- Payroll professionals must complete a variety of tax forms depending on the size and type of business
- Penalties for tax filing errors are common and expensive
- A software for payroll and tax filing service can relieve tax-filing stress
Missing a tax filing deadline, filling out incorrect paperwork, or making errors on a tax form can have significant financial repercussions. In 2020 alone, the Internal Revenue Service (IRS) collected $6 billion in employer penalties for missing or miscalculated payments, affecting an estimated one in three businesses. Obviously, payroll and taxes are complicated, and can be an administrative and financial burden for businesses of all sizes. HR managers and payroll professionals may have to complete and submit a variety of tax forms, depending on the number of employees and the type of businesses. In this post we break down the most common IRS tax forms, detailing the information required for each, as well as who needs to complete them, why, and when.
The Most Common Tax Forms
Payroll taxes (also known as employment taxes, trust fund taxes) are one of the biggest responsibilities of payroll professionals and HR managers. Knowing which forms need to be filled out when, and how to submit each, is critical to avoiding costly errors and maintaining compliance.
Below is a brief overview of the most common tax forms for US-based businesses. For more details on each—as well as additional forms not covered below—download our Guide for Payroll Professionals. The guide also includes links to the most recent version of each form.
Form W-4: Employee Withholding Certificates
Employers use the information in Form W-4 to calculate how much Federal and state (if applicable) income tax to withhold from each employee.
Employees usually fill out any required Forms W-4 prior to their first day of work. (Depending on which state you are operating in, you may have to ask employees to complete a State version Form W-4 as well as the Federal W-4.)
Employees do not have to fill out a new W-4 every year; they must do so, however, when starting a new job or if any of the required information has changed over the course of the year.
Federal Form W-4
The Federal Form W-4 was redesigned by the IRS in 2020 to be more accurate. This form asks employees for:
- Personal data
- Filing status
- Dependents (if any)
- Other income, deductions, and withholdings
Keep this form on file; it is for employer use and does not need to be submitted to the IRS, but you will need the information on it to complete other common tax forms.
State Form W-4
State versions of W-4s serve a similar function as Federal W-4s: to determine how much income to withhold for state income taxes. These forms are updated regularly and may need to be completed by employees each year, depending on location.
Note that many states have different names for this form (for example, in California it’s Form DE 4; in Mississippi it’s Form 89-350). Additionally, 11 states, including Alaska, Florida, New Hampshire and others, do not have state income tax and do not require this type of form. Our Guide for Payroll Professionals includes a list of State Form W-4s and variations and requirements for all states.
Form W-2: Wage and Tax Statement
This form reports the amount of income paid and taxes withheld from each employee. Form W-2 is filled out annually by the employer using payroll information, and given to both the employee and the IRS by January 31.
Note that you only fill out W-2 forms for employees—you do not fill out Form W-2 for independent contractors or freelancers; use Form 1099-NEC instead (see also Form W-9).
Form 941: Employer’s Quarterly Federal Tax Return
The IRS uses information from this quarterly form to evaluate the accuracy of your annual W-3 forms (filed annual with Form W-2)—so it is particularly important to be accurate and complete with the information you provide.
On Form 941 you will report the number of employees you have, total wages (and other compensation) paid, as well as Federal income tax, Social Security and Medicare taxes withheld, along with the employer match of Social Security and Medicare taxes.
This form must be submitted by the employer to the IRS four times a year: April 30, July 31, October 31, and January 31.
Form W-9: Request for Taxpayer Identification Number and Certification
In general, if you have paid a contractor, freelancer, or other non-employee more than $600 over the course of the year, you must report these fees to the IRS (most often using Form 1099-NEC).
Form W-9 is used to gather the information you need to fill out Form 1099 from the non-employees, including their name, address, and Taxpayer Identification Number. This form is for your records; you do not file it to the IRS.
