The 6 Essential Payroll Tax Forms
If you run a business, you need to know about the following forms.
Form W-2 Employers must complete a Form W-2 for each employee. Employee wages, taxes withheld and other payroll related information are reported annually on the W-2. However, W-2s aren't filed directly with the IRS. Instead, employers file W-2s with the Social Security Administration (typically by Jan. 31), which sends the information to the IRS.
Form W-3 Form W-3 is a transmittal form that is sent with W-2 forms. This form shows the total number of W-2 forms being transmitted along with the total federal wages, Social Security wages, Medicare wages, withholding taxes and other relevant payroll information for all employees. The figures shown on the W-3 must reconcile with the collective W-2 amounts.
Form 941 Generally, employers must file Form 941, Employer's Quarterly Federal Tax Return, on a quarterly basis with the IRS. The form is used to report wages paid to employees; federal income tax, Social Security tax, and Medicare tax withheld from those wages; and your own portion of Social Security and Medicare taxes for the reporting quarter. The IRS matches your 941 forms with the totals on your Form W-3 to determine the accuracy of your filings.
Form 941s are due by the last day of the month that comes after the end of the quarter.
Form 944 Some small employers with annual employment tax liability of $1,000 or less may be able to file their payroll reporting forms annually instead of quarterly. In order to file annually, the employer must receive approval from the IRS. Typically, employers that have obtained this approval to file annually must report their taxes by Jan. 31, on Form 944, Employer's Annual Federal Tax Return.
If your employment tax liability eventually exceeds the $1,000 threshold, do not file the quarterly Form 941 until the IRS tells you that your filing requirement has switched to Form 941.
Form 940 Most employers must pay and report federal unemployment tax, also called FUTA tax, to the IRS. Only the employer pays FUTA tax, which must be filed annually on Form 940, Employer's Annual Federal Unemployment (FUTA) Tax Return, by Jan. 31.
Form W-4 Although you're not required to file Form W-4, Employee's Withholding Allowance Certificate, with the IRS, we're mentioning it because of the central role that it plays in employment tax filing. Each of your employees must complete a W-4 form, which is used to determine their income tax withholding. (Federal income tax withholding inexorably impacts your Form 941/Form 944 filings and your W-2/W-3 filings.) The Form W-4 was radically redesigned for 2020, so make sure, as with all tax forms, you are using the most recent version.
Also, in some cases, the IRS requires that employers submit copies of employees' W-4s to ensure the proper federal income tax is being withheld.