Tax Filings for Payroll Tax: Quarterly and Annual Filings

Tax

March 15, 2022

Written by John Wonneberger

Payroll tax is a fact of life for every Connecticut business, regardless of its size. If you’ve recently started a small business, you’ll need to know how to complete your quarterly or annual payroll tax filings. Even if you’ve been running a business for years, you could benefit from the aid of accounting services to reduce the headache of sorting out your tax filings.

When it comes to payroll taxes, most business owners prefer to pay them when they are due – quarterly and annually. In this blog post we’ll discuss quarterly and annual payroll taxes, from what they are, how they work and how to handle them in 2022.

What Tax Responsibilities Do Businesses Have in 2022

Whether you’re filing quarterly or annual payroll taxes, you have the same basic responsibilities at a federal level. These responsibilities depend on the regulations set in place in your respective state. .

Your responsibility as a business owner is to withhold taxes from your employees’ paychecks. This money is then deposited with the IRS. You’re also responsible for paying unemployment insurance tax, workers’ compensation tax, and social security and medicare taxes. The amount you owe in payroll taxes will depend on the state in which your business is located and the number of employees you have.

Federal Income

You’re responsible for withholding income based on federal income tax regulations. This is collected by the IRS (Internal Revenue Service) at schedules dates – the schedule depends on the size and nature of the business. Calculating federal income tax for employers is a somewhat complicated process, as it’s not based on a flat rate.

While individual income tax is calculated and collected annually, most employers must make regular deposits and file quarterly federal income payments. Failure to comply with the schedule determined by the IRS can result in costly penalties.

Social Security

Employers must withhold social security tax from their employees’ pay. Not only this, but they must match the amount that the employee is due to pay – this is called a “contribution” on behalf of the employer. There is a limit on the taxable amount for social security payments.

Social security is paid to the IRS either every 2 weeks or monthly, depending on the employer. These deposits must match the information filed each quarter or annually by your business. Social security payments are always filed electronically.

Medicare

Medicare tax is deposited and filed similarly to social security payments. Medicare tax is calculated as of an employee’s Medicare wages – once again, the employer must withhold this amount and match this with a contribution.

Unlike social security, there is no upper limit on taxable earnings for Medicare. Quarterly or annual filings must be made electronically.

Federal Unemployment

The Employer’s Annual Federal Unemployment Tax Return (FUTA) is completed through form 940, and unlike the responsibilities above, it is always filed annually. This form details payments of unemployment compensation and so doesn’t require regular deposits and filings in the way that the other forms do.

Deposits and Filings

“Deposits” are the money you pay to the IRS. The schedule for deposits depends on the type of business you operate – you’ll set this schedule up with the IRS when you start your business.

“Filings” are detailed reports of the taxes you paid throughout the year or quarter. They explain to the IRS why you paid each amount and must also be completed on time.

There are severe penalties for businesses that miss their deposit or filing dates so it’s important to understand the process and get help if needed.

What’s the Difference Between Quarterly and Annual Payroll Tax Filings?

Most businesses complete form 941 to file their taxes. This form is for quarterly reports. However, some very small businesses may use form 944, which is an annual report. In general, you’ll use form 941 if you have employees and/or if your business withheld federal income tax from their paychecks.

Quarterly Payroll Tax Filings (Form 941)

This form includes:

  • Employer information. This will include your Employer Identification Number (EIN), which you’re assigned when you hire your first employee. It will also include information like your company name and address.
  • Payments to employees. This isn’t limited to the flat salary you pay your employees. It also takes tips, bonuses, and additional payments into account – you must keep track of these and make appropriate deposits.
  • Federal tax income withheld. This is the amount of income you withheld from your employees per federal tax regulations.
  • Social security withheld. This is the amount you deducted from your employees’ wages to cover their social security contributions. It also details your social security contributions as an employer.
  • Medicare withheld. This is the amount you kept back from your employees’ wages to cover Medicare requirements. Again, it includes your contributions.
  • Adjustments. This covers any changes that need to be reported, such as an incorrect deposit. You’ll be expected to amend the deposit amount if this is the case.
  • Total tax liability. This is the total of your deposits throughout that quarter.

Annual Payroll Tax Filings (Form 944)

Form 944 covers the same information as form 941. However, as it’s an annual report rather than a quarterly filing, it would be substantially more difficult for most businesses to calculate their totals for each area. This is why most businesses complete form 941.

The IRS will inform you of which form you need to submit – it depends on the size of your business. It’s also not something that businesses choose. The IRS determines which forms are appropriate for your business and will let you know which you need to complete. 

Requesting Form 944

If the IRS hasn’t informed you that you need to fill out form 944 annually but also hasn’t asked you to fill out form 941, you need to get in touch with them. They may also ask you to fill out form 941 when you only have 1 or 2 employees, and you believe that your business should only need to fill out form 944. 

Again, the best course of action is to get in touch with the IRS and request form 944.

Should I Fill Out Form 944 Myself?

You can fill out your annual tax filing yourself – it’s fairly straightforward. The less straightforward part is having recorded and assembled the appropriate data throughout the year. This is where most small businesses struggle and could use the help of accounting services.

Forms for Employees

In addition to your employer filings, you’ll need to provide your employees with the relevant forms. This is the W-2 form – it’s the Wage and Tax Statement form for employees. This form must be distributed to every employee that works for you in a calendar year. The latest date for W-2 distribution is January 31st in the year after the calendar year the employee started working for you.

If you’ve terminated an employee’s contract early, you may need to provide them with a W-2 form before January 31st. It’s important to speak to a tax professional to find out what documents and information you will need, and what other forms you might need to file. 

Who Qualifies For Annual Payroll Tax Filing Services?

Annual tax filing is reserved for smaller businesses. This is because it would be an undue burden on businesses with only 1 or 2 employees to report all taxes deposited, income, and otherwise, every quarter. Equally, it would be far too complex for large businesses to assemble all their employee data in a single form 944 at the end of the year.

The IRS will let you know which form you need to fill out in most cases. However, errors are always possible, so it’s always a good idea to have a tax and accounting professional review your filings before submitting them.

Working With Nesso Group to File Your Payroll Taxes

Keeping track of your tax deposits and tax filings can be…well, taxing. That’s why Nesso Accounting Group is here to help your business manage its filings with professional accounting services. Here’s why you should consider Nesso Group as your accounting services partner.

File Taxes In A Timely Manner

Your business could face stiff penalties for making late or inaccurate deposits and filings. The accounting services provided by our team at Nesso Group include a permanently open line to help you understand when you need to deposit and file and full assistance with this process.

Get A Better Understanding With Our Expertise

Accounting services exist to reduce the legal burden on employers. At Nesso Group, we provide accounting services, we count with many years of experience helping clients understand their tax obligations and helping them submit accurate, up-to-date returns without dealing with the jargon.

We Take Care Of The Details

You’d be forgiven for thinking that the IRS would let you off small mistakes. Unfortunately, this isn’t always the case. It’s best to get everything right the first time, which is what Nesso Accounting Services will do for you when you call us.

Working with Nesso Group is the best way to ensure that you never make late or inaccurate deposits or filings.

Annual Accounting Services: Final Thoughts

By working with our experts at Nesso Accounting Services, you’re reducing the stress on your business, and you can be sure that your quarterly or annual tax filings are accurate and will be submitted on time. Work with Nesso Group to make your annual payroll tax filings easier.

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