{"id":1305,"date":"2022-09-26T13:30:03","date_gmt":"2022-09-26T13:30:03","guid":{"rendered":"https:\/\/taxreliefprofessional.com\/?p=1305"},"modified":"2023-09-25T20:17:07","modified_gmt":"2023-09-25T20:17:07","slug":"payroll-tax-penalties-and-how-to-avoid-them","status":"publish","type":"post","link":"https:\/\/taxreliefprofessional.com\/filing-taxes\/payroll-tax-penalties-and-how-to-avoid-them","title":{"rendered":"Payroll Tax Penalties and How to Avoid Them"},"content":{"rendered":"\n

You know the adage, there are two things you can count on in life, death and taxes. When it comes to payroll taxes<\/a>, the IRS doesn’t mess around.<\/p>\n\n\n\n

These payroll taxes, known as trust fund taxes, are expected on time by the IRS. In fact, they reserve some of the harshest IRS penalties for those who don’t pay payroll taxes on time.<\/p>\n\n\n\n

All businesses need to pay payroll taxes, sometimes even if you’re hiring freelancers.<\/p>\n\n\n\n

Failure to get the payroll tax submitted to the IRS promptly can quickly add up to a hefty bill with the IRS in payroll tax penalties.<\/p>\n\n\n\n

Read on to learn more about the penalties that come from unpaid payroll taxes and how to avoid them.<\/p>\n\n\n\n

What Are Unpaid Payroll Tax Penalties?<\/h2>\n\n\n\n

Let’s start with a general understanding of unpaid payroll tax penalties<\/a> or employment tax penalties. These are penalties issued by the government; typically, the IRS for not paying the required taxes taken from employee wages.<\/p>\n\n\n\n

When an employer calculates wages, they must remove certain federal and state taxes for things like social security and unemployment. Then they must submit these taxes to the IRS.<\/p>\n\n\n\n

If an employer either doesn’t take the taxes out or takes them out and doesn’t pay them to the IRS on time, the employer can face these stiff penalties.<\/p>\n\n\n\n

Failure to pay can occur for any number of reasons, including incorrect calculations, missed deadlines, and improper reporting. Whatever the reason, the penalties can add up quickly from the IRS and should be avoided if possible.<\/p>\n\n\n\n

How to Avoid Payroll Tax Penalties<\/h2>\n\n\n\n

So, what can an employer do to ensure they pay the required payroll tax on time? It may depend on what’s causing the employer to pay late.<\/p>\n\n\n\n

Let’s take a closer look at some things you can do to ensure those payroll taxes are paid on time.<\/p>\n\n\n\n

Budget for Tax Payments<\/h3>\n\n\n\n

The idea that you need to set up a budget for tax payments may seem almost simplistic, yet many businesses just fail to plan for the payment of these taxes. This is especially true for a small business.<\/p>\n\n\n\n

When you budget for your business, you need to consider the number of employees you have and what you generally are expected to pay in payroll taxes each month.<\/p>\n\n\n\n

Then make sure this is a part of your monthly expenditure budget.<\/p>\n\n\n\n

Automate Payroll<\/h3>\n\n\n\n

For many businesses, even small ones, the best solution to assist with payroll and the associated taxes is to automate their payroll system.<\/p>\n\n\n\n

There are many different types of programs your business can use to automate payroll calculations and will also handle your tax payments.<\/p>\n\n\n\n

Generally, these payroll systems make handling payroll much simpler and more streamlined once set up. It helps businesses avoid problems and miss payments.<\/p>\n\n\n\n

Keep Up With IRS Requirements<\/h3>\n\n\n\n

Employer liabilities include ensuring you know all the expectations of the IRS. The IRS regularly provides information to employers about what is expected of them. This might include information related to:<\/p>\n\n\n\n

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  • Publishing news releases<\/li>\n\n\n\n
  • Tax return news<\/li>\n\n\n\n
  • Tax law updates<\/li>\n\n\n\n
  • Tax tips<\/li>\n\n\n\n
  • Form deadlines<\/li>\n<\/ul>\n\n\n\n

    Paying attention to the information the IRS is pushing out to you as a business will help to avoid you not doing what they expect.<\/p>\n\n\n

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    \n Evaluate your tax situation\n <\/h2>\n

    \n By evaluating your tax situation, you can identify areas where you may be able to reduce your tax burden and make informed decisions about your financial future.\n <\/p>\n \n \n\n\n

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