2024 Publication 15

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Department of the Treasury

Internal Revenue Service

Publication 15

Cat. No. 10000W

(Circular E),

Employer's

Tax Guide

For use in 2024

Get forms and other information faster and easier at:

• IRS.gov (English)

• IRS.gov/Spanish (Español)

•

IRS.gov/Chinese (中文)

•

IRS.gov/Korean (한국어)

• IRS.gov/Russian (Pусский)

• IRS.gov/Vietnamese (Tiếng Việt)

Contents

What's New ............................... 1

Reminders ............................... 2

Calendar ................................. 9

Introduction ............................. 11

1. Employer Identification Number (EIN) ....... 12

2. Who Are Employees? .................... 12

3. Family Employees ...................... 15

4. Employee's Social Security Number (SSN) ... 15

5. Wages and Other Compensation ........... 17

6. Tips .................................. 21

7. Supplemental Wages .................... 22

8. Payroll Period .......................... 23

9. Withholding From Employees' Wages ....... 24

10. Required Notice to Employees About the

Earned Income Credit (EIC) .............. 29

11. Depositing Taxes ...................... 30

12. Filing Form 941, Form 943, Form 944, or

Form 945 ............................ 36

13. Reporting Adjustments to Forms 941, Form

943, or Form 944 ...................... 39

14. Federal Unemployment (FUTA) Tax ........ 42

15. Special Rules for Various Types of Services

and Payments ......................... 44

16. Third-Party Payer Arrangements .......... 51

17. Federal Agency Certifying Requirements of

Federal Income Taxes Withheld From U.S.

Government Employees Working in, or

Federal Pension Recipients Residing in,

American Samoa, the CNMI, and Guam ..... 52

How To Get Tax Help ....................... 54

Index .................................. 57

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

Pub. 15 is now for all employers. Pub. 15 can now be

used by all employers, including agricultural employers

and employers in the U.S. territories. Pub. 51, Agricultural

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Employer's Tax Guide; Pub. 80, Federal Tax Guide for Em-

ployers in the U.S. Virgin islands, Guam, American Sa-

moa, and the Commonwealth of the Northern Mariana Is-

lands; and Pub. 179, Guía Contributiva Federal para

Patronos Puertorriqueños, have been discontinued. If you

prefer Pub. 15 in Spanish, there is a new Pub. 15 (sp)

available for 2024.

Unless otherwise noted, references throughout this

publication to Form W-2 include Forms W-2AS, W-2CM,

W-2GU, W-2VI, and Form 499R-2/W-2PR; references to

Form W-2c include Form 499R-2c/W-2cPR; references to

Form W-3 include Form W-3SS and Form W-3PR; and

references to Form W-3c include Form W-3C (PR).

Social security and Medicare tax for 2024. The rate of

social security tax on taxable wages is 6.2% each for the

employer and employee. The social security wage base

limit is $168,600.

The Medicare tax rate is 1.45% each for the employee

and employer, unchanged from 2023. There is no wage

base limit for Medicare tax.

Social security and Medicare taxes apply to the wages

of household workers you pay $2,700 or more in cash wa-

ges in 2024. Social security and Medicare taxes apply to

election workers who are paid $2,300 or more in cash or

an equivalent form of compensation in 2024.

The COVID-19 related credit for qualified sick and

family leave wages is limited to leave taken after

March 31, 2020, and before October 1, 2021, and may

no longer be claimed on Form 941. Generally, the

credit for qualified sick and family leave wages, as enac-

ted under the Families First Coronavirus Response Act

(FFCRA) and amended and extended by the COVID-rela-

ted Tax Relief Act of 2020, for leave taken after March 31,

2020, and before April 1, 2021, and the credit for qualified

sick and family leave wages under sections 3131, 3132,

and 3133 of the Internal Revenue Code, as enacted under

the American Rescue Plan Act of 2021 (the ARP), for

leave taken after March 31, 2021, and before October 1,

2021, have expired. However, employers that pay qualified

sick and family leave wages in 2024 for leave taken after

March 31, 2020, and before October 1, 2021, are eligible

to claim a credit for qualified sick and family leave wages

in 2024. Effective for tax periods beginning after Decem-

ber 31, 2023, the lines used to claim the credit for qualified

sick and family leave wages have been removed from

Form 941, Employer’s QUARTERLY Federal Tax Return,

because it would be extremely rare for an employer to pay

wages in 2024 for qualified sick and family leave taken af-

ter March 31, 2020, and before October 1, 2021. Instead,

if you’re eligible to claim the credit for qualified sick and

family leave wages because you paid the wages in 2024

for an earlier applicable leave period, file Form 941-X, Ad-

justed Employer's QUARTERLY Federal Tax Return or

Claim for Refund, after filing Form 941, to claim the credit

for qualified sick and family leave wages paid in 2024. Fil-

ing a Form 941-X before filing a Form 941 for the quarter

may result in errors or delays in processing your Form

941-X.

New Forms 941 (sp), 943 (sp), and 944 (sp). If you

prefer your form and instructions in Spanish, you can file

new Form 941 (sp), new Form 943 (sp), and Form 944

(sp).

Reminders

Qualified small business payroll tax credit for in-

creasing research activities. For tax years beginning

before January 1, 2023, a qualified small business may

elect to claim up to $250,000 of its credit for increasing re-

search activities as a payroll tax credit. The Inflation Re-

duction Act of 2022 (the IRA) increases the election

amount to $500,000 for tax years beginning after Decem-

ber 31, 2022. The payroll tax credit election must be made

on or before the due date of the originally filed income tax

return (including extensions). The portion of the credit

used against payroll taxes is allowed in the first calendar

quarter beginning after the date that the qualified small

business filed its income tax return. The election and de-

termination of the credit amount that will be used against

the employer’s payroll taxes 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 In-

creasing Research Activities.

Starting in the first quarter of 2023, the payroll tax credit

is first used to reduce the employer share of social secur-

ity tax up to $250,000 per quarter and any remaining

credit reduces the employer share of Medicare tax for the

quarter. Any remaining credit, after reducing the employer

share of social security tax and the employer share of

Medicare tax, is then carried forward to the next quarter.

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 or, if applicable, line 17, is reported on

Form 941, Form 943, or Form 944. For more information

about the payroll tax credit, see IRS.gov/

ResearchPayrollTC. Also see the line 16 instructions in the

Instructions for Form 941 (line 17 instructions in the In-

structions for Form 943 or line 13 instructions in the In-

structions for Form 944) for information on reducing your

record of tax liability for this credit.

Disaster tax relief. Disaster tax relief is available for

those impacted by disasters. For more information about

disaster relief, go to IRS.gov/DisasterTaxRelief.

Payroll tax credit for certain tax-exempt organiza-

tions affected by qualified disasters. Section 303(d) of

the Taxpayer Certainty and Disaster Tax Relief Act of 2020

allows for a payroll tax credit for certain tax-exempt organi-

zations affected by certain qualified disasters not related

to COVID-19. This credit is claimed on Form 5884-D (not

on Form 941, Form 943, or Form 944). Form 5884-D is

filed after the Form 941 for the quarter, Form 943 for the

year, or Form 944 for the year for which the credit is being

claimed has been filed. For more information about this

credit, go to IRS.gov/Form5884D.

2024 withholding tables. The Percentage Method and

Wage Bracket Method withholding tables, the employer in-

structions on how to figure employee withholding, and the

amount to add to a nonresident alien employee's wages

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for figuring income tax withholding are included in Pub.

15-T, Federal Income Tax Withholding Methods, available

at IRS.gov/Pub15T.

Moving expense reimbursement. P.L. 115-97 sus-

pends the exclusion for qualified moving expense reim-

bursements from your employee's income for tax years

beginning after 2017 and before 2026. However, the ex-

clusion 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 due to a military order. The

exclusion applies only to reimbursement of moving expen-

ses that the member could deduct if they had paid or in-

curred them without reimbursement. See Moving Expen-

ses 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.

Withholding on supplemental wages. P.L. 115-97 low-

ered the withholding rates on supplemental wages for tax

years beginning after 2017 and before 2026. See section

7 for the withholding rates.

Backup withholding. P.L. 115-97 lowered the backup

withholding rate to 24% for tax years beginning after 2017

and before 2026. For more information on backup with-

holding, see Backup withholding, later.

Certification program for professional employer or-

ganizations (PEOs). The Stephen Beck, Jr., Achieving a

Better Life Experience Act of 2014 required the IRS to es-

tablish a voluntary certification program for PEOs. PEOs

handle various payroll administration and tax reporting re-

sponsibilities for their business clients and are typically

paid a fee based on payroll costs. To become and remain

certified under the certification program, certified profes-

sional employer organizations (CPEOs) must meet vari-

ous 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 for em-

ployment tax purposes 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) be-

tween the CPEO and the customer (CPEO contract), but

only for wages and other compensation paid to the indi-

vidual by the CPEO. To become a CPEO, the organization

must apply through the IRS Online Registration System.

For more information or to apply to become a CPEO, go to

IRS.gov/CPEO. Also see Revenue Procedure 2023-18,

2023-13 I.R.B. 605, available at IRS.gov/irb/

2023-13_IRB#REV-PROC-2023-18.

Outsourcing payroll duties. Generally, as an employer,

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 re-

sponsible if the third party fails to perform any required ac-

tion. Before 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 pro-

vider 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 CPEO contract, then the CPEO is gener-

ally treated as the employer, but only for wages and other

compensation paid to the individual by the CPEO. How-

ever, with respect to certain employees covered by a

CPEO contract, you 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.

Aggregate Form 941 or Form 943 filers. Approved

section 3504 agents and CPEOs must complete Sched-

ule R (Form 941), Allocation Schedule for Aggregate Form

941 Filers, or Schedule R (Form 943), Allocation Schedule

for Aggregate Form 943 Filers, as applicable, when filing

an aggregate Form 941 or Form 943. An aggregate quar-

terly Form 941 or annual Form 943 is filed by an agent ap-

proved by the IRS under section 3504 of the Internal Rev-

enue Code. To request approval to act as an agent for an

employer, the agent files Form 2678 with the IRS unless

you're a state or local government agency acting as an

agent under the special procedures provided in Revenue

Procedure 2013-39, 2013-52 I.R.B. 830, available at

IRS.gov/irb/2013-52_IRB#RP-2013-39. An aggregate

quarterly Form 941 or annual Form 943 is also filed by

CPEOs approved by the IRS under section 7705. To be-

come a CPEO, the organization must apply through the

IRS Online Registration System at IRS.gov/CPEO. CPEOs

file Form 8973, Certified Professional Employer Organiza-

tion/Customer Reporting Agreement, to notify the IRS that

they’ve started or ended a service contract with a client or

customer. CPEOs must generally file Form 941 or Form

943 and the applicable Schedule R electronically. For

more information about a CPEO's requirement to file elec-

tronically, see Revenue Procedure 2023-18.

Other third-party payers that file an aggregate quarterly

Form 941 or annual Form 943, such as non-certified

PEOs, must complete and file the applicable Schedule R if

they have clients that are claiming any employment tax

credit (for example, the qualified small business payroll tax

credit for increasing research activities).

Aggregate Form 940 filers. Approved section 3504

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 unless you're a state or

local government agency acting as an agent under the

special procedures provided in Revenue Procedure

2013-39. 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 serv-

ice contract with a client or customer. CPEOs must gener-

ally file Form 940 and Schedule R (Form 940)

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electronically. For more information about a CPEO's re-

quirement to file electronically, see Revenue Procedure

2023-18.

Work opportunity tax credit for qualified tax-exempt

organizations hiring qualified veterans. Qualified

tax-exempt organizations that hire eligible unemployed

veterans may be able to claim the work opportunity tax

credit against their payroll tax liability using Form 5884-C.

For more information, go to IRS.gov/WOTC.

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/

2014-04_IRB#NOT-2014-7. For more information, includ-

ing questions and answers related to Notice 2014-7, go to

IRS.gov/MedicaidWaiverPayments.

No federal income tax withholding on disability pay-

ments for injuries incurred as a direct result of a ter-

rorist attack directed against the United States. Disa-

bility payments for injuries incurred as a direct result of a

terrorist attack directed against the United States (or its al-

lies) aren't included in income. Because federal income

tax withholding is only required when a payment is includi-

ble in income, no federal income tax should be withheld

from these payments. See Pub. 907, Tax Highlights for

Persons With Disabilities; and Pub. 3920, Tax Relief for

Victims of Terrorist Attacks.

Voluntary withholding on dividends and other distri-

butions 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 in-

formation, see Notice 2013-77, 2013-50 I.R.B. 632, availa-

ble at IRS.gov/irb/2013-50_IRB#NOT-2013-77.

Definition of marriage. A marriage of two individuals is

recognized for federal tax purposes if the marriage is rec-

ognized by the state or territory of the United States in

which the marriage is entered into, regardless of legal resi-

dence. Two individuals who enter into a relationship that is

denominated as marriage under the laws of a foreign juris-

diction are recognized as married for federal tax purposes

if the relationship would be recognized as marriage under

the laws of at least one state 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 or territory of the

United States where such relationship was entered into

aren't lawfully married for federal tax purposes, regardless

of legal residence.

Differential wage payments. Qualified differential wage

payments made by employers to individuals serving in the

U.S. Armed Forces are subject to income tax withholding

but not social security, Medicare, or FUTA tax. See section

5 for more information.

Severance payments. Severance payments are wages

subject to social security and Medicare taxes, income tax

withholding, and FUTA tax.

You must receive written notice from the IRS to file

Form 944. If you’ve been filing quarterly Forms 941 and

believe your employment taxes for the calendar year will

be $1,000 or less, and you would like to file an annual

Form 944 instead of quarterly Forms 941, you must con-

tact 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 quarterly

Forms 941 before you may file this form. For more infor-

mation on requesting to file Form 944, including the meth-

ods and deadlines for making a request, see the Instruc-

tions for Form 944.

Employers can request to file quarterly Forms 941 in-

stead of an annual Form 944. If you received notice

from the IRS to file Form 944 but would like to file quarterly

Forms 941 instead, you must contact the IRS during the

first calendar quarter of the tax year to request to file quar-

terly Forms 941. You must receive written notice from the

IRS to file quarterly Forms 941 instead of Form 944 before

you may file these forms. For more information on request-

ing to file quarterly Forms 941, including the methods and

deadlines for making a request, see the Instructions for

Form 944.

Correcting Form 941, Form 943, or Form 944. If you

discover an error on a previously filed Form 941, make the

correction using Form 941-X. If you discover an error on a

previously filed Form 943, make the correction using Form

943-X. If you discover an error on a previously filed Form

944, make the correction using Form 944-X. Forms 941-X,

943-X, and 944-X are filed separately from Forms 941,

943, and 944. Forms 941-X, 943-X, and 944-X are used

by employers to claim refunds or abatements of employ-

ment taxes, rather than Form 843. See section 13 for more

information.

Zero wage return. If you haven't filed a “final” Form 940

and "final" Form 941, Form 943, or Form 944, or aren't a

“seasonal” employer (Form 941 only), you must continue

to file a Form 940 and Forms 941, Form 943, or Form 944,

even for periods during which you paid no wages. The IRS

encourages you to file your “zero wage” Form 940 and

Form 941, Form 943, or Form 944 electronically. Go to

IRS.gov/EmploymentEfile for more information on elec-

tronic filing.

Federal tax deposits must be made by electronic

funds transfer (EFT). You must use EFT to make all fed-

eral 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 be-

half. 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 the Treasury.

Services provided by your tax professional, financial insti-

tution, 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 800-555-4477, 800-244-4829 (Spanish), or

303-967-5916 (toll call). To contact EFTPS using

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Telecommunications Relay Services (TRS) for people who

are deaf, hard of hearing, or have a speech disability, dial

711 and then provide the TRS assistant the 800-555-4477

number or 800-733-4829. Additional information about

EFTPS is also available in Pub. 966.

Residents of the Philippines working in the Common-

wealth of the Northern Mariana Islands (CNMI). Em-

ployers must withhold and pay social security and Medi-

care taxes on wages and other compensation paid to

residents of the Philippines who don't hold an H-2 status

for services performed as employees in the CNMI unless

those workers are eligible for exemption from social secur-

ity and Medicare taxes under an exception listed in sec-

tion 15. For more information, see Announcement

2012-43, 2012-51 I.R.B. 723, available at IRS.gov/irb/

2012-51_IRB#ANN-2012-43.

Federal employers in the CNMI. The U.S. Treasury De-

partment and the CNMI Division of Revenue and Taxation

entered into an agreement under 5 U.S.C. section 5517 in

December 2006. Under this agreement, all federal em-

ployers (including the Department of Defense) are re-

quired to withhold CNMI income taxes (rather than federal

income taxes) and deposit the CNMI taxes with the CNMI

Treasury for employees who are subject to CNMI taxes

and whose regular place of federal employment is in the

CNMI. For more information, including details on complet-

ing Form W-2, go to IRS.gov/5517Agreements. Federal

employers are also required to file quarterly and annual re-

ports with the CNMI Division of Revenue and Taxation. For

questions, contact the CNMI Division of Revenue and Tax-

ation.

Pub. 5146 explains employment tax examinations

and appeal rights. Pub. 5146 provides employers with

information on how the IRS selects employment tax re-

turns 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

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 and secure programs to make filing and

payment easier.

Spend less time worrying about 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 800-555-4477, 800-244-4829 (Spanish), or

303-967-5916 (toll call). To contact EFTPS using TRS

for people who are deaf, hard of hearing, or have a

speech disability, dial 711 and then provide the TRS

assistant the 800-555-4477 number or 800-733-4829.

•

For electronic filing of Forms W-2, Wage and Tax

Statement, including Forms W-2AS, W-2CM, W-2GU,

and W-2VI, and Forms 499R-2/W-2PR, go to

SSA.gov/employer. You may be required to file Forms

W-2 electronically. For details, see the General

Instructions for Forms W-2 and W-3. If you experience

problems filing electronically, contact the Social

Security Administration (SSA) at 800-772-6270. To

speak with the SSA's Regional Employer Services

Liaison Officer, go to the SSA's Regional Employer

Services Liaison Officers website at SSA.gov/

employer/wage_reporting_specialists.htm. The

Regional Employer Services Liaison Officers are

available to provide assistance with all questions

about the SSA's payroll reporting processes and

applications. Employers in the CNMI should contact

their local tax department for instructions on

completing Form W-2CM. You can get Form W-2CM

and its instructions by going to Finance.gov.mp/

forms.php, or by calling 670-664-1000.

If you’re filing your tax return or paying your fed-

eral taxes electronically, a valid employer identifi-

cation number (EIN) is required at the time the re-

turn 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. See section 1 for information

about applying for an EIN.

Electronic funds withdrawal (EFW). If you file your em-

ployment tax return electronically, you can e-file and use

EFW to pay the balance due in a single step using tax

preparation software or through a tax professional. How-

ever, 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 bal-

ance due shown on your employment tax return by credit

or debit card. Your payment will be processed by a pay-

ment processor who will charge a processing fee. 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.

Online payment agreement. You may be eligible to ap-

ply 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

Many forms and instructions discussed in this publication

have Spanish-language versions available for employers

and employees. Some examples include Form 941 (sp),

Form 944 (sp), Form SS-4 (sp), Form W-4 (sp), and Form

W-9 (sp). Although this publication doesn't reference

Spanish-language forms and instructions in each instance

that one is available, you can see Pub. 15 (sp) and go to

IRS.gov to determine if a Spanish-language version is

available.

CAUTION

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Hiring New Employees

Eligibility for employment. You must verify that each

new employee is legally eligible to work in the United

States, including American Samoa, Guam, the CNMI, the

U.S Virgin Islands (USVI), and Puerto Rico. 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. For more informa-

tion, go to the USCIS website at USCIS.gov/I-9-Central, or

call 800-375-5283 or 800-767-1833 (TTY).

You may use the Social Security Number Verification

Service (SSNVS) at SSA.gov/employer/ssnv.htm to verify

that an employee name matches an SSN. A person may

have a valid SSN but not be authorized to work in the Uni-

ted States. You may use E-Verify at E-Verify.gov to confirm

the employment eligibility of newly hired employees.

New hire reporting. All 50 states, and most of the territo-

ries, have a new hire registry. 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. Go to the Office of Child Support En-

forcement website at acf.hhs.gov/programs/css/employers

for more information. Employers in American Samoa,

Guam, the CNMI, the USVI, and Puerto Rico should con-

tact their local government for information on their new

hire registry.

W-4 request. Ask each new employee to complete the

2024 Form W-4. See section 9.

Name and social security number (SSN). Record

each new employee's name and SSN from their social se-

curity card if it is available. If an employee can't provide

their social security card, you should verify their SSN and

their eligibility for employment as discussed under Verifi-

cation of SSNs. Any employee without a social security

card should apply for one. See section 4.

Information Returns

You must file Forms W-2 to report wages paid to

employees. You may also be required to file information

returns to report certain types of payments made during

the year. For example, you must file Form 1099-NEC,

Nonemployee Compensation, 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, the Instructions for Forms 1099-MISC and

1099-NEC). 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.

Technical Services Operation (TSO). The IRS oper-

ates the TSO to answer questions about reporting on

Forms W-2, W-3, and 1099, and other information returns.

If you have questions related to reporting on information

returns, call 866-455-7438 (toll free) or 304-263-8700 (toll

call). The center can also be reached by email at

[email protected]v. Don't include taxpayer identification num-

bers (TINs) or attachments in email because email isn't

secure.

Federal Income Tax

Withholding

References to federal income tax withholding

don't apply to employers in American Samoa,

Guam, the CNMI, the USVI, and Puerto Rico, un-

less you have employees who are subject to U.S. income

tax withholding. Contact your local tax department for in-

formation about 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 in Pub. 15-T. Farm

operators and crew leaders must withhold federal income

tax from the wages of farmworkers if the wages are

subject to social security and Medicare taxes. If you're

paying supplemental wages to an employee, see section

7. If you have nonresident alien employees, see

Withholding federal income taxes on the wages of

nonresident alien employees in section 9.

See section 8 of Pub. 15-A, Employer’s Supplemental

Tax Guide, for information about withholding on pensions

(including distributions from tax-favored retirement plans),

annuities, and individual retirement arrangements (IRAs).

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, Form 943, or Form 944) and nonpayroll

(Form 945) withholding. Nonpayroll items include the

following.

•

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.

CAUTION

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•

Indian gaming profits.

•

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, Form 943, or Form 944, not on

Form 945. However, distributions from such plans to a

beneficiary or estate of a deceased employee aren't wa-

ges and are reported on Forms 1099-R, Distributions

From Pensions, Annuities, Retirement or Profit-Sharing

Plans, IRAs, Insurance Contracts, etc.; income tax with-

held must be reported on Form 945.

Backup withholding. You must generally withhold 24%

of certain taxable payments if the payee fails to furnish you

with their correct TIN. This withholding is referred to as

“backup withholding.”

Payments subject to backup withholding include inter-

est, 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, pen-

sions, annuities, IRAs (including simplified em-

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 to request payees to furnish a

TIN. Form W-9 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 include a list of types of payees

who are exempt from backup withholding. For more infor-

mation, see Pub. 1281, Backup Withholding for Missing

and Incorrect Name/TIN(s).

CAUTION

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 Annually (see Calendar for due dates): Page

Verify work eligibility of new employees ....... 6

File Form 944 if required (pay tax with return if

Record employees' names and SSNs from not required to deposit) ..................... 36

social security cards ....................

Remind employees to submit a new Form W-4

Ask employees for Form W-4 ..............

if they need to change their withholding .......... 24

Each Payday: Ask for a new Form W-4 from employees

Withhold federal income tax based on each

claiming exemption from income tax

employee's Form W-4 ................... 24 withholding .............................. 25

Withhold employee's share of social security Reconcile Forms 941 (Form 943 or Form 944) with

and Medicare taxes .................... 27 Forms W-2 and W-3 ....................... 38

Deposit: Furnish each employee a Form W-2 ............ 10

• Withheld income tax, File Copy A of Forms W-2 and the transmittal

• Withheld and employer social security taxes,

and

Form W-3 with the SSA ..................... 10

• Withheld and employer Medicare taxes ......

