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Publication 15

(Circular E), Employer's Tax Guide


What's New(p1)

Future developments.(p1)
The IRS has created a page on for information about Publication 15 (Circular E), at Information about any future developments affecting Publication 15 (Circular E) (such as legislation enacted after we release it) will be posted on that page.
Social security and Medicare tax for 2012.(p1)
The employee tax rate for social security is 4.2% on wages paid and tips received before March 1, 2012. The employee tax rate for social security increases to 6.2% on wages paid and tips received after February 29, 2012. The employer tax rate for social security remains unchanged at 6.2%. The social security wage base limit is $110,100. The Medicare tax rate is 1.45% each for the employee and employer, unchanged from 2011. There is no wage base limit for Medicare tax.
Employers should implement the 4.2% employee social security tax rate as soon as possible, but not later than January 31, 2012. After implementing the 4.2% rate, employers should make an offsetting adjustment in a subsequent pay period to correct any overwithholding of social security tax as soon as possible, but not later than March 31, 2012.
Social security and Medicare taxes apply to the wages of household workers you pay $1,800 or more in cash or an equivalent form of compensation. Social security and Medicare taxes apply to election workers who are paid $1,500 or more in cash or an equivalent form of compensation.
At the time this publication was prepared for release, the rate for the employee's share of social security tax was 4.2% and scheduled to increase to 6.2% for wages paid after February 29, 2012. However, Congress was discussing an extension of the 4.2% employee tax rate for social security beyond February 29, 2012. Check for updates at
2012 withholding tables.(p2)
This publication includes the 2012 Percentage Method Tables and Wage Bracket Tables for Income Tax Withholding.
VOW to Hire Heroes Act of 2011.(p2)
On November 21, 2011, the President signed into law the VOW to Hire Heroes Act of 2011. This new law provides an expanded work opportunity tax credit to businesses that hire eligible unemployed veterans and, for the first time, also makes part of the credit available to tax-exempt organizations. Businesses claim the credit as part of the general business credit and tax-exempt organizations claim it against their payroll tax liability. The credit is available for eligible unemployed veterans who begin work on or after November 22, 2011, and before January 1, 2013. More information about the credit against a tax-exempt organization's payroll tax liability will be available early in 2012 at
FUTA tax rate.(p2)
The FUTA tax rate is 6.0% for 2012.
Expiration of Attributed Tip Income Program (ATIP).(p2)
The Attributed Tip Income Program (ATIP) is scheduled to expire on December 31, 2011.
Withholding allowance.(p2)
The 2012 amount for one withholding allowance on an annual basis is $3,800.
Change of address.(p2)
Beginning in 2012, employers must use new Form 8822-B, Change of Address—Business, for any address change.



COBRA premium assistance credit.(p2)

The credit for COBRA premium assistance payments applies to premiums paid for employees involuntarily terminated between September 1, 2008, and May 31, 2010, and to premiums paid for up to 15 months. See COBRA premium assistance credit under Introduction.

Federal tax deposits must be made by electronic funds transfer.(p2)

You must use electronic funds transfer to make all federal tax deposits. Generally, electronic fund transfers are made using the Electronic Federal Tax Payment System (EFTPS). If you do not want to use EFTPS, you can arrange for your tax professional, financial institution, payroll service, or other trusted third party to make deposits on your behalf. Also, you may arrange for your financial institution to initiate a same-day wire payment on your behalf. EFTPS is a free service provided by the Department of Treasury. Services provided by your tax professional, financial institution, payroll service, or other third party may have a fee.
For more information on making federal tax deposits, see How To Deposit in section 11. To get more information about EFTPS or to enroll in EFTPS, visit or call 1-800-555-4477. Additional information about EFTPS is also available in Publication 966, The Secure Way to Pay Your Federal Taxes.

Aggregate Form 941 filers.(p2)

Agents must complete Schedule R (Form 941), Allocation Schedule for Aggregate Form 941 Filers, when filing an aggregate Form 941, Employer's QUARTERLY Federal Tax Return. Aggregate Forms 941 may only be filed by agents approved by the IRS under section 3504 of the Internal Revenue Code. To request approval to act as an agent for an employer, the agent files Form 2678, Employer/Payer Appointment of Agent, with the IRS.

