table of contents section e worksheets and payroll taxes

TABLE OF CONTENTS

SECTION E

WORKSHEETS AND PAYROLL TAXES Page

Affidavit -- Internal Revenue Service Mailing........... 18

Authorization to Release Information.................... 17

Correspondence: Agricultural Wage Summation......................... 29-32 Form 940 -- Federal Unemployment Tax (Not Req'd -- Ag. Employer) ....................... 21

Net Operating Loss Refund Claim..................... 22

Promissory Note Form -- Imputed Interest (Demand Note).. 19 (9 Year Note) . 20

Tax Information Worksheets:

Business (Schedule C).............................. 7-8 Form 1099 Worksheet ............................ 9 Form W-2 Worksheet ............................. 10 Schedule A/B Worksheet ......................... 6

Client Information Summation (File)................ 15 Client Information to Complete Return (Add'l)...... 16

Deposit Rules -- Form 941/943...................... 23-24 Deposit Rules -- Late Payment Penalties............ 25-26 Deposit Rules –- Form 940.......................... 26 Deposit Rules –- Form 944.......................... 26-27

Farmer (Schedule F)................................ 2-3 Form 1099 Worksheet ............................ 4 Form W-2 Worksheet ............................. 5 Schedule A/B Worksheet ......................... 1

Form 8809 (Application for Extension of Time To File Information Returns) ...................... 13-14

Health Insurance Information Worksheet............. 12

Individual: Schedule A/B Worksheet ......................... 6 Payroll Taxes for Family Members ............... 33

Payroll Tax Reports (Amended) – Forms 94X.......... 22-28

Rental Income (Schedule E)......................... 11

ccronin

Text Box

This chapter has not be updated in 2021.

E-1

TAX WORKSHEET -- FARM DATE OF BIRTH

Husband Wife Address

Dependents

HEALTH CARE COVERAGE Yes No

YEAR 2020

SSN SSN School Dist.

SSN Yes No Yes No

SSN SSN

PLEASE 1) ALL 1099/1098's (INTEREST, DIVIDEND, PATR. DIVIDEND, ETC.) BRING 2) ALL TAX FORMS/CORRESPONDENCE RECEIVED FROM THE GOVERNMENT. WITH ALL 3) SUPPORTING DOCUMENTS CONCERNING RETIREMENT PLAN CONTRIBUTIONS. WORKSHEETS 4) ALL FSA/CCC PAYMENT INFO & CROP HAIL/DROUGHT INSURANCE SETTLEMENT FORMS.

5) YEAR-END SOCIAL SECURITY BENEFIT STATEMENTS. 6) COLLEGE TUITION EXPENSE DOCUMENTATION. 7) ANY HEALTH INSURANCE COVERAGE STATEMENTS (1095-A, 1095-B OR 1095-C).

WAGES: Bring W-2's from employers. (H) $ (W) $

IRA CONTRIBUTION: (H) $ Check if (W) $ Check if Roth IRA Roth IRA

SOCIAL SECURITY RECEIVED (H) $ (W) $ (BRING DOCUMENTS)

1) Are Medicare insurance premiums withheld from monthly social security checks? (H) Yes (W) Yes

TAX REFUNDS -- RECEIVED 2020

STATE: $ FEDERAL: $

INTEREST INCOME: List by institution H W J

DIVIDEND INCOME: (non-farm) H W J

$ |_|_|_| $ |_|_|_| $ |_|_|_| $ |_|_|_| $ |_|_|_| $ |_|_|_| US BOND interest $ |_|_|_| $ |_|_|_| Municipal bond interest $ |_|_|_| $ |_|_|_|

BRING ALL INTEREST/DIVIDEND 1099'S

IMPORTANT: You may qualify to itemize deductions on your state tax return, even though you do not itemize on the federal. Please fill out all information requested below:

MEDICAL & DENTAL EXPENSES: Health/accident insurance ..... $ (do not include pre-tax premiums)

Long-term care ins. (husband) . $ (wife) .... $ Medicine/drugs (prescriptions) $ Summarize all other doctor, dental and medical expenses

. $ . $ . $

INTEREST: (Do not list if taken as farm/business expense)

Home mortgage paid to: Financial institutions ........ $ $ $ Individuals $ $ $ Margin/Investment interest .... $

No. of miles for medical care 1-1-20 to 12-31-20 @ 17¢ .. $ LESS: REIMBURSEMENT BY INS .... $

TAXES: State income tax .............. $ Real estate tax (personal residence portion) ........... $ Personal property taxes ....... $ Vehicle sales tax . $ Vehicle license . $ . $ (non-bus) . $

NOTE: Personal interest expense is no longer deductible.

CHARITABLE CONTRIBUTIONS: Contributions pd. by check/or for which you have a receipt....... $ $ $ Goodwill, etc. (value) ........ $ Charitable miles

CASUALTY LOSSES: (non-business) . $ LESS: REIMBURSEMENT BY INS .... $( )

DEPENDENTS TUITION/BOOKS (Iowa Only):

Dependents tuition/textbooks (K through 12 only) ........... $

CHILD CARE EXPENSE: Paid for child care to allow both parents to work (Name, Address, TIN):

$

(Age 3-5 child development materials) $ $ DIRECT DEPOSIT:

DESIGNATION OF $3.00 OF YOUR TAX MONEY FOR: Presidential Campaign Fund: Yes No

Bank Routing No. Acct. No.

TELEPHONE NO: ( )

E-2Signature of Taxpayer

NAME:

FARM INCOME AND EXPENSE

YEAR 2020

Purchased Livestock Sale Price Cost Profit Loss Cattle Hogs

NOTE: Breeding/Dairy Livestock, Mach. Sales, Purchases and Trades on back.

FARM INCOME: Cattle – raised. ......... $ Sheep – raised. .......... $ Swine – raised. .......... $ Dairy products. .......... $ Corn. .................... $ Soybeans. ................ $ Hay/Straw/other $

SUBTOTAL $

Per Unit Retain (Info): $ $ $

Patr. dividends .......... $

FARM EXPENSE: ** Auto (actual) x % $

(actual) x % $ ** P/up (actual) x % $

(actual) x % $ ** Truck (actual) x % $

Chemicals ............ $ Conservation expenses $ Custom (mach.) hire .. $ Employee benefit prog. $ Feed purchased $ Fertilizer/lime $ Freight, trucking $ Gasoline, fuel, oil .. $ (list p/up & auto above)

* Insurance ............ $ * Interest – mortgage .. $

*Other $ . $ $ . $ $ . $ . $ . $ (Attach all 1099’s)

Ag program payments (1) $ (2) CRP................. $ (3) Other (CSP, etc.)... $

CCC loans under election.. $ CCC loans forfeit/repaid.. $ Crop insurance proceeds/ certain disaster pmts. (1) Current year ....... $ (2) From last yr. –

report current yr. $ Custom (mach.) hire. ..... $

Labor hired $ Rent or lease: Machinery & equip. . $

Other (land, etc.) . $ Repairs/maintenance .. $ Seeds purchased ...... $ Storage .............. $ Supplies ............. $

* Taxes (real estate) .. $ Utilities x % $ Veterinary, medicine . $ Phone x % $ Cellular phone $ Legal/prof. fees (bus.) $ Farm org. & papers $ Office expenses ...... $ Bank charges ......... $ Trailer expense ...... $

