entire year for determining the contribution amount, only those expenses incurred after you actually establish your HSA are qualified medical expenses. 2013 1040ez tax form   Qualified medical expenses are those incurred by the following persons. 2013 1040ez tax form You and your spouse. 2013 1040ez tax form All dependents you claim on your tax return. 2013 1040ez tax form Any person you could have claimed as a dependent on your return except that: The person filed a joint return, The person had gross income of $3,900 or more, or You, or your spouse if filing jointly, could be claimed as a dependent on someone else's 2013 return. 2013 1040ez tax form    For this purpose, a child of parents that are divorced, separated, or living apart for the last 6 months of the calendar year is treated as the dependent of both parents whether or not the custodial parent releases the claim to the child's exemption. 2013 1040ez tax form You cannot deduct qualified medical expenses as an itemized deduction on Schedule A (Form 1040) that are equal to the tax-free distribution from your HSA. 2013 1040ez tax form Insurance premiums. 2013 1040ez tax form   You cannot treat insurance premiums as qualified medical expenses unless the premiums are for: Long-term care insurance. 2013 1040ez tax form Health care continuation coverage (such as coverage under COBRA). 2013 1040ez tax form Health care coverage while receiving unemployment compensation under federal or state law. 2013 1040ez tax form Medicare and other health care coverage if you were 65 or older (other than premiums for a Medicare supplemental policy, such as Medigap). 2013 1040ez tax form   The premiums for long-term care insurance (item (1)) that you can treat as qualified medical expenses are subject to limits based on age and are adjusted annually. 2013 1040ez tax form See Limit on long-term care premiums you can deduct in the instructions for Schedule A (Form 1040). 2013 1040ez tax form   Items (2) and (3) can be for your spouse or a dependent meeting the requirement for that type of coverage. 2013 1040ez tax form For item (4), if you, the account beneficiary, are not 65 or older, Medicare premiums for coverage of your spouse or a dependent (who is 65 or older) generally are not qualified medical expenses. 2013 1040ez tax form Health coverage tax credit. 2013 1040ez tax form   You cannot claim this credit for premiums that you pay with a tax-free distribution from your HSA. 2013 1040ez tax form See Publication 502 for more information on this credit. 2013 1040ez tax form Deemed distributions from HSAs. 2013 1040ez tax form   The following situations result in deemed taxable distributions from your HSA. 2013 1040ez tax form You engaged in any transaction prohibited by section 4975 with respect to any of your HSAs, at any time in 2013. 2013 1040ez tax form Your account ceases to be an HSA as of January 1, 2013, and you must include the fair market value of all assets in the account as of January 1, 2013, on Form 8889. 2013 1040ez tax form You used any portion of any of your HSAs as security for a loan at any time in 2013. 2013 1040ez tax form You must include the fair market value of the assets used as security for the loan as income on Form 1040 or Form 1040NR. 2013 1040ez tax form   Examples of prohibited transactions include the direct or indirect: Sale, exchange, or leasing of property between you and the HSA, Lending of money between you and the HSA, Furnishing goods, services, or facilities between you and the HSA, and Transfer to or use by you, or for your benefit, of any assets of the HSA. 2013 1040ez tax form   Any deemed distribution will not be treated as used to pay qualified medical expenses. 2013 1040ez tax form These distributions are included in your income and are subject to the additional 20% tax, discussed later. 2013 1040ez tax form Recordkeeping. 2013 1040ez tax form You must keep records sufficient to show that: The distributions were exclusively to pay or reimburse qualified medical expenses, The qualified medical expenses had not been previously paid or reimbursed from another source, and The medical expenses had not been taken as an itemized deduction in any year. 2013 1040ez tax form Do not send these records with your tax return. 2013 1040ez tax form Keep them with your tax records. 2013 1040ez tax form Reporting Distributions on Your Return How you report your distributions depends on whether or not you use the distribution for qualified medical expenses (defined earlier). 2013 1040ez tax form If you use a distribution from your HSA for qualified medical expenses, you do not pay tax on the distribution but you have to report the distribution on Form 8889. 2013 1040ez tax form However, the distribution of an excess contribution taken out after the due date, including extensions, of your return is subject to tax even if used for qualified medical expenses. 2013 1040ez tax form Follow the instructions for the form and file it with your Form 1040 or Form 1040NR. 2013 1040ez tax form If you do not use a distribution from your HSA for qualified medical expenses, you must pay tax on the distribution. 2013 1040ez tax form Report the amount on Form 8889 and file it with your Form 1040 or Form 1040NR. 2013 1040ez tax form You may have to pay an additional 20% tax on your taxable distribution. 2013 1040ez tax form HSA administration and maintenance fees withdrawn by the trustee are not reported as distributions from the HSA. 2013 1040ez tax form Additional tax. 2013 1040ez tax form   There is an additional 20% tax on the part of your distributions not used for qualified medical expenses. 2013 1040ez tax form Figure the tax on Form 8889 and file it with your Form 1040 or Form 1040NR. 2013 1040ez tax form Exceptions. 2013 1040ez tax form   There is no additional tax on distributions made after the date you are disabled, reach age 65, or die. 2013 1040ez tax form Balance in an HSA An HSA is generally exempt from tax. 2013 1040ez tax form You are permitted to take a distribution from your HSA at any time; however, only those amounts used exclusively to pay for qualified medical expenses are tax free. 2013 1040ez tax form Amounts that remain at the end of the year are generally carried over to the next year (see Excess contributions , earlier). 2013 1040ez tax form Earnings on amounts in an HSA are not included in your income while held in the HSA. 2013 1040ez tax form Death of HSA Holder You should choose a beneficiary when you set up your HSA. 2013 1040ez tax form What happens to that HSA when you die depends on whom you designate as the beneficiary. 2013 1040ez tax form Spouse is the designated beneficiary. 2013 1040ez tax form   If your spouse is the designated beneficiary of your HSA, it will be treated as your spouse's HSA after your death. 2013 1040ez tax form Spouse is not the designated beneficiary. 2013 1040ez tax form   If your spouse is not the designated beneficiary of your HSA: The account stops being an HSA, and The fair market value of the HSA becomes taxable to the beneficiary in the year in which you die. 2013 1040ez tax form If your estate is the beneficiary, the value is included on your final income tax return. 2013 1040ez tax form The amount taxable to a beneficiary other than the estate is reduced by any qualified medical expenses for the decedent that are paid by the beneficiary within 1 year after the date of death. 2013 1040ez tax form Filing Form 8889 You must file Form 8889 with your Form 1040 or Form 1040NR if you (or your spouse, if married filing a joint return) had any activity in your HSA during the year. 2013 1040ez tax form You must file the form even if only your employer or your spouse's employer made contributions to the HSA. 2013 1040ez tax form If, during the tax year, you are the beneficiary of two or more HSAs or you are a beneficiary of an HSA and you have your own HSA, you must complete a separate Form 8889 for each HSA. 2013 1040ez tax form Enter “statement” at the top of each Form 8889 and complete the form as instructed. 2013 1040ez tax form Next, complete a controlling Form 8889 combining the amounts shown on each of the statement Forms 8889. 2013 1040ez tax form Attach the statements to your tax return after the controlling Form 8889. 2013 1040ez tax form Employer Participation This section contains the rules that employers must follow if they decide to make HSAs available to their employees. 2013 1040ez tax form Unlike the previous discussions, “you” refers to the employer and not to the employee. 2013 1040ez tax form Health plan. 2013 1040ez tax form   If you want your employees to be able to have an HSA, they must have an HDHP. 2013 1040ez tax form You can provide no additional coverage other than those exceptions listed previously under Other health coverage . 2013 1040ez tax form Contributions. 2013 1040ez tax form   You can make contributions to your employees' HSAs. 2013 1040ez tax form You deduct the contributions on your business income tax return for the year in which you make the contributions. 2013 1040ez tax form If the contribution is allocated to the prior year, you still deduct it in the year in which you made the contribution. 2013 1040ez tax form   For more information on employer contributions, see Notice 2008-59, 2008-29 I. 2013 1040ez tax form R. 2013 1040ez tax form B. 2013 1040ez tax form 123, questions 23 through 27, available at www. 2013 1040ez tax form irs. 2013 1040ez tax form gov/irb/2008-29_IRB/ar11. 2013 1040ez tax form html. 2013 1040ez tax form Comparable contributions. 2013 1040ez tax form   If you decide to make contributions, you must make comparable contributions to all comparable participating employees' HSAs. 2013 1040ez tax form Your contributions are comparable if they are either: The same amount, or The same percentage of the annual deductible limit under the HDHP covering the employees. 2013 1040ez tax form The comparability rules do not apply to contributions made through a cafeteria plan. 2013 1040ez tax form Comparable participating employees. 2013 1040ez tax form   Comparable participating employees: Are covered by your HDHP and are eligible to establish an HSA, Have the same category of coverage (either self-only or family coverage), and Have the same category of employment (part-time, full-time, or former employees). 2013 1040ez tax form   To meet the comparability requirements for eligible employees who have not established an HSA by December 31 or have not notified you that they have an HSA, you must meet a notice requirement and a contribution requirement. 2013 1040ez tax form   You will meet the notice requirement if by January 15 of the following calendar year you provide a written notice to all such employees. 2013 1040ez tax form The notice must state that each eligible employee who, by the last day of February, establishes an HSA and notifies you that they have established an HSA will receive a comparable contribution to the HSA for the prior year. 2013 1040ez tax form For a sample of the notice, see Regulation 54. 2013 1040ez tax form 4980G-4 A-14(c). 2013 1040ez tax form You will meet the contribution requirement for these employees if by April 15, 2014, you contribute comparable amounts plus reasonable interest to the employee's HSA for the prior year. 2013 1040ez tax form Note. 2013 1040ez tax form For purposes of making contributions to HSAs of non-highly compensated employees, highly compensated employees shall not be treated as comparable participating employees. 2013 1040ez tax form Excise tax. 2013 1040ez tax form   If you made contributions to your employees' HSAs that were not comparable, you must pay an excise tax of 35% of the amount you contributed. 