Aggregate Form 940 filers.(p2)

Agents must complete Schedule R (Form 940), Allocation Schedule for Aggregate Form 940 Filers, when filing an aggregate Form 940, Employer's Annual Federal Unemployment (FUTA) Tax Return. Aggregate Forms 940 can be filed by agents acting on behalf of home care service recipients who receive home care services through a program administered by a federal, state, or local government. To request approval to act as an agent on behalf of home care service recipients, the agent files Form 2678 with the IRS.

Employers can choose to file Forms 941 instead of Form 944.(p2)

If you previously were notified to file Form 944, Employer's ANNUAL Federal Tax Return, but want to file quarterly Forms 941 to report your social security, Medicare and withheld federal income taxes, you must first contact the IRS to request to file Forms 941, rather than Form 944. See Rev. Proc. 2009-51, 2009-45 I.R.B 625, for the procedures for employers who previously were notified to file Form 944 to request to file Forms 941 instead. In addition, Rev. Proc. 2009-51 provides the procedures for employers to request to file Form 944. Rev. Proc. 2009-51 is available at Also see the Instructions for Form 944.

Electronic Filing and Payment(p2)

Now, more than ever before, businesses can enjoy the benefits of filing and paying their federal taxes electronically. Whether you rely on a tax professional or handle your own taxes, the IRS offers you convenient programs to make filing and payment easier.
Spend less time and worry on taxes and more time running your business. Use e-file and the Electronic Federal Tax Payment System (EFTPS) to your benefit.

Electronic funds withdrawal (EFW).(p2)

If you file Form 940, Form 941, or Form 944 electronically, you can e-file and e-pay (electronic funds withdrawal) the balance due in a single step using tax preparation software or through a tax professional. However, do not use EFW to make federal tax deposits. For more information on paying your taxes using EFW, visit the IRS website at A fee may be charged to file electronically.

Credit and debit card payments.(p3)

For information on paying your taxes with a credit or debit card, visit the IRS website at

Forms in Spanish(p3)

You can provide Formulario W-4(SP), Certificado de Exención de Retenciones del Empleado, in place of Form W-4, Employee's Withholding Allowance Certificate, to your Spanish-speaking employees. For more information, see Publicación 17(SP), El Impuesto Federal sobre los Ingresos (Para Personas Físicas). For nonemployees, Formulario W-9(SP), Solicitud y Certificación del Número de Identificación del Contribuyente, may be used in place of Form W-9, Request for Taxpayer Identification Number and Certification.

Hiring New Employees(p3)


Eligibility for employment.(p3)

You must verify that each new employee is legally eligible to work in the United States. This will include completing the U.S. Citizenship and Immigration Services (USCIS) Form I-9, Employment Eligibility Verification. You can get the form from USCIS offices or by calling 1-800-870-3676. Contact the USCIS at 1-800-375-5283, or visit the USCIS website at for more information.

New hire reporting.(p3)

You are required to report any new employee to a designated state new hire registry. Many states accept a copy of Form W-4 with employer information added. Visit the Office of Child Support Enforcement website at for more information.

W-4 request.(p3)

Ask each new employee to complete the 2012 Form W-4. See section 9.

Name and social security number.(p3)

Record each new employee's name and number from his or her social security card. Any employee without a social security card should apply for one. See section 4.

Paying Wages, Pensions, or Annuities(p3)


Correcting Form 941 or Form 944.(p3)

If you discover an error on a previously filed Form 941 or Form 944, make the correction using Form 941-X, Adjusted Employer's QUARTERLY Federal Tax Return or Claim for Refund, or Form 944-X, Adjusted Employer's ANNUAL Federal Tax Return or Claim for Refund. Forms 941-X and 944-X are stand-alone forms, meaning taxpayers can file them when an error is discovered. Forms 941-X and 944-X are used by employers to claim refunds or abatements of employment taxes, rather than Form 843. See section 13 for more information.

