If you’re a small business owner, you probably have a lot of questions about taxes. One of the most common forms you’ll encounter is the IRS Form 941, also known as the Employer’s Quarterly Federal Tax Return. This form is used to report the income taxes, social security taxes, and Medicare taxes you withheld from your employees’ paychecks, as well as your own share of these taxes.

In this post, we’ll explain what IRS Form 941 is, who needs to file it, how often it’s updated, what are the requirements to fill it out, how to file it, and what taxes are reported on it. We’ll also give you some tips to consider when filing Form 941, and answer some frequently asked questions.

What Is IRS Form 941: Employer’s Quarterly Federal Tax Return?

IRS Form 941 is a quarterly tax form that employers use to report the federal income tax, social security tax, and Medicare tax they withheld from their employees’ wages, tips, and other compensation. Employers also use Form 941 to report their own share of social security and Medicare taxes, as well as any adjustments, credits, or deposits they made for these taxes.

Form 941 helps the IRS to verify that employers are withholding and paying the correct amount of taxes from their employees’ paychecks, and that they are depositing these taxes on time. Form 941 also helps the IRS to match the taxes reported by employers with the taxes reported by employees on their individual tax returns.

Who Needs to File IRS Form 941?

Generally, any employer who pays wages to one or more employees and withholds federal income tax, social security tax, or Medicare tax from their paychecks must file Form 941 every quarter. This includes sole proprietors, partnerships, corporations, S corporations, LLCs, and non-profit organizations.

However, there are some exceptions to this rule. For example, you don’t have to file Form 941 if:

You’re a household employer and you pay your household employees (such as nannies, housekeepers, or gardeners) less than $2,300 in 2021.
You’re a seasonal employer and you don’t pay wages to your employees for some quarters of the year.
You’re a farm employer and you file Form 943, Employer’s Annual Federal Tax Return for Agricultural Employees, instead of Form 941.
You’re an employer of American Indians and you file Form 944, Employer’s Annual Federal Tax Return, instead of Form 941.

If you’re not sure whether you need to file Form 941 or not, you can check the IRS website or consult a tax professional for guidance.

How Often Does The IRS Update Form 941?

The IRS updates Form 941 every year to reflect any changes in the tax laws, rates, or credits that affect employers and employees. For example, in 2020, the IRS revised Form 941 to include new lines for reporting the COVID-19 related tax credits, such as the employee retention credit and the sick and family leave credit.

The IRS usually releases the updated Form 941 in December or January of each year, and employers must use the latest version of the form when filing their quarterly tax returns. You can find the most recent Form 941 on the IRS website or download it from the link below.

Requirements to Fill out Form 941

To fill out Form 941, you’ll need some basic information about your business and your employees, such as:

Your business name, address, and employer identification number (EIN).
The number of employees you paid wages to in each quarter.
The total amount of wages, tips, and other compensation you paid to your employees in each quarter.
The total amount of federal income tax, social security tax, and Medicare tax you withheld from your employees’ paychecks in each quarter.
The total amount of social security and Medicare tax you owe as an employer in each quarter.
The total amount of tax deposits you made for each quarter.
The total amount of any adjustments, credits, or refunds you claim for each quarter.
The total amount of tax you owe or overpaid for each quarter.

You can use your payroll records, bank statements, or accounting software to gather this information. You can also use a tax software or a payroll service provider to help you calculate and fill out Form 941.

How to File Form 941?

You can file Form 941 either electronically or by mail. The IRS encourages employers to file electronically, as it is faster, easier, and more secure than paper filing. To file electronically, you’ll need to use an IRS-approved e-file provider, such as a tax software or a payroll service provider. You can find a list of authorized e-file providers on the IRS website.

If you choose to file by mail, you’ll need to print out Form 941 and mail it to the IRS address that corresponds to your location and payment method. You can find the mailing addresses on the Form 941 instructions or on the IRS website.

Regardless of how you file, you’ll need to file Form 941 by the deadline for each quarter. The deadlines are:

April 30 for the first quarter (January to March).
July 31 for the second quarter (April to June).
October 31 for the third quarter (July to September).
January 31 for the fourth quarter (October to December).