Furnish each payee a Form 1099 (for example,

Note. Due date of deposit generally depends Form 1099-NEC) ......................... 10

on your deposit schedule (monthly or File Forms 1099 and the transmittal Form

semiweekly). 1096 .................................. 10

Quarterly (By April 30, July 31, October 31,

File Form 940 ............................

and January 31):

File Form 945 for any nonpayroll income tax

Deposit FUTA tax if undeposited amount

withholding .............................. 10

is over $500 .......................... 43

File Form 941 (pay tax with return if not

required to deposit) ..................... 36

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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 (FMV) 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 payers

made to them.

•

Copies of employees' and recipients' income tax

withholding certificates (Forms W-4, W-4P, W-4R,

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.

•

Documentation to substantiate any credits claimed.

Records related to qualified sick leave wages and

qualified family leave wages for leave taken after

March 31, 2021, and before October 1, 2021, and

records related to qualified wages for the employee

retention credit paid after June 30, 2021, should be

kept for at least 6 years. For more information on

substantiation requirements, go to IRS.gov/PLC and

IRS.gov/ERC.

•

Documentation to substantiate the amount of any

employer or employee share of social security tax that

you deferred and paid for 2020.

If a crew leader furnished you with farmworkers, you

must keep a record of the name, permanent mailing

address, and EIN of the crew leader. If the crew leader

has no permanent mailing address, record their present

address.

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 Instructions for Form SS-4.

Filing Addresses

Generally, your filing address for Form 940, 941, 943, 944,

945, or 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 separate

instructions for Form 940, 941, 943, 944, 945, or CT-1 for

the filing addresses.

Private Delivery Services

(PDSs)

You can use certain 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/PDSstreetAddresses. Select the

mailing address listed on the webpage that is in the same

state as the address to which you would mail returns filed

without a payment, as shown in the instructions for your

employment tax return.

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.

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.

CAUTION

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E-News for Payroll

Professionals

The IRS has a subscription-based email service for payroll

professionals. Subscribers will receive periodic updates

from the IRS. The updates may include information

regarding recent legislative changes affecting federal

payroll reporting, IRS news releases and special

announcements pertaining to the payroll industry, new

employment tax procedures, and other information

specifically affecting federal payroll tax returns. To

subscribe, go to IRS.gov/Newsroom/E-News-

Subscriptions.

Telephone Help

Tax questions. You can call the IRS Business and Spe-

cialty Tax Line with your employment tax questions at

800-829-4933.

Help for people with disabilities. You may call

800-829-4059 (TDD/TTY for persons who are deaf, hard

of hearing, or have a speech disability) with any employ-

ment tax questions. You may also use this number for as-

sistance with unresolved tax problems.

Additional information. Go to IRS.gov/

EmploymentTaxes for additional employment tax informa-

tion. For general tax information relevant to agricultural

employers, go to IRS.gov/AgricultureTaxCenter. For infor-

mation about employer responsibilities under the Afforda-

ble Care Act, go to IRS.gov/ACA. For information about

COVID-19 tax relief, go to IRS.gov/Coronavirus.

Ordering Employer Tax Forms,

Instructions, and Publications

You can view, download, or print most of the forms,

instructions, and publications you may need at IRS.gov/

Forms. Otherwise, you can go to IRS.gov/OrderForms to

place an order and have them mailed to you. The IRS will

process your order as soon as possible. Don't resubmit

requests you've already sent us. You can get forms,

instructions, and publications faster online.

Instead of ordering paper Forms W-2 and W-3,

consider filing them electronically using the SSA's free

e-file service. Go to the SSA's Employer W-2 Filing

Instructions & Information webpage at SSA.gov/employer

to register for Business Services Online (BSO). 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.

The SSA's BSO is an independent program from the

Government of Puerto Rico electronic filing system.

Employers in Puerto Rico must visit Hacienda.gobierno.pr

for additional information.

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 and

responsibilities. The dates listed here haven’t been

adjusted for Saturdays, Sundays, and legal holidays (see

the TIP next). Pub. 509, Tax Calendars (for use in 2024),

adjusts the dates for Saturdays, Sundays, and legal

holidays. See section 11 for information about depositing

taxes reported on Forms 941, 943, 944, and 945. See

section 14 for information about depositing FUTA tax. Due

dates for forms required for health coverage reporting

aren't listed here. For these dates, see Pub. 509.

If any date shown next for filing a return, furnishing

a form, or depositing taxes falls on a Saturday,

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 holi-

day 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 fed-

eral 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 suffi-

cient postage, and is postmarked by the U.S. Postal Serv-

ice on or before the due date, or sent by an IRS-designa-

ted PDS on or before the due date. See Private Delivery

Services (PDSs) under Reminders, earlier, for more infor-

mation.

Fiscal year taxpayers. The due dates listed next apply

whether you use a calendar or a fiscal year.

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 to-

tal tax liability for the quarter (Form 941, line 12) 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. Pay any undeposited income,

social security, and Medicare taxes with your Form 944.

TIP

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You may pay these taxes with Form 944 if your total tax

liability for the year (Form 944, line 9) is less than

$2,500. For additional rules on when you can pay your

taxes with your return, see Payment with return in sec-

tion 11. If you timely deposited all taxes when due, you

may file by February 10.

File Form 943. Agricultural employers file Form 943

for the previous calendar year and deposit any undepos-

ited income, social security, and Medicare taxes. You

may pay these taxes with Form 943 if your total tax liabil-

ity for the year (Form 943, line 13) is less than $2,500. If

you timely deposited all taxes when due, you may file by

February 10.

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, earlier, for

more information.

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. See section 14 for more in-

formation on FUTA tax.

Furnish Forms 1099 and W-2. Furnish each em-

ployee a completed 2023 Form W-2. Furnish a 2023

Form 1099-NEC to payees for nonemployee compensa-

tion. Most Forms 1099 must be furnished to payees by

January 31, but some can be furnished by February 15.

For more information, see the Guide to Information Re-

turns chart in the General Instructions for Certain Infor-

mation Returns.

File Form W-2. File with the SSA Copy A of all 2023

paper and electronic Forms W-2 with Form W-3, Trans-

mittal of Wage and Tax Statements. Forms W-2AS,

W-2CM, W-2GU, and W-2VI are filed with Form W-3SS.

Forms 499R-2/W-2PR are filed with Form W-3PR. For

more information on reporting Form W-2 information to

the SSA electronically, go to 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.

Send Copy 1 of Forms W-2AS, W-2CM, W-2GU, and

W-2VI, and Form W-3SS to your local tax department at

the address shown on Form W-3SS. For more information

on Copy 1, contact your local tax department. Employers

in the CNMI should contact their local tax department for

instructions on how to file Copy 1. For additional informa-

tion on how to file Forms 499R-2/W-2PR with the Puerto

Rico Department of Treasury, go to Hacienda.gobierno.pr

or call 787-622-0123.

File Form 1099-NEC reporting nonemployee compen-

sation. File with the IRS Copy A of all 2023 paper

and electronic Forms 1099-NEC. Paper forms must be

filed with Form 1096, Annual Summary and Transmittal

of U.S. Information Returns. For information on filing in-

formation returns electronically with the IRS, see Pub.

1220, Specifications for Electronic Filing of Forms 1097,

1098, 1099, 3921, 3922, 5498, and W-2G.

By February 15

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.

On February 16

Forms W-4 claiming exemption from withholding ex-

pire. Any Form W-4 claiming exemption from with-

holding 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 as if they had

checked the box for Single or Married filing separately in

Step 1(c) and made no entries in Step 2, Step 3, or Step

4 of the 2024 Form W-4. See section 9 for more informa-

tion. If the employee gives you a new Form W-4 claiming

exemption from withholding after February 15, you may

apply the exemption to future wages, but don't refund

taxes withheld while the exempt status wasn't in place.

By February 28

File paper 2023 Forms 1099 and 1096. File Copy A

of all paper 2023 Forms 1099, except Forms 1099-NEC,

with Form 1096 with the IRS. For electronically filed re-

turns, see By March 31, later.

By February 29

File paper Form 8027. File paper Form 8027, Em-

ployer's Annual Information Return of Tip Income and

Allocated Tips, with the IRS. See section 6. For electron-

ically filed returns, see By March 31 next.

By March 31

File electronic 2023 Forms 1099 and 8027. File

electronic 2023 Forms 1099, except Forms 1099-NEC,

with the IRS. Also file electronic Form 8027 with the IRS.

For information on filing information returns electroni-

cally with the IRS, see Pub. 1220 and Pub. 1239, Speci-

fications 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 quar-

ter (including any amount carried over from other quar-

ters) if over $500. If $500 or less, carry it over to the next

quarter. See section 14 for more information.

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File Form 941. File Form 941 and deposit any unde-

posited income, social security, and Medicare taxes.

You may pay these taxes with Form 941 if your total tax

liability for the quarter (Form 941, line 12) is less than

$2,500. If you timely deposited all taxes when due, you

may file by May 10, August 10, November 10, or Febru-

ary 10, respectively. Don't file Form 941 for these quar-

ters 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 filing status, other income, deductions,

or credits have changed or will change for the next year.

Also remind employees to submit a new Form W-4 if

they made a mid-year change to their Form W-4 based

on their use of the IRS Tax Withholding Estimator availa-

ble at IRS.gov/W4App. Employees that made a

mid-year change may be underwithheld or overwithheld

once their Form W-4 is applied to the next full calendar

year.

Introduction

This publication explains your tax responsibilities as an

employer, including agricultural employers and employers

whose principal place of business is in American Samoa,

Guam, the CNMI, the USVI, or Puerto Rico. It explains the

requirements for withholding, depositing, reporting, pay-

ing, and correcting employment taxes. It explains the

forms you must give to your employees, those your em-

ployees must give to you, and those you must send to the

IRS and the SSA. References to “income tax” in this guide

apply only to federal income tax. Contact your state or lo-

cal tax department to determine their rules. Whenever the

term "United States" is used in this publication, it includes

American Samoa, Guam, the CNMI, the USVI, and Puerto

Rico, unless otherwise noted.

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 pay-

checks. 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 U.S. Treasury instead of to your employees.

Your employees trust that you pay the withheld taxes to

the U.S. 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 U.S. Treasury, the trust fund recovery penalty

may apply. See section 11 for more information.

This publication also provides employers, including em-

ployers in the USVI and Puerto Rico, with a summary of

their responsibilities in connection with the tax under the

Federal Unemployment Tax Act, known as FUTA tax. See

section 14 for more information.

Additional employment tax information is available in

Pubs. 15-A, 15-B, and 15-T. Pub. 15-A includes special-

ized information supplementing the basic employment tax

information provided in this publication. Pub. 15-B, Em-

ployer's Tax Guide to Fringe Benefits, contains information

about the employment tax treatment and valuation of vari-

ous types of noncash compensation. Pub. 15-T includes

the federal income tax withholding tables and instructions

on how to use the tables.

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 sec-

tion 15 for guidance. Railroad retirement taxes are ex-

plained in the Instructions for Form CT-1.

Comments and suggestions. We welcome your com-

ments about this publication and suggestions for future

editions.

You can send us comments through 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 com-

ment received, we do appreciate your feedback and will

consider your comments and suggestions as we revise

our tax forms, instructions, and publications. Don’t send

tax questions, tax returns, or payments to the above ad-

dress.

Getting answers to your tax questions. If you have

a tax question not answered by this publication, check

IRS.gov and How To Get Tax Help at the end of this publi-

cation.

Getting tax forms, instructions, and publications.

Go to IRS.gov/Forms to download current and prior-year

forms, instructions, and publications.

Ordering tax forms, instructions, and publications.

Go to IRS.gov/OrderForms to order current forms, instruc-

tions, and publications; call 800-829-3676 to order

prior-year forms and instructions. The IRS will process

your order for forms and publications as soon as possible.

Don’t resubmit requests you’ve already sent us. You can

get forms and publications faster online.

Federal government employers. The information in this

publication, including the rules for making federal tax de-

posits, applies to federal agencies.

State and local government employers. Payments to

employees for services in the employ of state and local

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government employers are generally subject to federal in-

come 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, wa-

ges, 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 ques-

tions about coverage under a section 218 (Social Security

Act) agreement, contact the appropriate state official. To

find your State Social Security Administrator, go to the Na-

tional Conference of State Social Security Administrators

website at NCSSSA.org.

Indian tribal governments. See Pub. 4268 for employ-

ment tax information for Indian tribal governments.

Disregarded entities and qualified subchapter S sub-

sidiaries (QSubs). Eligible single-owner disregarded en-

tities and QSubs are treated as separate entities for em-

ployment 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).

Useful Items

You may want to see:

Publication

15-A Employer's Supplemental Tax Guide

15-B Employer's Tax Guide to Fringe Benefits

15-T Federal Income Tax Withholding Methods

225 Farmer's Tax Guide

535 Business Expenses

583 Starting a Business and Keeping Records

1635 Employer Identification Number:

Understanding Your EIN

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 dig-

its are arranged as follows: 00-0000000. It is used to iden-

tify 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.

15-A

15-B

15-T

225

535

583

1635

If you don’t have an EIN, you may apply for one online

by going to IRS.gov/EIN. You may also apply for an EIN by

faxing or mailing Form SS-4 to the IRS. If the principal

business was created or organized outside of the United

States or U.S. territories, you 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 800-829-4933

or 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 busi-

ness. The IRS will tell you which number to use. For more

information, see Pub. 1635.

If you took over another employer's business (see Suc-

cessor 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 enter

“Applied For” and the date you applied for it in the space

shown for the number.

Always be sure the EIN on the form you file ex-

actly matches the EIN the IRS assigned to your

business. Don't use your SSN or individual tax-

payer identification number (ITIN) on forms that ask for an

EIN. If you used an EIN (including a prior owner's EIN) on

Form 941, Form 943, or Form 944, that is different from

the EIN reported on Form W-3, see Box h—Other EIN

used this year in the General Instructions for Forms W-2

and W-3. On Form W-3PR for Puerto Rico, “Other EIN

used this year” is reported in box f. The name and EIN on

Form 945 must match the name and EIN on your informa-

tion returns where federal income tax withholding is repor-

ted (for example, backup withholding reported on Form

1099-NEC). Filing a Form 945 with an incorrect EIN or us-

ing another business's EIN may result in penalties and de-

lays in processing your return.

Agricultural employers that have crew leaders. An

agricultural employer must record the crew leader's name,

address, and EIN. See sections 2 and 14.

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 independ-

ent contractor or an employee.

Generally, people in business for themselves aren't em-

ployees. For example, doctors, lawyers, veterinarians, and

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others in an independent trade in which they offer their

services to the public are usually not employees. 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

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 their pay,

unless backup withholding applies. Although the following

persons may not be common-law employees, they’re con-

sidered employees by statute for social security and Medi-

care tax purposes if the conditions under Tests, later, are

met.

a. An agent or commission driver who delivers meat, veg-

etable, fruit, or bakery products; beverages (other than

milk); laundry; or dry cleaning for someone else.

b. A full-time life insurance salesperson who sells primar-

ily for one company.

c. A homeworker who works at home or off premises by

the guidelines of the person for whom the work is done,

with materials or goods furnished by and returned to that

person or to someone that person designates.

d. A traveling or city salesperson (other than an agent 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 cus-

tomers must be retailers, wholesalers, contractors, or op-

erators of hotels, restaurants, or other businesses dealing

with food or lodging.

Tests. Withhold social security and Medicare taxes

from statutory employees' wages if all three of the follow-

ing tests apply.

1. The service contract states or implies that almost all

of the services are to be performed personally by

them.

2. They have little or no investment in the equipment and

property used to perform the services (other than an

investment in transportation facilities).

3. The services are performed on a continuing basis for

the same payer.

Persons in a or d, earlier, are also employees for FUTA

tax purposes if tests 1 through 3 are met.

Pub. 15-A gives examples of the employer-employee

relationship.

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 in-

come and employment taxes. See Pub. 15-A for more in-

formation.

Farmworkers. In general, you're an employer of farm-

workers if your employees:

•

Raise or harvest agricultural or horticultural products

on your farm (including the raising and feeding of live-

stock);

•

Work in connection with the operation, management,

conservation, improvement, or maintenance of your

farm and its tools and equipment, if the major part of

such service is performed on a farm;

•

Provide services relating to salvaging timber, or clear-

ing land of brush and other debris, left by a hurricane

(also known as hurricane labor), if the major part of

such service is performed on a farm;

•

Handle, process, or package any agricultural or horti-

cultural commodity in its unmanufactured state if you

produced over half of the commodity (for a group of up

to 20 unincorporated operators, all of the commodity);

•

Do work for you related to cotton ginning, turpentine,

gum resin products, or the operation and maintenance

of irrigation facilities.

For this purpose, the term “farm” includes stock, dairy,

poultry, fruit, fur-bearing animal, and truck farms, as well

as plantations, ranches, nurseries, ranges, greenhouses

or other similar structures used primarily for the raising of

agricultural or horticultural commodities, and orchards.

Farmwork doesn't include reselling activities that don't

involve any substantial activity of raising agricultural or

horticultural commodities, such as a retail store or a

greenhouse used primarily for display or storage. It also

doesn’t include processing services which change a com-

modity from its raw or natural state, or services performed

after a commodity has been changed from its raw or natu-

ral state.

Crew leaders. If you're a crew leader, you're an em-

ployer of farmworkers. A crew leader is a person who fur-

nishes and pays (either on their own behalf or on behalf of

the farm operator) workers to do farmwork for the farm op-

erator. If there is no written agreement between you and

the farm operator stating that you're their employee and if

you pay the workers (either for yourself or for the farm op-

erator), then you're a crew leader. For FUTA tax rules, see

section 14.

If you're a crew leader, you're not considered the em-

ployee of the farm operator for services you perform in fur-

nishing farmworkers and as a member of the crew.

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 gener-

ally 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 nonem-

ployee. You may be able to figure your liability using

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special section 3509 rates for the employee share of so-

cial security and Medicare taxes and 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 sec-

tion 3509. You’re liable for the income tax withholding re-

gardless of whether the employee paid income tax on the

wages. You continue to owe the full employer share of so-

cial security and Medicare taxes. The employee remains

liable for the employee share of social security and Medi-

care taxes. See section 3509 for details. Also see the In-

structions for Form 941-X, the Instructions for Form 943-X,

or the Instructions for Form 944-X.

Section 3509 rates aren't available if you intentionally

disregard the requirement to withhold taxes from the em-

ployee or if you withheld income taxes but not social se-

curity or Medicare taxes. Section 3509 isn't available for

reclassifying statutory employees. See Statutory employ-

ees, earlier in this section.

If the employer issued required information returns, the

section 3509 rates are the following.

•

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 em-

ployee rate of 0.9%) of wages subject to Additional

Medicare Tax.

•

For federal income tax withholding, the rate is 1.5% of

wages.

If the employer didn't issue required information returns,

the section 3509 rates are the following.

•

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 em-

ployee rate of 0.9%) of wages subject to Additional

Medicare Tax.

•

For federal 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 Un-

der 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.

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 partner-

ship agreement. See Pub. 541 for more details. The part-

nership 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 be-

ginning after 2006, the Small Business and Work Opportu-

nity Tax Act of 2007 (P.L. 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 ven-

ture 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 par-

ticipation in the instructions for Schedule C (Form

1040), line G) in the trade or business (mere joint own-

ership 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 part-

nership or limited liability company (LLC).

To make the election, all items of income, gain, loss,

deduction, and credit must be divided between the spou-

ses, in accordance with each spouse's interest in the ven-

ture, and reported as sole proprietors on a separate

Schedule C (Form 1040) or Schedule F (Form 1040).

Each spouse must also file a separate Schedule SE (Form

1040) to pay self-employment taxes, as applicable. See

the Instructions for Form 1040-SS for American Samoa,

Guam, the CNMI, the USVI, and Puerto Rico.

Spouses using the qualified joint venture rules are trea-

ted as sole proprietors for federal tax purposes and gener-

ally 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 proprietor-

ship. Generally, filing as a qualified joint venture won't in-

crease the spouses' total tax owed on the joint income tax

return. However, it gives each spouse credit for social

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security earnings on which retirement benefits are based

and for Medicare coverage without filing a partnership re-

turn.

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 com-

munity property under the community property laws of a

state, foreign country, or U.S. territory, you can treat the

business either as a sole proprietorship (of the spouse

who carried on the business) or a partnership. You may

still make an election to be taxed as a qualified joint ven-

ture instead of a partnership. See Exception—Qualified

joint venture, earlier in this section.

3. Family Employees

Child employed by parents. Payments for the services

of a child under age 18 who works for their parent in a

trade or business aren't subject to social security and

Medicare taxes if the trade or business is a sole proprie-

torship 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. Pay-

ments for the services of a child under age 21 who works

for their 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 their 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 regu-

larly employed to do such work.

One spouse employed by another. The wages for the

services of an individual who works for their 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 they work for:

•

A corporation, even if it is controlled by the child's pa-

rent or the individual's spouse;

•

A partnership, even if the child's parent is a partner,

unless each partner is a parent of the child;

•

A partnership, even if the individual's spouse is a part-

ner; or

•

An estate, even if it is the estate of a deceased parent.

In these situations, the child or spouse is considered to

work for the corporation, partnership, or estate, not you.

Parent employed by their child. When the employer is

a child employing their parent, the following rules apply.

•

Payments for the services of a parent in their child’s

(the employer’s) trade or business are subject to in-

come tax withholding and social security and Medi-

care taxes.

•

Payments for the services of a parent not in their

child’s (the employer’s) trade or business are generally

not subject to social security and Medicare taxes.

Social security and Medicare taxes do apply to

payments made to a parent for domestic services

if all of the following apply.

•

The parent is employed by their child (the employer).

•

The employer has a child or stepchild (including an

adopted child) living in the home.

•

The employer is a surviving spouse, divorced and not

remarried, or living with a spouse who, because of a

mental or physical condition, can't care for their child

or stepchild for at least 4 continuous weeks in the cal-

endar quarter in which the service is performed.

•

The child or stepchild of the employer is either under

age 18 or, due to a mental or physical condition, re-

quires the personal care of an adult for at least 4 con-

tinuous weeks in the calendar quarter in which the

service is performed.

Payments made to a parent employed by their child

aren't subject to FUTA tax, regardless of the type of serv-

ices provided.

4. Employee's Social Security

Number (SSN)

You’re required to get each employee's name and SSN

and to enter them on Form W-2. An employee's SSN con-

sists of nine digits arranged as follows: 000-00-0000. This

requirement also applies to resident and nonresident alien

employees. You should ask your employee to show you

their social security card, but the employee isn't required

to show the card if it isn't available. However, if an em-

ployee can't provide their social security card, you should

verify their SSN and their eligibility for employment as dis-

cussed later in this section under Verification of SSNs.

Don't accept a social security card that says “Not

valid for employment.” An SSN issued with this

legend doesn't permit employment.

You may, but aren't required to, photocopy the social

security card if the employee provides it. If you don't pro-

vide the correct employee name and SSN on Form W-2,

you may owe a penalty unless you have reasonable

cause. See Pub. 1586, Reasonable Cause Regulations &

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Requirements for Missing and Incorrect Name/TINs on In-

formation Returns, for information on the requirement to

solicit the employee's SSN.

In many cases, a replacement social security card

can be applied for online without visiting an SSA

office. In some cases, an SSN application can

also be started online before visiting an SSA office. For

more information, go to SSA.gov/number-card.

Applying for a social security card. Any employee

who is legally eligible to work in the United States and

doesn't have a social security card can get one by com-

pleting Form SS-5, Application for a Social Security Card,

and submitting the necessary documentation. You can get

Form SS-5 from the SSA website at SSA.gov/forms/

ss-5.pdf, at SSA offices, or by calling 800-772-1213 or

800-325-0778 (TTY). The employee must complete and

sign Form SS-5; it can't be filed by the employer. You may

be asked to supply a letter to accompany Form SS-5 if the

employee has exceeded their yearly or lifetime limit for the

number of replacement cards allowed.

Where to get and file Form SS-5 in the U.S. territo-

ries. Below is a list of the U.S. SSA offices located in the

U.S. territories.

American Samoa

Centennial Building 3rd Floor, Suite 302

1 Utulei Rd

Pago Pago, AS 96799

Guam

Suite 155

770 East Sunset Blvd

Barrigada, GU 96913

Commonwealth of the Northern Mariana Islands

MH II Building, Suite 201

Marina Heights Business Park

Saipan, MP 96950

U.S. Virgin Islands

1st Floor, Suite 14

8000 Nisky Shopping CT

St. Thomas, VI 00802

Additional information is available on the Social Secur-

ity Office Locator page at secure.ssa.gov/ICON. Also go

to this website and enter your ZIP Code to find your near-

est SSA office in Puerto Rico.

