Federal Employer's Tax Guide
Extracted from PDF file 2018-federal-publication-15.pdf, last modified January 2018
Employer's Tax GuideDepartment of the Treasury Internal Revenue Service Contents What's New . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 Reminders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 Publication 15 Cat. No. 10000W Calendar . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8 (Circular E), Employer's Tax Guide Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9 For use in 2018 1. Employer Identification Number (EIN) . . . . . . . 11 2. Who Are Employees? . . . . . . . . . . . . . . . . . . . . 11 3. Family Employees . . . . . . . . . . . . . . . . . . . . . . 13 4. Employee's Social Security Number (SSN) . . . 14 5. Wages and Other Compensation . . . . . . . . . . . 15 6. Tips . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18 7. Supplemental Wages . . . . . . . . . . . . . . . . . . . . 19 8. Payroll Period . . . . . . . . . . . . . . . . . . . . . . . . . . 20 9. Withholding From Employees' Wages . . . . . . . 21 10. Required Notice to Employees About the Earned Income Credit (EIC) . . . . . . . . . . . . . . 26 11. Depositing Taxes . . . . . . . . . . . . . . . . . . . . . . 26 12. Filing Form 941 or Form 944 . . . . . . . . . . . . . . 31 13. Reporting Adjustments to Form 941 or Form 944 . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33 14. Federal Unemployment (FUTA) Tax . . . . . . . . 36 15. Special Rules for Various Types of Services and Payments . . . . . . . . . . . . . . . . . 38 16. Third-Party Payer Arrangements . . . . . . . . . . 43 17. How To Use the Income Tax Withholding Tables . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44 How To Get Tax Help . . . . . . . . . . . . . . . . . . . . . . 68 Index . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70 Future Developments For the latest information about developments related to Pub. 15, such as legislation enacted after it was published, go to IRS.gov/Pub15. What's New Get forms and other information faster and easier at: • IRS.gov (English) • IRS.gov/Spanish (Español) • IRS.gov/Chinese (中文) Jan 25, 2018 • IRS.gov/Korean (한국어) • IRS.gov/Russian (Pусский) • IRS.gov/Vietnamese (TiếngViệt) 2018 federal income tax withholding. This publication includes the 2018 Percentage Method Tables and Wage Bracket Method Tables for Income Tax Withholding. The 2018 withholding tables incorporate changes to the individual tax rates based on tax legislation enacted on December 22, 2017 (P.L. 115-97). Employers should implement the 2018 withholding tables as soon as possible, but not later than February 15, 2018. Continue to use the 2017 withholding tables until you implement the 2018 withholding tables. The new withholding tables are designed to work with the Forms W-4, Employee's Withholding Allowance Certificate, that your employees previously gave you. To help employees determine their withholding, the IRS is revising the withholding tax calculator available at IRS.gov/W4App. The IRS anticipates that this calculator will be available by the end of February. Encourage your employees to use the withholding calculator to determine if they should give you a new Form W-4 for 2018. The IRS is also working on revising Form W-4 for 2018. The calculator and revised Form W-4 can be used by employees who wish to update their withholding in response to the new law or changes in their personal circumstances in 2018, and by workers starting a new job. Until a new Form W-4 is issued, employees and employers should continue to use the 2017 Form W-4. For more information, go to IRS.gov/NR1036. An employee who experiences a change of status that causes a reduction in the number of withholding allowances isn't required to give his or her employer a new Form W-4 until 30 days after the 2018 Form W-4 is released. An employee that has a reduction in the number of withholding allowances solely due to changes from P.L. 115-97 isn't required to give his or her employer a new Form W-4 during 2018 but may do so at any time. Employees may use the 2017 Form W-4 to report changes to withholding allowances until 30 days after the 2018 Form W-4 is released. New employees may continue to claim allowances on the 2017 Form W-4 until 30 days after the 2018 Form W-4 is released. Employees who submit new Forms W-4 for 2018 using the 2017 Form W-4 don't need to resubmit a 2018 Form W-4 when the 2018 Form W-4 is released. Exempt Form W-4. Generally, an employee may claim exemption from federal income tax withholding because he or she had no federal income tax liability last year and expects none this year. To continue to be exempt from withholding in 2018, an employee must give you a new Form W-4 by February 28, 2018. However, the 2018 Form W-4 may not be available before February 28, 2018. Employees may claim exemption from withholding for 2018 using the 2017 Form W-4 until 30 days after the 2018 Form W-4 is released. The 2017 Form W-4 must be (1) edited by striking "2017" in the text on line 7 and entering "2018" in its place, (2) completed by entering "Exempt 2018" on line 7, or (3) not edited but signed in 2018 and submitted under procedures established by the employer for the employee to certify entitlement to exempt status for 2018 by using the 2017 Form W-4 to claim exemption from withholding for 2018. In addition to 1–3 above, the employee can use any substantially similar method to 1–3 that clearly conveys in writing the employee's intent to certify his or her exemption from withholding for 2018. Employers that have established electronic systems for furnishing withholding allowance certificates may change their electronic systems to substantially conform with the options discussed above. Page 2 If the employee doesn't give you Form W-4 by February 28, 2018, follow the withholding rules discussed in section 9 under Exemption from federal income tax withholding. Employees who claimed exemption from withholding for 2018 using the 2017 Form W-4, as discussed above, don't need to resubmit a 2018 Form W-4 when the 2018 Form W-4 is released. Withholding allowance. The 2018 amount for one withholding allowance on an annual basis is $4,150. Withholding on supplemental wages. P.L. 115-97 lowered the withholding rates on supplemental wages. See section 7 for the new rates. Backup withholding. P.L. 115-97 lowered the backup withholding rate to 24%. For more information on backup withholding, see Backup withholding, later. Moving expense reimbursement. P.L. 115-97 suspends the exclusion for qualified moving expense reimbursements from your employee's income beginning after December 31, 2017, and before January 1, 2026. However, the exclusion is still available in the case of a member of the U.S. Armed Forces on active duty who moves because of a permanent change of station. The exclusion applies only to reimbursement of moving expenses that the member could deduct if he or she had paid or incurred them without reimbursement. See Moving Expenses in Pub. 3, Armed Forces' Tax Guide, for the definition of what constitutes a permanent change of station and to learn which moving expenses are deductible. Social security and Medicare tax for 2018. The social security tax rate is 6.2% each for the employee and employer, unchanged from 2017. The social security wage base limit is $128,400. The Medicare tax rate is 1.45% each for the employee and employer, unchanged from 2017. There is no wage base limit for Medicare tax. Social security and Medicare taxes apply to the wages of household workers you pay $2,100 or more in cash wages for 2018. Social security and Medicare taxes apply to election workers who are paid $1,800 or more in cash or an equivalent form of compensation in 2018. Disaster tax relief. Disaster tax relief was enacted for those impacted by Hurricane Harvey, Irma, or Maria. Additionally, the IRS has provided special relief designed to support employer leave-based donation programs to aid the victims of these hurricanes and to aid the victims of the California wildfires that began October 8, 2017. For more information about disaster relief, including the treatment of amounts paid to qualified tax-exempt organizations under employer leave-based donation programs, see Pub. 976. Reminders Qualified small business payroll tax credit for increasing research activities. For tax years beginning after December 31, 2015, a qualified small business may elect to