Form 941 constitutes the method by which payroll taxes are forwarded to the IRS by our employers. Instructions to file the same are provided in this article.
By law, every employer needs to report some facts and fulfill his accountability to the Internal Revenue Service (IRS). All registered and recognized employers under the jurisdiction of the IRS are supposed to file Form 941 on a quarterly basis, as described in the table below.
|Form 941 is due
Your Form 941 is due by the last day of the month that follows the end of the quarter.
Form 941 is filled in order to report the wages paid to employees, tips paid, federal income tax that has been withheld, deductions, share of social security, Medicare taxes (includes employer and employee contribution), current quarter’s adjustments, advanced income or credit, and any kind of exemptions. One very important part of the form is the Employer Identification Number (EIN). In case you conduct any financial activity that is enumerated above, you will need to get an EIN, irrespective of the size of your business or how many employees you have. Whether it is a corporation, company, partnership, or a sole trading concern, filing the form is essential and mandatory.
In case you deduct less than USD 50,000 in the look-back period, then you are a monthly schedule depositor. In contrast, if you deduct more than USD 50,000, then you are a semiweekly schedule depositor. There is one exception to the monthly/semiweekly depositor schedules. If you have an accumulated tax liability (reduced by any advanced Earned Income Credit) of USD 100,000 or more on any day during a deposit period, you must deposit the tax by the next banking day. If you were a monthly depositor prior to the USD 100,000 deposit, you must follow the semiweekly deposit rules for the remainder of the calendar year, in which you accrued the USD 100,000 deposit and for the following year. New employers should follow the monthly deposit rule.
For deposition, you will have to use the Electronic Federal Tax Payment System (EFTPS) to forward the tax amount to IRS. It must be noted that employers paying lesser than USD 2,500 have some relaxation in terms of compliance.
Instructions for Filling the Form
The Form has 19 lines that are needed to be filled up, plus a payment voucher with an acknowledgment.
- The introductory part of the form consists of general information such as Name, Address, and the Employer Identification Number.
- The first part consists of all details regarding the payment of wages and the deduction of taxes. In line 1, 2, 3, and 4, you will have to report details that include the number of employees, wages paid, income tax withheld, and whether any non-taxable wage has been paid.
- Next, you will need to fill the row 5 (a) to (d) and rows 6 (a) to (e). The fifth row will include the taxable social security wages, tips, Medicare wages and tips. 5 (d) is the total of all the three. The 6th row deals with exemptions. The number of employers exempted, total wages exempted, and the total amount exempted need to be filled in these rows.
- The seventh row includes total of all current quarter’s adjustments. The eighth row consists of the total tax after adjustments, whereas the ninth row consists of advanced income credit. The 9th, 10th and 11th rows, includes other totals such as deposits, over-payments, and advances.
- The remaining rows till 15 consist of balances and totals of any advances, credits and included deductions.
- Part 2 of the form consists of the payment schedule details and you will have to just enter in the total of the balance that you will be paying.
- Part 3 refers to closures, re-organization and other such financial aspects of the business.
- Part 4 and 5 give details regarding the third-party designee, your signature and the payment voucher. You will need to fill in several details such as your payment details and contact information.
Filling Form 941 on time is extremely crucial, as there are implications for late filing. If you have any query, please check the IRS website.