Business Taxes The form of business you operate determines what taxes you must payand how you pay them. The four general kinds of business taxes are: Income tax, Self-employment tax, Employment taxes, and Excise taxes. See Table 2 for the forms you file to report thesetaxes. TaxTip: You may want to get Publication 509. It has tax calendars that tellyou when to file returns and make tax payments. Income Tax All businesses except partnerships must file an annual income taxreturn. Partnerships file an information return. Which form you usedepends on how your business is organized. See Table 2 tofind out which return you have to file. The federal income tax is a pay-as-you-go tax. You must pay the taxas you earn or receive income during the year. An employee usually hasincome tax withheld from his or her pay. If you do not pay your taxthrough withholding, or do not pay enough tax that way, you might haveto pay estimated tax. If you are not required to make estimated taxpayments, you may pay any tax due when you file your return. Table 2 Estimated tax.Generally, you must pay taxes on income, including self-employmenttax (discussed next), by making regular payments of estimated taxduring the year. Sole proprietors, partners, and S corporation shareholders.You generally have to make estimated tax payments if you expect toowe tax of $1,000 or more when you file your return. Use Form1040-ES, Estimated Tax for Individuals, to figure andpay your estimated tax. For more information, see Publication 505,Tax Withholding and Estimated Tax. Corporations.You generally have to make estimated tax payments for yourcorporation if you expect it to owe tax of $500 or more when you fileits return. Use Form 1120-W, Estimated Tax forCorporations, to figure the estimated tax. You must deposit thepayments as explained on page 7 under Depositing Taxes. Formore information, see Publication 542. Self-Employment Tax Self-employment tax is the social security and Medicare tax forindividuals who work for themselves. Your payments of self-employmenttax contribute to your coverage under the social security system.Social security coverage provides you with retirement benefits,disability benefits, survivor benefits, and medical insurance(Medicare) benefits. You must pay self-employment tax if either of the followingapplies. Your net earnings from self-employment (excluding incomedescribed in (2) below) are $400 or more. You performed services for a church as an employee andreceived $108.28 or more. Use Schedule SE (Form 1040) to figure your self-employment tax.For more information, see Publication 533, Self-EmploymentTax. TaxTip: Deduct one-half of your self-employment tax as an adjustment toincome on your Form 1040. Social Security Administration (SSA) time limit for postingself-employment income.Generally, the SSA will give you credit only for self-employmentincome reported on a tax return filed within 3 years, 3 months, and 15days after the year you earned the income. If you file your tax returnor report a change in your self-employment income after this timelimit, SSA may change its records, but only to remove or reduce, notincrease, the amount of 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 befiled 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 agriculturalemployees, get Publication 51, Circular A, AgriculturalEmployer's Tax Guide. These publications explain your taxresponsibilities as an employer. If you are not sure whether the people working for you are youremployees, see Publication 15-A, Employer's SupplementalTax Guide. That publication has information to help youdetermine whether an individual is an employee or an independentcontractor. If you classify an employee as an independent contractor,you can be held liable for employment taxes for that worker plus apenalty. An independent contractor is someone who isself-employed. You do not generally have to withhold or pay any taxeson payments to an independent contractor. Federal Income, Social Security, and Medicare Taxes You withhold federal income tax from your employee's wages. Tofigure how much federal income tax to withhold from each wage payment,use the employee's Form W-4 (discussed later) and the methodsdescribed in Publication 15. Social security and Medicare taxes pay for benefits that workersand their families receive under the Federal Insurance ContributionsAct (FICA). Social security tax pays for benefits under the old-age,survivors, and disability insurance part of FICA. Medicare tax paysfor benefits under the hospital insurance part. You withhold part ofthese taxes from your employee's wages and you pay a matching amountyourself. To find out how much social security and Medicare tax towithhold and to pay, see Publication 15. Which form do I file?Farm employers report these taxes on Form 943, Employer'sAnnual Tax Return for Agricultural Employees. Other employersuse Form 941, Employer's Quarterly Federal Tax Return. Federal Unemployment (FUTA) Tax The federal unemployment tax is part of the federal and stateprogram under the Federal Unemployment Tax Act (FUTA) that paysunemployment compensation to workers who lose their jobs. You reportand pay FUTA tax separately from social security and Medicare taxesand 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 