claim up to $250,000 of its credit for increasing research activities as a payroll tax credit against the Publication 15 (2018) employer’s share of social security tax. The portion of the credit used against the employer’s share of social security tax is allowed in the first calendar quarter beginning after the date that the qualified small business filed its income tax return. The election and determination of the credit amount that will be used against the employer's share of social security tax are made on Form 6765, Credit for Increasing Research Activities. The amount from Form 6765, line 44, must then be reported on Form 8974, Qualified Small Business Payroll Tax Credit for Increasing Research Activities. Form 8974 is used to determine the amount of the credit that can be used in the current quarter. The amount from Form 8974, line 12, is reported on Form 941 or 941-SS, line 11 (or Form 944, line 8). For more information about the payroll tax credit, see Notice 2017-23, 2017-16 I.R.B. 1100, available at IRS.gov/irb/ 2017-16_IRB/ar07.html. Also see the line 16 instructions in the Instructions for Form 941 (line 13 instructions in the Instructions for Form 944). Certification program for professional employer organizations. The Tax Increase Prevention Act of 2014 required the IRS to establish a voluntary certification program for professional employer organizations (PEOs). PEOs handle various payroll administration and tax reporting responsibilities for their business clients and are typically paid a fee based on payroll costs. To become and remain certified under the certification program, certified professional employer organizations (CPEOs) must meet various requirements described in sections 3511 and 7705 and related published guidance. Certification as a CPEO may affect the employment tax liabilities of both the CPEO and its customers. A CPEO is generally treated as the employer of any individual who performs services for a customer of the CPEO and is covered by a contract described in section 7705(e)(2) between the CPEO and the customer (CPEO contract), but only for wages and other compensation paid to the individual by the CPEO. For more information, go to IRS.gov/CPEO. Also see Revenue Procedure 2017-14, 2017-3, I.R.B. 426, available at IRS.gov/irb/2017-03_IRB/ar14.html. Work opportunity tax credit for qualified tax-exempt organizations hiring qualified veterans. The work opportunity tax credit is available for eligible unemployed veterans who begin work on or after November 22, 2011, and before January 1, 2020. Qualified tax-exempt organizations that hire eligible unemployed veterans can claim the work opportunity tax credit against their payroll tax liability using Form 5884-C. For more information, go to IRS.gov/WOTC. COBRA premium assistance credit. Effective for tax periods beginning after December 31, 2013, the credit for COBRA premium assistance payments can't be claimed on Form 941, Employer's QUARTERLY Federal Tax Return (or Form 944, Employer's ANNUAL Federal Tax Return). Instead, after filing your Form 941 (or Form 944), file Form 941-X, Adjusted Employer's QUARTERLY Federal Tax Return or Claim for Refund (or Form 944-X, Adjusted Employer's ANNUAL Federal Tax Return or Claim for Refund), respectively, to claim the COBRA premium assistance credit. Filing a Form 941-X (or Form 944-X) before filing a Form 941 (or Form 944) for the return period may Publication 15 (2018) result in errors or delays in processing your Form 941-X (or Form 944-X). For more information, see the Instructions for Form 941 (or the Instructions for Form 944), or go to IRS.gov/COBRACredit. Medicaid waiver payments. Notice 2014-7 provides that certain Medicaid waiver payments are excludable from income for federal income tax purposes. See Notice 2014-7, 2014-4 I.R.B. 445, available at IRS.gov/irb/ 2014-4_IRB/ar06.html. For more information, including questions and answers related to Notice 2014-7, go to IRS.gov/MedicaidWaiverPayments. No federal income tax withholding on disability payments for injuries incurred as a direct result of a terrorist attack directed against the United States. Disability payments for injuries incurred as a direct result of a terrorist attack directed against the United States (or its allies) aren't included in income. Because federal income tax withholding is only required when a payment is includable in income, no federal income tax should be withheld from these payments. Voluntary withholding on dividends and other distributions by an Alaska Native Corporation (ANC). A shareholder of an ANC may request voluntary income tax withholding on dividends and other distributions paid by an ANC. A shareholder may request voluntary withholding by giving the ANC a completed Form W-4V. For more information see Notice 2013-77, 2013-50 I.R.B. 632, available at IRS.gov/irb/2013-50_IRB/ar10.html. Definition of marriage. A marriage of two individuals is recognized for federal tax purposes if the marriage is recognized by the state, possession, or territory of the United States in which the marriage is entered into, regardless of legal residence. Two individuals who enter into a relationship that is denominated as marriage under the laws of a foreign jurisdiction are recognized as married for federal tax purposes if the relationship would be recognized as marriage under the laws of at least one state, possession, or territory of the United States, regardless of legal residence. Individuals who have entered into a registered domestic partnership, civil union, or other similar relationship that isn't denominated as a marriage under the law of the state, possession, or territory of the United States where such relationship was entered into aren't lawfully married for federal tax purposes, regardless of legal residence. Outsourcing payroll duties. Generally, you’re responsible to ensure that tax returns are filed and deposits and payments are made, even if you contract with a third party to perform these acts. You remain responsible if the third party fails to perform any required action. If you choose to outsource any of your payroll and related tax duties (that is, withholding, reporting, and paying over social security, Medicare, FUTA, and income taxes) to a third-party payer, such as a payroll service provider or reporting agent, go to IRS.gov/OutsourcingPayrollDuties for helpful information on this topic. If a CPEO pays wages and other compensation to an individual performing services for you, and the services are covered by a contract described in section 7705(e)(2) between you and the CPEO (CPEO contract), then the CPEO is generally treated as the employer, but only for wages and other compensation paid to the Page 3 individual by the CPEO. However, with respect to certain employees covered by a CPEO contract, a customer may also be treated as an employer of the employees and, consequently, may also be liable for federal employment taxes imposed on wages and other compensation paid by the CPEO to such employees. For more information on the different types of third-party payer arrangements, see section 16. Severance payments are subject to social security and Medicare taxes, income tax withholding, and FUTA tax. Severance payments are wages subject to social security and Medicare taxes. As noted in section 15, severance payments are also subject to income tax withholding and FUTA tax. You must receive written notice from the IRS to file Form 944. If you’ve been filing Forms 941 (or Forms 941-SS, Employer's QUARTERLY Federal Tax Return—American Samoa, Guam, the Commonwealth of the Northern Mariana Islands, and the U.S. Virgin Islands, or Formularios 941-PR, Planilla para la Declaración Federal TRIMESTRAL del Patrono), and believe your employment taxes for the calendar year will be $1,000 or less, and you would like to file Form 944 instead of Forms 941, you must contact the IRS during the first calendar quarter of the tax year to request to file Form 944. You must receive written notice from the IRS to file Form 944 instead of Forms 941 before you may file this form. For more information on requesting to file Form 944, including the methods and deadlines for making a request, see the Instructions for Form 944. Employers can request to file Forms 941 instead of Form 944. If you received notice from the IRS to file Form 944 but would like to file Forms 941 instead, you must contact the IRS during the first calendar quarter