Table of Contents
For the latest information about developments related to Pub. 51, such as legislation enacted after it was published, go to www.irs.gov/pub51.
Social security and Medicare tax for 2016. The social security tax rate is 6.2% each for the employee and employer, unchanged from 2015. The social security wage base limit is $118,500, unchanged from 2015. The Medicare tax rate is 1.45% each for the employee and employer, unchanged from 2015. There is no wage base limit for Medicare tax.Social security and Medicare taxes apply to the wages of household workers you pay $2,000 or more in cash or an equivalent form of compensation.
New filing due date for 2016 Forms W-2, W-3, and 1099-MISC. . Both paper and electronically filed 2016 Forms W-2 and W-3 must be filed with the Social Security Administration (SSA) by January 31, 2017. Both paper and electronically filed 2016 Form 1099-MISC must be filed with the IRS by January 31, 2017.
Work opportunity tax credit for qualified tax-exempt organizations hiring qualified veterans extended. . The work opportunity tax credit is now available for eligible unemployed veterans who begin work after December 31, 2014, and before January 1, 2020. Qualified tax-exempt organizations that hire eligible unemployed veterans can claim the work opportunity tax credit against their payroll tax liability using Form 5884-C. For more information, visit IRS.gov and enter “work opportunity tax credit” in the search box.
New Pub. 5146 explains employment tax examinations and appeal rights. . Pub. 5146 provides employers with information on how the IRS selects employment tax returns to be examined, what happens during an exam, and what options an employer has in responding to the results of an exam, including how to appeal the results. Pub. 5146 also includes information on worker classification issues and tip exams.
COBRA premium assistance credit. Effective for tax periods beginning after December 31, 2013, the credit for COBRA premium assistance payments can't be claimed on Form 943, Employer's Annual Federal Tax Return for Agricultural Employees. Instead, after filing your Form 943, file Form 943-X, Adjusted Employer's Annual Federal Tax Return for Agricultural Employees or Claim for Refund, to claim the COBRA premium assistance credit. Filing a Form 943-X before filing a Form 943 for the year may result in errors or delays in processing your Form 943-X. For more information, see the Instructions for Form 943 or visit IRS.gov and enter "COBRA" in the search box.
Same-sex marriage. For federal tax purposes, marriages of couples of the same sex are treated the same as marriages of couples of the opposite sex. The term “spouse” includes an individual married to a person of the same sex. However, individuals who have entered into a registered domestic partnership, civil union, or other similar relationship that isn’t considered a marriage under state law aren’t considered married for federal tax purposes. For more information, see Revenue Ruling 2013-17, 2013-38 I.R.B. 201, available at www.irs.gov/irb/2013-38_IRB/ar07.html. Notice 2013-61 provides special administrative procedures for employers to make claims for refunds or adjustments of overpayments of social security and Medicare taxes with respect to certain same-sex spouse benefits before expiration of the period of limitations. Notice 2013-61, 2013-44 I.R.B. 432, is available at www.irs.gov/irb/2013-44_IRB/ar10.html. You may correct errors to federal income tax withholding and Additional Medicare Tax withheld for prior years if the amount reported on your employment tax return doesn’t agree with the amount you actually withheld. This type of error is an administrative error. You may also correct errors to federal income tax withholding and Additional Medicare Tax withheld for prior years if section 3509 rates apply.
Additional Medicare Tax withholding. In addition to withholding Medicare tax at 1.45%, you must withhold a 0.9% Additional Medicare Tax from wages you pay to an employee in excess of $200,000 in a calendar year. You are required to begin withholding Additional Medicare Tax in the pay period in which you pay wages in excess of $200,000 to an employee and continue to withhold it each pay period until the end of the calendar year. Additional Medicare Tax is only imposed on the employee. There is no employer share of Additional Medicare Tax. All wages that are subject to Medicare tax are subject to Additional Medicare Tax withholding if paid in excess of the $200,000 withholding threshold. For more information on what wages are subject to Medicare tax, see the chart, Special Rules for Various Types of Services and Payments, in section 15 of Pub. 15. For more information on Additional Medicare Tax, visit IRS.gov and enter “Additional Medicare Tax” in the search box.
