Tax Basics: Form 941

This article was last edited on 08/20/2019. For updated information on Form 941, visit About Form 941, Employer’s Quarterly Federal Tax Return.

As an employer, you required to withhold certain taxes from your employees’ pay, including federal income tax, Social Security tax, and Medicare tax. You’re also responsible for the employer’s portion of Social Security and Medicare taxes.

Each quarter, you’ll report these taxes by filing Form 941, Employer’s Quarterly Federal Tax Return. Form 941 reports:

• wages paid
• tips your employees have reported
• federal income tax withheld
• employee and employer portions of Social Security and Medicare taxes
• additional Medicare tax withheld
• adjustments to Social Security and Medicare taxes

How to fill out Form 941

Make sure to include your employer identification number (EIN), business name, and address on the top of both pages and that you indicate which quarter you’re filing.

Part 1

• Line 1 – Enter the number of employees you paid during the quarter.
• Line 2 – Enter the total wages, tips, and other compensation paid to your team members during the quarter.
• Line 3 – Enter how much federal income tax you withheld from your employees’ paychecks.
• Line 4 – Check the box if none of your staff’s wages or tips were subject to Social Security or Medicare taxes.
• Line 5a – Enter the total amount of payments that were subject to Social Security tax withholding in column 1. Then, multiply that amount by 0.124 and enter the resulting number in column 2. Read also: A Beginner’s Guide to Social Security Taxes
• Line 5b – Enter any tips your team reported to you during the quarter in column 1. Include cash tips, charged tips that you paid to your workers, and tips received from coworkers under a tip-sharing arrangement. Multiply the amount by 0.124 and enter the resulting number in column 2.
• Line 5c – Enter all wages, tips, sick pay, and taxable fringe benefits subject to Medicare tax in column 1. Then, multiply that amount by 0.029 and enter the resulting number column 2.
• Line 5d – Enter any wages and tips that are subject to additional Medicare tax withholding in column 1. You’ll only withhold additional Medicare tax when an employee’s wages are over $200,000. Multiply that amount by 0.009 and enter the resulting number in column 2.
• Line 5e – Add all the amounts from column 2 and enter the total.
• Line 5f – If the IRS sent you a Section 3121(q) Notice and Demand, enter the tax due. You’ll receive this notice if your employees failed to report tips or underreported how much they made.
• Line 6 – Add all the amounts from lines 3, 5e, and 5f.
• Line 7 – Enter any adjustments for fractions of cents due to rounding.
• Line 8 – Enter any adjustments for the employee share of Social Security and Medicare taxes withheld that were deposited by a third-party sick pay payer.
• Line 9 – Enter any adjustments for uncollected employee shares of Social Security and Medicare taxes on tips and group-term life insurance premiums paid for former employees.
• Line 10 – Add all the amounts from lines 6, 7, 8, and 9.
• Line 11 – If you have a credit from Form 8974, Qualified Small Business Payroll Tax Credit for Increasing Research Activities, enter the amount.
• Line 12 – Subtract line 11 from line 10. 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 any taxes owed when you file Form 941. You can pay through the Electronic Federal Tax Payment System (EFTPS) or with a check using Form 941-V. If the amount on line 12 is $2,500 or more, you must deposit federal payroll taxes based on your deposit schedule. Learn more about when to deposit your payroll taxes.
• Line 13 – Enter any tax deposits you’ve made during the quarter, including any overpayments from previous quarters.
• Line 14 – If the amount entered on line 12 is more than the amount on line 13, subtract line 13 from line 12. This is how much you still owe the IRS.
• Line 15 – If the amount entered on line 13 is higher than the amount on line 12, subtract line 12 from line 13. This means you have overpaid the IRS. Check the box to indicate whether you would like to have the amount applied to your next return or if you want a refund.

Part 2

If you’re a quarterly depositor and your tax liability on line 12 is less than $2,500, check the first box.

If you’re a monthly depositor, check the second box and complete the tax liability schedule. Enter your tax liability for each month of the quarter. Then, enter your total tax liability for the quarter.

If you’re a semi-weekly depositor, check the third box and enter your daily tax liability on Schedule B (Form 941). File Schedule B with Form 941.

Part 3

• Line 17 – Check the box if you closed your business or stopped paying wages during the quarter. Then, enter the last day you paid your employees.
• Line 18 – Check the box if you’re a seasonal employer who doesn’t have to file a return every quarter.

If neither line applies, leave Part 3 blank.

Part 4

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’re authorizing the IRS to speak to that person about 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 the return
• respond to certain IRS notices about math errors and return preparation

Part 5

Don’t forget to sign Form 941 before you file it.

• If you’re a sole proprietorship, you’re the only person who can sign the form.
• If your business is a corporation or an LLC treated as a corporation, have the president, vice president, or other principal officer sign it.
• If your company is a partnership or an LLC treated as a partnership, a responsible and duly authorized member, partner, or officer may sign.
• If your business is a single-member LLC treated as a disregarded entity, have the owner or principal office sign.

When to file Form 951

Start filing Form 941 for the quarter in which you first paid wages subject to Social Security and Medicare taxes. Then, submit the form every quarter. The form is due the month after each quarter ends:

• Quarter 1 is due by April 30
• Quarter 2 is due by July 31
• Quarter 3 is due by October 31
• Quarter 4 is due by January 31 of the following year

Choosing to file Form 941

If you’re required to file Form 944, Employer’s Annual Federal Tax Return, but would like to submit Form 941 instead, you can request to do so by

• calling the IRS at 1-800-829-4933 between January 1 and April 3
• by mailing your request between January 1 and March 15

If the IRS changes your filing requirement, they will send you written notice.