Payroll Tax Forms: Everything You Need to Know

As a business owner, managing payroll forms may not be at the top of your to-do list, but it must be done correctly to avoid costly fines from the Internal Revenue Service (IRS).

Tax forms and payroll can be confusing and overwhelming topics. However, understanding the different types of tax forms and their purposes is crucial for compliance with tax laws and regulations. In this article, we will break down the various tax payment forms related to payroll in a calendar year and provide clear explanations to help demystify the process.

Payroll tax is a tax imposed on employers, employees, or both that is based on the wages paid to employees. It is typically used to fund specific government programs, such as Social Security and Medicare in the United States. Employers are usually responsible for withholding the tax from employee paychecks and then remitting it to the government. Payroll taxes are different from income taxes, which are based on an individual’s overall income.

Unemployment Tax: What is it?

Unemployment tax, also known as unemployment insurance tax, is a type of payroll tax that is imposed on employers to fund state unemployment compensation programs. These programs provide temporary financial assistance to workers who have lost their jobs through no fault of their own. The tax is based on a percentage of each employee’s wages, and the rate can vary depending on the state and the employer’s history of layoffs. Employers are responsible for paying the tax, and it is typically collected and administered by the state government.

What are the payroll tax forms you need to know?

Knowing which forms you need to fill out can help to avoid penalties and fines. The IRS forms you need to be aware of are:

• Form 1099-MISC
• Form 1095-B (Employee Health Coverage)
• Form 1094-B (Summarizes Form 1095-B)
• Form 1095-C (Employee Health Coverage- ALEs )
• Form 1094-C (Summarizes Form 1095-C)
• Form 940 (Annual federal taxes)
• Form 941 (Quarterly federal taxes)
• Form 944 (Annual federal taxes)
• Form 945 (Non-Payroll Payments-e.g. Pension & Annuities)
• Form W-2 ( Tax filing included)
• Form W-3
• Form W-4

Explanation of Payroll Report Forms

Form 1099-MISC

Due date: March 1st if filed by paper or March 31st if filed electronically.

Form 1099-MISC is a tax form used to report miscellaneous income received by an individual or business during the tax year. This includes income from freelance work, rental property, or other non-employment sources. The form is typically used to report income to independent contractors or self-employed individuals and is typically issued by the payer to the recipient.

Form 1095-B

Due date: January 31st

Form 1095-B is a tax form used to report information about an individual’s health insurance coverage to the IRS. It is used by insurers, self-insured employers, and government agencies to report coverage information to both the insured individual and the IRS. It is required under the Affordable Care Act (ACA) and is typically issued by the insurance provider to the insured individual by January 31st of the calendar year following the tax year in question.

Form 1094-B

Due date: February 28th

Form 1094-B is a transmittal form used in conjunction with Form 1095-B to report information about an individual’s health insurance coverage to the IRS. It is used by insurers, self-insured employers, and government agencies to transmit forms 1095-B to the IRS. This form includes summary information of the forms 1095-B that were issued to individuals, and it is also used to report coverage information to the IRS.

Form 1095-C

Due date: February 28th if filed by paper or March 31st if filed electronically.

Form 1095-C is a tax form used to report information about an individual’s health insurance coverage offered by an employer. It is used by employers subject to the Employer Shared Responsibility Provision of the Affordable Care Act (ACA) to report coverage information to both the employee and the IRS. The form is typically issued to the employee by January 31st of the year following the tax year in question.

Form 1094-C

Due date: February 28th if filed by paper or March 31st if filed electronically.

Form 1094-C is a transmittal form used with Form 1095-C to report information about an individual’s health insurance coverage offered by an employer to the IRS. It is used by employers subject to the Employer Shared Responsibility Provision of the Affordable Care Act (ACA) to transmit forms 1095-C to the IRS. This form includes summary information of the forms 1095-C issued to employees.

Form 940

Due date: January 31st

Form 940 is a federal IRS tax form used to report an employer’s annual Federal Unemployment Tax Act (FUTA) tax liability. The form is used to report the employer’s FUTA tax liability for the year, which is based on the wages paid to employees during the year. Employers are required to file Form 940 and pay any FUTA tax due by January 31st of the year following the tax year in question.

Form 941

Due date: The last day of the month following the end of the quarter.