Outsourcing payroll duties. You are responsible to ensure that tax returns are filed and deposits and payments are made, even if you contract with a third-party to perform these acts. You remain responsible if the third-party fails to perform any required action. If you choose to outsource any of your payroll and related tax duties (that is, withholding, reporting, and paying over social security, Medicare, FUTA, and income taxes) to a third-party payer, such as a payroll service provider or reporting agent, visit IRS.gov and enter “outsourcing payroll duties” in the search box for helpful information on this topic.
Compensation paid to H-2A foreign agricultural workers. Report compensation of $600 or more paid to foreign agricultural workers who entered the country on H-2A visas in box 1 of Form W-2, Wage and Tax Statement. Compensation paid to H-2A workers for agricultural labor performed in connection with this visa isn't subject to social security and Medicare taxes, and therefore shouldn't be reported as wages subject to social security tax (line 2), Medicare tax (line 4), or Additional Medicare Tax withholding (line 6) on Form 943, and shouldn't be reported as social security wages (box 3) or Medicare wages (box 5) on Form W-2. On Form W-2, don't check box 13 (Statutory employee), as H-2A workers aren't statutory employees.An employer isn't required to withhold federal income tax from compensation it pays an H-2A worker for agricultural labor performed in connection with this visa but may withhold if the worker asks for withholding and the employer agrees. In that case, the worker must give the employer a completed Form W-4, Employee's Withholding Allowance Certificate. Federal income tax withheld should be reported on Form 943, line 8, and in box 2 of Form W-2.These reporting rules apply when the H-2A worker provides his or her taxpayer identification number (TIN) to the employer. If the H-2A worker doesn't provide a TIN and the total annual wages to the H-2A worker are at least $600, the employer is required to backup withhold. See the Instructions for Form 1099-MISC and the Instructions for Form 945.
Disregarded entities and qualified subchapter S subsidiaries (QSubs). Eligible single-owner disregarded entities and QSubs are treated as separate entities for employment tax purposes. Eligible single-member entities that haven't elected to be taxed as corporations must report and pay employment taxes on wages paid to their employees using the entities' own names and EINs. See Regulations sections 1.1361-4(a)(7) and 301.7701-2(c)(2)(iv).
Differential wage payments. Qualified differential wage payments made by employers to individuals serving in the Armed Forces after 2008 are subject to income tax withholding but not social security, Medicare, or FUTA taxes. For more information, see Pub. 15.
Federal tax deposits must be made by electronic funds transfer (EFT). You must use EFT to make all federal tax deposits. Generally, an EFT is made using the Electronic Federal Tax Payment System (EFTPS). If you don't want to use EFTPS, you can arrange for your tax professional, financial institution, payroll service, or other trusted third-party to make electronic deposits on your behalf. Also, you may arrange for your financial institution to initiate a same-day wire payment on your behalf. EFTPS is a free service provided by the Department of Treasury. Services provided by your tax professional, financial institution, payroll service, or other third-party may have a fee.For more information on making federal tax deposits, see How To Deposit in section 7. To get more information about EFTPS or to enroll in EFTPS, visit www.eftps.gov or call 1-800-555-4477 or 1-800-733-4829 (TDD). Additional information about EFTPS is also available in Pub. 966.
Electronic filing and payment. Now, more than ever before, businesses can enjoy the benefits of filing tax returns and paying their taxes electronically. Whether you rely on a tax professional or handle your own taxes, the IRS offers you convenient programs to make it easier.Spend less time and worry on taxes and more time running your business. Use e-file and EFTPS to your benefit.
