Avoid Payroll Tax Penalties By Doing This!
Many business owners are unaware that the IRS places a higher priority on collecting payroll taxes than on collecting unpaid income taxes. As a result, there's a lot on the line if payroll taxes have been overlooked or mishandled. If you fail to properly address payroll taxes, both the IRS and state-level agencies will notice.
What Are Payroll Taxes?
Employers pay payroll taxes as a contribution and employees as a percentage deduction from their salaries. These taxes are usually paid to the local, state, or federal governments. Payroll taxes include the Social Security and Medicare taxes, as well as federal and state unemployment taxes and local taxes.
Employers are required to withhold and pay employee payroll taxes. As an employer, you will be individually responsible for withholding and paying income taxes and other payroll taxes to state and federal agencies. Payroll tax penalties may apply if payroll taxes are not paid on time.
How Can Employers Avoid Payroll Tax Penalties?
If you have unpaid payroll taxes, the IRS may assess penalties and interest on your account. The agency can also seize your assets, garnish your wages, or take the funds from your bank account. Usually, this is due in major part to having incorrect calculations, missed deadlines, and inaccurate reporting.
Maintaining proper employee classification is a great tip to help employers avoid payroll tax penalties. Oftentimes, employers may try to avoid paying taxes by listing their employees as independent contractors. If the IRS determines that the employees were misclassified and should have been paid as employees because they're not qualified to be independent contractors, the penalties would be much higher than normal.
Employers can avoid tax penalties by remembering to withhold taxes from their employee's pay. Each time you withhold taxes, set aside your tax contributions. Doing this will not only help you keep track of your payroll taxes but it can also be a great reminder to continue to withhold and contribute to your employees. Payroll software has been a great help for employers to collect and calculate payroll taxes a lot easier.
To avoid paying payroll tax penalties, make sure that you are up to date with the tax deposit schedules. The flat rates of employer payroll taxes and the wage base limits are subject to change by local, state, and federal governments so it's good to get in the habit of keeping yourself updated with changes in tax laws.
Resolve Your Tax Bills
If you've found yourself in a nasty mess with the IRS, take a deep breath. Unpaid back taxes may be the biggest issue that taxpayers face, but the resolution may be very simple. For taxpayers who may have difficulty paying off an excessive amount of tax debt, there's a relief program that consolidates many major relief programs into a one-size-fits-all assistance program; The IRS Fresh Start Program.
It's a new and improved relief program that consolidates many major relief programs into a one-size-fits-all assistance program. Any issues regarding back taxes, unfiled years, or any other tax-related problems may be solved through one program; the IRS Fresh Start Program!
See if You Qualify for the Fresh Start Program Today!
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