Applying for an SSN. If you file Form W-2 on paper and

your employee applied for an SSN but doesn't have one

when you must file Form W-2, enter “Applied For” on the

form. If you’re filing electronically, enter all zeros

(000-00-0000 if creating forms online or 000000000 if up-

loading a file) in the SSN field. When the employee re-

ceives the SSN, file Copy A of Form W-2c, Corrected

Wage and Tax Statement, with the SSA to show the em-

ployee's SSN. Furnish Copies B, C, and 2 of Form W-2c to

the employee. Up to 25 Forms W-2c for each Form W-3c,

TIP

Transmittal of Corrected Wage and Tax Statements, may

be filed per session over the Internet, with no limit on the

number of sessions. For more information, go to the SSA's

Employer W-2 Filing Instructions & Information webpage

at SSA.gov/employer. Advise your employee to correct the

SSN on their original Form W-2.

Correctly record the employee's name and SSN. Re-

cord the name and SSN of each employee as they’re

shown on the employee's social security card. If the em-

ployee's name isn't correct as shown on the card (for ex-

ample, because of marriage or divorce), the employee

should request an updated card from the SSA. Continue

to report the employee's wages under the old name until

the employee shows you the updated social security card

with the corrected name.

If the SSA issues the employee an updated card after a

name change, or a new card with a different SSN after a

change in alien work status, file a Form W-2c to correct

the name/SSN reported for the most recently filed Form

W-2. It isn't necessary to correct other years if the previ-

ous name and number were used for years before the

most recent Form W-2.

IRS individual taxpayer identification numbers

(ITINs) for aliens. Don't accept an ITIN in place of an

SSN for employee identification or for work. An ITIN is

only available to resident and nonresident aliens who

aren't eligible for U.S. employment and need identification

for other tax purposes. You can identify an ITIN because it

is a nine-digit number, formatted like an SSN, that starts

with the number "9" and has a range of numbers from “50–

65,” “70–88,” “90–92,” and “94–99” for the fourth and fifth

digits (for example, 9NN-7N-NNNN). For more information

about ITINs, see the Instructions for Form W-7 or go to

IRS.gov/ITIN.

An individual with an ITIN who later becomes eli-

gible to work in the United States must obtain an

SSN. If the individual is currently eligible to work

in the United States, instruct the individual to apply for an

SSN and follow the instructions under Applying for an

SSN, earlier in this section. Don't use an ITIN in place of

an SSN on Form W-2.

Verification of SSNs. Employers and authorized report-

ing agents can use the Social Security Number Verifica-

tion Service (SSNVS) to instantly verify that an employee

name matches an SSN for up to 10 names and SSNs (per

screen) at a time, or submit an electronic file of up to

250,000 names and SSNs and usually receive the results

the next business day. Go to SSA.gov/employer/ssnv.htm

for more information. A person may have a valid SSN but

not be authorized to work in the United States. Employers

may use E-Verify at E-Verify.gov to confirm the employ-

ment eligibility of newly hired employees.

Accessing the SSNVS. The SSA’s BSO is used to

access the SSNVS. BSO users will need a social security

online account. You can use your personal my Social Se-

curity account that was created before September 18,

2021, or an existing Login.gov credential or ID.me

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credential. If you don’t have a social security online ac-

count, a Login.gov credential, or an ID.me credential,

you’ll need to create one. For more information, go to the

SSA’s website at SSA.gov/bso.

5. Wages and Other

Compensation

Wages subject to federal employment taxes generally in-

clude all pay you give to an employee for services per-

formed. The pay may be in cash or in other forms. It in-

cludes salaries, vacation allowances, bonuses,

commissions, and taxable fringe benefits. It doesn't matter

how you measure or make the payments. Amounts an em-

ployer pays as a bonus for signing or ratifying a contract in

connection with the establishment of an employer-em-

ployee relationship and an amount paid to an employee

for cancellation of an employment contract and relinquish-

ment of contract rights are wages subject to social secur-

ity, Medicare, and FUTA taxes and income tax withhold-

ing. Also, compensation paid to a former employee for

services performed while still employed is wages subject

to employment taxes.

Cash wages paid to farmworkers. Cash wages that

you pay to employees for farmwork are generally subject

to social security tax and Medicare tax. You may also be

required to withhold, deposit, and report Additional Medi-

care Tax. See section 9 for more information. If the wages

are subject to social security and Medicare taxes, they’re

also subject to federal income tax withholding. You’re lia-

ble for the payment of these taxes to the federal govern-

ment whether or not you collect them from your employ-

ees. If, for example, you withhold less than the correct tax

from an employee's wages, you’re still liable for the full

amount. You may also be liable for FUTA tax, which isn't

withheld by you or paid by the employee. FUTA tax is dis-

cussed in section 14. Cash wages include checks, money

orders, and any kind of money or cash.

More information. See section 6 for a discussion of tips

and section 7 for a discussion of supplemental wages.

Also, see section 15 for exceptions to the general rules for

wages. Pub. 15-A provides additional information on wa-

ges, including nonqualified deferred compensation, and

other compensation. Pub. 15-B provides information on

other forms of compensation, including:

•

Accident and health benefits,

•

Achievement awards,

•

Adoption assistance,

•

Athletic facilities,

•

De minimis (minimal) benefits,

•

Dependent care assistance,

•

Educational assistance,

•

Employee discounts,

•

Employee stock options,

•

Employer-provided cell phones,

•

Group-term life insurance coverage,

•

Health savings accounts,

•

Lodging on your business premises,

•

Meals,

•

No-additional-cost services,

•

Retirement planning services,

•

Transportation (commuting) benefits,

•

Tuition reduction, and

•

Working condition benefits.

Noncash wages, including commodity wages, paid to

farmworkers. Noncash wages include food, lodging,

clothing, transportation passes, farm products, or other

goods or commodities. Noncash wages paid to farmwork-

ers, including commodity wages, aren't subject to social

security taxes, Medicare taxes, or federal income tax with-

holding. However, you and your employee can agree to

have federal income tax withheld on noncash wages.

Noncash wages, including commodity wages, are trea-

ted as cash wages if the substance of the transaction is a

cash payment. Noncash wages treated as cash wages

are subject to social security taxes, Medicare taxes, and

federal income tax withholding.

Report the value of noncash wages in box 1 of Form

W-2 (box 7 of Form 499R-2/W-2PR) together with cash

wages. Noncash wages for farmwork are subject to fed-

eral income tax unless a specific exclusion applies. Don't

show noncash wages in box 3 or 5 of Form W-2 (box 20 or

22 of Form 499R-2/W-2PR), unless the substance of the

transaction is a cash payment and they’re being treated as

cash wages.

Share farmers. You don't have to withhold or pay social

security and Medicare taxes on amounts paid to share

farmers under share-farming arrangements.

A “share farmer” working for you isn’t your employee.

However, the share farmer may be subject to self-employ-

ment tax. In general, share farming is an arrangement in

which certain commodity products are shared between

the farmer and the owner (or tenant) of the land. For de-

tails, see Regulations section 31.3121(b)(16)-1.

Compensation paid to H-2A visa holders. Report

compensation of $600 or more paid to foreign agricultural

workers who entered the country on H-2A visas in box 1 of

Form W-2 (box 7 of Form 499R-2/W-2PR) but don't report

it as social security wages (box 3 of Form W-2 or box 20 of

Form 499R-2/W-2PR) or Medicare wages (box 5 of Form

W-2 or box 22 of Form 499R-2/W-2PR) on Form W-2 be-

cause compensation paid to H-2A workers for agricultural

labor performed in connection with this visa isn't subject to

social security and Medicare taxes. On Form W-2, don't

check box 13 (Statutory employee), as H-2A workers

aren't statutory employees.

An employer isn't required to withhold federal income

tax from compensation paid to an H-2A worker for agricul-

tural labor performed in connection with this visa but may

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withhold if the worker asks for withholding and the em-

ployer agrees. In that case, the worker must give the em-

ployer a completed Form W-4. Federal income tax with-

held should be reported in box 2 of Form W-2.

These reporting rules apply when the H-2A worker pro-

vides their TIN to the employer. If the H-2A worker doesn't

provide a TIN and the total annual wages to the H-2A

worker are at least $600, the employer is required to

backup withhold. See the Instructions for Forms

1099-MISC and 1099-NEC and the Instructions for Form

945.

For more information on foreign agricultural workers on

H-2A visas, go to IRS.gov/H2A.

Employee business expense reimbursements. A re-

imbursement or allowance arrangement is a system by

which you pay the advances, reimbursements, and

charges for your employees' business expenses. How you

report a reimbursement or allowance amount depends on

whether you have an accountable or a nonaccountable

plan. If a single payment includes both wages and an ex-

pense reimbursement, you must specify the amount of the

reimbursement.

These rules apply to all allowable ordinary and neces-

sary employee business expenses.

Accountable plan. To be an accountable plan, your

reimbursement or allowance arrangement must require

your employees to meet all three of the following rules.

1. They must have paid or incurred allowable expenses

while performing services as your employees. The re-

imbursement or advance must be payment for the ex-

penses and must not be an amount that would have

otherwise been paid to the employee as wages.

2. They must substantiate these expenses to you within

a reasonable period of time.

3. They must return any amounts in excess of substanti-

ated expenses within a reasonable period of time.

Amounts paid under an accountable plan aren't wages

and aren't subject to income, social security, Medicare,

and FUTA taxes.

If the expenses covered by this arrangement aren't sub-

stantiated (or amounts in excess of substantiated expen-

ses aren't returned within a reasonable period of time), the

amount paid under the arrangement in excess of the sub-

stantiated expenses is treated as paid under a nonac-

countable plan. This amount is subject to income, social

security, Medicare, and FUTA taxes for the first payroll pe-

riod following the end of the reasonable period of time.

A reasonable period of time depends on the facts and

circumstances. Generally, it is considered reasonable if

your employees receive their advance within 30 days of

the time they pay or incur the expenses, adequately ac-

count for the expenses within 60 days after the expenses

were paid or incurred, and return any amounts in excess

of expenses within 120 days after the expenses were paid

or incurred. Alternatively, it is considered reasonable if you

give your employees a periodic statement (at least quar-

terly) that asks them to either return or adequately account

for outstanding amounts and they do so within 120 days.

Nonaccountable plan. Payments to your employee

for travel and other necessary expenses of your business

under a nonaccountable plan are wages and are treated

as supplemental wages and subject to income, social se-

curity, Medicare, and FUTA taxes. Your payments are trea-

ted as paid under a nonaccountable plan if:

•

Your employee isn't required to or doesn't substantiate

timely those expenses to you with receipts or other

documentation,

•

You advance an amount to your employee for busi-

ness expenses and your employee isn't required to or

doesn't return timely any amount they don’t use for

business expenses,

•

You advance or pay an amount to your employee re-

gardless of whether you reasonably expect the em-

ployee to have business expenses related to your

business, or

•

You pay an amount as a reimbursement you would

have otherwise paid as wages.

See section 7 for more information on supplemental

wages.

Per diem or other fixed allowance. You may reim-

burse your employees by travel days, miles, or some other

fixed allowance under the applicable revenue procedure.

In these cases, your employee is considered to have ac-

counted to you if your reimbursement doesn't exceed

rates established by the federal government. The stand-

ard mileage rate for auto expenses is provided in Pub.

15-B.

The government per diem rates for meals and lodging

in the continental United States can be found by going to

the U.S. General Services Administration website at

GSA.gov/PerDiemRates. Other than the amount of these

expenses, your employees' business expenses must be

substantiated (for example, the business purpose of the

travel or the number of business miles driven). For infor-

mation on substantiation methods, see Pub. 463.

If the per diem or allowance paid exceeds the amounts

substantiated, you must report the excess amount as wa-

ges. This excess amount is subject to income tax with-

holding and payment of social security, Medicare, and

FUTA taxes. Show the amount equal to the substantiated

amount (that is, the nontaxable portion) in box 12 of Form

W-2 using code “L.” Employers in Puerto Rico report the

amount in box 12 (no code needed).

Wages not paid in money. If in the course of your trade

or business you pay your employees in a medium that is

neither cash nor a readily negotiable instrument, such as a

check, you’re said to pay them “in kind.” Payments in kind

may be in the form of goods, lodging, food, clothing, or

services. Generally, the FMV of such payments at the time

they’re provided is subject to federal income tax withhold-

ing and social security, Medicare, and FUTA taxes.

However, noncash payments for household work, agri-

cultural labor, and service not in the employer's trade or

business are exempt from social security, Medicare, and

FUTA taxes. Withhold income tax on these payments only

if you and the employee agree to do so. Nonetheless,

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noncash payments for agricultural labor, such as com-

modity wages, are treated as cash payments subject to

employment taxes if the substance of the transaction is a

cash payment. See Noncash wages, including commodity

wages, paid to farmworkers, earlier in this section, for

more information.

Meals and lodging. The value of meals isn't taxable in-

come and isn't subject to federal income tax withholding

and social security, Medicare, and FUTA taxes if the meals

are furnished for the employer's convenience and on the

employer's premises. The value of lodging isn't subject to

federal income tax withholding and social security, Medi-

care, and FUTA taxes if the lodging is furnished for the

employer's convenience, on the employer's premises, and

as a condition of employment.

“For the convenience of the employer” means you have

a substantial business reason for providing the meals and

lodging other than to provide additional compensation to

the employee. For example, meals you provide at the

place of work so that an employee is available for emer-

gencies during their lunch period are generally considered

to be for your convenience. You must be able to show

these emergency calls have occurred or can reasonably

be expected to occur, and that the calls have resulted, or

will result, in you calling on your employees to perform

their jobs during their meal period.

Whether meals or lodging are provided for the conven-

ience of the employer depends on all of the facts and cir-

cumstances. A written statement that the meals or lodging

are for your convenience isn't sufficient.

50% test. If over 50% of the employees who are pro-

vided meals on an employer's business premises receive

these meals for the convenience of the employer, all

meals provided on the premises are treated as furnished

for the convenience of the employer. If this 50% test is

met, the value of the meals is excludable from income for

all employees and isn't subject to federal income tax with-

holding or employment taxes. For more information, see

Pub. 15-B.

Health insurance plans. If you pay the cost of an acci-

dent or health insurance plan for your employees, includ-

ing an employee's spouse and dependents, your pay-

ments aren't wages and aren't subject to social security,

Medicare, and FUTA taxes, or federal income tax with-

holding. Generally, this exclusion also applies to qualified

long-term-care insurance contracts. However, for income

tax withholding, the value of health insurance benefits

must be included in the wages of S corporation employ-

ees who own more than 2% of the S corporation (2%

shareholders). For social security, Medicare, and FUTA

taxes, the health insurance benefits are excluded from the

2% shareholder's wages. See Announcement 92-16 for

more information. You can find Announcement 92-16 on

page 53 of Internal Revenue Bulletin 1992-5.

Health savings accounts (HSAs) and medical sav-

ings accounts (MSAs). Your contributions to an employ-

ee's HSA or Archer MSA aren't subject to social security,

Medicare, or FUTA tax, or federal income tax withholding

if it is reasonable to believe at the time of payment of the

contributions they’ll be excludable from the income of the

employee. To the extent it isn't reasonable to believe they’ll

be excludable, your contributions are subject to these

taxes. Employee contributions to their HSAs or MSAs

through a payroll deduction plan must be included in wa-

ges and are subject to social security, Medicare, and

FUTA taxes and income tax withholding. However, HSA

contributions made under a salary reduction arrangement

in a section 125 cafeteria plan aren't wages and aren't

subject to employment taxes or withholding. For more in-

formation, see the Instructions for Form 8889.

Medical care reimbursements. Generally, medical care

reimbursements paid for an employee under an employ-

er's self-insured medical reimbursement plan aren't wages

and aren't subject to social security, Medicare, and FUTA

taxes, or income tax withholding. See Pub. 15-B for a rule

regarding inclusion of certain reimbursements in the gross

income of highly compensated individuals.

Differential wage payments. Differential wage pay-

ments are any payments made by an employer to an indi-

vidual for a period during which the individual is perform-

ing service in the uniformed services while on active duty

for a period of more than 30 days and represent all or a

portion of the wages the individual would have received

from the employer if the individual were performing serv-

ices for the employer.

Differential wage payments are wages for income tax

withholding, but aren't subject to social security, Medicare,

or FUTA tax. Employers should report differential wage

payments in box 1 of Form W-2 (box 7 of Form 499R-2/

W-2PR). For more information about the tax treatment of

differential wage payments, see Revenue Ruling 2009-11,

2009-18 I.R.B. 896, available at IRS.gov/irb/

2009-18_IRB#RR-2009-11.

Fringe benefits. You must generally include fringe bene-

fits in an employee's wages (but see Nontaxable fringe

benefits next). The benefits are subject to income tax with-

holding and employment taxes. Fringe benefits include

cars you provide, flights on aircraft you provide, free or dis-

counted commercial flights, vacations, discounts on prop-

erty or services, memberships in country clubs or other

social clubs, and tickets to entertainment or sporting

events. In general, the amount you must include is the

amount by which the FMV of the benefit is more than the

sum of what the employee paid for it plus any amount the

law excludes. There are other special rules you and your

employees may use to value certain fringe benefits. See

Pub. 15-B for more information.

Nontaxable fringe benefits. Some fringe benefits

aren't taxable (or are minimally taxable) if certain condi-

tions are met. See Pub. 15-B for details. The following are

some examples of nontaxable fringe benefits.

•

Services provided to your employees at no additional

cost to you.

•

Qualified employee discounts.

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•

Working condition fringes that are property or services

that would be allowable as a business expense or de-

preciation expense deduction to the employee if they

had paid for them. Examples include a company car

for business use and subscriptions to business maga-

zines.

•

Certain minimal value fringes (including an occasional

cab ride when an employee must work overtime and

meals you provide at eating places you run for your

employees if the meals aren't furnished at below cost).

•

Qualified transportation fringes subject to specified

conditions and dollar limitations (including transporta-

tion in a commuter highway vehicle, any transit pass,

and qualified parking).

•

The use of on-premises athletic facilities operated by

you if substantially all of the use is by employees, their

spouses, and their dependent children.

•

Qualified tuition reduction an educational organization

provides to its employees for education. For more in-

formation, see Pub. 970.

•

Employer-provided cell phones provided primarily for

a noncompensatory business reason.

However, don't exclude the following fringe benefits

from the wages of highly compensated employees unless

the benefit is available to other employees on a nondiscri-

minatory basis.

•

No-additional-cost services.

•

Qualified employee discounts.

•

Meals provided at an employer-operated eating fa-

cility.

•

Reduced tuition for education.

For more information, including the definition of a highly

compensated employee, see Pub. 15-B.

When taxable fringe benefits are treated as paid.

You may choose to treat certain taxable noncash fringe

benefits as paid by the pay period, by the quarter, or on

any other basis you choose, as long as you treat the bene-

fits as paid at least once a year. You don't have to make a

formal choice of payment dates or notify the IRS of the

dates you choose. You don't have to make this choice for

all employees. You may change methods as often as you

like, as long as you treat all benefits provided in a calendar

year as paid by December 31 of the calendar year. See

section 4 of Pub. 15-B for more information, including a

discussion of the special accounting rule for fringe bene-

fits provided during November and December.

Valuation of fringe benefits. Generally, you must de-

termine the value of fringe benefits no later than January

31 of the next year. Before January 31, you may reasona-

bly estimate the value of the fringe benefits for purposes

of withholding and depositing on time.

Withholding federal income tax on fringe benefits.

You may add the value of fringe benefits to regular wages

for a payroll period and figure withholding taxes on the to-

tal, or you may withhold federal income tax on the value of

the fringe benefits at the optional flat 22% supplemental

wage rate. However, see Withholding on supplemental

wages when an employee receives more than $1 million of

supplemental wages during the calendar year in section 7.

You may choose not to withhold income tax on the

value of an employee's personal use of a vehicle you pro-

vide. You must, however, withhold social security and

Medicare taxes on the use of the vehicle. See Pub. 15-B

for more information on this election.

Withholding social security and Medicare taxes on

fringe benefits. You add the value of fringe benefits to

regular wages for a payroll period and figure social secur-

ity and Medicare taxes on the total.

If you withhold less than the required amount of social

security and Medicare taxes from the employee in a calen-

dar year but report and pay the proper amount, you may

recover the taxes from the employee. See Pub. 15-B for

more information.

Depositing taxes on fringe benefits. Once you

choose when fringe benefits are paid, you must deposit

taxes in the same deposit period you treat the fringe bene-

fits as paid. To avoid a penalty, deposit the taxes following

the general deposit rules for that deposit period.

If you determine by January 31 you overestimated the

value of a fringe benefit at the time you withheld and de-

posited for it, you may claim a refund for the overpayment

or have it applied to your next employment tax return. See

Valuation of fringe benefits, earlier in this section. If you

underestimated the value and deposited too little, you may

be subject to a failure-to-deposit (FTD) penalty. See sec-

tion 11 for information on deposit penalties.

If you deposited the required amount of taxes but with-

held a lesser amount from the employee, you can recover

from the employee the social security, Medicare, or in-

come taxes you deposited on their behalf and included in

the employee's Form W-2. However, you must recover the

income taxes before April 1 of the following year.

Back pay. Back pay, including retroactive wage increa-

ses (but not amounts paid as liquidated damages), is

taxed as ordinary wages in the year paid. For information

on reporting back pay to the SSA, see Pub. 957.

Sick pay. In general, sick pay is any amount you pay un-

der a plan to an employee who is unable to work because

of sickness or injury. These amounts are sometimes paid

by a third party, such as an insurance company or an em-

ployees' trust. In either case, these payments are subject

to social security, Medicare, and FUTA taxes. These taxes

don't apply to sick pay paid more than 6 calendar months

after the last calendar month in which the employee

worked for the employer. The payments are always sub-

ject to federal income tax. See section 6 of Pub. 15-A for

more information.

For purposes of this publication, all references to

"sick pay" mean ordinary sick pay, not "qualified

sick leave wages" under the FFCRA, as amended

by the COVID-related Tax Relief Act of 2020, and the ARP.

TIP

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Identity protection services. The value of identity pro-

tection services provided by an employer to an employee

isn't included in an employee's gross income and doesn't

need to be reported on an information return (such as

Form W-2) filed for an employee. This includes identity

protection services provided before a data breach occurs.

This exception doesn't apply to cash received instead of

identity protection services or to proceeds received under

an identity theft insurance policy. For more information,

see Announcement 2015-22, 2015-35 I.R.B. 288, availa-

ble at IRS.gov/irb/2015-35_IRB#ANN-2015-22; and An-

nouncement 2016-02, 2016-3 I.R.B. 283, available at

IRS.gov/irb/2016-03_IRB#ANN-2016-02.

6. Tips

You’re permitted to establish a system for elec-

tronic tip reporting by employees. See Regula-

tions section 31.6053-1(d).

Cash tips your employee receives from customers are

generally subject to withholding. Your employee must re-

port cash tips to you by the 10th of the month after the

month the tips are received. Cash tips include tips paid by

cash, check, debit card, and credit card. The report

should include tips you paid over to the employee for

charge customers, tips the employee received directly

from customers, and tips received from other employees

under any tip-sharing arrangement. Both directly and indi-

rectly tipped employees must report tips to you. No report

is required for months when tips are less than $20. If you

don’t give your employees any specific method to report

tips (for example, an electronic tip reporting system), your

employees must give you a statement reporting their tips.

The statement must be signed and dated by the employee

and must include:

•

The employee's name, address, and SSN;

•

Your name and address;

•

The month and year (or the beginning and ending

dates, if the statement is for a period of less than 1

calendar month) the report covers; and

•

The total of tips received during the month or period.

You may also suggest that your employees see Pub.

531, Reporting Tip Income.

Collecting taxes on tips. You must collect federal in-

come tax, employee social security tax, and employee

Medicare tax on the employee's tips. The withholding

rules for withholding an employee's share of Medicare tax

on tips also apply to withholding the Additional Medicare

Tax once wages and tips exceed $200,000 in the calendar

year.

You can collect these taxes from the employee's wages

(excluding tips) or from other funds they make available.