Electronic funds withdrawal (EFW). If you file Form 943 electronically, you can e-file and e-pay (electronic funds withdrawal) the balance due in a single step using tax preparation software or through a tax professional. However, don't use EFW to make federal tax deposits. For more information on paying your taxes using EFW, visit the IRS website at www.irs.gov/payments. A fee may be charged to file electronically.
Credit or debit card payments. Employers can pay the balance due shown on Form 943 by credit or debit card. Don't use a credit or debit card to make federal tax deposits. For more information on paying your taxes with a credit or debit card, visit the IRS website at www.irs.gov/payments.
Online payment agreement. You may be eligible to apply for an installment agreement online if you have a balance due when you file your employment tax return. For more information, see the instructions for your employment tax return or visit the IRS website at www.irs.gov/payments.
When you hire a new employee. Ask each new employee to complete the 2016 Form W-4, or its Spanish version, Formulario W-4(SP). Also, ask the employee to show you his or her social security card so that you can record the employee's name and social security number (SSN) accurately. If the employee has lost the card or recently changed names, have the employee apply for a duplicate or corrected card. If the employee doesn't have a card, have the employee apply for one on Form SS-5, Application for a Social Security Card. See section 1 for more information.
Eligibility for employment. You must verify that each new employee is legally eligible to work in the United States. This includes completing the U.S. Citizenship and Immigration Services (USCIS) Form I-9, Employment Eligibility Verification. You can get Form I-9 at www.uscis.gov/forms, USCIS offices, or by calling 1-800-870-3676. For more information, visit the USCIS website at www.uscis.gov or call 1-800-375-5283 or 1-800-767-1833 (TDD).
New hire reporting. You are required to report any new employee to a designated state new-hire registry. A new employee is an employee who hasn't previously been employed by you or was previously employed by you but has been separated from such prior employment for at least 60 consecutive days. Many states accept a copy of Form W-4 with employer information added. Visit the Office of Child Support Enforcement's website at www.acf.hhs.gov/programs/cse/newhire for more information.
Dishonored payments. Any form of payment that is dishonored and returned from a financial institution is subject to a penalty. The penalty is $25 or 2% of the payment, whichever is more. However, the penalty on dishonored payments of $24.99 or less is an amount equal to the payment. For example, a dishonored payment of $18 is charged a penalty of $18.
Forms in Spanish. You can provide Formulario W-4(SP) in place of Form W-4 to your Spanish-speaking employees. For more information, see Pub. 17(SP), El Impuesto Federal sobre los Ingresos (Para Personas Físicas).For nonemployees, Formulario W-9(SP), Solicitud y Certificación del Número de Identificación del Contribuyente, may be used in place of Form W-9, Request for Taxpayer Identification Number and Certification.References in this publication to Form W-4 or Form W-9 also apply to their equivalent Spanish translations—Formulario W-4(SP) or Formulario W-9(SP).
Information returns. You may be required to file information returns to report certain types of payments made during the year. For example, you must file Form 1099-MISC, Miscellaneous Income, to report payments of $600 or more to persons not treated as employees (for example, independent contractors) for services performed for your trade or business. For details about filing Forms 1099 and for information about required electronic filing, see the General Instructions for Certain Information Returns for general information and the separate, specific instructions for each information return that you file (for example, Instructions for Form 1099-MISC). Generally, don't use Forms 1099 to report wages or other compensation that you paid to employees; report these amounts on Form W-2.See the General Instructions for Forms W-2 and W-3 for details about filing Forms W-2 and for information about required electronic filing. If you file 250 or more Forms W-2, you must file them electronically. The IRS and Social Security Administration (SSA) won't accept information returns on magnetic media.
Information reporting customer service site. The IRS operates an information return customer service site to answer questions about reporting on Forms W-2, W-3, 1099, and other information returns. If you have questions related to reporting on information returns, you may call 1-866-455-7438 (toll free), 304-263-8700 (toll call), or 304-579-4827 (TDD/TTY for persons who are deaf, hard of hearing, or have a speech disability). The call site can also be reached by email at firstname.lastname@example.org. Don't include tax identification numbers (TINs) or attachments in email correspondence because electronic mail isn't secure.
