What is form 945 used for and when must it be filed?

Essentially, any business that has withheld or was required to withhold federal income tax from a payment that was made outside of their payroll should file Form 945. Businesses are only required to file Form 945 if they have non-payroll tax liability during the tax year.

Form 945 for 2025: Annual Return of Withheld Federal Income Tax

Charles Hardy | Last Updated: December 19, 2025

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What is Form 945?

Form 945, Annual Return of Withheld Federal Income Tax, is used to report withheld federal income tax from nonpayroll payments, including distributions from qualified retirement plans.

Any business that withholds or is required to withhold federal income tax from payments made other than their payroll must
file Form 945. Businesses must only submit Form 945 if they have a non-payroll tax liability during the tax year.

If no non-payroll payments were made during the tax year, then you are not required to file
Form 945.

What’s New in Form 945 for 2025?

The IRS has introduced updates to Form 945 for 2025. Here’s a detailed breakdown of
each update:

Direct Deposit Now Available for Form 945 Refunds

Form 945 refunds can now be issued through direct deposit, thanks to Executive Order 14247, which promotes electronic payments for all federal disbursements. This makes refunds faster, more secure, and automatically deposits the refunds to a checking or savings account

If you prefer, you can still apply any overpayment to your next return instead of receiving a direct
deposit refund.
Electronic Balance Due Payments Are Now Required

All balance due payments for Form 945 must now be made electronically. This change is also driven by Executive Order 14247 and aims to reduce paper check processing, improve speed and accuracy, provide safer, more efficient
payment options
Form 945 Return Transcripts Available Online

Employers can now access Form 945 return transcripts electronically for tax years 2023 and later. These transcripts can be downloaded through your IRS Business
Tax Account.

This update makes it easier to review past filings, confirm reported amounts, and share records
when needed.

What information is required to complete Form 945 for 2025?

Keep the following information ready to streamline your Form 945 filing process:

Your name, address, and EIN (Employer Identification Number)
The total amount of federal income taxes withheld from non-payroll payments
Backup withholding
Total deposits made for the year 2025
Balance due or overpayment, if any
Complete Form 945-A (applicable for semiweekly depositors)

Want to learn more? Check out our article for step-by-step instructions on completing
Form 945.

Which payment should be included on
Form 945?

Form 945 is used to report federal income tax withheld from nonpayroll payments. These nonpayroll
payments include:

Pensions (including distributions from tax-favored retirement plans, for example, section 401(k), section 403(b), and governmental section 457(b) plans), annuities, and IRA distributions reported on the
1099 Forms (1099-R, 1099-MISC, or 1099-NEC)
Military Retirement
Gambling winnings reported on Form W-2G
Indian gaming profits
Certain government payments on which the recipient elected voluntary income
tax withholding
Dividends and other distributions by an Alaska Native Corporation (ANC) on which the recipient elected voluntary income tax withholding; and
Payments subject to backup withholding.

However, there are a few exceptions. Do not use Form 945 to report federal income tax withholding from wages or federal income tax withheld on distributions to participants from nonqualified pension plans (including nongovernmental section 457(b) plans). If you withhold such taxes, report them on Form 941 or Form 944.

Who must attach 945-A with Form 945?

If you are a semiweekly schedule depositor or accumulate a tax liability of $100,000 or more on any given day of a calendar month, use Form 945-A to report your federal tax liability (based on the dates payments were made or wages were paid) and attach it with Form 945.

The total from line M on Form 945-A must match the amount on line 3 of
Form 945.