Breeding fees ........ $ Grain ckoff/etc. ..... $

Federal gas tax credit Other: $ prior year’s return..... $ $ State

gas tax refund...... $ $ Cash rent................. $ $ .. $ $ Reimbursed expenses....... $ $ . $ $ . $ $ Other..................... $ $ . $ . $ . $ . $

TOTAL $

LESS: Produce consumed-cost .. $( )

* Exclude personal residence share of interest, taxes & insurance

** See additional info. on back

*IF YOU SEALED GRAIN PRIOR TO 2020, WHEN DID YOU REPORT THE PROCEEDS AS INCOME? at date grain sealed at date loan paid

Suggested 401(k)/etc Contrib H W

I HEREBY VERIFY THAT THE INCOME AND EXPENSE INFORMATION SET FORTH ON THIS WORKSHEET IS SUBSTANTIATED BY WRITTEN RECORDS MAINTAINED BY THE UNDERSIGNED. SPECIFICALLY, WRITTEN RECORDS ARE MAINTAINED FOR ALL BUSINESS DEDUCTIONS CLAIMED FOR VEHICLES (AUTOS, PICKUPS, ETC.), COMPUTERS AND ANY OTHER ENTERTAINMENT, RECREATION OR AMUSEMENT PROPERTY WHICH WERE UTILIZED FOR BOTH PERSONAL AND BUSINESS PURPOSES.

E-3

**BUSINESS AUTO, PICKUP & TRUCK INFORMATION: (MUST BE FILLED IN)

VEHICLE

BUSINESS MILES

COMMUTING

MILES

NON-BUS MILES

TOTAL MILES

ODOMETER READING 1-1-20 to 12-31-20

1.

2.

3.

4.

NOTE: SMR rate = 57.5¢/mile (1-1-20 to 12-31-20)

DAIRY AND BREEDING LIVESTOCK (RAISED) AND SOLD:

Cows (raised)

Bulls (raised)

$

$

Sows (raised)

Boars (raised)

$

$

(raised) $ (raised) $

DAIRY AND BREEDING LIVESTOCK (BOUGHT) AND SOLD: DATE DATE SALE

BOUGHT SOLD PRICE COST PROFIT LOSS

Cows

Bulls

Sows

Boars

MACHINERY SALES:

MACHINERY SOLD (NOT purchases or trades)

DATE PURCHASED/PRICE

DATE SOLD

SALE PRICE

1. $

2. $

MACHINERY PURCHASES & TRADES/LAND CLEARING EXPENSE: Machinery purchased, bldgs. erected, fence & tile installed, breeding livestock purchased, auto & pickup (List only if acquired during the past year).

NEW OR DATE TRADE-IN CASH DIFFERENCE COST – NO ITEM USED PURCHASED IF ANY (BOOT) IF TRADE TRADE-IN

1. $ $

2. $ $

3. $ $

4. $ $

5. $ $

6. $ $

7. $ $

FARM GAS GALLONAGE: Gallons purchased for non- highway use (farming) -- (Exclude vehicle hwy usage gallonage)

NOTE: If you used gasohol for non-highway (farm) use, bring in gallonage slips

NOTE: Did you file for and receive a gas tax refund from the State of Iowa in 2020? Yes No

1/1/20 7/1/20 to to

6/30/20 12/31/20

(Revised 11/20) E-4

However, 2020 Forms 1099-NEC that report non- employee compensation are required to be filed separately with IRS on or before January 31, 2021.

FARM

INFORMATION FOR 1099 REPORTS (2020)

PAYMENTS MADE TO OTHERS

NAME: SSN/TIN:

If you paid any person or non-corporate entity (e.g. single member LLC, partnership, etc.) more than $600 for interest, rent, custom work, tax preparation, or other payments in connection with your farm operation, you are required to file Forms 1096 and 1099.

If you wish we will prepare these forms for you. 1099's are required to be sent to the party paid on or before January 31, 2021. Forms 1096 and 1099 are generally required to be filed with IRS on or before February 28, 2021 (if filing paper) or March 31, 2021 (if filing electronically).

Forms 1099-MISC reporting gross proceeds paid to attorneys are required to be sent the the party paid on or before February 15, 2021 and are generally required to be filed with the IRS on or before February 28, 2021 (if filing paper forms) or March 31, 2021 (if filing electronically).

To prepare these forms, we need the following information completed for each individual to whom payment was made. *You are required to provide the social security numbers or tax identification numbers.*

FAILURE TO COMPLY WITH INFORMATION REPORT REQUIREMENTS CAN RESULT IN A PENALTY OF $280 PER REPORT NOT FILED ON TIME.

NAME OF PERSON PAID: Check if new address NAME OF PERSON PAID:

Check if new address

ADDRESS: ADDRESS:

SOCIAL SEC. NO.: SOCIAL SEC. NO.: AMOUNT PAID: AMOUNT PAID: PURPOSE OF PAYMENT: PURPOSE OF PAYMENT:

NAME OF PERSON PAID:




ADDRESS: ADDRESS:






ADDRESS: ADDRESS:






ADDRESS: ADDRESS:


NOTE: The IRS now requires a 1099-MISC to be sent to all veterinarians for whom a taxpayer made a trade or business payment of more than $600, regardless of whether the veterinarian is incorporated or not. The fee paid to the veterinarian practice is reported as a medical and healthcare payment in Box 6 of Form 1099-MISC.

SEE REVERSE SIDE FOR WAGES PAID

(Revised 11/20) E-5

Forms W-2 and W-3 are required to be filed with the proper taxing

authorities on or before January 31, 2021.

FARM: INFORMATION FOR W-2 (2020)

NAME: SSN/TIN:

If you paid any employee during 2020, whether by cash or in-kind, you are required to file Form W-2. W-2s are required to be sent to each employee whether payment was made by cash or in kind prior to January 31, 2021.

We will need the following information to complete these forms for you. FAILURE TO COMPLY WITH INFORMATION REPORT REQUIREMENTS CAN RESULT IN A PENALTY OF $280 PER REPORT NOT FILED ON TIME.

Agricultural employers are also required to file Form 943 or Form 943-EZ prior to January 31, 2021. Agricultural wages paid by check or in cash are generally subject to FICA (social security) withholding. However, if total agricultural wages are less than $2,500, employees who are paid less than $150 in 2020 are exempt from this requirement. All agricultural wages paid are subject to FICA (social security) withholding if the employer paid total wages of $2,500 or more (cash or in-kind) to all employees (including family help) during 2020.

NON-FAMILY HELP: Soc. Sec.

Gross Withheld Fed IA Net Name and Address SSN: Amt. Paid if any W/H W/H Wages

FAMILY HELP: Soc. Sec.

Gross Withheld Fed IA Net Name and Address Age SSN: Amt. Paid if any W/H W/H Wages

TELEPHONE NO: ( ) E-6

(

TAX WORKSHEET -- GENERAL DATE OF BIRTH

Husband Wife Address

Dependents

HEALTH CARE COVERAGE Yes No

YEAR 2020

SSN SSN School Dist.

