Table of Contents
Table of Contents
If you pay wages, chances are you’ll need to complete Form 941. In this article, you’ll learn more about Form 941, who should file it, and why.
What Is Form 941?
Form 941 is an Internal Revenue Service (IRS) form used to determine the amount owed for both federal income tax withholding and Federal Insurance (FICA) taxes.
Who Needs to File Form 941?
Any person or business that pays wages must file Form 941 quarterly, even if there were no wages paid for that quarter.
However, there are some exceptions: seasonal employers who don’t pay employee wages during one or more quarters; employers of household employees (e.g., housekeepers, maids, babysitters, gardeners); employers of agricultural employees; or in the event of a business reorganization or termination when the business is sold or transferred to another business.
What Must Be Reported on Form 941?
There are five sections to Form 941: business demographics, calculations, deposit schedules, liabilities, third-party designation, and a place for signatures. Let’s look at each section.
Business Demographics
This section requires employers to provide business information such as employer identification number (EIN), business name, trade name (any other name the business may go by), and business address.
Calculations
Part 1, or the calculation section of the document, requires you to enter data that will calculate your organization’s payment. The items listed below are used to calculate this amount.
- Wages, tips, and other compensation employees received.
- Federal income tax (varies based on filing status and taxable income) you withheld from employees’ wages, tips, and other compensation.
- Any employer or employee share of Social Security (6.2%) and Medicare taxes (1.45%).
- Any additional Medicare tax withheld.
- Tax adjustments to Social Security and Medicare taxes for sick pay, tips, and group-term life insurance.
- Any payroll tax credit to increase research activities used by qualified small businesses.
Deposit Schedules and Liabilities
This section determines whether or not you have to deposit the federal income taxes, the employer and employee social security taxes, and the Medicare taxes you withheld.
Third-Party Designation
Complete this section if your organization wishes to allow an employee, paid tax preparer, or another person to discuss this form on your behalf with the IRS.
Signatures
Once you have completed your form, you must sign acknowledgement that the information provided is correct.
For more information, see the IRS instructions here: Instructions for Completing Form 941
How to File Form 941
Employers have two options to file Form 941: electronically or by mail.
E-File
There are benefits to filing your documents online: it saves time, it is secure, and proof of filing is received within 24 hours.
There are two ways to e-file. You can file yourself using approved IRS software, or you may use an authorized IRS e-file tax professional to submit the form on your behalf.
Looking for a simple option? Eddy’s payroll software automates end-of-year Form 941 filing. Learn more
Where you mail your form is contingent upon the state in which your business is located. Be sure to include your payment voucher.
Consequences of Not Filing Form 941
Failure to file Form 941 on time incurs a penalty of 5% of the total tax amount due. Each month you fail to file incurs an additional 5% penalty for up to five months.
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Questions You’ve Asked Us About Form 941
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Wendy is an HR professional with over 10 years of HR experience in education and health care, both in the private and non-profit sector. She is the owner of KHRServices, a full service HR management agency. She is also SHRM and HRCI certified, serves as a HRCI Ambassador, and voted 2021 Most Inclusive HR Influencer.
