Summary: Quarterly contribution and wage reporting is an obligation on all US employers to account to the IRS for their employer obligations every quarter.

Do you employ workers regularly? Do they contribute to benefits programs on their own behalf, like Social Security, Medicare, and unemployment insurance? If you do, you may be required to perform quarterly contribution and wage reporting. Just what this is and what it entails is exactly what we’ll explore in this short article.

What Is A Quarterly Contribution?

A quarterly contribution to a plan is a payment to fund the plan that happens every quarter or every three months. This can include plans for mandatory insurance, like unemployment insurance required in most states, but can also be extended to health and retirement plans as required by the Employee Retirement Income Security Act of 1974 (ERISA). Even if a plan has an annual contribution, employers can often choose to contribute quarterly instead.

What is Quarterly Wage Reporting?

As with quarterly contributions, quarterly wage reporting happens once every three months for a total of four times per year. This wage reporting is used to summarize the wages paid to employees in each quarter of the year. These reports are used to determine how much is due to various state and federal programs from the employer and from the employee’s contributions as well.

In the US, this kind of reporting is generally used to show employee earnings so that state and federal unemployment programs like state unemployment tax acts (SUTA) and Federal Unemployment Tax Act (FUTA) programs receive their correct contributions.

Quarterly Contribution and Wage Reports

In most cases, both state and federal governments require employers to file combined quarterly contribution and wage reports. Thus, employers are generally responsible for reporting to both the federal government and their state bodies.

Federal Reports

The Internal Revenue Service (IRS) requires employers to submit two different reports, one annually (Form 940, Employer’s Annual Federal Unemployment (FUTA) Tax Return) and one quarterly (Form 941, Employer’s Quarterly Federal Tax Return). With Form 940, employers can report their FUTA tax liability and remit these taxes.

If the employer will have to pay more than $500 in the calendar year, they must make at least one quarterly payment, though they can choose to make all four quarterly contributions.

On Form 941, the employer reports each employee’s wages and the income, Social Security, and Medicare taxes taken from their salaries. The employer also uses this form to pay their own quarterly contributions to Social Security and Medicare.

State Reports

Each state has its own system for quarterly contributions and wage reporting. Most provide employers with a single form for this purpose, such as:

Most states enable employers to file these reports online and usually encourage electronic filing for easier document management.

Who Has to File Quarterly Contribution and Wage Reports?

The rules for who has to file quarterly reports depend on both the IRS and the individual states, with their different tax administrations.

According to the IRS, almost all employers must make reports if they paid wages of $1,500 or more to employees in any quarter or employed one or more employees for at least part of a day in 20 or more weeks in the year. Exceptions to these requirements include employers of farm workers and household employees. Seasonal employers also don’t have to file quarterly reports in quarters when they have no employees and pay no wages.

Generally, if an employer has an Employer Identification Number (EIN), then they are normally required to perform quarterly reporting, even if they did not pay wages during a quarter. 

At the state level, rules differ. Some states likewise require all employers to file quarterly reports, while others use wage thresholds or employee types to determine if an employer must file or not.

In some cases, third parties can file these reports on behalf of employers. This includes Professional Employer Organizations (PEOs) and other third-party payers.

Contents of a Quarterly Contribution and Wage Report

When you complete a quarterly contribution and wage report as an employer, there is some specific information you’re required to include. You’ll need to indicate your EIN, as this is how the IRS and many state governments recognize you as an employer.

As we’re talking about contributions and wage reporting, it should come as no surprise that you need to report all the wages and other earnings paid to your employees during the quarter. You’ll also indicate the contributions you and your employees made to Social Security and Medicare. Additionally, you’ll show the contributions that you made to unemployment taxes for your employees.

For different states, the contents of a quarterly report can vary. The DE9 for California, for example, asks employers to report their:

  • Total wages paid for the quarter
  • Unemployment insurance rate and contributions made in the quarter
  • Employment training tax paid to the state
  • State disability taxes paid
  • California personal income tax withheld from employees in the quarter

This produces a summary of the state taxes paid and lets the state body assess whether the employer is meeting their tax obligations or not based on the wages they pay their employees.

How and When Do You File Quarterly Contribution and Wage Reports?

Federal reports are based on the fiscal year and give employers time to complete their obligations even after the end of the calendar year. Quarterly reports are due to the IRS on April 30, July 31, October 31, and January 31. While many states copy this filing schedule, some don’t, so it’s important to check with your state’s revenue department to ensure you know your deadlines accurately.

Most states ask employers to file their quarterly reports online, but make provisions for those employers that prefer to file on paper. Likewise, the IRS enables convenient online filing but also gives paper options. The agencies in charge of these reports generally give useful instructions on how to file necessary reports.

Quarterly Contribution and Wage Reporting Summarized

Employers are required by federal and state laws to report on the wages they pay their employees and the withholdings they make for income, Social Security, Medicare, and unemployment taxes.

Employers need to report these wages and withholdings, as well as their own employer contributions to mandatory plans for their employees. Both state bodies and the IRS use these quarterly reports to ensure that employers are meeting their tax obligations and making necessary contributions on time.

FAQ

No, you do not need to file quarterly contribution and wage reports because you don’t pay them wages, withhold income taxes, or contribute to Social Security, Medicare, and unemployment insurance plans for them. Instead, contractors are responsible for these payments and file their own reports.

Yes, in most cases, you’ll receive a tax penalty if you don’t file your quarterly reports on time. The longer you delay, the larger this penalty will become until it reaches a maximum, which is the same as not filing.