The IRS Form 941, Employer’s Quarterly Federal Tax Return, used by businesses to report employee wages and payroll taxes.
Usually, Form 941 reports:
Wages paid to employees
Federal income taxes withheld
FICA taxes (Social Security, and Medicare taxes)
Tips Reported
Additional taxes withheld
It’s important to accurately file Form 941. IRS compares the amounts on your Form 941 with your annual Form W-3.
2. Who needs to file Form 941?
Employers or business owners who pay wages to an employee must file IRS Form 941 every quarter.
There are a few exceptions. If you are
Seasonal business employers
Employers of household employees
Employers of farm employees
then you don’t have to file Form 941.
For example, if you received a notification to file Form 944 instead of Form 941, you must file Form 944 annually; don’t file quarterly Form 941.
3. Information to be reported on Form 941
As an employer, you need to report the following information when you are filing form 941 with the IRS:
Quarter for which form 941 is filed
Business details including:
Business Name, EIN, and Address
Employment Details:
Number of Employees
Medicare and Social Security Taxes
Deposits Made to the IRS
Deposit schedule and tax liability
Signing Authority Information
Online Signature PIN or Form 8453-EMP
You can’t wait until the 941 filing deadline to pay all the taxes for the quarter. You must deposit the taxes either monthly or semi-weekly, depending on the amount that you owe.
4. What information shouldn’t be reported on the 941 Tax Form?
Use Form 941 for reporting tax withholdings from employee wages. You shouldn’t report nonpayroll withholding information on Form 941. This includes employee backup withholding and income tax withholding for:
Pensions
Annuities
Gambling wins
Use Form 945 to report the withholdings from pensions, annuities and gambling wins.
5. When is Form 941 Due?
Your IRS Form 941 is due by the last day of the month that follows the end of the quarter:
April 30 for the First-quarter (January, February, and March)
July 31 for the Second-quarter (April, May, and June)
October 31 for the Third-quarter (July, August, and September)
January 31 for the Fourth-quarter (October, November, and December)
If the due date falls on any federal holiday, then the next business day will be the filing deadline.
If your taxes have been deposited on time and in full, the deadline is extended to the 10th day of the second month following the end of the quarter.
6. What are the changes in 2020 Form 941?
The tax rates for both Social Security and Medicare have remained the same.
The social security wage base limit is $137,700 for 2020 (it was $132,900 for 2019).
Social security and Medicare taxes apply to the wages of household workers that you paid $2,200 or more in cash wages in 2020. Social security and Medicare taxes apply to election workers who are paid $1,900 or more in cash or an equivalent form of compensation during 2020.
7. Form 941 filing methods
E-filing of Form 941 is the easiest method and it is actually preferred by the IRS. Employers will be able to get their IRS filing status instantly and the total filing process will take less than 5 minutes. This method saves employers time and allows them to easily pay their balance due as well.
The traditional paper filing Form 941 involves more time and effort. Many hidden costs like printing, envelopes, and postal mailing charges are included. Tracking the filing status of your Form 941 can be stressful for employers, as they might not know whether or not the return is accepted by the IRS.
To make the year-end process of 941s and W-2s as error-free and smooth as possible:
Review all wage and tax categories. Then, prior to processing your W-2s and 941s, verify that all general ledger liability accounts balance.