of the tax year to request to file Forms 941. You must receive written notice from the IRS to file Forms 941 instead of Form 944 before you may file these forms. For more information on requesting to file Forms 941, including the methods and deadlines for making a request, see the Instructions for Form 944. Federal tax deposits must be made by electronic funds transfer (EFT). You must use EFT to make all federal tax deposits. Generally, an EFT is made using the Electronic Federal Tax Payment System (EFTPS). If you don't want to use EFTPS, you can arrange for your tax professional, financial institution, payroll service, or other trusted third party to make electronic deposits on your behalf. Also, you may arrange for your financial institution to initiate a same-day wire payment on your behalf. EFTPS is a free service provided by the Department of Treasury. Services provided by your tax professional, financial institution, payroll service, or other third party may have a fee. For more information on making federal tax deposits, see How To Deposit in section 11. To get more information about EFTPS or to enroll in EFTPS, go to EFTPS.gov, or call 1-800-555-4477 or 1-800-733-4829 (TDD). Additional information about EFTPS is also available in Pub. 966. Aggregate Form 941 filers. Agents and CPEOs must complete Schedule R (Form 941), Allocation Schedule for Page 4 Aggregate Form 941 Filers, when filing an aggregate Form 941. Aggregate Forms 941 are filed by agents approved by the IRS under section 3504 of the Internal Revenue Code (IRC). To request approval to act as an agent for an employer, the agent files Form 2678 with the IRS. Aggregate Forms 941 are also filed by CPEOs approved by the IRS under section 7705. CPEOs file Form 8973, Certified Professional Employer Organization/Customer Reporting Agreement, to notify the IRS that they’ve started or ended a service contract with a client or customer. Aggregate Form 940 filers. Agents and CPEOs must complete Schedule R (Form 940), Allocation Schedule for Aggregate Form 940 Filers, when filing an aggregate Form 940, Employer's Annual Federal Unemployment (FUTA) Tax Return. Aggregate Forms 940 can be filed by agents acting on behalf of home care service recipients who receive home care services through a program administered by a federal, state, or local government. To request approval to act as an agent on behalf of home care service recipients, the agent files Form 2678 with the IRS. Aggregate Forms 940 are also filed by CPEOs approved by the IRS under section 7705. CPEOs file Form 8973 to notify the IRS that they’ve started or ended a service contract with a client or customer. Pub. 5146 explains employment tax examinations and appeal rights. Pub. 5146 provides employers with information on how the IRS selects employment tax returns to be examined, what happens during an exam, and what options an employer has in responding to the results of an exam, including how to appeal the results. Pub. 5146 also includes information on worker classification issues and tip exams. Electronic Filing and Payment Now, more than ever before, businesses can enjoy the benefits of filing and paying their federal taxes electronically. Whether you rely on a tax professional or handle your own taxes, the IRS offers you convenient programs to make filing and payment easier. Spend less time and worry on taxes and more time running your business. Use e-file and EFTPS to your benefit. For e-file, go to IRS.gov/EmploymentEfile for additional information. A fee may be charged to file electronically. For EFTPS, go to EFTPS.gov or call EFTPS Customer Service at 1-800-555-4477 or 1-800-733-4829 (TDD). For electronic filing of Forms W-2, Wage and Tax Statement, go to SSA.gov/employer. If you’re filing your tax return or paying your federal taxes electronically, a valid EIN is required at CAUTION the time the return is filed or the payment is made. If a valid EIN isn't provided, the return or payment won't be processed. This may result in penalties. ! Electronic funds withdrawal (EFW). If you file your employment tax return electronically, you can e-file and use Publication 15 (2018) EFW to pay the balance due in a single step using tax preparation software or through a tax professional. However, don't use EFW to make federal tax deposits. For more information on paying your taxes using EFW, go to IRS.gov/EFW. Credit or debit card payments. You can pay the balance due shown on your employment tax return by credit or debit card. Don't use a credit or debit card to make federal tax deposits. For more information on paying your taxes with a credit or debit card, go to IRS.gov/ PayByCard. Your payment will be processed by a payment processor who will charge a processing fee. Online payment agreement. You may be eligible to apply for an installment agreement online if you can’t pay the full amount of tax you owe when you file your employment tax return. For more information, see the instructions for your employment tax return or go to IRS.gov/OPA. Forms in Spanish You can provide Formulario W-4(SP), Certificado de Exención de Retenciones del Empleado, in place of Form W-4, Employee's Withholding Allowance Certificate, to your Spanish-speaking employees. For more information, see Pub. 17(SP), El Impuesto Federal sobre los Ingresos (Para Personas Físicas). For nonemployees, such as independent contractors, Formulario W-9(SP), Solicitud y Certificación del Número de Identificación del Contribuyente, may be used in place of Form W-9, Request for Taxpayer Identification Number and Certification. Hiring New Employees Eligibility for employment. You must verify that each new employee is legally eligible to work in the United States. This includes completing the U.S. Citizenship and Immigration Services (USCIS) Form I-9, Employment Eligibility Verification. You can get Form I-9 at USCIS.gov/ Forms, USCIS offices, or by calling 1-800-870-3676. For more information, visit the USCIS website at USCIS.gov/ I-9-Central or call 1-800-375-5283 or 1-800-767-1833 (TDD). Name and social security number (SSN). Record each new employee's name and SSN from his or her social security card. Any employee without a social security card should apply for one. See section 4. Paying Wages, Pensions, or Annuities Correcting Form 941 or Form 944. If you discover an error on a previously filed Form 941 or Form 944, make the correction using Form 941-X or Form 944-X. Forms 941-X and 944-X are stand-alone forms, meaning taxpayers can file them when an error is discovered. Forms 941-X and 944-X are used by employers to claim refunds or abatements of employment taxes, rather than Form 843. See section 13 for more information. Income tax withholding. Withhold federal income tax from each wage payment or supplemental unemployment compensation plan benefit payment according to the employee's Form W-4 and the correct withholding table. If you have nonresident alien employees, see Withholding income taxes on the wages of nonresident alien employees in section 9. In 2018, withhold from periodic pension and annuity payments as if the recipient is married claiming three withholding allowances, unless he or she has provided Form W-4P, Withholding Certificate for Pension or Annuity Payments, either electing no withholding or giving a different number of allowances, marital status, or an additional amount to be withheld. Don't withhold on direct rollovers from qualified plans or governmental section 457(b) plans. See section 9 and Pub. 15-A, Employer's Supplemental Tax Guide. Pub. 15-A includes information about withholding on pensions and annuities. Zero wage return. If you haven't filed a “final” Form 941 or Form 944, or aren't a “seasonal” employer, you must continue to file a Form 941 or Form 944, even for periods during which you paid no wages. The IRS encourages you to file your “Zero Wage” Forms 941 or 944 electronically. Go to IRS.gov/EmploymentEfile for more information on electronic filing. New hire reporting. You’re required to report any new employee to a designated state new hire registry. A new employee is an employee who hasn't previously been employed by you or was previously employed by you but has been separated from such prior employment for at least 60 consecutive days. Many states accept a copy of Form W-4 with employer information added. Visit the Office of Child Support Enforcement website at acf.hhs.gov/programs/css/ employers for more information. W-4 