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Publication 15 (Circular E), Employer's Tax Guide

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Publication 15 (Circular E), Employer's Tax Guide Userid: CPM Schema: tipx Leadpct: 100% Pt. size: 10 Draft Ok to Print AH XSL/XML Fileid: … ations/P15/2021/A/XML/Cycle07/source (Init. & Date) _______ Page 1 of 50 14:20 - 4-Feb-2021 The type and rule above prints on all proofs including departmental reproduction proofs. MUST be removed before printing. Department of the Treasury Contents Internal Revenue Service What's New .............................. 2 Publication 15 Reminders ............................... 3 Cat. No. 10000W Calendar ................................. 9 Introduction ............................. 11 (Circular E), 1. Employer Identification Number (EIN) ....... 12 2. Who Are Employees? .................... 12 Employer's 3. Family Employees ...................... 14 Tax Guide 4. Employee's Social Security Number (SSN) ... 15 5. Wages and Other Compensation ........... 16 6. Tips .................................. 19 For use in 2021 7. Supplemental Wages .................... 20 8. Payroll Period .......................... 21 9. Withholding From Employees' Wages ....... 22 10. Required Notice to Employees About the Earned Income Credit (EIC) .............. 27 11. Depositing Taxes ...................... 27 12. Filing Form 941 or Form 944 .............. 33 13. Reporting Adjustments to Form 941 or Form 944 ............................ 35 14. Federal Unemployment (FUTA) Tax ........ 38 15. Special Rules for Various Types of Services and Payments ................. 41 16. Third-Party Payer Arrangements .......... 46 How To Get Tax Help ...................... 47 Index .................................. 50 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. At the time this publication went to print, Congress was considering changes to coronavirus (COVID-19) tax relief. If new legislation impacts this publication, updates will be posted to IRS.gov/Pub15. You may also go to IRS.gov/ Coronavirus for the latest information about COVID-19 tax relief. Also check for recent developments that impact your employment tax return by going to the Recent Developments section on IRS.gov/Form941 or IRS.gov/ Form944. Get forms and other information faster and easier at: • IRS.gov (English) • IRS.gov/Korean (한국어) • IRS.gov/Spanish (Español) • IRS.gov/Russian (Pусский) • IRS.gov/Chinese (中文) • IRS.gov/Vietnamese (TiếngViệt) Feb 04, 2021 Page 2 of 50 Fileid: … ations/P15/2021/A/XML/Cycle07/source 14:20 - 4-Feb-2021 The type and rule above prints on all proofs including departmental reproduction proofs. MUST be removed before printing. security taxes. The deferred amount is reported on What's New your 2020 employment tax return. The deferred amount of the employer share of social security tax is Coronavirus (COVID-19) related employment tax only available for deposits due on or after March 27, credits and other tax relief. 2020, and before January 1, 2021, as well as deposits and payments due after January 1, 2021, that are re- The Families First Coronavirus Response Act • quired for wages paid on or after March 27, 2020, and (FFCRA), enacted on March 18, 2020, and amended before January 1, 2021. One-half of the deferred by the COVID-related Tax Relief Act of 2020, provides amount of the employer share of social security tax is certain employers with tax credits that reimburse them due by December 31, 2021, and the remainder is due for the cost of providing paid sick and family leave wa- by December 31, 2022. Any payments or deposits you ges to their employees for leave related to COVID-19. make before December 31, 2021, are first applied Qualified sick and family leave wages and the related against your payment due on December 31, 2021, credits for qualified sick and family leave wages are and then applied against your payment due on De- only reported on employment tax returns with respect cember 31, 2022. Because both December 31, 2021, to wages paid for leave taken in quarters beginning af- and December 31, 2022, are nonbusiness days, pay- ter March 31, 2020, and before April 1, 2021, unless ments made on the next business day will be consid- extended by future legislation. If you paid qualified ered timely. For more information about the deferral of sick and family leave wages in 2021 for 2020 leave, employment tax deposits, go to IRS.gov/ETD and see you will claim the credit on your 2021 employment tax the Instructions for Form 941 or the Instructions for return. Under the FFCRA, certain employers with Form 944, available at IRS.gov/Form941 and IRS.gov/ fewer than 500 employees provide paid sick and fam- Form944, respectively. ily leave to employees unable to work or telework. The FFCRA required such employers to provide leave to • The Presidential Memorandum on Deferring Payroll such employees after March 31, 2020, and before Tax