Every time you run payroll, you should be withholding money from your employees’ wages to cover your small business tax liabilities—but that’s not all. There are certain payroll tax forms you must complete and file alongside your tax payments, too. This is where it gets confusing because the instructions—and the due dates—differ for each form. Keeping your ducks in a row may feel challenging when it comes to your payroll taxes, have no fear: we’ll guide you through the payroll tax forms you need to know and make managing them a total breeze.
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What are payroll tax forms?
Payroll tax forms are used to facilitate the collection and filing of payroll taxes. These forms are used to:
- Gather employees’ and independent contractors’ taxpayer identification numbers
- Calculate and report your employees’ federal income tax withholding rates
- Report your Social Security and Medicare payroll tax withholdings for your employees
- Report your compensation payments to nonemployees such as independent contractors
- Calculate and report your employees’ state income tax withholding rates
Types of payroll tax forms
In order to run payroll and file your payroll taxes correctly, you need several IRS and tax forms to keep you compliant at the state, local, and federal levels. These tax forms may include:
IRS Form W-4 is a form that enables you to determine how much income tax you will withhold from your employees’ paychecks. You should have all new employees provide you with a completed copy of Form W-4 before or on their first day as part of your team.
An employee can file an updated W-4 with your company any time they experience a qualifying life event, such as getting married or having a child, that would change their withholding allowance. While you should keep all your employees’ most recent W-4 forms in your records, you do not need to file any W-4 forms with the IRS.
Forms W-2 and W-3
IRS Form W-2 is a form that you use to indicate how much payroll tax you withhold from your employee’s wages. The primary reason you collect W-4 Forms from your employees is to ensure that you are properly calculating the tax withholding you report on Form W-2.
For the 2020 tax year, you must file all your employees’ W-2 forms with the Social Security Administration by February 1, 2021. You must also send your employees copies of their W-2 forms by this date.
Alongside all your individual W-2 forms, you must also submit a W-3 form. IRS Form W-3 is a summary of all your W-2 forms. It indicates the total employee wages you paid out to your employees—and the payroll taxes you withheld from your employees—during the calendar year. Unlike Form W-2, you do not need to file a copy of Form W-3 with your employees.
IRS Form 941 is a form that details your quarterly federal payroll taxes to the IRS. On this form, you will detail how much federal income tax and FICA tax (Social Security and Medicare taxes) you withheld from your employee wages during the quarter.
Almost all employers must file IRS Form 941. The only Form 941 employer exceptions are companies that have filed final returns, seasonal employers, or businesses that hire household or farm employees. On rare occasions, the IRS will notify you that your company qualifies to use Form 944, the annual alternative to Form 941, instead.
If you use Form 944, then your quarterly filing deadlines are April 30, July 31, October 31, and January 31. Note that all 944 forms filed on January 31 are for the fourth quarter of the prior calendar year.
If you pay independent contractors in addition to full-time employees, you also need to include Form W-9 among the tax forms you collect. IRS Form W-9 is a tax form that an independent contractor uses to provide their employers with their taxpayer identification number.
Form W-9 is essentially the independent contractor version of the W-4 form you use for your employees, but with one major difference. Whereas you must withhold taxes for all employees who give you a W-4, you should not withhold taxes from payments to independent contractors. Just like with Form W-4, you don’t need to file Form W-9 with the IRS, but you should keep each of your independent contractors’ W-9 forms on file.
If Form W-9 is the independent contractor version of Form W-4, then Form 1099-NEC is the independent contractor version of Form W-2. IRS Form 1099-NEC is a tax form through which you report all wages paid to an independent contractor.
Before the 2020 tax year, the IRS required employers to use Form 1099-MISC to report nonemployee compensation (the fancy term for payments to independent contractors). The IRS has made this change due to Congress passing the PATH Act in 2015. The PATH Act changed the due date for 1099-MISC forms reporting nonemployee compensation to January 31, but it still allowed for 1099-MISC forms reporting other miscellaneous income to be filed later. Due to confusion around the two possible deadlines, the IRS has revived Form 1099-NEC for the first time since 1982 to distinguish nonemployee compensation reporting from other Form 1099-MISC reporting.
Note that although the PATH Act made the filing deadline for nonemployee compensation reporting January 31, for the 2020 tax year, the Form 1099-NEC deadline is February 1, 2021.
State tax withholding certificates
State tax withholding certificates are tax forms that assist employers in determining the amount of state payroll taxes to withhold from employee wages. They’re essentially the state version of Form W-4. For more info, visit the Department of Labor Statistics to see a state-by-state requirement list (which should also detail your state’s equivalent of Form W-2).
Keep in mind that some states don’t collect income tax at all—lucky you! In this case, your small business’s state tax burden likely lies entirely in your employment taxes as determined by the State Unemployment Tax Act (SUTA).
State withholding, local, and employment tax forms
In addition to state tax withholding certificates, some states may require small businesses to fill out additional forms detailing their withholding and local taxes. These forms will eventually be filed with your state agency or jurisdiction, and you can check with your local authorities to learn more.
What payroll tax forms do I need to run payroll?
Whew! That was a lot of paperwork, right?
With so many tax forms to get to know, you might be wondering if you can start running payroll before having all these forms in hand. To start running payroll, you only need to collect your employees’ W-4 forms, your independent contractors’ W-9 forms, and your completed state tax withholding certificates for your employees. Every time you run payroll, record your wage payments and tax withholdings for each pay cycle so that you can more quickly complete, file, and pay Forms W-2, W-3, 941, and 1099-NEC by their deadlines.
Payroll tax form chart
Below is a more in-depth list of common forms you’ll often need to run payroll:
|Form W-4||An employee’s first day of work or before.||This form helps the employer calculate how much federal tax needs to be withheld for each employee each pay period. Employees fill it out on their first day on the job and they can update it any time a qualifying life event (like have a child) affects their withholding allowance.|
|Form W-2||January 31st is the deadline to file Form W-2 and to distribute this form to employees.||The W-2 is a wage and tax statement you need to give to each employee at the end of the year. They need it to file their taxes.|
|Form W-3||February 1, 2021 is the deadline to file your Form W-3.||The W-3 is a form that reports the total employee wages and payroll taxes you paid. You do not need to file a copy with your employees.|
|Form 941||Due at the end of each quarter. If the quarter ends on a non-banking day, then it’s due the next business day. Typically due the final day of March, June, September, and December.||Filed four times a year, Form 941 documents the total amount withheld for Social Security, Medicare, and federal income taxes each quarter.|
|Form W-9||At latest, upon an independent contractor filing their first assignment for your small business.||This form details the independent contractor's taxpayer identification number.|
|1099-NEC||January 31st is the deadline to report payments to non-employees as well as the deadline to distribute 1099s to contractors||You’ll likely need to file Form 1099-MISC at the end of the year for any independent contractors or professionals you’ve worked with who aren’t incorporated. It’s the income statement that contractors use to show the IRS how much they earned.|
|State tax withholding certificates||Check your state’s required forms and due dates.||Similar to the Form W-4, state tax withholding certificates helps the employer calculate how much state taxes to withhold from an employee, if any. The Department of Labor Statistics has a list of each state’s withholding form.|
|State withholding, local, and unemployment tax forms||Check your state’s required forms and due dates.||States may have withholding, unemployment, and local taxes. Most require a tax form to report the wages and taxes to the state agency or jurisdiction. To learn more, check with your state or jurisdiction.|
How to get extra help keeping up with payroll tax forms
Keeping track of all the forms required for payroll and remembering to submit them on time can be tricky. It’s best to consult a CPA or use a payroll provider like Gusto that will submit tax filings like these on your behalf.