IRS Form 941 is your employer’s quarterly federal tax return.
It’s used by employers to report tax withholding amounts for estimated income tax payments, employer payments, and FICA taxation, more commonly called Social Security and Medicare.
You have to report the numbers on IRS Form 941 if you’ve been paying employees, and you’ve been withholding federal taxes out of their earnings.
What Is Form 941?
IRS Form 941 is a quarterly report which cites:
- Withholding of federal income taxes from employee paychecks based on the data from their W-4 forms.
- Withholding amounts due based on your employees’ Medicare and Social Security wages.
- Tax credits for participation in COVID-19 associated tax relief programs.
Who Uses Form 941?
Employers use this form to record their withholding data to the IRS. Employees do not receive a copy. Form 941 is also used to:
- Fix numbers due.
- Calculate an entire payroll tax obligation
- Subtract amounts already paid to get a final piece of overpayment or underpayment.
Tip: You might be able to file a yearly federal tax return on Form 944 instead of filing quarterly Forms 941 in the event you anticipate your FICA taxes and withheld federal income tax for the year to be $1,000 or less. You must submit a written request or telephone the IRS to exercise this choice.
Where to Get Form 941
Form 941 is available online in the IRS site. You can download a blank copy, or you may complete it on the internet, then save it to a hard drive, and then print out the finished copy.
Examine the Social Security wage base for the present season ($137,700 for 2020). Make sure you’ve stopped withholding Social Security for higher-paid workers based on this threshold. Workers do not have to pay Social Security tax on earnings over this amount.
Note: The Social Security wage base is indexed for inflation, so it could be expected to grow somewhat annually.
Contain the additional Medicare tax for workers whose salary reaches $200,000 for the year.
How to Fill Out IRS Form 941
Form 941 is a quarterly report, so the numbers you include are just for the specific quarter. Make sure you check the correct”Report for this Quarter” box at the top of the form.
This is the reporting and calculation of your payroll tax obligation.
Line 1: Enter the number of workers that were paid during the quarter. Include employees who received wages, tips, or other compensation.
Line 2: Enter the total taxable compensation paid to these employees during the quarter. This is exactly the identical amount that could be included in the employee’s W-2 form for this quarter.
Line 3: Report the total federal income tax withheld from employee compensation during the quarter, such as salary, tips, fringe benefits, and supplemental unemployment compensation benefits.
Line 4: Check this box if no employee compensation was subject to Social Security or Medicare tax.
Lines 5a – 5e: This section includes two columns for every entry. Column 1 is the total, and Column two is the tax percent calculation. Enter the total taxable Social Security salary in Column 1, line 5a, and multiply by .124. Enter the number in Column 2. Do the exact same for hints on line 5b. Enter the total taxable Medicare wages and tips in column 1, line 5c, and multiply by .029. Enter the result in Column 2.
Enter the taxable wages and tips subject to the extra Medicare tax online 5d, and multiply by 0.009.
Insert Column 2 levels from 5a, 5b, 5c, and 5d, and enter the total in 5e.
Line 5, Section 3121(q) Notice and Demand — Tax Due on Unreported Tips: The IRS will send you a Section 3121(q) Notice and Demand if it decides that a tipped employee has underreported tips. You have to report and pay the worker and company component of FICA taxes on those unreported tips. You aren’t responsible for withholding and paying the employee share of FICA taxes on unreported tips.
The next section is adjustments to the total:
Line 7 is an adjustment for fractions of cents. Use traditional rounding–if beneath half down, if half or more up. Use the negative sign, not parentheses, for decreases.
Line 8 is a modification for sick pay.
Line 9 is an adjustment for tips and group-term life insurance.
Lines 11a, 11b, and 11c are alterations for particular kinds of tax credits. Line 11a for an adjustment to get a tax credit for research activities. Line 11b is to get the non-refundable region of the tax credit for qualified sick leave and family leave payments.7 Line 11c is to get the non-refundable part of this Employee Retention Credit.8
Line 11d totals the taxes for these tax credits, from lines 11a, 11b, and 11c.
Line 13a is complete deposits for the quarter. Line 13b is your deferred amount of the employer share of Social Security tax.
Line 13c is the refundable part of the tax charge for qualified family and sick leave salaries. Line 13d is the refundable part of the employer retention credit.
