As an employer, you’ll withhold certain taxes from your employees’ pay – federal income tax, social security tax, and Medicare tax. You’re also responsible for the employer’s portion of social security and Medicare taxes. You’ll report your tax liability by filing Form 941, Employer’s Quarterly Federal Tax Return, each quarter.
Use Form 941 to report:
wages you’ve paid,
tips your employees have reported to you,
federal income tax you’ve withheld,
employer and employee portions of social security and Medicare taxes,
Additional Medicare Tax withheld,
the current quarter’s adjustments to social security and Medicare taxes, and
qualified small business payroll tax credit for increasing your research activities.
How to Fill Out Form 941
Before you begin filling out Form 941, include your EIN, business name, trade name, and address on the top of page 1. Check the box for the quarter you’re filing. Go ahead and enter your business name and EIN on the top of page 2, so you don’t forget later.
On line 1, enter the number of employees who received wages, tips, or other forms of compensation during the quarter.
On line 2, enter the total wages, tips, and other compensation paid to your employees during the quarter.
This total will include any amounts included in box 1 of your employees’ W-2. Include any sick pay paid by a third party, if the third party gave you timely notice of the payments and transferred the employer’s tax liability to you.
On line 3, enter the federal income tax you withheld from your employees’ paychecks during the quarter, including any excise taxes withheld or golden parachute payments.
Don’t include any income tax withheld by a third-party sick pay payer, even if that income tax is reported on an employee’s W-2.
If none of your employees’ wages, tips, etc. is subject to social security or Medicare taxes, check this box, and skip to line 6.
You’ll use lines 5a-5f to calculate the total social security and Medicare taxes incurred during the quarter.
On line 5a, enter any wages, sick pay, and taxable fringe benefits subject to social security taxes in column 1. Only the first $128,400 your employee makes during the year is subject to social security taxes.
Multiply the amount in column 1 by 12.4%, and enter that amount in column 2. The 12.4% accounts for the 6.2% shares for both the employee and you.
In line 5b, column 1, enter any tips your employees have reported to you during the quarter, until they reach $128,400 in wages and tips for the year. These tips should include cash tips, charged tips that you paid to your employees, and tips received from other employees under a tip-sharing arrangement.
Your employees must report any cash tips to you by the 10th day of the month after the month they received the tips. They can report tips to you by using Form 4070 or by submitting a written statement or electronic tip record.
Multiply the amount in column 1 by 12.4% and enter the total in column 2.
Enter all wages, tips, sick pay, and taxable fringe benefits subject to Medicare taxes in column 1 of line 5c. Multiply this amount by 2.9% and enter the total in column 2.
The 2.9% accounts for the 1.45% shares for both the employee and you.
On line 5d, enter all wages and tips subject to Additional Medicare Tax withholding in column 1. Additional Medicare Tax is only imposed on the employee and is withheld on wages over $200,000.
Multiply the amount in column 1 by 0.9%, and enter the total in column 2.
Add column 2 from lines 5a through 5d, and enter the total on line 5e.
If you received a Section 3121(q) Notice and Demand, enter the tax due on line 5f.
The IRS will issue a Section 3121(q) to inform you of tips received by employees who failed to report or underreported their tips to you. You’re not responsible for the employer share of social security and Medicare taxes on unreported tips until you’ve received this notice.
On line 6, add lines 3, 5e, and 5f.
Lines 7 – 9.
On lines 7 through 9, enter any tax adjustments.
On line 7, enter adjustments for fractions of cents (due to rounding), related to the employee share of social security and Medicare taxes.
Enter adjustments for the employee share of social security and Medicare taxes withheld and deposited by a third-party sick pay payer on line 8.
On line 9, you’ll enter adjustments for
any uncollected employee share of social security and Medicare taxes on tips, and
any uncollected employee share of social security and Medicare taxes on group-term life insurance premiums paid for former employees.
If the amount is less than $2,500, and you didn’t incur a $100,000 next-day deposit obligation during the quarter, you can deposit the amount or pay the amount when you file Form 941.
If the amount on line 12 is $2,500 or more, you must deposit the total based on your deposit schedule.
On line 13, enter deposits you’ve made during the quarter, including any overpayments from previous quarters.
If the amount on line 12 is greater than the amount on line 13, subtract line 13 from line 12, and enter the difference on line 14. This is the amount you still owe.
