All businesses, including nonprofit and government entities, compensate employees for their efforts. It is the employer’s responsibility to comply with the federal and state payroll laws. A part of complying with the laws is filing all required payroll tax forms and making all necessary deposits of payroll taxes. The consequences of not complying with these laws can be significant to an organization.
Federal Tax Deposit
Employers must deposit the federal income taxes withheld from employees’ checks as well as both the employer and employee social security and Medicare taxes. Deposits are made according to the monthly or semiweekly deposit schedules, unless you accumulate more than $100,000 in taxes on any day (see information below). The deposit schedule for a calendar year is determined from the total taxes reported on Form 941, line 10, in a 4-quarter lookback period. The lookback period begins July 1 and ends June 30.
- If the total taxes on Form 941, Line 10 (total taxes after adjustments), for the 4 quarters in your lookback period were $50,000 or less, you are a monthly depositor. Under the monthly deposit schedule, deposit employment taxes on payments made during the month by the 15th day of the following month.
- If the total taxes on Form 941, Line 10 for the 4 quarters in your lookback period were more than $50,000 you must deposit using the semiweekly deposit schedule. The semiweekly deposit schedule depends on the employer’s payday.
|If payday falls on a:||Then deposit taxes due by the following:|
|Wednesday, Thursday or Friday||Wednesday|
|Saturday, Sunday, Monday or Tuesday||Friday|
- If you accumulate $100,000 or more in taxes on any day, you must deposit tax by the next business day regardless of your deposit schedule. If you are a monthly schedule depositor and accumulate a $100,000 tax liability on any day, you become a semiweekly depositor on the next day and remain so for at least the rest of the calendar year and for the following calendar year.
Federal Tax Reporting – Quarterly
In addition to the required payroll deposits, employees must file the Form 941. The Form 941 is filed quarterly and reports the following information:
- Wages you have paid
- Tips your employees received
- Federal income tax you withheld
- Both the employer and employee’s share of social security and Medicare taxes
- Additional .9% Medicare withheld from employee’s wages in excess of $200,000 in a calendar year (employee only tax)
- Current quarter adjustments – fractions of cents, sick pay, tips and group-term life insurance
Form 941 is due the month following the end of each quarter:
|Quarter Includes||Quarter Ends||Form 941 Due Date|
|January, February, and March||March 31||April 30|
|April, May, and June||June 30||July 31|
|July, August, and September||September 30||October 31|
|October, November, and December||December 31||January 31|
Federal Tax Reporting – Annual
After the end of the calendar year, payroll information must be submitted to the IRS. Form W-2, Wage and Tax Statement is used to submit annual payroll information. Form 1099 Miscellaneous is filed for each person to whom you paid the following during the year:
- At least $10 in royalties or broker payments in lieu of dividends or tax-exempt interest
- At least $600 in rents, services (including parts & materials), prizes and awards, other income payments, medical and health care payments
- Gross proceeds of $600 or more paid to an attorney
- Withheld any federal income tax under the backup withholding rules regardless of the amount of the payment
Payments that do not need reported on the Form 1099 include:
- Payments to a corporation (except for medical and health care payments, attorney’s fees, veterinarians, gross proceeds paid to an attorney)
- Payments for merchandise, telegrams, telephone, freight, storage and other similar items
- Payments of rents to real estate agents
- Business travel allowances paid to employees
The due date for giving the recipient forms W-2 and 1099 is January 31. The paper filing of Forms W-3/W-2s and Forms 1096/1099 due date is the last day of February. Electronically filing of Forms W-3/W-2 and 1096/1099 due date is March 31. E-Filing is required if you have 250 or more W-2s or 1099s. Our accounting services department can assist with preparation, review and/or e-filing of these returns.
If you have any questions regarding the above information or additional questions regarding federal payroll taxes and required filings, please contact Jani Zweber or Rebekah Wolkenhauer at 342-5630.