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Amend 1040Amend 1040 Publication 80 - Main Content Table of Contents Introduction 1. Amend 1040 Employer Identification Number (EIN) 2. Amend 1040 Who Are Employees?Tests. Amend 1040 Business Owned and Operated by Spouses Farm Crew Leaders 3. Amend 1040 Employee's Social Security Number (SSN)Registering for SSNVS. Amend 1040 4. Amend 1040 Wages and Other CompensationFringe Benefits 5. Amend 1040 TipsOrdering rule. Amend 1040 6. Amend 1040 Social Security and Medicare Taxes for FarmworkersThe $150 Test or the $2,500 Test 7. Amend 1040 How To Figure Social Security and Medicare TaxesHousehold and agricultural employers. Amend 1040 8. Amend 1040 Depositing TaxesPayment with Return When To Deposit How To Deposit Deposit Penalties 9. Amend 1040 Employer's ReturnsReporting Adjustments to Form 941-SS, 944-SS, 944, or 943 Current Period Adjustments Prior Period Adjustments 10. Amend 1040 Wage and Tax StatementsWaiver. Amend 1040 11. Amend 1040 Federal Unemployment (FUTA) Tax—U. Amend 1040 S. Amend 1040 Virgin Islands Employers Only How To Get Tax Help Introduction This publication is for employers whose principal place of business is in the U. Amend 1040 S. Amend 1040 Virgin Islands, Guam, American Samoa, or the Commonwealth of the Northern Mariana Islands, or who have employees who are subject to income tax withholding for any of these jurisdictions. Amend 1040 Employers and employees in these areas are generally subject to social security and Medicare taxes under the Federal Insurance Contributions Act (FICA). Amend 1040 See section 6 and section 7 for more information. Amend 1040 This publication summarizes employer responsibilities to collect, pay, and report these taxes. Amend 1040 Whenever the term “United States” is used in this publication, it includes U. Amend 1040 S. Amend 1040 Virgin Islands, Guam, American Samoa, and the Commonwealth of the Northern Mariana Islands. Amend 1040 This publication also provides employers in the U. Amend 1040 S. Amend 1040 Virgin Islands with a summary of their responsibilities in connection with the tax under the Federal Unemployment Tax Act, known as FUTA tax. Amend 1040 See section 11 for more information. Amend 1040 Except as shown in the table in section 12, social security, Medicare, and FUTA taxes apply to every employer who pays taxable wages to employees or who has employees who report tips. Amend 1040 This publication does not include information relating to the self-employment tax (for social security and Medicare of self-employed persons). Amend 1040 See Publication 570, Tax Guide for Individuals With Income From U. Amend 1040 S. Amend 1040 Possessions, if you need this information. Amend 1040 This publication also does not include information relating to income tax withholding. Amend 1040 In U. Amend 1040 S. Amend 1040 Virgin Islands, Guam, American Samoa, and the Commonwealth of the Northern Mariana Islands, contact your local tax department for information about income tax withholding. Amend 1040 See Publication 15 (Circular E), for information on U. Amend 1040 S. Amend 1040 federal income tax withholding. Amend 1040 Comments and suggestions. Amend 1040 We welcome your comments about this publication and your suggestions for future editions. Amend 1040 You can write to us at the following address: Internal Revenue Service Tax Forms and Publications Division 1111 Constitution Ave. Amend 1040 NW, IR-6526 Washington, DC 20224 We respond to many letters by telephone. Amend 1040 Therefore, it would be helpful if you would include your daytime phone number, including the area code, in your correspondence. Amend 1040 You can also send us comments from www. Amend 1040 irs. Amend 1040 gov/formspubs. Amend 1040 Click on More Information and then click on Comment on Tax Forms and Publications. Amend 1040 Although we cannot respond individually to each comment received, we do appreciate your feedback and will consider your comments as we revise our tax forms, instructions, and publications. Amend 1040 1. Amend 1040 Employer Identification Number (EIN) An employer identification number (EIN) is a nine-digit number that the IRS issues. Amend 1040 Its format is 00-0000000. Amend 1040 It is used to identify the tax accounts of employers and certain other organizations and entities that have no employees. Amend 1040 Use your EIN on all of the items that you send to the IRS and SSA for your business. Amend 1040 If you do not have an EIN, you may apply for one online. Amend 1040 Go to IRS. Amend 1040 gov and click on the Apply for an EIN Online link under Tools. Amend 1040 You may also apply for an EIN by calling 1-800-829-4933, (U. Amend 1040 S. Amend 1040 Virgin Islands only) or 267-941-1099 (toll call), or you can fax or mail Form SS-4, Application for Employer Identification Number, to the IRS. Amend 1040 Do not use a social security number (SSN) in place of an EIN. Amend 1040 If you do not have an EIN by the time a return is due, file a paper return and enter “Applied For” and the date that you applied for it in the space shown for the number. Amend 1040 If you took over another employer's business, do not use that employer's EIN. Amend 1040 You should have only one EIN. Amend 1040 If you have more than one, write to the IRS office where you file your returns using the “without a payment” address in the Instructions for Form 941-SS, Instructions for Form 944, or Instructions for Form 943. Amend 1040 Or call the IRS Business & Specialty Tax Line at 1-800-829-4933 (U. Amend 1040 S. Amend 1040 Virgin Islands only) or 267-941-1000 (toll call). Amend 1040 Persons who are deaf, hard of hearing, or have a speech disability (TDD/TTY users) in the U. Amend 1040 S. Amend 1040 Virgin Islands may call 1-800-829-4059. Amend 1040 The IRS will tell you which EIN to use. Amend 1040 For more information, see Publication 1635, Employer Identification Number: Understanding Your EIN, or Publication 583, Starting a Business and Keeping Records. Amend 1040 2. Amend 1040 Who Are Employees? Generally, employees are defined either under common law or under special statutes for certain situations. Amend 1040 See Publication 15-A, Employer's Supplemental Tax Guide, for details on statutory employees and nonemployees. Amend 1040 Employee status under common law. Amend 1040 Generally, a worker who performs services for you is your employee if you can control what will be done and how it will be done. Amend 1040 This is so even when you give the employee freedom of action. Amend 1040 What matters is that you have the right to control the details of how the services are performed. Amend 1040 See Publication 15-A for more information on how to determine whether an individual providing services is an independent contractor or an employee. Amend 1040 Generally, people in business for themselves are not employees. Amend 1040 For example, doctors, lawyers, veterinarians, and others in an independent trade in which they offer their services to the public are usually not employees. Amend 1040 However, if the business is incorporated, corporate officers who work in the business are employees of the corporation. Amend 1040 If an employer-employee relationship exists, it does not matter what it is called. Amend 1040 The employee may be called an agent or independent contractor. Amend 1040 It also does not matter how payments are measured or paid, what they are called, or if the employee works full or part time. Amend 1040 Statutory employees. Amend 1040 There are also some special definitions of employees for social security, Medicare, and FUTA taxes. Amend 1040 While the following persons may not be common law employees, they are considered employees for social security and Medicare purposes if the conditions under Tests , discussed later, are met. Amend 1040 a. Amend 1040 An agent (or commission) driver who delivers food or beverages (other than milk) or picks up and delivers laundry or dry cleaning for someone else. Amend 1040 b. Amend 1040 A full-time life insurance salesperson who sells primarily for one company. Amend 1040 c. Amend 1040 A homeworker who works by the guidelines of the person for whom the work is done, with materials furnished by and returned to that person or to someone that person designates. Amend 1040 d. Amend 1040 A traveling or city salesperson (other than an agent-driver or commission-driver) who works full time (except for sideline sales activities) for one firm or person getting orders from customers. Amend 1040 The orders must be for merchandise for resale or supplies for use in the customer's business. Amend 1040 The customers must be retailers, wholesalers, contractors, or operators of hotels, restaurants, or other businesses dealing with food or lodging. Amend 1040 Tests. Amend 1040 Withhold social security and Medicare taxes from statutory employees' wages if all three of the following tests apply. Amend 1040 The service contract states or implies that almost all of the services are to be performed personally by them. Amend 1040 They have little or no investment in the equipment and property used to perform the services (other than an investment in transportation facilities). Amend 1040 The services are performed on a continuing basis for the same payer. Amend 1040 Persons in a or d, earlier, are also employees for FUTA tax purposes if tests 1 through 3 are met (U. Amend 1040 S. Amend 1040 Virgin Islands only). Amend 1040 Publication 15-A gives examples of the employer-employee relationship. Amend 1040 Statutory nonemployees. Amend 1040 Certain direct sellers, qualified real estate agents, and certain companion sitters are, by law, considered nonemployees. Amend 1040 They are generally treated as self-employed for employment tax