SSN Yes No Yes No

SSN SSN

PLEASE BRING WITH ALL WORKSHEETS

1) ALL 1099/1098 (INTEREST INCOME, DIVIDENDS AND MORTGAGE INTEREST TAX FORMS). 2) ALL TAX FORMS/CORRESPONDENCE RECEIVED FROM THE GOVERNMENT. 3) SUPPORTING DOCUMENTS CONCERNING RETIREMENT PLAN CONTRIBUTIONS. 4) YEAR END SOCIAL SECURITY BENEFIT STATEMENTS. 5) COLLEGE TUITION EXPENSE DOCUMENTATION. 6) RESIDENTIAL ENERGY CREDIT EXPENSE DOCUMENTATION. 7) ANY HEALTH INSURANCE COVERAGE STATEMENTS (1095-A, 1095-B OR 1095-C).

WAGES: Bring W-2's from employers. (H) $ (W) $

IRA CONTRIBUTION: (H)$ Check if Roth IRA

W) $ Check if Roth IRA

SOCIAL SECURITY RECEIVED: (H) $ (W) $ (BRING DOCUMENTS)

1) Are medicare insurance premiums withheld from monthly social security checks? (H) Yes (W) Yes

TAX REFUNDS -- RECEIVED 2020:

STATE: $ FEDERAL: $

INTEREST INCOME: List by institution DIVIDEND INCOME: H W J H W J

$ |_|_|_| $ |_|_|_| $ |_|_|_| US BOND interest $ |_|_|_| Municipal bond interest $ |_|_|_|

BRING ALL INTEREST/DIVIDEND 1099'S

IMPORTANT: You may qualify to itemize deductions on your state tax return, even though you do not itemize on the federal. Please fill out all information requested below:

$ |_|_|_| $ |_|_|_| $ |_|_|_| $ |_|_|_| $ |_|_|_|

MEDICAL & DENTAL EXPENSES: Health/accident insurance. .... $ (do not include pre-tax premiums) Long-term care ins. (husband).. $

INTEREST: (Do not list if taken as farm/business expense)

Home mortgage paid to: Financial institutions ........ $

(wife)..... $ $ Medicine/drugs (prescriptions). $ $ Summarize all other doctor, Individuals $ dental and medical expenses $

.. $ $ .. $ .. $ No. of miles for medical care 1-1-20 to 12-31-20 @ 17¢ .. $ LESS: REIMBURSEMENT BY INS. . $

TAXES: State income tax. ............. $ Real estate tax (personal

Margin/Investment interest .... $

NOTE: Personal interest expense is no longer deductible.

CHARITABLE CONTRIBUTIONS: Contributions pd. by check/or for which you have a receipt ...... $

residence portion)............ $ $ Personal property taxes........ $ $ Vehicle sales tax .. $ Vehicle license .. $ .. $ (non-bus) .. $

CASUALTY LOSSES: (non-business) .. $ LESS: REIMBURSEMENT BY INS..... $( )

DEPENDENTS TUITION/BOOKS (Iowa Only): Dependents tuition/textbooks

Goodwill, etc. (value) ........ $ Charitable miles

CHILD CARE EXPENSE: Paid for child care to allow both parents to work (Name, Address, TIN):

(K through 12 only)............ $ $ (Age 3-5 child development materials) $ $

DIRECT DEPOSIT: DESIGNATION OF $3.00 OF YOUR TAX MONEY FOR: Presidential Campaign Fund: Yes No

Bank Routing No. Acct. No.

E-7

SCHEDULE C WORKSHEET Tax Year 2020

Business Name: Business Address:

Main Business Activity Main Business Product Employer TIN:

DO YOU DEDUCT THE EXPENSES OF AN OFFICE IN YOUR HOME? Yes No (If Yes, list home office expense separately on next page)

INCOME: Gross receipts or sales:.. $ . $ . $ . $

EXPENSE: Advertising .......... $ Bad debts from sales or services ............. $

** Auto (actual) . $ x % $ LESS: Returns & Allowances .. $( ) x % $

** Truck/pickup (actual) Other Income: x % $ . $ x % $ . $ . $ . $ . $

Commissions .......... $ Contract labor ....... $ Employee benefit program $

* Insurance ............ $ * Interest ............. $

Mortgage interest pd. COST OF GOODS SOLD: to banks, etc. ...... $ Inventory at beginning Other $ of year................. $ $

Purchases $ $ LESS: Cost of items for own personal use. $( )

$

Cost of labor (do not include salary paid to

Legal & professional . $ Office expense/postage . $ Rent or lease: Machinery & equipment . $ Other business prop. $

* Repairs/maintenance .. $ Supplies ............. $

yourself). .............. $ Materials & supplies. .... $ Other costs. ............. $ . $ . $ . $

SUBTOTAL $

* Taxes-real estate .... $ Taxes-FICA (Employer’s share only) ......... $ Federal unemployment .. $ State unemployment .. $

Taxes-Sales (if included in gross receipts) .. $

** Travel (lodging/meals) Compute on back LESS: Inventory at end * Utilities x % $ of year.................. $( ) Wages $

COST OF GOODS SOLD AT END OF YEAR $

LESS: Jobs credit .... $( ) Other expenses: Phone x % $

Suggested 401(k)/etc. contribution

Cellular phone ....... $ Bank service charges . $

H W Dues & publications .. $ Laundry/cleaning/janitorial $

Suggested IRA contribution Freight .............. $ H W Licenses/permits ..... $

$ ROTH IRA: (H) Yes (W) Yes $

$ * If business is exclusively operated from $ an

office maintained in your personal $ residence, compute deductible share of $ interest, taxes, insurance, utilities, $ office repairs, etc. on the back of this $ form where indicated. $

$ $

** See additional information on back


Signature of Taxpayer

E-8

TRAVEL EXPENSE: HOME OFFICE EXPENSE:

Lodging $

Airfare $

Vehicle rental $

Parking $

Cabs/Bus fare $

Tolls $

Other $

Area of Home used for business:

Bus. sq. ft. / Total sq. ft. or

Bus. rooms / Total rooms

Day Care Facilities: (Bus. usage additional information)

Hrs./day Days/wk.

*************************

*Mortgage Interest $ x % $

*Real Estate Taxes $ x % $

Insurance MEALS/ENTERTAINMENT: x % $

Repairs (Direct) Meals (Incl. Tips)

x 50 % $ x 100 %

Repairs (Indirect) x %

$

$ Utilities

x % $

*Balance to Itemized Deductions

BUSINESS AUTO, PICKUP & TRUCK INFORMATION: (MUST BE FILLED IN)

VEHICLE BUSINESS MILES

COMMUTING

MILES

NON-BUS MILES

TOTAL MILES

ODOMETER READING 1-1-20 to 12-31-20

1.

2.

3.

4.

NOTE: SMR rate = 57.5¢/mile (1-1-20 to 12-31-20)

MACHINERY SALES: (NOT purchases or trades)

MACHINERY SOLD DATE PURCHASED DATE SOLD SALE PRICE 1.

2.

MACHINERY PURCHASES & TRADES: Machinery purchased, bldgs. erected, auto & pickup (List only if acquired during the past year).

ITEM NEW OR DATE TRADE-IN CASH DIFFERENCE COST IF NO

1. USED

PURCHASED

IF ANY

(BOOT) IF TRADE

TRADE-IN

2.

3.

4.

5.

6.

7.

(Revised 11/20)

E-9

However, 2020 Forms 1099-NEC that report non-employee compensation (NEC)(contract labor, commissions, etc.) are required to be filed separately with IRS on or before January 31, 2021.

