IRS Form 941 - Line by Line Instructions - Explained
Updated on April 24, 2020 - 10:30 AM by Admin, TaxBandits
If you are an employer, you likely need to fill out and file Form 941 each quarter. To avoid major mistakes, learn how to fill out Form 941 line by line.
Just follow the below instructions to complete and File your form 941 to the IRS.
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1. Complete Business Information
First, complete your basic details in
Box 1 - Entering Employer Details
In box 1, enter the EIN, name, business name, and address.
Box 2 - Choosing Quarter
In box 2, choose a quarter for which Form 941 is being filed.
For example, if you are filing the Form for the first quarter of 2020 tax year, put an “X” in the box next to “January, February, March.”
Form 941 for 2020
2. Part 1 - Questions for the quarter
Part 1 reports the employees, their wages, and the federal income taxes withheld from their paycheck.
Part 1 consists of 15 lines where each line is explained in detail with the information that must be entered.
Line 1
Enter the number of employees, who got wages, tips, or other pay in the particular quarter
Line 2
Enter the complete wages, tips, paid and other pay to your employees
Line 3
Enter the federal income tax withheld from the employee’s paycheck
Line 4
Check this box if wages are not subject to social security and medicare tax. And if it doesn't apply, please skip this line
Form 941 - Part 1 Instructions
Line 5a - Taxable social security wages
Enter the total wages paid to employees that are subject to social security for the quarter.
Line 5a = Column 1 x 0.124 = Column 2
Line 5b - Taxable social security tips
Enter the tips reported for all your employees during the quarter
Line 5b = Column 1 x 0.124 = Column 2
Line 5c - Taxable Medicare wages & tips
Enter the wages, tips, that are subject to medicare tax
Line 5c = Column 1 x 0.029 = Column 2
Line 5d - Taxable wages & tips subject to Additional Medicare Tax withholding
Enter all the taxable wages & tips subject to Additional Medicare Tax withholding
Line 5e - Sum of Column 2 from Lines 5a, 5b, 5c and 5d
Line 5f - Section 3121(q) Notice and Demand—Tax due on unreported tips
Enter the tax due that you have received from the Section 3121(q) Notice and Demand
Form 941 - 5a-5f Instructions
The IRS issues Section 3121(q) Notice and Demand to employers advising them to report tips that their employees have failed to report. Employers aren’t liable for their share of social security and medicare taxes unless the employer receives this notice.
Line 6 - Total taxes before adjustments
Enter the sum of line 3, 5e, and 5f
Line 7 to 9 - Tax Adjustments
Enter the Adjustment for a fraction of cents (Line 7), sick pay (Line 8), tips and group life insurance (Line 9)
Line 10 - Total taxes after adjustments
Enter the sum of line 6 to line 9
Line 11 - Qualified small business payroll tax credit for increasing research activities
Enter the amount on Line 11 requires the attachment of Form 8974
Line 12 - Total taxes after adjustments and credits
Enter the difference between line 11 and 10
Form 8974 is used to determine the amount of credit that can be claimed for the increasing research activities.
Line 13 - Total deposits for the quarter
Enter the deposits for the quarter including the overpayment applied for the previous quarter and the overpayment applied from Form 941-X for the current quarter
Line 14 - Balance due
Enter the difference, If line 12 is more than the line 13
You can make federal tax deposits for the amount shown on line 14 using EFW.
If you are a monthly schedule depositor and making a payment for the amount shown on Line 14, you can pay by EFW, EFT, Credit or debit card, check, money order.
File Form 941-V, if you prefer to pay the balance due using check or money order.
If you were unable to pay the balance due in full you can apply for an installment agreement online. To apply using the Online Payment Agreement Application, please visit IRS.gov/OPA.
Line 15 - Overpayment
Enter the difference, if line 13 is more than line 12. Choose either box, Apply to next return or send a refund as you prefer
Form 941 Part 1 Instructions
If you deposited more than the correct amount for the quarter, you can either choose to get the refund for the overpayment or apply it to your next 941 return.
Part 2 - Deposit schedule and tax liability for the quarter
Line 16, you have options to check any one of the boxes based on your tax liability.
Check box 1, If Line 12
On your Form 941 was less than $2,500
On your previous quarterly return was less than $2,500
You didn’t incur a $100,000 next-day deposit obligation during the current quarter
Check box 2, If you were
A monthly schedule depositor for the entire quarter, and enter your tax liability for each month of the quarter (Month 1, Month 2, and Month 3).
Your total liability for the quarter must be equal to line 12 on your form 941.
Check box 3, If you were
A semiweekly depositor during any part of the quarter.
You must also enter the tax liability on Schedule B (Form 941), Report of Tax Liability for Semiweekly Schedule Depositors, and attach it along the Form 941 if you were a semiweekly depositor.
Form 941 Part 2 Instructions
Part 3 - About your business
Part 3 will be mostly used by the businesses closed for the year or by the seasonal employer.
Line 17 - If your business has closed or you stopped paying wages
If your business was closed or you stopped paying wages in the quarter, check on line 17 and enter the final date when you paid wages.
Line 18 - If you are a seasonal employer and you don’t have to file a return for every quarter of the year
If you are a seasonal employer and don’t have to file Form 941 every quarter, then check the box under line 18.
Form 941 Line 17 & 18 Instructions
If lines 17 and 18 don’t apply to your business, then just leave Part 3 blank and move on to Part 4.
Part 4 - Third-party designee
Part 4 requires information about the third party designee that the employer authorizes to discuss with the IRS.
Check “Yes”, If you wish to discuss this return with the IRS and provide the designee name and phone number. Also, enter the 5 digit pin to use while talking with the IRS.
Check “No”, if you don’t wish to discuss.
Form 941 Part 4 Instructions
Part 5 - Signature
Once each and every part is completed, you are required to sign Form 941.
The following persons are authorized to sign the return for each type of business entity.
Sole proprietorship: Individual who owns the company
Corporation or an LLC treated as a corporation: President, vice president, or other principal officer
Partnership or an LLC treated as a partnership: Partner, member, or officer
Single-member LLC: Owner of the LLC or a principal officer
Trust or estate: The fiduciary
Paid Preparers Using Only Form 941 must be
Form 941 must be signed by a duly authorized agent of the taxpayer if a valid power of attorney has been filed.
If the form is prepared by the paid preparer, enter their information such as name, signature, address, PTIN, and contact number.
A paid preparer is someone who completes your Form 941 filing and is responsible for preparing payroll tax forms on your behalf.
If your Form 941 is filed by a paid preparer, they have to enter their information on part 5.