2013 1040ez tax form Employment taxes. 2013 1040ez tax form   Amounts you contribute to your employees' HSAs are generally not subject to employment taxes. 2013 1040ez tax form You must report the contributions in box 12 of the Form W-2 you file for each employee. 2013 1040ez tax form This includes the amounts the employee elected to contribute through a cafeteria plan. 2013 1040ez tax form Enter code “W” in box 12. 2013 1040ez tax form Medical Savings Accounts (MSAs) Archer MSAs were created to help self-employed individuals and employees of certain small employers meet the medical care costs of the account holder, the account holder's spouse, or the account holder's dependent(s). 2013 1040ez tax form After December 31, 2007, you cannot be treated as an eligible individual for Archer MSA purposes unless: You were an active participant for any tax year ending before January 1, 2008, or You became an active participant for a tax year ending after December 31, 2007, by reason of coverage under a high deductible health plan (HDHP) of an Archer MSA participating employer. 2013 1040ez tax form A Medicare Advantage MSA is an Archer MSA designated by Medicare to be used solely to pay the qualified medical expenses of the account holder who is eligible for Medicare. 2013 1040ez tax form Archer MSAs An Archer MSA is a tax-exempt trust or custodial account that you set up with a U. 2013 1040ez tax form S. 2013 1040ez tax form financial institution (such as a bank or an insurance company) in which you can save money exclusively for future medical expenses. 2013 1040ez tax form What are the benefits of an Archer MSA?   You may enjoy several benefits from having an Archer MSA. 2013 1040ez tax form You can claim a tax deduction for contributions you make even if you do not itemize your deductions on Form 1040 or Form 1040NR. 2013 1040ez tax form The interest or other earnings on the assets in your Archer MSA are tax free. 2013 1040ez tax form Distributions may be tax free if you pay qualified medical expenses. 2013 1040ez tax form See Qualified medical expenses , later. 2013 1040ez tax form The contributions remain in your Archer MSA from year to year until you use them. 2013 1040ez tax form An Archer MSA is “portable” so it stays with you if you change employers or leave the work force. 2013 1040ez tax form Qualifying for an Archer MSA To qualify for an Archer MSA, you must be either of the following. 2013 1040ez tax form An employee (or the spouse of an employee) of a small employer (defined later) that maintains a self-only or family HDHP for you (or your spouse). 2013 1040ez tax form A self-employed person (or the spouse of a self-employed person) who maintains a self-only or family HDHP. 2013 1040ez tax form You can have no other health or Medicare coverage except what is permitted under Other health coverage , later. 2013 1040ez tax form You must be an eligible individual on the first day of a given month to get an Archer MSA deduction for that month. 2013 1040ez tax form If another taxpayer is entitled to claim an exemption for you, you cannot claim a deduction for an Archer MSA contribution. 2013 1040ez tax form This is true even if the other person does not actually claim your exemption. 2013 1040ez tax form Small employer. 2013 1040ez tax form   A small employer is generally an employer who had an average of 50 or fewer employees during either of the last 2 calendar years. 2013 1040ez tax form The definition of small employer is modified for new employers and growing employers. 2013 1040ez tax form Growing employer. 2013 1040ez tax form   A small employer may begin HDHPs and Archer MSAs for his or her employees and then grow beyond 50 employees. 2013 1040ez tax form The employer will continue to meet the requirement for small employers if he or she: Had 50 or fewer employees when the Archer MSAs began, Made a contribution that was excludable or deductible as an Archer MSA for the last year he or she had 50 or fewer employees, and Had an average of 200 or fewer employees each year after 1996. 2013 1040ez tax form Changing employers. 2013 1040ez tax form   If you change employers, your Archer MSA moves with you. 2013 1040ez tax form However, you may not make additional contributions unless you are otherwise eligible. 2013 1040ez tax form High deductible health plan (HDHP). 2013 1040ez tax form   To be eligible for an Archer MSA, you must be covered under an HDHP. 2013 1040ez tax form An HDHP has: A higher annual deductible than typical health plans, and A maximum limit on the annual out-of-pocket medical expenses that you must pay for covered expenses. 2013 1040ez tax form Limits. 2013 1040ez tax form   The following table shows the limits for annual deductibles and the maximum out-of-pocket expenses for HDHPs for 2013. 2013 1040ez tax form   Self-only coverage Family coverage Minimum annual deductible $2,150 $4,300 Maximum annual deductible $3,200 $6,450 Maximum annual out-of-pocket expenses $4,300 $7,850 Family plans that do not meet the high deductible rules. 2013 1040ez tax form   There are some family plans that have deductibles for both the family as a whole and for individual family members. 2013 1040ez tax form Under these plans, if you meet the individual deductible for one family member, you do not have to meet the higher annual deductible amount for the family. 2013 1040ez tax form If either the deductible for the family as a whole or the deductible for an individual family member is less than the minimum annual deductible for family coverage, the plan does not qualify as an HDHP. 2013 1040ez tax form Example. 2013 1040ez tax form You have family health insurance coverage in 2013. 2013 1040ez tax form The annual deductible for the family plan is $5,500. 2013 1040ez tax form This plan also has an individual deductible of $2,000 for each family member. 2013 1040ez tax form The plan does not qualify as an HDHP because the deductible for an individual family member is less than the minimum annual deductible ($4,300) for family coverage. 2013 1040ez tax form Other health coverage. 2013 1040ez tax form   You (and your spouse, if you have family coverage) generally cannot have any other health coverage that is not an HDHP. 2013 1040ez tax form However, you can still be an eligible individual even if your spouse has non-HDHP coverage provided you are not covered by that plan. 2013 1040ez tax form However, you can have additional insurance that provides benefits only for the following items. 2013 1040ez tax form Liabilities incurred under workers' compensation laws, torts, or ownership or use of property. 2013 1040ez tax form A specific disease or illness. 2013 1040ez tax form A fixed amount per day (or other period) of hospitalization. 2013 1040ez tax form You can also have coverage (whether provided through insurance or otherwise) for the following items. 2013 1040ez tax form Accidents. 2013 1040ez tax form Disability. 2013 1040ez tax form Dental care. 2013 1040ez tax form Vision care. 2013 1040ez tax form Long-term care. 2013 1040ez tax form Contributions to an MSA Contributions to an Archer MSA must be made in cash. 2013 1040ez tax form You cannot contribute stock or other property to an Archer MSA. 2013 1040ez tax form Who can contribute to my Archer MSA?   If you are an employee, your employer may make contributions to your Archer MSA. 2013 1040ez tax form (You do not pay tax on these contributions. 2013 1040ez tax form ) If your employer does not make contributions to your Archer MSA, or you are self-employed, you can make your own contributions to your Archer MSA. 2013 1040ez tax form Both you and your employer cannot make contributions to your Archer MSA in the same year. 2013 1040ez tax form You do not have to make contributions to your Archer MSA every year. 2013 1040ez tax form    If your spouse is covered by your HDHP and an excludable amount is contributed by your spouse's employer to an Archer MSA belonging to your spouse, you cannot make contributions to your own Archer MSA that year. 2013 1040ez tax form Limits There are two limits on the amount you or your employer can contribute to your Archer MSA: The annual deductible limit. 2013 1040ez tax form An income limit. 2013 1040ez tax form Annual deductible limit. 2013 1040ez tax form   You (or your employer) can contribute up to 75% of the annual deductible of your HDHP (65% if you have a self-only plan) to your Archer MSA. 2013 1040ez tax form You must have the HDHP all year to contribute the full amount. 2013 1040ez tax form If you do not qualify to contribute the full amount for the year, determine your annual deductible limit by using the worksheet in the Instructions for Form 8853, Archer MSAs and Long-Term Care Insurance Contracts. 2013 1040ez tax form Example 1. 2013 1040ez tax form You have an HDHP for your family all year in 2013. 2013 1040ez tax form The annual deductible is $5,000. 2013 1040ez tax form You can contribute up to $3,750 ($5,000 × 75%) to your Archer MSA for the year. 2013 1040ez tax form Example 2. 2013 1040ez tax form You have an HDHP for your family for the entire months of July through December 2013 (6 months). 2013 1040ez tax form The annual deductible is $5,000. 2013 1040ez tax form You can contribute up to $1,875 ($5,000 × 75% ÷ 12 × 6) to your Archer MSA for the year. 2013 1040ez tax form If you and your spouse each have a family plan, you are treated as having family coverage with the lower annual deductible of the two health plans. 2013 1040ez tax form The contribution limit is split equally between you unless you agree on a different division. 2013 1040ez tax form Income limit. 2013 1040ez tax form   You cannot contribute more than you earned for the year from the employer through whom you have your HDHP. 2013 1040ez tax form   If you are self-employed, you cannot contribute more than your net self-employment income. 2013 1040ez tax form This is your income from self-employment minus expenses (including the deductible part of self-employment tax). 2013 1040ez tax form Example 1. 2013 1040ez tax form Noah Paul earned $25,000 from ABC Company in 2013. 2013 1040ez tax form Through ABC, he had an HDHP for his family for the entire year. 2013 1040ez tax form The annual deductible was $5,000. 2013 1040ez tax form He can contribute up to $3,750 to his Archer MSA (75% × $5,000). 2013 1040ez tax form He can contribute the full amount because he earned more than $3,750 at ABC. 2013 1040ez tax form Example 2. 2013 1040ez tax form Westley Lawrence is self-employed. 2013 1040ez tax form He had an HDHP for his family for the entire year in 2013. 2013 1040ez tax form The annual deductible was $5,000. 2013 1040ez tax form Based on the annual deductible, the maximum contribution to his Archer MSA would have been $3,750 (75% × $5,000). 2013 1040ez tax form However, after deducting his business expenses, Joe's net self-employment income is $2,500 for the year. 2013 1040ez tax form Therefore, he is limited to a contribution of $2,500. 2013 1040ez tax form Individuals enrolled in Medicare. 2013 1040ez tax form   Beginning with the first month you are enrolled in Medicare, you cannot contribute to an Archer MSA. 2013 1040ez tax form However, you may be eligible for a Medicare Advantage MSA, discussed later. 2013 1040ez tax form When To Contribute You can make contributions to your Archer MSA for 2013 until April 15, 2014. 2013 1040ez tax form Reporting Contributions on Your Return Report all contributions to your Archer MSA on Form 8853 and file it with your Form 1040 or Form 1040NR. 2013 1040ez tax form You should include all contributions you, or your employer, made for 2013, including those made by April 15, 2014, that are designated for 2013. 