BUSINESS

INFORMATION FOR 1099 REPORTS (2020)

PAYMENTS MADE TO OTHERS

NAME: SSN/TIN:

If you paid any person or non-corporate entity (e.g. single member LLC, partnership, etc.) more than $600 for interest, rent, commissions, contract labor, tax preparation, or other payments in connection with your trade or business, you are required to file Forms 1096 and 1099.

If you wish we will prepare these forms for you. 1099's are required to be sent to the party paid on or before January 31, 2021. Forms 1096 and 1099 are generally required to be filed with IRS on or before February 28, 2021 (if filing paper) or March 31, 2021 (if filing electronically).

Forms 1099-MISC reporting gross proceeds paid to attorneys are due February 15, 2021 and are required to be sent to the party paid on or before February 28, 2021 (if filing paper forms) or March 31, 2021 (if filing electronically).

To prepare these forms, we need the following information completed for each individual to whom payment was made. *You are required to provide the social security numbers or tax identification numbers.*

FAILURE TO COMPLY WITH INFORMATION REPORT REQUIREMENTS CAN RESULT IN A PENALTY OF $280 PER REPORT NOT FILED ON TIME.

NAME OF PERSON PAID: Check if new address NAME OF PERSON PAID:


ADDRESS: ADDRESS:






ADDRESS: ADDRESS:






ADDRESS: ADDRESS:




NAME OF PERSON PAID: Check if

new address

ADDRESS: ADDRESS:


NOTE: The IRS now requires a 1099 to be sent to all veterinarians for whom a taxpayer made a trade or business payment of more than $600, regardless of whether the veterinarian is incorporated or not. The fee paid to the veterinarian practice is reported as a medical and healthcare payment in Box 6 of Form 1099-MISC.

SEE REVERSE SIDE FOR WAGES PAID

(Revised 11/20)

E-10

Forms W-2 and W-3 are now required to be filed with the proper taxing

authorities on or before January 31, 2021.

BUSINESS: INFORMATION FOR W-2 (2020)

NAME: SSN/TIN:

If you paid any employee during 2020, you are required to file Form W-2. W-2s are required to be sent to each employee prior to January 31, 2021.

We will need the following information to complete these forms for you. FAILURE TO COMPLY WITH INFORMATION REPORT REQUIREMENTS CAN RESULT IN A PENALTY OF $280 PER REPORT NOT FILED ON TIME.

NON-FAMILY HELP:

Soc. Sec. Gross Withheld Fed IA Net

Name and Address SSN: Amt. Paid if any W/H W/H Wages

FAMILY HELP: Soc. Sec.

Gross Withheld Fed IA Net Name and Address Age SSN: Amt. Paid if any W/H W/H Wages

FUTA TAXES: For wages paid between 1/1/20 and 12/31/20: .006% of the first (Form 940) $7,000 of taxable FUTA wages per employee per year.

E-11

SCHEDULE E WORKSHEET Tax Year 2020

Property type

Property A

Property B

Property C

Property D

Address:

INCOME: Gross rent Other income

$ $ $ $

$ $ $ $

$ $ $ $

$ $ $ $

EXPENSE:

Advertising Cleaning/Maint Insurance Legal/prof Management fees Mortgage interest Other interest Repairs Supplies Real Est Tax Utilities: Elec. Gas Water Garbage

$ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $

$ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $

$ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $

$ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $

BUS VEHICLE EXPENSE: Auto x %

x % Pickup x %

x % Bank charges Dues/publications Phone x % Cell phone x % Office exp/postage License/permits

Mowing Snow removal Pest control Assn. dues

$ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $

$ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $

$ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $

$ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $


Signature of Taxpayer

E-12

NOTE – MEDICARE COVERAGE: If you received Medicare coverage for the entire year, you are not required to complete this form.

HEALTH INSURANCE INFORMATION WORKSHEET

(Must be filled out prior to income tax appt.)

PLEASE 1) ANY Form 1095-A, Form 1095-B or Form 1095-C you BRING receive. TO INITIAL 2) Proof of insurance coverage (insurance card, TAX APPT. documentation from insurance company, etc.).

Name DOB Health Care Coverage SSN

Husband Yes No

Wife Yes No

Dependent Yes No

Dependent Yes No

Dependent Yes No

Dependent Yes No

Health Insurance Information

Health Insurance Provider Company Name

Owner of Policy

Dates of Coverage*

Husband Wife Dependent(s)

* Detail any months during 2020 in which you did not maintain insurance coverage:

Describe any exemption or exception from required health insurance coverage:

Are you receiving any 2020 premium tax credit with regard to your health insurance coverage Yes No

NOTE: In order to prepare your 2020 individual income tax return, the IRS requires that we have detailed information regarding your 2020 individual and family health insurance coverage. Your assistance in completing the information detailed above is greatly appreciated.

E-15

TAXPAYER

ADDRESS (only if changed)

YEAR: 20

DATE RECEIVED

PREPARER

FILE REFERRED TO

NET OPERATING LOSS:

FEDERAL

CARRYOVER:

$

YEAR

CARRYBACK:

$ _ $ $ _

STATE $

$

$ _

$ _

GENL BUS CR: C/OVER

FRGN TAX CR: C/OVER

§179 DEPR.: C/OVER

ALT MIN TAX: C/OVER

$

$

$

$

CAPITAL LOSS C/OVER:

CHARIT. CONTRIB. C/OVER:

$ (S/T)

$ (L/T)

$ _(Fed)

$ (St.) PASSIVE LOSS C/O $ PRIOR YR. RETURN

HOME OFFICE DEDUCTION AMENDMENTS: _ C/OVER: OPER EXP. $ RETIREMENT _

DEPR. $ PLAN: FMV 12-31 $ _

HAIL INS. DEFERRAL: $ IRA: TRAD ROTH

GRAIN BASIS/LIVESTOCK MTG. POINTS C/OVER: AMORTIZATION: _

INSTALL. SALE: _

COMMENTS: DIRECT DEPOSIT – BANK INFO

BANK: _

ROUTING NO.: _

ACCT. NO.: _

CHECKING SAVINGS

Per yr./Per Qtr. Per yr./Per Qtr. FEDERAL EST. $ / STATE EST. $ / _

Cred./Overpmt. $ Cred./Overpmt. $ _

FILING INST Immediately

By Taxpayer/Mailout

NOTES/PREP TIME:

1099

W-2

$

$

Need Correspondence 943 $

HOLD FEDERAL UNTIL 944 $

HOLD STATE UNTIL DATE PROMISED

TOTAL Other $

E-FILE: Fed IA Other States: 20 TAX PREP CHARGE $

IOWA REQUIRED NO (Revised 11/20)

(Revised 11/20) E-16

INFORMATION NEEDED TO COMPLETE YOUR TAX RETURN

Client Name: Preparer:

Date Requested:

Information Needed

1.

2.

3.

4.

5.

6.

7.

As soon as you have ALL the above requested information collected return to:

Preparer Notes: Date Info. Rec'd

1.

2.

3.

E-17

AUTHORIZATION FOR RELEASE OF INFORMATION

TO:

The undersigned hereby authorizes the release of any requested information pertaining to the savings accounts, certificates of deposit, interest and non-interest bearing/checking accounts, loan account(s), mortgages, guarantees, or any other files, information or accounts held by your bank (or any of its offices), or FSA office, to

. The release of this information is intended to facilitate financial, estate, or income tax planning and preparation on behalf of the undersigned.

