Compliance Overview For Payroll Reporting

About Payroll Reporting

A key element of the payroll administration cycle is reporting. Employers are required to file numerous reports with federal and state agencies to account for the taxes they have withheld and paid.

Federal and State Tax Filings

The primary federal tax report is Form 941, Employer's QUARTERLY Federal Tax Return. This form is used to report wages paid, income taxes withheld, and both the employer and employee shares of Social Security and Medicare taxes. Most states have similar quarterly wage and tax reports.

Quarterly and Annual Reports (941s, W-2s, etc.)

In addition to the quarterly 941s, employers have major annual reporting obligations:

• Form 940, Employer's Annual Federal Unemployment (FUTA) Tax Return
• Form W-2, Wage and Tax Statement: Employers must provide a W-2 to each employee and file copies with the Social Security Administration (SSA) by January 31st of the following year. The SSA shares this data with the IRS.
• Form W-3, Transmittal of Wage and Tax Statements: This form summarizes the information from all the W-2s and is filed with the SSA.

Common Reporting Errors and How to Avoid Them

In addition to the quarterly 941s, employers have major annual reporting obligations:

• Mismatched Names and Social Security Numbers: The name and SSN on the W-2 must exactly match the SSA's records. The SSA offers a free verification service that employers can use.
• Incorrectly Reporting Pre-Tax Deductions: Contributions to 401(k)s and health insurance premiums reduce taxable wages, and this must be reflected correctly in the various boxes on the W-2.
• Missing Deadlines: Filing and furnishing deadlines are strict. Using a payroll calendar and setting automated reminders is crucial to avoid late-filing penalties.

Disclaimer

This information provided is based on state laws and regulations, and is subject to change. While HRcertification.com makes every effort to make sure this information is current and accurate, it is not engaged in rendering legal or professional advice, and shall not be held responsible for inaccuracies contained herein.