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12.6 Small Business/Self-Employed/Other Business : Forms 941, 940, Employment Taxes
If you do not have any employees for a particular quarter, do you
have to file an Employer's Quarterly Federal Tax Return Form 941?
Seasonal employers are not required to file for quarters when they regularly
have no tax liability because they have paid no wages. To alert the IRS that
you will not have to file a return for one or more quarters during the year,
check the seasonal employer box above line 1 on Form 941. The IRS will mail
two Forms 941 to you once a year after March 1. The preprinted name and address
information will not include the date the quarter ended. You must enter the
date the quarter ended when you file the return. The IRS generally will not
inquire about unfiled returns if at least one return showing tax due is filed
each year. However, you must check the seasonal employer box on each quarterly
return you file. Otherwise, the IRS will expect a return to be filed for each
quarter.
For any employer, who no longer has employees, a final return should be
filed for the last quarter during which you had employees.
References:
All of the Forms 941 that I can find ask for the number of employees
on record as of March 12th. Is there a similar form for the second quarter?
The Form 941 is the same for all 4 quarters. Only on the January-March
calendar quarter Form 941 should you enter the number of employees on your
payroll during the pay period that includes March 12. You do not need to answer
this question on the Forms 941 for the other 3 quarters.
References:
We are about to hire employees and need to know how much tax to
take out and where to send this money?
You will need to secure a completed Form W-4 (PDF), Employee's
Withholding Allowance Certificate, from each employee. You will need Publication 15, Circular E, Employer's Tax Guide, and Publication 15-A (PDF), Employer's Supplemental Tax Guide, to determine
the amount of withholding and for directions on depositing the withholding
amounts and other employment taxes. Publication 15T, New Withholding Tables contains
the revised withholding tables. The change is a result of the Jobs and Growth
Tax Relief Reconciliation Act of 2003. This publication is a supplement to
Publication 15.
Generally, employers will quarterly file Form 941 (PDF), Employer's Quarterly Federal Tax Return, and annually
file Form 940 (PDF), Employer's Annual Federal
Unemployment Tax Return (FUTA), and Form W-2 (PDF), Wage
and Tax Statement, with Form W-3 (PDF), Transmittal
of Income and Tax Statements.
References:
- Publication 15, Circular E, Employer's Tax Guide
- Publication 15-A (PDF), Employer's
Supplemental Tax Guide
- Form 940 (PDF), Employer's Annual
Federal Unemployment Tax Return
- Form 941 (PDF), Employer's Quarterly
Federal Tax Return
- Form W-2 (PDF), Wage and Tax Statement
- Form W-3 (PDF), Transmittal of
Income and Tax Statements
- Form W-4 (PDF), Employee's Withholding
Allowance Certificate
- Publication 15-T (PDF) , New
Withholding Tables (For wages Paid Through December 2004)
What is the federal unemployment tax rate for 2003?
The federal unemployment tax rate for 2003 remains at 6.2% and is still
figured on the first $7,000 of wages you paid each employee in 2003. However,
if you have timely paid state unemployment contributions on the same wages,
you can be eligible for a credit. For specific information, refer to Tax Topic 760, Form 940 (PDF) or Form 940EZ (PDF) - Employer's Annual Federal Unemployment Tax Returns ,
or Publication 15, Circular E, Employer's Tax Guide .
References:
- Form 940 (PDF), Employer's Annual
Federal Unemployment Tax Return
- Form 940EZ (PDF), Employer's
Annual Federal Unemployment Tax Return
- Tax Topic 760, Form 940/940-EZ - Employer's annual
federal unemployment tax return
- Publication 15, Circular E, Employer's Tax Guide
If a new employee has reached the limit for social security wage
base with a previous employer in the same year, does the new employer need
to withhold FICA taxes on wages paid for both the company and employee?
Yes, the social security wages base limit is applied to each separately
employer. The individual employee is subject to social security taxes up to
the maximum amount from each employer. As a result of an employee working
for two or more employers in the same year, social security tax in excess
of the maximum wage base may be withheld from his or her pay. An employee
can claim the excess of social security tax withheld from pay resulting from
working for two or more employers as a credit against the employee's income
tax when filing Form 1040 (PDF), U.S. Individual
Income Tax Return. However, there is no provision for an employer to
get a credit for the employer portion of social security tax paid in this
situation. There is no wage limit on the Hospital Insurance tax.
References:
We have an employee who has reached the limit for social security
tax. We understand that this limits withholding requirements on the employee's
portion of social security tax. However, is the employer still required to
contribute their portion of the social security tax for this employee?
The employer is subject to the same social security tax rate and wage base
limits as the employee. When the employee reaches their limitation, the employer
also reaches the limitation and no longer has to pay social security taxes
for that employee.
References:
If an employee is collecting social security benefits, is the employer
required to take out social security and medicare taxes?
Yes, the employer is required to follow the withholding requirements for
social security and medicare taxes even if an employee is collecting social
security benefits. Per Chapter 9 of Publication 15, Circular E, Employer's
Tax Guide, employee wages are subject to social security and Medicare
taxes regardless of the employee's age or whether he or she is receiving social
security benefits.
References:
What are the maximum wages subject to social security and the maximum
social security tax to be withheld for 2003?
The maximum wages subject to social security is $87,000 for 2003 resulting
in a maximum for the employee portion of social security tax of $5,394.00
(of course, there is no limit on wages subject to medicare tax). Additional
information can be found at the Social Security
Administration web site.
References:
Are housing allowances for ministers subject to social security
and Medicare taxes?
Yes, housing allowances for ministers are subject to social security and
Medicare taxes, under the Self-Employment Contributions Act. However, if you
are a duly ordained, commissioned, or licensed minister of a church, a member
of a religious order not under a vow of poverty, or a Christian Science practitioner
who elected and was approved for exemption from social security coverage and
self-employment tax, your housing allowance would not be subject to social
security or Medicare taxes. Refer to Publication 517, Social Security
and Other Information for Members of the Clergy and Religious Workers,
for additional information.
References:
- Publication 517, Social Security and Other Information
for Members of the Clergy and Religious Workers
- Form 4361 (PDF), Application
for Exemption from Self-Employment Tax for Use by Ministers, Members of Religious
Orders, and Christian Science Practitioners
We hired a nanny to look after our baby while we work. We would
like to make it all legal, i.e. pay her social security taxes and so forth.
How do we do this?
A nanny is considered a household employee. A household employer only has
to pay social security and Medicare tax for the employee(s) that receive $1,400
or more in cash wages for the year 2003. If the amount paid is less than $1,400,
no social security or Medicare tax is owed. The taxes are 15.3% of cash wages.
Your share is 7.65% and the employee's share is 7.65%. You can choose to pay
the employee's share yourself and not withhold it. You may also be responsible
for paying federal unemployment taxes. For directions on household employees,
refer to Publication 926, Household Employer's Tax Guide.
References:
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