Any privilege of confidentiality which I may have is waived to this extent.

This agreement will remain in effect until amended or revoked in writing by the undersigned.

Dated this day of , 201 .

Signed:

Address:

SSN/TIN:

E-18

AFFIDAVIT

STATE OF IOWA ) ) SS

COUNTY OF )

I, , being first duly sworn on oath, depose and say that on the day of , 202 , I personally mailed to the Internal Revenue Service located in [City], [State/Zip], a Form , for , SSN/TIN: , appropriately signed, and accompanied by a check in the amount of $ , the amount of the tax shown thereon as due. The return, along with a cover letter, was mailed by ordinary mail in a sealed envelope with proper postage thereon, by depositing the same on said date in a United States Post Office mail receptacle in , Iowa. A true copy of the face of the form and the cover letter are attached hereto.

Subscribed in my presence and sworn to before me by the said this day of , 202 .

Notary Public in and for the State of Iowa.

Caveat: This form not to be used for a Consumer Credit Transaction.

© The Iowa State Bar Association 2016 IowaDocs®

Form No. 136, Promissory Note Revised January 2016

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PROMISSORY NOTE (DEMAND)

$ Date:

FOR VALUE RECEIVED, the undersigned, each as principal, jointly and severally, promise(s) to pay to the order of at , Iowa, the sum of DOLLARS with interest thereon from , payable at least annually as set_ at the rate of % per annum until payment hereof as follows:

The Promissory Note is payable upon demand. forth below

Interest shall accrue monthly on this Promissory Note at a variable rate, equal to the monthly short-term applicable federal rate (AFR) in effect at the beginning of each monthly period under the provisions of Section 7872 of the Internal Revenue Code of 1986, as amended.

Interest shall first be deducted from the payment and any balance shall be applied on principal. Principal and interest not paid when due shall draw interest at the rate of % per annum. Upon default in payment of any interest, or any installment of principal, the whole amount then unpaid shall become immediately due and payable at the option of the holder without notice. The undersigned, in case of suit on this note, agrees to pay attorney’s fees.

Makers, endorsers and sureties waive demand of payment, notice of non-payment, protest and

notice. Sureties, endorsers and guarantors agree to all of the provisions of this note, and consent that the time or times of payment of all or any part hereof may be extended after maturity, from time to time, without notice.

Important. Read Before Signing: The terms of this Agreement should be read carefully

because only those terms in writing are enforceable. No other terms or oral promises not contained in this written contract may be legally enforced. You may change the terms of this Agreement only by another written agreement. Borrower acknowledges the receipt of a copy of this document at the time it was signed.

Address:

Phone:

Caveat: This form not to be used for a Consumer Credit Transaction.

© The Iowa State Bar Association 2016 IowaDocs®

Form No. 136, Promissory Note Revised January 2016

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PROMISSORY NOTE (9 YEARS)

$ Date:

FOR VALUE RECEIVED, the undersigned, each as principal, jointly and severally, promise(s) to pay to the order of at , Iowa, the sum of DOLLARS with interest thereon from , payable at least annually as set_ at the rate of * % per annum until payment hereof as follows: forth below

Interest shall first be deducted from the payment and any balance shall be applied on principal. Principal and interest not paid when due shall draw interest at the rate of % per annum. Upon default in payment of any interest, or any installment of principal, the whole amount then unpaid shall become immediately due and payable at the option of the holder without notice. The undersigned, in case of suit on this note, agrees to pay attorney’s fees.

Makers, endorsers and sureties waive demand of payment, notice of non-payment, protest and

notice. Sureties, endorsers and guarantors agree to all of the provisions of this note, and consent that the time or times of payment of all or any part hereof may be extended after maturity, from time to time, without notice.

Important. Read Before Signing: The terms of this Agreement should be read carefully

because only those terms in writing are enforceable. No other terms or oral promises not contained in this written contract may be legally enforced. You may change the terms of this Agreement only by another written agreement. Borrower acknowledges the receipt of a copy of this document at the time it was signed.

Address:

Phone:

*NOTE: The stated interest rate herein is the monthly mid-term applicable federal rate (AFR) in effect as of the date of this Promissory Note under the provisions of Section 7872 of the Internal Revenue Code of 1986, as amended.

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Internal Revenue Service Chief, Collection Branch Ogden, Utah 84201-0046

Re:

Form 940/940EZ

TIN: Tax Period Ended:

Gentlemen:

Your notice of , 202 to the above taxpayer has been referred to our office for reply. A copy of the notice has been attached to this correspondence for reference purposes. This notice requests additional information concerning the filing of Form 940/940EZ, Employers Annual Federal Unemployment Tax Return, for calendar year 202 .

Please be advised that the taxpayer is not required to file Form 940 as the taxpayer is an agricultural employer who:

(1) does not pay cash wages of $20,000 or more during any

calendar quarter; and

(2) does not employ 10 or more farm workers during some part of a single day during any 20 different weeks in a calendar year.

As such, the taxpayer is not required to file Form 940/940EZ.

We would appreciate your assistance in seeing that your records are updated to indicate the above information for this taxpayer.

Sincerely,

Enclosure cc:

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RE: Form 1045/IA1040X--Refund Claim Net Operating Loss (Farm only – Federal/5-year carryback)

Dear :

Your 2020 income tax return disclosed a net operating loss. In order to obtain some current tax benefit from this loss, it was necessary to prepare a claim for refund to apply the loss against prior year's income.

Enclosed please find Form l045, Application for Tentative Refund, and Form IA1040X, Amended Iowa Individual Income Tax Return, prepared for your signature, claiming tax refunds in the amount of $ and $ , respectively. Please sign and date the returns on the lines marked with a red "x", located on the face of the returns in the lower left-hand corner. Please return the signed forms to our office in the enclosed pre-addressed, stamped envelope for further processing.

FEDERAL REFUND: The Internal Revenue Service should forward your federal refund within 90 days of the filing of Form 1045. If your refund is paid after April 15, 2021, you may be paid interest on your refund for the period of time the IRS had the use of your money. However, said interest will only be paid if the refund is not paid by IRS within 45 days from the filing date of this refund claim. Thus, the actual check you receive may be larger than the amount claimed.

IOWA REFUND: The Iowa Department of Revenue should forward your Iowa refund as soon as they have had an opportunity to process Form IA1040X. Currently processing of such refund claims takes four to six months. The State of Iowa will normally pay interest on your refund from the date upon which the claim is filed with the Department of Revenue. Thus, the actual check you receive will be larger than the amount claimed.

If you have any questions concerning this matter, please contact the office at your convenience. An additional copy of the return is enclosed with our bill for preparation fees attached, and should be retained by you with your business records.

Sincerely,

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FORMS 941/943 -- FEDERAL DEPOSIT RULES

FORM 941 (NON-FARM) EMPLOYERS:

1. DIMINIMIS RULE: Less than $2,500 ($1,000 before January 1, 2002)

accumulated employment taxes during quarter -- deposit or remit quarterly.

While employers are defined as "monthly depositors" or "semi-weekly depositors", if the total amount of accumulated employment taxes for a quarter is less than $2,500 ($1,000 before January 1, 2002), the amount may be deposited or remitted with a timely filed tax return without penalty.

2. MONTHLY DEPOSIT RULE: An employer is a monthly depositor for the entire

calendar year if the aggregate amount of employment taxes reported in the base period is $50,000 or less.