purposes. Amend 1040 See Publication 15-A for details. Amend 1040 H-2A agricultural workers. Amend 1040 On Form W-2, do not check box 13 (Statutory employee) as H-2A workers are not statutory employees. Amend 1040 Treating employees as nonemployees. Amend 1040 If you incorrectly treated an employee as a nonemployee and did not withhold social security and Medicare taxes, you will be liable for the taxes. Amend 1040 See Treating employees as nonemployees in section 2 of Publication 15 (Circular E), for details on Internal Revenue Code section 3509, which may apply. Amend 1040 IRS help. Amend 1040 If you want the IRS to determine if a worker is an employee, file Form SS-8, Determination of Worker Status for Purposes of Federal Employment Taxes and Income Tax Withholding. Amend 1040 Voluntary Classification Settlement Program (VCSP). Amend 1040 Employers who are currently treating their workers (or a class or group of workers) as independent contractors or other nonemployees and want to voluntarily reclassify their workers as employees for future tax periods may be eligible to participate in the VCSP if certain requirements are met. Amend 1040 To apply, use Form 8952, Application for Voluntary Classification Settlement Program (VCSP). Amend 1040 For more information, visit IRS. Amend 1040 gov and enter “VCSP” in the search box. Amend 1040 Business Owned and Operated by Spouses If you and your spouse jointly own and operate a business and share in the profits and losses, you are partners in a partnership, whether or not you have a formal partnership agreement. Amend 1040 See Publication 541, Partnerships, for more details. Amend 1040 The partnership is considered the employer of any employees, and is liable for any employment taxes due on wages paid to its employees. Amend 1040 Exception—Qualified Joint Venture. Amend 1040 If you and your spouse materially participate as the only members of a jointly owned and operated business, and you file a joint Form 1040, U. Amend 1040 S. Amend 1040 Individual Income Tax Return, or joint Form 1040-SS, U. Amend 1040 S. Amend 1040 Self-Employment Tax Return—U. Amend 1040 S. Amend 1040 Virgin Islands, Guam, American Samoa, the Commonwealth of the Northern Mariana Islands, or Puerto Rico, you can make a joint election to be taxed as a qualified joint venture instead of a partnership. Amend 1040 See the Instructions for Schedule C (Form 1040) or the Instructions for Form 1040-SS. Amend 1040 Spouses electing qualified joint venture status are treated as sole proprietors for federal tax purposes. Amend 1040 Either of the sole proprietor spouses may report and pay the employment taxes due on wages paid to the employees, using the EIN of that spouse’s sole proprietorship. Amend 1040 For more information on qualified joint ventures, visit IRS. Amend 1040 gov and enter “qualified joint venture” in the search box. Amend 1040 Farm Crew Leaders You are an employer of farmworkers if you are a crew leader. Amend 1040 A crew leader is a person who furnishes and pays (either on his or her own behalf or on behalf of the farm operator) workers to do farmwork for the farm operator. Amend 1040 If there is no written agreement between you and the farm operator stating that you are his or her employee, and if you pay the workers (either for yourself or for the farm operator), then you are a crew leader. Amend 1040 3. Amend 1040 Employee's Social Security Number (SSN) An employee's social security number (SSN) consists of nine digits separated as follows: 000-00-0000. Amend 1040 You must get each employee's name and SSN and enter them on Form W-2AS, W-2CM, W-2GU, or W-2VI. Amend 1040 If you do not report the employee's correct name and SSN, you may owe a penalty unless you have reasonable cause. Amend 1040 See Publication 1586, Reasonable Cause Regulations and Requirements for Missing and Incorrect Name/TINs, for information on the requirement to solicit the employee's SSN. Amend 1040 Employee's social security card. Amend 1040 You should ask the employee to show you his or her social security card. Amend 1040 The employee may show the card if it is available. Amend 1040 Do not accept a social security card that says “Not valid for employment. Amend 1040 ” A social security number issued with this legend does not permit employment. Amend 1040 You may, but you are not required to, photocopy the social security card if the employee provides it. Amend 1040 If an employee does not have a social security card or needs a new one, the employee should apply for one on Form SS-5 and submit the necessary documentation. Amend 1040 The employee must complete and sign Form SS-5; it cannot be filed by the employer. Amend 1040 You may be asked to supply a letter to accompany Form SS-5 if the employee has exceeded his or her yearly or lifetime limit for the number of replacement cards allowed. Amend 1040 If your employee has applied for an SSN but has not received the card before you must file your Form W-2 reports, and you are filing your reports on paper, enter “Applied For” in box d. Amend 1040 Enter all zeroes in the SSN field if filing electronically. Amend 1040 When the employee receives the SSN, file Copy A of Form W-2c with SSA to show the employee's SSN. Amend 1040 Correctly record the employee's name and SSN. Amend 1040 Record the name and number of each employee as they appear on his or her social security card. Amend 1040 If the name is not correct as shown on the card (for example, because of marriage or divorce), the employee should request a corrected card from the SSA. Amend 1040 Continue to use the old name until the employee shows you the replacement social security card with the corrected name. Amend 1040 If the SSA issues the employee a replacement card after a name change, or a new card with a different social security number after a change in alien work status, file a Form W-2c to correct the name/SSN reported on the most recently filed Form W-2AS, W-2CM, W-2GU, or W-2VI. Amend 1040 It is not necessary to correct other years if the previous name and SSN were used for years before the most recent Form W-2. Amend 1040 Where to get and file social security number application forms. Amend 1040 U. Amend 1040 S. Amend 1040 Virgin Islands—U. Amend 1040 S. Amend 1040 Social Security Administration, 8000 Nisky Center, First Floor, Suite 2, St. Amend 1040 Thomas, VI 00802. Amend 1040 Guam—U. Amend 1040 S. Amend 1040 Social Security Administration, 655 Harmon Loop Road, Suite 300, Dededo, GU 96929. Amend 1040 American Samoa—U. Amend 1040 S. Amend 1040 Social Security Administration, Pago Plaza, Suite 117, Pago Pago, AS 96799. Amend 1040 Commonwealth of the Northern Mariana Islands—U. Amend 1040 S. Amend 1040 Social Security Administration, MH Building, Suite 201, Saipan, MP 96950. Amend 1040 Verification of social security numbers. Amend 1040 Employers and authorized reporting agents can use the Social Security Number Verification Service (SSNVS) to instantly verify up to 10 names and SSNs (per screen) at a time, or submit an electronic file of up to 250,000 names and SSNs and usually receive the results the next business day. Amend 1040 Visit www. Amend 1040 socialsecurity. Amend 1040 gov/employer/ssnv. Amend 1040 htm for more information. Amend 1040 Registering for SSNVS. Amend 1040 You must register online and receive authorization from your employer to use SSNVS. Amend 1040 To register, visit SSA's website at www. Amend 1040 ssa. Amend 1040 gov/employer and click on the Business Services Online link. Amend 1040 Follow the registration instructions to obtain a user identification (ID) and password. Amend 1040 You will need to provide the following information about yourself and your company. Amend 1040 Name. Amend 1040 SSN. Amend 1040 Date of birth. Amend 1040 Type of employer. Amend 1040 EIN. Amend 1040 Company name, address, and telephone number. Amend 1040 Email address. Amend 1040 When you have completed the online registration process, SSA will mail a one-time activation code to your employer. Amend 1040 You must enter the activation code online to use SSNVS. Amend 1040 4. Amend 1040 Wages and Other Compensation Generally, all wages are subject to social security and Medicare tax (and FUTA tax for U. Amend 1040 S. Amend 1040 Virgin Islands employers). Amend 1040 However, wages subject to social security tax and FUTA tax are limited by a wage base amount that you pay to each employee for the year. Amend 1040 The wage base for social security tax is $117,000 for 2014. Amend 1040 After you pay $117,000 to an employee in 2014, including tips, do not withhold social security tax on any amount that you later pay to the employee for the year. Amend 1040 The wage base for FUTA tax is $7,000 for 2014. Amend 1040 All wages are subject to Medicare tax. Amend 1040 The wages may be in cash or in other forms, such as an automobile for personal use. Amend 1040 Wages include salaries, vacation allowances, bonuses, commissions, and fringe benefits. Amend 1040 It does not matter how payments are measured or paid. Amend 1040 See the table in section 12 for exceptions to social security, Medicare, and FUTA taxes on wages. Amend 1040 See section 5 and section 6 for a discussion of how the rules apply to tips and farmworkers. Amend 1040 Social security and Medicare taxes apply to most payments of sick pay, including payments by third parties such as insurance companies. Amend 1040 Special rules apply to the reporting of third-party sick pay. Amend 1040 For details, see Publication 15-A. Amend 1040 Determine the value of noncash pay (such as goods, lodging, and meals) by its fair market value. Amend 1040 However, see Fringe Benefits , later in this section. Amend 1040 Except for farmworkers and household employees, this