Knowing which small business IRS forms to fill out may be one of the most difficult parts of running your payroll program. There are so many tax forms for employees to fill out that it can be difficult to know which ones apply to your business. Below are seven IRS payroll forms that small employers need to file.
1. Form W-2, Wage and Tax Statement
File a Form W-2 for every employee that worked for you during the calendar year. Use your payroll information from the year to fill out the form.
Form W-2 reports taxes you withheld from employee wages to the government. Send Form W-2 to each employee and the Social Security Administration (SSA). Keep a copy of each Form W-2 for at least four years.
Form W-2 is due to employees and the SSA on the same date.
Remember, independent contractors are not the same as employees, and they require different small business tax forms. Be careful not to misclassify 1099 vs. W-2 workers. Do not send Form W-2 to independent contractors. Instead, send them IRS Form 1099-MISC, Miscellaneous Income.
2. Form W-3, Transmittal of Wage and Tax Statements
Form W-3 is a transmittal form that summarizes all your Forms W-2. Send Form W-3 with Form W-2 to the SSA. Form W-3 is due at the same time as Form W-2 deadlines. Employees do not receive Form W-3.
3. Form 940, Employer’s Annual Federal Unemployment (FUTA) Tax Return
FUTA (Federal Unemployment Tax Act) funds are used by the federal government to oversee each state’s unemployment insurance program. Employers pay FUTA, but do not withhold them from employee paychecks. You pay FUTA taxes quarterly.
File Form 940 once a year to report your FUTA payments. Send Form 940 to the IRS. Use the Form 940 Schedule A attachment to help determine your FUTA taxes on Form 940. This will be really important for businesses in California, Connecticut, Ohio, and the U.S. Virgin Islands because those are considered credit reduction states (or U.S. territories).
4. Form 941, Employer’s Quarterly Federal Tax Return
Report the employment taxes you withheld and contributed to each quarter. Report these tax payments on Form 941.
You might not report federal income taxes and FICA taxes at the same time that you deposit them. If your quarterly tax liability is under $2,500, deposit taxes quarterly. If your quarterly tax liability is over $2,500, you have to follow a deposit schedule.
Regardless of your deposit schedule, report federal income taxes and FICA taxes with Form 941 to the IRS quarterly.
5. Form 944, Employer’s Annual Federal Tax Return
Some small employers might report federal income taxes and FICA taxes annually instead of quarterly. This reporting difference calls for a different payroll form for small business. Form 944 replaces Form 941 for these employers. The IRS must notify you to use Form 944.
6. Form 1095-B, Health Coverage
Form 1095-B is a form used to report employee health coverage. File Form 1095-B if you offer your employees a self-insured health plan. A self-insured health plan means your business operates its own health insurance instead of purchasing coverage from an insurer. Self-insured health coverage is more common among large employers, but small employers can self-fund as well.
File Form 1095-B for each full-time, covered employee. Send one copy of the form to the employee and one copy to the IRS. Keep a copy of this IRS payroll form for at least three years.
January 31: Mail Form 1095-B to employees
February 28: Mail paper format Form 1095-B to the IRS, or
March 31: Electronically file Form 1095-B to the IRS
7. Form 1094-B, Transmittal of Health Coverage Information Returns
Form 1094-B is a transmittal form that summarizes Form 1095-B. Form 1094-B gives an overview of the health insurance you offer to employees.
Return Form 1094-B with Form 1095-B to the IRS. Form 1094-B deadlines are the same as Form 1095-B deadlines. Employees do not receive Form 1094-B.
Tax forms for your payroll program
There are many more small business payroll tax forms you may use for your company besides the forms listed here. The IRS provides an extended list of small business tax forms with instructions. Be sure you file all necessary forms on time to avoid government penalties.
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This article is updated from its original publication date of 12/9/2015.