DEPOSIT RULE: Deposit each month's employment taxes by the 15th day of the following month.

3. SEMI-WEEKLY DEPOSIT RULE: An employer is a semi-weekly depositor for the entire calendar year if the aggregate amount of employment taxes reported for the base period exceeds $50,000.

(A) Deposit employment taxes accumulated with respect to payments on

Wednesday, Thursday and/or Friday on or before the following Wednesday.

(B) Deposit employment taxes accumulated with respect to payments on

Saturday, Sunday, Monday and/or Tuesday on or before the following Friday.

Semi-Weekly Wage Payment Date Deposit Dates

Wednesday, Thursday, and/or on or before the Friday following Wednesday

Saturday, Sunday, Monday, on or before the Tuesday following Friday

4. ONE-DAY RULE: If an employer accumulates $100,000 or more of employment taxes, the employer must deposit the next banking day. At that time, the employer immediately becomes a semi-weekly depositor, whether the employer was a monthly depositor or not, for the remainder of the calendar year and for the following calendar year.

5. SAFE HARBOR RULES: You will be treated as having deposited the required

amount if any shortfall does not exceed the greater of: (1) $100; or (2) 2% of the amount of taxes otherwise required to be deposited, and the shortfall is deposited on or before the make-up date. IRC Regs. §31.6302-1(f).

(A) MAKE-UP DATE FOR A MONTHLY DEPOSITOR: Deposit or remit by the due date of return.

(B) MAKE-UP DATE FOR A SEMI-WEEKLY AND ONE-DAY DEPOSITOR: On or before the earlier of the first Wednesday or Friday, which falls on or after the 15th day of the month following the month in which the deposit is required to be made.

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6. DEFINITIONS:

(A) BANKING DAY: Consistent with present law, deposits are required only on banking days. If a deposit is required to be made on a day that is not a banking day, the deposit is considered to have been timely if it is made by the close of the next banking day. Saturday, Sunday, and holidays are not considered banking days.

(B) BASE PERIOD: A non-farm employer's status as a monthly depositor

or a semi-weekly depositor will be known before the beginning of each calendar year and will be determined annually. The determination is based on the amount of employment taxes the employer reported for a one-year base period ending the preceding June 30. For example, a taxpayer who reported less than $50,000 of employment taxes between July 1, 2017 and June 30, 2018 will be considered a monthly depositor for the 2019 calendar year.

The base period is a four calendar quarter period as follows:

2019: July 1, 2017 – June 30, 2018 2020: July 1, 2018 – June 30, 2019 2021: July 1, 2019 – June 30, 2020

New employers will have accumulated employment taxes of zero (0) for any base period quarter in which the employer did not exist. Therefore, they are considered monthly depositors for the first year of business, unless the $100,000 one-day rule exception applies.

(C) SHORTFALL: The excess of the amount of employment taxes required

to be deposited for the period over the amount actually deposited. For this purpose, a period is either a monthly, semi-weekly, or daily period.

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FORM 943 -- AGRICULTURAL EMPLOYERS:

(A) Forms 943 and 941 taxes (farm and non-farm employers) are not combined for the purpose of determining whether a deposit of either is due. Separate deposits (EFTPS, etc.) must be used for each.

(B) Form 943 will be filed annually with the base period as follows:

Year 2019 – base period 2017 calendar year Year 2020 – base period 2018 calendar year Year 2021 – base period 2019 calendar year

(C) Deposit requirements will follow the monthly and semi-weekly rules as previously detailed.

****************************************************

ELIMINATION OF FEDERAL TAX DEPOSIT PAYMENT COUPON (EFTPS Deposit Rules)

IRC Reg. §31.6302-1(h)(2)(iii) provided that beginning January 1, 2011, taxpayers must deposit all depository taxes (such as employment taxes, excise tax, corporate income and estimated tax, etc.) electronically using EFTPS. After December 31, 2010, the old paper coupon system was discarded and is no longer maintained by the Treasury Department.

NOTE – PAYMENT WITH RETURN: Taxpayers will still be able to make payments directly with a filed return if the payment required is under threshold limits (e.g. Form 943 = less than $2,500).

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NOTE -- RELIEF FROM CASCADING PENALTIES: In the past, if a deposit was not paid in full, the next deposit (even if complete for that period) would be divided between the previous amount due and the current period, resulting in penalties for both tax periods. By applying the deposits to the most recently ended deposit period, late tax deposit penalties will not accumulate and what the IRS has termed “cascading” penalties will be avoided.

PENALTY – LATE TAX DEPOSITS (IRC §6656)

GENERAL: Penalty based on length of time tax deposit is late.

(1) 2% -- 1st to 5th day late; (2) 5% -- 6th to 15th day late; (3) 10% -- more than 15 days late; and (4) 15% -- if the deposit is not made within 10 days after the IRS

issues the first delinquency notice or notice demanding payment.

NOTE: A 10% penalty will also be imposed if tax is required to be deposited electronically but is not deposited using EFTPS.

SAFE HARBOR RULES: You will be treated as having deposited the required amount if any shortfall does not exceed the greater of: (1) $100; or (2) 2% of the amount of taxes otherwise required to be deposited, and the shortfall is deposited on or before the make-up date. IRC Regs. §31.6302- 1(f).

AVOIDANCE OF FAILURE-TO-DEPOSIT PENALTY/RELIEF FROM CASCADING PENALTIES: Rev. Proc. 2001-58 provides guidance as to how IRS will credit federal employment and excise tax deposits under IRC §6656(e) to determine if a failure-to-deposit penalty should apply. The rules go into effect when a taxpayer has not made deposits in sufficient amounts to satisfy the cumulative deposit obligations of at least one deposit due date.

DEPOSIT APPLICATION RULE: The IRS will apply deposits to the most recently ended deposit period or periods within the specified tax period to which the deposit relates, unless the person making the deposit designates different periods to which the IRS is to apply the deposit. Any excess amount will be applied to deposit periods ending on or after the date of deposit in period-ending-date order.

In the alternative, taxpayers receiving a penalty notice for a specified tax period may contact IRS and designate the application of a deposit of taxes to a period or periods within the return period for which the deposit penalty relates. The designation must be made during the 90-day period immediately following the date of an IRS penalty notice for the return period to which the deposit relates. IRC §6656(e).

APPLICATION: These procedures apply to all taxes required to be deposited under IRC §6302 and on Forms 720, 940, 941, 943, 945, CT-1 and 1042.

EFFECTIVE DATE: Federal tax deposit periods beginning after 12-31-01.

***********************************************

NOTE -- FIRST-TIME DEPOSITORS LIMITED EXCEPTION: Penalty for failure to deposit payroll taxes for first-time depositors may be waived by IRS provided: (1) failure to deposit is inadvertent; (2) occurs during first quarter that deposits are required; and (3) employment tax return is filed on or before its due date. IRC §6656(c) & (d). The waiver is contingent upon the taxpayer paying the current tax liability.

NOTE: In April, 2013, the IRS updated its first-time abatement (waiver) policy to require that penalty relief will be limited to those taxpayers

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that are current with filing and payment requirements. The first-time abatement (waiver) relief is considered before any reasonable cause relief.