2013 1040ez tax form You should receive Form 5498-SA, HSA, Archer MSA, or Medicare Advantage MSA Information, from the trustee showing the amount you (or your employer) contributed during the year. 2013 1040ez tax form Your employer's contributions should be shown in box 12 of Form W-2, Wage and Tax Statement, with code R. 2013 1040ez tax form Follow the instructions for Form 8853 and complete the worksheet in the instructions. 2013 1040ez tax form Report your Archer MSA deduction on Form 1040 or Form 1040NR. 2013 1040ez tax form Excess contributions. 2013 1040ez tax form   You will have excess contributions if the contributions to your Archer MSA for the year are greater than the limits discussed earlier. 2013 1040ez tax form Excess contributions are not deductible. 2013 1040ez tax form Excess contributions made by your employer are included in your gross income. 2013 1040ez tax form If the excess contribution is not included in box 1 of Form W-2, you must report the excess as “Other income” on your tax return. 2013 1040ez tax form   Generally, you must pay a 6% excise tax on excess contributions. 2013 1040ez tax form See Form 5329, Additional Taxes on Qualified Plans (Including IRAs) and Other Tax-Favored Accounts, to figure the excise tax. 2013 1040ez tax form The excise tax applies to each tax year the excess contribution remains in the account. 2013 1040ez tax form   You may withdraw some or all of the excess contributions and not pay the excise tax on the amount withdrawn if you meet the following conditions. 2013 1040ez tax form You withdraw the excess contributions by the due date, including extensions, of your tax return. 2013 1040ez tax form You withdraw any income earned on the withdrawn contributions and include the earnings in “Other income” on your tax return for the year you withdraw the contributions and earnings. 2013 1040ez tax form Deducting an excess contribution in a later year. 2013 1040ez tax form   You may be able to deduct excess contributions for previous years that are still in your Archer MSA. 2013 1040ez tax form The excess contribution you can deduct in the current year is the lesser of the following two amounts. 2013 1040ez tax form Your maximum Archer MSA contribution limit for the year minus any amounts contributed to your Archer MSA for the year. 2013 1040ez tax form The total excess contributions in your Archer MSA at the beginning of the year. 2013 1040ez tax form   Any excess contributions remaining at the end of a tax year are subject to the excise tax. 2013 1040ez tax form See Form 5329. 2013 1040ez tax form Distributions From an MSA You will generally pay medical expenses during the year without being reimbursed by your HDHP until you reach the annual deductible for the plan. 2013 1040ez tax form When you pay medical expenses during the year that are not reimbursed by your HDHP, you can ask the trustee of your Archer MSA to send you a distribution from your Archer MSA. 2013 1040ez tax form You can receive tax-free distributions from your Archer MSA to pay for qualified medical expenses (discussed later). 2013 1040ez tax form If you receive distributions for other reasons, the amount will be subject to income tax and may be subject to an additional 20% tax as well. 2013 1040ez tax form You do not have to make withdrawals from your Archer MSA each year. 2013 1040ez tax form If you no longer qualify to make contributions, you can still receive tax-free distributions to pay or reimburse your qualified medical expenses. 2013 1040ez tax form A distribution is money you get from your Archer MSA. 2013 1040ez tax form The trustee will report any distribution to you and the IRS on Form 1099-SA, Distributions From an HSA, Archer MSA, or Medicare Advantage MSA. 2013 1040ez tax form Qualified medical expenses. 2013 1040ez tax form   Qualified medical expenses are those expenses that would generally qualify for the medical and dental expenses deduction. 2013 1040ez tax form These are explained in Publication 502. 2013 1040ez tax form   Also, non-prescription medicines (other than insulin) are not considered qualified medical expenses for MSA purposes. 2013 1040ez tax form A medicine or drug will be a qualified medical expense for MSA purposes only if the medicine or drug: Requires a prescription, Is available without a prescription (an over-the-counter medicine or drug) and you get a prescription for it, or Is insulin. 2013 1040ez tax form   Qualified medical expenses are those incurred by the following persons. 2013 1040ez tax form You and your spouse. 2013 1040ez tax form All dependents you claim on your tax return. 2013 1040ez tax form Any person you could have claimed as a dependent on your return except that: The person filed a joint return, The person had gross income of $3,900 or more, or You, or your spouse if filing jointly, could be claimed as a dependent on someone else's 2013 return. 2013 1040ez tax form    For this purpose, a child of parents that are divorced, separated, or living apart for the last 6 months of the calendar year is treated as the dependent of both parents whether or not the custodial parent releases the claim to the child's exemption. 2013 1040ez tax form    You cannot deduct qualified medical expenses as an itemized deduction on Schedule A (Form 1040) that are equal to the tax-free distribution from your Archer MSA. 2013 1040ez tax form Special rules for insurance premiums. 2013 1040ez tax form   Generally, you cannot treat insurance premiums as qualified medical expenses for Archer MSAs. 2013 1040ez tax form You can, however, treat premiums for long-term care coverage, health care coverage while you receive unemployment benefits, or health care continuation coverage required under any federal law as qualified medical expenses for Archer MSAs. 2013 1040ez tax form Health coverage tax credit. 2013 1040ez tax form   You cannot claim this credit for premiums that you pay with a tax-free distribution from your Archer MSA. 2013 1040ez tax form See Publication 502 for information on this credit. 2013 1040ez tax form Deemed distributions from Archer MSAs. 2013 1040ez tax form   The following situations result in deemed taxable distributions from your Archer MSA. 2013 1040ez tax form You engaged in any transaction prohibited by section 4975 with respect to any of your Archer MSAs at any time in 2013. 2013 1040ez tax form Your account ceases to be an Archer MSA as of January 1, 2013, and you must include the fair market value of all assets in the account as of January 1, 2013, on Form 8853. 2013 1040ez tax form You used any portion of any of your Archer MSAs as security for a loan at any time in 2013. 2013 1040ez tax form You must include the fair market value of the assets used as security for the loan as income on Form 1040 or Form 1040NR. 2013 1040ez tax form   Examples of prohibited transactions include the direct or indirect: Sale, exchange, or leasing of property between you and the Archer MSA, Lending of money between you and the Archer MSA, Furnishing goods, services, or facilities between you and the Archer MSA, and Transfer to or use by you, or for your benefit, of any assets of the Archer MSA. 2013 1040ez tax form   Any deemed distribution will not be treated as used to pay qualified medical expenses. 2013 1040ez tax form These distributions are included in your income and are subject to the additional 20% tax, discussed later. 2013 1040ez tax form Recordkeeping. 2013 1040ez tax form You must keep records sufficient to show that: The distributions were exclusively to pay or reimburse qualified medical expenses, The qualified medical expenses had not been previously paid or reimbursed from another source, and The medical expenses had not been taken as an itemized deduction in any year. 2013 1040ez tax form Do not send these records with your tax return. 2013 1040ez tax form Keep them with your tax records. 2013 1040ez tax form Reporting Distributions on Your Return How you report your distributions depends on whether or not you use the distribution for qualified medical expenses (defined earlier). 2013 1040ez tax form If you use a distribution from your Archer MSA for qualified medical expenses, you do not pay tax on the distribution but you have to report the distribution on Form 8853. 2013 1040ez tax form Follow the instructions for the form and file it with your Form 1040 or Form 1040NR. 2013 1040ez tax form If you do not use a distribution from your Archer MSA for qualified medical expenses, you must pay tax on the distribution. 2013 1040ez tax form Report the amount on Form 8853 and file it with your Form 1040 or Form 1040NR. 2013 1040ez tax form You may have to pay an additional 20% tax, discussed later, on your taxable distribution. 2013 1040ez tax form If an amount (other than a rollover) is contributed to your Archer MSA this year (by you or your employer), you also must report and pay tax on a distribution you receive from your Archer MSA this year that is used to pay medical expenses of someone who is not covered by an HDHP, or is also covered by another health plan that is not an HDHP, at the time the expenses are incurred. 2013 1040ez tax form Rollovers. 2013 1040ez tax form   Generally, any distribution from an Archer MSA that you roll over into another Archer MSA or an HSA is not taxable if you complete the rollover within 60 days. 2013 1040ez tax form An Archer MSA and an HSA can only receive one rollover contribution during a 1-year period. 2013 1040ez tax form See the Form 8853 instructions for more information. 2013 1040ez tax form Additional tax. 2013 1040ez tax form   There is a 20% additional tax on the part of your distributions not used for qualified medical expenses. 2013 1040ez tax form Figure the tax on Form 8853 and file it with your Form 1040 or Form 1040NR. 2013 1040ez tax form Report the additional tax in the total on Form 1040 or Form 1040NR. 2013 1040ez tax form Exceptions. 2013 1040ez tax form   There is no additional tax on distributions made after the date you are disabled, reach age 65, or die. 2013 1040ez tax form Balance in an Archer MSA An Archer MSA is generally exempt from tax. 2013 1040ez tax form You are permitted to take a distribution from your Archer MSA at any time; however, only those amounts used exclusively to pay for qualified medical expenses are tax free. 2013 1040ez tax form Amounts that remain at the end of the year are generally carried over to the next year (see Excess contributions , earlier). 2013 1040ez tax form Earnings on amounts in an Archer MSA are not included in your income while held in the Archer MSA. 2013 1040ez tax form Death of the Archer MSA Holder You should choose a beneficiary when you set up your Archer MSA. 2013 1040ez tax form What happens to that Archer MSA when you die depends on whom you designate as the beneficiary. 2013 1040ez tax form Spouse is the designated beneficiary. 2013 1040ez tax form   If your spouse is the designated beneficiary of your Archer MSA, it will be treated as your spouse's Archer MSA after your death. 2013 1040ez tax form Spouse is not the designated beneficiary. 2013 1040ez tax form   If your spouse is not the designated beneficiary of your Archer MSA: The account stops being an Archer MSA, and The fair market value of the Archer MSA becomes taxable to the beneficiary in the year in which you die. 2013 1040ez tax form   If your estate is the beneficiary, the fair market value of the Archer MSA will be included on your final income tax return. 