kind of pay may be subject to social security, Medicare, and FUTA taxes. Amend 1040 Back pay, including retroactive wage increases (but not amounts paid as liquidated damages), is taxed as ordinary wages in the year paid. Amend 1040 For information on reporting back pay to the Social Security Administration, see Publication 957, Reporting Back Pay and Special Wage Payments to the Social Security Administration. Amend 1040 Travel and business expenses. Amend 1040 Payments to your employee for travel and other necessary expenses of your business generally are included in taxable wages if (a) your employee is not required to or does not substantiate timely those expenses to you with receipts or other documentation, or (b) you advance an amount to your employee for business expenses and your employee is not required to or does not return timely any amount that he or she does not substantiate. Amend 1040 Sick pay. Amend 1040 In general, sick pay is any amount that you pay, under a plan that you take part in, to an employee because of sickness or injury. Amend 1040 These amounts are sometimes paid by a third party, such as an insurance company. Amend 1040 In either case, these payments are subject to social security and Medicare taxes (and FUTA tax for U. Amend 1040 S. Amend 1040 Virgin Islands employers). Amend 1040 Sick pay becomes exempt from these taxes after the end of 6 calendar months after the calendar month the employee last worked for the employer. Amend 1040 Publication 15-A explains the employment tax rules that apply to sick pay, disability benefits, and similar payments to employees. Amend 1040 Fringe Benefits Generally, fringe benefits are includible in the gross income of an employee and are subject to employment taxes. Amend 1040 Examples of fringe benefits include the use of an automobile, aircraft flights that you provide, free or discounted commercial airline flights, vacations, discounts on property or services, memberships in country clubs or other social clubs, and tickets to entertainment or sporting events. Amend 1040 In general, the amount included in the employee's income is the excess of the fair market value of the benefit over the sum of any amount paid for it by the employee and any amount excluded by law. Amend 1040 For more information, see Publication 15-B, Employer's Tax Guide to Fringe Benefits. Amend 1040 When fringe benefits are treated as paid. Amend 1040 You can choose to treat certain noncash fringe benefits (including personal use of an automobile provided by you) as paid by the pay period, quarter, or on any other basis that you choose, but they must be treated as paid at least annually. Amend 1040 You do not have to make a formal choice of payment dates or notify the IRS. Amend 1040 You do not have to use the same basis for all employees. Amend 1040 You may change methods as often as you like, as long as all benefits provided in a calendar year are treated as paid no later than December 31 of the calendar year. Amend 1040 However, see Special accounting rule for fringe benefits provided during November and December , later in this section. Amend 1040 You can treat the value of a single taxable noncash fringe benefit as paid on one or more dates in the same calendar year, even if the employee gets the entire benefit at one time. Amend 1040 However, once you elect the payment dates, you must report the taxes on your return in the same tax period in which you treated them as paid. Amend 1040 This election does not apply to a fringe benefit where real property or investment personal property is transferred. Amend 1040 Withholding social security and Medicare taxes on fringe benefits. Amend 1040 You add the value of fringe benefits to regular wages for a payroll period and figure social security and Medicare taxes on the total. Amend 1040 If you withhold less than the required amount of social security and Medicare taxes from the employee in a calendar year but report and pay the proper amount, you may recover the taxes from the employee. Amend 1040 Depositing taxes on fringe benefits. Amend 1040 Once you choose payment dates for taxable noncash fringe benefits, you must deposit taxes in the same deposit period that you treat the fringe benefits as paid. Amend 1040 You may make a reasonable estimate of the value of the fringe benefits. Amend 1040 In general, the value of taxable noncash fringe benefits provided in a calendar year must be determined by January 31 of the following year. Amend 1040 You may claim a refund of overpayments or elect to have any overpayment applied to the next employment tax return. Amend 1040 If deposits are underpaid, see Deposit Penalties in section 8. Amend 1040 Valuation of vehicles provided to employees. Amend 1040 If you provide a vehicle to your employees, you may either determine the actual value of the benefit for the entire calendar year, taking into account the business use of the vehicle, or consider the entire use for the calendar year as personal and include 100% of the value of the vehicle in the employee's income. Amend 1040 For reporting information to employees, see the box 14 instructions in the General Instructions for Forms W-2 and W-3. Amend 1040 Special accounting rule for fringe benefits provided during November and December. Amend 1040 You may choose to treat the value of taxable noncash fringe benefits provided during November and December as paid in the next year. Amend 1040 However, this applies only to those benefits that you actually provided during November and December, not to those you merely treated as paid during those months. Amend 1040 If you use this rule, you must notify each affected employee between the time of the employee's last paycheck of the calendar year and at or near the time that you give the employee Form W-2AS, W-2CM, W-2GU, or W-2VI. Amend 1040 If you use the special accounting rule, your employee must also use it for the same period that you use it. Amend 1040 You cannot use this rule for a fringe benefit of real property or tangible or intangible real property of a kind normally held for investment that is transferred to your employee. Amend 1040 5. Amend 1040 Tips Tips that your employee receives from customers are generally subject to social security and Medicare withholding. Amend 1040 Your employee must report cash tips to you by the 10th of the month after the month that the tips are received. Amend 1040 The report should include tips you paid over to the employee for charge customers, tips the employee received directly from customers, and tips received from other employees under any tip-sharing arrangement. Amend 1040 Both directly and indirectly tipped employees must report tips to you. Amend 1040 The report should not include tips that the employee paid out to other employees. Amend 1040 No report is required for months when tips are less than $20. Amend 1040 Your employees report tips on Form 4070, Employee's Report of Tips to Employer, or on a similar statement. Amend 1040 They may also use Form 4070A, Employee's Daily Record of Tips, to keep a record of their tips. Amend 1040 Both forms are included in Publication 1244, Employee's Daily Record of Tips and Report to Employer, available at IRS. Amend 1040 gov. Amend 1040 The statement must be signed by the employee and must include: The employee's name, address, and SSN, Your name and address, The month or period that the report covers, and The total tips received during the month or period. Amend 1040 You are permitted to establish a system for electronic tip reporting by employees. Amend 1040 See Regulations section 31. Amend 1040 6053-1(d). Amend 1040 Collecting taxes on tips. Amend 1040 You must collect the employee social security and Medicare taxes on the employee's tips. Amend 1040 You can also collect these taxes from the employee's wages or from other funds that he or she makes available. Amend 1040 Stop collecting the employee social security tax when his or her total wages and tips for 2014 reach $117,000. Amend 1040 Collect the employee Medicare tax for the whole year on all wages and tips. Amend 1040 You are responsible for the employer social security tax on wages and tips until the wages (including tips) reach the wage base limit. Amend 1040 You are responsible for the employer Medicare tax for the whole year on all wages and tips. Amend 1040 File Form 941-SS (or Form 944) to report withholding and employer taxes on tips. Amend 1040 The withholding rules for withholding an employee's share of Medicare tax on tips also apply to withholding the Additional Medicare Tax once wages and tips exceed $200,000 in the calendar year. Amend 1040 Ordering rule. Amend 1040 If, by the 10th of the month after the month you received an employee's report on tips, you do not have enough employee funds available to deduct the employee social security and Medicare tax on tips, you no longer have to collect it and are not liable for it. Amend 1040 Reporting tips. Amend 1040 Report tips and any collected and uncollected social security in boxes 1, 5, 7, and 12 on Forms W-2AS, W-2CM, W-2GU, or W-2VI and on Form 941-SS, lines 5b, 5c, and 5d (Form 944, lines 4b, 4c, and 4d). Amend 1040 Do not include any uncollected Additional Medicare Tax in box 12 of Form W-2. Amend 1040 Report an adjustment on Form 941-SS, line 9 (Form 944, line 6), for the uncollected social security and Medicare taxes. Amend 1040 The table in section 12 shows how tips are treated for FUTA tax purposes. Amend 1040 Revenue Ruling 2012-18 provides guidance for employers regarding social security and Medicare taxes imposed on tips, including information on the reporting of the employer share of social security and Medicare taxes under section 3121(q), the difference between