The 1998 IRS Restructuring and Reform Act expanded the waiver for first- time depositors to include a waiver of the penalty for the first deposit a taxpayer is required to make after the taxpayer is required to change the frequency of payroll deposits, provided the taxpayer timely files the employment tax return, pays the current liability and meets net worth requirements (2 million - individual/7 million - corporation). IRC §6656(c)(2)(B). This abatement (waiver) policy generally requires that a taxpayer have no prior payroll tax deposit or payment penalties for the preceding 3 years.

***********************************************

FORM 940

FUTA DEPOSIT RULES

Tax Rate: For wages paid between 1/1/18 and 12/31/18: .006% of the first $7,000 of taxable FUTA wages per employee per year.

General Deposit Rule: If total FUTA tax liability for any of the first three quarters of a calendar year exceeds $500 (effective 1-1-05; $100 prior), deposit on or before the last day of the first calendar month following the close of the quarter (i.e. April 30th, July 31st, October 31st). Otherwise, the undeposited liability is carried over to the next quarter. IRC §6157.

***********************************************

FORM 944

EMPLOYER’S ANNUAL FEDERAL TAX RETURN

Beginning January 1, 2006, small employers who owe $1,000 or less in total employment tax per year (federal withholding and FICA/MED taxes) were eligible to file Form 944 (Employer’s Annual Federal Tax Return) rather than filing Form 941 (Employer’s Quarterly Federal Tax Return) four times per year.

Eligible Employers: Those with estimated annual employment tax liability of $1,000 or less (approximately $4,000 or less in annual wages), and who have been notified by IRS of their eligibility to file Form 944. Form SS-4 now contains a check box (line 14) to be utilized by new employers who believe they will be eligible to file Form 944.

Filing Requirements/Due Date of Return: The due date for filing Form 944 will generally be January 31st. However, an employer that has made one or more deposits in full payment of the current year federal employment tax liability has an extra 10 calendar days to file Form 944 (Feb.10th). IRC Regs. §31.6071(a)-1(a). Payroll tax due may be paid by check mailed to the Service with a payment voucher or through EFTPS.

NOTE: Taxpayers filing Form 943 (Employer’s Annual Federal Tax Return for Agricultural Employees) and Form 1040, Schedule H (Household Employment Taxes) are not eligible to file Form 944. However, if an employer files Form 944, the employer may choose to report wages with respect to household employees on Form 944 instead of reporting such wages on Schedule H (Form 1040).

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EXAMPLE: An employer who discovers an underpayment or overpayment error on a previously filed Form 941 will use Form 941X to make the necessary correction. Because the 94X series are stand-alone forms, they can be filed as soon as an error is discovered. Employers do not have to wait until they file their next tax return to correct an error.

NOTE – Unexpected Business Growth: Form 944 filers whose businesses grow unexpectedly during the year to a total tax liability of $2,500 or more (approximately $10,000 in wages), will need to make deposits in accordance with the current guidelines to avoid any failure to deposit penalties. However, they must still file the Form 944 for the year. Generally, if an employer exceeds the $1,000 employment tax liability threshold, the IRS will send a notice advising the employer that they have been returned to a Form 941 quarterly filing requirement.

In the meantime, an employer that is participating in the Form 944 program can pay their entire federal employment tax liability for that year along with the timely filed Form 944, as long as that liability is less than $2,500 (per the Form 944 instructions).

In addition, when an employer participating in the Form 944 program has: (1) an actual federal employment tax liability of $2,500 or more for that year; and (2) an actual liability of less than $2,500 for a particular quarter of that year, the liability for that entire quarter can be paid by the last day of the first month following the end of that quarter. If this exception applies to the fourth quarter, the entire liability for the fourth quarter can be paid along with the timely filed Form 944 for the year. IRC Reg. §31.6302-1(f)(4)(iii).

EXAMPLE: A growing small employer with federal employment tax liability of $2,500 or more for this year (but less than $2,500 for each quarter) can make one tax deposit to pay for the entire first quarter by 5/1/21, another tax deposit to pay for the entire second quarter by 8/1/21, another deposit to pay for the entire third quarter by 10/31/21, and a final deposit to pay for entire fourth quarter along with the 2018 Form 944 filed by 1/31/22. IRC Reg. §31.6302- 1(f)(5), Example 3.

Opting Out of Form 944 Program – 2010 and After: As noted above, an employer that is required to file Form 944 for the current calendar year must do so even if the actual federal employment tax liability for that year exceeds the $1,000 threshold. However, for tax years beginning on or after 1/1/2010, employers may opt out of filing Form 944 for any reason. Rev. Proc. 2009-51.

To opt out, the employer must (1) contact the IRS to request permission to file Forms 941 (prior to March 15th (if in writing); prior to April 1st (by phone) of the tax year, unless new employer); and (2) receive a written notification from IRS that the employer’s filing requirement has been changed to Form 941. IRC Regs. §31.6011(a)-1(a)(5) and –4(a)(4).

NOTE: Eligible Form 941 filers who wished to file Form 944 could opt in under the same format and during the same election periods. In this case, IRS will issue written notification that the employer’s filing requirement was changed to Form 944.

***********************************************

AMENDED PAYROLL TAX REPORTING – FORMS 94X

Beginning January 1, 2009, taxpayers must utilize the series 94X forms (941X, 943X, 944X and 945X) to correct amounts previously reported on Forms 941, 943, 944 and 945. Each 94X form corresponds line-by-line with the employment tax return it is correcting.

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An employer correcting only an overpayment reported on Form 941 can make an adjustment and apply a credit to the quarter in which the Form 941X is filed. Form 941X can also be used to claim a refund.

Overpayments and underpayments made on the same Form 941X are treated as adjustments only. No refund is given to the taxpayer. Credit is given on the next Form 941 filed.

Corrections with a balance due can be paid using EFTPS, a credit card, or the filer can send a check along with Form 941X.

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AGRICULTURAL (WAGES) -- FILING REQUIREMENTS

Federal/Iowa Income Tax Withholding

IRC §3401(a)(2) requires agricultural employers to withhold federal income tax on wages paid to employees, if the wages were subject to FICA (social security) tax withholding. This change in tax law put the agricultural employer on par with other employers with regard to employee tax withholding requirements.

I. Agricultural wages subject to FICA (social security) tax withholding:

A. Test #1:

1. If paid by check or cash; AND

2. The employer paid any employee $150 or more during the year.

THEN -- that employee's wages are subject to FICA withholding regardless of total wages paid to all employees.

B. Test #2:

1. If paid by check or cash; AND

2. The employer paid total wages of $2,500 or more (cash or in-kind) to all employees (including family help and household domestic help) during the year.

THEN -- all wages paid (other than in-kind wages) are subject to FICA withholding.

The 2020 and 2021 FICA tax rate is 15.3%. 7.65% withheld from employee wages; 7.65% paid by the employer.

TAX PLANNING EXCEPTION – CHILD UNDER AGE 18: Wages paid by check or cash to the employer's son or daughter who are under age 18 are exempt for FICA (social security) tax withholding.

FEDERAL INCOME TAX WITHHOLDING: Required only if wages are subject to FICA (social security) tax withholding.

STATE INCOME TAX WITHHOLDING: If wages are subject to federal income tax withholding, they generally are also subject to state income tax withholding.

NOTE – CORPORATE OFFICER WAGES: Wages paid to officers of farm corporations in their executive capacity are not wages paid for agricultural labor.

