As a small business owner or HR manager, you need to be aware of numerous tax forms and compliance regulations. These annual and quarterly reports are essential for keeping your organization compliant. Federal Tax Form 941 is no exception.
But what is Form 941, and why do you need to file one for your organization? This article will cover what IRS Form 941 is, how it works, and who needs to file one.
What is IRS Form 941?
IRS Form 941, also known as the Employer’s Quarterly Tax Return, is a form employers use to report any federal income tax, Social Security tax, and Medicare tax withheld from their employees. This information is then used to calculate your employment taxes.
This form replaced1 Form SS-LA for the Social Security Administration (SSA) and IRS Form W-1 for reporting income taxes withheld in 1950.
Who must file Form 941?
All organizations with at least one employee must complete and file this form every quarter. However, some organizations with $1,000 or less in annual tax liability can get an exemption from the IRS. Instead, these organizations can use Form 944 to report their federal income tax annually.
Seasonal businesses aren’t required to file a Form 941 during quarters with no employees. Employers of only farm employees and employers of only household employees also don’t need to file.
When is Form 941 due?
Form 941 is due on a quarterly basis.
The form is due by the following dates:
- April 30
- July 31
- October 31
- January 31 (for Q4 withholding)
If the tax deadline falls on a weekend or a federal holiday, the due date is pushed to the following business day.
How to file Form 941
Now that we’ve covered what Form 941 is, let’s discuss how to file the quarterly tax form. You can find the current version of the form and complete instructions on the IRS website2.
Fill in your primary business information
At the top of the form, start by filling out the section with your business information. You’ll provide your employer identification number (EIN), business name, trade name (such as a DBA), and address. You’ll also check which quarter you are filing for.
Complete Part I
In box 1, you’ll provide the number of employees at your organization who received wages, tips, or other compensation for the quarter. In box 2, you’ll provide the total wages, tips, and other compensation for all of your employees for the quarter. In box 3, you’ll add the federal income tax you withheld from wages for the quarter.
You'll fill out the next section if your employees’ wages are subject to Social Security or Medicare taxes. This is broken up into subcategories for taxable Social Security wages, qualified sick leave, qualified family leave, Social Security tips, Medicare wages and tips, and any wages subject to additional Medicare tax withholding. You’ll use the equations listed for each to determine the amount in column 2. The sum of column 2 will go in box 5e.
In box 6, you’ll total boxes 3, 5e, and 5f to get your total taxes before adjustments. You’ll round this number in box 7 to take care of any fractions of cents. Now, in boxes 8 and 9, you’ll make any adjustments to the total for sick pay, tips, and group-term life insurance.
If you’re eligible for the qualified small business payroll tax credit for increasing research activities, you’ll fill out Form 8974 and attach it to this form. Enter the total from that form in box 11a.
In the final box for page one, you’ll enter any nonrefundable credits for qualified sick and family leave wages taken before April 1.
Part 1 continues on the next page.
In box 11d, enter any nonrefundable credits for qualified sick and family leave taken between March 31 and October 1. You’ll total boxes 11a, 11b, and 11d in box 11g. Now subtract line 11g from line 10 and enter that amount in line 12 to get your total taxes after adjustments and credits.
In box 13a, you’ll enter the total deposits you’ve made for the quarter, including any overpayments from previous quarters. Now you’ll total any refundable credits for qualified sick and family leave in boxes 13c and 13e. Total this amount in box 13g along with the total deposits from 13a.
If line 12 is larger than line 13g, enter the difference in line 14. This is your balance due to the IRS. If line 13g is larger than line 12, enter the difference in line 15. This is how much you’ve overpaid on taxes. You can apply this to your next quarterly return or request a refund from the IRS.
Complete Part 2
In Part 2, you’ll let the IRS know which deposit schedule your organization uses for income taxes. The IRS offers a few ways to deposit employee and employer taxes. First is a monthly deposit schedule.
According to IRS Publication 15, organizations are monthly depositors if the total taxes on Form 941 for line 12 for the last four quarters were $50,000 or less. Monthly depositors make payments by the 15th of the month following the end of the quarter (for example, deposits are due April 15 for first quarter taxes).