Income tax withholding.(p3)

Withhold federal income tax from each wage payment or supplemental unemployment compensation plan benefit payment according to the employee's Form W-4 and the correct withholding table. If you have nonresident alien employees, see Withholding income taxes on the wages of nonresident alien employees in section 9.
Withhold from periodic pension and annuity payments as if the recipient is married claiming three withholding allowances, unless he or she has provided Form W-4P, Withholding Certificate for Pension or Annuity Payments, either electing no withholding or giving a different number of allowances, marital status, or an additional amount to be withheld. Do not withhold on direct rollovers from qualified plans or governmental section 457(b) plans. See section 9 and Publication 15-A, Employer's Supplemental Tax Guide. Publication 15-A includes information about withholding on pensions and annuities.

Zero wage return.(p4)

If you have not filed a "final" Form 941 or Form 944, or are not a "seasonal" employer, you must continue to file a Form 941 or Form 944 even for periods during which you paid no wages. IRS encourages you to file your "Zero Wage" Forms 941 or 944 electronically using IRS e-file at

Employer Responsibilities

Employer Responsibilities: The following list provides a brief summary of your basic responsibilities. Because the individual circumstances for each employer can vary greatly, responsibilities for withholding, depositing, and reporting employment taxes can differ. Each item in this list has a page reference to a more detailed discussion in this publication.
 New Employees:Page  Page
Verify work eligibility of new employees3 Annually (By January 31 of the current year, for the prior year): 
Record employees' names and SSNs from File Form 944 if required (pay tax with return if 
 social security cards3  not required to deposit)24
Ask employees for Form W-43 Annually (see Calendar for due dates):
 Each Payday: Remind employees to submit a new Form W-4 
Withhold federal income tax based on each  if they need to change their withholding16
 employee's Form W-416Ask for a new Form W-4 from employees 
Withhold employee's share of social security  claiming exemption from income tax 
 and Medicare taxes19 withholding17
Deposit: Reconcile Forms 941 (or Form 944) with Forms 
 • Withheld income tax  W-2 and W-325
 • Withheld and employer social security taxes Furnish each employee a Form W-26
 • Withheld and employer Medicare taxes20File Copy A of Forms W-2 and the transmittal 
 Note: Due date of deposit generally depends on  Form W-3 with the SSA7
 your deposit schedule (monthly or semiweekly) Furnish each other payee a Form 1099 (for 
 Quarterly (By April 30, July 31, October 31,
and January 31):
  example, Form 1099-MISC, Miscellaneous Income6
Deposit FUTA tax if undeposited amount File Forms 1099 and the transmittal Form 
 is over $50029  10967
File Form 941 (pay tax with return if not File Form 9406
  required to deposit)24File Form 945 for any nonpayroll income tax 

Information Returns(p4)

You may be required to file information returns to report certain types of payments made during the year. For example, you must file Form 1099-MISC, Miscellaneous Income, to report payments of $600 or more to persons not treated as employees (for example, independent contractors) for services performed for your trade or business. For details about filing Forms 1099 and for information about required electronic filing, see the 2012 General Instructions for Certain Information Returns for general information and the separate, specific instructions for each information return you file (for example, 2012 Instructions for Form 1099-MISC). Do not use Forms 1099 to report wages and other compensation you paid to employees; report these on Form W-2. See the Instructions for Forms W-2 and W-3 for details about filing Form W-2 and for information about required electronic filing. If you file 250 or more Forms 1099, you must file them electronically. If you file 250 or more Forms W-2, you must file them electronically. SSA will not accept Forms W-2 and W-3 filed on magnetic media.

Information reporting customer service site.(p4)

The IRS operates the Enterprise Computing Center-Martinsburg, a centralized customer service site, to answer questions about reporting on Forms W-2, W-3, 1099, and other information returns. If you have questions related to reporting on information returns, call 1-866-455-7438 (toll free) or 304-263-8700 (toll call). The center can also be reached by email at Call 304-267-3367 if you are a TDD/TYY user.

