You’re part business owner, part marketer, and part … payroll tax filing extraordinaire. And being a payroll tax filing extraordinaire requires that you know how to file employee taxes.
Filing payroll taxes takes time and an understanding of the process. Read on to learn more about filing employee taxes. And, find out how online payroll handles payroll tax filings and deposits (so you don’t have to!).
What taxes are included in payroll filing?
You are responsible for withholding and contributing taxes when you have employees. Deposit and report these taxes with the appropriate federal, state, or local government.
Use the following chart to see what taxes are included in payroll tax filing.
| Payroll Tax | Who Pays? | Tax Rate |
|---|---|---|
| Federal income tax | Employee | Varies |
| Social Security tax | Employer and employee | 6.2% (employer) and 6.2% (employee) |
| Medicare tax | Employer and employee | 1.45% (employer) and 1.45% (employee |
| FUTA tax | Employer | 6% (0.6% with FUTA tax credit) |
| SUTA tax | Employer (and employee in a handful of states) | Varies |
| State income tax | Employee | Varies |
| Local income tax | Employee (and employer in some localities) | Varies |
Several payroll taxes have a taxable wage base. This threshold is the maximum amount an employee’s income can be taxed annually. Examples include Social Security and FUTA taxes.
| Is your payroll set up? Check out our article, “How to Do Payroll: Your Step-by-step Guide on Paying Employees” if you need help getting started. |
How to file employee taxes
Filing employee taxes refers to reporting tax information on tax return forms. However, “filing” is just one part of the equation. You also need to deposit the collected amount.
We’ll go over both responsibilities below. Here’s how to file employee taxes (and deposit the amounts), step by step.
1. Calculate payroll withholding
You must calculate payroll taxes to withhold from your employees’ paychecks each pay period. And, calculate the amount you need to contribute.
Streamline it: Payroll software calculates these amounts on your behalf so you can put the calculator and spreadsheets away.
2. Deposit payroll taxes
You must remit withheld and contributed taxes to the applicable federal, state, and local tax agencies.
Deposit federal taxes—federal income, Social Security, Medicare, and FUTA taxes—with the IRS. According to the IRS, you must pay federal tax deposits through an electronic funds transfer (EFT), a payroll service or tax professional, or a financial institution.
Deposit federal income, Social Security, and Medicare taxes monthly or semiweekly, depending on your deposit schedule. Your deposit schedule is based on a lookback period.
Deposit FUTA tax quarterly (the last day of the month after the end of the quarter) if your FUTA tax liability is more than $500 for the current tax quarter. You can roll FUTA funds over into the next quarter if your FUTA tax liability is less than $500 in the current quarter.
Deposit state and local taxes according to your state and locality’s requirements.
Streamline it: Full-service payroll deposits federal, state, and local taxes on your behalf.
3. Report employment taxes
In addition to depositing the taxes, you must report them on the appropriate forms:
- Form 941, Employer’s Quarterly Federal Tax Return, reports federal income, Social Security, and Medicare taxes. Some small businesses may be able to use Form 944, Employer’s Annual Federal Tax Return, instead.
- Form 940, Employer’s Annual Federal Unemployment (FUTA) Tax Return, reports FUTA tax.
- State and local tax returns vary. Check with your state for forms and filing requirements.
You can typically file payroll taxes online. Consult the IRS website to learn more about e-filing federal employment tax forms. Consult your state and locality to learn about e-filing state and local tax forms.
Streamline it: Full-service payroll files federal, state, and local tax reports on your behalf.
4. Distribute W-2s
After you run your final payroll for the year, you must prepare Forms W-2 to distribute to the proper tax agencies and your employees.
Form W-2, Wage and Tax Statement, reports information about your employees’ annual wages and withheld taxes.
Submit copies of Form W-2 to the Social Security Administration (SSA) and file with the state, city, or local tax department if required. Also, send the form to your employee.
Streamline it: Full-service payroll submits your W-2 (and W-3) data to the proper tax agencies.
Payroll tax filing due dates
When are federal payroll taxes due? Your deadline depends on the type of tax you’re depositing and reporting.
State and local tax filings and deposits vary by state. Check with your state and locality for specific information.
Federal payroll taxes are lumped into the following buckets:
- Federal income, Social Security, and Medicare taxes
- FUTA tax
1. Federal income, Social Security, and Medicare
Deposit federal income, Social Security, and Medicare tax monthly or semiweekly, based on your lookback period.
Report federal income, Social Security, and Medicare taxes on the quarterly Form 941, which is due by the last day of the month following the end of a quarter:
- April 30
- July 31
- October 31
- January 31
2. FUTA tax
If your FUTA tax is more than $500 for a quarter, deposit FUTA taxes on the last day of the month after the end of a quarter:
- April 30
- July 31
- October 31
- January 31
If your FUTA tax is less than $500 for a quarter, you must carry it forward to the next quarter until your cumulative FUTA tax liability exceeds $500.
Report FUTA tax on Form 940, which is due on January 31.
Do payroll tax filing services handle everything for you?
Yes! Payroll tax filing services calculate, deposit, and file payroll taxes on your behalf.
You can “outsource” your payroll tax filing responsibilities to a full-service payroll platform, like Patriot Software.
Payroll software streamlines the payroll tax filing process by:
- Calculating federal, state, and local taxes
- Filing all payroll tax forms with the appropriate agency
- Making on-time tax deposits
Consider using reputable payroll tax filing services to save time and ensure federal, state, and local compliance.
How much are payroll tax filing services?
The cost of payroll tax filing services varies by provider. Many payroll software providers charge a monthly fee and a per-employee fee.
Some providers charge additional fees for year-end payroll tax filings, unlimited payroll runs, and support. Look for an affordable payroll service—like Patriot Software—that includes these features in their subscription cost.
Patriot’s payroll software is fast, easy, and affordable. Start keeping your time and money today!
Your quick reference payroll tax filing chart
Use the following chart to help you determine your payroll tax filing responsibilities, including what form to file and the filing deadline.
Bear in mind that state and local reporting forms and filing deadlines vary.
| Payroll Tax | Form to File | Filing Deadline |
|---|---|---|
| Federal income tax Social Security tax Medicare tax | Form 941* | April 30 July 31 October 31 January 31 |
| FUTA tax | Form 940 | January 31 |
| SUTA tax | Varies | Varies |
| State income tax | Varies | Varies |
| Local income tax | Varies | Varies |
*Again, some small businesses may use Form 944 and file their payroll taxes annually instead of quarterly.
Don’t get bogged down by all the responsibilities of small business ownership. With Patriot’s Full Service Payroll, you run the payroll, and we’ll handle the calculations, filings, and deposits. So go ahead and focus on your business—we’ve got the payroll covered! Start your free trial today.
This is not intended as legal advice; for more information, please click here.
