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taxmap/pubs/p225-063.htm#TXMP11be246e Reporting and Paying Social Security, Medicare, and Withheld Federal Income Taxes(p78)

Reporting and Paying Social Security, Medicare, and Withheld Federal Income Taxes

You must withhold federal income, social security, and Medicare taxes required to be withheld from the salaries and wages of your employees. You are liable for the payment of these taxes to the federal government whether or not you collect them from your employees. If, for example, you withhold less than the correct tax from an employee's wages, you are still liable for the full amount. You must also pay the employer's share of social security and Medicare taxes.

taxmap/pubs/p225-063.htm#TXMP22035c00 Form 943.(p78)

Report withheld federal income tax and social security and Medicare taxes on 
Form 943. Your 2007 Form 943 is due by January 31, 2008 (or February 11, 2008, if you made deposits on time in full payment of the taxes due for the year).

taxmap/pubs/p225-063.htm#TXMP132357b2 Deposits.(p78)

Generally, you must deposit both the employer and employee shares of social security and Medicare taxes and federal income tax withheld (minus any advance earned income credit payments) during the year. However, you may make payments with Form 943 instead of depositing them if you accumulate less than a $2,500 tax liability during the year (line 11 of Form 943) and you pay in full with a timely filed return.

For more information on deposit rules, see Publication 51 (Circular A).

taxmap/pubs/p225-063.htm#TXMP1cadbf04 Electronic Federal Tax Payment System (EFTPS).(p78)

You may have to deposit taxes using EFTPS. You must use EFTPS to make deposits of all depository tax liabilities (including social security, Medicare, withheld federal income, excise, and corporate income taxes) you incur in 2008 if you deposited more than $200,000 in federal depository taxes in 2006. If you first meet the $200,000 threshold in 2007, you must begin depositing using EFTPS in 2009. Once you meet the $200,000 threshold, you must continue to make deposits using EFTPS in later years even if subsequent deposits are less than the $200,000 threshold.

If you must use EFTPS but fail to do so, you may be subject to a 10% penalty.

If you do not have to use EFTPS because you did not meet the $200,000 threshold, you can voluntarily make deposits using EFTPS. If you are using EFTPS voluntarily, you will not be subject to the 10% penalty if you make a deposit using a paper coupon.

For information about EFTPS or to enroll in EFTPS, visit www.eftps.gov or see Publication 966, The Secure Way to Pay Your Federal Taxes, or call 1-800-555-4477.

taxmap/pubs/p225-063.htm#TXMP0ce98d8e Form W-2.(p78)

By January 31, you must furnish each employee a Form W-2 showing total wages for the previous year and total federal income tax and social security and Medicare taxes withheld. However, if an employee stops working for you and requests the form earlier, you must give it to the employee within 30 days of the later of the following dates.

• The date the employee requests the form.
• The date you make your final payment of wages to the employee.

taxmap/pubs/p225-063.htm#TXMP5519834d Trust fund recovery penalty.(p78)

If you are responsible for withholding, accounting for, depositing, or paying federal withholding taxes and willfully fail to do so, you can be held liable for a penalty equal to the withheld tax not paid. A responsible person can be an officer of a corporation, a partner, a sole proprietor, or an employee of any form of business. A trustee or agent with authority over the funds of the business can also be held responsible for the penalty.

Willfully means voluntarily, consciously, and intentionally. Paying other expenses of the business instead of the taxes due is acting willfully.

taxmap/pubs/p225-063.htm#TXMP57cceb69 Consequences of treating an employee as an independent contractor.(p78)

If you classify an employee as an independent contractor and your have no reasonable basis for doing so, you may be held liable for employment taxes for that worker. See Publication 15-A for more information.

Previous Page:  Publication 225 - Farmer's Tax Guide - Advance Payment of Earned Income Credit Next Page:  Publication 225 - Farmer's Tax Guide - Federal Unemployment (FUTA) Tax Use   to find additional occurrences of topic items.