See Tips are treated as supplemental wages in section 7

for more information. Stop collecting the employee social

security tax when their wages and tips for tax year 2024

reach $168,600; collect the income and employee

TIP

Medicare taxes for the whole year on all wages and tips.

You’re responsible for the employer social security tax on

wages and tips until the wages (including tips) reach the

limit. You’re responsible for the employer Medicare tax for

the whole year on all wages and tips. Tips are considered

to be paid at the time the employee reports them to you.

Deposit taxes on tips based on your deposit schedule as

described in section 11. File Form 941 or Form 944 to re-

port withholding and employment taxes on tips.

Ordering rule. If, by the 10th of the month after the

month for which you received an employee's report on

tips, you don't have enough employee funds available to

deduct the employee tax, you no longer have to collect it.

If there aren't enough funds available, withhold taxes in

the following order.

1. Withhold on regular wages and other compensation.

2. Withhold social security and Medicare taxes on tips.

3. Withhold income tax on tips.

Reporting tips. Report tips and any collected and uncol-

lected social security and Medicare taxes on Form W-2

(Form 499R-2/W-2PR for employers in Puerto Rico) and

on Form 941, lines 5b, 5c, and, if applicable, 5d (Form

944, lines 4b, 4c, and, if applicable, 4d). Report a negative

adjustment on Form 941, line 9 (Form 944, line 6), for the

uncollected social security and Medicare taxes. Enter the

amount of uncollected social security tax and Medicare

tax in box 12 of Form W-2 with codes “A” and “B,” respec-

tively. On Form 499R-2/W-2PR, enter the amount of un-

collected social security and Medicare taxes in boxes 25

and 26, respectively. Don't include any uncollected Addi-

tional Medicare Tax in box 12 of Form W-2. For additional

information on reporting tips, see section 13 and the Gen-

eral Instructions for Forms W-2 and W-3. Employers in Pu-

erto Rico, see the Instructions for Form W-3PR.

Revenue Ruling 2012-18 provides guidance for em-

ployers regarding social security and Medicare taxes im-

posed on tips, including information on the reporting of the

employer share of social security and Medicare taxes un-

der section 3121(q), the difference between tips and serv-

ice charges, and the section 45B credit. See Revenue

Ruling 2012-18, 2012-26 I.R.B. 1032, available at

IRS.gov/irb/2012-26_IRB#RR-2012-18.

FUTA tax on tips. If an employee reports to you in writ-

ing $20 or more of tips in a month, the tips are also subject

to FUTA tax.

Allocated tips. If you operate a large food or beverage

establishment, you must report allocated tips under cer-

tain circumstances. However, don't withhold income, so-

cial security, or Medicare taxes on allocated tips.

A large food or beverage establishment is one that is lo-

cated in the 50 states or the District of Columbia, provides

food or beverages for consumption on the premises,

where tipping is customary, and where there were nor-

mally more than 10 employees on a typical business day

during the preceding year.

The tips may be allocated by one of three meth-

ods—hours worked, gross receipts, or good faith

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agreement. For information about these allocation meth-

ods, and for information about required electronic filing of

Form 8027, see the Instructions for Form 8027. For more

information on filing Form 8027 electronically with the IRS,

see Pub. 1239.

Tip Rate Determination and Education Program. Em-

ployers may participate in the Tip Rate Determination and

Education Program. The program primarily consists of two

voluntary agreements developed to improve tip income re-

porting by helping taxpayers to understand and meet their

tip reporting responsibilities. The two agreements are the

Tip Rate Determination Agreement (TRDA) and the Tip

Reporting Alternative Commitment (TRAC). A tip agree-

ment, the Gaming Industry Tip Compliance Agreement

(GITCA), is available for the gaming (casino) industry. For

more information, see Pub. 3144.

More information. Advise your employees to see Pub.

531 or use the IRS Interactive Tax Assistant at IRS.gov/

TipIncome for help in determining if their tip income is tax-

able and for information about how to report tip income.

7. Supplemental Wages

References to federal income tax withholding

don't apply to employers in American Samoa,

Guam, the CNMI, the USVI, and Puerto Rico, un-

less you have employees who are subject to U.S. income

tax withholding. Contact your local tax department for in-

formation about income tax withholding.

Supplemental wages are wage payments to an em-

ployee that aren't regular wages. They include, but aren't

limited to, bonuses, commissions, overtime pay, payments

for accumulated sick leave, severance pay, awards, prizes,

back pay, reported tips, retroactive pay increases, and

payments for nondeductible moving expenses. However,

employers have the option to treat overtime pay and tips

as regular wages instead of supplemental wages. Other

payments subject to the supplemental wage rules include

taxable fringe benefits and expense allowances paid un-

der a nonaccountable plan. How you withhold on supple-

mental wages depends on whether the supplemental pay-

ment is identified as a separate payment from regular

wages. See Regulations section 31.3402(g)-1 for addi-

tional guidance. Also see Revenue Ruling 2008-29,

2008-24 I.R.B. 1149, available at IRS.gov/irb/

2008-24_IRB#RR-2008-29.

Withholding on supplemental wages when an em-

ployee receives more than $1 million of supplemen-

tal wages from you during the calendar year. Special

rules apply to the extent supplemental wages paid to any

one employee during the calendar year exceed $1 million.

If a supplemental wage payment, together with other sup-

plemental wage payments made to the employee during

the calendar year, exceeds $1 million, the excess is sub-

ject to withholding at 37% (or the highest rate of income

tax for the year). Withhold using the 37% rate without re-

CAUTION

gard to the employee's Form W-4. In determining supple-

mental wages paid to the employee during the year, in-

clude payments from all businesses under common

control. For more information, see Treasury Decision

9276, 2006-37 I.R.B. 423, available at IRS.gov/irb/

2006-37_IRB#TD-9276.

Withholding on supplemental wage payments to an

employee who doesn't receive $1 million of supple-

mental wages during the calendar year. If the supple-

mental wages paid to the employee during the calendar

year are less than or equal to $1 million, the following rules

apply in determining the amount of income tax to be with-

held.

Supplemental wages combined with regular wages.

If you pay supplemental wages with regular wages but

don't specify the amount of each, withhold federal income

tax as if the total were a single payment for a regular pay-

roll period.

Supplemental wages identified separately from regu-

lar wages. If you pay supplemental wages separately (or

combine them in a single payment and specify the amount

of each), the federal income tax withholding method de-

pends partly on whether you withhold income tax from

your employee's regular wages.

1. If you withheld income tax from an employee's regular

wages in the current or immediately preceding calen-

dar year, you can use one of the following methods for

the supplemental wages.

a. Withhold a flat 22% (no other percentage al-

lowed).

b. If the supplemental wages are paid concurrently

with regular wages, add the supplemental wages

to the concurrently paid regular wages and with-

hold federal income tax as if the total were a single

payment for a regular payroll period. If there are no

concurrently paid regular wages, add the supple-

mental wages to, alternatively, either the regular

wages paid or to be paid for the current payroll pe-

riod or the regular wages paid for the preceding

payroll period. Figure the income tax withholding

as if the total of the regular wages and supplemen-

tal wages is a single payment. Subtract the tax al-

ready withheld or to be withheld from the regular

wages. Withhold the remaining tax from the sup-

plemental wages. If there were other payments of

supplemental wages paid during the payroll period

made before the current payment of supplemental

wages, aggregate all the payments of supplemen-

tal wages paid during the payroll period with the

regular wages paid during the payroll period, fig-

ure the tax on the total, subtract the tax already

withheld from the regular wages and the previous

supplemental wage payments, and withhold the

remaining tax.

2. If you didn't withhold income tax from the employee's

regular wages in the current or immediately preceding

calendar year, use method 1b.

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Regardless of the method you use to withhold income tax

on supplemental wages, they’re subject to social security,

Medicare, and FUTA taxes.

Example 1. You pay John Peters a base salary on the

1st of each month. John’s most recent Form W-4 is from

2018, and John is single, claims one withholding allow-

ance, and didn’t enter an amount for additional withhold-

ing on Form W-4. In January, John is paid $1,000. You de-

cide to use the Wage Bracket Method of withholding.

Using Worksheet 3 and the withholding tables in section 3

of Pub. 15-T, you withhold $14 from this amount. In Febru-

ary, John receives salary of $1,000 plus a commission of

$500, which you combine with regular wages and don't

separately identify. You figure the withholding based on

the total of $1,500. The correct withholding from the tables

is $66.

Example 2. You pay Sharon Warren a base salary on

the 1st of each month. Sharon submitted a 2024 Form

W-4 and checked the box for Single or Married filing sepa-

rately. Sharon didn’t complete Steps 2, 3, and 4 on Form

W-4. Sharon’s May 1 pay is $2,000. You decide to use the

Wage Bracket Method of withholding. Using Worksheet 2

and the withholding tables in section 2 of Pub. 15-T, you

withhold $79. On May 15, Sharon receives a bonus of

$1,000. Electing to use supplemental wage withholding

method 1b, you do the following.

1. Add the bonus amount to the amount of wages from

the most recent base salary pay date (May 1) ($2,000

+ $1,000 = $3,000).

2. Determine the amount of withholding on the com-

bined $3,000 amount to be $196 using the wage

bracket tables.

3. Subtract the amount withheld from wages on the most

recent base salary pay date (May 1) from the com-

bined withholding amount ($196 – $79 = $117).

4. Withhold $117 from the bonus payment.

Example 3. The facts are the same as in Example 2,

except you elect to use the flat rate method of withholding

on the bonus. You withhold 22% of $1,000, or $220, from

Sharon's bonus payment.

Example 4. The facts are the same as in Example 2,

except you elect to pay Sharon a second bonus of $2,000

on May 29. Using supplemental wage withholding method

1b, you do the following.

1. Add the first and second bonus amounts to the

amount of wages from the most recent base salary

pay date (May 1) ($2,000 + $1,000 + $2,000 =

$5,000).

2. Determine the amount of withholding on the com-

bined $5,000 amount to be $435 using the wage

bracket tables.

3. Subtract the amounts withheld from wages on the

most recent base salary pay date (May 1) and the

amounts withheld from the first bonus payment from

the combined withholding amount ($435 – $79 – $117

= $239).

4. Withhold $239 from the second bonus payment.

Tips are treated as supplemental wages. Withhold in-

come tax on tips from wages earned by the employee or

from other funds the employee makes available. Don't

withhold the income tax due on tips from employee tips. If

an employee receives regular wages and reports tips, fig-

ure income tax withholding as if the tips were supplemen-

tal wages. If you withheld income tax from the regular wa-

ges in the current or immediately preceding calendar year,

you can withhold on the tips by method 1a or 1b dis-

cussed earlier in this section under Supplemental wages

identified separately from regular wages. If you didn’t with-

hold income tax from the regular wages in the current or

immediately preceding calendar year, add the tips to the

regular wages and withhold income tax on the total by

method 1b discussed earlier. Employers also have the op-

tion to treat tips as regular wages rather than supplemen-

tal wages. Service charges aren't tips; therefore, withhold

taxes on service charges as you would on regular wages.

Vacation pay. Vacation pay is subject to withholding as if

it were a regular wage payment. When vacation pay is in

addition to regular wages for the vacation period (for ex-

ample, an annual lump-sum payment for unused vacation

leave), treat it as a supplemental wage payment. If the va-

cation pay is for a time longer than your usual payroll pe-

riod, spread it over the pay periods for which you pay it.

8. Payroll Period

Your payroll period is a period of service for which you

usually pay wages. When you have a regular payroll pe-

riod, withhold income tax for that time period even if your

employee doesn't work the full period.

No regular payroll period. When you don't have a reg-

ular payroll period, withhold the tax as if you paid wages

for a daily or miscellaneous payroll period. Figure the

number of days (including Sundays and holidays) in the

period covered by the wage payment. If the wages are un-

related to a specific length of time (for example, commis-

sions paid on completion of a sale), count back the num-

ber of days from the payment period to the latest of:

•

The last wage payment made during the same calen-

dar year;

•

The date employment began, if during the same cal-

endar year; or

•

January 1 of the same year.

Employee paid for period less than 1 week. When

you pay an employee for a period of less than 1 week, and

the employee signs a statement under penalties of perjury

indicating they aren’t working for any other employer dur-

ing the same week for wages subject to withholding, figure

withholding based on a weekly payroll period. If the em-

ployee later begins to work for another employer for wages

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subject to withholding, the employee must notify you

within 10 days. You then figure withholding based on the

daily or miscellaneous period.

9. Withholding From

Employees' Wages

References to federal income tax withholding

don't apply to employers in American Samoa,

Guam, the CNMI, the USVI, and Puerto Rico, un-

less you have employees who are subject to U.S. income

tax withholding. Contact your local tax department for in-

formation about income tax withholding.

Federal Income Tax Withholding

Redesigned Form W-4. The IRS redesigned Form W-4

for 2020 and subsequent years. Before 2020, the value of

a withholding allowance was tied to the amount of the per-

sonal exemption. Due to changes in the law, taxpayers

can no longer claim personal exemptions or dependency

exemptions; therefore, Form W-4 no longer asks an em-

ployee to report the number of withholding allowances that

they are claiming. The revised Form W-4 is divided into

five steps. Step 1 and Step 5 apply to all employees. In

Step 1, employees enter personal information like their

name and filing status. In Step 5, employees sign the

form. Employees who complete only Step 1 and Step 5

will have their withholding figured based on their filing sta-

tus's standard deduction and tax rates with no other ad-

justments. If applicable, in Step 2, employees increase

their withholding to account for higher tax rates due to in-

come from other jobs in their household. Under Step 2,

employees either enter an additional amount to withhold

per payroll period in Step 4(c) or check the box in Step

2(c) for higher withholding rate tables to apply to their wa-

ges. In Step 3, employees decrease their withholding by

reporting the annual amount of any credits they will claim

on their income tax return. In Step 4, employees may in-

crease or decrease their withholding based on the annual

amount of other income or deductions they will report on

their income tax return and they may also request any ad-

ditional federal income tax they want withheld each pay

period.

An employee who submitted Form W-4 in any year be-

fore 2020 isn’t required to submit a new form merely be-

cause of the redesign. Employers will continue to figure

withholding based on the information from the employee's

most recently submitted Form W-4. The withholding tables

in Pub. 15-T allow employers to figure withholding based

on a Form W-4 for 2019 or earlier, as well as the rede-

signed Form W-4. While you may ask your employee first

paid wages before 2020 that hasn’t yet submitted a rede-

signed Form W-4 to submit a new Form W-4 using the re-

designed version of the form, you should explain to them

that they’re not required to do this and if they don't submit

a new Form W-4, withholding will continue based on a

valid Form W-4 previously submitted. All newly hired em-

ployees must use the redesigned form. Similarly, any other

CAUTION

employees who wish to adjust their withholding must use

the redesigned form.

Pub. 15-T provides an optional computational bridge to

treat 2019 and earlier Forms W-4 as if they were 2020 or

later Forms W-4 for purposes of figuring federal income

tax withholding. This computational bridge allows you to

use computational procedures and data fields for a 2020

and later Form W-4 to arrive at the equivalent withholding

for an employee that would have applied using the compu-

tational procedures and data fields on a 2019 or earlier

Form W-4. See How To Treat 2019 and Earlier Forms W-4

as if They Were 2020 or Later Forms W-4 under Introduc-

tion in Pub. 15-T.

More information. For more information about the re-

designed Form W-4 and regulations that provide guidance

for employers concerning income tax withholding from

employees’ wages, see Treasury Decision 9924, 2020-44

I.R.B. 943, available at IRS.gov/irb/2020-44_IRB#TD-

9924. For information about Form W-4, go to IRS.gov/

FormW4. Employer instructions on how to figure em-

ployee withholding are provided in Pub. 15-T, available at

IRS.gov/Pub15T.

Farm operators and crew leaders must withhold

federal income tax from the wages of farmworkers

if the wages are subject to social security and

Medicare taxes.

Using Form W-4 to figure withholding. To know how

much federal income tax to withhold from employees' wa-

ges, you should have a Form W-4 on file for each em-

ployee. Encourage your employees to file an updated

Form W-4 for 2024, especially if they owed taxes or re-

ceived a large refund when filing their 2023 tax return.

Ask all new employees to give you a signed Form W-4

when they start work. Make the form effective with the first

wage payment. If a new employee doesn't give you a com-

pleted Form W-4 in 2024 (including an employee who pre-

viously worked for you and was rehired in 2024, and who

fails to furnish a Form W-4), treat the new employee as if

they had checked the box for Single or Married filing sepa-

rately in Step 1(c) and made no entries in Step 2, Step 3,

or Step 4 of the 2024 Form W-4. An employee who was

paid wages before 2020 and who failed to furnish a Form

W-4 should continue to be treated as single and claiming

zero allowances on a 2019 Form W-4. If you use the op-

tional computational bridge, described earlier under Rede-

signed Form W-4, you may treat this employee as if they

had checked the box for Single or Married filing separately

in Step 1(c), and made no entries in Step 2 and Step 3, an

entry of $8,600 in Step 4(a), and an entry of zero in Step

4(b) of the 2024 Form W-4.

Electronic system to receive Form W-4. You may

establish a system to electronically receive Forms W-4

from your employees. See Regulations section 31.3402(f)

(5)-1(c) and Pub. 15-T for more information.

Effective date of Form W-4. A Form W-4 for 2023 or

earlier years remains in effect for 2024 unless the em-

ployee gives you a 2024 Form W-4. When you receive a

new Form W-4 from an employee, don't adjust withholding

TIP

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for pay periods before the effective date of the new form. If

an employee gives you a Form W-4 that replaces an exist-

ing Form W-4, begin withholding no later than the start of

the first payroll period ending on or after the 30th day from

the date when you received the replacement Form W-4.

For exceptions, see Exemption from federal income tax

withholding, IRS review of requested Forms W-4, and In-

valid Forms W-4, later in this section.

A Form W-4 that makes a change for the next cal-

endar year won't take effect in the current calen-

dar year.

Successor employer. If you’re a successor employer

(see Successor employer, later in this section), secure

new Forms W-4 from the transferred employees unless

the “Alternative Procedure” in section 5 of Revenue Proce-

dure 2004-53 applies. See Revenue Procedure 2004-53,

2004-34 I.R.B. 320, available at IRS.gov/irb/

2004-34_IRB#RP-2004-53.

You may advise your employees to use the IRS

Tax Withholding Estimator available at IRS.gov/

W4App for help in determining how to complete

their Forms W-4. An employee that makes a mid-year

change to their withholding after using the IRS Tax With-

holding Estimator may be underwithheld or overwithheld

once their Form W-4 is applied to the next full calendar

year. Therefore, you should remind employees that made

a mid-year change to revisit the IRS Tax Withholding Esti-

mator in early January and submit a new Form W-4 for the

year.

Completing Form W-4. The amount of any federal in-

come tax withholding must be based on filing status, in-

come (including income from other jobs), deductions, and

credits. Your employees may not base their withholding

amounts on a fixed dollar amount or percentage. How-

ever, an employee may specify a dollar amount to be with-

held each pay period in addition to the amount of with-

holding based on filing status and other information

reported on Form W-4.

Employees that are married filing jointly and have spou-

ses that also currently work, or employees that hold more

than one job at the same time, should account for their

higher tax rate by completing Step 2 of their 2024 Form

W-4. Employees also have the option to report on their

2024 Form W-4 other income they will receive that isn't

subject to withholding and other deductions they will claim

in order to increase the accuracy of their federal income

tax withholding.

See Pub. 505 for more information about completing

Form W-4. Along with Form W-4, you may wish to order

Pub. 505 for use by your employees.

Don't accept any withholding or estimated tax pay-

ments from your employees in addition to withholding

based on their Form W-4. If they require additional with-

holding, they should submit a new Form W-4 and, if nec-

essary, pay estimated tax by filing Form 1040-ES or by

CAUTION

TIP

making an electronic payment of estimated taxes. Em-

ployees who receive tips may provide funds to their em-

ployer for withholding on tips; see Collecting taxes on tips

in section 6.

Exemption from federal income tax withholding.

Generally, an employee may claim exemption from federal

income tax withholding because they had no income tax

liability last year and expect none this year. See the Form

W-4 instructions for more information. However, the wa-

ges are still subject to social security and Medicare taxes.

See also Invalid Forms W-4, later in this section.

A Form W-4 claiming exemption from withholding is ef-

fective when it is given to the employer and only for that

calendar year. To continue to be exempt from withholding,

an employee must give you a new Form W-4 by February

15. If the employee doesn't give you a new Form W-4 by

February 15, begin withholding as if they had checked the

box for Single or Married filing separately in Step 1(c) and

made no entries in Step 2, Step 3, or Step 4 of the 2024

Form W-4. If the employee provides a new Form W-4

claiming exemption from withholding on February 16 or

later, you may apply it to future wages but don't refund any

taxes withheld while the exempt status wasn’t in place.

Withholding federal income taxes on the wages of

nonresident alien employees. In general, you must

withhold federal income taxes on the wages of nonresi-

dent alien employees. However, see Pub. 515 for excep-

tions to this general rule. See section 5 for more guidance

on H-2A visa workers.

Withholding adjustment for nonresident alien em-

ployees. Nonresident aliens may not claim the standard

deduction on their tax returns; therefore, employers must

add an amount to the wages of nonresident alien employ-

ees performing services within the United States in order

to figure the amount of federal income tax to withhold from

their wages. The amount is added to their wages solely for

calculating federal income tax withholding. The amount

isn’t included in any box on the employee's Form W-2 and

doesn’t increase the income tax liability of the employee.

The amount also doesn't increase the social security tax

or Medicare tax liability of the employer or the employee,

or the FUTA tax liability of the employer. See Withholding

Adjustment for Nonresident Alien Employees under Intro-

duction in Pub. 15-T for the amount to add to their wages

for the payroll period.

Supplemental wage payment. The adjustment for

determining the amount of income tax withholding for non-

resident alien employees doesn't apply to a supplemental

wage payment (see section 7) if the 37% mandatory flat

rate withholding applies or if the 22% optional flat rate

withholding is being used to calculate income tax with-

holding on the supplemental wage payment.

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Nonresident alien employee's Form W-4. When com-

pleting Forms W-4, nonresident aliens are required to:

•

Not claim exemption from income tax withholding

(even if they meet both of the conditions to claim ex-

emption from withholding listed in the Form W-4

instructions);

•

Request withholding as if they’re single, regardless of

their actual filing status;

•

Not claim the child tax credit or credit for other de-

pendents in Step 3 of Form W-4 (if the nonresident

alien is a resident of Canada, Mexico, or South Korea,

or a student from India, or a business apprentice from

India, they may claim, under certain circumstances

(see Pub. 519), the child tax credit or credit for other

dependents); and

•

Write “Nonresident Alien” or “NRA” in the space below

Step 4(c) of Form W-4.

If you maintain an electronic Form W-4 system, you

should provide a field for nonresident aliens to enter non-

resident alien status instead of writing “Nonresident Alien”

or “NRA” in the space below Step 4(c) of Form W-4. You

should instruct nonresident aliens to see Notice 1392,

Supplemental Form W-4 Instructions for Nonresident Ali-

ens, before completing Form W-4.

Form 8233. If a nonresident alien employee claims a

tax treaty exemption from withholding, the employee must

submit Form 8233 with respect to the income exempt un-

der the treaty, instead of Form W-4. For more information,

see the Instructions for Form 8233 and Pay for Personal

Services Performed under Withholding on Specific In-

come in Pub. 515.

IRS review of requested Forms W-4. When requested

by the IRS, you must make original Forms W-4 available

for inspection by an IRS employee. You may also be direc-

ted to send certain Forms W-4 to the IRS. You may receive

a notice from the IRS requiring you to submit a copy of

Form W-4 for one or more of your named employees.

Send the requested copy or copies of Form W-4 to the

IRS at the address provided and in the manner directed by

the notice. The IRS may also require you to submit copies

of Form W-4 to the IRS as directed by a revenue proce-

dure or notice published in the Internal Revenue Bulletin.

After submitting a copy of a requested Form W-4 to the

IRS, continue to withhold federal income tax based on that

Form W-4 if it is valid (see Invalid Forms W-4, later in this

section). However, if the IRS later notifies you in writing

that the employee isn't entitled to claim exemption from

withholding or a claimed amount of deductions or credits,

withhold federal income tax based on the effective date,

employee's permitted filing status, and withholding in-

structions specified in the IRS notice (commonly referred

to as a “lock-in letter”).