If the amount on line 13 is greater than the amount on line 12, subtract line 12 from line 13, and enter the difference on line 15.
Check the appropriate box to choose whether you’d like the amount to be applied to your next return or if you’d like a refund. If you don’t check either box, or if you check both boxes, the IRS will generally apply the overpayment to your account.
If you check the first box and are a monthly depositor, or if you check the second box, complete the tax liability schedule, found below the second checkbox. Enter the amount you deposited each month during the quarter, then add the three months together. The total should equal the total from line 12.
If you check the first box and are a semi-weekly depositor, or if you check the third box, complete Schedule B (Form 941), and attach it to Form 941.
You’ll only complete Part 3 if lines 17 or 18 apply to your business. If neither line applies, leave Part 3 blank.
Check the box on line 17 if you closed your business or stopped paying wages during the quarter. Enter the last date you paid wages.
Check the box on line 18 if you’re a seasonal employer who doesn’t have to file a return every quarter.
If you want to allow an employee, tax preparer, or another person to discuss Form 941 with the IRS, check “yes” and enter the person’s name and phone number. Have the person choose any five numbers as their personal identification number (PIN).
By checking “yes”, you are authorizing the IRS to speak to that person about any questions the IRS has while processing your return. You’re also authorizing the person to
give the IRS any information that’s missing from the return,
call the IRS for information about processing the return, and
respond to certain IRS notices that you’ve shared about math errors and return preparation. The IRS will never send notices directly to that person.
After you’ve completed both pages of Form 941, you must sign it.
If your business is a partnership or an LLC treated as a partnership, a responsible and duly authorized member, partner, or officer having knowledge of the business’s affairs may sign.
If you’re a single-member LLC treated as a disregarded entity, the owner or a principal owner may sign.
When to File
You’ll begin filing Form 941 for the quarter in which you first paid wages that are subject to social security and Medicare taxes. After that, you must file every quarter, even if you don’t have any taxes to report, unless you’re a seasonal employer or have filed a final return.
Form 941 is due the month after each quarter ends:
Form 941 Due Date
Quarter 1 (January – March)
Quarter 2 (April – June)
Quarter 3 (July – September)
Quarter 4 (October – December)
If you’ve made timely deposits, in full payment each quarter, you may file Form 941 by the 10th day of the second month following the end of the quarter. For example, for the first quarter, you could file Form 941 by May 10, instead of April 30.
Choosing to File Form 941
If you’re required to file Form 944, Employer’s Annual Federal Tax Return, but would like to file Form 941 instead, you can request to do so by calling the IRS at 1-800-829-4933 between January 1 and April 3, or by mail between January 1 and March 15. After the IRS has processed your request, they will send written notice that your filing requirement has changed.
There are three deposit schedules for social security and Medicare taxes – monthly, semi-weekly, and next-day. You can determine which schedule to use based on your reported tax liability during a lookback period. You’ll look at your total taxes after adjustments, found on line 12, to determine your tax liability.
The lookback period runs from July 1 through June 30. Per the IRS, the lookback period for 2018 is
3rd Quarter 2016
4th Quarter 2016
1st Quarter 2017
2nd Quarter 2017
July 1, 2016
October 1, 2016
January 1, 2017
April 1, 2017
September 30, 2016
December 31, 2016
March 31, 2017
June 30, 2017
If your total taxes for all four quarters were $50,000 or less, you’re a monthly depositor. If your total taxes were greater than $50,000, you’re a semi-weekly depositor.
If you’re a monthly depositor, deposit your taxes on payments made during the month by the 15th day of the following month.
Make deposits based on your payment schedule, if you’re a semi-weekly depositor.
If you pay your employees on Wednesday, Thursday, and/or Friday, deposit your taxes by the following Wednesday. If you pay your employees Saturday, Sunday, Monday, and/or Tuesday, deposit your taxes by the following Friday.
If your federal tax liability exceeds $100,000 for a single payroll run, you are required to deposit the tax by the next banking day.
If you’re making a payment with Form 941, also complete Form 941-V, which is a payment voucher attached to Form 941.
You’ll only make a payment with Form 941 if
your total taxes for either the current quarter or the preceding quarter are less than $2,500, you didn’t incur a $100,000 next-day deposit obligation during the current quarter, and you’re paying in full with a timely filed return; or