If you have employees, you must deposit all the federal income tax you withhold from your employees (based on their Form W-4 ), including both the employer and employee portions of Social Security and Medicare taxes, known collectively as FICA. So how does it work? How do you go about reporting and depositing employee taxes?
Form 941
Based on your situation, you may have to make deposits on a monthly or a semiweekly schedule — and deciding which one is right for your business involves calculations:
If you’re a Form 941 filer (quarterly), your deposit schedule for a calendar year is determined from the total taxes reported on your Form 941s during a set look-back period. Did you report $50,000 or less of taxes, you’re a monthly schedule depositor; if you reported more than $50,000, you’re a semiweekly schedule depositor. Companies that use annual Form 944 or Form 945 have similar look-back rules but on an annual basis.
You have a separate process for your annual federal unemployment tax, which requires Form 940. With a few exceptions, if you answer “yes” to either one of these questions, you must file Form 940:
- Did you pay wages of $1,500 or more?
- Did you have one or more employees for at least some part of a day in any 20 or more different weeks? Count all full-time, part-time and temporary employees (but not partners if your business is a partnership).
Most employees know that they have to prepare a Form W-2 for each employee, but there are also subtleties there. According to the IRS, employers who pay remuneration, including noncash payments of $600 or more for the year for services performed by an employee, must file a Form W-2 for each employee for whom:
- Income, Social Security or Medicare tax was withheld.
- Income tax would have been withheld if the employee had claimed no more than one withholding allowance or had not claimed exemption from withholding on Form W-4, Employee’s Withholding Certificate.
Form W-3
Less well known is the accompanying Form W-3, Transmittal of Wage and Tax Statements. Anyone required to file Form W-2 must file Form W-3 to transmit Copy A of Form W-2.
Finally, after you’re all set with your amounts, you cannot just write a check. You must use the electronic federal tax payment system (or EFTPS) to make all federal tax deposits.
This is just a summary of the involved and always-changing process of payroll tax submissions. Systems and the specific amounts referenced can change, so be sure to keep in touch with professionals to make sure you’re following the correct and current rules and procedures.
Did you skip to the bottom?
Seems like a lot to keep up with in addition to running your business. That’s because it is, good news is WE CAN DO IT FOR YOU. At Atlantic Payroll Partners can handle your payroll. Not just allowing you to keep track of employees hours and wages but all of your payroll. We take care of the burden tax reporting and deposits for you. New policy or regulation, don’t worry about it; with our payroll solution we keep up with new policies. Interest in pricing for payroll, get a quote.
Copyright 2024
Why Atlantic Payroll Partners
The biggest payroll companies probably won’t have time for your business. It’s that simple, you’ll be a number. At Atlantic Payroll Partners, you’ll be the opposite. We’ll know more than your name; we’ll know the names of your children and their birthday’s as well. We will know you.
We’ve been helping Florida business by managing their payroll and providing workers' compensation quotes for ten years. We help keep payroll cost affordable by provided transparent PEO payroll quotes that allow you to plan your budget accordingly. Like the big payroll companies, you can manage your payroll and payroll timekeeping with us, while reaping the benefits of PEO risk management.
Thinking about payroll outsourcing can be scary. Make sure you know what to expect from payroll outsourcing providers; to make the best decision for your business. In addition to offering payroll, and workers' comp quote we offer: Human Resource consultations, Accounting services, and benefits such as, 401ks and Healthcare plans.
Payroll Risk Management
Payroll Risk Management Strategies
In 2020, the IRS published an alert urging employers and taxpayers to beware of tax scams, including payroll phishing schemes. And that’s only the beginning when it comes to payroll threats.
In general, employers must also guard against:
- Noncompliance with payroll laws, whether intentional or unintentional.
- Payroll fraud by employees.
- Misuse of self-service technology.
- Unforeseen disasters that can disrupt the payroll function, such as fires, storms, hurricanes, pandemics and terrorist attacks.
These threats can severely hinder business operations, damage the bottom line, or harm the company’s reputation. So, it’s essential to have payroll risk management procedures in place.
Payroll risk management is about establishing and maintaining guardrails for preventing and combating payroll threats.
Also called “internal payroll controls,” these guardrails help protect your business against payroll scams, noncompliance, and disturbances stemming from disasters.
To develop appropriate safeguards, you’ll need to take a sweeping look at your payroll responsibilities, processes and systems. Then, create solutions to improve weaknesses.
Below are situations to consider.
Phishing Scams
The IRS has warned that employers, tax professionals and taxpayers need to guard against phishing schemes designed to steal Form W-2 details and other tax information. In addition, direct deposit and gift card scams are on the rise since more people are working from home because of the COVID-19 pandemic.
Be sure to train your payroll employees on how to spot, thwart and report payroll phishing scams.
Payroll Compliance
Determine the federal, state and local wage-and-hour and employment tax laws your business must comply with. Generally, these include hours worked, minimum wage, overtime, meal and break periods, exempt employee compensation, child labor, timekeeping, recordkeeping, and mandatory and voluntary deductions.
Create standardized procedures for administering your wage-and-hour and employment tax responsibilities, and for verifying accuracy.
Employee Payroll Fraud
Use a timekeeping system that vastly reduces the chance of time theft by employees, such as an automated platform that eliminates “buddy punching.”
Route timecard information to the employee’s manager or supervisor for approval before sending the data to payroll for processing.
Segregate payroll duties to avoid one employee or department having sole control over your payroll function. If your business has only one payroll employee, assign a qualified backup, such as someone in accounting.
Double-check your payroll transactions for each pay period to verify that wages are paid to employees who actually earned the wages.
Perform a thorough preemployment background check on employees who will be handling payroll duties.
Confirm that your bank has procedures for detecting and reporting fraudulent payroll checks.
Employee Self-Service Technology
Inform employees that:
- Unauthorized use of the self-service portal is prohibited.
- They should keep their login credentials for the portal private.
- They must enter only accurate information when updating their payroll/HR information through the self-service portal.
Disasters and Emergencies
Develop a payroll continuity plan that enables you to fulfill your payroll obligations in the event of a disaster or emergency.
If you outsource payroll, the provider should have a contingency plan for meeting designated payroll duties during disasters and emergencies.
Copyright 2021
Copyright 2024
Why Atlantic Payroll Partners
The biggest payroll companies probably won’t have time for your business. It’s that simple, you’ll be a number. At Atlantic Payroll Partners, you’ll be the opposite. We’ll know more than your name; we’ll know the names of your children and their birthday’s as well. We will know you.
We’ve been helping Florida business by managing their payroll and providing workers' compensation quotes for ten years. We help keep payroll cost affordable by provided transparent PEO payroll quotes that allow you to plan your budget accordingly. Like the big payroll companies, you can manage your payroll and payroll timekeeping with us, while reaping the benefits of PEO risk management.
Thinking about payroll outsourcing can be scary. Make sure you know what to expect from payroll outsourcing providers; to make the best decision for your business. In addition to offering payroll, and workers' comp quote we offer: Human Resource consultations, Accounting services, and benefits such as, 401ks and Healthcare plans.