As a first-time business owner (or not), you might not realize that if you pay employees, you must file quarterly taxes. And to do that, the IRS needs you to file Form 941. Although not every business owner has to file this tax form, most of them are.
As a result, it’s critical to grasp the Form 941 instructions so you can file, interpret, and submit the form correctly.
This article will discuss everything you need to know about Form 941 to help you out.
What Is Form 941?
Employers report employee earnings and payroll taxes on Form 941, often known as the “Employer’s Quarterly Tax Form.” Employers must disclose the number of employees and the amounts taken from each employee’s pay, including federal income tax, Social Security tax, and Medicare tax.
You can mail the 941 tax form to the IRS via paper mail or e-file it using IRS-approved software. If there are any relevant advances on earned income credits that you handed out to employees, you must also state them.
What Is Form-941 Used For?
Because it provides each employee’s social security number and total annual compensation for the period, you can use Form 941 can as a quarterly payroll summary.
Social security and Medicare taxes are included in FICA taxes. The employer and the employee split these taxes 50/50. Both must pay around 6.2 percent of their salaries for social security and 1.45 percent for medicare. These taxes amount to a 15.3 percent deduction from quarterly wages. FICA tax laws and rates change frequently, but these are the fundamentals.
In addition, you can use Form 941 to:
- Adjust amounts due
- Calculate a total payroll tax liability
- Subtract amounts already paid to get a final amount of overpayment or underpayment
What Is The Deadline For Filing Form 941?
Form 941 is a quarterly form, which means employers must file it every three months. For each quarter, you must file Form 941 by the following deadlines:
- First-quarter: April 30
- Second-quarter: July 31
- Third-quarter: October 31
- Fourth-quarter: January 31
The form is due the next business day if the quarterly due dates fall on a weekend or holiday. Ensure you submit the paperwork and tax payments by the quarterly due dates to avoid fines.
Who Doesn’t Need To File Form 941?
In general, any business owner with employees must complete Form 941. But there are often a few exceptions. You may not need to complete the form if you:
Employers should file Form 944 yearly rather than quarterly if their annual liability for Social Security, Medicare, and withheld federal income tax is less than $1,000.
- You have a seasonal occupation.
If your workers work seasonally, you are exempt from filing Form 941 during the quarters when they are away from work ( in quarters when you have no tax liability). However, if this applies to you, you must state that you are a seasonal employer on your Form 941.
You should report Household employees on Schedule H of Form 1040. They are not necessary on Form 941.
Farm employees need to complete Form 943 rather than Form 941 because they are subject to unique tax regulations that differ from standard tax and withholding regulations.
- You pay independent contractors.
Technically speaking, Independent contractors are not workers. Due to this, you must file a 1099-MISC form to detail the payments you made to your contractors during that fiscal year.
How To File Form 941: Employer’s Quarterly Federal Tax Return
The six-page Form 941 is in five parts. The employer includes a name (a trade name if one exists), address, and employer identification number (EIN) at the top of page 1. The employer also mentions the filing time:
- First-quarter (January, February, March)
- Second-quarter (April, May, June)
- Third-quarter (July, August, September)
- Fourth-quarter (October, November, December)
What Happens If I File Form 941 Incorrectly?
When completing Form 941, as with every tax form, there is a chance for error, especially if it is your first time submitting business taxes. If you discover that your Form 941 has some problems, you can fix them using Form 941-X. Both over- and under-reported taxes can be corrected using Form 941-X.
As long as you complete Form 941-X within three years of the date you filed your previous Form 941, the IRS will let you remedy any errors you made when underreporting taxes. You must pay taxes by the due date for the quarter you discovered the mistake and submit Form 941-X.
What Taxes Do I Report On Form 941?
There are four distinct tax types that you can report on form 941:
- Federal taxes withheld from employee wages
- Taxes on Social Security. The tax rate, which includes both the employee and employer portions, is 12.4%.
- Medicare taxes. The rate, which accounts for employer and employee share, is 2.9 percent.
- Added Medicare taxes on wages above $200,000. The employee is the only one who must pay the 0.9 percent tax rate.
What Are The Penalties For Not Filing Form 941?
For each month or portion of a month that a Form 941 is late, you owe a penalty of 5%. The maximum penalty is set at 25%. Making tax payments past due dates or paying less than you owe will result in a different penalty. Depending on how many days you are late paying the correct amount, the IRS will tax you 2 to 15% of the underpayment.
The total amount you report on the four Form 941s at the end of the year must match the sum you report on the W-2 forms you give to employees and the Form W-3 you submit to the government. If something is missing, you may have to answer some questions from the IRS.
FAQs On File Form 941
Can You Electronically File Form 941?
You can submit your Form 941 electronically or by mail with any related tax payments. Instead of using both methods, you should pick one or the other. The IRS e-file allows you to file your form online.
After initial enrollment, the U.S. Department of the Treasury’s Electronic Federal Tax Payment System (EFTPS) allows you to submit your payment electronically.
Where do I Get Form 941?
The IRS website offers online access to Form 941. You can print out the completed version after downloading a blank copy or finishing it online, saving it to your hard drive.
Do You Have to File a 941 if You Have No Payroll?
Generally, even if you have no taxes to submit, you must fill a 941 four times a year as long as you run a business that withholds taxes from employee payroll checks. The main exceptions are those who employ domestic helpers like housekeepers or maids and agricultural employers.
Also, seasonal business owners may only pay the tax on the months they worked.
How Do I Submit a Quarterly 941 Form?
You have two options if you decide to mail in your 941. You can either fill it out on your computer and print it, or print it first and fill it out by hand. The Modernized e-file (MeF) system on irs.gov allows for electronic filing.
Employment taxes are a big responsibility. However, you have to pay them religiously.
Now you know how important it is to fill out Form 941 every quarter. It would be best if you endeavored to do this early. And if you noticed or made any errors, report them as soon as possible and see them fixed.