About Payroll Reporting Requirements

Which Payroll Reporting Forms Are Required? What Should Be Included?

A payroll report is a form used to notify various government entities of employment tax liabilities. There are several forms required for reporting payroll. According to the IRS, employers who withhold federal income tax or social security and Medicare taxes must submit certain information to the government.

Which Payroll Reporting Forms Should I Use?

Employers are required to file certain forms regarding their payrolls. Below is a list of some of these required forms:

• Form 940, Employer's Annual Federal Unemployment (FUTA) Tax Return
  For reporting FUTA taxes. Note: Only the employer pays FUTA tax; it is not withheld from the employee's wages
• Form 941, Employer's Quarterly Federal Tax Return
  This includes withholding on sick pay and supplemental unemployment benefits
• File Form 943, Employer's Annual Federal Tax Return for Agricultural Employees
  For reporting agricultural wages
• File Form 944, Employer's Annual Federal Tax Return
  If you have received written notification about the Form 944 program
• File Form 945, Annual Return of Withheld Federal Income Tax
  For reporting backup withholding
• Form W-2, Wage and Tax Statement
  Form W-2 is used to inform both the employee and the taxing agencies how much the employee received in wages - and what taxes were withheld and paid. It also includes information on how much was paid for fringe benefits and state and local taxation

What Should Be Included On The W2?

Below are some of the items that should be included on the W2:

• Total wages, bonuses, prizes, and awards paid to employees during the year
• Total tips reported by the employee to the employer (not allocated tips)
• Total non-cash payments, including certain fringe benefits
• Certain employee business expense reimbursements
• The cost of accident and health insurance premiums for 2% or more shareholder-employees paid by an S corporation
• Taxable benefits from a Section 125 cafeteria plan (that is, employee chooses cash)
• Employer contributions for qualified long-term care services to the extent that such coverage is provided through a flexible spending or similar arrangement
• Taxable value of group-term life insurance in excess of $50,000.00
• Employee contributions to a Health Savings Account
• All other compensation, including certain scholarship and fellowship grants. Other compensation includes taxable amounts that were paid to the employee from which federal income tax was not withheld. The employer may report other compensation on a separate Form W-2

When Must Funds Be Deposited

According to the IRS, there are two deposit schedules: monthly and semi-weekly. Before the beginning of each calendar year, employers must determine which of the two deposit schedules it will use. Note that failure to make a timely deposit may result in a penalty of up to 15 percent.

Employers must use electronic funds transfer to make all federal tax deposits. Deposits for FUTA tax are required for the quarter within which the tax due exceeds $500. The tax must be deposited by the end of the month following the end of the quarter.

Reporting Employment Taxes

Employers must report wages, tips and other compensation paid to an employee by filing the required form(s) to the IRS. You must also report taxes you deposit by filing Forms 940, 941 and 944 on paper or through e-file.

Depositing Employment Taxes
Employers must deposit federal income tax withheld, as well as both the employer and employee social security and Medicare taxes.

Much of what is included above is excerpted from our Payroll Reporting Training & Certification Program.