request. Ask each new employee to complete the 2018 Form W-4. See section 9. New employees may continue to claim allowances on the 2017 Form W-4 until 30 days after the 2018 Form W-4 is released. Publication 15 (2018) Page 5 Information Returns You may be required to file information returns to report certain types of payments made during the year. For example, you must file Form 1099-MISC, Miscellaneous Income, to report payments of $600 or more to persons not treated as employees (for example, independent contractors) for services performed for your trade or business. For details about filing Forms 1099 and for information about required electronic filing, see the General Instructions for Certain Information Returns for general information and the separate, specific instructions for each information return you file (for example, Instructions for Form 1099-MISC). Generally, don't use Forms 1099 to report wages and other compensation you paid to employees; report these on Form W-2. See the General Instructions for Forms W-2 and W-3 for details about filing Form W-2 and for information about required electronic filing. If you file 250 or more Forms 1099-MISC, you must file them electronically. If you file 250 or more Forms W-2, you must file them electronically. Electronic filing is the only form of magnetic media that the IRS and SSA will accept. Information reporting customer service site. The IRS operates an information return customer service site to answer questions about reporting on Forms W-2, W-3, 1099, and other information returns. If you have questions related to reporting on information returns, call 1-866-455-7438 (toll free), 304-263-8700 (toll call), or 304-579-4827 (TDD/TTY for persons who are deaf, hard of hearing, or have a speech disability). The center can also be reached by email at [email protected] Don't include tax identification numbers (TINs) or attachments in email correspondence because electronic mail isn't secure. Nonpayroll Income Tax Withholding Nonpayroll federal income tax withholding (reported on Forms 1099 and Form W-2G, Certain Gambling Winnings) must be reported on Form 945, Annual Return of Withheld Federal Income Tax. Separate deposits are required for payroll (Form 941 or Form 944) and nonpayroll (Form 945) withholding. Nonpayroll items include: Pensions (including distributions from tax-favored retirement plans, for example, section 401(k), section 403(b), and governmental section 457(b) plans), annuities, and IRA distributions. Military retirement. Gambling winnings. Indian gaming profits. Employer Responsibilities Employer Responsibilities: The following list provides a brief summary of your basic responsibilities. Because the individual circumstances for each employer can vary greatly, responsibilities for withholding, depositing, and reporting employment taxes can differ. Each item in this list has a page reference to a more detailed discussion in this publication. New Employees: Page Verify work eligibility of new employees . . . . . . . 5 Record employees' names and SSNs from social security cards . . . . . . . . . . . . . . . . . . . . 5 Ask employees for Form W-4 . . . . . . . . . . . . . . 5 Each Payday: Withhold federal income tax based on each employee's Form W-4 . . . . . . . . . . . . . . . . . . . 21 Withhold employee's share of social security and Medicare taxes . . . . . . . . . . . . . . . . . . . . 24 Deposit: • Withheld income tax • Withheld and employer social security taxes • Withheld and employer Medicare taxes . . . . . 26 Note: Due date of deposit generally depends on your deposit schedule (monthly or semiweekly) Quarterly (By April 30, July 31, October 31, and January 31): Deposit FUTA tax if undeposited amount is over $500 . . . . . . . . . . . . . . . . . . . . . . . . . . 37 File Form 941 (pay tax with return if not required to deposit) . . . . . . . . . . . . . . . . . . . . . 31 Page 6 Annually (see Calendar for due dates): Page File Form 944 if required (pay tax with return if not required to deposit) . . . . . . . . . . . . . . . . . . . . . 31 Remind employees to submit a new Form W-4 if they need to change their withholding . . . . . . . . . . 21 Ask for a new Form W-4 from employees claiming exemption from income tax withholding . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22 Reconcile Forms 941 (or Form 944) with Forms W-2 and W-3 . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33 Furnish each employee a Form W-2 . . . . . . . . . . . . 9 File Copy A of Forms W-2 and the transmittal Form W-3 with the SSA . . . . . . . . . . . . . . . . . . . . . 9 Furnish each other payee a Form 1099 (for example, Form 1099-MISC) . . . . . . . . . . . . . . . . . . . . . . . . . 9 File Forms 1099 and the transmittal Form 1096 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9 9 File Form 940 . . . . . . . . . . . . . . . . . . . . . . . . . . . . File Form 945 for any nonpayroll income tax withholding . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9 Publication 15 (2018) Certain government payments on which the recipient elected voluntary income tax withholding. Dividends and other distributions by an ANC on which the recipient elected voluntary income tax withholding. Payments subject to backup withholding. For details on depositing and reporting nonpayroll income tax withholding, see the Instructions for Form 945. Distributions from nonqualified pension plans and deferred compensation plans. Because distributions to participants from some nonqualified pension plans and deferred compensation plans (including section 457(b) plans of tax-exempt organizations) are treated as wages and are reported on Form W-2, income tax withheld must be reported on Form 941 or Form 944, not on Form 945. However, distributions from such plans to a beneficiary or estate of a deceased employee aren't wages and are reported on Forms 1099-R, Distributions From Pensions, Annuities, Retirement or Profit-Sharing Plans, IRAs, Insurance Contracts, etc.; income tax withheld must be reported on Form 945. Backup withholding. You generally must withhold 24% of certain taxable payments if the payee fails to furnish you with his or her correct taxpayer identification number (TIN). This withholding is referred to as “backup withholding.” Payments subject to backup withholding include interest, dividends, patronage dividends, rents, royalties, commissions, nonemployee compensation, payments made in settlement of payment card or third-party network transactions, and certain other payments you make in the course of your trade or business. In addition, transactions by brokers and barter exchanges and certain payments made by fishing boat operators are subject to backup withholding. Backup withholding doesn't apply to wages, pensions, annuities, IRAs (including simplified emCAUTION ployee pension (SEP) and SIMPLE retirement plans), section 404(k) distributions from an employee stock ownership plan (ESOP), medical savings accounts (MSAs), health savings accounts (HSAs), long-term-care benefits, or real estate transactions. ! You can use Form W-9 or Formulario W-9(SP) to request payees to furnish a TIN. Form W-9 or Formulario W-9 (SP) must be used when payees must certify that the number furnished is correct, or when payees must certify that they’re not subject to backup withholding or are exempt from backup withholding. The Instructions for the Requester of Form W-9 or Formulario W-9(SP) includes a list of types of payees who are exempt from backup withholding. For more information, see Pub. 1281, Backup Withholding for Missing and Incorrect Name/TIN(s). Publication 15 (2018) Recordkeeping Keep all records of employment taxes for at least 4 years. These should be available for IRS review. Your records should include the following information. Your EIN. Amounts and dates of all wage, annuity, and pension payments. Amounts of tips reported to you by your employees. Records of allocated tips. The fair market value of in-kind wages paid. Names, addresses, SSNs, and occupations of employees and recipients. Any employee copies of Forms W-2 and W-2c returned to you as undeliverable. Dates of employment for each employee. Periods for which employees and recipients were paid while absent due to sickness or injury and the amount and weekly rate of payments you or third-party payors made to them. Copies of employees' and recipients' income tax withholding allowance certificates (Forms