2013 1040ez tax form The amount taxable to a beneficiary other than the estate is reduced by any qualified medical expenses for the decedent that are paid by the beneficiary within 1 year after the date of death. 2013 1040ez tax form Filing Form 8853 You must file Form 8853 with your Form 1040 or Form 1040NR if you (or your spouse, if married filing a joint return) had any activity in your Archer MSA during the year. 2013 1040ez tax form You must file the form even if only your employer or your spouse's employer made contributions to the Archer MSA. 2013 1040ez tax form If, during the tax year, you are the beneficiary of two or more Archer MSAs or you are a beneficiary of an Archer MSA and you have your own Archer MSA, you must complete a separate Form 8853 for each MSA. 2013 1040ez tax form Enter “statement” at the top of each Form 8853 and complete the form as instructed. 2013 1040ez tax form Next, complete a controlling Form 8853 combining the amounts shown on each of the statement Forms 8853. 2013 1040ez tax form Attach the statements to your tax return after the controlling Form 8853. 2013 1040ez tax form Employer Participation This section contains the rules that employers must follow if they decide to make Archer MSAs available to their employees. 2013 1040ez tax form Unlike the previous discussions, “you” refers to the employer and not to the employee. 2013 1040ez tax form Health plan. 2013 1040ez tax form   If you want your employees to be able to have an Archer MSA, you must make an HDHP available to them. 2013 1040ez tax form You can provide no additional coverage other than those exceptions listed previously under Other health coverage . 2013 1040ez tax form Contributions. 2013 1040ez tax form   You can make contributions to your employees' Archer MSAs. 2013 1040ez tax form You deduct the contributions on the “Employee benefit programs” line of your business income tax return for the year in which you make the contributions. 2013 1040ez tax form If you are filing Form 1040, Schedule C, this is Part II, line 14. 2013 1040ez tax form Comparable contributions. 2013 1040ez tax form   If you decide to make contributions, you must make comparable contributions to all comparable participating employees' Archer MSAs. 2013 1040ez tax form Your contributions are comparable if they are either: The same amount, or The same percentage of the annual deductible limit under the HDHP covering the employees. 2013 1040ez tax form Comparable participating employees. 2013 1040ez tax form   Comparable participating employees: Are covered by your HDHP and are eligible to establish an Archer MSA, Have the same category of coverage (either self-only or family coverage), and Have the same category of employment (either part-time or full-time). 2013 1040ez tax form Excise tax. 2013 1040ez tax form   If you made contributions to your employees' Archer MSAs that were not comparable, you must pay an excise tax of 35% of the amount you contributed. 2013 1040ez tax form Employment taxes. 2013 1040ez tax form   Amounts you contribute to your employees' Archer MSAs are generally not subject to employment taxes. 2013 1040ez tax form You must report the contributions in box 12 of the Form W-2 you file for each employee. 2013 1040ez tax form Enter code “R” in box 12. 2013 1040ez tax form Medicare Advantage MSAs A Medicare Advantage MSA is an Archer MSA designated by Medicare to be used solely to pay the qualified medical expenses of the account holder. 2013 1040ez tax form To be eligible for a Medicare Advantage MSA, you must be enrolled in Medicare and have a high deductible health plan (HDHP) that meets the Medicare guidelines. 2013 1040ez tax form A Medicare Advantage MSA is a tax-exempt trust or custodial savings account that you set up with a financial institution (such as a bank or an insurance company) in which the Medicare program can deposit money for qualified medical expenses. 2013 1040ez tax form The money in your account is not taxed if it is used for qualified medical expenses, and it may earn interest or dividends. 2013 1040ez tax form An HDHP is a special health insurance policy that has a high deductible. 2013 1040ez tax form You choose the policy you want to use as part of your Medicare Advantage MSA plan. 2013 1040ez tax form However, the policy must be approved by the Medicare program. 2013 1040ez tax form Medicare Advantage MSAs are administered through the federal Medicare program. 2013 1040ez tax form You can get information by calling 1-800-Medicare (1-800-633-4227) or through the Internet at www. 2013 1040ez tax form medicare. 2013 1040ez tax form gov. 2013 1040ez tax form Note. 2013 1040ez tax form You must file Form 8853, Archer MSAs and Long-Term Care Insurance Contracts, with your tax return if you have a Medicare Advantage MSA. 2013 1040ez tax form Flexible Spending Arrangements (FSAs) A health flexible spending arrangement (FSA) allows employees to be reimbursed for medical expenses. 2013 1040ez tax form FSAs are usually funded through voluntary salary reduction agreements with your employer. 2013 1040ez tax form No employment or federal income taxes are deducted from your contribution. 2013 1040ez tax form The employer may also contribute. 2013 1040ez tax form Note. 2013 1040ez tax form Unlike HSAs or Archer MSAs which must be reported on Form 1040 or Form 1040NR, there are no reporting requirements for FSAs on your income tax return. 2013 1040ez tax form For information on the interaction between a health FSA and an HSA, see Other employee health plans under Qualifying for an HSA, earlier. 2013 1040ez tax form What are the benefits of an FSA?   You may enjoy several benefits from having an FSA. 2013 1040ez tax form Contributions made by your employer can be excluded from your gross income. 2013 1040ez tax form No employment or federal income taxes are deducted from the contributions. 2013 1040ez tax form Withdrawals may be tax free if you pay qualified medical expenses. 2013 1040ez tax form See Qualified medical expenses , later. 2013 1040ez tax form You can withdraw funds from the account to pay qualified medical expenses even if you have not yet placed the funds in the account. 2013 1040ez tax form Qualifying for an FSA Health FSAs are employer-established benefit plans. 2013 1040ez tax form These may be offered in conjunction with other employer-provided benefits as part of a cafeteria plan. 2013 1040ez tax form Employers have complete flexibility to offer various combinations of benefits in designing their plan. 2013 1040ez tax form You do not have to be covered under any other health care plan to participate. 2013 1040ez tax form Self-employed persons are not eligible for an FSA. 2013 1040ez tax form Certain limitations may apply if you are a highly compensated participant or a key employee. 2013 1040ez tax form Contributions to an FSA You contribute to your FSA by electing an amount to be voluntarily withheld from your pay by your employer. 2013 1040ez tax form This is sometimes called a salary reduction agreement. 2013 1040ez tax form The employer may also contribute to your FSA if specified in the plan. 2013 1040ez tax form You do not pay federal income tax or employment taxes on the salary you contribute or the amounts your employer contributes to the FSA. 2013 1040ez tax form However, contributions made by your employer to provide coverage for long-term care insurance must be included in income. 2013 1040ez tax form When To Contribute At the
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The 2013 1040ez Tax Form

2013 1040ez tax form Publication 517 - Main Content Table of Contents Social Security CoverageCoverage of Members of the Clergy Coverage of Religious Workers (Church Employees) U. 2013 1040ez tax form S. 2013 1040ez tax form 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. 2013 1040ez tax form Full-time student. 2013 1040ez tax form Adjusted gross income. 2013 1040ez tax form More information. 2013 1040ez tax form 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). 2013 1040ez tax form 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. 2013 1040ez tax form Your earnings for these ministerial services (defined later) are subject to self-employment (SE) tax unless one of the following applies. 2013 1040ez tax form You are a member of a religious order who has taken a vow of poverty. 2013 1040ez tax form You ask the Internal Revenue Service (IRS) for an exemption from SE tax for your services and the IRS approves your request. 2013 1040ez tax form See Exemption From Self-Employment (SE) Tax , later. 2013 1040ez tax form 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. 2013 1040ez tax form For more information, see Bilateral Social Security (Totalization) Agreements in Publication 54. 2013 1040ez tax form 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. 2013 1040ez tax form See Ministerial Services , later. 2013 1040ez tax form 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. 2013 1040ez tax form However, you can request that the IRS grant you an exemption, as discussed under Exemption From Self-Employment (SE) Tax , later. 2013 1040ez tax form For the specific services covered, see Ministerial Services , later. 2013 1040ez tax form Ministers defined. 2013 1040ez tax form   Ministers are individuals who are duly ordained, commissioned, or licensed by a religious body constituting a church or church denomination. 2013 1040ez tax form 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. 2013 1040ez tax form   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. 2013 1040ez tax form Employment status for other tax purposes. 2013 1040ez tax form   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. 2013 1040ez tax form For income tax or retirement plan purposes, your income earned as an employee will be considered wages. 2013 1040ez tax form Common-law employee. 2013 1040ez tax form   Under common-law rules, you are considered either an employee or a self-employed person. 2013 1040ez tax form 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. 2013 1040ez tax form For more information about the common-law rules, see Publication 15-A, Employer's Supplemental Tax Guide. 2013 1040ez tax form   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. 2013 1040ez tax form 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. 2013 1040ez tax form Example. 2013 1040ez tax form A church hires and pays you a salary to perform ministerial services subject to its control. 2013 1040ez tax form Under the common-law rules, you are an employee of the church while performing those services. 2013 1040ez tax form Form SS-8. 2013 1040ez tax form   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. 2013 1040ez tax form 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. 2013 1040ez tax form See Ministerial Services , later. 2013 1040ez tax form However, you can request that the IRS grant you an exemption as discussed under Exemption From Self-Employment (SE) Tax , later. 2013 1040ez tax form Vow of poverty. 2013 1040ez tax form   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. 2013 1040ez tax form You do not need to request a separate exemption. 2013 1040ez tax form For income tax purposes, the earnings are tax free to you. 2013 1040ez tax form Your earnings are considered the income of the religious order. 2013 1040ez tax form Services covered under FICA at the election of the order. 2013 1040ez tax form   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. 2013 1040ez tax form 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. 2013 1040ez tax form   The order or subdivision elects coverage by filing Form SS-16. 2013 1040ez tax form 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. 