If the deadline falls on a weekend or a federal holiday, you’ll have until the next business day to file. If you file late, you may face penalties and interest charges from the IRS.

Part 1

Part 1 of Form 941 is where you report the number of employees you paid wages to, the total amount of wages, tips, and other compensation you paid, and the total amount of federal income tax, social security tax, and Medicare tax you withheld from your employees’ paychecks in each quarter.

You’ll need to fill out lines 1 to 6 of Part 1, as follows:

Line 1: Enter the number of employees who received wages, tips, or other compensation in the quarter.
Line 2: Enter the total amount of wages, tips, and other compensation you paid to your employees in the quarter.
Line 3: Enter the total amount of federal income tax you withheld from your employees’ paychecks in the quarter.
Line 4: Enter the total amount of taxable social security wages and tips you paid to your employees in the quarter. This is the amount of wages and tips that are subject to the 6.2% social security tax rate.
Line 5a: Enter the total amount of taxable Medicare wages and tips you paid to your employees in the quarter. This is the amount of wages and tips that are subject to the 1.45% Medicare tax rate.
Line 5b: Enter the total amount of wages and tips you paid to your employees that are subject to the additional 0.9% Medicare tax rate. This is the amount of wages and tips that exceed $200,000 for the year.
Line 6: Add lines 3, 4, 5a, and 5b, and enter the total amount of taxes you withheld from your employees’ paychecks in the quarter.

Part 2

Part 2 of Form 941 is where you report your own share of social security and Medicare taxes as an employer, as well as any adjustments, credits, or deposits you made for these taxes in each quarter.

You’ll need to fill out lines 7 to 13 of Part 2, as follows:

Line 7: Multiply line 4 by 6.2%, and enter the amount of social security tax you owe as an employer in the quarter.
Line 8: Multiply line 5a by 1.45%, and enter the amount of Medicare tax you owe as an employer in the quarter.
Line 9: Add lines 6, 7, and 8, and enter the total amount of taxes you owe before any adjustments or credits in the quarter.
Line 10: Enter the total amount of any adjustments you made for fractions of cents, sick pay, tips, and group-term life insurance in the quarter. You can find the instructions for these adjustments on the Form 941 instructions or on the IRS website.
Line 11: Enter the total amount of any COVID-19 related tax credits you claim in the quarter, such as the employee retention credit and the sick and family leave credit. You can find the instructions for these credits on the Form 941 instructions or on the IRS website.
Line 12: Enter the total amount of any other credits you claim in the quarter, such as the credit for COBRA premium assistance payments. You can find the instructions for these credits on the Form 941 instructions or on the IRS website.
Line 13: Subtract lines 10, 11, and 12 from line 9, and enter the total amount of taxes you owe after any adjustments or credits in the quarter.

Part 3

Part 3 of Form 941 is where you report the total amount of tax deposits you made for each quarter, as well as any balance due or overpayment you have.

You’ll need to fill out lines 14 to 19 of Part 3, as follows:

Line 14: Enter the total amount of tax deposits you made for the quarter, including any overpayment you applied from a prior quarter.
Line 15: Enter the total amount of any balance due for the quarter. This is the amount of taxes you owe after any adjustments or credits, minus the amount of tax deposits you made. If this amount is less than $2,500, you can pay it with your Form 941. If this amount is $2,500 or more, you must deposit it by the deadline.
Line 16: Enter the total amount of any overpayment for the quarter. This is the amount of tax deposits you made, minus the amount of taxes you owe after any adjustments or credits. If this amount is $10 or more, you can choose to apply it to your next return or request a refund.
Line 17: Check the box that indicates how you want to apply your overpayment, if any. You can either apply it to your next return or request a refund.
Line 18: Check the box that indicates whether you’re a monthly or semiweekly depositor. This depends on your tax liability and deposit schedule. You can find the instructions for determining your deposit schedule on the Form 941 instructions or on the IRS website.
Line 19: Check the box that indicates whether you made all your deposits on time and in full, or whether you have an underpayment or late payment. If you have an underpayment or late payment, you may be subject to penalties and interest charges from the IRS.

Part 4

Part 4 of Form 941 is where you provide your contact information and sign the form to certify that the information you provided is true, correct, and complete.

