IRS Publication 15: Employer’s Tax Guide is an essential document from the Internal Revenue Service, designed to help employers understand their responsibilities for filing and reporting tax-related information. This publication details everything related to the withholding, depositing, reporting, paying, and correcting of taxes for employees. IRS Publication 15 is also known as Circular E.
Key Takeaways
- Comprehensive Tax Guide: IRS Publication 15 provides detailed information on the tax obligations of employers, including filing and reporting requirements.
- Employee Tax Withholdings: The guide covers the details of withholding federal income tax, Medicare, and Social Security taxes from employee paychecks.
- Compliance: Employers receive guidelines to ensure they comply with federal tax regulations.
A Deep Dive into IRS Publication 15
IRS Publication 15 is utilized to determine federal income tax withholdings from employee wages, excluding state or local taxes. The guide provides crucial details for calculating federal income taxes and includes important sections on Medicare and Social Security tax amounts. Employers must also refer to their respective state’s tax rules to accurately withhold state income tax from their employees’ paychecks. For more specific information, IRS Publication 15-A may be referenced.
Calculation Methods for Income Tax Withholding
Historically, the Employer’s Tax Guide included the Percentage Method Tables and Wage Bracket Method Tables for calculating income tax withholdings. From 2020 onwards, these tables are provided separately in Publication 15-T, Federal Income Tax Withholding Methods. For easy calculations, employers can use the online Income Tax Withholding Assistant for Employers available on the IRS website.
Employee Withholding Setup
These wage bracket tables help employers determine the exact percentage of payroll to withhold for taxes during each pay period, ensuring compliance with federal tax regulations. Employees must also complete and submit a W-4 Form, which can be updated to reflect changes in personal or financial situations. If an employee fails to complete a W-4 Form, the Employer’s Tax Guide provides instructions on default tax withholding amounts.
How to Use IRS Publication 15
The publication is easily accessible online via the official IRS website. It contains updates and new legislative changes to keep employers informed. The guide includes the following crucial sections:
- Employer Identification Numbers (EINs): Instructions on obtaining and using EINs.
- Employee Regulations: Legal definitions and classifications of different types of employees.
- Family Employees: Specific rules about hiring and paying family members.
- Social Security Numbers (SSNs): Requirements for employee SSNs.
- Wages and Compensation Details: Clear guidelines on handling wages and other forms of compensation.
- Tip Reporting: Procedures for reporting and paying employee tips.
- Supplemental Wages: Information on additional wage types like bonuses and commissions.
- Payroll Periods and Withholding: Setting payroll periods and correctly withholding taxes from wages.
- Earned Income Credit (EIC): Employer requirements to notify employees about EIC eligibility.
- Tax Deposits: Instructions on depositing taxes accurately and timely.
- Filing Forms 941 and 944: Steps for filing these quarterly reporting forms.
- Adjustments and Corrections: Guidelines for correcting errors on filed forms 941 and 944.
- Federal Unemployment Tax (FUTA): Detailed information about the FUTA tax responsibilities.
By mastering the guidelines in IRS Publication 15, you will ensure that your business remains compliant with federal tax laws and manages employee taxes efficiently. Remember to keep informed of any legislative updates to stay aligned with best practices.
Related Terms: IRS, withholding tax, federal income tax, Medicare, Social Security, Form W-4, Employer Identification Number, FUTA tax.
References
- Internal Revenue Service. “2019: Publication 15 - (Circular E), Employer’s Tax Guide,” Pages 1–9.
- Internal Revenue Service. “2019: Publication 15 - (Circular E), Employer’s Tax Guide,” Page 9.
- Internal Revenue Service. “About Publication 15-A, Employer’s Supplemental Tax Guide (Supplement to Circular E, Employer’s Tax Guide, Publication 15).”
- Internal Revenue Service. “2019: Publication 15 - (Circular E), Employer’s Tax Guide,” Pages 44 & 45.
- Internal Revenue Service. “2020 Publication 15”.
- Internal Revenue Service. “About Form W-4, Employee’s Withholding Certificate.”
- Internal Revenue Service. “2019: Publication 15 - (Circular E), Employer’s Tax Guide,” Page 20.
- Internal Revenue Service. “2019: Publication 15 - (Circular E), Employer’s Tax Guide,” Page 1.
