Employment Taxes, Worker Status and Reporting

An employer's payroll duties for 2025: FICA and FUTA, deposit schedules, Forms 941, 944 and 940, supplemental wage and backup withholding, worker classification and section 530 relief, accountable plans, information returns and record keeping. The SEE tests deposit rules, due dates and short FICA or FUTA computations.

Business Tax Preparation4 min read7 sections

Must-know for the exam

Monthly depositor if lookback-period Form 941 taxes were $50,000 or less; the 2025 lookback period is July 1, 2023 to June 30, 2024 (Treas. Reg. 31.6302-1(b); Pub. 15 (2025)).
Accumulating $100,000 on any day requires deposit by the next business day and makes a monthly depositor semiweekly (Treas. Reg. 31.6302-1(c)(3)).
A quarterly liability under $2,500 may be paid with a timely Form 941 (Treas. Reg. 31.6302-1(f)(4); Pub. 15 (2025)).
Form 941 is due the last day of the month after the quarter, with 10 extra days if all deposits were timely (Treas. Reg. 31.6071(a)-1).
Employer FICA for 2025 is 6.2% on wages up to $176,100 plus 1.45% on all wages; the 0.9% Additional Medicare Tax has no employer match (IRC 3111; Pub. 15 (2025)).
FUTA is 6.0% of the first $7,000 per employee, usually 0.6% net after the 5.4% state credit, reported on Form 940 (IRC 3301, 3302, 3306(b)(1)).
The trust fund recovery penalty equals 100% of unpaid withheld income tax and employee FICA, assessed on willful responsible persons (IRC 6672(a)).
Supplemental wages: optional 22% flat rate up to $1 million; mandatory 37% above it (Treas. Reg. 31.3402(g)-1).
Backup withholding is 24%; Form 1099-NEC is required for $600 or more paid in 2025; the $2,000 threshold starts in 2026 (IRC 3406, 6041 as amended by P.L. 119-21).
Keep employment tax records at least 4 years after the tax is due or paid, whichever is later (Treas. Reg. 31.6001-1(e)(2)).

On this page · 7 sections

Traps that cost marks

Confusing the $50,000 lookback test with the $100,000 next-day rule.
Following the monthly schedule after accumulating $100,000.
Assuming small liabilities need no return.
Using the 15th-of-the-month pattern of income tax returns.
Withholding FUTA from employee wages.
Including the employer's share of FICA in the trust fund penalty.
Treating the contract label as decisive.
Relying on a signed contractor agreement for relief.

Why it matters on the exam

Payroll errors are costly because withheld taxes belong to the government. The SEE asks who is an employee, when deposits are due, which return reports what, and how much an employer owes. Many distractors are real figures attached to the wrong rule, such as 22% versus 24% withholding or $600 versus $2,000.

Pub. 15 in the source set is a 2026 edition; the 2025 figures here come from the bank and Rev. Proc. 2024-40 or are fixed in the Code.

Deposits and returns

Look back — Total Form 941 taxes from July 1, 2023 to June 30, 2024.
$50,000 or less — Monthly depositor: deposit by the 15th of the next month.
More than $50,000 — Semiweekly depositor.
$100,000 on any day — Deposit by the next business day; semiweekly from then on.
Under $2,500 a quarter — May pay with the timely filed return.

Treas. Reg. 31.6302-1; Pub. 15 (2025).

•Form 941 quarterly: due April 30, July 31, October 31 and January 31.

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Business Tax Preparation