You’ll need to fill out lines 20 to 22 of Part 4, as follows:

Line 20: Enter your name, title, phone number, and email address.
Line 21: Enter the name and phone number of the person who can answer any questions from the IRS about your Form 941. This can be the same person as line 20, or someone else, such as your accountant or payroll service provider.
Line 22: Sign and date the form, and enter your title and the name of your business.

Part 5

Part 5 of Form 941 is where you provide information about any third-party designee you authorize to discuss your Form 941 with the IRS. A third-party designee can be anyone you choose, such as your accountant, payroll service provider, or attorney.

You’ll need to fill out lines 23 to 25 of Part 5, as follows:

Line 23: Check the box that indicates whether you want to allow a third-party designee to discuss your Form 941 with the IRS.
Line 24: Enter the name, phone number, and personal identification number (PIN) of your third-party designee.
Line 25: Sign and date the form, and enter your title and the name of your business.

Download Latest Form 941

You can download the latest version of Form 941 from the IRS website or from the link below. You can also order a paper copy of the form by calling 1-800-829-3676 or by visiting the IRS website.

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Taxes Reported on Form 941

The taxes reported on Form 941 are the federal income tax, social security tax, and Medicare tax that employers withhold from their employees’ paychecks, as well as their own share of social security and Medicare taxes. These taxes are also known as the federal employment taxes or the payroll taxes.

The federal income tax is the tax that employees pay on their income, based on their filing status, exemptions, deductions, and tax brackets. Employers are responsible for withholding the correct amount of federal income tax from their employees’ paychecks, based on the information they provide on Form W-4, Employee’s Withholding Certificate.

The social security tax is the tax that employees and employers pay to fund the Social Security program, which provides benefits to retired workers, disabled workers, and their dependents. The social security tax rate is 6.2% for both employees and employers, up to a maximum wage base of $142,800 for 2021. Employers are responsible for withholding the employee’s share of social security tax from their paychecks, and paying their own share of social security tax to the IRS.

The Medicare tax is the tax that employees and employers pay to fund the Medicare program, which provides health insurance to senior citizens and people with certain disabilities. The Medicare tax rate is 1.45% for both employees and employers, with no wage limit. Employers are responsible for withholding the employee’s share of Medicare tax from their paychecks, and paying their own share of Medicare tax to the IRS.

In addition, there is an additional Medicare tax of 0.9% that applies to employees who earn more than $200,000 for the year, regardless of their filing status. Employers are responsible for withholding the additional Medicare tax from the paychecks of these employees, but they do not have to pay their own share of this tax.

Points to Consider When Filing Form 941

When filing Form 941, there are some points to consider to avoid common mistakes and ensure compliance with the IRS rules. Here are some of them:

Make sure you use the correct version of Form 941 for the quarter you’re reporting. The IRS updates Form 941 every year, and you must use the latest version of the form when filing your quarterly tax return.
Make sure you file Form 941 by the deadline for each quarter. The deadlines are April 30, July 31, October 31, and January 31 for the first, second, third, and fourth quarters, respectively. If you file late, you may face penalties and interest charges from the IRS.
Make sure you deposit your taxes on time and in full, according to your deposit schedule. You can either be a monthly or a semiweekly depositor, depending on your tax liability and deposit schedule. You can find the instructions for determining your deposit schedule on the Form 941 instructions or on the IRS website. If you deposit late or less than the required amount, you may face penalties and interest charges from the IRS.
Make sure you report and pay any taxes that are not reported on Form 941, such as the federal unemployment tax (FUTA), the state unemployment tax (SUTA), or any state or local income taxes. You can find the instructions for reporting and paying these taxes on the IRS website or on your state or local tax agency website.
Make sure you keep accurate and complete records of your payroll and tax transactions, such as your payroll records, bank statements, tax forms, and receipts. You may need these records to support your Form 941 in case of an audit or a dispute with the IRS.
Make sure you consult a tax professional if you have any questions or doubts about filing Form 941, or if you need assistance with your payroll and tax compliance. A tax professional can help you understand the tax laws and regulations, avoid errors and penalties, and save time and money.

