Payroll Tax Responsibilities for Employers
Payroll taxes are mandated by both state and federal governments. As an employer, you are required to withhold and remit taxes on behalf of your employees. In addition, employers must pay Social Security and Medicare taxes, as well as state and federal unemployment taxes.
Employer Responsibilities:
Employers are required to purchase workers’ compensation and disability insurance as mandated by state law.
Payroll Tax Reporting:
Employers must report and deposit payroll taxes accurately and on time. Key federal payroll tax forms include:
- Form 940 or 940-EZ – Annual Federal Unemployment Tax Return (FUTA)
- Form 941 – Quarterly Federal Payroll Tax Return
- Forms W-2 and W-3 – Wage and Tax Statement & Transmittal of Wage and Tax Statements
Failure to comply with these requirements can result in penalties and interest. Proper payroll tax handling is essential to staying compliant and avoiding IRS or state audits.