The Importance of Filing Quarterly Payroll Tax Returns

Businesses with one or more employees are required to withhold and remit taxes. Depending on the filing status of the employer, the returns are generally due each quarter.

Quarterly Returns:

Federal, Social Security, Medicare – Form 941

State (KY – K1, IN- WH1)

State Unemployment (KY – UI3, IN UC-1)

Local returns

The IRS Form 941, Employer’s Quarterly Federal Tax Return, is used to report the number of employees, wages paid, tips paid (if applicable), the employee and employer portion of Social Security and Medicare. This form also reports to the Internal Revenue Service the tax liability due each quarter and the payments made to reconcile to a zero balance.

State returns that have a quarterly filing requirement are used to report the wages paid and the state taxes that were withheld and paid.

State Unemployment returns report to the state unemployment agencies the wages paid to each employee and any taxable wages up to their respective limits (determined by the agencies normally in December of the preceding year). These returns also assist the unemployment agencies to calculate the base wages for an employee should they file for unemployment.

Local returns are reported to the taxing jurisdiction that the employee works in (Louisville/Jefferson County, City of Shelbyville, Shelby County, City of Mt. Washington, to name a few). Indiana local taxes are filed with the IN withholding tax.

Timely Filing/ Payments

It is the employer’s responsibility to timely file and pay the payroll taxes on or before the due date. Missing due dates and payments can significantly affect your business. Late filing and late payment penalties can accumulate very quickly and the taxing agencies will send notices demanding payments for these penalties. If not paid timely, the IRS and state agencies can send your account to collections or levy your bank account in order to clear the account balance.

Compliance Strategies

1. Avoid missing the tax deadlines – make a tax calendar of due dates for payments / returns or utilize the IRS online tax calendar
2. Keep complete and accurate payroll records for employees, timesheets, payroll reports, W2’s, etc.
3. Watch for IRS and State Updates
4. Work with a 3^rd party payroll processor like Baldwin CPA’s Elevate Team. By using a 3^rd party payroll processor, you eliminate the majority of the headaches like late-filing and late-payment penalties.

The Elevate Team at Baldwin CPAs is ready to assist you in processing your payroll, filing and paying your taxes. Our team is well versed in payroll laws and requirements and attend Payroll.Org conferences annually. Please contact us if you would like to discuss how Baldwin CPAs can help you.

This article was written by Debbie Woodcock. Debbie is a Senior Payroll Specialist with Baldwin CPAs. For more information on the support Baldwin CPAs can provide you, contact debbie.woodcock@baldwincpas.com.