tips and service charges, and the section 45B credit. Amend 1040 See Revenue Ruling 2012-18, 2012-26 I. Amend 1040 R. Amend 1040 B. Amend 1040 1032, available at www. Amend 1040 irs. Amend 1040 gov/irb/2012-26_IRB/ar07. Amend 1040 html. Amend 1040 6. Amend 1040 Social Security and Medicare Taxes for Farmworkers The tests described below apply only to services that are defined as agricultural labor (farmwork). Amend 1040 In general, you are an employer of farmworkers if your employees: Raise or harvest agricultural or horticultural products on your farm (including the raising and feeding of livestock); Work in connection with the operation, management, conservation, improvement, or maintenance of your farm and its tools and equipment; Provide services relating to salvaging timber, or clearing land of brush and other debris, left by a hurricane (also known as hurricane labor); Handle, process, or package any agricultural or horticultural commodity if you produced over half of the commodity (for a group of up to 20 unincorporated operators, all of the commodity); or Do work for you related to cotton ginning, turpentine, gum resin products, or the operation and maintenance of irrigation facilities. Amend 1040 For this purpose, the term “farm” includes stock, dairy, poultry, fruit, fur-bearing animal, and truck farms, as well as plantations, ranches, nurseries, ranges, greenhouses or other similar structures used primarily for the raising of agricultural or horticultural commodities, and orchards. Amend 1040 Farmwork does not include reselling activities that do not involve any substantial activity of raising agricultural or horticultural commodities, such as a retail store or a greenhouse used primarily for display or storage. Amend 1040 A “share farmer” working for you is not your employee. Amend 1040 However, the share farmer may be subject to self-employment tax. Amend 1040 In general, share farming is an arrangement in which certain commodity products are shared between the farmer and the owner (or tenant) of the land. Amend 1040 For details, see Regulations section 31. Amend 1040 3121(b)(16)-1. Amend 1040 The $150 Test or the $2,500 Test All cash wages that you pay to any employee for farmwork are subject to social security and Medicare taxes if either of the following two tests is met. Amend 1040 You pay cash wages to the employee of $150 or more in a year (count all cash wages paid on a time, piecework, or other basis) for farmwork. Amend 1040 The $150 test applies separately to each farmworker that you employ. Amend 1040 If you employ a family of workers, each member is treated separately. Amend 1040 Do not count wages paid by other employers. Amend 1040 The total that you pay for farmwork (cash and noncash) to all of your employees is $2,500 or more during the year. Amend 1040 Exceptions. Amend 1040 The $150 and $2,500 tests do not apply to wages that you pay to a farmworker who receives less than $150 in annual cash wages and the wages are not subject to social security and Medicare taxes even if you pay $2,500 or more in that year to all of your farmworkers if the farmworker: Is employed in agriculture as a hand-harvest laborer, Is paid piece rates in an operation that is usually paid on a piece-rate basis in the region of employment, Commutes daily from his or her home to the farm, and Had been employed in agriculture less than 13 weeks in the preceding calendar year. Amend 1040 Amounts that you pay to these seasonal farmworkers, however, count toward the $2,500-or-more test to determine whether wages that you pay to other farmworkers are subject to social security and Medicare taxes. Amend 1040 7. Amend 1040 How To Figure Social Security and Medicare Taxes The tax rate for social security is 6. Amend 1040 2% (amount withheld) each for the employer and employee (12. Amend 1040 4% total). Amend 1040 The social security wage base limit is $117,000. Amend 1040 The tax rate for Medicare is 1. Amend 1040 45% (amount withheld) each for the employee and employer (2. Amend 1040 9% total). Amend 1040 There is no wage base limit for Medicare tax; all covered wages are subject to Medicare tax. Amend 1040 Multiply each wage payment by these percentages to figure the tax to withhold from employees. Amend 1040 Employers report both the employee and employer shares on Forms 941-SS, 944, or Form 943 (farm employment). Amend 1040 See section 5 for information on tips. Amend 1040 Additional Medicare Tax withholding. Amend 1040 In addition to withholding Medicare tax at 1. Amend 1040 45%, you must withhold a 0. Amend 1040 9% Additional Medicare Tax from wages you pay to an employee in excess of $200,000 in a calendar year. Amend 1040 You are required to begin withholding Additional Medicare Tax in the pay period in which you pay wages in excess of $200,000 to an employee and continue to withhold it each pay period until the end of the calendar year. Amend 1040 Additional Medicare Tax is only imposed on the employee. Amend 1040 There is no employer share of Additional Medicare Tax. Amend 1040 All wages that are subject to Medicare tax are subject to Additional Medicare Tax withholding if paid in excess of the $200,000 withholding threshold. Amend 1040 For more information on what wages are subject to Medicare tax, see the chart Special Rules for Various Types of Employment and Payments in section 12. Amend 1040 For more information on Additional Medicare Tax, visit IRS. Amend 1040 gov and enter “Additional Medicare Tax” in the search box. Amend 1040 Deducting the tax. Amend 1040 Deduct the employee tax from each wage payment. Amend 1040 If you are not sure that the wages that you pay to a farmworker during the year will be taxable, you may either deduct the tax when you make the payments or wait until the $2,500 test or the $150 test explained in section 6 has been met. Amend 1040 Employee's portion of taxes paid by employer. Amend 1040 If you pay your employee's social security and Medicare taxes without deducting them from the employee's pay, you must include the amount of the payments in the employee's wages for social security and Medicare taxes. Amend 1040 This increase in the employee's wage payment for your payment of the employee's social security and Medicare taxes is also subject to employee social security and Medicare taxes. Amend 1040 This again increases the amount of the additional taxes that you must pay. Amend 1040 Household and agricultural employers. Amend 1040 This discussion does not apply to household and agricultural employers. Amend 1040 If you pay a household or agricultural employee's social security and Medicare taxes, these payments must be included in the employee's wages. Amend 1040 However, this wage increase due to the tax payments is not subject to social security or Medicare taxes as discussed in this section. Amend 1040 See Publication 15-A for details. Amend 1040 Sick pay payments. Amend 1040 Social security and Medicare taxes apply to most payments of sick pay, including payments made by third parties such as insurance companies. Amend 1040 For details on third-party payers of sick pay, see Publication 15-A. Amend 1040 8. Amend 1040 Depositing Taxes You must deposit social security and Medicare taxes if your tax liability (Form 941-SS, line 10; Form 944, line 7; or Form 943, line 11) is $2,500 or more for the tax return period. Amend 1040 You must make the deposit by electronic funds transfer. Amend 1040 For more information about electronic funds transfers, see How To Deposit , later in this section. Amend 1040 Payment with Return $2,500 rule. Amend 1040 Instead of making deposits during the current quarter, you can pay your total Form 941-SS tax liability when you timely file Form 941-SS if: Your total Form 941-SS tax liability for either the current quarter or the preceding quarter is less than $2,500 and You do not incur a $100,000 next-day deposit obligation during the current quarter. Amend 1040 If you are not sure your total liability for the current quarter will be less than $2,500, (and your liability for the preceding quarter was not less than $2,500), make deposits using the semiweekly or monthly rules so you won't be subject to failure to deposit penalties. Amend 1040 Employers who have been notified to file Form 944 can pay their tax liability due for the fourth quarter with Form 944, if their fourth quarter tax liability is less than $2,500. Amend 1040 Employers must have deposited any tax liability due for the first, second, and third quarters, according to the deposit rules, in order to avoid failure-to-deposit penalties for deposits due during those quarters. Amend 1040 Only monthly schedule depositors are allowed to make an Accuracy of Deposits Rule payment with the return. Amend 1040 Semiweekly schedule depositors must timely deposit the amount. Amend 1040 See Accuracy of Deposits Rule and How To Deposit, later in this section. Amend 1040 When To Deposit Under the rules discussed below, the only difference between farm and nonfarm workers' employment tax deposit rules is the lookback period. Amend 1040 Therefore, farm and nonfarm workers are discussed together except where noted. Amend 1040 Depending on your total taxes reported during a lookback period (discussed later), you are either a monthly schedule depositor or a semiweekly schedule depositor. Amend 1040 The terms “monthly schedule depositor” and “semiweekly schedule depositor” do not refer to how often you pay your employees or how often you are required to make deposits. Amend 1040 The terms identify which set of rules that you must follow when a tax liability arises (for example, when you have a payday). Amend 1040 You will need to determine your deposit schedule for a calendar year based on the total