Change of responsible party. Any entity with an EIN must file Form 8822-B to report the latest change to its responsible party. Form 8822-B must be filed within 60 days of the change. For a definition of "responsible party," see the Form 8822-B instructions.
Ordering forms and publications. You can order employment tax and information return forms, instructions, and publications online at www.irs.gov/orderforms. You can also visit www.irs.gov/formspubs to download forms, instructions, and publications.Instead of ordering paper Forms W-2 and W-3, consider filing them electronically using the SSA's free e-file service. Visit the SSA's Employer W-2 Filing Instructions & Information website at www.socialsecurity.gov/employer, to register for Business Services Online. You will be able to create and file “fill-in” versions of Forms W-2 with SSA and can print out completed copies of Forms W-2 for filing with state and local governments, distribution to your employees, and for your records. Form W-3 will be created for you based on your Forms W-2.
Tax questions. If you have an employment tax question, check the information available on IRS.gov or call 1-800-829-4933 or 1-800-829-4059 (TDD/TTY for persons who are deaf, hard of hearing, or have a speech disability) Monday–Friday from 7:00 a.m.–7:00 p.m. local time (Alaska and Hawaii follow Pacific time). We can't answer tax questions sent to the address provided later for comments and suggestions.
Amounts and dates of all wage, annuity, and pension payments.
Names, addresses, SSNs, and occupations of employees and recipients.
Any employee copies of Forms W-2 and W-2c returned to you as undeliverable.
Dates of employment for each employee.
Periods for which employees and recipients were paid while absent due to sickness or injury and the amount and weekly rate of payments you or third-party payers made to them.
Copies of employees' and recipients' income tax withholding allowance certificates (Forms W-4, W-4(SP), W-4P, and W-4S).
Dates and amounts of tax deposits you made and acknowledgment numbers for deposits made by EFTPS.
Copies of returns filed and confirmation numbers.
Records of fringe benefits and expense reimbursements provided to your employees, including substantiation.
If a crew leader furnished you with farmworkers, you must keep a record of the name, permanent mailing address, and EIN of the crew leader. If the crew leader has no permanent mailing address, record his or her present address.
Federal Express (FedEx): FedEx First Overnight, FedEx Priority Overnight, FedEx Standard Overnight, FedEx 2 Day, FedEx International Next Flight Out, FedEx International Priority, FedEx International First, and FedEx International Economy.
United Parcel Service (UPS): UPS Next Day Air Early AM, UPS Next Day Air, UPS Next Day Air Saver, UPS 2nd Day Air, UPS 2nd Day Air A.M., UPS Worldwide Express Plus, and UPS Worldwide Express.
For the IRS mailing address to use if you are using a private delivery service, go to IRS.gov and enter "private
delivery service" in the search box.Your private delivery service can tell you how to get written proof of the mailing date.
Photographs of missing children. The IRS is a proud partner with the National Center for Missing and Exploited Children. Photographs of missing children selected by the Center may appear in this publication on pages that would otherwise be blank. You can help bring these children home by looking at the photographs and calling 1-800-THE-LOST (1-800-843-5678) if you recognize a child.
The following are important dates and responsibilities. See section 7 for information about depositing taxes reported on Forms 941, 943, 944, and 945. Also see Pub. 509, Tax Calendars.
File Form 943. See section 8 for more information on Form 943. If you deposited all Form 943 taxes when due, you may file Form 943 by February 10.
Furnish each employee with a completed Form W-2.
Furnish each recipient to whom you paid $600 or more in nonemployee compensation with a completed Form 1099 (for example, Form 1099-MISC).
File Form 940, Employer's Annual Federal Unemployment (FUTA) Tax Return. See section 10 for more information on FUTA. If you deposited all the FUTA tax when due, you may file Form 940 by February 10.