W-4, W-4P, W-4(SP), W-4S, and W-4V). Dates and amounts of tax deposits you made and acknowledgment numbers for deposits made by EFTPS. Copies of returns filed and confirmation numbers. Records of fringe benefits and expense reimbursements provided to your employees, including substantiation. Change of Business Name Notify the IRS immediately if you change your business name. Write to the IRS office where you file your returns, using the Without a payment address provided in the instructions for your employment tax return, to notify the IRS of any business name change. See Pub. 1635 to see if you need to apply for a new EIN. Change of Business Address or Responsible Party Notify the IRS immediately if you change your business address or responsible party. Complete and mail Form 8822-B to notify the IRS of a business address or responsible party change. For a definition of “responsible party,” see the Form 8822-B instructions. Page 7 Private Delivery Services You can use certain private delivery services (PDSs) designated by the IRS to meet the “timely mailing as timely filing” rule for tax returns. Go to IRS.gov/PDS for the current list of PDSs. The PDS can tell you how to get written proof of the mailing date. For the IRS mailing address to use if you're using a PDS, go to IRS.gov/PDSstreetAdresses. ! CAUTION PDSs can't deliver items to P.O. boxes. You must use the U.S. Postal Service to mail any item to an IRS P.O. box address. Telephone Help Tax questions. You can call the IRS Business and Specialty Tax Line with your employment tax questions at 1-800-829-4933. Help for people with disabilities. You may call 1-800-829-4059 (TDD/TTY for persons who are deaf, hard of hearing, or have a speech disability) with any employment tax questions. You may also use this number for assistance with unresolved tax problems. Additional employment tax information. Go to IRS.gov/EmploymentTaxes for additional employment tax information. Ordering Employer Tax Forms and Publications You can order employer tax forms and publications and information returns online at IRS.gov/OrderForms. Instead of ordering paper Forms W-2 and W-3, consider filing them electronically using the SSA's free e-file service. Visit the SSA's Employer W-2 Filing Instructions & Information website at SSA.gov/employer to register for Business Services Online. You’ll be able to create Forms W-2 online and submit them to the SSA by typing your wage information into easy-to-use fill-in fields. In addition, you can print out completed copies of Forms W-2 to file with state or local governments, distribute to your employees, and keep for your records. Form W-3 will be created for you based on your Forms W-2. Filing Addresses Generally, your filing address for Forms 940, 941, 943, 944, 945, and CT-1 depends on the location of your residence or principal place of business and whether or not you’re including a payment with your return. There are separate filing addresses for these returns if you’re a tax-exempt organization or government entity. See the Page 8 separate instructions for Forms 940, 941, 943, 944, 945, or CT-1 for the filing addresses. Dishonored Payments Any form of payment that is dishonored and returned from a financial institution is subject to a penalty. The penalty is $25 or 2% of the payment, whichever is more. However, the penalty on dishonored payments of $24.99 or less is an amount equal to the payment. For example, a dishonored payment of $18 is charged a penalty of $18. Photographs of Missing Children The IRS is a proud partner with the National Center for Missing & Exploited Children® (NCMEC). Photographs of missing children selected by the Center may appear in this publication on pages that would otherwise be blank. You can help bring these children home by looking at the photographs and calling 1-800-THE-LOST (1-800-843-5678) if you recognize a child. Calendar The following is a list of important dates responsibilities. Also see Pub. 509, Tax Calendars. and If any date shown next for filing a return, furnishing a form, or depositing taxes falls on a Saturday, TIP Sunday, or legal holiday, the due date is the next business day. The term "legal holiday" means any legal holiday in the District of Columbia. A statewide legal holiday delays a filing due date only if the IRS office where you’re required to file is located in that state. However, a statewide legal holiday doesn't delay the due date of federal tax deposits. See Deposits Due on Business Days Only in section 11. For any filing due date, you’ll meet the “file” or “furnish” requirement if the envelope containing the return or form is properly addressed, contains sufficient postage, and is postmarked by the U.S. Postal Service on or before the due date, or sent by an IRS-designated PDS on or before the due date. See Private Delivery Services under Reminders for more information. By January 31 File Form 941 or Form 944. File Form 941 for the fourth quarter of the previous calendar year and deposit any undeposited income, social security, and Medicare taxes. You may pay these taxes with Form 941 if your total tax liability for the quarter is less than $2,500. File Form 944 for the previous calendar year instead of Form 941 if the IRS has notified you in writing to file Form 944 and pay any undeposited income, social security, and Medicare taxes. You may pay these taxes with Form Publication 15 (2018) 944 if your total tax liability for the year is less than $2,500. For additional rules on when you can pay your taxes with your return, see Payment with return in section 11. If you timely deposited all taxes when due, you may file by February 10. File Form 940. File Form 940 to report any FUTA tax. However, if you deposited all of the FUTA tax when due, you may file by February 10. Furnish Forms 1099 and W-2. Furnish each employee a completed Form W-2. Furnish Form 1099-MISC to payees for nonemployee compensation. Most Forms 1099 must be furnished to payees by January 31, but some can be furnished by February 15. For more information, see the General Instructions for Certain Information Returns. File Form W-2. File with the SSA Copy A of all 2017 paper and electronic Forms W-2 with Form W-3, Transmittal of Wage and Tax Statements. For more information on reporting Form W-2 information to the SSA electronically, visit the SSA’s Employer W-2 Filing Instructions & Information webpage at SSA.gov/ employer. If filing electronically, via the SSA's Form W-2 Online service, the SSA will generate Form W-3 data from the electronic submission of Form(s) W-2. File Form 1099-MISC reporting nonemployee compensation. File with the IRS Copy A of all 2017 paper and electronic Forms 1099-MISC that report nonemployee compensation, with Form 1096, Annual Summary and Transmittal of U.S. Information Returns. For information on filing information returns electronically with the IRS, see Pub. 1220, Specifications for Electronic Filing of Forms 1097, 1098, 1099, 3921, 3922, 5498, and W-2G. File Form 945. File Form 945 to report any nonpayroll federal income tax withheld. If you deposited all taxes when due, you may file by February 10. See Nonpayroll Income Tax Withholding under Reminders for more information. By February 28 Request a new Form W-4 from exempt employees. Ask for a new Form W-4 from each employee who claimed exemption from income tax withholding last year. File paper 2017 Forms 1099 and 1096. File Copy A of all paper 2017 Forms 1099, except Forms 1099-MISC reporting nonemployee compensation, with Form 1096 with the IRS. For electronically filed returns, see By March 31 below. File paper Form 8027. File paper Form 8027, Employer's Annual Information Return of Tip Income and Allocated Tips, with the IRS. See section 6. For electronically filed returns, see By March 31 below. Publication 15 (2018) On March 1 Forms W-4 claiming exemption from withholding expire. Any Form W-4 claiming exemption from withholding for the previous year has now expired. Begin withholding for any employee who previously claimed exemption from withholding but hasn't given you a new Form W-4 for the current year. If the employee doesn't give you a new Form W-4, withhold tax based on the last valid Form W-4 you have for the employee that doesn't claim exemption from withholding or, if one doesn't exist, as if he or she is single with zero withholding allowances. See section 9 for more information. If the employee gives you a new Form W-4 claiming