AnnualFederal Unemployment (FUTA) Tax Return. Or, if you qualify, youcan use the simpler Form 940-EZ instead. See Publication 15 tofind out if you can use this form. Hiring Employees When hiring employees, have them fill out Form I-9 and FormW-4. If your employees qualify for advance payments of theearned income credit, they must give you a Form W-5. Form I-9.You must verify that each new employee is legally eligible to workin the United States. Both you and the employee must complete theImmigration and Naturalization Service (INS) Form I-9,Employment Eligibility Verification. You can get the formfrom INS offices. Call the INS at1-800-755-0777 for more information aboutyour responsibilities. Form W-4.Each employee must fill out Form W-4, Employee'sWithholding Allowance Certificate. You will use the filingstatus and withholding allowances shown on this form to figure theamount of income tax to withhold from your employee's wages. Form W-5.An eligible employee who has a qualifying child is entitled toreceive advance earned income credit (EIC) payments with his or herpay during the year. To get these payments, the employee must give youa properly completed Form W-5, Earned Income Credit AdvancePayment Certificate. You are required to make advance EICpayments to employees who give you a completed and signed FormW-5. For more information, see Publication 15. Wage Reporting--Form W-2 After the calendar year is over, you must furnish copies of FormW-2, Wage and Tax Statement, to each employee to whomyou paid wages during the year. You must also send copies to theSocial Security Administration. See Information Returns,later, for more information on Form W-2. Excise Taxes This section explains the excise taxes you may have to pay and theforms 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 equipment, facilities, or products. For more information on excise taxes, see Publication 510. Form 720.The federal excise taxes reported on Form 720, QuarterlyFederal Excise Tax Return, consist of several broad categoriesincluding the following. Environmental taxes. Communications taxes. Fuel taxes. Tax on the first retail sale of heavy trucks andtrailers. Luxury tax on passenger cars. Hoteles GermaniaManufacturers' taxes on the sale or use of a variety ofdifferent products. Form 2290.There is a federal excise tax on trucks, truck tractors, and busesused on public highways. The tax applies to vehicles having a taxablegross weight of 55,000 pounds or more. Report the tax on Form 2290,Heavy Vehicle Use Tax Return. accommodation in BrackeFor more information, see theInstructions for Form 2290. Form 730.If you are in the business of accepting bets or running a bettingpool or lottery, you may be liable for the federal excise tax onwagering. Use Form 730, Tax on Wagering, to figure the taxon the bets you receive. Form 11-C.Use Form 11-C, Occupational Tax and Registration Returnfor Wagering, to register any wagering activity and to pay theoccupational 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 beliable for one or more excise taxes. Report these taxes on forms filedwith the Bureau of Alcohol, Tobacco, and Firearms (ATF). Depositing Taxes kosci zasadyYou generally have to deposit employment taxes, certain excisetaxes, corporate income tax, and S corporation taxes before you fileyour return. Mail or deliver deposits with completed deposit couponsto an authorized financial institution or a Federal Reserve bankfor your area unless you make the deposits electronically as discussedlater. To be on time, mailed deposits must arrive at the depositary by thedue date. You may be charged a penalty for not making deposits whendue, unless you have reasonable cause. TaxTip: To help ensure proper crediting of your account, include thefollowing on your check or money order. Your EIN. Type of tax. Tax period for the payment. Deposit coupons.Form 8109, Federal Tax Deposit Coupon, is used fordepositing taxes. On each coupon, you must show the deposit amount,the type of tax, the period for which you are making a deposit, andyour 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 identificationnumber (EIN), as discussed earlier, the IRS will send you the couponbook. If you have a deposit due and there is not enough time to obtaina coupon book, you can get a blank coupon (Form 8109-B) bycalling 1-800-829-1040. If you have not received your EIN and must make a deposit, mailyour payment with an explanation to the Internal Revenue ServiceCenter where you file your return. Make your check or money orderpayable to the United States Treasury. On the payment, write your name(exactly as shown on Form SS-4), address, kind of tax, periodcovered, and date you applied for an EIN. Do not use Form8109-B in this situation. Electronic deposit of taxes.hotels in TartuGenerally, taxpayers whose total deposits of social security andMedicare taxes and withheld income tax during previous years exceededcertain amounts are required to deposit taxes through the ElectronicFederal Tax Payment System (EFTPS). Taxpayers not required to make deposits by EFTPS may enroll in thesystem, which will allow tax deposits without coupons, paper checks,or visits to an authorized depositary. For more information, seePublication 15.