Nonpayroll Income Tax Withholding(p4)

Nonpayroll federal income tax withholding (reported on Forms 1099 and Form W-2G) must be reported on Form 945, Annual Return of Withheld Federal Income Tax. Separate deposits are required for payroll (Form 941 or Form 944) and nonpayroll (Form 945) withholding. Nonpayroll items include:
For details on depositing and reporting nonpayroll income tax withholding, see the Instructions for Form 945.
All income tax withholding reported on Form W-2 must be reported on Form 941, Form 943, Form 944, or Schedule H (Form 1040).

Distributions from nonqualified pension plans and deferred compensation plans.(p4)

Because distributions to participants from some nonqualified pension plans and deferred compensation plans (including section 457(b) plans of tax-exempt organizations) are treated as wages and are reported on Form W-2, income tax withheld must be reported on Form 941 or Form 944, not on Form 945. However, distributions from such plans to a beneficiary or estate of a deceased employee are not wages and are reported on Forms 1099-R; income tax withheld must be reported on Form 945.

Backup withholding.(p4)

You generally must withhold 28% of certain taxable payments if the payee fails to furnish you with his or her correct taxpayer identification number (TIN). This withholding is referred to as "backup withholding."
Payments subject to backup withholding include interest, dividends, patronage dividends, rents, royalties, commissions, nonemployee compensation, and certain other payments you make in the course of your trade or business. In addition, transactions by brokers and barter exchanges and certain payments made by fishing boat operators are subject to backup withholding.
Backup withholding does not apply to wages, pensions, annuities, IRAs (including simplified employee pension (SEP) and SIMPLE retirement plans), section 404(k) distributions from an employee stock ownership plan (ESOP), medical savings accounts, health savings accounts, long-term-care benefits, or real estate transactions.
You can use Form W-9 or Formulario W-9(SP) to request payees to furnish a TIN and to certify the number furnished is correct. You can also use Form W-9 or Formulario W-9(SP) to get certifications from payees that they are not subject to backup withholding or that they are exempt from backup withholding. The Instructions for the Requester of Form W-9 or Formulario W-9(SP) includes a list of types of payees who are exempt from backup withholding. For more information, see Publication 1281, Backup Withholding for Missing and Incorrect Name/TIN(s).


Keep all records of employment taxes for at least 4 years. These should be available for IRS review. Your records should include the following information.

Change of Address(p5)

To notify the IRS of a new business mailing address or business location, file 8822-B, Change of Address—Business. Do not mail Form 8822-B with your employment tax return.

Private Delivery Services(p5)

You can use certain private delivery services designated by the IRS to mail tax returns and payments. The list includes only the following:
Your private delivery service can tell you how to get written proof of the mailing date.
Private delivery services cannot deliver items to P.O. boxes. You must use the U.S. Postal Service to mail any item to an IRS P.O. box address.

Telephone Help(p5)


Tax questions.(p5)

You can call the IRS Business and Specialty Tax Line with your employment tax questions at 1-800-829-4933.

Help for people with disabilities.(p5)

Telephone help is available using TTY/TDD equipment. You may call 1-800-829-4059 with any tax question or to order forms and publications. You may also use this number for assistance with unresolved tax problems.

Recorded tax information (TeleTax).(p5)

