How to File Payroll Taxes

by Krystal Wascher; Updated September 26, 2017
All employers must report and file payroll tax forms on either an annual or quarterly basis.

Businesses with employees are required by the federal government to withhold federal income, Social Security and Medicare taxes from each employee’s paycheck. Businesses must also contribute or “match” Medicare and Social Security tax amounts based upon each employee’s wages. After separating payroll tax from an employee’s actual wages, a check is issued to the employee for the net wage amount and the payroll tax withholding is deposited with a federal tax depository. In addition to depositing payroll tax, most businesses must also file quarterly payroll tax statements with the Internal Revenue Service.

Step 1

Determine the payroll tax amounts that must be withheld from each of your employees’ wages. Depending on the amount of wages or salary, each employee will be responsible for paying a specific income, Medicare, and Social Security tax which is determined by multiplying the employee’s wages by the tax rate that corresponds to their income level. Additional information on tax brackets, rates and withholdings is available in “IRS Publication 15, Employer’s Tax Guide” which can be found on the Internal Revenue Service’s website.

Step 2

Deposit payroll withholdings with a qualified federal tax depository. Payroll deposits can be made electronically through the “Electronic Federal Tax Payment System (EFTPS)” or by mailing or delivering your payment to an authorize bank using IRS Form 8109-B. Information regarding the EFTPS systems and IRS deposit forms are located on the IRS website.

Step 3

Complete and file “IRS Form 941, Employer’s Quarterly Federal Tax Return.” This form is for businesses that must pay $1,000 or more in employment tax each year. Most businesses will fall into this category. Business with less that $1,000 in employment tax obligations may use “IRS Form 944, Employers’ Annual Federal Tax Return.” Both forms will require information regarding the number of employees that your business maintains and the amount of withholding deposits that the business has made over the course of the year or quarter.

Step 4

Prepare and file W-2 statements on behalf of each employee at the end of each fiscal year, or before January 31. Employers should use “IRS Form W-2, Wage and Tax Statement” to record the total wages paid to the employee and total withholdings over the course of year. A copy of this form must be provided to both the employee and the Social Security Administration before the January 31 deadline.

About the Author

Krystal Wascher has been writing online content since 2008. She received her Bachelor of Arts in political science and philosophy from Thiel College and a Juris Doctor from Duquesne University School of Law. She was admitted to the Pennsylvania Bar in 2009.

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