For the latest information about developments related to Pub. 80, such as legislation enacted after it was published, go to www.irs.gov/pub80.
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. Social security and Medicare taxes apply to election workers who are paid $1,700 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.
Motion picture project employers. Beginning January 1, 2016, all wages paid by a motion picture project employer to a motion picture project worker during a calendar year are subject to a single social security tax wage base ($118,500 for 2016) and a single FUTA tax wage base ($7,000 for 2016) regardless of the worker's status as a common law employee of multiple clients of the motion picture project employer. For more information, including the definition of a motion picture project employer and motion picture project worker, see Internal Revenue Code section 3512.
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 941-SS, Employer's QUARTERLY Federal Tax Return—American Samoa, Guam, the Commonwealth of the Northern Mariana Islands, and the U.S. Virgin Islands. Instead, after filing your Form 941-SS, file Form 941-X, Adjusted Employer's QUARTERLY Federal Tax Return or Claim for Refund, to claim the COBRA premium assistance credit. Filing a Form 941-X before filing a Form 941-SS for the quarter may result in errors or delays in processing your Form 941-X. For more information, see the Instructions for Form 941-SS or visit IRS.gov and enter “COBRA” in the search box. See the Instructions for Form 943 or the Instructions for Form 944 if you file one of these returns.
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 refund 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 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 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 Employment and Payments , in section 12. 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.
Residents of the Philippines working in the Commonwealth of the Northern Mariana Islands (CNMI). The IRS won't assert that an employer has understated liability for social security and Medicare taxes because they failed to treat services performed before January 1, 2015, in the CNMI by a resident of the Philippines as employment as defined under Internal Revenue Code section 3121(b). For more information, see Announcement 2012-43, 2012-51 I.R.B. 723, available at www.irs.gov/irb/2012-51_IRB/ar15.html.
CNMI government employees now subject to social security and Medicare taxes. Beginning in the fourth calendar quarter of 2012, CNMI government employees are subject to social security and Medicare taxes.
You must receive written notice from the IRS to file Form 944. If you have been filing Forms 941-SS and believe your employment taxes for the calendar year will be $1,000 or less, and you would like to file Form 944, Employer's ANNUAL Federal Tax Return, instead of Forms 941-SS, you must contact the IRS to request to file Form 944. You must receive written notice from the IRS to file Form 944 instead of Forms 941-SS before you may file this form. For more information on requesting to file Form 944, see the Instructions for Form 944.
Federal employers in the CNMI. The U.S. Treasury Department and the CNMI Division of Revenue and Taxation entered into an agreement under 5 USC 5517 in December 2006. Under this agreement, all federal employers (including the Department of Defense) are required to withhold CNMI income taxes (rather than federal income taxes) and deposit the CNMI taxes with the CNMI Treasury for employees who are subject to CNMI taxes and whose regular place of federal employment is in the CNMI. Federal employers are also required to file quarterly and annual reports with the CNMI Division of Revenue and Taxation. For questions, contact the CNMI Division of Revenue and Taxation.
Change of responsible party. . Any entity with an employer identification number (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.
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 8.For more information about EFTPS or to enroll in EFTPS, visit the EFTPS website at 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. Using electronic options can make filing a return and paying your federal tax easier. Use EFTPS to make deposits or pay in full, whether you rely on a tax professional or prepare your own taxes. You can use IRS e-file to file certain returns. If there is a balance due on the return, you can e-file and e-pay in a single step by authorizing an electronic funds withdrawal (EFW) from your bank account while e-filing. Don't use EFW to pay taxes that are required to be deposited. Visit the IRS website at www.irs.gov/efile for more information on filing electronically. 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.
For EFTPS, visit www.eftps.gov or call EFTPS Customer Service at 1-800-555-4477 or 1-800-733-4829 (TDD).
For electronic filing of Forms W-2AS, W-2CM, W-2GU, W-2VI, Wage and Tax Statements; W-3SS, Transmittal of Wage and Tax Statements; and W-2c, Corrected Wage and Tax Statement, visit www.socialsecurity.gov/employer.
Electronic option for filing Forms W-2AS, W-2CM, W-2GU, or W-2VI. Employers in American Samoa, the CNMI, Guam, and the U.S. Virgin Islands can now use the Social Security Administration's (SSA's) W-2 Online service to create, save, print, and submit up to 50 Forms W-2AS, W-2CM, W-2GU, or W-2VI at a time over the Internet. Form W-3SS will be generated automatically based on your Forms W-2AS, W-2CM, W-2GU, or W-2VI. For more information, visit the SSA's website at www.ssa.gov/bso/bsowelcome.htm.
Credit or debit card payments. For information on paying your taxes with a credit or debit card, visit the IRS website at www.irs.gov/payments. However, don't use credit or debit cards to make federal tax deposits.
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.
Hiring new employees. Record the number and name from each new employee's social security card. An employee who doesn't have a social security card should apply for one on Form SS-5, Application for a Social Security Card. See section 3.
Reporting discrepancies between Forms 941-SS (or Form 944) and Forms W-2. File Schedule D (Form 941), Report of Discrepancies Caused by Acquisitions, Statutory Mergers, or Consolidations, to explain certain wage, tax, and payment discrepancies between Forms 941-SS (or Form 944), and Forms W-2 that were caused by acquisitions, statutory mergers, or consolidations. For more information, see the Instructions for Schedule D (Form 941).
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.
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.
Recordkeeping. Keep all records of employment taxes for 4 years. These should be available for IRS review.There is no required format for such records, but they should include your EIN; the amounts and dates of all wage payments (including fringe benefits) and tips reported; the names, addresses, and occupations of employees receiving such payments and their social security numbers (SSNs); copies of returns filed; dates of employment; and the dates and amounts of deposits made. Farm employers must keep a record of the name, permanent address, and EIN of each crew leader. See Farm Crew Leaders in section 2.
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).
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. Also see Pub. 509, Tax Calendars.
Furnish wage and tax statements to employees. Give each employee a completed Form W-2AS, W-2CM, W-2GU, or W-2VI. See section 10 for more information.
U.S. Virgin Islands employers only must file Form 940, Employer's Annual Federal Unemployment (FUTA) Tax Return, with the IRS. Pay or deposit (if more than $500) any balance of the tax due. If you deposited the full amount of taxes when due, you may file Form 940 by February 10.
File Form 944 with the IRS if you were notified by the IRS to file Form 944 instead of quarterly Forms 941-SS. If you deposited the full amount of taxes when due, you may file Form 944 by February 10.
By February 29. File paper wage and tax statements with the SSA. File Copy A of 2015 Forms W-2AS, W-2CM, W-2GU, or W-2VI, and Form W-3SS with the SSA. For electronically filed returns, see By March 31 next.
By March 31. File electronic 2015 Forms W-2AS, W-2CM, W-2GU, or W-2VI with the SSA. Visit the SSA's Employer W-2 Filing Instructions & Information webpage at www.socialsecurity.gov/employer for more information.
By April 30, July 31, October 31, and January 31. File Form 941-SS with the IRS. If you deposited the full amount of taxes when due, you may file Form 941-SS by May 10, August 10, November 10, and February 10, respectively. Don't file Form 941-SS for these quarters if you have been notified to file Form 944 and you didn't request to file quarterly Forms 941-SS.Deposit FUTA tax for the quarter (including any amount carried over from other quarters) if over $500. If $500 or less, carry it over to the next quarter. See section 11 for more information.
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