 Internal Revenue Service IRS Tax News Filing Payroll Taxes Electronically is a Smart Business Move You're doing right paying payroll taxes is a smart business move because if you don't, the IRS will move your business off a cliff where you will hang suspended Wiley Coyote-esque like just long enough so they can pick your pockets in midair before you plummet to the distant dirt below Part of the cliff most likely landing on your head after impact with the ground the IRS then traveling down to see the wreckage not to help just so they can stick their tongue out at you a few times before being on their way It almost makes you want to plot some kind of extravagant scheme to get those IRS people possibly like drawing a fake tunnel in a cliff so the IRS will run into it or something like that IRS Tax Tip 2022-74, May 12, 2022 Business Owners can simplify things by filing payroll taxes electronically and in my opinion anything we can do to simplify the payroll taxes is typically a good thing the payroll taxes if there's an error in them can cause multiple kinds of problems one obviously you got to fix the error most likely and that could be a little bit more difficult with payroll taxes because you've got that withholding component to it if there's an error in the payroll taxes then it could mess up the future tax calculations that are going to happen because of the caps and so on that are applied to some of the withholdings for example it's also one of those things that we might not actually catch the errors until the end of the year when we summarize everything in the W-2s and the 940 kind of calculations and by that time if we find an error that's like the worst time to kind of catch it because now we've got to fix it when everything else is going on basically at the end of the year so in my opinion payroll taxes is one of those things it would be best to measure twice, cut once try to get it right the first time in other words instead of kind of tinkering with it and make sure that when you're putting the payroll system in place you have a good system that you're putting in place are you using tax software are you going to get payroll help from a third party even small payroll can start to get fairly complex and if you don't have anything basically helping you or supporting you like software or third party provider it can get overwhelming fairly quickly so e-file software performs calculations and populates forms and schedules using a step-by-step process it will also alert the filer if they are missing information which reduces the chances of receiving an IRS notice here are some of the benefits of filing these forms electronically it saves times it's secure and accurate the filer gets an email to confirm the IRS received the form within 24 hours here's how businesses can e-file employers submit the forms themselves will need to purchase IRS approved software there's a link to that here there may be a fee to file electronically so that's kind of the downside of course and obviously when you're looking at payroll and thinking about how to set up payroll payroll in and of itself is costly for the payroll and then it can be costly to get help to process the payroll meaning you might pay more for software to help you to process it and file it and so on and so forth or possibly pay a third party to do that but again those are the things that you got to take into consideration because like I say if there's errors in the payroll then it might be more costly to try to kind of fix the payroll and if you have to switch payroll providers switching from one system to the next in the middle of a year becomes difficult because of those cap calculations in the payroll and so when you got to sum everything up at the end of the year becomes kind of a problem it's possible but it's still a problem it's not too bad to switch as long as you plan to switch at the end of the year like if you're going to start in January and you can switch after that point or something like that but switching can be a problem so you'd like to get it right the first time if possible also the software will require a signature by one of the two ways the software instructs the user to apply for an online signature a PIN there's a link to that taxpayers should allow at least 45 days to receive their PIN the user can scan and attach form 8453 the EMP Employment Tax Declaration for an IRS E file return there's a link to that here employers can have their tax professional file to form for them so if you have a tax professional helping you it used to be that a lot of CPA firms would do payroll taxes but because it's kind of become more and more complicated for the payroll taxes and there's been other companies that have basically picked that up now then it's likely that you're working with a third party payroll provider rather than a more general CPA firm that's going to specialize on probably taxes and audits and that kind of stuff so but make sure if you're picking up a third party provider to help you that they're legit that you know you trust the third party provider and so on because you don't want to get messed up with the payroll taxes because you're also withholding stuff from the employees so if they don't pay the payroll taxes if there's a problem with it it's not just that you didn't pay taxes now you also withheld money from the employees because you were required to and you didn't pay their taxes which again now you got this kind of liability thing which is an added kind of issue so the authorized IRS e-file providers for individuals and business can help employers locate electronic return organitor near them originator near them so you can go through these links and try to see if you can sort one out to help search around if you would like to here are some of the forms employers can e-file so we got the form 940 employers annual federal unemployment tax return that's similar it sounds similar to the form 941 but this is the one that you file at the end of the year it's for the employers use this form to report annual federal unemployment tax not the other taxes remember the taxes we got on the payroll taxes on the federal side of things social security, Medicare, federal income tax for the employee not for us the business we pay you know whatever system we're paying on it and then we've got the federal unemployment tax the 940 at the end of the year is the federal unemployment tax then we got the form 941 employers quarterly federal tax return that's the one we have to do on a quarterly basis instead of a yearly basis most of the time employers use this form to report income tax social security tax or Medicare tax from employees paychecks they also use it to pay their portion of social security and Medicare tax so this is the big one and that's why you got to do it quarterly because the IRS wants to verify it on a quarterly basis instead of a yearly basis because of its significance and so that includes the federal income tax that you're withholding that you know from the employee because they filled out a W-4 and what not and then the social security that you withheld from them the Medicare that you withheld from them which is more of a flat tax but there's a cap on the social security which confuses things and so on and so forth and then it also includes your portion of the social security that you have to pay over and above as well as the Medicare for the employer portion so that's the big one then you got the form 943 employers annual federal tax return for agriculture employees so this is a specialized form for the specialized area employers filed this form if they paid wages to one or more farm workers and the wages were subject to social security and Medicare taxes or federal income tax withholding form 944 employers annual federal tax return so this is for small employers that use this form these are employers whose annual liability for social security, Medicare and withheld federal income taxes is $1,000 or less so that's a fairly small threshold if you're under that threshold the IRS is saying we're not going to bother taking the quarterly returns you can just file it like once a year because you don't make much and we don't really care much but if you make more than that then you got to file it quarterly that's what they're saying these employers use this form to file pay these taxes only once a year instead of every quarter the employer must contact the IRS to request to file form 944 employers are not permitted to file form 944 unless they are notified by the IRS to do so in other words usually you got to do the 941s on a quarterly basis unless the IRS says yeah whatever we'll just you know you get approval to do this this annual 944 one file form 945 annual return of withheld federal income tax there's a link to that here employers use this form to report federal income tax withheld from non payroll payments so there's links to all this payroll stuff and so you can look at it for days and years possibly months at least and read up on it and they'll be a link to this in the description