employment taxes reported on Forms 941-SS, line 10; Form 944, line 7; or Form 943, line 9, for your lookback period (defined below). Amend 1040 If you filed both Forms 941-SS and 941 during the lookback period, combine the tax liabilities for these returns for purposes of determining your deposit schedule. Amend 1040 Determine your deposit schedule for Form 943 separately from Forms 941-SS and 941. Amend 1040 Lookback period for employers of nonfarm workers. Amend 1040 The lookback period for Form 941-SS (or Form 941) consists of four quarters beginning July 1 of the second preceding year and ending June 30 of the prior year. Amend 1040 These four quarters are your lookback period even if you did not report any taxes for any of the quarters. Amend 1040 For 2014, the lookback period is July 1, 2012, through June 30, 2013. Amend 1040 Table 1. Amend 1040 Lookback Period for Calendar Year 2014 Lookback Period July 1, 2012 Oct. Amend 1040 1, 2012 Jan. Amend 1040 1, 2013 Apr. Amend 1040 1, 2013 through through through through Sep. Amend 1040 30, 2012 Dec. Amend 1040 31, 2012 Mar. Amend 1040 31, 2013 June 30, 2013 The lookback period for Form 944 is the second calendar year preceding the current calendar year. Amend 1040 For example, the lookback period for calendar year 2014 is calendar year 2012. Amend 1040 In addition, for employers who filed Form 944 for 2012 or for 2013 and will file Form 941-SS (or Form 941) for 2014, the lookback period for 2014 is the second calendar year preceding the current calendar year, that is, 2012. Amend 1040 Lookback period for employers of farmworkers. Amend 1040 The lookback period for Form 943 is the second calendar year preceding the current calendar year. Amend 1040 The lookback period for calendar year 2014 is calendar year 2012. Amend 1040 Adjustments to lookback period taxes. Amend 1040 To determine your taxes for the lookback period, use only the tax that you reported on the original returns (Forms 941-SS, 943, or 944). Amend 1040 Do not include any adjustments shown on Form 941-X, 943-X, or 944-X. Amend 1040 Example. Amend 1040 An employer originally reported total taxes of $45,000 for the lookback period. Amend 1040 The employer discovered during January 2014 that the tax reported during the lookback period was understated by $10,000 and corrected this error by filing Form 941-X. Amend 1040 The employer is a monthly schedule depositor for 2014 because the lookback period tax liabilities are based on the amounts originally reported, and they were $50,000 or less. Amend 1040 Deposit Period The term “deposit period” refers to the period during which tax liabilities are accumulated for each required deposit due date. Amend 1040 For monthly schedule depositors, the deposit period is a calendar month. Amend 1040 The deposit periods for semiweekly schedule depositors are Wednesday through Friday and Saturday through Tuesday. Amend 1040 Monthly Deposit Schedule If your total tax reported for the lookback period is $50,000 or less, you are a monthly schedule depositor for the current year. Amend 1040 You must deposit taxes on wage payments made during a calendar month by the 15th day of the following month. Amend 1040 New employers. Amend 1040 Your tax liability for any quarter in the lookback period before the date you started or acquired your business is considered to be zero. Amend 1040 Therefore, you are a monthly schedule depositor for the first calendar year of your business (but see the $100,000 Next-Day Deposit Rule , later in this section). Amend 1040 Semiweekly Deposit Schedule If your total tax reported for the lookback period is more than $50,000, you are a semiweekly schedule depositor for the current year. Amend 1040 If you are a semiweekly schedule depositor, you must deposit on Wednesday and/or Friday, depending on what day of the week that you make wage payments, as follows. Amend 1040 Deposit taxes on wage payments made on Wednesday, Thursday, and/or Friday by the following Wednesday. Amend 1040 Deposit taxes on wage payments made on Saturday, Sunday, Monday, and/or Tuesday by the following Friday. Amend 1040 Semiweekly depositors are generally not required to deposit twice a week if their payments were in the same semiweekly period unless the $100,000 Next-Day Deposit Rule , discussed later in this section, applies. Amend 1040 For example, if you made a payment on both Wednesday and Friday and incurred taxes of $10,000 for each pay date, deposit the $20,000 on the following Wednesday. Amend 1040 If you made no additional payments on Saturday through Tuesday, no deposit is due on Friday. Amend 1040 Semiweekly deposit period spanning two quarters. Amend 1040 If you have more than one pay date during a semiweekly period and the pay dates fall in different calendar quarters, you will need to make separate deposits for the separate liabilities. Amend 1040 Example. Amend 1040 If you have a pay date on Monday, March 31, 2014 (first quarter), and another pay date on Tuesday, April 1, 2014 (second quarter), two separate deposits will be required even though the pay dates fall within the same semiweekly period. Amend 1040 Both deposits will be due on Friday, April 4, 2014 (3 business days from the end of the semiweekly deposit period). Amend 1040 Examples of Monthly and Semiweekly Schedules Employers of nonfarm workers. Amend 1040 Rose Co. Amend 1040 reported Form 941-SS taxes as follows: 2013 Lookback Period 3rd Quarter 2011 $12,000 4th Quarter 2011 12,000 1st Quarter 2012 12,000 2nd Quarter 2012 12,000 $48,000 2014 Lookback Period 3rd Quarter 2012 $12,000 4th Quarter 2012 12,000 1st Quarter 2013 12,000 2nd Quarter 2013 15,000 $51,000 Rose Co. Amend 1040 is a monthly schedule depositor for 2013 because its taxes for the four quarters in its lookback period ($48,000 for the 3rd quarter of 2011 through the 2nd quarter of 2012) were not more than $50,000. Amend 1040 However, for 2014, Rose Co. Amend 1040 is a semiweekly schedule depositor because the total taxes for the four quarters in its lookback period ($51,000 for the 3rd quarter of 2012 through the 2nd quarter of 2013) exceeded $50,000. Amend 1040 Employers of farmworkers. Amend 1040 Red Co. Amend 1040 reported taxes on its 2012 Form 943, line 9, of $48,000. Amend 1040 On its 2013 Form 943, line 11, it reported taxes of $60,000. Amend 1040 Red Co. Amend 1040 is a monthly schedule depositor for 2014 because its taxes for its lookback period ($48,000 for calendar year 2012) were not more than $50,000. Amend 1040 However, for 2015, Red Co. Amend 1040 is a semiweekly schedule depositor because the total taxes for its lookback period ($60,000 for calendar year 2013) exceeded $50,000. Amend 1040 New agricultural employers. Amend 1040 New agricultural employers filing Form 943 are monthly schedule depositors for the first and second calendar years of their business because their taxes for the lookback period (2 years) are considered to be zero. Amend 1040 However, see the $100,000 Next-Day Deposit Rule , later in this section. Amend 1040 Deposits on Business Days Only If a deposit due date falls on a day that is not a business day, the deposit is considered timely if it is made by the close of the next business day. Amend 1040 A business day is any day other than a Saturday, Sunday, or legal holiday. Amend 1040 For example, if a deposit is required to be made on Friday, but Friday is a legal holiday, the deposit is considered timely if it is made by the following Monday (if Monday is a business day). Amend 1040 Semiweekly schedule depositors have at least 3 business days to make a deposit. Amend 1040 If any of the 3 weekdays after the end of a semiweekly period is a legal holiday, you will have an additional day for each day that is a legal holiday to make the required deposit. Amend 1040 For example, if a semiweekly schedule depositor accumulated taxes for payments made on Friday and the following Monday is a legal holiday, the deposit normally due on Wednesday may be made on Thursday (this allows 3 business days to make the deposit). Amend 1040 Legal holiday. Amend 1040 The term “legal holiday” means any legal holiday in the District of Columbia. Amend 1040 Legal holidays for 2014 are listed below. Amend 1040 January 1—New Year's Day January 20—Birthday of Martin Luther King, Jr. Amend 1040 February 17—Washington's Birthday April 16—District of Columbia Emancipation Day May 26—Memorial Day July 4—Independence Day September 1—Labor Day October 13—Columbus Day November 11—Veterans Day November 27—Thanksgiving Day December 25—Christmas Day Application of Monthly and Semiweekly Schedules The following examples illustrate the procedure for determining the deposit date under the two different deposit schedules. Amend 1040 Monthly schedule example. Amend 1040 Spruce Co. Amend 1040 is a monthly schedule depositor with seasonal employees. Amend 1040 It paid wages each Friday during August but did not pay any wages during September. Amend 1040 Under the monthly deposit schedule, Spruce Co. Amend 1040 must deposit the combined tax liabilities for the four August paydays by September 15. Amend 1040 Spruce Co. Amend 1040 does not have a deposit requirement for September (due by October 15) because no wages were paid and, therefore, it did not have a tax liability for September. Amend 1040 Semiweekly schedule example. Amend 1040 Green, Inc. Amend 1040 is a semiweekly schedule depositor and pays wages once each month on the last Friday of the month. Amend 1040 Although Green, Inc. Amend 1040 , has a semiweekly deposit schedule, it will deposit just once a month because it pays wages only once a month. Amend 1040 The deposit, however, will be made under the semiweekly deposit schedule as follows: Green, Inc. Amend 1040 ’s tax liability for