II. Wage and Tax Payment Filings Required:

A. FORMS W-2/W-3: W-2’s are required to be sent to each employee for any amount of wages paid (1) whether cash or in-kind; and (2) regardless of FICA or federal/Iowa withholding. IRC §6051(a); §3401(a)(2); §3121(a)(8). These reports are generally required to be mailed to each employee prior to January 31st. Beginning in 2017, Forms W-2 and W-3 are now also required to be filed with the proper taxing authorities on or before January 31st. FAILURE TO COMPLY WITH INFORMATION REPORT REQUIREMENTS CAN RESULT IN A PENALTY OF $280 PER REPORT NOT FILED ON TIME FOR 2020.

B. FORM 943: Agricultural employers are required to file Form 943 or Form

943-EZ, with payment of any taxes due that are not required to be deposited, prior to January 31st – (February 10th if all tax was timely deposited in full).

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Deposit Rule Deposit Due Date

DIMINIMUS RULE: (1) If at the end of December your total undeposited taxes for the year are less than $2,500

No deposit is required. You may pay the taxes to IRS with Form 943, or you may deposit them by January 31st.

MONTHLY DEPOSIT RULE: Use this rule unless yearly employment taxes exceeded $50,000 in base period (e.g. 2019 = base period for 2021)

(2) If at the end of any month except December your total undeposited taxes are less than $2,500:

(3) If at the end of any month your total undeposited taxes are $2,500 or more:

No deposit is required. You may carry the taxes over to the following month.

Within 15 days after end of month.

Effective January 1, 2011 and after, all federal tax payments (FICA/federal withholding) are required to be paid by using EFTPS.

C. Federal/Iowa Unemployment Taxes: Cash wages paid to agricultural employees

are generally exempt from federal and state unemployment taxes unless:

1. Cash wages of $20,000 or more are paid in any calendar quarter during 2019 or 2020; OR

2. The employer had 10 or more agricultural employees during some portion of

a day (whether or not at the same time) for at least one day during any 20 different weeks in 2019 or 2020.

If an agricultural employer is subject to federal/Iowa unemployment taxes, the federal FUTA tax rates for 2020 are as follows:

Tax Rate: For wages paid between 1/1/20 and 12/31/20: .006% of the first $7,000 of taxable FUTA wages per employee per year.

III. Additional Employment Tax Filings:

A. SS-4: Every employer is required to obtain a federal tax identification number (TIN) by filing Form SS-4. This TIN will be utilized by the employer in filing all employment tax reports. Identification numbers can now be obtained from IRS on-line (see below), or by fax, phone or mail.

[https://www.irs.gov/businesses/small-businesses-self-employed/apply-for-an-

employer-identification-number-ein-online]

B. Forms W-4, Employee's Withholding Allowance Certificate): This is a form which the employee fills out to let the employer know how many dependency exemptions are being claimed for income tax withholding purposes. Generally, the employee can claim a dependency exemption for himself/herself, spouse, and each child claimed as a dependent on his/her individual income tax return. Additional dependency exemptions are allowed for special circumstances (e.g. substantial itemized deductions, child and dependent care credit, child tax credit, deductible IRA contribution, student loan interest, etc.). These special circumstances are disclosed in the instructions for federal and state Forms W-4. Whenever the employee is in doubt, zero dependency exemptions should be claimed.

http://www.irs.gov/businesses/small-businesses-self-employed/apply-for-an-




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NOTE – IA W-4: There is a separately determined Iowa income tax withholding level (e.g. different dependency exemptions can be claimed -- 2 on federal; 0 -- on Iowa, to insure income tax refunds or limited tax liability).

C. Form I-9 (Employment Eligibility Verification):

D. Iowa Withholding Permit: Every employer who is required to withhold Iowa

income tax needs to apply to the Department of Revenue to obtain a withholding tax identification number. Application is made using the Iowa Business Tax Registration form which can be completed on-line (see below) or by fax/mail.

[https://www.idr.iowa.gov/CBA/start.asp]

NOTE: In January, 2005, the Department began requesting that all withholding tax filings and payments be made electronically (on-line).

Due dates for Iowa income tax withholding deposits are:

TYPE OF FILER AMOUNTS FILING DATE Quarterly filer less than $500 per

month/$6,000 per yr. Last day of the month following the end of the quarter

Monthly filer $500 to $10,000 per month/$6,000 to $120,000 per yr.

15th day of the month following the month the tax is withheld.

Semi-monthly Filer more than $10,000 per month/$5,000 semi-monthly

10th day of the month following the month the tax is withheld and 25th day of each month.

E. Miscellaneous:

NOTE: If the employer pays the employee’s share of social security and medicare taxes without deducting it from the employee’s wage, this payment amount is treated as additional income to the employee and must be included in Box 1 of the employee’s W-2. The payment amount does not increase the employee’s social security and medicare wages nor does it get added to total wages for FUTA purposes.

Farm wages to a child or spouse of the taxpayer are generally subject to employment taxes including social security and medicare state and federal income tax withholding. Farm wages paid to a child who is under the age of 18 are exempt from social security and medicare taxes. IRC §3121(b)(3)A. Wages paid to a child who is under the age of 21 for “domestic services” in the parents’ home are exempt from social security and medicare taxes. Farm wages or domestic wages paid to a child who is under age 21 are exempt from FUTA tax. IRC §3306(c)(5). Farm wages paid to a spouse are subject to social security and medicare taxes, but are exempt from FUTA tax. Domestic wages paid to a spouse are exempt from social security and medicare tax as well as FUTA tax.

Review Dumond v. Comm., T.C. Summary Opinion 2005-11, (January 31, 2005) where wages to children (ages 10 and 5) were disallowed when received in a lump sum at year end, checks were not cashed until the following year and proceeds went back into the parent’s account. Also see Denman v. Comm., 48 T.C. 439 (1967) where only 10% of claimed wages to a 10 and 7 year old were allowed.

SINGLE MEMBER LLCs: The owner of a disregarded SMLLC is treated as the employer for purposes of the under age 18 employee-child exemption from social security and medicare taxes. IRC Reg. §31.3121(b)(3)-1T(d). Also, the owner of a disregarded SMLLC is treated as the employer for purposes of the under age 21 employee-child exemption from the FUTA tax. IRC Reg. §31.3306(c)(5)-1T(d). For wages paid to other employees, the SMLLC is treated as a corporation for social security, medicare and FUTA tax purposes.

http://www.idr.iowa.gov/CBA/start.asp

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CHILD WAGES/ROTH IRA: A tax planning opportunity arises for parents to pay their children a wage (must provide a W-2) for work in the home or trade/business to provide the earned income basis upon which to contribute up to $6,000 per year into a Roth IRA. Under the basis recovery rules for Roth IRA distributions, the contributions would be available for distribution for college expenses without income taxation and without incurring the 10% early withdrawal penalty. Also, under current law, the funds held in a Roth IRA account would not be considered a resource for college financial aid purposes. This appears to be a better investment for college-bound children than educational IRAs, if one must choose between the two. However, a Roth IRA contribution will not preclude a contribution to an educational IRA in the same year.

PART-TIME/DAY LABORERS: The issue also arises whether part-time day laborers are employees or independent contractors. In a farm setting it would seem difficult to find that these laborers are anything other than employees, as the employer is in control of hours, and the laborers do not bring any equipment to the job site. In order to protect the employer in the event of their injury, the employees need to be covered under a workman’s compensation insurance policy.

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