Correct Withholding / Estimated Payments / Federal Deposits
Withholding
The easiest way to pay your taxes to the IRS is to have your employer withhold them from your paycheck. You have some control over the amount withheld through form W-4 (IRS link). If you are unsure how much taxes to withhold, err on the side of withholding more. Excess withholding results in a refund. Returns with a refund cannot have late filing or paying penalties.
Estimated Payments
Estimated tax payments (IRS link) may be necessary if there is insufficient tax withholding. This is a typical situation for self-employed people. Estimated need to be deposited with the IRS quarterly. Yet, we recommend depositing taxes more regularly, e.g. monthly.
Federal Tax Deposits
The IRS takes payroll taxes very seriously. Employers need to be very careful. They need to be meticulous about timely and prompt deposits (IRS link) of these taxes. The IRS will notice any missing deposits in a short time. Adverse action will be aggressive and quick.
The IRS will try to identify any person who could be responsible for payroll tax deposits. Such individuals could be held personally liable for the tax debt (Trust Fund Recovery Penalty – IRS link). We can help. Contact us now!