What is Circular E?
Circular E, officially titled “Publication 15 (Circular E), Employer’s Tax Guide,” is a document published by the Internal Revenue Service (IRS) in the United States. It provides comprehensive guidance for employers on their federal tax responsibilities related to withholding, depositing, reporting, and paying employment taxes.
Key points about Circular E
- Employer’s Tax Guide: Circular E guides employers on various aspects of federal employment taxes. It includes information on income tax withholding, Social Security and Medicare taxes (FICA), federal unemployment tax (FUTA), and other related topics.
- Tax Withholding Tables: One of the crucial features of Circular E is the set of tax withholding tables included within the publication. These tables help employers determine the amount of federal income tax to withhold from employees’ wages based on factors such as filing status and allowances claimed.
- Employment Tax Due Dates: The circular provides information on the due dates for depositing employment taxes, filing tax returns, and other important deadlines that employers need to be aware of to stay in compliance with federal tax regulations.
- Reporting Requirements: The publication outlines the reporting requirements for employers, including the completion and filing of various forms such as Form 941 (Employer’s Quarterly Federal Tax Return) and Form 940 (Employer’s Annual Federal Unemployment (FUTA) Tax Return).
- Depositing Taxes: The circular guides the electronic deposit requirements for employment taxes. Employers are typically required to deposit withheld taxes electronically through the Electronic Federal Tax Payment System (EFTPS).
- Changes and Updates: The IRS updates the circular annually to reflect tax laws, rates, and other relevant information changes. Employers are advised to use the most recent version of the publication to ensure compliance with current regulations.
- Online Access: Employers can access the circular on the IRS website. The online version includes links to additional resources, forms, and instructions related to employment taxes.
Conclusion
Circular E is an essential resource for employers to understand their federal tax obligations, calculate tax withholding, and meet reporting and payment deadlines. Employers are encouraged to consult the circular regularly, especially when there are updates or changes in tax laws, to ensure accurate and compliant handling of employment taxes.