Form 940: Employer’s Annual Federal Unemployment Tax Return
Form 940 is used to calculate and report your business’s Federal unemployment (FUTA) tax. On this form, you report all wages paid to full-time and part-time employees throughout the year—even though the tax is only calculated on the first $7,000 paid to each employee. This tax is not withheld from employees; the employer is responsible for paying it.
You will need to complete this form if:
- Any employee was paid $1,500 or more during the calendar year
- Any employee worked more than 20 weeks during the year
Form 940 is due to the IRS annually by January 31 of the following year.
Form 943: Employer’s Annual Federal Tax Return for Agricultural Employees
As the name suggests, Form 943 is relevant to you if you have farmworkers or other agricultural employees (including harvesters, managers, soil surveyors, and others). On this form, submitted annually, you report total wages paid, as well as taxes, Social Security, and Medicare amounts withheld. Form 943 is due to the IRS annually by January 31 of the following year.
Form 944: Employer’s Annual Federal Tax Return
The same information requested from form 941 is requested for Form 944, but it is only submitted once a year. Do not submit both forms. In general, smaller businesses and some new businesses file the annual Form 944; the IRS will advise you if your organization qualifies.
Form 944 is due to the IRS annually by January 31 of the following year.
Form 945: Annual Return of Withheld Federal Income Tax
This form is used to calculate and withhold federal income tax from non-payroll payments, such as pensions, military retirement pensions, annuities, and gambling income.
Use Form 945 for backup withholding (withholding federal income tax from non-employees in certain circumstances, such as when the taxpayer ID of the payee is missing or incorrect). The IRS will notify you if backup withholding is required.
Form 945 is due to the IRS annually by January 31 of the following year.
Forms 1095 and 1094
These forms relate to health coverage, and there are a couple of different versions. You may have to complete a Form 1095 (and its affiliated Form 1094) if you’re an Applicable Large Employer (ALE; usually an organization with 50 or more employees) or offer self-insured health care plans.
Read our blog post for more about ACA compliance and reporting.
Form 1095-C: Employer-Provided Health Insurance Offer and Coverage
Form 1095-C details the health care coverage you offer your employees during the year; it includes employee information, coverage, and lowest premiums you offer.
If your business qualifies as an ALE, you must complete and submit this form for every employee eligible for health-care coverage, whether they opted into the plan or not. You must fill out Form 1095-C for each employee, once a year, and submit a copy to both the employee and the IRS.
Also known as Transmittal of Employer-Provided Health Insurance Offer and Coverage
Information Returns, Form 1094-C accompanies and summarizes your Form 1095-C submissions. It includes the number of employees you have, and the number of Form 1095-Cs you are submitting. File this form with the IRS; employees do not receive a copy.
Form 1095-B: Health Coverage
Form 1095-B provides proof of minimum essential healthcare coverage. Essentially, it shows that the plans the employer offered were ACA-compliant. It contains information such as the coverage provider and effective dates. Applicable employers must send this form to their employees and the IRS.
With the exception of those employers who are non-ALE and self-insured, the employer’s health care provider handles this form on their behalf
Form 1094-B acts as a “cover sheet” for the Form 1095-B. It includes information such as the employer’s name and contact information. Applicable employers must send this form to the IRS. They do not need to send it to their employees. In most cases, the employer’s healthcare provider handles this form on their behalf.
Forms 1099: Reporting Non-Employment Income
About 20 different versions of Form 1099 exist to provide information about various types of non-employment income or other transactions, from debt cancellation to interest income. We’ve included the two most common tax forms ones below.
The “Misc” refers to miscellaneous income or miscellaneous information. Complete and submit Form 1099-MISC if you’ve paid an individual:
- More than $10 in royalties
- More than $600 in other miscellaneous income, including rent, prizes/awards, medical payments, and others
Payouts to freelancers and contractors, once covered in this category, are now reported using Form 1099-NEC.
As mentioned above, Form 1099-NEC (Nonemployee compensation) reports payments totalling $600 or more to independent contractors and freelancers. It also covers payments such as lawyers’ fees, commissions, and benefits.
Forms 1099 are due to recipients by January 31 of the following year.
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