Publication 583 |
2001 Tax Year |
Business Taxes
The form of business you operate determines what taxes you must pay
and how you pay them. The following are the four general kinds of
business taxes.
- Income tax.
- Self-employment tax.
- Employment taxes.
- Excise taxes.
See Table 2 on page 6 for the forms you file to report
these taxes.
You may want to get Publication 509.
It has tax calendars that tell
you when to file returns and make tax payments.
Income Tax
All businesses except partnerships must file an annual income tax
return. Partnerships file an information return. Which form you use
depends on how your business is organized. See Table 2 to
find out which return you have to file.
The federal income tax is a pay-as-you-go tax. You must pay the tax
as you earn or receive income during the year. An employee usually has
income tax withheld from his or her pay. If you do not pay your tax
through withholding, or do not pay enough tax that way, you might have
to pay estimated tax. If you are not required to make estimated tax
payments, you may pay any tax due when you file your return.
Table 2. Which Forms Must I File?
Estimated tax.
Generally, you must pay taxes on income, including self-employment
tax (discussed next), by making regular payments of estimated tax
during the year.
Sole proprietors, partners, and S corporation shareholders.
You generally have to make estimated tax payments if you expect to
owe tax of $1,000 or more when you file your return. Use Form
1040-ES, Estimated Tax for Individuals, to figure and
pay your estimated tax. For more information, see Publication 505,
Tax Withholding and Estimated Tax.
Corporations.
You generally have to make estimated tax payments for your
corporation if you expect it to owe tax of $500 or more when you file
its return. Use Form 1120-W, Estimated Tax for
Corporations, to figure the estimated tax. You must deposit the
payments as explained on page 8 under Depositing Taxes. For
more information, see Publication 542.
Self-Employment Tax
Self-employment tax is the social security and Medicare tax for
individuals who work for themselves. Your payments of self-employment
tax contribute to your coverage under the social security system.
Social security coverage provides you with retirement benefits,
disability benefits, survivor benefits, and hospital insurance
(Medicare) benefits.
You must pay self-employment tax if either of the following
applies.
- Your net earnings from self-employment (excluding income
described in (2)) are $400 or more.
- You performed services for a church as an employee and
received income of $108.28 or more.
Use Schedule SE (Form 1040) to figure your self-employment tax.
For more information, see Publication 533,
Self-Employment
Tax.
You can deduct one-half of your self-employment tax as an
adjustment to income on your Form 1040.
The Social Security Administration (SSA) time limit for
posting self-employment income.
Generally, the SSA will give you credit only for self-employment
income reported on a tax return filed within 3 years, 3 months, and 15
days after the tax year you earned the income. If you file your tax
return or report a change in your self-employment income after this
time limit, the SSA may change its records, but only to remove or
reduce the amount. The SSA will not change its records to increase
your self-employment income.
Employment Taxes
This section briefly discusses the employment taxes you must pay,
the forms you must file to report them, and other forms that must be
filed when you have employees.
Employment taxes include the following.
- Federal income tax withholding.
- Social security and Medicare taxes.
- Federal unemployment (FUTA) tax.
If you have employees, you will need to get Publication 15,
Circular E, Employer's Tax Guide. If you have agricultural
employees, get Publication 51,
Circular A, Agricultural
Employer's Tax Guide. These publications explain your tax
responsibilities as an employer.
If you are not sure whether the people working for you are your
employees, see Publication 15-A, Employer's Supplemental
Tax Guide. That publication has information to help you
determine whether an individual is an employee or an independent
contractor. If you classify an employee as an independent contractor,
you can be held liable for employment taxes for that worker plus a
penalty. An independent contractor is someone who is self-employed.
You do not generally have to withhold or pay any taxes on payments to
an independent contractor.
Federal Income, Social Security, and Medicare Taxes
You generally must withhold federal income tax from your employee's
wages. To figure how much federal income tax to withhold from each
wage payment, use the employee's Form W-4 (discussed later under
Hiring Employees) and the methods described in Publication 15.
Social security and Medicare taxes pay for benefits that workers
and their 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. You withhold part of
these taxes from your employee's wages and you pay a matching amount
yourself. To find out how much social security and Medicare tax to
withhold and to pay, see Publication 15.
Which form do I file?
Report these taxes on Form 941, Employer's Quarterly Federal
Tax Return. (Farm employers use Form 943, Employer's Annual
Tax Return for Agricultural Employees.)
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.
Which form do I file?
Report federal unemployment tax on Form 940, Employer's Annual
Federal Unemployment (FUTA) Tax Return. Or, if you qualify, you
can use the simpler Form 940-EZ instead. See Publication 15 to
find out if you can use this form.
Hiring Employees
When hiring employees, have them fill out Form I-9 and Form
W-4. If your employees qualify for advance payments of the
earned income credit, they also must give you a Form W-5.
