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Form 945 Instructions for 2023

Updated on January 23, 2024 - 10:30 AM by Admin, TaxBandits

Business entities may not need to file Form 945 with the IRS every year, so it can be easy to forget what exactly this form requires and when and how to fill it out. Here is what all businesses need to know about Form 945 and its instructions going into the upcoming tax season.

This is a refresher on all things Form 945. From who needs to file it, to how to file and when, keep reading for a full breakdown of Form 945.

The following topics are covered in this article:

1. What is IRS Form 945 and who should file them?

Form 945 is an IRS Tax Form that is required to be filed by business entities that have paid non-payroll payments during the tax year. This means the payment was not associated with a wage or payment for services. Some of these payments include pensions, gambling winnings, and payments subject to backup withholding.

2. Line by Line instructions to Form 945

Businesses should start Form 945 by entering their basic required information. This includes their name, address, trade name (if applicable), and their EIN.

  • On line A, the business should indicate if they will not need to file returns in the future, and enter the date that the final payments were made.
  • On line 1, enter the amount of the payment if it was from pensions, IRAs, gambling winnings, etc.
  • On line 2, enter the amount of backup withholding
  • On line 3, enter the total taxes. If the amount is $2500 or more, this line must match up with the amount entered further down on 7M. If you are required to complete
    Form 945-A for semiweekly depositors, this must match up with the amount entered in line M
  • On line 4, enter the total deposits from the tax year, including any overpayments.
  • On line 5, enter the balance due. If the amount you entered on line 3 is greater than the amount on line 4, check the specific instructions before proceeding.
  • On line 6, enter the overpayment. If line 4 is greater than line 3, enter the difference here.
  • On Line 7, requires you to enter your federal tax liability for each month of the tax year in boxes A-M.If you are a semiweekly depositor, skip this section. You are required to attach Form 945-A instead.

    Now, that the form is complete, all that is left is the signatures. You will need to sign as well as your third-party designee and paid preparer if you have them.

    If you plan to make a payment to the IRS, you will need to complete the Form 945-V payment voucher.

3. Due date to file 945

The deadline to file Form 945 is January 31, 2024 for the 2023 tax year, if the due date falls on the weekend then the next working day is the deadline.

4. Penalties for failing to file 945

There are penalties and interest accrued for late filing and payment of deposits if you can’t prove that you had a reasonable cause. If you get a penalty notice from the IRS, you should respond with an explanation of why the form was filed late.

To avoid those penalties, file before the due. E-filing Form 945 is a quick process with the
following steps

  • Choose Form 945
  • Enter the Form details
  • Review and transmit to the IRS