Initial lock-in letter. The IRS uses information repor-

ted on Form W-2 to identify employees with withholding

compliance problems. In some cases, if a serious under-

withholding problem is found to exist for a particular em-

ployee, the IRS may issue a lock-in letter to the employer

specifying the employee's permitted filing status and pro-

viding withholding instructions for the specific employee.

You’ll also receive a copy for the employee that identifies

the permitted filing status and provides a description of

the withholding instructions you’re required to follow and

the process by which the employee can provide additional

information to the IRS for purposes of determining the ap-

propriate withholding and/or modifying the specified filing

status. You must furnish the employee copy to the em-

ployee within 10 business days of receipt if the employee

is employed by you as of the date of the notice. You may

follow any reasonable business practice to furnish the em-

ployee copy to the employee. Begin withholding based on

the notice on the date specified in the notice.

Implementation of lock-in letter. When you receive

the notice specifying the permitted filing status and provid-

ing withholding instructions, you may not withhold immedi-

ately on the basis of the notice. You must begin withhold-

ing tax on the basis of the notice for any wages paid after

the date specified in the notice. The delay between your

receipt of the notice and the date to begin the withholding

on the basis of the notice permits the employee time to

contact the IRS.

Seasonal employees and employees not currently

performing services. If you receive a notice for an em-

ployee who isn't currently performing services for you,

you’re still required to furnish the employee copy to the

employee and withhold based on the notice if any of the

following apply.

•

You’re paying wages for the employee's prior services

and the wages are subject to income tax withholding

on or after the date specified in the notice.

•

You reasonably expect the employee to resume serv-

ices within 12 months of the date of the notice.

•

The employee is on a leave of absence that doesn't

exceed 12 months or the employee has a right to re-

employment after the leave of absence.

Termination and rehire of employees. If you must

furnish and withhold based on the notice and the employ-

ment relationship is terminated after the date of the notice,

you must continue to withhold based on the notice if you

continue to pay any wages subject to income tax withhold-

ing. You must also withhold based on the notice or modifi-

cation notice (explained next) if the employee resumes the

employment relationship with you within 12 months after

the termination of the employment relationship.

Modification notice. After issuing the notice specify-

ing the permitted filing status and providing withholding in-

structions, the IRS may issue a subsequent notice (modifi-

cation notice) that modifies the original notice. The

modification notice may change the permitted filing status

and withholding instructions. You must withhold federal in-

come tax based on the effective date specified in the mod-

ification notice.

New Form W-4 after IRS notice. After the IRS issues

a notice or modification notice, if the employee provides

you with a new Form W-4 claiming complete exemption

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from withholding or a completed Form W-4 that results in

less withholding than would result under the IRS notice or

modification notice, disregard the new Form W-4. You

must withhold based on the notice or modification notice

unless the IRS notifies you to withhold based on the new

Form W-4. If the employee wants to put a new Form W-4

into effect that results in less withholding than required,

the employee must contact the IRS.

If, after you receive an IRS notice or modification notice,

your employee gives you a new completed Form W-4 that

results in more withholding than would result under the no-

tice or modification notice, you must withhold tax based

on the new Form W-4. Otherwise, disregard any subse-

quent Forms W-4 provided by the employee and withhold

based on the IRS notice or modification notice.

If, in a year before 2020, you received a lock-in

letter for an employee, then for 2024 you should

continue to follow the instructions in the lock-in

letter. You will use the withholding methods described in

Pub. 15-T for an employee with a Form W-4 from 2019 or

earlier, or you may use the optional computational bridge

to treat 2019 and earlier Forms W-4 as if they were 2020

or later Forms W-4 for purposes of figuring federal income

tax withholding. See How To Treat 2019 and Earlier Forms

W-4 as if They Were 2020 or Later Forms W-4 under the

Introduction in Pub. 15-T. You should continue following

the instructions in the pre-2020 lock-in letter until you re-

ceive a letter releasing your employee from the lock-in

procedures, you receive a modification notice, or your em-

ployee gives you a new Form W-4 that results in more

withholding than would result under the notice.

For additional information about employer withholding

compliance, see IRS.gov/WHC.

Substitute Forms W-4. You’re encouraged to have your

employees use the official version of Form W-4. You may

use a substitute version of Form W-4 to meet your busi-

ness needs. However, your substitute Form W-4 must

contain language that is identical to the official Form W-4

and your form must meet all current IRS rules for substi-

tute forms. At the time you provide your substitute form to

the employee, you must provide them with all tables, in-

structions, and worksheets from the current Form W-4. For

more information, see Pub. 15-T.

You can't accept substitute Forms W-4 developed by

employees. An employee who submits an employee-de-

veloped substitute Form W-4 after October 10, 2007, will

be treated as failing to furnish a Form W-4. However, con-

tinue to honor any valid employee-developed Forms W-4

you accepted before October 11, 2007.

Invalid Forms W-4. Any unauthorized change or addition

to Form W-4 makes it invalid. This includes taking out any

language by which the employee certifies the form is cor-

rect. A Form W-4 is also invalid if, by the date an em-

ployee gives it to you, they clearly indicate it is false. An

employee who submits a false Form W-4 may be subject

to a $500 penalty. You may treat a Form W-4 as invalid if

the employee wrote “exempt” below Step 4(c) and

checked the box in Step 2(c) or entered numbers for

Steps 3 and 4.

CAUTION

When you get an invalid Form W-4, don't use it to figure

federal income tax withholding. Tell the employee it is in-

valid and ask for another one. If the employee doesn't give

you a valid one, and you have an earlier Form W-4 for this

employee that is valid, withhold as you did before. If you

don't have an earlier Form W-4 that is valid, withhold tax

as if the employee had checked the box for Single or Mar-

ried filing separately in Step 1(c) and made no entries in

Step 2, Step 3, or Step 4 of the 2024 Form W-4. However,

an employee who was paid wages in 2019 who never sub-

mitted a valid Form W-4 and submits an invalid Form W-4

in 2024 should continue to be treated as single and claim-

ing zero allowances on a 2019 Form W-4. If you use the

optional computational bridge, described earlier under Re-

designed Form W-4, you may treat this employee as if

they had checked the box for Single or Married filing sepa-

rately in Step 1(c), and made no entries in Step 2 and

Step 3, an entry of $8,600 in Step 4(a), and an entry of

zero in Step 4(b) of the 2024 Form W-4.

Amounts exempt from levy on wages, salary, and

other income. If you receive a Notice of Levy on Wages,

Salary, and Other Income (a notice in the Form 668 ser-

ies), you must withhold amounts as described in the in-

structions for these forms. Pub. 1494 has tables to figure

the amount exempt from levy. If a levy issued in a prior

year is still in effect and the taxpayer submits a new State-

ment of Exemptions and Filing Status, use the current

year Pub. 1494 to figure the exempt amount.

Social Security and Medicare Taxes

The Federal Insurance Contributions Act (FICA) provides

for a federal system of old-age, survivors, disability, and

hospital insurance. The old-age, survivors, and disability

insurance part is financed by the social security tax. The

hospital insurance part is financed by the Medicare tax.

Each of these taxes is reported separately.

Generally, you’re required to withhold social security

and Medicare taxes from your employees' wages and pay

the employer share of these taxes. Certain types of wages

and compensation aren't subject to social security and

Medicare taxes. See section 5 and section 15 for details.

Generally, employee wages are subject to social security

and Medicare taxes regardless of the employee's age or

whether they are receiving social security benefits. If the

employee reported tips, see section 6.

The $150 test or the $2,500 test for farmwork. All

cash wages that you pay to an employee during the year

for farmwork are subject to social security and Medicare

taxes and federal income tax withholding if either of the

two tests below is met.

•

You pay cash wages to an employee of $150 or more

in a year for farmwork (count all cash wages paid on a

time, piecework, or other basis). The $150 test applies

separately to each farmworker that you employ. If you

employ a family of workers, each member is treated

separately. Don't count wages paid by other employ-

ers.

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•

The total that you pay for farmwork (cash and non-

cash) to all your employees is $2,500 or more during

the year.

Exceptions. Annual cash wages of less than $150

you pay to a seasonal farmworker aren't subject to social

security and Medicare taxes, or federal income tax with-

holding, even if you pay $2,500 or more to all your farm-

workers. However, these wages count toward the $2,500

test for determining whether other farmworkers' wages are

subject to social security and Medicare taxes.

A seasonal farmworker is a worker who:

•

Is employed in agriculture as a hand-harvest laborer,

•

Is paid piece rates in an operation that is usually paid

on a piece-rate basis in the region of employment,

•

Commutes daily from their permanent home to the

farm, and

•

Had been employed in agriculture less than 13 weeks

in the preceding calendar year.

Wages paid to a child under 18 working on a farm that

is a sole proprietorship or a partnership in which each

partner is a parent of a child aren't subject to social secur-

ity and Medicare taxes. However, these wages count to-

ward the $2,500 test for determining whether other farm-

workers' wages are subject to social security and

Medicare taxes.

Deducting the tax. Deduct the employee tax from

each wage payment. If you’re not sure that the wages that

you pay to a farmworker during the year will be taxable,

you may either deduct the tax when you make the pay-

ments or wait until the $2,500 test or the $150 test dis-

cussed earlier has been met.

Tax rates and the social security wage base limit. So-

cial security and Medicare taxes have different rates and

only the social security tax has a wage base limit. The

wage base limit is the maximum wage subject to the tax

for the year. Determine the amount of withholding for so-

cial security and Medicare taxes by multiplying each pay-

ment by the employee tax rate.

For 2024, the social security tax rate is 6.2% (amount

withheld) each for the employer and employee (12.4% to-

tal). The social security wage base limit is $168,600. The

tax rate for Medicare is 1.45% (amount withheld) each for

the employee and employer (2.9% total). There is no wage

base limit for Medicare tax; all covered wages are subject

to Medicare tax.

Additional Medicare Tax withholding. In addition to

withholding Medicare tax at 1.45%, you must withhold a

0.9% Additional Medicare Tax from wages you pay to an

employee in excess of $200,000 in a calendar year. You’re

required to begin withholding Additional Medicare Tax in

the pay period in which you pay wages in excess of

$200,000 to an employee and continue to withhold it each

pay period until the end of the calendar year. Additional

Medicare Tax is only imposed on the employee. There is

no employer share of Additional Medicare Tax. All wages

that are subject to Medicare tax are subject to Additional

Medicare Tax withholding if paid in excess of the $200,000

withholding threshold.

For more information on what wages are subject to

Medicare tax, see section 15. For more information on Ad-

ditional Medicare Tax, go to IRS.gov/ADMTfaqs.

Successor employer. When corporate acquisitions

meet certain requirements, wages paid by the predeces-

sor are treated as if paid by the successor for purposes of

applying the social security wage base and for applying

the Additional Medicare Tax withholding threshold (that is,

$200,000 in a calendar year). You should determine

whether or not you should file Schedule D (Form 941), Re-

port of Discrepancies Caused by Acquisitions, Statutory

Mergers, or Consolidations, by reviewing the Instructions

for Schedule D (Form 941). See Regulations section

31.3121(a)(1)-1(b) for more information. Also see Reve-

nue Procedure 2004-53, 2004-34 I.R.B. 320, available at

IRS.gov/irb/2004-34_IRB#RP-2004-53.

Example. Early in 2024, you bought all of the assets of

a plumbing business from Mr. Martin. Mr. Brown, who had

been employed by Mr. Martin and received $2,000 in wa-

ges before the date of purchase, continued to work for

you. The wages you paid to Mr. Brown are subject to so-

cial security taxes on the first $166,600 ($168,600 minus

$2,000). Medicare tax is due on all of the wages you pay

Mr. Brown during the calendar year. You should include

the $2,000 Mr. Brown received while employed by Mr.

Martin in determining whether Mr. Brown's wages exceed

the $200,000 for Additional Medicare Tax withholding

threshold.

Employee's portion of taxes paid by employer. If you

pay your employee's social security and Medicare taxes

without deducting them from the employee's pay, you

must include the amount of the payments in the employ-

ee's wages for social security and Medicare taxes. This in-

crease in the employee's wage payment for your payment

of the employee's social security and Medicare taxes is

also subject to employee social security and Medicare

taxes. This again increases the amount of the additional

taxes that you must pay. For more information, see Reve-

nue Ruling 86-14, 1986-1 C.B. 304, and Pub. 15-A.

Household and agricultural employers. If you

would rather pay a household or agricultural employee's

share of the social security and Medicare taxes without

withholding them from the employee’s wages, you may do

so. If you don't withhold the taxes, however, you must still

pay them on behalf of the employee. Any employee so-

cial security and Medicare taxes that you pay are addi-

tional income to the employee. Include it in box 1 of the

employee's Form W-2 (box 7 of Form 499R-2/W-2PR), but

don't count it as social security and Medicare wages and

don't include it in boxes 3 and 5 (boxes 20 and 22 of Form

499R-2/W-2PR). Also, don't count the additional income

as wages for FUTA tax purposes. Different rules apply to

employer payments of social security and Medicare taxes

for non-household and non-agricultural employees. See

section 7 of Pub. 15-A.

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Example. Gavrielle operates a small family fruit farm.

Gavrielle employs day laborers in the picking season to al-

low Gavrielle time to get the crops to market. Gavrielle

doesn't deduct the employees' share of social security

and Medicare taxes from their pay; instead, Gavrielle pays

it on their behalf. When Gavrielle prepares the employees'

Forms W-2, Gavrielle adds each employee's share of so-

cial security and Medicare taxes that Gavrielle paid to the

employee's wage income (box 1 of Form W-2), but doesn't

include it in box 3 (social security wages) or box 5 (Medi-

care wages and tips).

For 2024, Gavrielle paid Dan $1,000 during the year.

Gavrielle enters $1,076.50 in box 1 of Dan's Form W-2

($1,000 wages plus $76.50 social security and Medicare

taxes paid for Dan). Gavrielle enters $1,000.00 in boxes 3

and 5 of Dan's Form W-2.

Sick pay payments. Social security and Medicare taxes

apply to most payments of sick pay, including payments

made by third parties such as insurance companies. For

details on third-party payers of sick pay, see Pub. 15-A.

Motion picture project employers. All wages paid by a

motion picture project employer to a motion picture project

worker during a calendar year are subject to a single so-

cial security tax wage base ($168,600 for 2024) and a sin-

gle FUTA tax wage base ($7,000 for 2024) regardless of

the worker's status as a common-law employee of multiple

clients of the motion picture project employer. For more in-

formation, including the definition of a motion picture

project employer and a motion picture project worker, see

section 3512.

Withholding social security and Medicare taxes on

nonresident alien employees. In general, if you pay wa-

ges to nonresident alien employees, you must withhold

social security and Medicare taxes as you would for a U.S.

citizen or resident alien. However, see Pub. 515 for excep-

tions to this general rule. One such exception is for foreign

agricultural workers on H-2A visas, who are exempt from

social security and Medicare taxes. See Compensation

paid to H-2A visa holders in section 5.

International social security agreements. The United

States has social security agreements, also known as to-

talization agreements, with many countries that eliminate

dual social security coverage and taxation. Compensation

subject to social security and Medicare taxes may be ex-

empt under one of these agreements. You can get more

information and a list of agreement countries from the

SSA at SSA.gov/international. Also see Pub. 519, U.S. Tax

Guide for Aliens.

Religious exemption. An exemption from social secur-

ity and Medicare taxes is available to members of a recog-

nized religious sect opposed to insurance. This exemption

is available only if both the employee and the employer

are members of the sect. For more information, see Pub.

517.

Foreign persons treated as American employers. Un-

der section 3121(z), a foreign person who meets both of

the following conditions is generally treated as an Ameri-

can employer for purposes of paying FICA taxes on wages

paid to an employee who is a U.S. citizen or resident.

1. The foreign person is a member of a domestically

controlled group of entities.

2. The employee of the foreign person performs services

in connection with a contract between the U.S. Gov-

ernment (or an instrumentality of the U.S. Govern-

ment) and any member of the domestically controlled

group of entities. Ownership of more than 50% consti-

tutes control.

Part-Time Workers

Part-time workers and workers hired for short periods of

time are treated the same as full-time employees for fed-

eral income tax withholding and social security, Medicare,

and FUTA tax purposes.

Generally, it doesn't matter whether the part-time

worker or worker hired for a short period of time has an-

other job or has the maximum amount of social security

tax withheld by another employer. See Successor em-

ployer, earlier in this section, for an exception to this rule.

Income tax withholding may be figured the same way

as for full-time workers or it may be figured by the

part-year employment method explained in section 6 of

Pub. 15-T.

10. Required Notice to

Employees About the Earned

Income Credit (EIC)

You must notify employees, except for employees in

American Samoa, Guam, Puerto Rico, the CNMI, and the

USVI, who have no federal income tax withheld that they

may be able to claim a tax refund because of the EIC. Al-

though you don't have to notify employees who claim ex-

emption from withholding on Form W-4 about the EIC,

you’re encouraged to notify any employees whose wages

for 2023 were less than $56,838 ($63,398 if married filing

jointly) that they may be eligible to claim the credit for

2023. This is because eligible employees may get a re-

fund of the amount of the EIC that is more than the tax

they owe.

You’ll meet this notification requirement if you issue the

employee Form W-2 with the EIC notice on the back of

Copy B, or a substitute Form W-2 with the same state-

ment. You’ll also meet the requirement by providing Notice

797, Possible Federal Tax Refund Due to the Earned In-

come Credit (EIC), or your own statement that contains

the same wording.

If a substitute for Form W-2 is given to the employee on

time but doesn't have the required statement, you must

notify the employee within 1 week of the date the substi-

tute for Form W-2 is given. If Form W-2 is required but isn't

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given on time, you must give the employee Notice 797 or

your written statement by the date Form W-2 is required to

be given. If Form W-2 isn't required, you must notify the

employee by February 7, 2024.

11. Depositing Taxes

Generally, you must deposit federal income tax withheld

and both the employer and employee social security and

Medicare taxes. You must use EFT to make all federal tax

deposits. See How To Deposit, later in this section, for in-

formation on electronic deposit requirements.

Payment with return. You may make a payment with a

timely filed Form 941, Form 943, Form 944, or Form 945

instead of depositing, without incurring a penalty, if one of

the following applies.

•

You’re a monthly schedule depositor (defined later)

and make a payment in accordance with the Accuracy

of Deposits Rule, discussed later in this section. This

payment may be $2,500 or more.

•

Your Form 941 total tax liability (Form 941, line 12) for

either the current quarter or the prior quarter is less

than $2,500, and you didn't incur a $100,000 next-day

deposit obligation during the current quarter. However,

if you're unsure that your total tax liability for the cur-

rent quarter will be less than $2,500 (and your liability

for the prior quarter wasn't less than $2,500), make

deposits using the semiweekly or monthly rules so you

won't be subject to an FTD penalty.

•

Your Form 943 total tax liability (Form 943, line 13) for

the year is less than $2,500. However, if you're unsure

that you will report less than $2,500, deposit under the

rules explained in this section so that you won't be

subject to an FTD penalty.

•

Your Form 944 total tax liability for the year (Form 944,

line 9) is less than $2,500, or your Form 944 total tax

liability for the year (Form 944, line 9) is $2,500 or

more and you already deposited the taxes you owed

for the first, second, and third quarters of the year;

your net tax for the fourth quarter is less than $2,500;

and you're paying, in full, the tax you owe for the fourth

quarter with a timely filed return.

•

Your Form 945 total tax liability (Form 945, line 3) for

the year is less than $2,500. However, if you're unsure

that you will report less than $2,500, deposit under the

rules explained in this section so that you won't be

subject to an FTD penalty.

Separate deposit requirements for nonpayroll (Form

945) tax liabilities. Separate deposits are required for

nonpayroll and payroll income tax withholding. Don't com-

bine deposits for Forms 941 (Form 943 or Form 944) and

Form 945 tax liabilities. Generally, the deposit rules for

nonpayroll liabilities are the same as discussed next, ex-

cept the rules apply to an annual rather than a quarterly

return period. If the total amount of tax for the year repor-

ted on Form 945 is less than $2,500, you're not required to

make deposits during the year. See the separate Instruc-

tions for Form 945 for more information.

Separate deposit requirements for employers of both

farm and nonfarm workers. If you employ both farm

and nonfarm workers, you must treat employment taxes

for the farmworkers (Form 943 taxes) separately from em-

ployment taxes for the nonfarm workers (Form 941/944

taxes). Form 943 taxes and Form 941/944 taxes aren't

combined for purposes of applying any of the deposit

schedule rules. If a deposit is due, deposit the Form

941/944 taxes and the Form 943 taxes by making sepa-

rate deposits. For example, if you're a monthly schedule

depositor for both Form 941/944 taxes and Form 943

taxes and your tax liability at the end of April is $1,500 re-

portable on Form 941/944 and $1,200 reportable on Form

943, deposit both amounts by May 15. Use one transac-

tion to deposit the $1,500 of Form 941/944 taxes and an-

other transaction to deposit the $1,200 of Form 943 taxes.

When To Deposit

There are two deposit schedules—monthly and semi-

weekly—for determining when you deposit social security,

Medicare, and withheld federal income taxes. These

schedules tell you when a deposit is due after a tax liability

arises. Your tax liability is based on the dates payments

were made or wages were paid. For taxable noncash

fringe benefits, see When taxable fringe benefits are trea-

ted as paid in section 5. Before the beginning of each cal-

endar year, you must determine which of the two deposit

schedules you’re required to use. The deposit schedule

you must use is based on the total tax liability you reported

on Forms 941, line 12; Form 943, line 13; Form 944, line 9;

or Form 945, line 3, during a lookback period, discussed

next. Your deposit schedule isn't determined by how often

you pay your employees or make deposits. See special

rules for Forms 943, 944, and 945, later in this section.

Also see Application of Monthly and Semiweekly Sched-

ules, later in this section.

These rules don't apply to FUTA tax. See section

14 for information on depositing FUTA tax.

Lookback period. If you’re a Form 941 filer, your deposit

schedule for a calendar year is determined from the total

taxes reported on Forms 941, line 12, in a 4-quarter look-

back period. The lookback period begins July 1 and ends

June 30 as shown next in Table 1. If you reported $50,000

or less of taxes for the lookback period, you’re a monthly

schedule depositor; if you reported more than $50,000,

you’re a semiweekly schedule depositor.

Table 1. Lookback Period for Calendar Year

2024

July 1, 2022, Oct. 1, 2022, Jan. 1, 2023, Apr. 1, 2023,

through through through through

Sept. 30, 2022 Dec. 31, 2022 Mar. 31, 2023 June 30, 2023

CAUTION

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The lookback period for a 2024 Form 941 filer

who filed Form 944 in either 2022 or 2023 is cal-

endar year 2022.

If you’re a Form 943 or Form 944 filer for the current

year or either of the preceding 2 years, your deposit

schedule for a calendar year is determined from the total

taxes reported during the second preceding calendar year

(either on your Forms 941 for all 4 quarters of that year,

your Form 943 for that year, or your Form 944 for that

year). The lookback period for 2024 for a Form 943 or

Form 944 filer is calendar year 2022. If you reported

$50,000 or less of taxes for the lookback period, you’re a

monthly schedule depositor; if you reported more than

$50,000, you’re a semiweekly schedule depositor.

If you’re a Form 945 filer, your deposit schedule for a

calendar year is determined from the total taxes reported

on line 3 of your Form 945 for the second preceding calen-

dar year. The lookback period for 2024 for a Form 945 filer

is calendar year 2022.

Your total tax liability for the lookback period is de-

termined based on the amount of taxes you repor-

ted on Forms 941, line 12; Form 943, line 13; or

Form 944, line 9. Your total liability isn’t reduced by the re-

fundable portion of the credit for qualified sick and family

leave wages, or the refundable portion of the COBRA pre-

mium assistance credit. For more information about these

credits, see the instructions for your employment tax re-

turn that were applicable during the lookback period.

Adjustments and the lookback rule. Adjustments

made on Form 941-X, Form 943-X, Form 944-X, and Form

945-X don't affect the amount of tax liability for previous

periods for purposes of the lookback rule.

