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Employment Taxes
The Social Security Administration (SSA) time limit for posting
self-employment income. Generally, the SSA will give you credit
only for self-employment income reported on a tax return filed
within 3 years, 3 months, and 15 days after the tax year you
earned the income. If you file your tax return or report a
change in your self-employment income after this time limit,
the SSA may change its records, but only to remove or reduce
the amount. The SSA will not change its records to increase
your self-employment income.
Employment Taxes
This section briefly discusses the employment taxes you must
pay, the forms you must file to report them, and other forms
that must be filed when you have employees.
Employment taxes include the following.
* Social security and Medicare taxes.
* Federal income tax withholding.
* Federal unemployment (FUTA) tax.
If you have employees, you will need to get Publication 15,
Circular E, Employer's Tax Guide. If you have agricultural
employees, get Publication 51, Circular A, Agricultural
Employer's Tax Guide. These publications explain your tax
responsibilities as an employer.
If you are not sure whether the people working for you are your
employees, see Publication 15-A, Employer's Supplemental Tax
Guide. That publication has information to help you determine
whether an individual is an employee or an independent
contractor. If you classify an employee as an independent
contractor, you can be held liable for employment taxes for
that worker plus a penalty. An independent contractor is
someone who is self-employed. Generally, you do not have to
withhold or pay any taxes on payments to an independent
contractor.
Federal Income, Social Security, and Medicare Taxes
You generally must withhold federal income tax from your
employee's wages. To figure how much federal income tax to
withhold from each wage payment, use the employee's Form W-4
(discussed later under Hiring Employees) and the methods
described in Publication 15.
Social security and Medicare taxes pay for benefits that
workers and their families receive under the Federal Insurance
Contributions Act (FICA). Social security tax pays for benefits
under the old-age, survivors, and disability insurance part of
FICA. Medicare tax pays for benefits under the hospital
insurance part of FICA. You withhold part of these taxes from
your employee's wages and you pay a matching amount yourself.
To find out how much social security and Medicare tax to
withhold and to pay, see Publication 15.
Which form do I file? Report these taxes on Form 941,
Employer's Quarterly Federal Tax Return. (Farm employers use
Form 943, Employer's Annual Federal Tax Return for Agricultural
Employees.)
Federal Unemployment (FUTA) Tax
The federal unemployment tax is part of the federal and state
program under the Federal Unemployment Tax Act (FUTA) that pays
unemployment compensation to workers who lose their jobs. You
report and pay FUTA tax separately from social security and
Medicare taxes and withheld income tax. You pay FUTA tax only
from your own funds. Employees do not pay this tax or have it
withheld from their pay.
Which form do I file? Report federal unemployment tax on Form
940, Employer's Annual Federal Unemployment (FUTA) Tax Return.
See Publication 15 to find out if you can use this form.
Hiring Employees
Have the employees you hire fill out Form I-9 and Form W-4. If
your employees qualify for and want to receive advanced earned
income credit payments, they must give you a completed Form
W-5.
Form I-9. You must verify that each new employee is legally
eligible to work in the United States. Both you and the
employee must complete the U.S. Citizenship and Immigration
Services (USCIS) Form I-9, Employment Eligibility Verification.
You can get the form from USCIS offices or from the USCIS
website at www.uscis.gov. Call the USCIS at 1-800-375-5283 for
more information about your responsibilities.
Form W-4. Each employee must fill out Form W-4, Employee's
Withholding Allowance Certificate. You will use the filing
status and withholding allowances shown on this form to figure
the amount of income tax to withhold from your employee's
wages, see Publication 15.
Employees claiming more than 10 withholding allowances. An
employee who claims more than 10 withholding allowances for
wages paid in 2007 can use several methods of withholding. See
section 16 of Publication 15.
Form W-5. An eligible employee who has a qualifying child is
entitled to receive advance earned income credit (EIC) payments
with his or her pay during the year. To get these payments, the
employee must give you a properly completed Form W-5, Earned
Income Credit Advance Payment Certificate. You are required to
make advance EIC payments to employees who give you a completed
and signed Form W-5. For more information, see Publication
15.
Form W-2 Wage Reporting
After the calendar year is over, you must furnish copies of
Form W-2, Wage and Tax Statement, to each employee to whom you
paid wages during the year. You must also send copies to the
Social Security Administration. See Information Returns, later,
for more information on Form W-2.
December 12, 2008
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Source:
http://www.irs.gov/publications/p583/ar02.html#d0e196
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