the April 25, 2014 (Friday), payday must be deposited by April 30, 2014 (Wednesday). Amend 1040 Under the semiweekly deposit schedule, liabilities for wages paid on Wednesday through Friday must be deposited by the following Wednesday. Amend 1040 $100,000 Next-Day Deposit Rule If you accumulate taxes of $100,000 or more on any day during a deposit period, you must deposit by the close of the next business day, whether you are a monthly or a semiweekly schedule depositor. Amend 1040 For purposes of the $100,000 rule, do not continue accumulating taxes after the end of a deposit period. Amend 1040 For example, if a semiweekly schedule depositor has accumulated taxes of $95,000 on Tuesday and $10,000 on Wednesday, the $100,000 next-day deposit rule does not apply because the $10,000 is accumulated in the next deposit period. Amend 1040 Thus, $95,000 must be deposited by Friday and $10,000 must be deposited by the following Wednesday. Amend 1040 However, once you accumulate at least $100,000 in a deposit period, stop accumulating at the end of that day and begin to accumulate anew on the next day. Amend 1040 For example, Fir Co. Amend 1040 is a semiweekly schedule depositor. Amend 1040 On Monday, Fir Co. Amend 1040 accumulates taxes of $110,000 and must deposit on Tuesday, the next business day. Amend 1040 On Tuesday, Fir Co. Amend 1040 accumulates additional taxes of $30,000. Amend 1040 Because the $30,000 is not added to the previous $110,000 and is less than $100,000, Fir Co. Amend 1040 does not have to deposit the $30,000 until Friday (following the semiweekly deposit schedule). Amend 1040 If you are a monthly schedule depositor and you accumulate a $100,000 tax liability on any day during a month, you become a semiweekly schedule depositor on the next day and remain so for the remainder of the calendar year and for the following calendar year. Amend 1040 Example. Amend 1040 Elm, Inc. Amend 1040 started its business on May 1, 2014. Amend 1040 On May 8, it paid wages for the first time and accumulated a tax liability of $40,000. Amend 1040 On Friday, May 9, Elm, Inc. Amend 1040 paid wages and accumulated a liability of $60,000, making its accumulated Form 941-SS tax liability total $100,000. Amend 1040 Elm, Inc. Amend 1040 must deposit $100,000 by Monday, May 12, the next business day. Amend 1040 Because this was the first year of its business, the tax liability for its lookback period is considered to be zero, and it would be a monthly schedule depositor based on the lookback rules. Amend 1040 However, because Elm, Inc. Amend 1040 accumulated $100,000 on May 9, it became a semiweekly schedule depositor on May 10. Amend 1040 It will be a semiweekly schedule depositor for the remainder of 2014 and for 2015. Amend 1040 Accuracy of Deposits Rule You are required to deposit 100% of your tax liability on or before the deposit due date. Amend 1040 However, penalties will not be applied for depositing less than 100% if both of the following conditions are met. Amend 1040 Any deposit shortfall does not exceed the greater of $100 or 2% of the amount of taxes otherwise required to be deposited, and The deposit shortfall is paid or deposited by the shortfall makeup date as described below. Amend 1040 Makeup date for deposit shortfall: Monthly schedule depositor. Amend 1040 Deposit or pay the shortfall by the due date of your Form 941-SS, 944, or 943 for the period in which the shortfall occurred. Amend 1040 You may pay the shortfall with your return even if the amount is $2,500 or more. Amend 1040 Semiweekly schedule depositor. Amend 1040 Deposit by the earlier of: The first Wednesday or Friday (whichever comes first) that comes on or after the 15th of the month following the month in which the shortfall occurred, or The return due date for the period in which the shortfall occurred. Amend 1040 For example, if a semiweekly schedule depositor filing Form 941-SS has a deposit shortfall during July 2014, the shortfall makeup date is August 15, 2014 (Friday). Amend 1040 However, if the shortfall occurred on the required April 2 (Wednesday), deposit date for a March 28 (Friday) pay date, the return due date for the March 28 pay date (April 30) would come before the May 16 (Friday) shortfall makeup date. Amend 1040 In this case, the shortfall must be deposited by April 30, 2014. Amend 1040 Employers of Both Farm and Nonfarm Workers If you employ both farm and nonfarm workers, you must treat employment taxes for the farmworkers (Form 943 taxes) separately from employment taxes for the nonfarm workers (Form 941-SS or 944 taxes). Amend 1040 Form 943 taxes and Form 941-SS (or Form 944) taxes are not combined for purposes of applying any of the deposit rules. Amend 1040 If a deposit is due, deposit the Form 941-SS (or Form 944) taxes and Form 943 taxes separately, as discussed next. Amend 1040 How To Deposit You must deposit employment taxes by electronic funds transfer. Amend 1040 See Payment with Return , earlier in this section, for exceptions explaining when taxes may be paid with the tax return instead of being deposited. Amend 1040 Electronic deposit requirement. Amend 1040 You must use electronic funds transfer to make all federal tax deposits (such as deposits of employment tax, excise tax, and corporate income tax). Amend 1040 Generally, electronic fund transfers are made using the Electronic Federal Tax Payment System (EFTPS). Amend 1040 If you do not want to use EFTPS, you can arrange for your tax professional, financial institution, payroll service, or other trusted third party to make electronic deposits on your behalf. Amend 1040 EFTPS is a free service provided by the Department of the Treasury. Amend 1040 To get more information or to enroll in EFTPS, call 1-800-555-4477 (U. Amend 1040 S. Amend 1040 Virgin Islands only) or 303-967-5916 (toll call). Amend 1040 You can also visit the EFTPS website at www. Amend 1040 eftps. Amend 1040 gov. Amend 1040 Additional information about EFTPS is also available in Publication 966. Amend 1040 When you receive your EIN. Amend 1040 If you are a new employer that indicated a federal tax obligation when requesting an EIN, you will be pre-enrolled in EFTPS. Amend 1040 You will receive information about Express Enrollment in your Employer Identification Number (EIN) Package and an additional mailing containing your EFTPS personal identification number (PIN) and instructions for activating your PIN. Amend 1040 Follow the steps in your “How to Activate Your Enrollment” brochure to activate your enrollment and begin making your payroll tax deposits. Amend 1040 If you outsource any of your payroll and related tax duties to a third party payer, such as a payroll service provider or reporting agent, be sure to tell them about your EFTPS enrollment. Amend 1040 Deposit record. Amend 1040 For your records, an Electronic Funds Transfer (EFT) Trace Number will be provided with each successful payment. Amend 1040 The number can be used as a receipt or to trace the payment. Amend 1040 Depositing on time. Amend 1040 For deposits made by EFTPS to be on time, you must initiate the deposit by 8 p. Amend 1040 m. Amend 1040 Eastern time the day before the date the deposit is due. Amend 1040 If you use a third party to make deposits on your behalf, they may have different cutoff times. Amend 1040 Same-day payment option. Amend 1040 If you fail to initiate a deposit transaction on EFTPS by 8 p. Amend 1040 m. Amend 1040 Eastern time the day before the date a deposit is due, you can still make your deposit on time by using the Federal Tax Application (FTA). Amend 1040 To use the same-day payment method, you will need to make arrangements with your financial institution ahead of time. Amend 1040 Please check with your financial institution regarding availability, deadlines, and costs. Amend 1040 Your financial institution may charge you a fee for payments made this way. Amend 1040 To learn more about the information you will need to provide your financial institution to make a same-day wire payment, please visit www. Amend 1040 eftps. Amend 1040 gov to download the Same-Day Payment Worksheet. Amend 1040 How to claim credit for overpayments. Amend 1040 If you deposited more than the right amount of taxes for a tax period, you can choose on Form 941-SS, 941, 944, or 943 for that tax period to have the overpayment refunded or applied as a credit to your next return. Amend 1040 Do not ask EFTPS to request a refund from the IRS for you. Amend 1040 Deposit Penalties Penalties may apply if you do not make required deposits on time or if you make deposits of less than the required amount. Amend 1040 The penalties do not apply if any failure to make a proper and timely deposit was due to reasonable cause and not to willful neglect. Amend 1040 The IRS may also waive penalties if you inadvertently fail to deposit in the first quarter that a deposit is due, or the first quarter during which your frequency of deposits changed, if you timely filed your employment tax return. Amend 1040 For amounts not properly or timely deposited, the penalty rates are as follows. Amend 1040 2% - Deposits made 1 to 5 days late. Amend 1040 5% - Deposits made 6 to 15 days late. Amend 1040 10% - Deposits made 16 or more days late. Amend 1040 Also applies to amounts paid within 10 days of the date of the first notice that the IRS sent asking for the tax due. Amend 1040 10% - Amounts (that should have been deposited) paid directly to the IRS or paid with your tax return (but see Payment with Return , earlier in this section, for exceptions). Amend 1040 15% - Amounts still unpaid more than 10 days after the date of the first notice that the IRS sent asking for the tax due or the day on which you received notice and demand for immediate