2013 1040ez tax form If the election is made, the order or subdivision pays both the employer's and employee's share of the tax. 2013 1040ez tax form You do not pay any of the FICA tax. 2013 1040ez tax form Services performed outside the order. 2013 1040ez tax form   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. 2013 1040ez tax form   In these cases, your income from self-employment or as an employee of that outside organization is taxable to you directly. 2013 1040ez tax form You may, however, be able to take a charitable deduction for the amount you turn over to the order. 2013 1040ez tax form See Publication 526, Charitable Contributions. 2013 1040ez tax form Rulings. 2013 1040ez tax form   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. 2013 1040ez tax form To request a ruling, follow the procedures in Revenue Procedure 2014-1, 2014-1 I. 2013 1040ez tax form R. 2013 1040ez tax form B. 2013 1040ez tax form 1, available at www. 2013 1040ez tax form irs. 2013 1040ez tax form gov/irb/2014-1_IRB/ar05. 2013 1040ez tax form html. 2013 1040ez tax form 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. 2013 1040ez tax form However, you can request an exemption as discussed under Exemption From Self-Employment (SE) Tax , later. 2013 1040ez tax form Practitioners. 2013 1040ez tax form   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. 2013 1040ez tax form State law specifically exempts Christian Science practitioners from licensing requirements. 2013 1040ez tax form   Some Christian Science practitioners also are Christian Science teachers or lecturers. 2013 1040ez tax form Income from teaching or lecturing is considered the same as income from their work as practitioners. 2013 1040ez tax form Readers. 2013 1040ez tax form   For tax purposes, Christian Science readers are considered the same as ordained, commissioned, or licensed ministers. 2013 1040ez tax form 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. 2013 1040ez tax form Some exceptions are discussed next. 2013 1040ez tax form 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. 2013 1040ez tax form 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. 2013 1040ez tax form Instead, your wages are subject to SECA and you must pay SE tax on your wages if they exceed $108. 2013 1040ez tax form 28 during the tax year. 2013 1040ez tax form However, you can request an exemption from SE tax if you are a member of a recognized religious sect, as discussed below. 2013 1040ez tax form Churches and church organizations make this election by filing two copies of Form 8274. 2013 1040ez tax form For more information about making this election, see Form 8274. 2013 1040ez tax form 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. 2013 1040ez tax form This exemption does not apply to your service, if any, as a minister of a church or as a member of a religious order. 2013 1040ez tax form Make this choice by filing Form 4029. 2013 1040ez tax form See Requesting Exemption—Form 4029 , later, under Members of Recognized Religious Sects. 2013 1040ez tax form U. 2013 1040ez tax form S. 2013 1040ez tax form 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. 2013 1040ez tax form 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. 2013 1040ez tax form S. 2013 1040ez tax form social security system. 2013 1040ez tax form To determine your alien status, see Publication 519, U. 2013 1040ez tax form S. 2013 1040ez tax form Tax Guide for Aliens. 2013 1040ez tax form Residents of Puerto Rico, the U. 2013 1040ez tax form S. 2013 1040ez tax form Virgin Islands, Guam, the CNMI, and American Samoa. 2013 1040ez tax form   If you are a resident of one of these U. 2013 1040ez tax form S. 2013 1040ez tax form possessions but not a U. 2013 1040ez tax form S. 2013 1040ez tax form citizen, for SE tax purposes you are treated the same as a citizen or resident alien of the United States. 2013 1040ez tax form For information on figuring the tax, see Self-Employment Tax: Figuring Net Earnings , later. 2013 1040ez tax form 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. 2013 1040ez tax form Income you receive for performing ministerial services is subject to SE tax unless you have an exemption as explained later. 2013 1040ez tax form Even if you have an exemption, only the income you receive for performing ministerial services is exempt. 2013 1040ez tax form The exemption does not apply to any other income. 2013 1040ez tax form The following discussions provide more detailed information on ministerial services of ministers, members of a religious order, and Christian Science practitioners and readers. 2013 1040ez tax form Ministers Most services you perform as a minister, priest, rabbi, etc. 2013 1040ez tax form , are ministerial services. 2013 1040ez tax form 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. 2013 1040ez tax form You are considered to control, conduct, and maintain a religious organization if you direct, manage, or promote the organization's activities. 2013 1040ez tax form 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. 2013 1040ez tax form Services for nonreligious organizations. 2013 1040ez tax form   Your services for a nonreligious organization are ministerial services if the services are assigned or designated by your church. 2013 1040ez tax form Assigned or designated services qualify even if they do not involve performing sacerdotal functions or conducting religious worship. 2013 1040ez tax form   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. 2013 1040ez tax form Services that are not part of your ministry. 2013 1040ez tax form   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. 2013 1040ez tax form The following are not ministerial services. 2013 1040ez tax form Services you perform for nonreligious organizations other than the services stated above. 2013 1040ez tax form 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. 2013 1040ez tax form These services are not ministerial services even if you are performing sacerdotal functions or conducting religious worship. 2013 1040ez tax form (For example, if you perform services as a chaplain in the Armed Forces of the United States, those services are not ministerial services. 2013 1040ez tax form ) Services you perform in a government-owned and operated hospital. 2013 1040ez tax form (These services are considered performed by a government employee, not by a minister as part of the ministry. 2013 1040ez tax form ) 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. 2013 1040ez tax form Books or articles. 2013 1040ez tax form   Writing religious books or articles is considered to be in the exercise of your ministry and is considered a ministerial service. 2013 1040ez tax form   This rule also applies to members of religious orders and to Christian Science practitioners and readers. 2013 1040ez tax form 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. 2013 1040ez tax form The services are considered ministerial because you perform them as an agent of the order. 2013 1040ez tax form 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. 2013 1040ez tax form 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. 2013 1040ez tax form Effect of employee status. 2013 1040ez tax form   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. 2013 1040ez tax form 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. 2013 1040ez tax form This result is true even if you have taken a vow of poverty. 2013 1040ez tax form Example. 2013 1040ez tax form Pat Brown and Chris Green are members of a religious order and have taken vows of poverty. 2013 1040ez tax form They renounce all claims to their earnings. 2013 1040ez tax form The earnings belong to the order. 2013 1040ez tax form Pat is a licensed attorney. 2013 1040ez tax form The superiors of the order instructed her to get a job with a law firm. 2013 1040ez tax form Pat joined a law firm as an employee and, as she requested, the firm made the salary payments directly to the order. 2013 1040ez tax form Chris is a secretary. 2013 1040ez tax form The superiors of the order instructed him to accept a job with the business office of the church that supervises the order. 2013 1040ez tax form Chris took the job and gave all his earnings to the order. 2013 1040ez tax form Pat's services are not duties required by the order. 2013 1040ez tax form Her earnings are subject to social security and Medicare tax under FICA and to federal income tax. 2013 1040ez tax form Chris' services are duties required by the order. 2013 1040ez tax form He is acting as an agent of the order and not as an employee of a third party. 2013 1040ez tax form 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. 2013 1040ez tax form Christian Science Practitioners and Readers Services you perform as a Christian Science practitioner or reader in the exercise of your profession are ministerial services. 2013 1040ez tax form Amounts you receive for performing these services are generally subject to SE tax. 2013 1040ez tax form You may request an exemption from SE tax, discussed next, which applies only to those services. 2013 1040ez tax form 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. 2013 1040ez tax form 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. 2013 1040ez tax form They do not have to request the exemption. 2013 1040ez tax form Who cannot be exempt. 2013 1040ez tax form   You cannot be exempt from SE tax if you made one of the following elections to be covered under social security. 2013 1040ez tax form These elections are irrevocable. 2013 1040ez tax form 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. 2013 1040ez tax form You elected before 1968 to be covered under social security for your ministerial services. 2013 1040ez tax form Requesting exemption. 2013 1040ez tax form    Table 2, earlier, briefly summarizes the procedure for requesting exemption from the SE tax. 2013 1040ez tax form More detailed explanations follow. 2013 1040ez tax form 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. 2013 1040ez tax form It does not apply to any other self-employment income. 2013 1040ez tax form Table 2. 2013 1040ez tax form 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. 2013 1040ez tax form You file Form 4361, described below under Requesting Exemption—Form 4361 . 2013 1040ez tax form 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. 2013 1040ez tax form You file for other than economic reasons. 2013 1040ez tax form 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). 2013 1040ez tax form This requirement does not apply to Christian Science practitioners or readers. 2013 1040ez tax form You establish that the organization that ordained, commissioned, or licensed you, or your religious order, is a tax-exempt religious organization. 2013 1040ez tax form You establish that the organization is a church or a convention or association of churches. 2013 1040ez tax form You did not make an election discussed earlier under Who cannot be exempt . 2013 1040ez tax form 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. 2013 1040ez tax form Requesting Exemption—Form 4361 To request exemption from SE tax, file Form 4361 in triplicate (original and two copies) with the IRS. 2013 1040ez tax form The IRS will return to you a copy of the Form 4361 that you filed indicating whether it has approved your exemption. 2013 1040ez tax form If it is approved, keep the approved copy of Form 4361 in your permanent records. 2013 1040ez tax form When to file. 2013 1040ez tax form   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. 2013 1040ez tax form You have net earnings from self-employment of at least $400. 