Example. An employer originally reported a tax liabil-

ity of $45,000 for the lookback period. The employer dis-

covered, during January 2024, that the tax reported for

one of the lookback period quarters was understated by

$10,000 and corrected this error by filing Form 941-X. This

employer is a monthly schedule depositor for 2024 be-

cause the lookback period tax liabilities are based on the

amounts originally reported, and they were $50,000 or

less. The $10,000 adjustment is also not treated as part of

the 2024 taxes.

Deposit period. The term “deposit period” refers to the

period during which tax liabilities are accumulated for

each required deposit due date. For monthly schedule de-

positors, the deposit period is a calendar month. The de-

posit periods for semiweekly schedule depositors are

Wednesday through Friday and Saturday through Tues-

day.

If you're an agent with an approved Form 2678,

the deposit rules apply to you based on the total

employment taxes accumulated by you for your

own employees and on behalf of all employers for whom

you're authorized to act. For more information on an agent

with an approved Form 2678, see Revenue Procedure

2013-39, 2013-52 I.R.B. 830, available at IRS.gov/irb/

2013-52_IRB#RP-2013-39.

CAUTION

TIP

Monthly Deposit Schedule

For Form 941 filers, you're a monthly schedule depositor

for a calendar year if the total taxes on Forms 941, line 12,

for the 4 quarters in your lookback period were $50,000 or

less. For Form 943, Form 944, or Form 945 filers, you're a

monthly schedule depositor for a calendar year if the total

taxes on Form 943, line 13; Form 944, line 9; or Form 945,

line 3, during your lookback period were $50,000 or less.

Under the monthly deposit schedule, deposit employment

taxes on payments made during a month by the 15th day

of the following month. See also Deposits Due on Busi-

ness Days Only and $100,000 Next-Day Deposit Rule,

later in this section. Monthly schedule depositors

shouldn't file Form 941, Form 943, Form 944, or Form 945

on a monthly basis.

New employers. For Form 941 filers, your tax liability for

any quarter in the lookback period before you started or

acquired your business is considered to be zero. There-

fore, you’re a monthly schedule depositor for the first cal-

endar year of your business. For Form 943, Form 944, or

Form 945 filers, your tax liability in the lookback period be-

fore you started or acquired your business is considered

to be zero. Therefore, you're a monthly schedule depositor

for the first and second calendar years of your business.

However, see $100,000 Next-Day Deposit Rule, later in

this section.

Semiweekly Deposit Schedule

For Form 941 filers, you're a semiweekly schedule deposi-

tor for a calendar year if the total taxes on Forms 941,

line 12, during your lookback period were more than

$50,000. For Form 943, Form 944, or Form 945 filers,

you're a semiweekly schedule depositor for a calendar

year if the total taxes on Form 943, line 13; Form 944,

line 9; or Form 945, line 3, during your lookback period

were more than $50,000. Under the semiweekly deposit

schedule, deposit employment taxes for payments made

on Wednesday, Thursday, and/or Friday by the following

Wednesday. Deposit taxes for payments made on Satur-

day, Sunday, Monday, and/or Tuesday by the following Fri-

day. See also Deposits Due on Business Days Only, later

in this section.

Semiweekly schedule depositors must complete

Schedule B (Form 941), Report of Tax Liability for

Semiweekly Schedule Depositors, and submit it

with Form 941. If you file Form 943 and are a semiweekly

schedule depositor, complete Form 943-A, Agricultural

Employer's Record of Federal Tax Liability, and submit it

with Form 943. If you file Form 944 or Form 945 and are a

semiweekly schedule depositor, complete Form 945-A,

Annual Record of Federal Tax Liability, and submit it with

your return.

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Table 2. Semiweekly Deposit Schedule

IF the payday falls on a... THEN deposit taxes by the

following...

Wednesday, Thursday, and/or

Friday

Wednesday.

Saturday, Sunday, Monday, and/or

Tuesday

Friday.

Semiweekly deposit period spanning 2 quarters

(Form 941 filers). If you have more than 1 pay date dur-

ing a semiweekly period and the pay dates fall in different

calendar quarters, you’ll need to make separate depos-

its for the separate liabilities.

Example. If you have a pay date on Saturday, March

30, 2024 (first quarter), and another pay date on Monday,

April 1, 2024 (second quarter), two separate deposits

would be required even though the pay dates fall within

the same semiweekly period. Both deposits would be due

Friday, April 5, 2024.

Semiweekly deposit period spanning 2 return peri-

ods (Form 943, Form 944, or Form 945 filers). The pe-

riod covered by a return is the return period. The return

period for annual Forms 943, 944, and 945 is a calendar

year. If you have more than one pay date during a semi-

weekly period and the pay dates fall in different return pe-

riods, you'll need to make separate deposits for the sepa-

rate liabilities. For example, if a return period ends on

Thursday, taxes accumulated on Wednesday and Thurs-

day are subject to one deposit obligation, and taxes accu-

mulated on Friday are subject to a separate obligation.

Separate deposits are required because two different re-

turn periods are affected.

Summary of Steps To Determine Your Deposit Schedule

Identify your lookback period (see Lookback period, earlier in

this section).

Add the total taxes you reported on Forms 941, line 12, during

the lookback period.

Determine if you’re a monthly or semiweekly schedule

depositor:

IF the total taxes you

reported in the lookback

period were...

THEN you’re a...

$50,000 or less monthly schedule depositor.

more than $50,000 semiweekly schedule

depositor.

Example of Monthly and Semiweekly

Schedules

Rose Co. reported Form 941 taxes as follows.

2023 Lookback Period 2024 Lookback Period

3rd Quarter 2021 $12,000 3rd Quarter 2022 $12,000

4th Quarter 2021 12,000 4th Quarter 2022 12,000

1st Quarter 2022 12,000 1st Quarter 2023 12,000

2nd Quarter 2022 12,000 2nd Quarter 2023 15,000

$48,000 $51,000

Rose Co. is a monthly schedule depositor for 2023 be-

cause its tax liability for the 4 quarters in its lookback pe-

riod (third quarter 2021 through second quarter 2022)

wasn't more than $50,000. However, for 2024, Rose Co.

will be a semiweekly schedule depositor because the total

taxes exceeded $50,000 for the 4 quarters in its lookback

period (third quarter 2022 through second quarter 2023).

Example for employers of farmworkers. Red Co. re-

ported taxes on its 2022 Form 943, line 13, of $48,000. On

its 2023 Form 943, line 13, it reported taxes of $60,000.

Red Co. is a monthly schedule depositor for 2024 be-

cause its taxes for its lookback period ($48,000 for calen-

dar year 2022) weren't more than $50,000. However, for

2025, Red Co. is a semiweekly schedule depositor be-

cause the total taxes for its lookback period ($60,000 for

calendar year 2023) exceeded $50,000.

Deposits Due on Business Days Only

If a deposit is required to be made on a day that isn't a

business day, the deposit is considered timely if it is made

by the close of the next business day. A business day is

any day other than a Saturday, Sunday, or legal holiday.

For example, if a deposit is required to be made on a Fri-

day and Friday is a legal holiday, the deposit will be con-

sidered timely if it is made by the following Monday (if that

Monday is a business day).

Semiweekly schedule depositors have at least 3

business days following the close of the semiweekly pe-

riod to make a deposit. If any of the 3 weekdays after the

end of a semiweekly period is a legal holiday, you’ll have

an additional day for each day that is a legal holiday to

make the required deposit. For example, if a semiweekly

schedule depositor accumulated taxes for payments

made on Friday and the following Monday is a legal holi-

day, the deposit normally due on Wednesday may be

made on Thursday (this allows 3 business days to make

the deposit).

Legal holiday. The term “legal holiday” means any legal

holiday in the District of Columbia. For purposes of the de-

posit rules, the term “legal holiday” doesn't include other

statewide legal holidays. Legal holidays for 2024 are listed

next.

•

January 1—New Year's Day

•

January 15—Birthday of Martin Luther King, Jr.

•

February 19—Washington's Birthday

•

April 16—District of Columbia Emancipation Day

•

May 27—Memorial Day

•

June 19—Juneteenth National Independence Day

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•

July 4—Independence Day

•

September 2—Labor Day

•

October 14—Indigenous Peoples' Day (Columbus

Day)

•

November 11—Veterans Day

•

November 28—Thanksgiving Day

•

December 25—Christmas Day

Application of Monthly and Semiweekly

Schedules

The terms “monthly schedule depositor” and “semiweekly

schedule depositor” don't refer to how often your business

pays its employees or even how often you’re required to

make deposits. The terms identify which set of deposit

rules you must follow when an employment tax liability ari-

ses. The deposit rules are based on the dates when wa-

ges are paid (cash basis), not on when tax liabilities are

accrued for accounting purposes.

Monthly schedule example. Spruce Co. is a monthly

schedule depositor with seasonal employees. It paid wa-

ges each Friday during January but didn't pay any wages

during February. Under the monthly deposit schedule,

Spruce Co. must deposit the combined tax liabilities for

the January paydays by February 15. Spruce Co. doesn't

have a deposit requirement for February (due by March

15) because no wages were paid and, therefore, it didn't

have a tax liability for February.

Semiweekly schedule example. Green, Inc., is a semi-

weekly schedule depositor and pays wages once each

month on the last Friday of the month. Although Green,

Inc., has a semiweekly deposit schedule, it will deposit

just once a month because it pays wages only once a

month. The deposit, however, will be made under the

semiweekly deposit schedule as follows: Green, Inc.'s tax

liability for the April 26, 2024 (Friday), payday must be de-

posited by May 1, 2024 (Wednesday). Under the semi-

weekly deposit schedule, liabilities for wages paid on

Wednesday through Friday must be deposited by the fol-

lowing Wednesday.

$100,000 Next-Day Deposit Rule

If you accumulate $100,000 or more in taxes on any day

during a monthly or semiweekly deposit period (see De-

posit period, earlier in this section), you must deposit the

tax by the next business day, whether you’re a monthly or

semiweekly schedule depositor.

For purposes of the $100,000 rule, don't continue accu-

mulating a tax liability after the end of a deposit period.

For example, if a semiweekly schedule depositor has ac-

cumulated a liability of $95,000 on a Tuesday (of a Satur-

day-through-Tuesday deposit period) and accumulated a

$10,000 liability on Wednesday, the $100,000 next-day

deposit rule doesn't apply because the $10,000 is accu-

mulated in the next deposit period. Thus, $95,000 must be

deposited by Friday and $10,000 must be deposited by

the following Wednesday.

However, once you accumulate at least $100,000 in a

deposit period, stop accumulating at the end of that day

and begin to accumulate anew on the next day. For exam-

ple, Fir Co. is a semiweekly schedule depositor. On Mon-

day, Fir Co. accumulates taxes of $110,000 and must de-

posit this amount on Tuesday, the next business day. On

Tuesday, Fir Co. accumulates additional taxes of $30,000.

Because the $30,000 isn't added to the previous

$110,000 and is less than $100,000, Fir Co. must deposit

the $30,000 by Friday (following the semiweekly deposit

schedule).

If you’re a monthly schedule depositor and accu-

mulate a $100,000 tax liability on any day during

the deposit period, you become a semiweekly

schedule depositor on the next day and remain so for at

least the rest of the calendar year and for the following cal-

endar year.

Example. Elm, Inc., started its business on May 6,

2024. On Wednesday, May 8, it paid wages for the first

time and accumulated a tax liability of $40,000. On Friday,

May 10, Elm, Inc., paid wages and accumulated a liability

of $60,000, bringing its total accumulated tax liability to

$100,000. Because this was the first year of its business,

the tax liability for its lookback period is considered to be

zero, and it would be a monthly schedule depositor based

on the lookback rules. However, since Elm, Inc., accumu-

lated a $100,000 liability on May 10, it became a semi-

weekly schedule depositor on May 11. It will be a semi-

weekly schedule depositor for the remainder of 2024 and

for 2025. Elm, Inc., is required to deposit the $100,000 by

Monday, May 13, the next business day.

The $100,000 tax liability threshold requiring a

next-day deposit is determined before you con-

sider any reduction of your liability for nonrefunda-

ble credits.

Accuracy of Deposits Rule

You’re required to deposit 100% of your tax liability on or

before the deposit due date. However, penalties won't be

applied for depositing less than 100% if both of the follow-

ing conditions are met.

•

Any deposit shortfall doesn't exceed the greater of

$100 or 2% of the amount of taxes otherwise required

to be deposited.

•

The deposit shortfall is paid or deposited by the short-

fall makeup date as described next.

Makeup Date for Deposit Shortfall:

1. Monthly schedule depositor. Deposit the shortfall

or pay it with your return by the due date of your return

for the return period in which the shortfall occurred.

You may pay the shortfall with your return even if the

amount is $2,500 or more.

CAUTION

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2. Semiweekly schedule depositor. Deposit by the

earlier of:

a. The first Wednesday or Friday (whichever comes

first) that falls on or after the 15th day of the month

following the month in which the shortfall occurred,

b. The due date of your return (for the return period

of the tax liability).

For example, if a semiweekly schedule depositor has a

deposit shortfall during February 2024, the shortfall

makeup date is March 15, 2024 (Friday). However, if the

shortfall occurred on the required October 2, 2024 (Wed-

nesday), deposit due date for the September 27, 2024

(Friday), pay date, the return due date for the September

27 pay date (October 31, 2024) would come before the

November 15, 2024 (Friday), shortfall makeup date. In this

case, the shortfall must be deposited by October 31,

2024.

How To Deposit

You must deposit employment taxes, including Form 945

taxes, by EFT. See Payment with return, earlier in this sec-

tion, for exceptions explaining when taxes may be paid

with the tax return instead of being deposited.

Electronic deposit requirement. You must use EFT to

make all federal tax deposits. Generally, an EFT is made

using EFTPS. If you don't want to use EFTPS, you can ar-

range for your tax professional, financial institution, payroll

service, or other trusted third party to make electronic de-

posits on your behalf. EFTPS is a free service provided by

the Department of the Treasury. To get more information

about EFTPS or to enroll in EFTPS, go to EFTPS.gov or

call 800-555-4477, 800-244-4829 (Spanish), or

303-967-5916 (toll call). To contact EFTPS using TRS for

people who are deaf, hard of hearing, or have a speech

disability, dial 711 and then provide the TRS assistant the

800-555-4477 number or 800-733-4829. Additional infor-

mation about EFTPS is also available in Pub. 966.

When you receive your EIN. If you’re a new em-

ployer that indicated a federal tax obligation when re-

questing an EIN, you’ll be pre-enrolled in EFTPS. You’ll re-

ceive information about Express Enrollment in your

Employer Identification Number (EIN) Package and an ad-

ditional mailing containing your EFTPS personal identifi-

cation number (PIN) and instructions for activating your

PIN. Call the toll-free number located in your “How to Acti-

vate Your Enrollment” brochure to activate your enrollment

and begin making your payroll tax deposits. If you out-

source any of your payroll and related tax duties to a

third-party payer, such as a payroll service provider (PSP)

or reporting agent, be sure to tell them about your EFTPS

enrollment.

Deposit record. For your records, an EFT Trace

Number will be provided with each successful payment.

The number can be used as a receipt or to trace the pay-

ment.

Depositing on time. For deposits made by EFTPS to

be on time, you must submit the deposit by 8 p.m. Eastern

time the day before the date the deposit is due. If you use

a third party to make a deposit on your behalf, they may

have different cutoff times.

Same-day wire payment option. If you fail to submit

a deposit transaction on EFTPS by 8 p.m. Eastern time

the day before the date a deposit is due, you can still

make your deposit on time by using the Federal Tax Col-

lection Service (FTCS) to make a same-day wire payment.

To use the same-day wire payment method, you’ll need to

make arrangements with your financial institution ahead of

time. Please check with your financial institution regarding

availability, deadlines, and costs. Your financial institution

may charge you a fee for payments made this way. To

learn more about the information you’ll need to give to

your financial institution to make a same-day wire pay-

ment, go to IRS.gov/SameDayWire.

How to claim credit for overpayments. If you depos-

ited more than the right amount of taxes for a quarter, you

can choose on Form 941 for that quarter (or on Form 943,

Form 944, or Form 945 for that year) to have the overpay-

ment refunded or applied as a credit to your next return.

Don't ask EFTPS to request a refund from the IRS for you.

Deposit Penalties

Although the deposit penalties information provi-

ded next refers specifically to Form 941, these

rules also apply to Form 943, Form 944, and Form

945. The penalties won't apply if the employer qualifies for

the exceptions to the deposit requirements discussed un-

der Payment with return, earlier in this section).

Penalties may apply if you don't make required deposits

on time or if you make deposits for less than the required

amount. The penalties don't apply if any failure to make a

proper and timely deposit was due to reasonable cause

and not to willful neglect. If you receive a penalty notice,

you can provide an explanation of why you believe reason-

able cause exists.

If you timely filed your employment tax return, the IRS

may also waive deposit penalties if you inadvertently failed

to deposit and it was the first quarter that you were re-

quired to deposit any employment tax, or if you inadver-

tently failed to deposit the first time after your deposit fre-

quency changed. You must also meet the net worth and

size limitations applicable to awards of administrative and

litigation costs under section 7430; for individuals, this

means that your net worth can't exceed $2 million, and for

businesses, your net worth can't exceed $7 million and

you also can't have more than 500 employees.

The IRS may also waive the deposit penalty the first

time you're required to make a deposit if you inadvertently

send the payment to the IRS rather than deposit it by EFT.

For amounts not properly or timely deposited, the pen-

alty rates are as follows.

TIP

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Penalty Charged for...

2% Deposits made 1 to 5 days late.

5% Deposits made 6 to 15 days late.

10% Deposits made 16 or more days late, but before 10 days from

the date of the first notice the IRS sent asking for the tax due.

10% Amounts that should have been deposited, but instead were

paid directly to the IRS, or paid with your tax return. But see

Payment with return, earlier in this section, for exceptions.

15% Amounts still unpaid more than 10 days after the date of the

first notice the IRS sent asking for the tax due or the day on

which you received notice and demand for immediate

payment, whichever is earlier.

Late deposit penalty amounts are determined using

calendar days, starting from the due date of the liability.

Special rule for former Form 944 filers. If you filed

Form 944 for the prior year and file Forms 941 for the cur-

rent year, the FTD penalty won't apply to a late deposit of

employment taxes for January of the current year if the

taxes are deposited in full by March 15 of the current year.

Order in which deposits are applied. Deposits are

generally applied to the most recent tax liability within the

quarter. If you receive an FTD penalty notice, you may

designate how your deposits are to be applied in order to

minimize the amount of the penalty if you do so within 90

days of the date of the notice. Follow the instructions on

the penalty notice you receive. For more information on

designating deposits, see Revenue Procedure 2001-58.

You can find Revenue Procedure 2001-58 on page 579 of

Internal Revenue Bulletin 2001-50 at IRS.gov/pub/irs-irbs/

irb01-50.pdf.

Example. Cedar, Inc., is required to make a deposit of

$1,000 on February 15 and $1,500 on March 15. It doesn't

make the deposit on February 15. On March 15, Cedar,

Inc., deposits $2,000. Under the deposits rule, which ap-

plies deposits to the most recent tax liability, $1,500 of the

deposit is applied to the March 15 deposit and the remain-

ing $500 is applied to the February deposit. Accordingly,

$500 of the February 15 liability remains undeposited. The

penalty on this underdeposit will apply as explained ear-

lier.

Trust fund recovery penalty. If federal income, social

security, or Medicare taxes that must be withheld (that is,

trust fund taxes) aren't withheld or aren't deposited or paid

to the U.S. Treasury, the trust fund recovery penalty may

apply. The penalty is 100% of the unpaid trust fund tax. If

these unpaid taxes can't be immediately collected from

the employer or business, the trust fund recovery penalty

may be imposed on all persons who are determined by

the IRS to be responsible for collecting, accounting for, or

paying over these taxes, and who acted willfully in not do-

ing so. The trust fund recovery penalty won't apply to any

amount of trust fund taxes an employer holds back in an-

ticipation of any credits they are entitled to.

A responsible person can be an officer or employee

of a corporation, a partner or employee of a partnership,

an accountant, a volunteer director/trustee, or an

employee of a sole proprietorship, or any other person or

entity that is responsible for collecting, accounting for, or

paying over trust fund taxes. A responsible person may

also include one who signs checks for the business or oth-

erwise has authority to cause the spending of business

funds.

Willfully means voluntarily, consciously, and intention-

ally. A responsible person acts willfully if the person knows

the required actions of collecting, accounting for, or paying

over trust fund taxes aren't taking place, or recklessly dis-

regards obvious and known risks to the government's right

to receive trust fund taxes.

Separate accounting when deposits aren't made or

withheld taxes aren't paid. Separate accounting may

be required if you don't pay over withheld employee social

security, Medicare, or income taxes; deposit required

taxes; make required payments; or file tax returns. In this

case, you would receive written notice from the IRS requir-

ing you to deposit taxes into a special trust account for the

U.S. Government.

You may be charged with criminal penalties if you

don't comply with the special bank deposit re-

quirements for the special trust account for the

U.S. Government.

“Averaged” FTD penalty. The IRS may assess an

"averaged" FTD penalty of 2% to 10% if you’re a monthly

schedule depositor and didn't properly complete Form

941, line 16; Form 943, line 17; Form 944, line 13; or Form

945, line 7, when your tax liability shown on Form 941,

line 12; Form 943, line 13; Form 944, line 9; or Form 945,

line 3, equaled or exceeded $2,500.

The IRS may also assess an "averaged" FTD penalty of

2% to 10% if you’re a semiweekly schedule depositor and

your tax liability shown on Form 941, line 12; Form 943,

line 13; Form 944, line 9; or Form 945, line 3, equaled or

exceeded $2,500 and you:

•

Completed Form 941, line 16, instead of Schedule B

(Form 941); Form 943, line 17, instead of Form 943-A;

Form 944, line 13, instead of Form 945-A; or Form

945, line 7, instead of Form 945-A;

•

Failed to attach a properly completed Schedule B

(Form 941); Form 943-A, or Form 945-A, as applica-

ble; or

•

Improperly completed Schedule B (Form 941), Form

943-A, or Form 945-A by, for example, entering tax de-

posits instead of tax liabilities in the numbered

spaces.

The FTD penalty is figured by distributing your total tax

liability shown on Form 941, line 12; Form 943, line 13;

Form 944, line 9; or Form 945, line 3, equally throughout

the tax period. Then we apply your deposits and pay-

ments to the averaged liabilities in the date order we re-

ceived your deposits. We figure the penalty on any tax not

deposited, deposited late, or not deposited in the correct

amounts. Your deposits and payments may not be coun-

ted as timely because the actual dates of your tax liabili-

ties can't be accurately determined.

CAUTION

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You can avoid an "averaged" FTD penalty by reviewing

your return before you file it. Follow these steps before

submitting your Form 941, Form 943, Form 944, or Form

945.

•

If you’re a monthly schedule depositor, report your tax

liabilities (not your deposits) in the monthly entry

spaces on Form 941, line 16; Form 943, line 17; Form

944, line 13; or Form 945, line 7.

•

If you’re a semiweekly schedule depositor, report your

tax liabilities (not your deposits) on Schedule B (Form

941), Form 943-A, or Form 945-A, as applicable, on

the lines that represent the dates your employees

were paid.

•

Verify that your total liability shown on Form 941,

line 16, or the bottom of Schedule B (Form 941)

equals your tax liability shown on Form 941, line 12.

•

Verify that your total liability shown on Form 943,

line 17, or Form 943-A, line M, equals your tax liability

shown on Form 943, line 13.

•

Verify that your total liability shown on Form 944,

line 13, or Form 945-A, line M, equals your tax liability

shown on Form 944, line 9.

•

Verify that your total liability shown on Form 945,

line 7, or Form 945-A, line M, equals your tax liability

shown on Form 945, line 3.

•

Don't show negative amounts on Form 941, line 16, or

Schedule B (Form 941); Form 943, line 17, or Form

943-A; Form 944, line 13, or Form 945-A; or Form 945,

line 7, or Form 945-A.

•

For prior period errors, don't adjust your tax liabilities

reported on Form 941, line 16, or Schedule B (Form

941); Form 943, line 17, or Form 943-A; Form 944,

line 13, or Form 945-A; or Form 945, line 7, or Form

945-A. Instead, file an adjusted return (Form 941-X,

943-X, 944-X, or 945-X) if you’re also adjusting your

tax liability. If you’re only adjusting your deposits in re-

sponse to an FTD penalty notice, see the Instructions

for Schedule B (Form 941), the Instructions for Form

943-A (for Form 943), or the Instructions for Form

945-A (for Forms 944 and 945).

