IV. Employment and Excise Taxes

Definition:

• If you have one or more employees, you will generally be required to withhold federal income tax from their wages.
• You also may be subject to social security and Medicare taxes under the Federal Insurance Contributions Act (FICA) and federal unemployment tax under the Federal Unemployment Tax Act (FUTA).

Form(s):

Social security, Medicare, and withheld income tax are usually reported on Form 941, Employer's Quarterly Federal Tax Return. The exceptions are:

• If your employees are agricultural workers, use Form 943, Employer's Annual Tax Return for Agricultural Employees.
• If your employee(s) does household work in your private, non-farm home (for example, child care, housekeeping, or gardening work) attach Schedule H, Household Employment Taxes, to your Form 1040.

NOTE:Employers must report and pay required employment taxes for household domestic employees on Schedule H attached to Forms 1040 or 1040A. While withheld amounts no longer have to be deposited on a monthly basis, employers do need an employer identification number (EIN) to include on Form W-2 and Schedule H.

The non-payroll items including backup, withholding and withholding for pensions, annuities, IRAs, and gambling winnings are reported on Form 945, Annual Return of Withheld Federal Income Tax. The return is due January 31 of the preceding year.

Report Federal Unemployment Tax on Form 940, Employer's Annual Federal Unemployment (FUTA) Tax Return or Form 940EZ, a simplified version of Form 940.

Important information: If on your application you indicated you have or will have employees, you will be automatically enrolled in the Electronic Federal Tax Payment System (EFTPS). This is a free service provided by theU.S.Department of the Treasury that lets you pay all your federal taxes online or by phone. You will be receiving more information by mail, including a Personal Identification Number (PIN) and instructions for obtaining an Internet Password so you can make payments online. NO ACTION IS REQUIRED ON YOUR PART. Wait to receive your EFTPS materials in the mail.

Definition:

Excise tax is a tax on the manufacture, sale, or consumption of a specific commodity. Examples are fuel taxes, environmental taxes, and communications and air transportation taxes.

Form(s):

Most excise taxes are reported on Form 720, Quarterly Federal Excise Tax Return. Certain excise taxes are reported on different forms and to other organizations. Those excise taxes and forms are:

• Form 2290, Highway Use Tax
• Form 730, Tax on Wagering
• Form 11-C, Occupational Tax Return and Application for Registry-Wagering
• ATF Form 5300.26, Firearms, and ATF Form 5630.5, Alcohol, Tobacco, and Firearms