Employment Tax Returns Explained

Employment tax returns

Even if you have only one employee, you must comply with federal and state annual and quarterly employment tax reporting and deposit requirements.

For example, a W-2 must be issued to each employee. Form W-3 is a transmittal form used to summarize each W-2 issued. For example, if you have three employees, you would issue three W-2s and one W-3 summarizing certain data on each W-2.

Form W-3 and Copy A of each W-2 is filed with the Social Security Administration.

Then there's Form 941, filed quarterly to report federal payroll taxes withheld to the IRS. Federal payroll taxes include, Social Security, Medicare, and federal income taxes.

Form 940 is filed annually to report Federal Unemployment (FUTA) tax to the IRS.

Household Employees

If you paid a household employee, such as a babysitter, the annual wage threshold prescribed for household employees ($1,900 for 2015 and $2,000 for 2016), you'll need to file Schedule H, Household Employment Taxes. Schedule H is filed with Form 1040. If you do not have to file Form 1040, file Schedule H by itself and pay the taxes with the return to the U.S. Treasury.

Form W-2, Wage and Tax Statement:

Paper returns and electronically filed returns must be received by employees by January 31 of the following year. They are filed with the Social Security Administration. File Copy A of Form W-2 (and the accompanying transmittal Form W-3) by February 28 (or the 29th during a leap year). Electronically filed returns are due by March 31.

NoteYou can request a filing extension of 30 days with the Social Security Administration by sending Form 8809, Request for Extension of Time to File Information Returns.

Send Copy A of Form W-2 (and one transmittal Form W-3) to:
Social Security Administration,
Data Operations Center
Wilkes-Barre, PA 18769-0001.

Certified mail is recommended. If you use certified mail, change the zip code for the above address to 18769-0002.

If you use an IRS-approved private delivery service, add two things to the above address:

  1. Attn: W-2 Process, 1150 E. Mountain Drive.
  2. Change the zip code to:18702-7997.

For electronic filing of Form W-2 visit: wwww.socialsecurity.gov/employer.

Form 941, Employer's Quarterly Federal Tax Return

Form 941 is used to report the following payroll taxes:

  • Federal income taxes withheld
  • Social Security taxes withheld
  • Medicare taxes withheld
  • The employer's share of social security and Medicare taxes
  • Employment tax deposits made for the quarter.

Form 941 is due by the end of the month following the last month of each quarter. For example, the last month of the first quarter for calendar year taxpayers is March. Therefore, Form 941 would be due April 30.

You can mail Form 941 or file it electronically through an authorized third party transmitter using the IRS 941 online filing program.

Form 941 due dates are: April 30, July 31, October 31, and January 31.

Other Employment Tax Forms and Returns

Form 940, Employer's Annual Federal Unemployment (FUTA) Tax:

  • FUTA tax is strictly an employer paid tax. Employees do not pay it.
  • Form 940 is filed annually. It may be file electronically.

Form 944, Employer's Annual Federal Tax Return:

  • Form 944 is only filed if you were notified by the IRS in writing to do so.

Form W-4, Employee's Withholding Allowance Certificate:

  • Form W-4 must be completed by each new hire.
  • Federal income tax to be withheld is based on the number of exemption allowances claimed on the W-4.

Form I-9, Employment Eligibility Verification:

  • Form I-9 must be completed by each new hire.
  • This form is issued by the U.S. Citizenship and Immigration Services (USCIS).
  • You can get this form from USCIS offices or by calling 1-800-870-3676. Contact the USCIS at 1-800-375-5283 or access its web site at www.uscis.gov for more information.

All employees must complete Form W-4 and Form I-9 before they may start working for an employer.

Zero Wage Return

If you have not filed a final Form 941 or Form 944, or are not a seasonal employer, you must continue to file a Form 941 or Form 944 even for periods during which you paid no wages.

The IRS encourages you to file your Zero Wage Forms 941 or 944 electronically, using IRS e-file at www.irs.gov.

File your personal and small business taxes (Schedule C)