Form 941, also known as the Employer’s Quarterly Federal Tax Return, is a federal tax form used to report an employer’s federal income tax, Social Security tax, and Medicare tax liabilities for each quarter of the year. Employers are required to file Form 941 if they have employees and if they have paid or owe $1,000 or more in taxes during a quarter.

Form 944

Due date: January 31st

Form 944, also known as the Employer’s Annual Federal Tax Return, is a federal IRS tax form used to report an employer’s federal income tax, Social Security tax, and Medicare tax liabilities for the year. Employers with low annual employment tax liability (typically less than $1,000 per year) are eligible to file Form 944 annually instead of the quarterly Form 941.

Form 945

Due date: January 31st

Form 945, Annual Return of Withheld Federal Income Tax, is a tax form used to report the taxes withheld from non-payroll payments made by an employer during the year. These payments include but are not limited to pensions, annuities, and certain deferred compensation plans. The form is used to report the taxes withheld from these payments and is typically filed by employers or payers who are responsible for withholding and depositing federal income tax from these types of payments.

Form W-2

Due date: January 31st

Form W-2, also known as the Wage and Tax Statement, is one of the most common IRS forms and is used to report an employee’s wages and state taxes withheld by an employer during the year. Employers are required to provide a W-2 form to each employee and to the Social Security Administration (SSA) by the end of January of the following year. The form shows the employee’s total wages, salaries, and tips earned during the year, as well as the amount of federal, state, and other taxes withheld from the employee’s pay which is also dependent on the employers tax rate.

The form also includes the employee’s Social Security and Medicare wages and taxes. This form is important for employees to have as they will need to use the information on the form to file their personal income tax returns.

Form W-3

Due date: January 31st

Form W-3 is a transmittal form used in conjunction with Form W-2 to report an employee’s wages and taxes withheld by an employer to the Social Security Administration (SSA). Employers are required to provide a W-2 form to each employee and to the SSA by the end of January of the following calendar year. Form W-3 is used to transmit all the W-2 forms to the SSA, along with the total wages, taxes, and other information reported.

Form W-4

Due date: February 15th

Form W-4, also known as the Employee’s Withholding Allowance Certificate, is a tax form used by employees to inform their employer of their filing status and to claim withholding allowances. The form is used to calculate the amount of federal taxable income to be withheld from an employee’s pay. The number of allowances claimed on the form affects the amount of tax withholdings.

What Are Some Tips For Avoiding Payroll Tax Form Errors?

• Double-check the information: Before submitting payroll tax forms, ensure that all the information entered is accurate and complete. Double-check employee information, such as names, social security numbers, employer identification number and addresses.
  
  
• Keep accurate records: Make sure to keep accurate records of all employee information, hours worked, and pay, to ensure that the correct amount of taxes is withheld and paid.
  
  
• Stay organized: Keep all payroll tax forms and documents in one place and in an organized manner so that they can be easily accessed when needed.
  
  
• Use payroll services or payroll software: Payroll services or software can help with calculating taxes, preparing and filing tax forms, and can also help to avoid errors. Services like Paychex include a personal account manager. Read below for more details on payroll software.
  
  
• Keep up with deadlines: Be aware of the deadlines for filing payroll tax forms and make sure to file them on time to avoid penalties.
  
  
• Review the forms: Before submitting payroll tax forms, review them thoroughly to make sure that all the information is correct and that there are no errors.
  
  
• Seek professional help: If you’re unsure about any aspect of payroll tax deductions or tax credit, consider seeking professional help from a payroll specialist or accountant.
  
  

How Can Payroll Services Help With Filing Payroll Tax Forms?

Free Payroll Services can help with filing payroll tax forms by taking on the responsibility of preparing and filing the forms on behalf of the employer. Payroll services providers handle the calculation of taxes, withholding the correct amount, and preparing and filing tax forms. Platforms like Paycor handles complete end-to-end HR functions.

They also help with keeping track of employees’ personal information, hours worked, and pay, as well as assist with the management of deductions, tax credit, benefits, and other payroll-related tasks. Some providers like Gusto even offer health insurance, 401(k)s, expert HR, and team management tools.

 Payroll services providers can also help with compliance and reporting and can store historical data for easy access. Additionally, many payroll service providers can submit the forms electronically, which can save time and help to avoid errors caused by manual data entry.