2013 1040ez tax form 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. 2013 1040ez tax form The 2 years do not have to be consecutive tax years. 2013 1040ez tax form    The approval process can take some time, so you should file Form 4361 as soon as possible. 2013 1040ez tax form Example 1. 2013 1040ez tax form Rev. 2013 1040ez tax form Lawrence Jaeger, a clergyman ordained in 2013, has net self-employment earnings as a minister of $450 in 2013 and $500 in 2014. 2013 1040ez tax form He must file his application for exemption by the due date, including extensions, for his 2014 income tax return. 2013 1040ez tax form However, if Rev. 2013 1040ez tax form Jaeger does not receive IRS approval for an exemption by April 15, 2015, his SE tax for 2014 is due by that date. 2013 1040ez tax form Example 2. 2013 1040ez tax form Rev. 2013 1040ez tax form 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. 2013 1040ez tax form She must file her application for exemption by the due date, including extensions, for her 2014 income tax return. 2013 1040ez tax form 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. 2013 1040ez tax form Example 3. 2013 1040ez tax form In 2011, Rev. 2013 1040ez tax form David Moss was ordained a minister and had $700 in net self-employment earnings as a minister. 2013 1040ez tax form In 2012, he received $1,000 as a minister, but his related expenses were over $1,000. 2013 1040ez tax form Therefore, he had no net self-employment earnings as a minister in 2012. 2013 1040ez tax form Also in 2012, he opened a book store and had $8,000 in net self-employment earnings from the store. 2013 1040ez tax form In 2013, he had net self-employment earnings of $1,500 as a minister and $10,000 net self-employment earnings from the store. 2013 1040ez tax form Rev. 2013 1040ez tax form 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. 2013 1040ez tax form Thus, he must file his application for exemption by the due date, including extensions, for his 2013 income tax return. 2013 1040ez tax form Death of individual. 2013 1040ez tax form   The right to file an application for exemption ends with an individual's death. 2013 1040ez tax form A surviving spouse, executor, or administrator cannot file an exemption application for a deceased clergy member. 2013 1040ez tax form Effective date of exemption. 2013 1040ez tax form   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. 2013 1040ez tax form Once the exemption is approved, it is irrevocable. 2013 1040ez tax form Example. 2013 1040ez tax form Rev. 2013 1040ez tax form Trudy Austin, ordained in 2010, had $400 or more in net self-employment earnings as a minister in both 2010 and 2013. 2013 1040ez tax form She files an application for exemption on February 20, 2014. 2013 1040ez tax form If an exemption is granted, it is effective for 2010 and the following years. 2013 1040ez tax form Refunds of SE tax. 2013 1040ez tax form   If, after receiving an approved Form 4361, you find that you overpaid SE tax, you can file a claim for refund on Form 1040X. 2013 1040ez tax form 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. 2013 1040ez tax form A return you filed, or tax you paid, before the due date is considered to have been filed or paid on the due date. 2013 1040ez tax form   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. 2013 1040ez tax form 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. 2013 1040ez tax form Exception. 2013 1040ez tax form   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. 2013 1040ez tax form However, if you pay your benefits back, you may be considered for exemption. 2013 1040ez tax form Contact your local Social Security Administration office to find out the amount you must pay back. 2013 1040ez tax form Eligibility requirements. 2013 1040ez tax form   To claim this exemption from SE tax, all the following requirements must be met. 2013 1040ez tax form You must file Form 4029, discussed later under Requesting Exemption—Form 4029 . 2013 1040ez tax form 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. 2013 1040ez tax form 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. 2013 1040ez tax form 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. 2013 1040ez tax form 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. 2013 1040ez tax form The sect or division must complete part of the form. 2013 1040ez tax form The IRS will return to you a copy of the Form 4029 that you filed indicating whether it has approved your exemption. 2013 1040ez tax form If it is approved, keep the approved copy of Form 4029 in your permanent records. 2013 1040ez tax form When to file. 2013 1040ez tax form   You can file Form 4029 at any time. 2013 1040ez tax form   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. 2013 1040ez tax form See Effective date of exemption next for information on when the newly approved exemption would become effective. 2013 1040ez tax form    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. 2013 1040ez tax form Effective date of exemption. 2013 1040ez tax form   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. 2013 1040ez tax form (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. 2013 1040ez tax form )   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. 2013 1040ez tax form 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. 2013 1040ez tax form The exemption will end for the tax year where you or your sect/division first fails to meet the eligibility requirements. 2013 1040ez tax form Refunds of SE tax paid. 2013 1040ez tax form    To get a refund of any SE tax you paid while the exemption was in effect, file Form 1040X. 2013 1040ez tax form For information on filing this form, see Refunds of SE tax under Requesting Exemption—Form 4361, earlier. 2013 1040ez tax form Exemption From FICA Taxes Generally, under FICA, the employer and the employee each pay half of the social security and Medicare tax. 2013 1040ez tax form 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. 2013 1040ez tax form A partnership in which each partner holds a religious exemption from social security and Medicare is an employer for this purpose. 2013 1040ez tax form 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. 2013 1040ez tax form Information for employers. 2013 1040ez tax form   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. 2013 1040ez tax form   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. 2013 1040ez tax form Form W-2. 2013 1040ez tax form   When preparing a Form W-2 for an employee with an approved Form 4029, enter “Form 4029” in box 14, “Other. 2013 1040ez tax form ” Do not make any entries in boxes 3, 4, 5, or 6. 2013 1040ez tax form Forms 941, 943, and 944. 2013 1040ez tax form   If both you and your employee have received approved Forms 4029, do not include these exempt wages on the following forms. 2013 1040ez tax form Instead, follow the instructions given below. 2013 1040ez tax form 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. 2013 1040ez tax form 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. 2013 1040ez tax form 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. 2013 1040ez tax form Effective date. 2013 1040ez tax form   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. 2013 1040ez tax form 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. 2013 1040ez tax form 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. 2013 1040ez tax form Regular method. 2013 1040ez tax form Nonfarm optional method. 2013 1040ez tax form You may find Worksheets 1 through 4 helpful in figuring your net earnings from self-employment. 2013 1040ez tax form Blank worksheets are in the back of this publication, after the Comprehensive Example. 2013 1040ez tax form Regular Method Most people use the regular method. 2013 1040ez tax form 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. 2013 1040ez tax form Then, subtract your allowable business deductions and multiply the difference by 92. 2013 1040ez tax form 35% (. 2013 1040ez tax form 9235). 2013 1040ez tax form Use Schedule SE (Form 1040) to figure your net earnings and SE tax. 2013 1040ez tax form 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. 2013 1040ez tax form 35% (. 2013 1040ez tax form 9235). 2013 1040ez tax form Do not reduce your wages by any business deductions when making this computation. 2013 1040ez tax form Use Schedule SE (Form 1040), Section B, to figure your net earnings and SE tax. 2013 1040ez tax form 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. 2013 1040ez tax form Amounts included in gross income. 2013 1040ez tax form   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. 2013 1040ez tax form , 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. 2013 1040ez tax form This amount is also subject to income tax. 2013 1040ez tax form   For the income tax treatment of items (2) and (4), see Income Tax: Income and Expenses , later. 2013 1040ez tax form Example. 2013 1040ez tax form Pastor Roger Adams receives an annual salary of $39,000 as a full-time minister. 2013 1040ez tax form The $39,000 includes $5,000 that is designated as a rental allowance to pay utilities. 2013 1040ez tax form His church owns a parsonage that has a fair rental value of $12,000 per year. 2013 1040ez tax form The church gives Pastor Adams the use of the parsonage. 2013 1040ez tax form He is not exempt from SE tax. 2013 1040ez tax form He must include $51,000 ($39,000 plus $12,000) when figuring his net earnings for SE tax purposes. 2013 1040ez tax form 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. 2013 1040ez tax form Overseas duty. 2013 1040ez tax form   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. 2013 1040ez tax form S. 2013 1040ez tax form citizen or resident alien serving abroad and living in a foreign country. 2013 1040ez tax form   For information on excluding foreign earned income or the foreign housing amount, see Publication 54. 2013 1040ez tax form Example. 2013 1040ez tax form Diane Jones was the minister of a U. 2013 1040ez tax form S. 2013 1040ez tax form church in Mexico. 2013 1040ez tax form She earned $35,000 in that position and was able to exclude it all for income tax purposes under the foreign earned income exclusion. 2013 1040ez tax form The United States does not have a social security agreement with Mexico, so Mrs. 2013 1040ez tax form Jones is subject to U. 2013 1040ez tax form S. 2013 1040ez tax form SE tax and must include $35,000 when figuring net earnings from self-employment. 2013 1040ez tax form Specified U. 2013 1040ez tax form S. 2013 1040ez tax form possessions. 2013 1040ez tax form    The exclusion from gross income for amounts derived from American Samoa or Puerto Rico does not apply in computing net earnings from self-employment. 2013 1040ez tax form Also see Residents of Puerto Rico, the U. 2013 1040ez tax form S. 2013 1040ez tax form Virgin Islands, Guam, the CNMI, and American Samoa , earlier, under U. 2013 1040ez tax form S. 2013 1040ez tax form Citizens and Resident and Nonresident Aliens. 2013 1040ez tax form Amounts not included in gross income. 2013 1040ez tax form   Do not include the following amounts in gross income when figuring your net earnings from self-employment. 2013 1040ez tax form Offerings that others made to the church. 2013 1040ez tax form 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. 2013 1040ez tax form Pension payments or retirement allowances you receive for your past ministerial services. 2013 1040ez tax form The rental value of a parsonage or a parsonage allowance provided to you after you retire. 2013 1040ez tax form Allowable deductions. 