exemption from withholding after February 28, you may apply the exemption to future wages, but don't refund taxes withheld while the exempt status wasn't in place. By March 31 File electronic 2017 Forms 1099 and 8027. File electronic 2017 Forms 1099, except Forms 1099-MISC reporting nonemployee compensation, and 8027 with the IRS. For information on filing information returns electronically with the IRS, see Pub. 1220 and Pub. 1239, Specifications for Electronic Filing of Form 8027, Employer's Annual Information Return of Tip Income and Allocated Tips. By April 30, July 31, October 31, and January 31 Deposit FUTA taxes. Deposit FUTA tax for the quarter (including any amount carried over from other quarters) if over $500. If $500 or less, carry it over to the next quarter. See section 14 for more information. File Form 941. File Form 941 and deposit any undeposited income, social security, and Medicare taxes. You may pay these taxes with Form 941 if your total tax liability for the quarter is less than $2,500. If you timely deposited all taxes when due, you may file by May 10, August 10, November 10, or February 10, respectively. Don't file Form 941 for these quarters if you have been notified to file Form 944 and you didn't request and receive written notice from the IRS to file quarterly Forms 941. Before December 1 New Forms W-4. Remind employees to submit a new Form W-4 if their marital status or withholding allowances have changed or will change for the next year. Introduction This publication explains your tax responsibilities as an employer. It explains the requirements for withholding, depositing, reporting, paying, and correcting employment taxes. It explains the forms you must give to your Page 9 employees, those your employees must give to you, and those you must send to the IRS and the SSA. This guide also has tax tables you need to figure the taxes to withhold from each employee for 2018. References to “income tax” in this guide apply only to “federal” income tax. Contact your state or local tax department to determine if their rules are different. When you pay your employees, you don't pay them all the money they earned. As their employer, you have the added responsibility of withholding taxes from their paychecks. The federal income tax and employees' share of social security and Medicare taxes that you withhold from your employees' paychecks are part of their wages that you pay to the United States Treasury instead of to your employees. Your employees trust that you pay the withheld taxes to the United States Treasury by making federal tax deposits. This is the reason that these withheld taxes are called trust fund taxes. If federal income, social security, or Medicare taxes that must be withheld aren't withheld or aren't deposited or paid to the United States Treasury, the trust fund recovery penalty may apply. See section 11 for more information. Additional employment tax information is available in Pub. 15-A. Pub. 15-A includes specialized information supplementing the basic employment tax information provided in this publication. Pub. 15-B, Employer's Tax Guide to Fringe Benefits, contains information about the employment tax treatment and valuation of various types of noncash compensation. Most employers must withhold (except FUTA), deposit, report, and pay the following employment taxes. Income tax. Social security tax. Medicare tax. FUTA tax. There are exceptions to these requirements. See section 15 for guidance. Railroad retirement taxes are explained in the Instructions for Form CT-1. Comments and suggestions. We welcome your comments about this publication and your suggestions for future editions. You can send us comments from IRS.gov/ FormComments. Or you can write to: Internal Revenue Service Tax Forms and Publications 1111 Constitution Ave. NW, IR-6526 Washington, DC 20224 Although we can’t respond individually to each comment received, we do appreciate your feedback and will consider your comments as we revise our tax forms, instructions, and publications. We can’t answer tax questions sent to the above address. Federal government employers. The information in this publication, including the rules for making federal tax deposits, applies to federal agencies. Page 10 State and local government employers. Payments to employees for services in the employ of state and local government employers are generally subject to federal income tax withholding but not FUTA tax. Most elected and appointed public officials of state or local governments are employees under common law rules. See chapter 3 of Pub. 963, Federal-State Reference Guide. In addition, wages, with certain exceptions, are subject to social security and Medicare taxes. See section 15 for more information on the exceptions. If an election worker is employed in another capacity with the same government entity, see Revenue Ruling 2000-6 on page 512 of Internal Revenue Bulletin 2000-6 at IRS.gov/pub/irs-irbs/irb00-06.pdf. You can get information on reporting and social security coverage from your local IRS office. If you have any questions about coverage under a section 218 (Social Security Act) agreement, contact the appropriate state official. To find your State Social Security Administrator, visit the National Conference of State Social Security Administrators website at NCSSSA.org. Disregarded entities and qualified subchapter S subsidiaries (QSubs). Eligible single-owner disregarded entities and QSubs are treated as separate entities for employment tax purposes. Eligible single-member entities must report and pay employment taxes on wages paid to their employees using the entities' own names and EINs. See Regulations sections 1.1361-4(a)(7) and 301.7701-2(c)(2)(iv). COBRA premium assistance credit. The Consolidated Omnibus Budget Reconciliation Act of 1985 (COBRA) provides certain former employees, retirees, spouses, former spouses, and dependent children the right to temporary continuation of health coverage at group rates. COBRA generally covers multiemployer health plans and health plans maintained by private-sector employers (other than churches) with 20 or more full- and part-time employees. Parallel requirements apply to these plans under the Employee Retirement Income Security Act of 1974 (ERISA). Under the Public Health Service Act, COBRA requirements apply also to health plans covering state or local government employees. Similar requirements apply under the Federal Employees Health Benefits Program and under some state laws. For the premium assistance (or subsidy) discussed below, these requirements are all referred to as COBRA requirements. Under the American Recovery and Reinvestment Act of 2009 (ARRA), employers are allowed a credit against “payroll taxes” (referred to in this publication as “employment taxes”) for providing COBRA premium assistance to assistance-eligible individuals. For periods of COBRA continuation coverage beginning after February 16, 2009, a group health plan must treat an assistance-eligible individual as having paid the required COBRA continuation coverage premium if the individual elects COBRA coverage and pays 35% of the amount of the premium. An assistance-eligible individual is a qualified beneficiary of an employer's group health plan who is eligible for COBRA continuation coverage during the period beginning September 1, 2008, and ending May 31, 2010, due Publication 15 (2018) to the involuntarily termination from employment of a covered employee during the period and elects continuation COBRA coverage. The assistance for the coverage can last up to 15 months. The COBRA premium assistance credit was available to an employer for premiums paid on behalf of employees who were involuntarily terminated from employment between September 1, 2008, and May 31, 2010. The COBRA premium assistance credit isn’t available for individuals who were involuntarily terminated after May 31, 2010. Therefore, only in rare circumstances will the credit still be available, such as instances where COBRA eligibility was delayed as a result of employer-provided health insurance coverage following termination. For more information about the credit, see Notice 2009-27, 2009-16 I.R.B. 838, available at IRS.gov/irb/2009-16_irb/ar09.html. Administrators of the group health plans (or other entities) that provide or administer COBRA continuation coverage must provide notice to assistance-eligible individuals of the COBRA premium