Social security and Medicare tax for 2011.   The employee tax rate for social security is 4.2%. The employer tax rate for social security remains unchanged at 6.2%. The Medicare tax rate is 1.45% each for employers and employees.

  Do not withhold or pay social security tax after an employee reaches $106,800 in social security wages for the year. There is no limit on the amount of wages subject to Medicare tax.

Section 3121(q) Notice and Demand—Tax due on unreported tips.   A new line has been added to Form 941 for reporting social security and Medicare taxes on unreported tips. An employer now reports the amount of the taxes shown on the Section 3121(q) Notice and Demand on line 5e of the employer's Form 941 for the calendar quarter in which notice and demand is made. Previously, a section 3121(q) liability was reported on the line for “Current quarter's adjustments for tips and group-term life insurance.”

Qualified employer's social security tax exemption expired.   The qualified employer's exemption for their share (6.2%) of social security tax on wages/tips paid to qualified employees expired on December 31, 2010.

COBRA premium assistance credit.   The credit for COBRA premium assistance payments applies to premiums paid for employees involuntarily terminated between September 1, 2008, and May 31, 2010, and to premiums paid for up to 15 months. See COBRA Premium Assistance Payments on page 7.

Advance payment of earned income credit (EIC).   The option of receiving advance payroll payments of EIC is no longer available after December 31, 2010. Individuals eligible for EIC in 2011 can still claim the credit when they file their federal income tax return. Individuals who received advance payments of EIC in 2010 must file a 2010 federal income tax return.

Federal tax deposits must be made by electronic funds transfer.   Beginning January 1, 2011, you must use electronic funds transfer to make all federal tax deposits (such as deposits of employment tax, excise tax, and corporate income tax). Forms 8109 and 8109-B, Federal Tax Deposit Coupon, cannot be used after December 31, 2010. Generally, electronic funds transfers are made using the Electronic Federal Tax Payment System (EFTPS). If you do not want to use EFTPS, you can arrange for your tax professional, financial institution, payroll service, or other trusted third party to make deposits on your behalf. Also, you may arrange for your financial institution to initiate a same-day wire payment on your behalf. EFTPS is a free service provided by the Department of Treasury. Services provided by your tax professional, financial institution, payroll service, or other third party may have a fee.

  For more information on making federal tax deposits, see section 11 of Pub. 15 (Circular E), Employer's Tax Guide (for use in 2011). To get more information about EFTPS or to enroll in EFTPS, visit www.eftps.gov or call 1-800-555-4477. Additional information about EFTPS is also available in Publication 966, The Secure Way to Pay Your Federal Taxes.

Employers can choose to file Forms 941 instead of Form 944.   Employers that would otherwise be required to file Form 944, Employer's ANNUAL Federal Tax Return, can notify the IRS if they want to file quarterly Forms 941 instead of annual Form 944. See Rev. Proc. 2009-51 2009-45 I.R.B. 625, available at  
www.irs.gov/irb/2009-45_IRB/ar12.html.

Correcting a previously filed Form 941.   If you discover an error on a previously filed Form 941, make the correction using Form 941-X, Adjusted Employer's QUARTERLY Federal Tax Return or Claim for Refund. Form 941-X is filed separately from Form 941. For more information, see section 13 of Pub. 15 (Circular E) or visit IRS.gov and enter the keywords Correcting Employment Taxes.

Paid preparers must sign Form 941.   Paid preparers must complete and sign the paid preparer's section of Form 941.

Aggregate Form 941 filers.   Agents must complete Schedule R (Form 941), Allocation Schedule for Aggregate Form 941 Filers, when filing an aggregate Form 941. Aggregate Forms 941 are filed by agents approved by the IRS under section 3504. To request approval to act as an agent for an employer, the agent files Form 2678, Employer/Payer Appointment of Agent, with the IRS.

Electronic filing and payment.   Now, more than ever before, businesses can enjoy the benefits of filing and paying their federal taxes electronically. Whether you rely on a tax professional or handle your own taxes, the IRS offers you convenient programs to make filing and paying easier. Spend less time and worry on taxes and more time running your business. Use e-file and the Electronic Federal Tax Payment System (EFTPS) to your benefit.

  

For an EFTPS deposit to be on time, you must initiate the deposit by 8 p.m. Eastern time the day before the date the deposit is due.

Credit or debit card payments.   Employers can pay the balance due shown on Form 941 by credit or debit card. Do not use a credit or debit card to make federal tax deposits. For more information on paying your taxes with a credit or debit card, visit the IRS website at www.irs.gov/e-pay.

Employer's liability.   Employers are responsible to ensure that tax returns are filed and deposits and payments are made, even if the employer contracts with a third party. The employer remains liable if the third party fails to perform a required action.

Where can you get telephone help?   You can call the IRS Business and Specialty Tax Line toll free at 1-800-829-4933, Monday through Friday from 7 a.m. to 10 p.m. local time (Alaska and Hawaii follow Pacific time) for answers to your questions about completing Form 941, tax deposit rules, or obtaining an employer identification number (EIN).

Photographs of missing children.   The Internal Revenue Service is a proud partner with the National Center for Missing and Exploited Children. Photographs of missing children selected by the Center may appear in instructions on pages that would otherwise be blank. You can help bring these children home by looking at the photographs and calling 1-800-THE-LOST (1-800-843-5678) if you recognize a child.