Circular E, also known as the Employer’s Tax Guide (Publication 15), is a guide from the IRS that helps employers understand their tax duties. It covers everything from federal income tax withholding to Social Security and Medicare taxes. It also includes details about tax deposit schedules. Employers use Circular E to stay on track with payroll taxes and to report taxes correctly.
When does the IRS publish new Circular E guidelines?
The IRS updates Circular E every year, usually at the end of the year or early in the new tax year. The updated guide reflects any changes to tax laws, withholding rates, and employer requirements. Employers should always use the latest version to stay compliant with federal tax laws.
What are the components of Circular E?
Circular E has a few key sections that help employers manage payroll taxes. These include:
- Withholding tax tables: How to figure out how much federal income tax to withhold from employees’ wages.
- Employer tax responsibilities: Information on filing, deposit schedules, and recordkeeping duties.
- Social Security and Medicare taxes: How FICA taxes work and what the employer and employee contribution rates are.
- Federal unemployment tax (futa): Details on payroll taxes employers pay for unemployment insurance.
- Depositing and reporting taxes: How and when to deposit taxes using the Electronic Federal Tax Payment System (EFTPS).
- Special situations: Guidelines for things like supplemental wages, sick pay, and tips.
Staying updated with Circular E helps employers stay compliant with IRS rules and avoid any penalties related to tax withholding and reporting.