2013 1040ez tax form   When figuring your net earnings from self-employment, deduct all your expenses related to your ministerial services performed as a self-employed person. 2013 1040ez tax form These are ministerial expenses you incurred while working other than as a common-law employee of the church. 2013 1040ez tax form They include expenses incurred in performing marriages and baptisms, and in delivering speeches. 2013 1040ez tax form 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. 2013 1040ez tax form   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 . 2013 1040ez tax form 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. 2013 1040ez tax form Do not complete Schedule C or C-EZ (Form 1040). 2013 1040ez tax form 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. 2013 1040ez tax form Employee reimbursement arrangements. 2013 1040ez tax form   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. 2013 1040ez tax form Ask your employer if you are not sure if it reimburses you using an accountable or a nonaccountable plan. 2013 1040ez tax form Accountable plans. 2013 1040ez tax form   To be an accountable plan, your employer's reimbursement arrangement must include all three of the following rules. 2013 1040ez tax form 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. 2013 1040ez tax form You must adequately account to your employer for these expenses within a reasonable period of time. 2013 1040ez tax form You must return any excess reimbursement or allowance within a reasonable period of time. 2013 1040ez tax form   The reimbursement is not reported on your Form W-2. 2013 1040ez tax form Generally, if your expenses equal your reimbursement, you have no deduction. 2013 1040ez tax form If your expenses are more than your reimbursement, you can deduct your excess expenses for SE tax and income tax purposes. 2013 1040ez tax form Nonaccountable plan. 2013 1040ez tax form   A nonaccountable plan is a reimbursement arrangement that does not meet all three of the rules listed under Accountable plans above. 2013 1040ez tax form In addition, even if your employer has an accountable plan, the following payments will be treated as being paid under a nonaccountable plan. 2013 1040ez tax form Excess reimbursements you fail to return to your employer. 2013 1040ez tax form Reimbursement of nondeductible expenses related to your employer's business. 2013 1040ez tax form   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. 2013 1040ez tax form 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. 2013 1040ez tax form   For more information on accountable and nonaccountable plans, see Publication 463, Travel, Entertainment, Gift, and Car Expenses. 2013 1040ez tax form 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. 2013 1040ez tax form 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. 2013 1040ez tax form 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. 2013 1040ez tax form The tax rate for the social security part is 12. 2013 1040ez tax form 4%. 2013 1040ez tax form In addition, all of your net earnings are subject to the Medicare (hospital insurance) part of the SE tax. 2013 1040ez tax form This tax rate is 2. 2013 1040ez tax form 9%. 2013 1040ez tax form The combined self-employment tax rate is 15. 2013 1040ez tax form 3%. 2013 1040ez tax form Additional Medicare Tax. 2013 1040ez tax form   Beginning in 2013, a 0. 2013 1040ez tax form 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. 2013 1040ez tax form Medicare wages and self-employment income are combined to determine if income exceeds the threshold. 2013 1040ez tax form A self-employment loss is not considered for purposes of this tax. 2013 1040ez tax form RRTA compensation is separately compared to the threshold. 2013 1040ez tax form For more information, see Form 8959, Additional Medicare Tax, and its separate instructions. 2013 1040ez tax form Nonfarm Optional Method You may be able to use the nonfarm optional method for figuring your net earnings from self-employment. 2013 1040ez tax form 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. 2013 1040ez tax form You may use the nonfarm optional method if you meet all the following tests. 2013 1040ez tax form You are self-employed on a regular basis. 2013 1040ez tax form 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. 2013 1040ez tax form The net earnings can be from either farm or nonfarm earnings or both. 2013 1040ez tax form You have used this method less than 5 prior years. 2013 1040ez tax form (There is a 5-year lifetime limit. 2013 1040ez tax form ) The years do not have to be consecutive. 2013 1040ez tax form Your net nonfarm profits were: Less than $5,024, and Less than 72. 2013 1040ez tax form 189% of your gross nonfarm income. 2013 1040ez tax form If you meet all three tests, use Table 3 to figure your net earnings from self-employment under the nonfarm optional method. 2013 1040ez tax form Table 3. 2013 1040ez tax form Figuring Nonfarm Net Earnings IF your gross nonfarm income is . 2013 1040ez tax form . 2013 1040ez tax form . 2013 1040ez tax form THEN your net earnings are equal to . 2013 1040ez tax form . 2013 1040ez tax form . 2013 1040ez tax form $6,960 or less Two-thirds of your gross nonfarm income. 2013 1040ez tax form More than $6,960 $4,640. 2013 1040ez tax form Actual net earnings. 2013 1040ez tax form   Multiply your total earnings subject to SE tax by 92. 2013 1040ez tax form 35% (. 2013 1040ez tax form 9235) to get actual net earnings. 2013 1040ez tax form Actual net earnings are equivalent to net earnings under the “Regular Method. 2013 1040ez tax form ” More information. 2013 1040ez tax form   For more information on the nonfarm optional method, see Publication 334, Tax Guide for Small Business, and the Schedule SE (Form 1040) instructions. 2013 1040ez tax form 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. 2013 1040ez tax form Note. 2013 1040ez tax form For purposes of this section, references to members of the clergy are only to ministers or members of a religious order. 2013 1040ez tax form 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. 2013 1040ez tax form 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. 2013 1040ez tax form , in addition to your salary. 2013 1040ez tax form If the offering is made to the religious institution, it is not taxable to you. 2013 1040ez tax form 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. 2013 1040ez tax form However, you may be entitled to a charitable contribution deduction for the amount paid to the organization. 2013 1040ez tax form For more information, see Publication 526. 2013 1040ez tax form 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. 2013 1040ez tax form 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. 2013 1040ez tax form This exclusion applies only for income tax purposes. 2013 1040ez tax form It does not apply for SE tax purposes, as discussed earlier under Amounts included in gross income under Self-Employment Tax: Figuring Net Earnings. 2013 1040ez tax form Designation requirement. 2013 1040ez tax form   The church or organization that employs you must officially designate the payment as a housing allowance before it makes the payment. 2013 1040ez tax form It must designate a definite amount. 2013 1040ez tax form It cannot determine the amount of the housing allowance at a later date. 2013 1040ez tax form 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. 2013 1040ez tax form   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. 2013 1040ez tax form The local congregation must officially designate the part of your salary that is a housing allowance. 2013 1040ez tax form However, a resolution of a national church agency can designate your housing allowance if you are directly employed by the national agency. 2013 1040ez tax form Rental allowances. 2013 1040ez tax form   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. 2013 1040ez tax form   The amount you exclude cannot be more than the fair rental value of the home, including furnishings, plus the cost of utilities. 2013 1040ez tax form Fair rental value of parsonage. 2013 1040ez tax form   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. 2013 1040ez tax form However, the exclusion cannot be more than the reasonable pay for your services. 2013 1040ez tax form If you pay for the utilities, you can exclude any allowance designated for utility costs, up to your actual cost. 2013 1040ez tax form Example. 2013 1040ez tax form Rev. 2013 1040ez tax form Joanna Baker is a full-time minister. 2013 1040ez tax form The church allows her to use a parsonage that has an annual fair rental value of $24,000. 2013 1040ez tax form The church pays her an annual salary of $67,000, of which $7,500 is designated for utility costs. 2013 1040ez tax form Her actual utility costs during the year were $7,000. 2013 1040ez tax form For income tax purposes, Rev. 2013 1040ez tax form Baker excludes $31,000 from gross income ($24,000 fair rental value of the parsonage plus $7,000 from the allowance for utility costs). 2013 1040ez tax form She will report $60,000 ($59,500 salary plus $500 of unused utility allowance). 2013 1040ez tax form Her income for SE tax purposes, however, is $91,000 ($67,000 salary + $24,000 fair rental value of the parsonage). 2013 1040ez tax form Home ownership. 2013 1040ez tax form   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. 2013 1040ez tax form Excess rental allowance. 2013 1040ez tax form   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. 2013 1040ez tax form   Include in the total on Form 1040, line 7. 2013 1040ez tax form On the dotted line next to line 7, enter “Excess allowance” and the amount. 2013 1040ez tax form 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. 2013 1040ez tax form However, you can only deduct these expenses as itemized deductions on Schedule A (Form 1040). 2013 1040ez tax form Retired ministers. 2013 1040ez tax form   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. 2013 1040ez tax form 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. 2013 1040ez tax form Teachers or administrators. 2013 1040ez tax form   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. 2013 1040ez tax form 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. 2013 1040ez tax form    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. 2013 1040ez tax form In Publication 525, see Faculty lodging in the discussion on meals and lodging under Fringe Benefits. 2013 1040ez tax form   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. 2013 1040ez tax form Theological students. 2013 1040ez tax form   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. 2013 1040ez tax form Traveling evangelists. 2013 1040ez tax form   You can exclude a designated rental allowance from out-of-town churches if you meet all of the following requirements. 2013 1040ez tax form You are an ordained minister. 2013 1040ez tax form You perform ministerial services at churches located away from your community. 2013 1040ez tax form You actually use the rental allowance to maintain your permanent home. 2013 1040ez tax form Cantors. 2013 1040ez tax form   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. 2013 1040ez tax form 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. 2013 1040ez tax form See Members of Religious Orders , earlier, under Social Security Coverage. 2013 1040ez tax form Foreign Earned Income Certain income may be exempt from income tax if you work in a foreign country or in a specified U. 2013 1040ez tax form S. 2013 1040ez tax form possession. 2013 1040ez tax form Publication 54 discusses the foreign earned income exclusion. 