How to Pay Employer Federal Taxes
As an employer, there are a number of federal taxes you need to pay that relate to your employees.
Key Takeaways
- Complete an IRS Form 941 (or Form 943 for Agriculture Employees) to report the wages you pay, the tips your employees earn and to calculate the amount of federal income tax, Social Security tax and Medicare taxes you should pay to the IRS.
- Use Form 940 to calculate your Federal Unemployment Tax (FUTA). Report the amount of tax you owe for the year on Form 940 by January 31.
- You need to determine the FUTA you owe each quarter and make a payment when the cumulative amount for the year reaches $500.
- The federal government requires all employers to deposit taxes using the Electronic Federal Tax Payment System (EFTPS). You cannot mail in checks.
Paying payroll taxes
As an employer, you not only have to report the taxable income of your business, but there are a number of other federal taxes you need to pay that relate to your employees. This includes federal income tax withholding, Social Security, Medicare and unemployment taxes. Each type of tax has specific payment deadlines and forms you need to send to the IRS.
Step 1: Complete an IRS Form 941, Employer's Quarterly Income Tax Return, or annually Form 943 for Agriculture Employees
The main purpose of the form is to report the wages you pay, the tips your employees earn and to calculate the amount of federal income tax, Social Security tax and Medicare taxes you should have withheld and owe to the IRS. You can also account for other types of payments, such as any COBRA health insurance continuation assistance you provide.
You must file a separate Form 941 each quarter. The returns are due by the last day of the month following the end of each quarter, which falls on April 30, July 31, October 31 and January 31 each year.
Step 2: Calculate your Federal Unemployment Tax (FUTA) on Form 940
If you are an employer and pay wages of $1,500 or more in any calendar quarter of the previous year, or if you had one or more employees who worked at least 20 or more different weeks, then you have a responsibility to pay FUTA. If so, report the amount of tax you owe for the year on Form 940 by January 31.
However, you must determine the amount of tax you owe each quarter and make a payment when the cumulative amount for the year reaches $500. If after one quarter you owe less than $500, carry it forward and evaluate the amount again after the next quarter.
TurboTax Tip:
You can pay the employee withholding, Medicare, Social Security and unemployment taxes you calculate on Forms 940, 941, and 943 at eftps.gov. Make your EFTPS payment by 8 p.m. EST the day before payment is due to ensure you receive credit for a timely deposit.
Step 3: Sign up for the Electronic Federal Tax Payment System (EFTPS)
The federal government requires all employers to deposit taxes using this system and doesn’t allow you to mail in checks. If you haven’t been automatically enrolled by the IRS, you can create an account in EFTPS by visiting eftps.gov and clicking on "Enrollment." On the next page you should click the box marked "Business."
Have your employer identification number available and the business bank account and routing numbers you want to make your payments from. Be sure to enroll at least two weeks prior to the payment deadline, as it takes that long to receive your PIN.
Step 4: Make your tax payments
You can pay the employee income, Medicare, Social Security and unemployment taxes you calculate on Forms 940, 941, and 943 at eftps.gov. At the bottom of the page, click on “Make a Payment” and enter your EIN, PIN and Internet password. Your bank will debit the amount you request from your account and send payment to the IRS.
When you finish making the payment, you will receive a tracking number that you should retain for your records. Be sure to make your EFTPS payment by 8 p.m. EST the day before payment is due to ensure you receive credit for a timely deposit.
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