It’s hard to believe that Q1 2017 is already in the books. It seems as though yesterday we were performing year-end processes. Many businesses have a series of processes to balance payrolls at the end of the quarter, either developed in-house over the years or checklists provided to you by your payroll provider. In case you do not, here is a list of items to assist you:
SUTA – State Unemployment Filings
In most states, rates are updated in the first quarter, so it’s a good idea to check the rates in your payroll system to make sure the current rate is stored. If you haven’t gotten a notice from your state agency this year, you should contact the unemployment taxing agency in your state. It is always best to be proactive, in order to avoid any potential penalties if your rate has gone up without you being aware of it.
The deadline for SUTA returns/deposits vary from state to state. Many states have adopted the end of the month following the quarter and do not give additional days if the last day falls on a weekend.
The Federation of Tax Administrators has a list of tax agencies by state that will provide the current website for each state.
You should also review your employees and make sure the SUTA is set in the state in which they work. Generally, unemployment is credited in the state the employee works. There are exceptions so make sure you are aware of the process for your state.
FUTA – Federal Unemployment Filings
While FUTA returns are not due until the end of the year, payments must be made on a quarterly basis, and payments should be made timely. At the end of the year, return totals should match your quarterly payments. Deposits are due on the final day of the month following quarter end unless the last day of the month falls on a weekend. Then the deposit will be due on the following Monday.
State income withholding
Deposits are dependent on the deposit frequency assigned by the state, which are based on deposit thresholds. If your tax liability exceeds $100,000 during any given tax period, your deposit MUST be deposited the next business day (i.e. if you are a monthly depositor and you process bonuses on the last day of the month, escalating your tax liability to $101,000 for the month, you are required to process the tax deposit immediately for next day payment). Some smaller and mid-size companies are unaware of this and have been penalized extensively for this oversight.
At quarter end, state 941 returns are due, and you can be penalized for not turning in a timely return. Several states also require filing zero returns, meaning if your state withholding account is in an open status and you have no tax liability, a return must still be filed. If you no longer conduct business in the state, then the return should be marked as final.
The deadline for withholding returns/deposits vary from state to state. Many states have adopted the end of the month following the quarter and do not give additional days if the last day falls on a weekend.
Federal income withholding
The Federal 941 deposits are based on the deposit requirement the IRS has assigned to you. As is the case with state withholding, the deposit frequency is based on deposit thresholds. Similar to state requirements, anytime the tax liability exceeds $100,000, the deposit must be processed immediately for next day payment in order to avoid penalties.
At the end of the quarter, Federal 941 returns are filed and you can be penalized for not turning in a timely return. At the end of the year the totals on your returns should match your deposits and all four quarters must add up to the totals on your W2’s.
If you are unclear about the requirements, it is wise to contact a tax professional for advice and assistance.
Tricia O’Neal is the Payroll & Tax Manager at Reliance Human Capital Management; she has over 20 years of experience as a payroll & tax practitioner and holds the Certified Payroll Professional (CPP) designation.