Obligations in Light of the Ongoing COVID-19 January 1, 2021. The COVID-related Tax Relief Act of Disaster, issued on August 8, 2020, directs the Secre- 2020 extends the periods for which employers provid- tary of the Treasury to defer the withholding, deposit, ing such leave that otherwise meets the requirements and payment of the employee share of social security of the FFCRA may continue to claim tax credits to wa- tax on wages paid during the period from September ges paid for leave taken before April 1, 2021, although 1, 2020, through December 31, 2020. The deferral of the requirement that employers provide the leave still the withholding and payment of the employee share of expired on December 31, 2020. For more information social security tax was available for employees whose about the credit for qualified sick and family leave wa- social security wages paid for a biweekly pay period ges, including the changes to the credits made under were less than $4,000, or the equivalent threshold the COVID-related Tax Relief Act of 2020, and to see amount for other pay periods. The COVID-related Tax if future legislation extends the dates that the credit Relief Act of 2020 defers the due date for the with- may be claimed, go to IRS.gov/PLC. Also check the holding and payment of the employee share of social Recent Developments section on IRS.gov/Form941 or security tax until the period beginning on January 1, IRS.gov/Form944. 2021, and ending on December 31, 2021. For more information about the deferral of employee social se- The Coronavirus Aid, Relief, and Economic Security • curity tax, see Notice 2020-65, 2020-38 I.R.B. 567, Act (CARES Act), enacted on March 27, 2020, and available at IRS.gov/irb/2020-38_IRB#NOT-2020-65, amended by the Taxpayer Certainty and Disaster Tax Notice 2021-11, and the Instructions for Form 941 or Relief Act of 2020, provides eligible employers with an the Instructions for Form 944. For information about employee retention credit if they keep employees on how to report the deferred amount of the employee their payroll, despite experiencing economic hardship share of social security tax on Form W-2 and Form W- related to COVID-19. The employee retention credit is 2c for 2020, see IRS.gov/FormW2 and the 2021 Gen- claimed on your employment tax return. The em- eral Instructions for Forms W-2 and W-3 (available in ployee retention credit was extended to 2021 for quali- early 2021). fied wages paid to employees between January 1, 2021, and June 30, 2021. The employee retention Notice 2021-11 modifies Notice 2020-65. No- credit was previously available for qualified wages TIP tice 2020-65 provides that the due date for the de- paid to employees between March 13, 2020, and De- ferred amount of the employee share of social se- cember 31, 2020. Different rules apply for qualified curity tax is April 30, 2021. However, the COVID-related wages paid after December 31, 2020. For more infor- Tax Relief Act of 2020, enacted on December 27, 2020, mation about the employee retention credit, and to defers the due date for the deferred amount of the em- see if future legislation extends the dates that the ployee share of social security tax to December 31, 2021. credit may be claimed, go to IRS.gov/ERC. Also Therefore, Notice 2020-65 was modified by Notice check the Recent Developments section on IRS.gov/ 2021-11 to reflect the new due date. Substitute "Decem- Form941 or IRS.gov/Form944. ber 31, 2021" for the due date of "April 30, 2021" provided • The CARES Act also allows employers to defer the deposit and payment of the employer share of social Page 2 Publication 15 (2021) Page 3 of 50 Fileid: … ations/P15/2021/A/XML/Cycle07/source 14:20 - 4-Feb-2021 The type and rule above prints on all proofs including departmental reproduction proofs. MUST be removed before printing. in previously published instructions. Notice 2021-11 is ex- definition of what constitutes a permanent change of sta- pected to be published in Internal Revenue Bulletin tion and to learn which moving expenses are deductible. 2021-06. Withholding on supplemental wages. P.L. 115-97 lowered the withholding rates on supplemental wages for Social security and Medicare tax for 2021. The rate of tax years beginning after 2017 and before 2026. See sec- social security tax on taxable wages, except for qualified tion 7 for the withholding rates. sick leave wages and qualified family leave wages, is Backup withholding. P.L. 115-97 lowered the backup 6.2% each for the employer and employee or 12.4% for withholding rate to 24% for tax years beginning after 2017 both. Qualified sick leave wages and qualified family leave and before 2026. For more information on backup with- wages aren't subject to the employer share of social se- holding, see Backup withholding, later. curity tax; therefore, the tax rate on these wages is 6.2%. The social security wage base limit is $142,800.
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