2013 1040ez tax form Publication 570, Tax Guide for Individuals With Income From U. 2013 1040ez tax form S. 2013 1040ez tax form Possessions, covers the rules for taxpayers with income from U. 2013 1040ez tax form S. 2013 1040ez tax form possessions. 2013 1040ez tax form You can get these free publications from the Internal Revenue Service at IRS. 2013 1040ez tax form gov or from most U. 2013 1040ez tax form S. 2013 1040ez tax form Embassies or consulates. 2013 1040ez tax form Expense Items The tax treatment of ministerial trade or business expenses, expenses allocable to tax-free income, and health insurance costs is discussed here. 2013 1040ez tax form 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. 2013 1040ez tax form You also may have to file Form 2106, Employee Business Expenses (or Form 2106-EZ, Unreimbursed Employee Business Expenses). 2013 1040ez tax form You claim these expenses as miscellaneous itemized deductions that are subject to the 2%-of-adjusted-gross-income (AGI) limit. 2013 1040ez tax form See Publication 529 for more information on this limit. 2013 1040ez tax form However, you cannot deduct any of your employee business expenses that are allocable to tax-free income (discussed next). 2013 1040ez tax form 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. 2013 1040ez tax form You cannot deduct the portion of your expenses that you allocate to your tax-free rental or parsonage allowance. 2013 1040ez tax form Exception. 2013 1040ez tax form   This rule does not apply to your deductions for home mortgage interest or real estate taxes on your home. 2013 1040ez tax form Figuring the allocation. 2013 1040ez tax form   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. 2013 1040ez tax form    Reduce your otherwise deductible expenses only in figuring your income tax, not your SE tax. 2013 1040ez tax form Example. 2013 1040ez tax form Rev. 2013 1040ez tax form 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. 2013 1040ez tax form He incurred $4,000 of unreimbursed expenses connected with his earnings for ministerial services. 2013 1040ez tax form $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. 2013 1040ez tax form Rev. 2013 1040ez tax form 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. 2013 1040ez tax form 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. 2013 1040ez tax form   If you receive a tax-free rental or parsonage allowance and have ministerial expenses, attach a statement to your tax return. 2013 1040ez tax form The statement must contain all of the following information. 2013 1040ez tax form A list of each item of taxable ministerial income by source (such as wages, salary, weddings, baptisms, etc. 2013 1040ez tax form ) plus the amount. 2013 1040ez tax form A list of each item of tax-free ministerial income by source (parsonage allowance) plus the amount. 2013 1040ez tax form A list of each item of otherwise deductible ministerial expenses plus the amount. 2013 1040ez tax form How you figured the nondeductible part of your otherwise deductible expenses. 2013 1040ez tax form A statement that the other deductions claimed on your tax return are not allocable to your tax-free income. 2013 1040ez tax form   See the attachments prepared for the Comprehensive Example , later. 2013 1040ez tax form Following the example, you will find blank worksheets for your own use. 2013 1040ez tax form 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. 2013 1040ez tax form If you qualify, you can take this deduction as an adjustment to income on Form 1040, line 29. 2013 1040ez tax form See the Instructions for Form 1040 to figure your deduction. 2013 1040ez tax form The following special rules apply to the self-employed health insurance deduction. 2013 1040ez tax form 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. 2013 1040ez tax form You cannot take the deduction for any month you are eligible to participate in a subsidized plan of your (or your spouse's) employer. 2013 1040ez tax form The deduction cannot exceed your net earnings from the business under which the insurance plan is established. 2013 1040ez tax form Your net earnings under this rule do not include the income you earned as a common-law employee (discussed earlier) of a church. 2013 1040ez tax form More information. 2013 1040ez tax form   For more information about the self-employed health insurance deduction, see chapter 6 in Publication 535. 2013 1040ez tax form Deduction for SE Tax You can deduct one-half of your SE tax in figuring adjusted gross income. 2013 1040ez tax form This is an income tax deduction only, on Form 1040, line 27. 2013 1040ez tax form Do not claim this deduction in figuring net earnings from self-employment subject to SE tax. 2013 1040ez tax form Income Tax Withholding and Estimated Tax The federal income tax is a pay-as-you-go tax. 2013 1040ez tax form You must pay the tax as you earn or receive income during the year. 2013 1040ez tax form An employee usually has income tax withheld from his or her wages or salary. 2013 1040ez tax form However, your salary is not subject to federal income tax withholding if both of the following conditions apply. 2013 1040ez tax form 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. 2013 1040ez tax form Your salary is for ministerial services (see Ministerial Services , earlier). 2013 1040ez tax form 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. 2013 1040ez tax form 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. 2013 1040ez tax form Determine your estimated tax by using the worksheets in Publication 505, Tax Withholding and Estimated Tax. 2013 1040ez tax form Pay the entire estimated tax for 2014 or the first installment by April 15, 2014. 2013 1040ez tax form See Form 1040-ES for the different payment methods. 2013 1040ez tax form The April 15 date applies whether or not your tax home and your abode are outside the United States and Puerto Rico. 2013 1040ez tax form For more information, see chapter 2 of Publication 505. 2013 1040ez tax form 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. 2013 1040ez tax form 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. 2013 1040ez tax form Table 4. 2013 1040ez tax form 2013 Filing Requirements for Most Taxpayers IF your filing status is . 2013 1040ez tax form . 2013 1040ez tax form . 2013 1040ez tax form AND at the end of 2013 you were* . 2013 1040ez tax form . 2013 1040ez tax form . 2013 1040ez tax form THEN file a return if your gross income** was at least . 2013 1040ez tax form . 2013 1040ez tax form . 2013 1040ez tax form 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. 2013 1040ez tax form ** 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). 2013 1040ez tax form 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). 2013 1040ez tax form 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. 2013 1040ez tax form Gross income includes gains, but not losses, reported on Form 8949 or Schedule D (Form 1040). 2013 1040ez tax form Gross income from a business means, for example, the amount on Schedule C (Form 1040), line 7, or Schedule F (Form 1040), line 9. 2013 1040ez tax form 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. 2013 1040ez tax form *** 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. 2013 1040ez tax form Additional requirements. 2013 1040ez tax form   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. 2013 1040ez tax form 28 or more from an electing church or church-controlled organization (see Coverage of Religious Workers (Church Employees) , earlier, under Social Security Coverage). 2013 1040ez tax form Self-employment tax. 2013 1040ez tax form   If you are liable for SE tax, you must file Schedule SE (Form 1040) with your return. 2013 1040ez tax form   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. 2013 1040ez tax form You should report ministerial earnings and expenses from nonemployee ministerial services on Schedule C or C-EZ (Form 1040). 2013 1040ez tax form You should then carry the net amount over to line 2 of Schedule SE (Form 1040), Section A or B. 2013 1040ez tax form 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). 2013 1040ez tax form 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. 2013 1040ez tax form Note. 2013 1040ez tax form 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. 2013 1040ez tax form You cannot deduct these expenses on Schedule C or C-EZ (Form 1040) as a trade or business expense. 2013 1040ez tax form Exemption from SE tax. 2013 1040ez tax form   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). 2013 1040ez tax form Instead, enter “Exempt—Form 4361” on the dotted line next to Form 1040, line 56. 2013 1040ez tax form 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. 2013 1040ez tax form    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). 2013 1040ez tax form Instead, enter “Exempt—Form 4029” on the dotted line next to Form 1040, line 56. 2013 1040ez tax form More information. 2013 1040ez tax form   For more information on filing your return, including when and where to file it, see the Instructions for Form 1040. 2013 1040ez tax form Retirement Savings Arrangements Retirement savings arrangements are plans that offer you a tax-favored way to save for your retirement. 2013 1040ez tax form You generally can deduct your contributions to the plan. 2013 1040ez tax form Your contributions and the earnings on them are not taxed until they are distributed. 2013 1040ez tax form Retirement plans for the self-employed. 2013 1040ez tax form   To set up one of the following plans you must be self-employed. 2013 1040ez tax form SEP (simplified employee pension) plan. 2013 1040ez tax form SIMPLE (savings incentive match plan for employees) plan. 2013 1040ez tax form Qualified retirement plan (also called a Keogh or H. 2013 1040ez tax form R. 2013 1040ez tax form 10 plan). 2013 1040ez tax form   The common-law rules determine whether you are an employee or a self-employed person for purposes of setting up a retirement plan. 2013 1040ez tax form See Employment status for other tax purposes under Coverage of Members of the Clergy, earlier. 2013 1040ez tax form This result is true even if your compensation for ministerial services (defined earlier) is subject to SE tax. 2013 1040ez tax form   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. 2013 1040ez tax form You are not a self-employed person for purposes of setting up a retirement plan. 2013 1040ez tax form This result is true even if your salary is subject to SE tax. 2013 1040ez tax form   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. 2013 1040ez tax form   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). 2013 1040ez tax form Individual retirement arrangements (IRAs). 2013 1040ez tax form   The traditional IRA and the Roth IRA are two individual retirement arrangements you can use to save money for your retirement. 2013 1040ez tax form 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). 2013 1040ez tax form   However, your maximum contribution to a Roth IRA will be further reduced or eliminated if your adjusted gross income is above a certain amount. 2013 1040ez tax form 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. 2013 1040ez tax form   If you contribute to a traditional IRA, your contribution may be deductible. 2013 1040ez tax form 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). 2013 1040ez tax form   For more information on IRAs, see Publication 590. 2013 1040ez tax form Tax-sheltered annuity plans. 2013 1040ez tax form   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. 2013 1040ez tax form For more