IRS Form 941 is one of the many IRS tax forms with which business owners need to be familiar. Form 941 needs to be filed regularly. As a result, setting up your accounting systems properly is important to make the reporting and filing process as seamless as possible. Take the time to understand what information is required on Form 941 and to make filing this document part of business as usual.
[Read more: Working as an Independent Contractor? These Resources Will Help You Manage Your Taxes]
What is IRS Form 941?
IRS Form 941 is more commonly known as the Employer’s Quarterly Federal Tax Return. This is the form your business uses to report income taxes and payroll taxes that you withheld from your employees’ wages. It also provides space to calculate and report Social Security and Medicare taxes.
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 (but do need to file Schedule H from Form 1040). 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.
[Read more: A Complete Guide to Filing Your Business Taxes]
What do you need to report on Form 941?
Businesses need to fill out Form 941 to report federal withholdings from employees. This includes information such as wages; employee tips (as reported); federal income tax withholdings; employer and employee shares of Social Security and Medicare taxes; and additional Medicare tax withholdings. You may also need to include quarterly adjustments to Social Security or Medicare taxes for things like sick pay or tips.
Accounting for these items will result in a total amount of money you will need to pay to cover your payroll tax responsibilities for the quarter.
Note that there are penalties for failing to file Form 941. The IRS charges a penalty of 5% of the total tax amount due, and your business will continue to be charged an additional 5% every month the return has not been submitted for up to five months.
How to file Form 941
There are two options for filing Form 941: by mail or electronically. The most convenient option is to use the federal e-File system. This can be accessed through many common small business tax software providers, such as TurboTax, H&R Block, or TaxSlayer. If you work with an accountant or a CPA, they will likely have access to an e-file tool and can send the form and payment on your behalf.
Alternatively, you can mail Form 941 directly to the IRS. “The mailing address depends on the state your business is in, whether you’re submitting payment with your return and what quarter you’re filing for,” notes NerdWallet. The IRS provides a list of addresses according to your state here. If you do need to send payment, mail a check made out to U.S. Treasury with your form.
When is Form 941 due?
File Form 941 with the IRS one month after the last day of the reporting period to avoid penalties. This means the due dates are:
- April 30, for the first quarter covering Jan. 1 to March 31.
- July 31, for the second quarter covering April 1 to June 30.
- October 31, for the third quarter covering July 1 to Sept. 30.
- January 31, for the fourth quarter covering Oct. 1 to Dec. 31.
Note that there are penalties for failing to file Form 941. The IRS charges a penalty of 5% of the total tax amount due, and your business will continue to be charged an additional 5% every month the return has not been submitted for up to five months.
On top of facing penalties for failing to file your tax return, you will also be charged an initial penalty of 0.5% of the unpaid tax amount if you also did not pay the taxes owed. After receiving a notice of intent to levy from the IRS, the penalty will increase to 1% after ten days. This penalty will continue to increase every month until the payment is made.
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