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What Are Employment Taxes?
Small business owners often have great responsibilities while operating and managing a business. Before you become an employer and hire employees, you need a Federal Employer Identification Number (EIN).
If you have employees, you are responsible for several federal, state, and local taxes. As an employer, you must withhold certain taxes from your employees pay checks. Employment taxes include the following.
* Federal income tax withholding
* Social Security and Medicare taxes
* Federal unemployment tax act (FUTA).
Federal Income Taxes/Social Security and Medicare Taxes
You generally must withhold federal income tax from your employees wages. To figure how much to withhold from each wage payment, use the employee's Form W-4 and the methods described in Publication 15, Employers Tax Guide and Publication 15-A, Employers Supplemental Tax Guide.
Social security and Medicare taxes pay for benefits that workers and families receive under the Federal Insurance Contributions Act (FICA). Social security tax pays for benefits under the old-age, survivors, and disability insurance part of FICA. Medicare tax pays for benefits under the hospital insurance part of FICA. You withhold part of these taxes from your employee's wages and you pay a matching amount yourself.
Which form do I file to report federal Income Taxes, Social Security, and Medicare taxes?
* Form 941, Employer's Quarterly Federal Tax Return
* Form 943, Employer's Annual Federal Tax Return for Agriculture Employees (For use by farm employers)
Federal Unemployment (FUTA) Tax
The federal unemployment tax is part of the federal and state program under the Federal Unemployment Tax Act (FUTA) that pays unemployment compensation to workers who lose their jobs. You report and pay FUTA tax separately from social security and Medicare taxes and withheld income tax. You pay FUTA tax only from your own funds. Employees do not pay this tax or have it withheld from their pay. Report FUTA taxes on Form 940, Employer's Annual Federal Unemployment (FUTA) Tax Return.
Depositing Taxes
In general, you must deposit income tax withheld and both the employer and employee social security and Medicare taxes (minus any advance EIC payments) by mailing or delivering a check, money order, or cash to a financial institution that is an authorized depositary for Federal taxes. However, some taxpayers are required to deposit using the Electronic Federal Tax Deposit System (EFTPS). For additional information, refer to our Employment Taxes for Small Businesses page.
Certain Taxpayers May Now File Their Employment Taxes Annually
To reduce burden for certain small business taxpayers, employers who have an Employment Tax liability of $1,000 or less for the year will now file Form 944, Employer’s Annual Federal Tax Return, instead of Form 941, Employer’s Quarterly Federal Tax Return. Eligible taxpayers will be notified by mail.
References/Related Topics
* Employment Taxes for Businesses
* Online Classroom, Lesson 7 - How to manage payroll so you withhold the right amount from employees
* Online Classroom, Lesson 9 - What you need to know about Federal Unemployment Taxes (FUTA)
* W-2 Online, Create, save, print, and submit Forms W-2 and W-2c online.
* Tax Calendar for Small Businesses and Self-Employed
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as in we aren't employers... and you'd better have your own workman's comp insurance cause you ain't suing us buddy...
though it is written like we are your buddy... look no forced dispatched, we like you, you pick the loads and you choose...
*que DARTH VADER music" muwahhhhahahahaaaaa
Not only does my carrier state "no forced dispatch" but they put this clause in the lease agreement.
