Page 5 - Form W4 and payroll Tables

9:19 - 23-Dec-2019
Page 3 of 48
Fileid: … ations/P15/2020/A/XML/Cycle07/source
The type and rule above prints on all proofs including departmental reproduction proofs. MUST be removed before printing.
Business Payroll Tax Credit for Increasing Research Ac- Aggregate Form 941 Filers, when filing an aggregate
tivities. Form 8974 is used to determine the amount of the Form 941. Aggregate Forms 941 are filed by agents ap-
credit that can be used in the current quarter. The amount proved by the IRS under section 3504 of the Internal Rev-
from Form 8974, line 12, is reported on Form 941 or enue Code. To request approval to act as an agent for an
941-SS, line 11 (or Form 944, line 8). For more informa- employer, the agent files Form 2678 with the IRS. Aggre-
tion about the payroll tax credit, see Notice 2017-23, gate Forms 941 are also filed by CPEOs approved by the
2017-16 I.R.B. 1100, available at IRS.gov/irb/ IRS under section 7705. CPEOs file Form 8973, Certified
2017-16_IRB#NOT-2017-23, and IRS.gov/ Professional Employer Organization/Customer Reporting
ResearchPayrollTC. Also see the line 16 instructions in Agreement, to notify the IRS that they’ve started or ended
the Instructions for Form 941 (line 13 instructions in the In- a service contract with a client or customer.
structions for Form 944). Aggregate Form 940 filers. Agents and CPEOs must
Certification program for professional employer or- complete Schedule R (Form 940), Allocation Schedule for
ganizations (PEOs). The Stephen Beck, Jr., Achieving a Aggregate Form 940 Filers, when filing an aggregate
Better Life Experience Act of 2014 required the IRS to es- Form 940, Employer's Annual Federal Unemployment
tablish a voluntary certification program for PEOs. PEOs (FUTA) Tax Return. Aggregate Forms 940 can be filed by
handle various payroll administration and tax reporting re- agents acting on behalf of home care service recipients
sponsibilities for their business clients and are typically who receive home care services through a program ad-
paid a fee based on payroll costs. To become and remain ministered by a federal, state, or local government. To re-
certified under the certification program, certified profes- quest approval to act as an agent on behalf of home care
sional employer organizations (CPEOs) must meet vari- service recipients, the agent files Form 2678 with the IRS.
ous requirements described in sections 3511 and 7705 Aggregate Forms 940 are also filed by CPEOs approved
and related published guidance. Certification as a CPEO by the IRS under section 7705. CPEOs file Form 8973 to
may affect the employment tax liabilities of both the CPEO notify the IRS that they’ve started or ended a service con-
and its customers. A CPEO is generally treated for em- tract with a client or customer.
ployment tax purposes as the employer of any individual Work opportunity tax credit for qualified tax-exempt
who performs services for a customer of the CPEO and is organizations hiring qualified veterans. Qualified
covered by a contract described in section 7705(e)(2) be- tax-exempt organizations that hire eligible unemployed
tween the CPEO and the customer (CPEO contract), but veterans may be able to claim the work opportunity tax
only for wages and other compensation paid to the indi- credit against their payroll tax liability using Form 5884-C.
vidual by the CPEO. To become a CPEO, the organization For more information, go to IRS.gov/WOTC.
must apply through the IRS Online Registration System.
For more information or to apply to become a CPEO, go to COBRA premium assistance credit. Effective for tax
IRS.gov/CPEO. Also see Revenue Procedure 2017-14, periods beginning after 2013, the credit for COBRA pre-
2017-3 I.R.B. 426, available at IRS.gov/irb/ mium assistance payments can't be claimed on Form 941,
2017-03_IRB#RP-2017-14. Employer's QUARTERLY Federal Tax Return (or Form
Outsourcing payroll duties. Generally, as an employer, 944, Employer's ANNUAL Federal Tax Return). Instead,
you’re responsible to ensure that tax returns are filed and after filing your Form 941 (or Form 944), file Form 941-X,
deposits and payments are made, even if you contract Adjusted Employer's QUARTERLY Federal Tax Return or
with a third party to perform these acts. You remain re- Claim for Refund (or Form 944-X, Adjusted Employer's
sponsible if the third party fails to perform any required ac- ANNUAL Federal Tax Return or Claim for Refund) to
tion. Before you choose to outsource any of your payroll claim the COBRA premium assistance credit. Filing a
and related tax duties (that is, withholding, reporting, and Form 941-X (or Form 944-X) before filing a Form 941 (or
paying over social security, Medicare, FUTA, and income Form 944) for the return period may result in errors or de-
taxes) to a third-party payer, such as a payroll service pro- lays in processing your Form 941-X (or Form 944-X). For
vider or reporting agent, go to IRS.gov/ more information, see the Instructions for Form 941 (or the
OutsourcingPayrollDuties for helpful information on this Instructions for Form 944).
topic. If a CPEO pays wages and other compensation to Medicaid waiver payments. Notice 2014-7 provides
an individual performing services for you, and the services that certain Medicaid waiver payments are excludable
are covered by a contract described in section 7705(e)(2) from income for federal income tax purposes. See Notice
between you and the CPEO (CPEO contract), then the 2014-7, 2014-4 I.R.B. 445, available at IRS.gov/irb/
CPEO is generally treated as the employer, but only for 2014-04_IRB#NOT-2014-7. For more information, includ-
wages and other compensation paid to the individual by ing questions and answers related to Notice 2014-7, go to
the CPEO. However, with respect to certain employees IRS.gov/MedicaidWaiverPayments.
covered by a CPEO contract, you may also be treated as No federal income tax withholding on disability pay-
an employer of the employees and, consequently, may ments for injuries incurred as a direct result of a ter-
also be liable for federal employment taxes imposed on rorist attack directed against the United States. Disa-
wages and other compensation paid by the CPEO to such bility payments for injuries incurred as a direct result of a
employees. For more information on the different types of terrorist attack directed against the United States (or its al-
third-party payer arrangements, see section 16. lies) aren't included in income. Because federal income
Aggregate Form 941 filers. Agents and CPEOs must tax withholding is only required when a payment is includi-
complete Schedule R (Form 941), Allocation Schedule for ble in income, no federal income tax should be withheld

Publication 15 (2020) Page 3