assistance. The 65% of the premium not paid by the assistance-eligible individuals is reimbursed to the employer maintaining the group health plan. The reimbursement is made through a credit against the employer's employment tax liabilities. For information on how to claim the credit, see the Instructions for Form 941-X or the Instructions for Form 944-X. The credit is treated as a deposit made on the first day of the return period (quarter or year). In the case of a multiemployer plan, the credit is claimed by the plan, rather than the employer. In the case of an insured plan subject to state law continuation coverage requirements, the credit is claimed by the insurance company, rather than the employer. Anyone claiming the credit for COBRA premium assistance payments must maintain the following information to support their claim, including the following. Information on the receipt of the assistance-eligible individuals' 35% share of the premium, including dates and amounts. In the case of an insurance plan, a copy of an invoice or other supporting statement from the insurance carrier and proof of timely payment of the full premium to the insurance carrier required under COBRA. In the case of a self-insured plan, proof of the premium amount and proof of the coverage provided to the assistance-eligible individuals. Attestation of involuntary termination, including the date of the involuntary termination for each covered employee whose involuntary termination is the basis for eligibility for the subsidy. Proof of each assistance-eligible individual's eligibility for COBRA coverage and the election of COBRA coverage. A record of the SSNs of all covered employees, the amount of the subsidy reimbursed with respect to each covered employee, and whether the subsidy was for one individual or two or more individuals. For more information, go to IRS.gov/COBRACredit. Publication 15 (2018) 1. Employer Identification Number (EIN) If you’re required to report employment taxes or give tax statements to employees or annuitants, you need an EIN. The EIN is a nine-digit number the IRS issues. The digits are arranged as follows: 00-0000000. It is used to identify the tax accounts of employers and certain others who have no employees. Use your EIN on all of the items you send to the IRS and the SSA. For more information, see Pub. 1635. If you don’t have an EIN, you may apply for one online by visiting the IRS website at IRS.gov/EIN. You may also apply for an EIN by faxing or mailing Form SS-4 to the IRS. Employers outside of the United States may also apply for an EIN by calling 267-941-1099 (toll call). Don't use an SSN in place of an EIN. You should have only one EIN. If you have more than one and aren't sure which one to use, call 1-800-829-4933 or 1-800-829-4059 (TDD/TTY for persons who are deaf, hard of hearing, or have a speech disability). Give the numbers you have, the name and address to which each was assigned, and the address of your main place of business. The IRS will tell you which number to use. For more information, see Pub. 1635. If you took over another employer's business (see Successor employer in section 9), don't use that employer's EIN. If you’ve applied for an EIN but don't have your EIN by the time a return is due, file a paper return and write “Applied For” and the date you applied for it in the space shown for the number. 2. Who Are Employees? Generally, employees are defined either under common law or under statutes for certain situations. See Pub. 15-A for details on statutory employees and nonemployees. Employee status under common law. Generally, a worker who performs services for you is your employee if you have the right to control what will be done and how it will be done. This is so even when you give the employee freedom of action. What matters is that you have the right to control the details of how the services are performed. See Pub. 15-A for more information on how to determine whether an individual providing services is an independent contractor or an employee. Generally, people in business for themselves aren't employees. For example, doctors, lawyers, veterinarians, and others in an independent trade in which they offer their services to the public are usually not employees. However, if the business is incorporated, corporate officers who work in the business are employees of the corporation. If an employer-employee relationship exists, it doesn't matter what it is called. The employee may be called an Page 11 agent or independent contractor. It also doesn't matter how payments are measured or paid, what they’re called, or if the employee works full or part time. Statutory employees. If someone who works for you isn't an employee under the common law rules discussed earlier, don't withhold federal income tax from his or her pay, unless backup withholding applies. Although the following persons may not be common law employees, they’re considered employees by statute for social security, Medicare, and FUTA tax purposes under certain conditions. An agent (or commission) driver who delivers food, beverages (other than milk), laundry, or dry cleaning for someone else. A full-time life insurance salesperson who sells primarily for one company. A homeworker who works by guidelines of the person for whom the work is done, with materials furnished by and returned to that person or to someone that person designates. A traveling or city salesperson (other than an agent-driver or commission-driver) who works full time (except for sideline sales activities) for one firm or person getting orders from customers. The orders must be for merchandise for resale or supplies for use in the customer's business. The customers must be retailers, wholesalers, contractors, or operators of hotels, restaurants, or other businesses dealing with food or lodging. Statutory nonemployees. Direct sellers, qualified real estate agents, and certain companion sitters are, by law, considered nonemployees. They’re generally treated as self-employed for all federal tax purposes, including income and employment taxes. H-2A agricultural workers. On Form W-2, don't check box 13 (Statutory employee), as H-2A workers aren't statutory employees. Treating employees as nonemployees. You’ll generally be liable for social security and Medicare taxes and withheld income tax if you don't deduct and withhold these taxes because you treated an employee as a nonemployee. You may be able to calculate your liability using special IRC section 3509 rates for the employee share of social security and Medicare taxes and the federal income tax withholding. The applicable rates depend on whether you filed required Forms 1099. You can't recover the employee share of social security tax, Medicare tax, or income tax withholding from the employee if the tax is paid under IRC section 3509. You’re liable for the income tax withholding regardless of whether the employee paid income tax on the wages. You continue to owe the full employer share of social security and Medicare taxes. The employee remains liable for the employee share of social security and Medicare taxes. See IRC section 3509 for details. Also see the Instructions for Form 941-X. Page 12 IRC section 3509 rates aren't available if you intentionally disregard the requirement to withhold taxes from the employee or if you withheld income taxes but not social security or Medicare taxes. IRC section 3509 isn't available for reclassifying statutory employees. See Statutory employees above. If the employer issued required information returns, the IRC section 3509 rates are: For social security taxes; employer rate of 6.2% plus 20% of the employee rate of 6.2% for a total rate of 7.44% of wages. For Medicare taxes; employer rate of 1.45% plus 20% of the employee rate of 1.45%, for a total rate of 1.74% of wages. For Additional Medicare Tax; 0.18% (20% of the employee rate of 0.9%) of wages subject to Additional Medicare Tax. For income tax withholding, the rate is 1.5% of wages. If the employer didn't issue required information returns, the IRC section 3509 rates are: For social security taxes; employer rate of 6.2% plus 40% of the employee rate of 6.2% for a total rate of 8.68% of wages. For Medicare taxes; employer rate of 1.45% plus 40% of the employee rate of 1.45%, for a total rate of 2.03% of wages. For Additional Medicare Tax; 0.36% (40% of the employee rate of 0.9%) of wages subject to Additional Medicare Tax. For