Line 13e is the total of lines 13a, 13b, 13c, and 13d. Line 13f is the total of advances for the COVID-related tax credits (from filing IRS Form 7200).
Line 13g is the total of deposits, deferrals, and non-refundable credits minus advances, subtracting line 13f from line 13e.
Worksheet 1 at the Instructions for Form 941 can help you calculate your tax refunds and deferments for Your qualified Charge for Sick and Family Leave and the Employee Retention Credit.
The next step is to figure out in the event that you have a balance due or an overpayment.
You’ve got a balance due if total deposits on line 13g are significantly less than the total taxes on Line 12. Enter the balance due on line 14.
You’ve got an overpayment if the overall credits and deposits online 13g are more significant than the total taxes online 12. You can apply it to your next return, or you can request a refund.
Component 2 is the Payroll Deposit Schedule. You must input the tax liability for each month in the quarter if you’re a monthly depositor. Attach Schedule B/Form 941, showing the tax liability for every semi-weekly deposit if you’re a semi-weekly depositor.
You can also deposit if line 12 on last quarter’s form 941 was $2,500, and you also didn’t have a $100,000 next-day deposit duty during the current quarter. Otherwise, you must make deposits according to your deposit program, monthly or semi-weekly.
Important: Your tax liability isn’t your deposits for each quarter. Your tax liability for the quarter has to equal the total on line 12.
Parts 3, 4, and 5
Part 3 asks questions about your organization, and Part 4 inquires if the IRS can speak to your third-party designee if you’ve got one. This may be a person you hired to prepare your Form 941 or to prepare your own payroll taxes.
Do not forget to sign the form at Part 5, also include the other information asked for in this section before you submit the form. Check for mistakes, particularly the ones that might lead to an underpayment. It is better to correct errors before you send in the form because this will allow you to avoid penalties and fines.
Can form 941 Be E-Filed?
You are able to submit Form 941 electronically using Federal E-file, and you’re able to pay any tax balance due electronically by using tax preparation software or through your tax expert.
Suggestion: You can also use the IRS EFTPS tax payment system to cover your payroll taxes when ends up that you owe.
Where to Email Form 941
The IRS website includes a page explaining where to file your taxes for Form 941, along with mailing addresses.
Caution: You can’t wait till you file Form 941 to pay all taxes to the quarter at that moment. You have to make either monthly or semi-weekly deposits, based on the amount owed.
Requirements for Filing Form 941
IRS Form 941 is due four times each year:
- April 30 for Quarter 1 (January, February, March).
- July 31 for Quarter 2 (April, May, June).
- October 31 for Quarter 3 (July, August, September).
- January 31 of the following year for Quarter 4 (October, November, December).
The adjusted due date will be the following business day if a due date lands on a vacation or a weekend day. For example, the due date for a July 31 payment could be Monday, August 2, if July 31 falls on a Saturday that year.
You have 10 more days following the due date to file Form 941 for the quarter if you’ve made your payroll tax deposits for the quarter completely and in time. All these are the filing dates should you fulfill these standards:
- By May 10 for the first quarter ending March 30.
- By August 10 for its second quarter ending June 30.
- By November 10 for the third quarter ending September 30.
- From February 10 for its fourth quarter ending December 31.
Warning: It’s your responsibility as an employer to file payroll tax reports such as Form 941 and also to cover your federal tax liabilities, even if you hire payroll support. The IRS can assess penalties and interest on account of your business if your payroll service fails to file and pay on time. You might also be held personally accountable for certain unpaid federal taxes.
Use Form 941 to Require Coronavirus Tax Credit Deferrals
The IRS is enabling companies to defer payment of certain employment taxes as part of two tax credits introduced during the 2020 coronavirus crisis.
The Employee Retention Tax Credit encourages companies to maintain paying workers if the business was affected by COVID-19. You are able to choose the tax charge by delaying payments to your employer share of Social Security taxation for specific employees through the end of 2020.
The Sick Leave and Family Leave Tax Credits help employers that must give paid sick leave and family leave to employees who can not work due to COVID-19. Your business can take these tax credits by keeping part of employment taxes related to employee wages instead of depositing them.
You can report the deferral of employment taxes using Form 941. This form was changed for the next quarter of 2020 to accommodate this shift.