If you have employees, you must file Form 941 to report any federal withholdings. This form determines your payroll tax liability for the quarter. Let's look at what information is required on Form 941 and how accounting software can help you automate this process.
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What is IRS Form 941?
IRS Form 941 is the form your business uses to report income taxes and payroll taxes withheld from your employee's wages. It also provides space to calculate and report Social Security and Medicare taxes.
Who needs to file Form 941?
Most businesses are required to file Form 941 quarterly, with a few exceptions. Seasonal businesses only need to file for the quarters in which they are operating.
Businesses that hire farm workers or household employees, such as a maid, also don't need to file Form 941. And if your business pays less than $1,000 in employment tax in a given tax year, you'll need to file Form 944 instead.
What do you need to report on Form 941?
Businesses need to report federal withholdings from employees, including:
- Wages paid to employees.
- All federal income tax withholdings.
- All reported employee tips.
- Employer and employee shares of Social Security and Medicare taxes in addition to any additional Medicare tax withholdings.
- Any quarterly adjustments to Social Security or Medicare taxes for things like sick pay or tips.
- Any payroll tax credits you claimed for increasing research activities prior to January 1, 2023.
Once you account for these items, you'll know the total amount you will need to pay to cover your payroll tax responsibilities for the quarter.
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How to file Form 941
The easiest way to file is by using the federal e-file system. This system can be accessed through many common tax preparation providers, including TurboTax, H&R Block, or TaxSlayer. If you work with an accountant or a certified public accountant, they can send the form on your behalf along with your payment.
Alternatively, you can mail Form 941 directly to the IRS. The mailing address depends on the state your business operates in, which quarter you are filing for, and whether the payment was included in your return. The IRS provides a list of addresses according to your state.
If you need to send a payment, mail a check made out to the U.S. Treasury along with the form or pay online via the Electronic Federal Tax Payment System.
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Most businesses are required to submit Form 941 on the last day of the month following each quarter.
When is Form 941 due?
Most businesses are required to submit Form 941 on the last day of the month following each quarter. The due dates are as follows:
- April 30 for the first quarter.
- July 31 for the second quarter.
- October 31 for the third quarter.
- January 31 for the fourth quarter.
If the due date falls on a weekend or legal holiday, you can file it on the next business day. Additionally, if your employment tax deposits are paid on time and in full for the quarter, you have an extra 10 business days to file from the due date.
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Common mistakes when filing Form 941
Here are some common mistakes to avoid when filing Form 941:
- Inaccurate employee information: Any information you provide about employees must be correct, including names, Social Security numbers, and addresses. Submitting incorrect information to the IRS comes with serious consequences.
- Incorrect calculations: Make sure to double-check your math to ensure you're reporting wages, withholding taxes, and listing deductions accurately. Calculation errors can cause you to over or underpay on your taxes.
- Missing data: Leaving out certain information is another common error. Double-check to ensure everything is filled out and that you've signed and dated the form.
- Filing late: It's important to submit Form 941 on time since the IRS charges a 5% penalty of the total tax amount due. Your business will continue to be charged an additional 5% every month the return has not been submitted for up to five months.
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Amending a filed Form 941
If you discover any errors, you'll need to submit an amended Form 941. You can fill out Form 941-X to correct compensation, income taxes withheld, taxable Social Security tips and wages, and taxable Medicare tips and wages.
You'll enter corrections under Part 3 and explain each correction you made in Part 4. The due date for Form 941-X depends on when you discovered the error and if you over or underreported on taxes.
How to automate Form 941 filing
The easiest way to automate your Form 941 filing is using payroll software that also has tax filing features. For example, Quickbooks, Gusto, and ADP can prepare and submit Form 941 to the IRS on your behalf.
Make sure to enable the automatic filing feature when you set up your payroll software. And fill out Form 8655 to give your software provider permission to file on your behalf.
This article was originally written by Danielle Fallon-O’Leary.
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