Employers are required to withhold and remit federal income tax, Social Security tax, and Medicare tax from employee wages. You must report tax withholdings every quarter. You will need to get familiar with Form 941 to do so.
What is Form 941?
Form 941, Employer’s Quarterly Federal Tax Return, is the form employers use to report employee wages and payroll taxes. The form contains information about the withholding you made from employee wages, along with the employer contributions you made for Social Security and Medicare taxes. You must e-file or mail the form to the IRS every quarter.
Who needs to fill out Form 941?
You must file Form 941 if you have employees. You use the form to report employee wages and tax withholding.
Once you file your first Form 941, you must file the form every quarter. You must submit the form even if you do not have taxes to report.
There are some exceptions to filing the form. Exemptions include:
- You filed a final return. You can indicate that a Form 941 is your final return on line 15 of the form.
- You are a seasonal employer. You don’t have to file the form in quarters that you have no tax liability. Instead, make sure you check the box on line 16 every time you do file to tell the IRS that you won’t file a return in one or more quarters.
- You employ household employees. See Publication 926 and Schedule H (Form 1040) for more information.
- You employ farm employees. See Form 943 and Publication 51 for more information.
What goes on Form 941?
You will report the following information on Form 941:
- Wages you paid employees
- Reported tips that your employees earned
- Federal income taxes you withheld
- Social Security and Medicare taxes you withheld and contributed to
- Additional Medicare taxes you withheld
- Adjustments to Social Security and Medicare taxes, sick pay, tips, and group-term life insurance
It is important to fill out the 941 Form accurately. The IRS will compare the amounts on your four forms to your yearly Form W-3.
When is Form 941 due?
You must file a new Form 941 each quarter. What is the Form 941 policy for submission?
- For the first quarter (January, February, March), the form is due by April 30.
- For the second quarter (April, May, June), the form is due by July 31.
- For the third quarter (July, August, September), the form is due by October 31.
- For the fourth quarter (October, November, December), the form is due by January 31.
If the due date falls on a Saturday, Sunday, or legal holiday, the form is due on the next business day.
If you fail to file the form on time, you might have to pay a penalty. You might also face a penalty if you make late tax payments.
To avoid penalties, you should:
- Pay taxes when they are due.
- File Form 941 on time.
- Report your tax liability accurately.
- Submit valid checks to pay taxes.
- Give the correct IRS Form W-2 to each employee.
- File Form W-3 and Copy A of Forms W-2 with the Social Security Administration correctly and promptly.
What if there are errors?
There is a potential for error whenever you file business taxes, especially if you’re filing business taxes for the first time. If there is an error on a Form 941 that you previously filed, you can make a correction using Form 941-X. You can use Form 941-X to correct both underreported and overreported taxes.
You can correct overreported taxes on a previous Form 941 within three years from the date when you filed the incorrect Form 941, or two years from the date you paid the tax reported on the Form 941, whichever is later. If you want to apply the overpayment as a credit to Form 941, file Form 941-X soon after you discover the error, but more than 90 days before the period of limitations expires. If you want to claim a refund for the overpayment, you can file Form 941-X any time before the period of limitations expires.
You can also correct underreported taxes on a previous 941 Form within three years of the date you filed the incorrect Form 941. You must file Form 941-X and pay taxes by the due date for the quarter when you discovered the error. This applies to underreported taxes only:
- If you discover the error in the first quarter, the form is due by April 30.
- If you discover the error in the second quarter, the form is due by July 31.
- If you discover the error in the third quarter, the form is due by October 31.
- If you discover the error in the fourth quarter, the form is due by January 31.
Forms 941 for a calendar year are considered filed on April 15 of the succeeding year if you filed them before that date.
More information on Form 941
If you want even more information about Form 941, such as where you send the form and how to make adjustments, look at the Instructions for Form 941.
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This article was originally published on 4/16/2012.