In addition to civil penalties, you may be subject to

criminal prosecution (brought to trial) for willfully:

•

Evading tax;

•

Failing to collect or truthfully account for and pay over

tax;

•

Failing to file a return, supply information, or pay any

tax due;

•

Furnishing false or fraudulent Forms W-2 to employ-

ees or failing to furnish Forms W-2;

•

Committing fraud and providing false statements;

•

Preparing and filing a fraudulent return; or

•

Committing identity theft.

CAUTION

12. Filing Form 941, Form 943,

Form 944, or Form 945

Form 941. If you paid wages subject to federal income

tax withholding (including withholding on sick pay and

supplemental unemployment benefits) or social security

and Medicare taxes, you must file Form 941 quarterly

even if you have no taxes to report, unless you filed a final

return, you receive an IRS notification that you’re eligible

to file Form 944, or the exceptions discussed later apply.

Also, if you’re required to file Forms 941 but 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. Form 941 must be filed by the

last day of the month that follows the end of the quarter.

However, if you made timely deposits in full payment of

your taxes for the quarter, you may file by the 10th day of

the 2nd month that follows the end of the quarter. See Cal-

endar, earlier.

Form 943. You must file Form 943 for each calendar

year beginning with the first year that you pay $2,500 or

more for farmwork or you employ a farmworker who meets

the $150 test explained under Social Security and Medi-

care Taxes, in section 9. Don’t report these wages on

Form 941, Form 944, or Form 945. File your 2023 Form

943 by January 31, 2024. However, if you made timely de-

posits in full payment of your taxes for the year, you may

file by February 12, 2024.

Form 944. If you receive written notification that you

qualify for the Form 944 program, you must file Form 944

instead of Forms 941. You must file Form 944 even if you

have no taxes to report (or you have taxes in excess of

$1,000 to report) unless you filed a final return for the prior

year. If you received notification to file Form 944, but pre-

fer to file Forms 941, you can request to have your filing

requirement changed to Forms 941 during the first calen-

dar quarter of the tax year. For more information on re-

questing to file Forms 941, including the methods and

deadlines for making a request, see the Instructions for

Form 944. File your 2023 Form 944 by January 31, 2024.

However, if you made timely deposits in full payment of

your taxes for the year, you may file by February 12, 2024.

Form 945. If you withhold or are required to withhold fed-

eral income tax (including backup withholding) from non-

payroll payments, you must file Form 945. You don't have

to file Form 945 for those years in which you don't have a

nonpayroll tax liability. Don't report on Form 945 withhold-

ing that is required to be reported on Form 1042, Annual

Withholding Tax Return for U.S. Source Income of Foreign

Persons. File your 2023 Form 945 by January 31, 2024.

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However, if you made timely deposits in full payment of

your taxes for the year, you may file by February 12, 2024.

Exceptions. The following exceptions apply to the filing

requirements for Forms 941 and 944.

•

Seasonal employers who don't have to file Forms

941 for quarters when they have no tax liability

because they have paid no wages. To alert the IRS

you won't have to file a return for 1 or more quarters

during the year, check the “Seasonal employer” box

on Form 941, line 18. When you fill out Form 941, be

sure to check the box on the top of the form that corre-

sponds to the quarter reported. Generally, the IRS

won't inquire about unfiled returns if at least one taxa-

ble return is filed each year. However, you must check

the “Seasonal employer” box on every Form 941 you

file. Otherwise, the IRS will expect a return to be filed

for each quarter.

•

Household employers reporting social security

and Medicare taxes and/or withheld income tax. If

you file Form 941, Form 943, or Form 944 for business

employees, you may include taxes for household em-

ployees on your Form 941, Form 943, or Form 944.

Otherwise, report social security and Medicare taxes

and income tax withholding for household employees

on Schedule H (Form 1040). See Pub. 926 for more

information.

•

Agricultural employers reporting social security,

Medicare, and withheld income taxes. Report

these taxes on Form 943.

Employers that pay Railroad Retirement Tax Act

(RRTA) taxes use Form CT-1 to report employ-

ment taxes imposed by the RRTA, and Form 941

or Form 944 to report federal income taxes withheld from

their employees' wages and other compensation.

E-file. The IRS e-file program allows a taxpayer to elec-

tronically file Form 941, Form 943, Form 944, and Form

945 using a computer with an Internet connection and

commercial tax preparation software. For more informa-

tion, go to IRS.gov/EmploymentEfile, or call

866-255-0654.

Electronic filing by reporting agents. Reporting agents

filing Form Forms 941, 943, 944, or 945 for groups of tax-

payers can file them electronically. For details, see Pub.

3112, IRS e-file Application and Participation. For informa-

tion on electronic filing, see Revenue Procedure 2007-40,

2007-26 I.R.B. 1488, available at IRS.gov/irb/

2007-26_IRB#RP-2007-40. For information on the differ-

ent types of third-party payer arrangements, see section

16.

Electronic filing by CPEOs. With the exception of the

first quarter (Form 941 only) for which a CPEO is certified,

CPEOs are required to electronically file Form 941 with

Schedule R (Form 941), or, if applicable, Form 943 with

Schedule R (Form 943). Under certain circumstances, the

IRS may waive the electronic filing requirement. To re-

quest a waiver, the CPEO must file a written request using

TIP

the IRS Online Registration System for Professional Em-

ployer Organizations at least 45 days before the due date

of the return for which the CPEO is unable to electronically

file. For more information on filing a waiver request elec-

tronically, go to IRS.gov/CPEO. Also see Revenue

Procedure 2023-18.

Penalties. For each whole or part month a return isn't

filed when required, there is a failure-to-file (FTF) penalty

of 5% of the unpaid tax due with that return. The maximum

penalty is generally 25% of the tax due. Also, for each

whole or part month the tax is paid late, there is a fail-

ure-to-pay (FTP) penalty of 0.5% per month of the amount

of tax. For individual filers only, the FTP penalty is reduced

from 0.5% per month to 0.25% per month if an installment

agreement is in effect. You must have filed your return on

or before the due date of the return to qualify for the re-

duced penalty. The maximum amount of the FTP penalty

is also 25% of the tax due. If both penalties apply in any

month, the FTF penalty is reduced by the amount of the

FTP penalty. The penalties won't be charged if you have

reasonable cause for failing to file or pay. If you receive a

penalty notice, you can provide an explanation of why you

believe reasonable cause exists.

Note. In addition to any penalties, interest accrues

from the due date of the tax on any unpaid balance.

If income, social security, or Medicare taxes that must

be withheld aren't withheld or aren't paid, you may be per-

sonally liable for the trust fund recovery penalty. See Trust

fund recovery penalty in section 11.

Generally, the use of a third-party payer, such as a PSP

or reporting agent, doesn't relieve an employer of the re-

sponsibility to ensure tax returns are filed and all taxes are

paid or deposited correctly and on time. However, see

Certified professional employer organization (CPEO), in

section 16, for an exception.

Don't file more than one return per return period.

Employers with multiple locations or divisions must file

only one Form 941 per quarter or one Form 944 per year.

An agricultural employer must file only one Form 943 per

year. A payer of nonpayroll payments that withheld federal

income tax or backup withholding must file only one Form

945 per year. Filing more than one return may result in

processing delays and may require correspondence be-

tween you and the IRS. For information on making adjust-

ments to previously filed returns, see section 13.

Reminders about filing.

•

Don't report more than 1 calendar quarter on a Form

941.

•

If you need Form 941, Form 943, Form 944, or Form

945, go to IRS.gov/Forms. Also see Ordering Em-

ployer Tax Forms, Instructions, and Publications, ear-

lier.

•

Enter your name and EIN on Form 941, Form 943,

Form 944, or Form 945. Be sure they’re exactly as they

appeared on earlier returns.

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•

See the Instructions for Form 941, Instructions for

Form 943, Instructions for Form 944, or Instructions for

Form 945 for information on preparing the form.

Final return. If you go out of business, you must file a fi-

nal return for the last quarter (last year for Form 943, Form

944, or Form 945) in which wages (nonpayroll payments

for Form 945) are paid. If you continue to pay wages or

other compensation for periods following termination of

your business, you must file returns for those periods. See

the Instructions for Form 941, Instructions for Form 943,

Instructions for Form 944, or Instructions for Form 945 for

details on how to file a final return.

If you’re required to file a final return, you’re also re-

quired to furnish Forms W-2 to your employees and file

Forms W-2 and W-3 with the SSA by the due date of your

final return. Don't send an original or copy of your Form

941, Form 943, or Form 944 to the SSA. See the General

Instructions for Forms W-2 and W-3 for more information.

Employers in Puerto Rico, see the Instructions for Form

W-3PR.

Filing late returns for previous years. Get a copy of

Form 941, Form 943, Form 944, or Form 945 (and sepa-

rate instructions) with a revision date showing the year,

and, if applicable, quarter for which your delinquent return

is being filed. Prior year and/or quarter Forms 941, 943,

944, and 945 are available, respectively, at IRS.gov/

Form941, IRS.gov/Form943, IRS.gov/Form944, and

IRS.gov/Form945 (select the link for all form revisions un-

der "Other Items You May Find Useful"). Also, see Order-

ing Employer Tax Forms, Instructions, and Publications,

earlier. Contact the IRS at 800-829-4933 if you have any

questions about filing late returns.

Table 3. Social Security and Medicare Tax

Rates (for 3 Prior Years)

Calendar Year

Wage Base Limit

(each employee)

Tax Rate on

Taxable Wages

and Tips

2023—Social security $160,200 12.4%*

2023—Medicare All Wages 2.9%

2022—Social security $147,000 12.4%*

2022—Medicare All Wages 2.9%

2021—Social security $142,800 12.4%*

2021—Medicare All Wages 2.9%

* Qualified sick leave wages and qualified family leave wages for leave taken

after March 31, 2020, and before April 1, 2021, aren't subject to the employer

share of social security tax; therefore, the tax rate on these wages is 6.2%

(0.062).

Reconciling Forms W-2 and W-3 with Forms 941,

Form 943, or Form 944. When there are discrepancies

between Forms 941, Form 943, or Form 944 filed with the

IRS and Forms W-2 and W-3 filed with the SSA, the IRS

or the SSA may contact you to resolve the discrepancies.

Take the following steps to help reduce discrepancies.

1. Report bonuses as wages and as social security and

Medicare wages on Forms W-2 and on Forms 941,

Form 943, or Form 944.

2. Report both social security and Medicare wages and

taxes separately on Forms W-2 and W-3, and on

Forms 941, Form 943, or Form 944.

3. Report the employee share of social security taxes on

Form W-2 in the box for social security tax withheld

(box 4), not as social security wages. On Form

499R-2/W-2PR, social security tax withheld is repor-

ted in box 21.

4. Report the employee share of Medicare taxes on

Form W-2 in the box for Medicare tax withheld

(box 6), not as Medicare wages. On Form 499R-2/

W-2PR, Medicare tax withheld is reported in box 23.

5. Make sure the social security wage amount for each

employee doesn't exceed the annual social security

wage base limit ($168,600 for 2024).

6. Don't report noncash wages that aren't subject to so-

cial security or Medicare taxes, as discussed earlier

under Wages not paid in money in section 5, as social

security or Medicare wages.

7. If you used an EIN on any Forms 941, Form 943, or

Form 944 for the year that is different from the EIN re-

ported on Form W-3, enter the other EIN on Form W-3

in the box for “Other EIN used this year” (box h). On

Form W-3PR, “Other EIN used this year” is reported in

box f.

8. Be sure the amounts on Form W-3 are the total of

amounts from Forms W-2.

9. Reconcile Form W-3 with your four quarterly Forms

941, annual Form 943, or annual Form 944 by com-

paring amounts reported for the following items.

a. Federal income tax withheld.

b. Social security and Medicare wages.

c. Social security and Medicare taxes. Generally, the

amounts shown on Forms 941, Form 943, or Form

944, including current year adjustments, should be

approximately twice the amounts shown on Form

W-3 because Forms 941, Form 943, and Form

944 report both the employer and employee social

security and Medicare taxes while Form W-3 re-

ports only the employee taxes.

Don't report backup withholding or withholding on non-

payroll payments, such as pensions, annuities, and gam-

bling winnings, on Forms 941, Form 943, or Form 944.

Withholding on nonpayroll payments is reported on Forms

1099 or W-2G and must be reported on Form 945. Only

taxes and withholding reported on Form W-2 should be re-

ported on Forms 941, Form 943, or Form 944.

Amounts reported on Forms W-2, W-3, and Forms 941,

Form 943, or Form 944 may not match for valid reasons.

For example, if you withheld any Additional Medicare Tax

from your employee’s wages, the amount of Medicare tax

that is reported on Forms 941, line 5c, column 2; Form

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943, line 5; or Form 944, line 4c, column 2, won’t be twice

the amount of the Medicare tax withheld that is reported in

box 6 of Form W-3 (box 13 of Form W-3PR) because the

Additional Medicare Tax is only imposed on the employee;

there is no employer share of Additional Medicare Tax.

Make sure there are valid reasons for any mismatch. Keep

your reconciliation so you’ll have a record of why amounts

didn't match in case there are inquiries from the IRS or the

SSA. See the Instructions for Schedule D (Form 941) if

you need to explain any discrepancies that were caused

by an acquisition, statutory merger, or consolidation.

When reconciling Forms W-2 and W-3 to Forms

941, Form 943, or Form 944, you should consider

that qualified sick leave wages and qualified fam-

ily leave wages for leave taken after March 31, 2020, and

before April 1, 2021, aren't subject to the employer share

of social security tax.

13. Reporting Adjustments to

Forms 941, Form 943, or Form

944

Current Period Adjustments

In certain cases, amounts reported as social security and

Medicare taxes on Form 941, lines 5a–5d, column 2 (Form

943, lines 3, 3a, 3b, 5, and 7; or Form 944, lines 4a–4d,

column 2), must be adjusted to arrive at your correct tax

liability (for example, excluding amounts withheld by a

third-party payer or amounts you weren't required to with-

hold). Current period adjustments are reported on Form

941, lines 7–9; Form 943, line 10; or Form 944, line 6, and

include the following types of adjustments.

Fractions-of-cents adjustment. If there is a small dif-

ference between total taxes after adjustments and nonre-

fundable credits (Form 941, line 12; Form 943, line 13; or

Form 944, line 9) and total deposits (Form 941, line 13a;

Form 943, line 14a; or Form 944, line 10a), it may have

been caused, all or in part, by rounding to the nearest cent

each time you figured payroll. This rounding occurs when

you figure the amount of social security and Medicare tax

to be withheld and deposited from each employee's wa-

ges. The IRS refers to rounding differences relating to em-

ployee withholding of social security and Medicare taxes

as “fractions-of-cents” adjustments. If you pay your taxes

with Form 941 (Form 943 or Form 944) instead of making

deposits because your total taxes for the quarter (year for

Form 943 or Form 944) are less than $2,500, you may

also report a fractions-of-cents adjustment.

To determine if you have a fractions-of-cents adjust-

ment for 2024, multiply the total wages and tips for the

quarter subject to:

•

Social security tax reported on Form 941, Form 943,

or Form 944 by 6.2% (0.062);

CAUTION

•

Medicare tax reported on Form 941, Form 943, or

Form 944 by 1.45% (0.0145); and

•

Additional Medicare Tax reported on Form 941, Form

943, or Form 944 by 0.9% (0.009).

Compare these amounts (the employee share of social

security and Medicare taxes) with the total social security

and Medicare taxes actually withheld from employees and

shown in your payroll records for the quarter (Form 941) or

the year (Form 943 or Form 944). If there is a small differ-

ence, the amount, positive or negative, may be a frac-

tions-of-cents adjustment. Fractions-of-cents adjustments

are reported on Form 941, line 7; Form 943, line 10; or

Form 944, line 6. If the actual amount withheld is less, re-

port a negative adjustment using a minus sign (if possible;

otherwise, use parentheses) in the entry space. If the ac-

tual amount is more, report a positive adjustment.

Adjustment of tax on third-party sick pay. Report both

the employer and employee share of social security and

Medicare taxes for sick pay on Form 941, lines 5a and 5c

(Form 943, lines 2 and 4; or Form 944, lines 4a and 4c). If

the aggregate wages paid for an employee by the em-

ployer and third-party payer exceed $200,000 for the cal-

endar year, report the Additional Medicare Tax on Form

941, line 5d (Form 943, line 7; or Form 944, line 4d). Show

as a negative adjustment on Form 941, line 8 (Form 943,

line 10; or Form 944, line 6), the social security and Medi-

care taxes withheld on sick pay by a third-party payer. See

section 6 of Pub. 15-A for more information.

Adjustment of tax on tips. If, by the 10th of the month

after the month you received an employee's report on tips,

you don't have enough employee funds available to with-

hold the employee's share of social security and Medicare

taxes, you no longer have to collect it. However, report the

entire amount of these tips on Form 941, lines 5b and 5c

(Form 944, lines 4b and 4c). If the aggregate wages and

tips paid for an employee exceed $200,000 for the calen-

dar year, report the Additional Medicare Tax on Form 941,

line 5d (Form 944, line 4d). Include as a negative adjust-

ment on Form 941, line 9 (Form 944, line 6), the total un-

collected employee share of the social security and Medi-

care taxes.

Adjustment of tax on group-term life insurance pre-

miums paid for former employees. The employee

share of social security and Medicare taxes for premiums

on group-term life insurance over $50,000 for a former

employee is paid by the former employee with their tax re-

turn and isn't collected by the employer. However, include

all social security and Medicare taxes for such coverage

on Form 941, lines 5a and 5c (Form 944, lines 4a and 4c).

For Form 943, include the social security wages and Medi-

care wages on lines 2 and 4, respectively; and report the

social security tax and Medicare tax on lines 3 and 5, re-

spectively. If the amount paid for an employee for premi-

ums on group-term life insurance combined with other wa-

ges exceeds $200,000 for the calendar year, report the

Additional Medicare Tax on Form 941, line 5d (Form 944,

line 4d). For Form 943, include the Additional Medicare

tax wages on line 6 and report the Additional Medicare tax

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on line 7. Back out the amount of the employee share of

these taxes as a negative adjustment on Form 941, line 9

(Form 943, line 10; or Form 944, line 6). See Pub. 15-B for

more information on group-term life insurance.

For the above adjustments, prepare and retain a

brief supporting statement explaining the nature

and amount of each. Don't attach the statement to

Form 941, Form 943, or Form 944. See the General In-

structions for Forms W-2 and W-3 for information on how

to report the uncollected employee share of social security

and Medicare taxes on tips and group-term life insurance

on Form W-2.

Example. Cedar, Inc., filed Form 941 and was entitled

to the following current period adjustments.

•

Fractions of cents. Cedar, Inc., determined the

amounts withheld and deposited for social security

and Medicare taxes during the quarter were a net

$1.44 more than the employee share of the amount

figured on Form 941, lines 5a–5d, column 2 (social se-

curity and Medicare taxes). This difference was

caused by adding or dropping fractions of cents when

figuring social security and Medicare taxes for each

wage payment. Cedar, Inc., must report a positive

$1.44 fractions-of-cents adjustment on Form 941,

line 7.

•

Third-party sick pay. Cedar, Inc., included taxes of

$2,000 for sick pay on Form 941, lines 5a and 5c, col-

umn 2, for social security and Medicare taxes. How-

ever, the third-party payer of the sick pay withheld and

paid the employee share ($1,000) of these taxes. Ce-

dar, Inc., is entitled to a $1,000 sick pay adjustment

(negative) on Form 941, line 8.

•

Life insurance premiums. Cedar, Inc., paid

group-term life insurance premiums for policies in ex-

cess of $50,000 for former employees. The former

employees must pay the employee share of the social

security and Medicare taxes ($200) on the policies.

However, Cedar, Inc., must include the employee

share of these taxes with the social security and Medi-

care taxes reported on Form 941, lines 5a and 5c, col-

umn 2. Therefore, Cedar, Inc., is entitled to a negative

$200 adjustment on Form 941, line 9.

No change to record of federal tax liability. Don't

make any changes to your record of federal tax liability re-

ported on Form 941, line 16, or Schedule B (Form 941)

(for Form 943 filers, Form 943 line 17, or Form 943-A; or

for Form 944 filers, Form 944, line 13, or Form 945-A) for

current period adjustments. The amounts reported on the

record reflect the actual amounts you withheld from em-

ployees' wages for social security and Medicare taxes.

Because the current period adjustments make the

amounts reported on Form 941, lines 5a–5d, column 2

(Form 943, lines 3, 5, and 7; or Form 944, lines 4a–4d,

column 2), equal the actual amounts you withheld (the

amounts reported on the record), no additional changes to

the record of federal tax liability are necessary for these

adjustments.

TIP

Prior Period Adjustments

Forms for prior period adjustments. Use Form 941-X,

Form 943-X, or Form 944-X to make a correction after you

discover an error on a previously filed Form 941, Form

943, or Form 944. There are also Forms 945-X and CT-1

X to report corrections on the corresponding returns. Use

Form 843 when requesting a refund or abatement of as-

sessed interest or penalties.

See Revenue Ruling 2009-39, 2009-52 I.R.B.

951, for examples of how the interest-free adjust-

ment and claim for refund rules apply in 10 differ-

ent situations. You can find Revenue Ruling 2009-39 at

IRS.gov/irb/2009-52_IRB#RR-2009-39.

Background. Treasury Decision 9405 changed the proc-

ess for making interest-free adjustments to employment

taxes reported on Form 941, Form 943, and Form 944 and

for filing a claim for refund of employment taxes. Treasury

Decision 9405, 2008-32 I.R.B. 293, is available at

IRS.gov/irb/2008-32_IRB#TD-9405. You’ll use the adjust-

ment process if you underreported employment taxes and

are making a payment, or if you overreported employment

taxes and will be applying the credit to the Form 941, Form

943, or Form 944 period during which you file Form 941-X,

Form 943-X, or Form 944-X. You’ll use the claim process if

you overreported employment taxes and are requesting a

refund or abatement of the overreported amount. We use

the terms “correct” and “corrections” to include inter-

est-free adjustments under sections 6205 and 6413, and

claims for refund and abatement under sections 6402,

6414, and 6404.

Correcting employment taxes. When you discover an

error on a previously filed Form 941, Form 943, or Form

944, you must:

•

Correct that error using Form 941-X, Form 943-X, or

Form 944-X;

•

File a separate Form 941-X, Form 943-X, or Form

944-X for each Form 941, Form 943, or Form 944

you’re correcting; and

•

File Form 941-X, Form 943-X, or Form 944-X sepa-

rately. Don't file with Form 941, Form 943, or Form

944.

Report current quarter adjustments for fractions of

cents, third-party sick pay, tips, and group-term life insur-

ance on Form 941 using lines 7–9, on Form 943 using

line 10, and on Form 944 using line 6. See Current Period

Adjustments, earlier in this section.

Report the correction of underreported and overrepor-

ted amounts for the same tax period on a single Form

941-X, Form 943-X, or Form 944-X unless you’re request-

ing a refund. If you’re requesting a refund and are correct-

ing both underreported and overreported amounts, file

one Form 941-X, Form 943-X, or Form 944-X correcting

the underreported amounts only and a second Form

941-X, Form 943-X, or Form 944-X correcting the overre-

ported amounts.

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See the chart on the last page of Form 941-X, Form

943-X, or Form 944-X for help in choosing whether to use

the adjustment process or the claim process. See the In-

structions for Form 941-X, the Instructions for Form 943-X,

or the Instructions for Form 944-X for details on how to

make the adjustment or claim for refund or abatement.

Income tax withholding adjustments. In a current cal-

endar year, correct prior quarter income tax withholding

errors by making the correction on Form 941-X when you

discover the error.

You may make an adjustment only to correct income

tax withholding errors discovered during the same calen-

dar year in which you paid the wages. This is because the

employee uses the amount shown on Form W-2 or, if ap-

plicable, Form W-2c, as a credit when filing their income

tax return (Form 1040, etc.).

