14-1. I started a new business. I need information on how to file Forms W-2.

First of all, Forms W-2 should be furnished to your employees by January 31. It is also your responsibility as an employer to file Forms W-2 with the Social Security Administration (SSA) for your employees, showing wages paid and taxes withheld for the year. You must send Copy A to the SSA with Form W-3 by February 28. Form W-3 shows the total of all W-2s being sent. The address is listed in the W-2 Instructions. See Tax Topic 752, Form W-2 - Where, When and How to File, or Publication 15, Circular E, Employer's Tax Guide, and Publication 393, Federal Employment Tax Forms.

14-2. One of my employees gave me a W-4 form claiming exemption from withholding. Do I have to send the W-4 to the IRS?

If you receive a Form W-4 on which an employee claims: 1) exemption from withholding and his or her wages would normally be expected to exceed $200 or more a week, or 2) more than 10 withholding allowances, you must send a copy of that W-4 to the IRS service center with your next Form 941 return or with a cover letter. The IRS will send you further instructions if it is determined that you should not honor the Form W-4. For additional information on Form W-4, see Tax Topic 753 and/or Publication 15, Circular E, Employer's Tax Guide.

14-3. How do I figure the amount of advance earned income credit to include in an employee's pay?

To figure the credit amount, use either the Tables for Percentage Method or Tables for Wage Bracket Method of Advance EIC Payments which are located in Publication 15, Circular E, Employer's Tax Guide. Add the advance earned income credit payments to the employee's net pay for the pay period. Since the EIC isn't wages, you do not withhold any income, social security, or Medicare taxes from the payment. For additional information, see Tax Topic 754, Form W-5 Advance Earned Income Credit and/or Publication 15, Circular E, Employer's Tax Guide.

14-4. How do I apply for an employer identification number (EIN)?

To obtain an EIN, you must complete Form SS-4. After you have completed the Form SS-4, you can get the EIN by mail, FAX, or by phone. The instructions for Form SS-4 provide both an IRS service center address and a phone number for Tele-TIN. For more information, see Tax Topic 755, Employer Identification Number (EIN) - How to Apply, or Publication 1635, Understanding Your EIN.

14-5. I hired a baby-sitter to care for my children in my home. Do I need to withhold taxes on her wages?

Household employees include housekeepers, maids, baby-sitters, gardeners, and others who work in or around your private residence as your employees. If you pay a household employee cash wages of $1,100 or more in a calendar year, you generally must withhold social security and Medicare taxes from all cash wages you pay to that employee. For specific information, see Tax Topic 756, Employment Taxes for Household Employees, or Publication 926, Household Employer's Tax Guide.

14-6. What is the federal unemployment tax rate for 1999?

The gross federal unemployment tax rate for 1999 remains at 6.2% and is still figured on the first $7,000 of wages you paid each employee in 1999. However, if you have timely paid state unemployment contributions on the same wages, you can be eligible for a credit. For specific information, see Tax Topic 760, Form 940/940EZ - Employer's Annual Federal Unemployment Tax Returns.

14-7. If my part-time employees receive less than $20 a month in tips, are they required to report them to me?

Employees who receive less than $20 per month in tips are not required to report the tips to the employer, but they must include them in gross income on their tax return. For additional information on tip withholding and reporting requirements, see Tax Topic 761 and/or Publication 15, Circular E, Employer's Tax Guide.

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