The IRS TeleTax service provides recorded tax information on topics that answer many individual and business federal tax questions. You can listen to up to three topics on each call you make. Touch-Tone service is available 24 hours a day, 7 days a week. TeleTax topics are also available on the IRS website at
A list of employment tax topics is provided below. Select, by number, the topic you want to hear and call 1-800-829-4477. For the directory of all topics, select
Topic 123.
Teletax Topics
(These topics are available in Spanish)
751Social Security and Medicare Withholding Rates
 (Tasas de retención del seguro social y Medicare, Tema)
752Form W-2—Where, When, and How to File
 (Dónde, Cuándo y Cómo Presentar El La Formulario W-2)
753Form W-4—Employee's Withholding Allowance Certificate
 (Formulario W-4(SP)—Certificado de Excensión de Retenciones del Empleado)
755Employer Identification Number (EIN)—How to Apply
 (Como Solicitar Un Número de Identificación Patronal (EIN))
756Employment Taxes for Household Employees
 (Impuestos Patronales para Empleados Domésticos)
757Form 941 and Form 944—Deposit Requirements
 (Formulario 941 and Formulario 944—Requisitos de Depósito)
758Form 941—Employer's QUARTERLY Federal Tax Return and Form 944—Employer's ANNUAL Federal Tax Return
 (Formulario 941-PR—Planilla para la Declaración Federal TRIMESTRAL del Patrono) (Formulario 944-PR-Planilla para la Declaración Federal ANUAL del Patrono)
759A New Tax Exemption and Business Credit are Available for Qualified Employers Under "The HIRE Act" of 2010
 (Nueva exención tributaria y crédito comercial para empleadores calificados disponibles bajo la Ley de Incentivos para la Contratación y Recuperación del Empleo del 2010 (HIRE, por sus siglas en inglés))
760FICA Tax Refunds for "Medical Residents"—Employee Claims
 (Ley de Impuestos al Seguro Social—Reclamaciones de reembolsos e impuestos para médicos residentes que son empleados)
761Tips—Withholding and Reporting
 (Propinas—Declaración y Retención)
762Independent Contractor vs. Employee
 (Contratista Independiente vs. Empleado)
763The "Affordable Care Act" of 2010 Offers Employers New Tax Deductions and Credits
 (Ley de Cuidado de Salud a Costo Asequible del 2010 ofrece a los empleadores deducciones y créditos tributarios nuevos)

Additional employment tax information.(p5)

Visit the IRS website at and click on the Employment Taxes link.

Ordering Employer Tax Products(p5)

You can order employer tax products and information returns online at To order 2011 and 2012 forms, select "Online Ordering for Information Returns and Employer Returns." You may also order employer tax products and information returns by calling 1-800-829-3676.
Instead of ordering paper Forms W-2 and W-3, consider filing them electronically using the Social Security Administration's (SSA) free e-file service. Visit the SSA's Employer W-2 Filing Instructions & Information website at, select "Electronically File Your W-2s," and provide registration information. You will be able to create Forms W-2 online and submit them to the SSA by typing your wage information into easy-to-use fill-in fields. In addition, you can print out completed copies of Forms W-2 to file with state or local governments, distribute to your employees, and keep for your records. Form W-3 will be created for you based on your
Forms W-2.

Contacting Your Taxpayer Advocate(p6)

The Taxpayer Advocate Service (TAS) is an independent organization within the IRS whose employees assist taxpayers who are experiencing economic harm, who are seeking help in resolving tax problems that have not been resolved through normal channels, or who believe an IRS system or procedure is not working as it should.
You can contact TAS by calling the TAS toll-free case intake line at 1-877-777-4778 to see if you are eligible for assistance. You can also call or write to your local taxpayer advocate, whose phone number and address are listed in your local telephone directory and in Publication 1546, Taxpayer Advocate Service – Your Voice at the IRS. You can file Form 911, Request for Taxpayer Advocate Service Assistance (And Application for Taxpayer Assistance Order), or ask an IRS employee to complete it on your behalf. For more information, go to

Filing Addresses(p6)

Generally, your filing address for Forms 940, 941, 943, 944, 945, and CT-1 depends on the location of your residence or principal place of business and whether or not you are including a payment with your return. There are separate filing addresses for these returns if you are a tax-exempt organization or government entity. If you are located in the United States and do not include a payment with your return, you should file at either the Cincinnati or Ogden Service Centers. See the separate instructions for Forms 940, 941, 943, 944, 945, or CT-1 for the filing addresses or "Where To File" on the IRS website at

Photographs of Missing Children(p6)

The Internal Revenue Service is a proud partner with the National Center for Missing and Exploited Children. Photographs of missing children selected by the Center may appear in this publication on pages that would otherwise be blank. You can help bring these children home by looking at the photographs and calling 1-800-THE-LOST (1-800-843-5678) if you recognize a child.

Comments and Suggestions(p6)

We welcome your comments about this publication and your suggestions for future editions. You can email us at Please put "Publication 15" on the subject line.
You can write to us at the following address:

Internal Revenue Service
Business Forms and Publications Branch
1111 Constitution Ave. NW, IR-6526
Washington, DC 20224

We respond to many letters by telephone. Therefore, it would be helpful if you would include your daytime phone number, including the area code, in your correspondence.