You can't adjust amounts reported as income tax with-

held in a prior calendar year unless it is to correct an ad-

ministrative error or section 3509 applies. An administra-

tive error occurs if the amount you entered on Form 941,

Form 943, or Form 944 isn't the amount you actually with-

held. For example, if the total income tax actually withheld

was incorrectly reported on Form 941, Form 943, or Form

944 due to a mathematical or transposition error, this

would be an administrative error. The administrative error

adjustment corrects the amount reported on Form 941,

Form 943, or Form 944 to agree with the amount actually

withheld from employees and reported on their Forms

W-2.

Additional Medicare Tax withholding adjustments.

Generally, the rules discussed earlier in this section under

Income tax withholding adjustments apply to Additional

Medicare Tax withholding adjustments. That is, you may

make an adjustment to correct Additional Medicare Tax

withholding errors discovered during the same calendar

year in which you paid wages. You can't adjust amounts

reported in a prior calendar year unless it is to correct an

administrative error or section 3509 applies. If you have

overpaid Additional Medicare Tax, you can't file a claim for

refund for the amount of the overpayment unless the

amount wasn't actually withheld from the employee's wa-

ges (which would be an administrative error).

If a prior year error was a nonadministrative error, you

may correct only the wages and tips subject to Additional

Medicare Tax withholding.

Collecting underwithheld taxes from employees. If

you withheld no income, social security, or Medicare taxes

or less than the correct amount from an employee's wa-

ges, you can make it up from later pay to that employee.

But you’re the one who owes the underpayment. Reim-

bursement is a matter for settlement between you and the

employee. Underwithheld income tax and Additional Med-

icare Tax must be recovered from the employee on or be-

fore the last day of the calendar year. There are special

rules for tax on tips (see section 6) and fringe benefits

(see section 5).

Refunding amounts incorrectly withheld from em-

ployees. If you withheld more than the correct amount of

income, social security, or Medicare taxes from wages

paid, repay or reimburse the employee the excess. Any

excess income tax or Additional Medicare Tax withholding

must be repaid or reimbursed to the employee before the

end of the calendar year in which it was withheld. Keep in

your records the employee's written receipt showing the

date and amount of the repayment or record of reimburse-

ment. If you didn't repay or reimburse the employee, you

must report and pay each excess amount when you file

Form 941 for the quarter (Form 943 or Form 944 for the

year) in which you withheld too much tax.

Correcting filed Forms W-2 and W-3. When adjust-

ments are made to correct wages and social security and

Medicare taxes because of a change in the wage totals re-

ported for a previous year, you also need to file Form W-2c

and Form W-3c with the SSA. Up to 25 Forms W-2c per

Form W-3c may be filed per session over the Internet, with

no limit on the number of sessions. For more information,

go to the SSA's Employer W-2 Filing Instructions & Infor-

mation webpage at SSA.gov/employer.

Exceptions to interest-free corrections of employ-

ment taxes. A correction won't be eligible for inter-

est-free treatment if:

•

The failure to report relates to an issue raised in an

IRS examination of a prior return, or

•

The employer knowingly underreported its employ-

ment tax liability.

A correction won't be eligible for interest-free treatment

after the earlier of the following.

•

Receipt of an IRS notice and demand for payment af-

ter assessment.

•

Receipt of an IRS notice of determination under sec-

tion 7436.

Wage Repayments

If an employee repays you for wages received in error,

don't offset the repayments against current year wages

unless the repayments are for amounts received in error in

the current year.

Repayment of current year wages. If you receive re-

payments for wages paid during a prior quarter in the cur-

rent year, report adjustments on Form 941-X to recover in-

come tax withholding and social security and Medicare

taxes for the repaid wages.

Repayment of prior year wages. If you receive repay-

ments for wages paid during a prior year, report an adjust-

ment on Form 941-X, Form 943-X, or Form 944-X to re-

cover the social security and Medicare taxes. You can't

make an adjustment for income tax withholding because

the wages were income to the employee for the prior year.

You can't make an adjustment for Additional Medicare Tax

withholding because the employee determines liability for

Additional Medicare Tax on the employee's income tax re-

turn for the prior year.

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You must also file Forms W-2c and W-3c with the SSA

to correct social security and Medicare wages and taxes.

Don't correct wages (box 1) on Form W-2c for the amount

paid in error. Give a copy of Form W-2c to the employee.

Employee reporting of repayment. The wages paid

in error in the prior year remain taxable to the employee for

that year. This is because the employee received and had

use of those funds during that year. The employee isn't

entitled to file an amended return (Form 1040-X) to re-

cover the income tax on these wages. Instead, the em-

ployee may be entitled to a deduction or credit for the re-

paid wages on their income tax return for the year of

repayment. However, the employee should file an amen-

ded return (Form 1040-X) to recover any Additional Medi-

care Tax paid on the wages paid in error in the prior year. If

an employee asks about reporting their wage repayment,

you may tell the employee to see Repayments in Pub. 525

for more information.

14. Federal Unemployment

(FUTA) Tax

FUTA tax doesn't apply to employers in American

Samoa, Guam, and the CNMI, but it does apply to

employers in the USVI and Puerto Rico.

The Federal Unemployment Tax Act (FUTA), with state

unemployment systems, provides for payments of unem-

ployment compensation to workers who have lost their

jobs. Most employers pay both a federal and a state un-

employment tax. For a list of state unemployment agen-

cies, go to the U.S. Department of Labor’s website at

oui.doleta.gov/unemploy/agencies.asp. Only the employer

pays FUTA tax; it isn't withheld from the employee's wa-

ges. For more information, see the Instructions for Form

940.

Services rendered to a federally recognized In-

dian tribal government (or any subdivision, sub-

sidiary, or business wholly owned by such an In-

dian tribe) are exempt from FUTA tax, subject to the tribe's

compliance with state law. For more information, see sec-

tion 3309(d) and Pub. 4268.

Who must pay? Use the following three tests to deter-

mine whether you must pay FUTA tax. Each test applies to

a different category of employee, and each is independent

of the others. If a test describes your situation, you’re sub-

ject to FUTA tax on the wages you pay to employees in

that category during the current calendar year.

1. General test.

You’re subject to FUTA tax in 2024 on the wages

you pay employees who aren't farmworkers or house-

hold workers if:

a. You paid wages of $1,500 or more in any calendar

quarter in 2023 or 2024, or

CAUTION

TIP

b. You had one or more employees for at least some

part of a day in any 20 or more different weeks in

2023 or 20 or more different weeks in 2024.

2. Household employees test.

You’re subject to FUTA tax if you paid total cash

wages of $1,000 or more to household employees in

any calendar quarter in 2023 or 2024. A household

employee is an employee who performs household

work in a private home, local college club, or local fra-

ternity or sorority chapter.

3. Farmworkers test.

You’re subject to FUTA tax on the wages you pay to

farmworkers if:

a. You paid cash wages of $20,000 or more to farm-

workers during any calendar quarter in 2023 or

2024, or

b. You employed 10 or more farmworkers during at

least some part of a day (whether or not at the

same time) during any 20 or more different weeks

in 2023 or 20 or more different weeks in 2024.

To determine whether you meet either test above for

farmworkers, you must count wages paid to aliens admit-

ted on a temporary basis to the United States to perform

farmwork, also known as H-2A visa workers. However, wa-

ges paid to H-2A visa workers aren't subject to the FUTA

tax.

Generally, farmworkers supplied by crew leaders, as

defined earlier in section 2, are considered employees of

the farm operator for purposes of the FUTA tax unless (a)

the crew leader is registered under the Migrant and Sea-

sonal Agricultural Worker Protection Act; or (b) substan-

tially all of the workers supplied by the crew leader operate

or maintain tractors, harvesting or crop-dusting machines,

or other machines provided by the crew leader. Therefore,

if (a) or (b) applies, the farmworkers are generally employ-

ees of the crew leader.

Figuring FUTA tax. For 2024, the FUTA tax rate is 6.0%.

The tax applies to the first $7,000 you pay to each em-

ployee as wages during the year. The $7,000 is the federal

wage base. Your state wage base may be different.

Generally, you can take a credit against your FUTA tax

for amounts you paid into state unemployment funds. The

credit may be as much as 5.4% of FUTA taxable wages. If

you’re entitled to the maximum 5.4% credit, the FUTA tax

rate after credit is 0.6%. You’re entitled to the maximum

credit if you paid your state unemployment taxes in full, on

time, and on all the same wages as are subject to FUTA

tax, and as long as the state isn't determined to be a credit

reduction state. See the Instructions for Form 940 to de-

termine the credit.

In some states, the wages subject to state unemploy-

ment tax are the same as the wages subject to FUTA tax.

However, certain states exclude some types of wages

from state unemployment tax, even though they’re subject

to FUTA tax (for example, wages paid to corporate offi-

cers, certain payments of sick pay by unions, and certain

fringe benefits). In such a case, you may be required to

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deposit more than 0.6% FUTA tax on those wages. See

the Instructions for Form 940 for further guidance.

In years when there are credit reduction states,

you must include liabilities owed for credit reduc-

tion with your fourth quarter deposit. You may de-

posit the anticipated extra liability throughout the year, but

it isn't due until the due date for the deposit for the fourth

quarter, and the associated liability should be recorded as

being incurred in the fourth quarter. See the Instructions

for Form 940 for more information.

Successor employer. If you acquired a business from

an employer who was liable for FUTA tax, you may be able

to count the wages that employer paid to the employees

who continue to work for you when you figure the $7,000

FUTA tax wage base. See the Instructions for Form 940.

Depositing FUTA tax. For deposit purposes, figure

FUTA tax quarterly. Determine your FUTA tax liability by

multiplying the amount of taxable wages paid during the

quarter by 0.6%. This amount may need to be adjusted,

however, depending on your entitlement to the credit for

state unemployment contributions. See the Instructions for

Form 940. Stop depositing FUTA tax on an employee's

wages when taxable wages reach $7,000 for the calendar

year.

If your FUTA tax liability for any calendar quarter is

$500 or less, you don't have to deposit the tax. Instead,

you may carry it forward and add it to the liability figured in

the next quarter to see if you must make a deposit. If your

FUTA tax liability for any calendar quarter is over $500 (in-

cluding any FUTA tax carried forward from an earlier quar-

ter), you must deposit the tax by EFT. See section 11 for

more information on EFTs.

Household employees. You’re not required to de-

posit FUTA taxes for household employees unless you re-

port their wages on Forms 941, Form 943, or Form 944.

See Pub. 926 for more information.

When to deposit. Deposit the FUTA tax by the last

day of the first month that follows the end of the quarter. If

the due date for making your deposit falls on a Saturday,

Sunday, or legal holiday, you may make your deposit on

the next business day. See Legal holiday, in section 11, for

a list of legal holidays occurring in 2024.

If your liability for the fourth quarter (plus any undepos-

ited amount from any earlier quarter) is over $500, deposit

TIP

the entire amount by the due date of Form 940 (January

31). If it is $500 or less, you can make a deposit, pay the

tax with a credit or debit card, or pay the tax with your

Form 940 by January 31. If you file Form 940 electroni-

cally, you can e-file and use EFW to pay the balance due.

For more information on paying your taxes with a credit or

debit card or using EFW, go to IRS.gov/Payments.

Table 4. When To Deposit FUTA Taxes

Quarter Ending Due Date

Jan.–Feb.–Mar. Mar. 31 Apr. 30

Apr.–May–June June 30 July 31

July–Aug.–Sept. Sept. 30 Oct. 31

Oct.–Nov.–Dec. Dec. 31 Jan. 31

Reporting FUTA tax. Use Form 940 to report FUTA tax.

File your 2023 Form 940 by January 31, 2024. However, if

you deposited all FUTA tax when due, you may file on or

before February 12, 2024.

Form 940 e-file. The Form 940 e-file program allows

a taxpayer to electronically file Form 940 using a computer

with an Internet connection and commercial tax prepara-

tion software. For more information, go to

IRS.gov/

EmploymentEfile, or call 866-255-0654.

Household employees. If you didn't report employ-

ment taxes for household employees on Forms 941, Form

943, or Form 944, report FUTA tax for these employees on

Schedule H (Form 1040). See Pub. 926 for more informa-

tion. You must have an EIN to file Schedule H (Form

1040).

Electronic filing by reporting agents. Reporting

agents filing Forms 940 for groups of taxpayers can file

them electronically. See Electronic filing by reporting

agents in section 12.

Electronic filing by CPEOs. CPEOs are required to

electronically file Form 940 with Schedule R (Form 940).

Under certain circumstances, the IRS may waive the elec-

tronic filing requirement. To request a waiver, the CPEO

must file a written request using the IRS Online Registra-

tion System for Professional Employer Organizations at

least 45 days before the due date of the return for which

the CPEO is unable to electronically file. For more infor-

mation on filing a waiver request electronically, go to

IRS.gov/CPEO. Also see Revenue Procedure 2023-18.

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15. Special Rules for Various Types of Services and Payments

Section references are to the Internal Revenue Code unless otherwise noted.

Special Classes of Employment and

Special Types of Payments

Treatment Under Employment Taxes

Federal Income Tax

Withholding

Social Security and

Medicare (including

Additional Medicare Tax

when wages are paid in

excess of $200,000)

FUTA

Agricultural labor:

1. Service on farm in connection with

cultivating soil; raising or harvesting any

agricultural or horticultural commodity;

the care of livestock, poultry, bees,

furbearing animals, or wildlife.

Taxable if wages subject to

social security tax and

Medicare tax.

Taxable if $150 test or

$2,500 test in section 9 is

met.

Taxable if either test in

section 14 is met.

2. Service in employ of owner or operator

of farm if major part of the services are

performed on farm, in management or

maintenance, etc., of farm, tools, or

equipment, or in salvaging timber, or

clearing brush and other debris left by

hurricane.

Taxable if wages subject to

social security tax and

Medicare tax.

Taxable if $150 test or

$2,500 test in section 9 is

met.

Taxable if either test in

section 14 is met.

3. In connection with the production and

harvesting of turpentine and other

oleoresinous products.

Taxable if wages subject to

social security tax and

Medicare tax.

Taxable if $150 test or

$2,500 test in section 9 is

met.

Taxable if either test in

section 14 is met.

4. Cotton ginning. Taxable if wages subject to

social security tax and

Medicare tax.

Taxable if $150 test or

$2,500 test in section 9 is

met.

Taxable if either test in

section 14 is met.

5. In connection with hatching of poultry. Taxable if wages subject to

social security tax and

Medicare tax.

Taxable if $150 test or

$2,500 test in section 9 is

met (not farmwork if

performed off farm).

Taxable if either test in

section 14 is met.

6. In operation or maintenance of ditches,

canals, reservoirs, or waterways used

only for supplying or storing water for

farming purposes and not owned or

operated for profit.

Taxable if wages subject to

social security tax and

Medicare tax.

Taxable if $150 test or

$2,500 test in section 9 is

met.

Taxable if either test in

section 14 is met.

7. In processing, packaging, delivering,

etc., any agricultural or horticultural

commodity in its unmanufactured state:

a. In employ of farm operator. Taxable if wages subject to

social security tax and

Medicare tax.

If operator produced over

half of commodity

processed, taxable if $150

test of $2,500 test in

section 9 is met; otherwise

taxable (not farmwork).

If employer produced over

half of commodity

processed, taxable if either

test in section 14 is met;

otherwise taxable (not

farmwork).

b. In employ of unincorporated

group of farm operators (never

more than 20).

Taxable if wages subject to

social security tax and

Medicare tax.

If group produced all

commodity processed,

taxable if $150 test or

$2,500 test in section 9 is

met; otherwise taxable (not

farmwork).

If employer produced over

half of commodity

processed, taxable if either

test in section 14 is met;

otherwise taxable (not

farmwork).

c. In employ of other groups of farm

operators (including cooperative

organizations and commercial

handlers).

Taxable if wages subject to

social security tax and

Medicare tax.

Taxable (not farmwork).

If employer produced over

half of commodity

processed, taxable if either

test in section 14 is met;

otherwise taxable (not

farmwork).

8. Handling or processing commodities

after delivery to terminal market for

commercial canning or freezing.

Taxable if wages subject to

social security tax and

Medicare tax.

Taxable (not farmwork).

Aliens:

1. Resident:

a. Service performed in the United

States.

Same as U.S. citizen. Same as U.S. citizen.

(Exempt if any part of

service as crew member of

foreign vessel or aircraft is

performed outside United

States).

Same as U.S. citizen.

Wages for services not considered farmwork are reported on Forms 941 or Form 944. Other exemptions may apply. See section 5 and section 13.

Benefits provided under cafeteria plans may qualify for exclusion from wages for social security, Medicare, and FUTA taxes.

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Special Classes of Employment and

Special Types of Payments

Treatment Under Employment Taxes

Federal Income Tax

Withholding

Social Security and

Medicare (including

Additional Medicare Tax

when wages are paid in

excess of $200,000)

FUTA

Aliens (continued):

b. Service performed outside the

United States.

Withhold. Taxable if (1) working for an

American employer, or (2)

an American employer by

agreement covers U.S.

citizens and residents

employed by its foreign

affiliates or subsidiary of an

American employer.

Exempt unless on or in

connection with an

American vessel or aircraft

and either performed under

contract made in United

States, or alien is employed

on such vessel or aircraft

when it touches U.S. port.

2. Nonresidents working in United States.

a. Workers lawfully admitted under

section 101 (a)(15)(H)(ii)(a) of the

Immigration and Nationality Act

on a temporary basis to perform

agricultural labor ("H-2A"

workers).

See Pub. 515 and Pub. 519. Exempt. Exempt.

b. Student, scholar, trainee, teacher,

etc., as nonimmigrant alien under

section 101(a)(15)(F), (J), (M), or

(Q).

See Pub. 515 and Pub. 519. Exempt if service is performed for purposes specified in

section 101(a)(15)(F), (J), (M), or (Q) of the Immigration

and Nationality Act. However, these taxes may apply if the

employee becomes a resident alien.

c. Philippine resident not admitted to

Guam or CNMI under section

101(a)(15)(H)(ii) of the

Immigration and Nationality Act.

See Pub. 515 and Pub. 519. Exempt if service is performed for purposes specified in

section 101(a)(15)(H)(ii) of the Immigration and Nationality

Act. However, these taxes may apply if the employee

becomes a resident alien.

d. Philippine resident not admitted to

CNMI under section 101(a)(15)(H)

(ii) of the Immigration and

Nationality Act for services

performed in the CNMI on or after

January 1, 2015.

See Pub. 515 and Pub. 519. Taxable. Exempt.

e. Korean resident admitted to

Guam under section 101(a)(15)

(H)(ii) of the Immigration and

Nationality Act.

See Pub. 515 and Pub. 519. Exempt if service is

performed for purposes

specified in section 101(a)

(15)(H)(ii) of the

Immigration and Nationality

Act. However, these taxes

may apply if the employee

becomes a resident alien.

Exempt.

f. Korean resident admitted to

CNMI under section 101(a)(15)(H)

(ii) of the Immigration and

Nationality Act.

See Pub. 515 and Pub. 519. Taxable. Exempt.

g. All other nonresidents working in

United States.

See Pub. 515 and Pub. 519. Same as U.S. citizen;

exempt if any part of

service as crew member of

foreign vessel or aircraft is

performed outside United

States and employer isn't

an American employer.

Same as U.S. citizen.

3. Nonresident working on American

vessel or aircraft outside United States.

See Pub. 515 and Pub. 519. Taxable if under contract made in United States or worker

is employed on vessel or aircraft when it touches U.S. port.

Cafeteria plan benefits under section 125. If employee chooses cash or other taxable benefit, subject to all employment taxes. If

employee chooses a non-taxable benefit, the treatment is the same as if the benefit was

provided outside the plan. See Pub. 15-B for more information.

Deceased worker:

1. Wages paid to beneficiary or estate in

same calendar year as worker's death.

See the General Instructions for Forms

W-2 and W-3 for details.

Exempt. Taxable. Taxable.

2. Wages paid to beneficiary or estate

after calendar year of worker's death.

Exempt. Exempt. Exempt.

Dependent care assistance programs. Exempt to the extent it is reasonable to believe amounts are excludable from gross income

under section 129.

Benefits provided under cafeteria plans may qualify for exclusion from wages for social security, Medicare, and FUTA taxes.

United States includes American Samoa, Guam, the CNMI, the USVI, and Puerto Rico.

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Special Classes of Employment and

Special Types of Payments

Treatment Under Employment Taxes

Federal Income Tax

Withholding

Social Security and

Medicare (including

Additional Medicare Tax

when wages are paid in

excess of $200,000)

FUTA

Disabled worker's wages paid after year in

which worker became entitled to disability

insurance benefits under the Social Security

Act.

Withhold. Exempt if worker didn't

perform any service for

employer during the period

for which payment is made.

Taxable.

Employee business expense

reimbursement:

1. Accountable plan.

a. Amounts not exceeding specified

government rate for per diem or

standard mileage.

Exempt. Exempt. Exempt.

b. Amounts in excess of specified

government rate for per diem or

standard mileage.

Withhold. Taxable. Taxable.

2. Nonaccountable plan. See section 5 for

details.

Withhold. Taxable. Taxable.

Family employees:

1. Child employed by parent (or

partnership in which each partner is a

parent of the child).

Withhold. Exempt until age 18; age

21 for domestic service.

Exempt until age 21.

2. Parent employed by child. Withhold. Taxable if in course of the

child’s business. For

domestic services, see

section 3.

Exempt.

3. Spouse employed by spouse. Withhold. Taxable if in course of

spouse's business.

Exempt.

See section 3 for more information.

Fishing and related activities, employment

in connection with catching, harvesting,

farming, etc.:

1. Salmon or halibut. Taxable unless (3) applies. Taxable unless (3) applies. Taxable unless (3) applies.

2. All other aquatic forms of animal and

vegetable life.

Taxable unless (3) applies. Taxable unless (3) applies. Exempt unless on vessel of

more than 10 net tons and

(3) doesn't apply.

3. An arrangement with the owner or

operator of the boat by which the

individual receives a share of the boat's

catch (or proceeds from the sale of the

catch), the share depending on the

boat's catch, and operating crew of the

boat is normally fewer than 10

individuals.

Exempt. Exempt if any cash remuneration is:

(a) $100 or less,

(b) Contingent on minimum catch, and

engineer, or cook for which cash remuneration is

traditional).

Foreign governments and international

organizations.

Exempt. Exempt. Exempt.

Foreign service by U.S. citizens:

1. As U.S. Government employees. Withhold. Same as within United

States.

Exempt.

2. For foreign affiliates of American

employers and other private employers.

Exempt if at time of payment

(1) it is reasonable to believe

employee is entitled to

exclusion from income under

section 911, or (2) the

employer is required by law

of the foreign country to

withhold income tax on such

payment.

Exempt unless (1) an

American employer by

agreement covers U.S.

citizens employed by its

foreign affiliates, or (2) U.S.

citizen works for American

employer.

Exempt unless (1) on

American vessel or aircraft

and work is performed under

contract made in United

States or worker is

employed on vessel when it

touches U.S. port, or (2) U.S.

citizen works for American

employer (except in a

contiguous country with

which the United States has

an agreement for

unemployment

compensation) or in the

USVI.

Income derived by Native Americans exercising fishing rights is generally exempt from employment taxes.

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Special Classes of Employment and

Special Types of Payments

Treatment Under Employment Taxes

Federal Income Tax

Withholding

Social Security and

Medicare (including

Additional Medicare Tax

when wages are paid in

excess of $200,000)

FUTA

Fringe benefits. Taxable on excess of fair market value of the benefit over the sum of an amount paid for it

by the employee and any amount excludable by law. However, special valuation rules may

apply. Benefits provided under cafeteria plans may qualify for exclusion from wages for

social security, Medicare, and FUTA taxes. See Pub. 15-B for details.

Government employment:

1. State/local governments and political

subdivisions, employees of:

a. Salaries and wages (includes

payments to most elected and

appointed officials). See

chapter 3 of Pub. 963.

Withhold. Generally, taxable for (1)

services performed by

employees who are either

(a) covered under a section

218 agreement, or (b) not

covered under a section

218 agreement and not a

member of a public

retirement system

(mandatory social security

and Medicare coverage);

and (2) (for Medicare tax

only) for services

performed by employees

hired or rehired after March

31, 1986, who aren't

covered under a section

218 agreement or the

mandatory social security

provisions, unless

specifically excluded by

law. See Pub. 963.

Exempt.

b. Election workers. Election

individuals are workers who are

employed to perform services for

state or local governments at

election booths in connection with

national, state, or local elections.

Exempt. Taxable if paid $2,300 or