IRS Form 941, Employer’s Quarterly Federal Tax Return: Filing Instructions and Tips You Need to Know

Regardless of whether you own and operate a small business or a multibillion-dollar corporation, if you pay employees a wage, you have to file Form 941. The IRS is diligent in the way it keeps track of employee wages and how much needs to be taken out of those wages in the form of taxes. Form 941 must be filed on a quarterly basis (every 3 months) every year. However, if you have employees whose annual payroll tax withholding liabilities are less than $1,000, you may be able to file on an annual rather than quarterly basis.

What is Form 941?

There are a few different wage-related taxes you need to report on Form 941:

  • Withholding taxes: These are taxes that are withheld from your employees’ income. You’re responsible for withholding these taxes from your employees’ paychecks. How much you withhold depends on how many withholdings the employee claimed on his or her Form W-4.
  • Employer taxes: These are taxes paid by you.
  • Shared taxes: FICA taxes include taxes withheld for Social Security and Medicaid. You’ll withhold and remit the employee’s portion.

As a business operator, you are required to file Form 941 on a quarterly basis for all of your employees. The four-page form notifies the IRS of your employees’ taxable income and liability every quarter, reporting the withholdings for federal income tax and Social Security/Medicare taxes. Seasonal employees do not require Form 941 to be filed if, and only if, they don’t work one or more quarters. All businesses are expected to file this form at the end of April, July, October, and January.

Form 941 Filing Deadlines

All businesses are expected to file this form at the end of April, July, October, and January. The due dates are:

  • April 30
  • July 31
  • October 31
  • January 31

If the due date of Form 941 falls on a holiday or a weekend, the date will be pushed to the next business day. For example, if the due date were to fall on the 4th of July, it would get pushed to the 5th if it were a non-weekend day.

How is Form 941 Different from Form 944?

Form 941 and Form 944 are very similar, since they both report FICA and income tax withholding. The main difference between the two forms is the amount of taxes owed by the company filing.

Most small businesses file Form 941 on a quarterly basis. But small businesses whose annual FICA and withholding taxes are less than $1,000 can file Form 944. Unlike Form 941, Form 944 only has to be filed once per year.

Form 941 Instructions

Filling out and completing your Form 941 is a relatively straightforward task. You’ll be expected to provide the following information:

  • The number of people you employ
  • The employee IDs of all of your employees
  • The total wages you paid each employee
  • The amount of taxes you’ve withheld
  • Payroll records
  • Documentation for any taxable tips your employee’s report
  • The total amount that you need to send to the IRS

Form 941 Calculations

Here are some general calculations that will help you determine your tax liability for the several different kinds of taxes on Form 941.

Income Tax Withholding

[Employee’s Tax Rate] x [total wages paid for the quarter]

  • How to determine an employee’s tax rateTheir tax rate is determined by their filing status and annual earnings
  • How to determine total wages paid for the quarter:Divide your employee’s annual wages by 4.

Social Security Tax

[12.4% Social Security Tax Rate] x [number of employees] x [wages up to $132,900 per employee]Note that the Social Security tax only applies to the first $132,900 of an employee’s wages.

Medicare Tax

[2.9% Medicare Tax Rate] x [total taxable wages]Employees earning a fixed income must pay an additional 0.9% Medicare tax on earnings over $200,000. This extra tax is paid by the employee, not by you, and should be taken out of their wages.

It can be time-consuming and tedious to make all these calculations, especially if you have several employees you have to make them for. A tax professional can help you make these quarterly calculations and payments.

Employer Responsibilities

As an employer, the responsibility to file Form 941 as accurately as possible and provide all of the necessary details falls on your shoulders. All of the data included on Form 941 should reflect what your employees will claim or file on their IRS W-2 Form. Failing to provide the IRS with accurate information regarding wages and withholdings could result in an audit from the IRS.

The employer is also responsible for making an additional payment to the IRS that matches the amount of money withheld for Medicare and Social Security taxes for all of their employees. As of 2015, the employer portion of payroll taxes must withhold additional Medicare tax from wages paid in the excess of $200,000 during each fiscal year as well as any other taxes withheld.

Avoiding Penalties and Staying on Top of Deadlines

If you want to avoid fines and penalties from the IRS, it’s best to file Form 941 on time. Failing to do so may result in a penalty of 5% of the tax due for each month or part of the month that it’s late. However, that penalty caps out at 25%. Additionally, there will be a separate penalty for underpaying these taxes; the IRS will charge an employer 2-15% of the underpayment, depending on how many days you’re late on paying the correct amount. At the end of the fiscal year, the total amounts you report on the Form 941 must equal the total of all the amounts you reported on your employee’s W-2s as well as their W-3s.

If you want to prevent a situation where you are faced with penalties and a potential audit from the IRS, it’s advised that you use professional payroll services to handle all of your employee and business-related taxes. A licensed tax professional or CPA will not only keep you and your business out of hot water with the IRS, but they may even be able to find ways to save you money on your taxes.

One of the many ways in which businesses fail is by getting behind on their taxes and the penalties that result. If you don’t want to be among the many small businesses that don’t succeed in their first three years, it’s extremely important that you stay on top of deadlines and penalties.

Can Form 941 Be Filed Electronically?

You can file Form 941 electronically if you choose to. You’re able to file Form 941 online via the IRS website, and you must use the service to transfer funds electronically. A tax professional can help your company with online filing.

Where to Mail Form 941

Once you have filled out your form and written a check out to the “United States Treasury,” be sure to include your EIN (if you don’t already have one, you can apply for one online). There are two different 941 mailing addresses:

  • Department of the Treasury Internal Revenue Service; Ogden, UT 84201-0005—this address is used for any business that wishes to file without a payment attached.
  • Internal Revenue Service PO Box 37941; Hartford, CT 06176-7941—this address is for businesses that wish to include a payment with their 941 tax form.

In an effort to cut back on the amount of paper used to file taxes and forms, the IRS will allow you to file your 941 tax forms online. The IRS may request copies of electronic accounting software records, so be sure that have them handy if you choose to file online. If you don’t use digital accounting services, there may be certain documents and proof of filing details that the IRS will require you to mail (even if you file online).

Filing Tax Form 941 with a Professional

For all of your business’s filing and tax related needs, Community Tax is here to help. Our dedicated and qualified staff is here to help you file your taxes correctly and on time. Find out why businesses across the country trust Community Tax with all of their filings and employee payroll services. Call today at (888) 684-5798 and we’ll set up an easy and convenient way for you to pay your employees while we take care of the details while you focus on your business.

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