What is Form 941?
Form 941, or Employer’s Quarterly Federal Tax Return, is a tax form from the Internal Revenue Service (IRS) that employers file every quarter to report income taxes, social security taxes, and Medicare taxes they have withheld from the paychecks of their employees.
While individual taxpayers only have to file a single tax return per year, businesses have to file quarterly tax returns. However, not all businesses have to file Form 941. Seasonal businesses do not have to file during quarters when they have not hired any employee. Businesses that hire farmworkers and individuals who hire household employees do not also need to file the form.
According to the federal tax agency, you must file Form 941 quarterly if you pay wages subject to federal income tax withholding or social security and Medicare taxes. When you file Form 941, you will need to report the following amounts:
- Wages you’ve paid.
- Tips your employees reported to you.
- Federal income tax you withheld.
- Both the employer and the employee share of social security and Medicare taxes.
- Additional Medicare Tax withheld from employees.
- Current quarter's adjustments to social security and Medicare taxes for fractions of cents, sick pay, tips, and group-term life insurance.
- Deferred amount of the employer share of social security tax.
- Qualified small business payroll tax credit for increasing research activities.
- Credit for qualified sick and family leave wages
- Employee retention credit
Federal laws mandate employers to withhold taxes from the pay of their employees. Form 941 is due four times every year. In general, the due date falls on the last day of the last month of every quarter — March 31 for Quarter 1: January, February, and March; June 30 for Quarter 2: April, May, and June; September 30 for Quarter 3: July, August, and September; and December 31 for Quarter 4: October, November, and December. When a due date falls on a holiday or weekend, the next business day becomes the new due date.
Failure to file Form 941 on time can lead to penalties. Underreporting tax liabilities also result in fines.
How to Fill Out Form 941?
Form 941 is a three-page document that consists of five parts that you need to accomplish as an employer. Follow the guide below to answer the form accurately.
To start, provide the following:
- Your Employee Identification Number (EIN)
- Your legal name, and not your trade name
- Your trade name, if applicable
- Your address
On the upper-right side of the first page, select the quarter you are reporting.
Line 1: Provide the number of employees on your payroll for the quarter.
Line 2: Provide total wages, tips, and other compensation such as sick pay, commissions, and bonuses paid to all employees during the filing period.
Line 3: Provide the total federal income tax withheld from the wages of employees.
Line 4: Check the box if no employee compensation was subject to Social Security or Medicare tax.
Lines 5a—5d: Calculate your tax obligations according to their classifications.
Line 5e: Add Column 2 from Line 5a to Line 5d.
Line 5f: If applicable, enter the tax due from your Section 3121(q) Notice and Demand.
Line 6: Add Lines 3, 5e, and 5f.
Line 7: Enter total fractions-of-cents adjustment.
Line 8: Enter the amount of the employees' portion of Social Security and Medicare taxes that a third-party sick-pay pay deposited and paid.
Line 9: Enter the total adjustments for tips and group-term life insurance.
Line 10: Add Lines 6 to 9.
Line 11a: Enter the amount of the credit from Form 8974.
Line 11b: Enter the non-refundable portion of the credit for qualified sick and family leave wages.
Line 11c: Enter the non-refundable portion of employee retention credit.
Line 11d: AddLines 11a to 11c.
Line 12: Subtract Line 11d from Line 10.
Line 13a: Enter total deposits for the quarter.
Lines 13b: Enter the deferred amount of the employer share of social security tax.
Lines 13c: Enter the refundable portion of the credit for qualified sick and family leave wages.
Lines 13d: Enter the refundable portion of employee retention credit.
Lines 13e: Add lines 13a to 13d.
Lines 13f: Enter total advances received from Forms 7200 for the quarter.
Lines 13g: Subtract Line 13f from Line 13e.
Line 14: Enter the total balance due.
Line 15: Enter the overpayment amount and mark the appropriate box on what to do with it — apply to the next return or send a refund.
Line 16: Use this portion to indicate whether you are a monthly or semiweekly schedule depositor. If monthly, provide the applicable information on Month 1, Month 2, and Month 3 boxes and compute for total liability for the quarter. If semiweekly, complete Form 941 Schedule B and attach it to this form.
Line 17: Mark the checkbox if your business has closed or stopped paying wages and provide the final date you paid wages.
Line 18: Mark the checkbox if you are a seasonal employer and do not have to file a return for every quarter of the year.
Line 19: Enter qualified health plan expenses allocable to qualified sick leave wages.
Line 20: Enter qualified health plan expenses allocable to qualified family leave wages.
Line 21: Enter qualified wages for the employee retention credit.
Line 22: Enter qualified health plan expenses allocable to wages reported on Line 21.
Line 23: Enter credit from Form 5884-C, Line 11, for this quarter.
Line 24: Enter qualified wage paid March 13 through March 31, 2020, for the employee retention credit. Only use this section for the second quarter filing of this form.
Line 25: Enter qualified health plan expenses allocable to wages reported on Line 24. Only use this section for the second quarter filing of this form.
Use this section to give permission to a third-party, including an accountant, lawyer, or tax professional who can discuss this form with the IRS on your behalf.
Sign and date the form to validate all the provided information.