payment, whichever is earlier. Amend 1040 Late deposit penalty amounts are determined using calendar days, starting from the due date of the liability. Amend 1040 Special rule for former Form 944 filers. Amend 1040 If you filed Form 944 for the prior year and must file Forms 941-SS for the current year because your employment tax liability for the prior year exceeded the Form 944 eligibility requirement ($1,000 or less), the failure-to-deposit penalty will not apply to a late deposit of employment taxes for the first month of the current year if the taxes are deposited in full by March 15 of the current year. Amend 1040 Order in which deposits are applied. Amend 1040 Deposits generally are applied to the most recent tax liability within the return period (quarter or year). Amend 1040 However, if you receive a failure-to-deposit penalty notice, you may designate how your payment is to be applied in order to minimize the amount of the penalty, if you do so within 90 days of the date of the notice. Amend 1040 Follow the instructions on the penalty notice that you received. Amend 1040 For more information on designating deposits, see Revenue Procedure 2001-58. Amend 1040 You can find Revenue Procedure 2001-58 on page 579 of Internal Revenue Bulletin 2001-50 at www. Amend 1040 irs. Amend 1040 gov/pub/irs-irbs/irb01-50. Amend 1040 pdf. Amend 1040 Example. Amend 1040 Cedar, Inc. Amend 1040 is required to make a deposit of $1,000 on July 15 and $1,500 on August 15. Amend 1040 It does not make the deposit on July 15. Amend 1040 On August 15, Cedar, Inc. Amend 1040 deposits $2,000. Amend 1040 Under the deposits rule, which applies deposits to the most recent tax liability, $1,500 of the deposit is applied to the August 15 deposit and the remaining $500 is applied to the July deposit. Amend 1040 Accordingly, $500 of the July 15 liability remains undeposited. Amend 1040 The penalty on this underdeposit will apply as explained earlier. Amend 1040 Trust fund recovery penalty. Amend 1040 If federal income, social security, or Medicare taxes that must be withheld are not withheld or are not deposited or paid to the United States Treasury, the trust fund recovery penalty may apply. Amend 1040 The penalty is the full amount of the unpaid trust fund tax. Amend 1040 This penalty may apply to you if these unpaid taxes cannot be immediately collected from the employer or business. Amend 1040 The trust fund recovery penalty may be imposed on all persons who are determined by the IRS to be responsible for collecting, accounting for, and paying over these taxes, and who acted willfully in not doing so. Amend 1040 A responsible person can be an officer or employee of a corporation, a partner or employee of a partnership, an accountant, a volunteer director/trustee, or an employee of a sole proprietorship, or any other person or entity that is responsible for collecting, accounting for, and paying over trust fund taxes. Amend 1040 A responsible person also may include one who signs checks for the business or otherwise has authority to cause the spending of business funds. Amend 1040 Willfully means voluntarily, consciously, and intentionally. Amend 1040 A responsible person acts willfully if the person knows the required actions of collecting, accounting for or paying over trust fund taxes are not taking place, or recklessly disregards obvious and known risks to the government's right to receive trust fund taxes. Amend 1040 “Averaged” failure-to-deposit penalty. Amend 1040 The IRS may assess an “averaged” failure-to-deposit (FTD) penalty of 2% to 10% if you are a monthly schedule depositor and did not properly complete Form 941-SS, line 14, when your tax liability shown on Form 941-SS, line 10, was $2,500 or more. Amend 1040 IRS may also assess this penalty of 2% to 10% if you are a semiweekly schedule depositor and your tax liability shown on Form 941-SS, line 10, was $2,500 or more and you did any of the following. Amend 1040 Completed Form 941-SS, line 14, instead of Schedule B (Form 941). Amend 1040 Failed to attach a properly completed Schedule B (Form 941). Amend 1040 Completed Schedule B (Form 941) incorrectly, for example, by entering tax deposits instead of tax liabilities in the numbered spaces. Amend 1040 The IRS figures the penalty by allocating your total tax liability shown on Form 941-SS, line 10, equally throughout the tax period. Amend 1040 Your deposits and payments may not be counted as timely because IRS does not know the actual dates of your tax liabilities. Amend 1040 You can avoid the penalty by reviewing your return before filing it. Amend 1040 Follow these steps before filing your Form 941-SS. Amend 1040 If you are a monthly schedule depositor, report your tax liabilities (not your deposits) in the monthly entry spaces on Form 941-SS, line 14. Amend 1040 If you are a semiweekly schedule depositor, report your tax liabilities (not your deposits) on Schedule B (Form 941) in the lines that represent the dates you paid your employees. Amend 1040 Verify that your total liability shown on Form 941-SS, line 14, or the bottom of Schedule B (Form 941) equals your tax liability shown on Form 941-SS, line 10. Amend 1040 Do not show negative amounts on Form 941-SS, line 14, or Schedule B (Form 941). Amend 1040 For prior period errors, do not adjust your tax liabilities reported on your current Form 941-SS, line 14, or on Schedule B (Form 941). Amend 1040 Instead, file an adjusted return (Form 941-X (if you are adjusting a previously filed Form 941-SS) or Form 944-X (if you are adjusting a previously filed Form 944-SS or 944)) if you are also adjusting your tax liability. Amend 1040 If you are only adjusting your deposits in response to a failure-to-deposit penalty notice, see the Instructions for Schedule B (Form 941) (if you previously filed Form 941-SS) or the Instructions for Form 944-X (if you previously filed Form 944-SS or 944). Amend 1040 If you filed Form 944 for 2013 and line 7 was $2,500 or more, you were required to complete Form 944, lines 13a–13m, or attach Form 945-A, Annual Record of Federal Tax Liability. Amend 1040 If you failed to complete lines 13a–13m, or failed to attach Form 945-A, whichever was required, IRS may assess an “averaged” failure-to-deposit (FTD) penalty. Amend 1040 9. Amend 1040 Employer's Returns General instructions. Amend 1040 File Forms 941-SS (or Form 944) for nonfarm workers and Form 943 for farmworkers. Amend 1040 (U. Amend 1040 S. Amend 1040 Virgin Islands employers may be required to file Form 940 for the combined wages of nonfarm workers and farmworkers. Amend 1040 ) Employers with employees subject to U. Amend 1040 S. Amend 1040 income tax withholding. Amend 1040 If you have both employees who are subject to U. Amend 1040 S. Amend 1040 income tax withholding and employees who are not subject to U. Amend 1040 S. Amend 1040 income tax withholding, you must file only Form 941 (or Form 944) and include all your employees’ wages on that form. Amend 1040 Nonfarm employers. Amend 1040 File Form 941-SS for the calendar quarter in which you first pay wages for nonfarm workers and for each quarter thereafter unless you are a seasonal employer or file a final return. Amend 1040 Due dates for each quarter of the calendar year are as follows. Amend 1040 Quarter Due Jan. Amend 1040 , Feb. Amend 1040 , Mar. Amend 1040 Apr. Amend 1040 30 Apr. Amend 1040 , May, June July 31 July, Aug. Amend 1040 , Sept. Amend 1040 Oct. Amend 1040 31 Oct. Amend 1040 , Nov. Amend 1040 , Dec. Amend 1040 Jan. Amend 1040 31 However, if you deposited all taxes when due for the quarter, you have 10 additional days from the due dates to file the return. Amend 1040 If the due date for filing your return falls on a Saturday, Sunday, or legal holiday, you may file on the next business day. Amend 1040 If you closed your business or stopped paying wages and do not have to file returns in the future, check the box on line 15 of your final Form 941-SS and show the date final wages were paid. Amend 1040 Form 944. Amend 1040 If IRS notified you to file Form 944, file your 2013 Form 944 by January 31, 2014, or by February 10, 2014 (if you deposited all taxes when due). Amend 1040 Household employers reporting social security and Medicare taxes. Amend 1040 If you are a sole proprietor and file Forms 941-SS (or Form 944) for business employees, you may include taxes for household employees on your Forms 941-SS (or Form 944). Amend 1040 Otherwise, report social security and Medicare taxes for household employees on Schedule H (Form 1040), Household Employment Taxes. Amend 1040 See Publication 926, Household Employer's Tax Guide, for more information. Amend 1040 Employers of farmworkers. Amend 1040 Every employer of farmworkers must file a Form 943 for each calendar year beginning with the first year the employer pays $2,500 or more for farmwork or employs a farmworker who meets the $150 test described in section 6. Amend 1040 File a Form 943 each year for all taxable wages paid for farmwork. Amend 1040 You may report household workers in a private home on a farm operated for profit on Form 943. Amend 1040 Do not report wages for farmworkers on Form 941-SS or 944. Amend 1040 Send Form 943 to the IRS by January 31 of the following year. Amend 1040 Send it with payment of any taxes due that you are not required to deposit. Amend 1040 If you deposited all taxes when due, you have 10 additional days to file. Amend 1040 Penalties. Amend 1040 For each whole or part month that a return is not filed when required (disregarding any extensions of the filing deadline), there is a failure-to-file penalty of 5% of the unpaid tax due with that return. Amend 1040 The maximum penalty is generally 25% of the tax due. Amend 1040 Also, for each whole or part