If your organization is new and you had no tax liability for previous quarters, your lookback period is considered $0, which means you’re likely a monthly depositor.
Your organization might be a semiweekly schedule depositor if the total taxes owed on line 12 during the previous four quarters was more than $50,000. Semiweekly depositors make tax payments for wages earned Wednesday through Friday by the following Wednesday and wages earned Saturday through Tuesday by the following Friday.
If your income taxes were less than $2,500 for the current quarter and you didn’t incur any $100,000 next-day deposit obligations, you can make a deposit with your Form 941 return.
To finish this section, you’ll check the box that applies to you, either monthly, semiweekly, or less than $2,500.
Complete business information in Part 3
In Part 3 of Form 941, you’ll provide information about your organization. Any questions that don’t apply to you can be left blank.
This section includes questions about if your business has closed, if you’re a seasonal employer only, and if you have expenses allocated to qualified health plans for sick leave wages and family leave wages.
Complete Part 4 and 5
Now that you’ve made it this far through the form, the hard part is over. All that’s left to do is assign an employee’s or tax preparer’s information for the IRS to contact in case of any problems (if you choose to do so) and sign and date the form.
Completing Form 941-V
If you’re making a tax payment with Form 941, you’ll also need to file Form 941-V, Payment Voucher. This option is available for organizations with less than $2,500 in tax liability for the quarter or monthly depositors who are making a payment in accordance with the IRS’ Accuracy of Deposits Rule.
You must make all other payments electronically through the Electronic Federal Tax Payment System (EFTPS).
How to submit Form 941 to the IRS
Most organizations submit Form 941 through the e-file system. Many vendors, including most tax preparation software and accounting firms, offer this service. You can find a list of authorized e-file vendors on the IRS website3.
If you mail Form 941 to the IRS, the destination depends on your organization's state.
|
Your business location |
Where to mail Form 941 without payment |
Where to mail Form 941 with payment |
|
Alabama, Alaska, Arizona, Arkansas, California, Colorado, Florida, Hawaii, Idaho, Iowa, Kansas, Louisiana, Minnesota, Mississippi, Missouri, Montana, Nebraska, Nevada, New Mexico, North Dakota, Oklahoma, Oregon, South Dakota, Texas, Utah, Washington, or Wyoming |
Department of the Treasury Internal Revenue Service Ogden, UT 84201-0005 |
Internal Revenue Service P.O. Box 932100 Louisville, KY 40293-21 |
|
Connecticut, Delaware, District of Columbia, Georgia, Illinois, Indiana, Kentucky, Maine, Maryland, Massachusetts, Michigan, New Hampshire, New Jersey, New York , North Carolina, Ohio, Pennsylvania, Rhode Island, South Carolina, Tennessee, Vermont, Virginia, West Virginia, or Wisconsin |
Department of the Treasury Internal Revenue Service Kansas City, MO 64999-0005 |
Internal Revenue Service PO Box 806532 Cincinnati, OH 45280-6532 |
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No principal place of business in any state |
Internal Revenue Service PO Box 409101 Ogden, UT 84409 |
Internal Revenue Service P.O. Box 932100 Louisville, KY 40293-2100 |
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If your organization is exempt, a government entity, or an American Indian tribal government entity you’ll use these address instead of your state’s assigned destination |
Department of the Treasury Internal Revenue Service Ogden, UT 84201-0005 |
Internal Revenue Service P.O. Box 932100 Louisville, KY 40293-2100 |
Conclusion
Filing IRS Form 941 every quarter is essential to ensure your business remains compliant with federal laws. Filing on time will also help you avoid any penalties associated with late or incorrect filings.
We recommend contacting your tax adviser or CPA to help you determine which deposit schedule to use and to assist with filing Form 941.
1. https://www.ssa.gov/history/1950.html
2. https://www.irs.gov/forms-pubs/about-form-941
3. https://www.irs.gov/e-file-providers/authorized-irs-e-file-providers-for-individuals
