12 Payroll Forms Employers Need

It is mandatory for employers to have up-to-date payroll forms regardless of how many employees they have. To maintain good standing with the IRS, you need the regulated payroll tax forms like W-4 for new hires and W-2 for wage and tax statements. Other less structured forms can also be useful in helping you organize your company’s processes—for instance, direct deposit authorizations.

Payroll Tax Forms for Employers

Here’s a more in-depth read and look at the payroll forms you may need to operate your business:

W-4 Form: Withholding Allowance Certificate

The W-4 Form will show you how much federal income tax you should withhold from employee paychecks.

All employers need updated copies of Form W-4 to distribute to new hires; employees should prioritize completing the form before or on their first day of work. You’ll need the information to determine how much to withhold for taxes from employee paychecks each pay period. The document provides space for employees to enter their personal information, like name, address, marital status, and several dependents. Maintaining records of each completed W-4 Form simplifies W-2 Form preparation.

W-2 Form: Wage and Tax Statement

The W-2 Form shows how much an employee earns for the calendar year, in addition to taxes withheld, certain retirement benefits, and other withholding information that may impact their taxes.

The W-2 Form is essential for all employers; you’ll use it to report the total wages paid to employees throughout the year. Also, you’ll include the total payroll taxes withheld (Social Security, Medicare, and income taxes) and other benefits. You’ll give each employee a copy of their own form no later than Jan. 31 after the year for which you’re reporting. You’ll also be responsible for sending copies of the forms to the Social Security Administration (SSA) and your state, city, or local tax department.

Be sure to check that you have six versions of each W-2 Form you distribute (one for each of the following: your records, the employee’s records, for the employee to submit with their federal tax return, for the employee to file with their city, state, and/or local tax return, for you to submit to the SSA, and for you to submit to the city, local, and/or state tax department.

W-3 Form: Transmittal of Wage and Tax Statements

The W-3 Form is a summary of all W-2 Forms on one document; you’ll submit it to the IRS with copies of each W-2 Form.

If you issue W-2 Forms, you will need to complete a W-3 Form and submit it to the SSA with applicable W-2 copies. It’s essentially a summary of all the individual W-2 Forms you are distributing for the year. You’ll report the total salary and wage payments you made to all employees in addition to the total taxes and other benefit information.

To check that all of the numbers you report on the W-3 flow, compare the totals to the information reflected on the other payroll forms. For example, add all individual salary and wage totals reported on the W-2 Forms, and the sum should equal the total wage amount reflecting on your W-3 Form.

Form 940: Federal Unemployment Tax Reporting

If you paid federal unemployment taxes (FUTA) during the year (most employers are required to), you’ll need to submit Form 940 by Jan. 31 of the following year. It helps you calculate and report the total FUTA taxes for which you’re liable, net of any payments made during the year. The IRS requires you to report and pay the tax quarterly if you’ll owe more than $500 for the year; if you pay your FUTA taxes each quarter and are up-to-date by year-end, you can wait until Feb.10 of the following year (at the latest) to file.

Generally, you’re subject to the tax if your business:

• Paid or will pay over $1,500 to its employees in a calendar quarter
• Employed one or more employees for at least 20 weeks of the year

Be mindful that you will likely also owe a state unemployment tax and subsequently need to report the total due on a specific payroll form for your state. Check your state tax agency’s website to be sure.

Form 941: Quarterly Federal Tax Return

Submit this form with your quarterly federal income tax payments.

If you withhold income tax, Social Security, and Medicare (FICA) payments from your employees’ paychecks, you should submit Form 941 (or Form 944 if the payments are small). You’ll report the total amounts withheld. It will also help you verify and pay the amount of FICA taxes for which your business is responsible (the total matches what you should withhold from employee checks, ultimately around 15.3% of wages paid).

The deadlines are at the end of the following months: January (for October through December), April (for January through March), July (for April through June), and October (for July through September).

Form 944: Employer’s Annual Federal Tax Return

Submit this form with your annual federal income tax payments; this is usually for really small companies.

Tax Form 944 fulfills the same purpose as Form 941 but is used less frequently. Only small businesses with an annual tax liability of less than $1,000 are eligible to file this form; it’s a report of the total income and FICA taxes withheld and payable (employees’ and employer’s share) throughout the year and is for employers who are eligible to make one payment annually (versus four quarterly payments).

Form 8027: Annual Information Return of Tip Income

Form 8027 shows how reasonable your employees’ reported tip amounts are; you may be responsible for distributing more money if the total doesn’t meet IRS guidelines.

Not all employers will use Form 8027, only large companies with workers who routinely receive tips (restaurants, bars, and companies in the hospitality industry). For purposes of this form, the IRS defines “large companies” as companies that have more than 10 employees working on a typical business day. The main purpose of this form is to report the total tip income received within the establishment and to calculate allocated tip amounts (a component of some restaurant payroll processes) that employers are responsible for paying tipped employees.