month that the tax is paid late (disregarding any extensions of the payment deadline), there is a failure-to-pay penalty of 0. Amend 1040 5% per month of the amount of tax. Amend 1040 For individual filers only, the failure-to-pay penalty is reduced from 0. Amend 1040 5% per month to 0. Amend 1040 25% per month if an installment agreement is in effect. Amend 1040 You must have filed your return on or before the due date of the return to qualify for the reduced penalty. Amend 1040 The maximum amount of the failure-to-pay penalty is also 25% of the tax due. Amend 1040 If both penalties apply in any month, the failure-to-file penalty is reduced by the amount of the failure-to-pay penalty. Amend 1040 The penalties will not be charged if you have a reasonable cause for failing to file or pay. Amend 1040 If you receive a penalty notice, you can provide an explanation of why you believe reasonable cause exists. Amend 1040 Reporting Adjustments to Form 941-SS, 944-SS, 944, or 943 Current Period Adjustments Make current period adjustments for fractions of cents, sick pay, tips, and group-term life insurance on your Form 941-SS, 944, or 943. Amend 1040 See the Instructions for Form 941-SS, Instructions for Form 944, or Instructions for Form 943 for information on how to report these adjustments. Amend 1040 Prior Period Adjustments Forms for prior period adjustments. Amend 1040 Use Form 941-X or Form 944-X to make a correction after you discover an error on a previously filed Form 941 or Form 944. Amend 1040 There are also Forms 943-X, 945-X, and CT-1X to report corrections on the corresponding returns. Amend 1040 Form 941-X and Form 944-X also replace Form 843, Claim for Refund and Request for Abatement, for employers to request a refund or abatement of overreported employment taxes. Amend 1040 Continue to use Form 843 when requesting a refund or abatement of assessed interest or penalties. Amend 1040 See Revenue Ruling 2009-39, 2009-52 I. Amend 1040 R. Amend 1040 B. Amend 1040 951, for examples of how the interest-free adjustment and claim for refund rules apply in 10 different situations. Amend 1040 You can find Revenue Ruling 2009-39, at www. Amend 1040 irs. Amend 1040 gov/irb/2009-52_IRB/ar14. Amend 1040 html. Amend 1040 Background. Amend 1040 Treasury Decision 9405 changed the process for making interest-free adjustments to employment taxes reported on Forms 941-SS, 943, 944-SS, and 944, and for filing a claim for refund of employment taxes. Amend 1040 Treasury Decision 9405, 2008-32 I. Amend 1040 R. Amend 1040 B. Amend 1040 293, is available at www. Amend 1040 irs. Amend 1040 gov/irb/2008-32_IRB/ar13. Amend 1040 html. Amend 1040 You will use the adjustment process if you underreported employment taxes and are making a payment, or if you overreported employment taxes and will be applying the credit to the Form 941-SS, 943, or 944 period during which you file Forms 941-X, 943-X, or 944-X, respectively. Amend 1040 You will use the claim process if you overreported employment taxes and are requesting a refund or abatement of the overreported amount. Amend 1040 We use the terms “correct” and “corrections” to include interest-free adjustments under sections 6205 and 6413, and claims for refund and abatement under sections 6402, 6414, and 6404 of the Internal Revenue Code. Amend 1040 Correcting employment taxes. Amend 1040 When you discover an error on a previously filed Form 941-SS, 943, 944-SS, or 944, you must: Correct that error using Form 941-X, Form 943-X, or Form 944-X, File a separate Form 941-X, Form 943-X, or Form 944-X for
Hurricane Sandy Recovery
Resources to help you recover from Hurricane Sandy.
On This Page
- Register for Assistance: Survivors in declared counties can use DisasterAssistance.gov to apply for assistance and check the status of your application online. The portal is a clearinghouse of more than 70 forms of assistance from 17 federal agencies and is accessible via Web-enabled mobile devices.
- Find Housing - The Department of Housing and Urban Development has help for people displaced by the storm, steps to take for a storm damaged home, and contacts if you feel you have experienced housing discrimination.
- Wreckage Removal - State and local governments who are public assistance applicants may be reimbursed by the Department of Homeland Security for the salaries and benefits of employees involved in cleanup efforts.
- Avoid Disaster Scams - Learn how to avoid charity and home repair cams after a disaster, from the Federal Trade Commission.
- Guides for Rebuilding - The U.S. Department of Housing and Urban Development offers disaster recovery guides for builders.
- Food Assistance - USDA provides food to disaster relief organizations for people affected by a disaster. It also offers grants for rural communities with water quality and supply issues, and assistance to farmers and others for natural disaster losses.
- Business Loans – Your business may be eligible for disaster assistance from the Small Business Administration.
- Government Contracting – The General Services Administration helps federal, state, and local governments get supplies, equipment, and services needed to support disaster relief.
Health and Safety
Safety is a primary issue when you're recovering from a disaster. Follow these tips to help ensure your safety and cope with the disaster. If you aren't able to return home, states, tribes, localities, and the Red Cross continue to operate emergency shelters along the East Coast. Here's how to find shelter:
- Stay informed about the federal public health response and recovery effort, food and water safety, preventing disease and injury, safe clean-up, sanitation, and mental health resources.
- Monitor conditions in your area; find shelter; and let others know you are safe, with the Red Cross Hurricane App.
- Download the FEMA app to find a map with open shelters and open FEMA Disaster Recovery Centers.
- Call the Red Cross at 1-800-RED-CROSS (1-800-733-2767).
- Search for shelters via text message: text: SHELTER and your ZIP code to 43362 (4FEMA). For example: Shelter 01234 (standard rates apply).
- Check local news media outlets.
Responders: People working on clean-up and helping disaster survivors also need to be concerned about their health and safety. The Department of Labor offers technical assistance and resources to help protect the occupational safety and health of workers in disaster areas.
Cancer patients can have can have weakened immune systems and may be at higher risk for infections, bleeding, fatigue, and injury. Call 1-800-4-CANCER (1-800-422-6237) to learn where to receive care if a disaster event disrupts care or displaces patients.
Find Family and Friends
- Red Cross Safe and Well List – During a disaster, register yourself as "safe and well" so that family and friends know of your well-being. You can also use the database to search for missing loved ones.
- Next of Kin National Registry – Register with, or search, this emergency contact system if you or your family member is missing, injured, or deceased.
- International Evacuees and Foreign Nationals – If you are a tourist or other foreign national and cannot reach family members directly, contact your consulate.
Donate and Volunteer
Cash donations are very useful in situations where supplies must be acquired quickly. This is the most efficient way to make an impact with your donations. If you need help in determining who to give to, the National Voluntary Organization Active in Disaster website has a list of major nonprofits that are active in disaster work or you can make your offer through the National Donations Management Network.
Volunteer - Affiliate with existing non-profit organizations before going to the disaster area. Immediately following a disaster, a community can become easily overwhelmed by the amount of generous people who want to help. Contacting and affiliating with an established organization will help to ensure that you are appropriately trained to respond in the most effective way. Be patient: Recovery lasts a lot longer than the media attention. There will be volunteer needs for many months.
Find Volunteer Opportunities
What Government is Doing
- Hurricane Sandy Rebuilding Task Force - The Task Force will coordinate long-term rebuilding plans for the affected region and its infrastructure.
- Safety and Cleanup - The US Environmental Protection Agency is checking areas affected by Hurricane Sandy for potential contamination, and offers safety and cleanup information for parents, homeowners, communities and local governments, and builders.
- Federal Building Closures – The General Services Administration provides a list of closed federal facilities in areas affected by Hurricane Sandy.
- Social Security Office Closures – If your local Social Security office is closed, there may be other ways to complete your business.
- Power Restoration – The Department of Energy is supporting utility power restoration.
- Federal Communications Commission – View notices on filing deadlines and information on the commission’s efforts to support the recovery of communications infrastructure.
- Restoring Wildlife Refuges – The Fish and Wildlife Service is working to assess damage to National Wildlife Refuges, and restore storm damaged areas for safe public access.
- Customs and Border Protection - News, photos and videos of Customs and Border Protection officers resume work in New York and New Jersey.
- Federal Employees and Retirees - The Office of Personnel Management has information about leave and pay for federal employees and retirees.
Hurricane Sandy Widget
To use the widget on your own site, copy the code below and paste it onto your web page:
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