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CONTRACTOR NOT EMPLOYEE OF CARRIER. It is expressly understood and agreed that CONTRACTOR is an independent contractor for the Equipment and driver services provided pursuant to this Agreement. CONTRACTOR agrees to defend, indemnify and hold CARRIER harmless for any claims, suits, or actions, including reasonable attorney's fees in protecting CARRIER'S interests, brought by employees, any union, the public, or state or federal agencies, arising out of the operation of this Equipment or the providing of driver services under this Agreement. CONTRACTOR hereby assumes full control and responsibility for all hours scheduled and worked, wages, salaries, workers' compensation and unemployment insurance, state and federal taxes, fringe benefits, and all other costs relating to the use of drivers and other labor provided by CONTRACTOR pursuant to this Agreement. Proof of such control and responsibility shall be submitted by CONTRACTOR to CARRIER as required by CARRIER and may include, but not limited to, proof of highway use tax being currently paid, proof of income tax being currently paid, and proof of payment of payroll tax for CONTRACTOR'S drivers. For the purposes of this section, the term CONTRACTOR refers to the owner of the Equipment as well as drivers that may be operating the Equipment on behalf of the owner. As required by law, CARRIER agrees to file information tax returns (Form 1099} on behalf of CONTRACTOR if CONTRACTOR is paid more than the statutory amount in compensation during a calendar year. CONTRACTOR hereby acknowledges that CONTRACTOR understands and agrees that CONTRACTOR is:
(i) Responsible to pay estimated social security tax and state and federal income taxes;
(ii) That the social security tax the individual must pay is higher than the social security tax the individual would pay if he or she were an employee; and
(iii) That the work is not covered by the unemployment compensation law of any state.
as in we aren't employers... and you'd better have your own workman's comp insurance cause you ain't suing us buddy...
though it is written like we are your buddy... look no forced dispatched, we like you, you pick the loads and you choose...
*que DARTH VADER music" muwahhhhahahahaaaaa
Very few companies are actually "No Forced Dispatch" as they claim either. They can only be legitimate "No Forced" if they offer you a choice of several loads, as does Landstar, Jones Motor Freight and a few others.
Not only does my carrier state "no forced dispatch" but they put this clause in the lease agreement.
So, by YOUR Contract, you are required to pay all taxes, including those for "employees" and show proof.
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Proof of such control and responsibility shall be submitted by CONTRACTOR to CARRIER as required by CARRIER and may include, but not limited to, proof of highway use tax being currently paid, proof of income tax being currently paid, and proof of payment of payroll tax for CONTRACTOR'S drivers.
However, as I stated, any company that claims to be "No Forced Dispatch" MUST offer a choice of multiple loads to be truly "No Forced Dispatch"
It isn't enough to just claim to be so in a Contract. It must be demonstrated.
My husband actually worked for this guy BIG MISTAKE he did 3 runs over 3800 miles and recieved $396 He witheld $600 for tires that had to be replaced when driving on pure ice when his trucks brakes locked up and wore his tires at first he said it was ok don't worry about it 2 weeks go by my husband asks for his first check he was told he would not recieve his first check for 3 weeks needing the job he stayed 3rd week we get his first check for over a 1500 mile run he gets $125 and learns this guy is charging him for the tires claiming driver neglect which would be mechanical failure.this was during one of the storms in the truckstop he was stopped at over 37 trucks had to be towed.Then the guy turns around and removes all of my husbands possessions out of the truck and tells him to come pick his stuff up at a police station which some of his stuff was missing which he said he would give back when he felt like it.He also charged my husband a $100 for DS/Physical which was never discussed that my husband was paying for this.This boy needs to man up and do whats right.
I also forgot to mention that then he said he would pay half of the tires before my husband got his stuff then he turned around and changed it back to my husbands going to pay the full amount.
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Very interesting thread. "Mike" is incorrect in paying hired employees via 1099, the law is very clear on that point. If I own the truck, whether I am making payments on it or own it outright, and I hire someone to drive it, they are my employee. They get paid on a W2 and taxes are withheld. If I "hire" an owner/operator who owns his own truck but does not have his own authority, then he is a contractor and I offer him a choice of loads. It is his/her decision as to whether to accept them or not. A contractor is paid on a 1099.
So "Mike" claims his employees are contractors, but who is paying for the fuel? Who pays for maintenance on the equipment? Who takes advantage of tax credits like depreciation and interest expenses on the equipment?
Putting language in a "contract" for an employee does not absolve the employer of their responsibility to account for the wages and employment taxes.
Now that "Mike" has been outted, I wonder how long before the IRS comes a calling????
It is amazing to me that "Mike" claims to be an astute businessman yet seems to lack some very basic business knowledge and ethics.
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12.21.2007
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