income tax withholding, the rate is 3.0% of wages. Relief provisions. If you have a reasonable basis for not treating a worker as an employee, you may be relieved from having to pay employment taxes for that worker. To get this relief, you must file all required federal tax returns, including information returns, on a basis consistent with your treatment of the worker. You (or your predecessor) must not have treated any worker holding a substantially similar position as an employee for any periods beginning after 1977. See Pub. 1976, Do You Qualify for Relief Under Section 530. IRS help. If you want the IRS to determine whether a worker is an employee, file Form SS-8. Voluntary Classification Settlement Program (VCSP). Employers who are currently treating their workers (or a class or group of workers) as independent contractors or other nonemployees and want to voluntarily reclassify their workers as employees for future tax periods may be eligible to participate in the VCSP if certain requirements are met. File Form 8952 to apply for the VCSP. For more information, go to IRS.gov/VCSP. Publication 15 (2018) Business Owned and Operated by Spouses If you and your spouse jointly own and operate a business and share in the profits and losses, you may be partners in a partnership, whether or not you have a formal partnership agreement. See Pub. 541 for more details. The partnership is considered the employer of any employees, and is liable for any employment taxes due on wages paid to its employees. Exception—Qualified joint venture. For tax years beginning after December 31, 2006, the Small Business and Work Opportunity Tax Act of 2007 (Public Law 110-28) provides that a “qualified joint venture,” whose only members are spouses filing a joint income tax return, can elect not to be treated as a partnership for federal tax purposes. A qualified joint venture conducts a trade or business where: The only members of the joint venture are spouses who file a joint income tax return, Both spouses materially participate (see Material participation in the Instructions for Schedule C (Form 1040), line G) in the trade or business (mere joint ownership of property isn't enough), Both spouses elect to not be treated as a partnership, and The business is co-owned by both spouses and isn't held in the name of a state law entity such as a partnership or limited liability company (LLC). To make the election, all items of income, gain, loss, deduction, and credit must be divided between the spouses, in accordance with each spouse's interest in the venture, and reported on separate Schedules C or F as sole proprietors. Each spouse must also file a separate Schedule SE to pay self-employment taxes, as applicable. Spouses using the qualified joint venture rules are treated as sole proprietors for federal tax purposes and generally don't need an EIN. If employment taxes are owed by the qualified joint venture, either spouse may report and pay the employment taxes due on the wages paid to the employees using the EIN of that spouse's sole proprietorship. Generally, filing as a qualified joint venture won't increase the spouses' total tax owed on the joint income tax return. However, it gives each spouse credit for social security earnings on which retirement benefits are based and for Medicare coverage without filing a partnership return. Note. If your spouse is your employee, not your partner, see One spouse employed by another in section 3. For more information on qualified joint ventures, go to IRS.gov/QJV. Exception—Community income. If you and your spouse wholly own an unincorporated business as community property under the community property laws of a state, foreign country, or U.S. possession, you can treat the business either as a sole proprietorship (of the spouse who carried on the business) or a partnership. You may Publication 15 (2018) still make an election to be taxed as a qualified joint venture instead of a partnership. See Exception—Qualified joint venture above. 3. Family Employees Child employed by parents. Payments for the services of a child under age 18 who works for his or her parent in a trade or business aren't subject to social security and Medicare taxes if the trade or business is a sole proprietorship or a partnership in which each partner is a parent of the child. If these payments are for work other than in a trade or business, such as domestic work in the parent's private home, they’re not subject to social security and Medicare taxes until the child reaches age 21. However, see Covered services of a child or spouse, later. Payments for the services of a child under age 21 who works for his or her parent, whether or not in a trade or business, aren't subject to FUTA tax. Payments for the services of a child of any age who works for his or her parent are generally subject to income tax withholding unless the payments are for domestic work in the parent's home, or unless the payments are for work other than in a trade or business and are less than $50 in the quarter or the child isn't regularly employed to do such work. One spouse employed by another. The wages for the services of an individual who works for his or her spouse in a trade or business are subject to income tax withholding and social security and Medicare taxes, but not to FUTA tax. However, the payments for services of one spouse employed by another in other than a trade or business, such as domestic service in a private home, aren't subject to social security, Medicare, and FUTA taxes. Covered services of a child or spouse. The wages for the services of a child or spouse are subject to income tax withholding as well as social security, Medicare, and FUTA taxes if he or she works for: A corporation, even if it is controlled by the child's parent or the individual's spouse; A partnership, even
2018 Publication 15
More about the Federal Publication 15 Corporate Income Tax
Publication 15 (Circular E) is a yearly IRS publication containing hundreds or pages worth of tax information for employers and business owners.
We last updated the Employer's Tax Guide in January 2019, and the latest form we have available is for tax year 2018. This means that we don't yet have the updated form for the current tax year. Please check this page regularly, as we will post the updated form as soon as it is released by the Federal Internal Revenue Service. You can print other Federal tax forms here.
Other Federal Corporate Income Tax Forms:
|Form Code||Form Name|
|Form 941||Employer's Quarterly Federal Tax Return|
|Form 9465||Installment Agreement Request|
|Form 1120-H||U.S. Income Tax Return for Homeowners Associations|
|990 (Schedule O)||Supplemental Information to Form 990 or 990-EZ|
|Form 4562||Depreciation and Amortization (Including Information on Listed Property)|
The Internal Revenue Service usually releases income tax forms for the current tax year between October and January, although changes to some forms can come even later. We last updated Federal Publication 15 from the Internal Revenue Service in January 2019.
About the Corporate Income Tax
The IRS and most states require corporations to file an income tax return, with the exact filing requirements depending on the type of company.
Sole proprietorships or disregarded entities like LLCs are filed on Schedule C (or the state equivalent) of the owner's personal income tax return, flow-through entities like S Corporations or Partnerships are generally required to file an informational return equivilent to the IRS Form 1120S or Form 1065, and full corporations must file the equivalent of federal Form 1120 (and, unlike flow-through corporations, are often subject to a corporate tax liability).
Additional forms are available for a wide variety of specific entities and transactions including fiduciaries, nonprofits, and companies involved in other specific types of business.
Historical Past-Year Versions of Federal Publication 15
We have a total of four past-year versions of Publication 15 in the TaxFormFinder archives, including for the previous tax year. Download past year versions of this tax form as PDFs here:
2018 Publication 15
2017 Publication 15
2016 Publication 15
2015 Publication 15
While we do our best to keep our list of Federal Income Tax Forms up to date and complete, we cannot be held liable for errors or omissions. Is the form on this page out-of-date or not working? Please let us know and we will fix it ASAP.