Allocated tips are additional amounts some employers are required to pay out if their total reported tips appear to be too low according to the size of the business. Form 8027 helps to calculate any additional amounts due. The deadline to file a paper copy of the form is March 2 (for 2021) and March 31 if you file electronically.

Schedule H (Form 1040)

Schedule H helps ensure your household employees pay the appropriate amount of payroll taxes.

You use Schedule H if you are paying cash wages to household employees such as nannies, caregivers, or babysitters. You’ll need to report the total wages paid along with taxes due (FICA, FUTA; the form has clear directions to help you calculate the amounts owed, so you don’t have to research it on your own).

Form WH-347: Certified Payroll

This is a federal form contractors can use to meet their certified payroll reporting requirements; however, some states are stricter and have their own forms. Be sure to check yours.

The Certified Payroll Form is a document for employers who work on federal projects. To ensure the agency funding the project continues to pay, you have to fill it out with details about every worker involved in the project, like name, hours worked, project name, wages earned, benefits paid, and so on. It’s important to submit an updated copy to the agency weekly.

Other Payroll-Related Forms for Employers

Employer and employee tax forms are the most pressing payroll documents for many companies. However, there are others (some specifically payroll and others not so much) of which employers should be aware. For instance, HR and payroll go hand in hand, meaning you can’t or shouldn’t process payroll without filing some key HR forms. Also, completing the proper contractor forms can save your company time and money.

Employer Contractor Forms

There’s a significant difference between employees and contractors in the sense that contractors have much more autonomy because employers cannot legally control how they perform their work. There’s also a difference in how you should report the money you pay them. W-2, W-3, and W-4 Forms are not applicable to contractors. W-9 and 1099 Forms are more appropriate.

Here’s a list of forms you need when paying contractors:

• W-9 Form: The W-9 is the W-4 for contractors. You should distribute a copy to each contractor you hire before they begin working. It will collect information like the employee’s name and Social Security number). You’ll use it to report to the IRS how much you paid out during the year (on Form 1099).
• 1099 Form: Similar to a W-2 (except it’s only for contractors that were paid at least $600 and doesn’t list any taxes paid), this form should report the total income paid to contractors. You should submit one to each contractor and send a copy to the IRS.
• 1096 Form: It is a summary of all 1099 Forms you distribute. It should reflect the grand total paid to all contractors and tie directly to each 1099 you’re distributing.

Non-Tax Payroll Forms

There are numerous non-tax-related payroll forms you can use to help manage your internal processes better. Since these are not regulated, you can create them on your own or download a free online payroll template.

Here are three of the most common non-tax payroll forms you should consider using:

• Direct deposit authorization form: Issued to employees wanting to receive their paychecks electronically vs by paper check; the form shows you have permission to pay them via direct deposit and usually includes space for a routing and account number.
• Time sheet: A document employees can use to record the hours they work each period; you can use it to verify work time before issuing paychecks.
• Paystub: A document you can issue with each paycheck that shows a breakdown of total earnings, deductions, etc. Some states require you to issue them (and dictate what information to include), and others don’t.

In addition to payroll forms, many employers require HR forms for new employees, including Form I-9 (used to verify work eligibility), Employer Identification Number (EIN) Form (used to request a state-issued number for reporting and paying taxes), and so on. These aren’t payroll forms per se (although often confused as such) but are required before processing any paychecks.

Why Payroll Forms Are Important

Payroll forms are important because they help employers record, summarize, and report paycheck and payroll tax information. It’s best to integrate them into your company processes, so they’re completed at the right time. You can face penalties for not submitting the proper documents to the appropriate agencies by their deadlines. One of the first steps to learning how to do payroll successfully is to gather (and in some cases, create) the payroll forms that apply to your business. Payroll software services can also provide some guidance and resources.

Key Takeaways to Remember About Payroll Forms

Many forms are tax-related, subject to IRS regulations, and only reflect employee information (not contractors’); other forms are more flexible, and you can produce them in-house (direct deposit, time sheets, and so on). Forms like 1099s help organize payments made to contractors, although they’re usually considered vendor payments rather than payroll.

All IRS forms have their deadline(s). Most employer payroll tax reports are filed quarterly while others are submitted annually. For your in-house forms, you can set your deadlines according to how you need to use the information (you can have employees submit timesheets weekly, biweekly, etc., depending on your pay cycle).

Bottom Line

Payroll forms are a necessity for your business. As a small business owner, it is best to start downloading the IRS forms applicable to your business. There are other, less-urgent forms you can customize for internal use, but you can integrate those into your processes later.

Other articles you may be interested in …

Form W9 vs 1099
Form W2 vs W4
1099 Contractors vs W2 Employees