File Form 945, Annual Return of Withheld Federal Income Tax, to report any nonpayroll federal income tax withheld in 2015. If you deposited all Form 945 taxes when due, you may file Form 945 by February 10.
On February 16. Any Form W-4 claiming exemption from withholding for the previous year has now expired. Begin withholding for any employee who previously claimed exemption from withholding but hasn't given you a new Form W-4 for the current year. If the employee doesn't give you a new Form W-4, withhold tax based on the last valid Form W-4 you have for the employee that doesn't claim exemption from withholding or, if one doesn't exist, as if he or she is single with zero withholding allowances. See section 5 for more information. If the employee furnishes a new Form W-4 claiming exemption from withholding after February 15, you may apply the exemption to future wages, but don't refund taxes withheld while the exempt status wasn't in place.
By February 28. File paper 2015 Forms 1099 and 1096. File Copy A of all paper 2015 Forms 1099 with Form 1096, Annual Summary and Transmittal of U.S. Information Returns, with the IRS. For electronically filed returns, see By March 31 below.
By February 29. File paper 2015 Forms W-2 and W-3. File Copy A of all paper 2015 Forms W-2 with Form W-3, Transmittal of Wage and Tax Statements, with the SSA. For electronically filed returns, see By March 31 next.
By March 31. File electronic 2015 Forms W-2 and 1099. File electronic 2015 Forms W-2 with the SSA and 2015 Forms 1099 with the IRS. For more information on reporting Form W-2 information to the SSA electronically, visit the SSA's Employer W-2 Filing Instructions & Information webpage at www.socialsecurity.gov/employer. For information on filing information returns electronically with the IRS, see Pub. 1220.
This publication is for employers of agricultural workers (farmworkers). It contains information that you may need to comply with the laws for agricultural labor (farmwork) relating to social security and Medicare taxes, FUTA tax, and withheld federal income tax (employment taxes). Agricultural employers report social security and Medicare taxes and withheld federal income tax on Form 943 and report FUTA tax on Form 940.
When you pay your employees, you don't pay them all the money they earned. As their employer, you have the added responsibility of withholding taxes from their paychecks. The federal income tax and employees' share of social security and Medicare taxes that you withhold from your employees' paychecks are part of their wages that you pay to the United States Treasury instead of to your employees. Your employees trust that you pay the withheld taxes to the United States Treasury by making federal tax deposits. This is the reason that these withheld taxes are called trust fund taxes. If federal income, social security, or Medicare taxes that must be withheld aren't withheld or aren't deposited or paid to the United States Treasury, the trust fund recovery penalty may apply. See section 7 for more information.
If you have nonfarm employees, see Pub. 15. If you have employees in the U.S. Virgin Islands, Guam, American Samoa, or the Commonwealth of the Northern Mariana Islands, see Pub. 80. Pub. 15-A contains more employment-related information, including information about sick pay and pension income. Pub. 15-B contains information about the employment tax treatment and valuation of various types of noncash compensation.
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Information on the receipt of the assistance eligible individuals' 35% share of the premium, including dates and amounts.
In the case of an insurance plan, a copy of invoice or other supporting statement from the insurance carrier and proof of timely payment of the full premium to the insurance carrier required under COBRA.
In the case of a self-insured plan, proof of the premium amount and proof of the coverage provided to the assistance eligible individuals.
Attestation of involuntary termination, including the date of the involuntary termination for each covered employee whose involuntary termination is the basis for eligibility for the subsidy.
Proof of each assistance eligible individual's eligibility for COBRA coverage and the election of COBRA coverage.
A record of the SSNs of all covered employees, the amount of the subsidy reimbursed with respect to each covered employee, and whether the subsidy was for one individual or two or more individuals.
15 Employer's Tax Guide
15-A Employer's Supplemental Tax Guide
15-B Employer's Tax Guide to Fringe Benefits
225 Farmer's Tax Guide
535 Business Expenses
583 Starting a Business and Keeping Records
1635 Employer Identification Number: Understanding Your EIN
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