Employment taxes are imposed for many reasons and may be paid by the employer, by the employee, or by both parties. Most employers are responsible for withholding, depositing, reporting, and paying taxes on income, Social Security, and Medicare, as well as the Federal Unemployment Tax. These taxes must be remitted in full to the Internal Revenue Service, or IRS (I-R-S), by mail or in person by the due date. Most employment taxes are due either monthly or semi-weekly. The schedule used is determined by the total tax liability reported on IRS Form 941 (nine forty-one) during a four-quarter period. Taxes for Earned Income Credit are not included in the tax liability on a payment schedule. Usually, if employers report more than $50,000 (fifty thousand dollars) during July 1 (first) and June 30 (thirtieth), the semi-weekly schedule is used, while monthly payments are required from businesses reporting $50,000 (fifty thousand dollars) or less. Regardless of the payment schedule established, the day a company accumulates a tax liability of more than $100,000 (one-hundred thousand dollars) during the deposit period, the tax must be deposited before the next banking day. Employment taxes may be submitted electronically or deposited along with Form 8109 (eighty-one oh nine), the Federal Tax Deposit Coupon. Payments are made to a Federal Reserve Bank or other authorized financial institution. Failure to remit the appropriate amount of taxes on time may result in penalties up to 15 percent, depending on how late the payment is. Penalties may also be applied if employment taxes are not paid in full or if an electronic transfer is required but not used. Employers who willfully fail to withhold or pay income, Social Security, or Medicare taxes may be subject to a 'trust fund recovery penalty' or be required to provide separate accounting for tax purposes. If you have questions regarding employment taxes, contact a tax professional for more information.
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