Form I-9.
You must verify that each new employee is legally eligible to work
in the United States. Both you and the employee must complete the
Immigration and Naturalization Service (INS) Form I-9,
Employment Eligibility Verification. You can get the form
from INS offices or from the INS web site at www.ins.usdoj.gov.
Call the INS at 1-800-375-5283 for more
information about your responsibilities.
Form W-4.
Each employee must fill out Form W-4, Employee's
Withholding Allowance Certificate. You will use the filing
status and withholding allowances shown on this form to figure the
amount of income tax to withhold from your employee's wages.
Form W-5.
An eligible employee who has a qualifying child is entitled to
receive advance earned income credit (EIC) payments with his or her
pay during the year. To get these payments, the employee must give you
a properly completed Form W-5, Earned Income Credit Advance
Payment Certificate. You are required to make advance EIC
payments to employees who give you a completed and signed Form
W-5. For more information, see Publication 15.
Wage Reporting--Form W-2
After the calendar year is over, you must furnish copies of Form
W-2, Wage and Tax Statement, to each employee to whom
you paid wages during the year. You must also send copies to the
Social Security Administration. See Information Returns,
later, for more information on Form W-2.
Excise Taxes
This section describes the excise taxes you may have to pay and the
forms you have to file if you do any of the following.
- Manufacture or sell certain products.
- Operate certain kinds of businesses.
- Use various kinds of services, facilities, or
products.
For more information on excise taxes, see Publication 510.
Form 720.
The federal excise taxes reported on Form 720, Quarterly
Federal Excise Tax Return, consist of several broad categories,
including the following taxes.
- Environmental taxes.
- Communications and air transportation taxes.
- Fuel taxes.
- Tax on the first retail sale of heavy trucks, trailers, and
tractors.
- Luxury tax on passenger cars.
- Manufacturers' taxes on the sale or use of a variety of
different articles.
Form 2290.
There is a federal excise tax on certain trucks, truck tractors,
and buses used on public highways. The tax applies to vehicles having
a taxable gross weight of 55,000 pounds or more. Report the tax on
Form 2290, Heavy Highway Vehicle Use Tax Return. For more
information, see the instructions for Form 2290.
Form 730.
If you are in the business of accepting wagers or conducting a
wagering pool or lottery, you may be liable for the federal excise tax
on wagering. Use Form 730, Monthly Tax on Wagering, to
figure the tax on the wagers you receive.
Form 11-C.
Use Form 11-C, Occupational Tax and Registration Return
for Wagering, to register for any wagering activity and to pay
the federal occupational tax on wagering.
ATF forms.
If you produce, sell, or import guns, tobacco, or alcohol products,
or if you manufacture equipment for their production, you may be
liable for one or more excise taxes. Report these taxes on forms filed
with the Bureau of Alcohol, Tobacco, and Firearms (ATF). For more
information, call the ATF National Revenue Center at
1-800-937-8864 or see the ATF web site at
www.atf.treas.gov.
Depositing Taxes
You generally have to deposit employment taxes, certain excise
taxes, corporate income tax, and S corporation taxes before you file
your return.
Mail or deliver deposits with completed deposit coupons
to an authorized financial institution unless you make the
deposits electronically, as discussed later.
To be on time, mailed deposits must arrive at the depositary by the
due date. You may be charged a penalty for not making deposits when
due, unless you have reasonable cause. See Penalties,
later.
To help ensure proper crediting of your account, include the
following on your check or money order.
- Your EIN.
- Type of tax.
- Tax period for the payment.
Deposit coupons.
Use Form 8109,
Federal Tax Deposit Coupon,
to deposit taxes. On each coupon, you must show the deposit
amount, the type of tax, the period for which you are making a
deposit, and your telephone number. Use a separate coupon for each tax
and period. You must include a coupon with each deposit you make.
Five to six weeks after you receive your employer identification
number (EIN), as discussed earlier, the IRS will send you a coupon
book. If you have a deposit due and there is not enough time to obtain
a coupon book, you can get a blank coupon (Form 8109-B) by
calling 1-800-829-1040.
If you have not received your EIN and must make a deposit, mail
your payment with an explanation to the Internal Revenue Service
Center where you file your return. Make your check or money order
payable to the United States Treasury. On the payment, write your name
(exactly as shown on Form SS-4), your address, the kind of tax,
the period covered, and the date you applied for an EIN. Do not
use Form 8109-B in this situation.
Electronic deposit of taxes.
Generally, taxpayers whose total deposits of social security and
Medicare taxes and withheld income tax during previous years exceeded
certain amounts are required to deposit taxes through the Electronic
Federal Tax Payment System (EFTPS).
Taxpayers not required to make deposits by EFTPS may enroll in the
system, which will allow tax deposits without coupons, paper checks,
or visits to an authorized depositary. For more information, see
Publication 15.
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