Bottom Line

IRS Form 941 is a quarterly tax form that employers use to report the federal income tax, social security tax, and Medicare tax they withheld from their employees’ paychecks, as well as their own share of these taxes. Employers must file Form 941 every quarter, by the deadline, and deposit their taxes on time and in full, according to their deposit schedule. Employers must also report and pay any other taxes that are not reported on Form 941, such as the federal unemployment tax, the state unemployment tax, or any state or local income taxes.

Filing Form 941 can be a complex and time-consuming task, especially for small business owners who have limited resources and expertise. That’s why it’s important to use the correct version of Form 941, follow the instructions carefully, and avoid common mistakes. It’s also advisable to use a tax software or a payroll service provider to help you calculate and fill out Form 941, and to consult a tax professional if you need guidance or assistance.

FAQs

What is the deadline for filing Form 941?

The deadline for filing Form 941 is the last day of the month that follows the end of the quarter. For example, the deadline for the first quarter (January to March) is April 30. If the deadline falls on a weekend or a federal holiday, the due date is the next business day.

How do I know which version of Form 941 to use?

You should use the most recent version of Form 941 that is available on the IRS website. The form may change from year to year or even from quarter to quarter, depending on the tax laws and regulations. You can find the current and past versions of Form 941 here: https://www.irs.gov/forms-pubs/about-form-941

How do I calculate the tax liability on Form 941?

To calculate the tax liability on Form 941, you need to add up the total wages and tips you paid to your employees during the quarter, subtract any non-taxable wages and tips, multiply the taxable wages and tips by the applicable tax rates (15.3% for social security and Medicare taxes, and the current federal income tax rate for each employee), and add any other taxes that apply to your business, such as the employer health care credit, the sick and family leave credits, or the deferred amount of the employer share of social security tax.

How do I deposit the taxes reported on Form 941?

You can deposit the taxes reported on Form 941 electronically or by mail, depending on your deposit schedule and the amount of taxes you owe. The IRS assigns you a deposit schedule based on your total tax liability during a four-quarter lookback period. You can be a monthly depositor, a semiweekly depositor, or a next-day depositor. You can find out more about the deposit schedules and methods here: https://www.irs.gov/businesses/small-businesses-self-employed/depositing-and-reporting-employment-taxes

What are the penalties for filing Form 941 late or incorrectly?

If you file Form 941 late or incorrectly, you may face penalties from the IRS. The penalty for filing late is 5% of the unpaid tax for each month or part of a month that the return is late, up to a maximum of 25%. The penalty for paying late is 0.5% of the unpaid tax for each month or part of a month that the payment is late, up to a maximum of 25%. You may also be charged interest on the unpaid tax and penalties. You can avoid or reduce the penalties if you can show reasonable cause for the failure to file or pay on time.

How do I correct a mistake on Form 941?

If you make a mistake on Form 941, you can correct it by filing Form 941-X, Adjusted Employer’s Quarterly Federal Tax Return or Claim for Refund. You should file Form 941-X as soon as possible after you discover the error. You can use Form 941-X to correct errors in wages, tips,> taxes, credits, or payments reported on a previously filed Form 941. You can find the instructions and the form here: https://www.irs.gov/forms-pubs/about-form-941-x

How do I file Form 941 electronically?

You can file Form 941 electronically through the IRS e-file system. To do so, you need to have an IRS-approved software or a tax professional who is authorized to e-file for you. You also need to have an electronic filing identification number (EFIN) and a personal identification number (PIN) to authenticate your identity. You can apply for an EFIN online here: https://www.irs.gov/tax-professionals/e-file-providers-partners/become-an-authorized-e-file-provider. You can create your own PIN or use a self-select PIN that the IRS assigns to you. You can find out more about e-filing Form 941 here: https://www.irs.gov/e-file-providers/businesses-and-self-employed/form-94x-meftax-year-2019-xml-schema-version-3-0

Where can I get help with filing Form 941?

If you need help with filing Form 941, you can contact the IRS by phone, email, or mail. You can also visit an IRS office or a tax assistance center near you. You can find the contact information and the locations of the IRS offices and centers here: https://www.irs.gov/help/contact-my-local-office. You can also seek help from a qualified tax professional, such as a certified public accountant, an enrolled agent, or a tax attorney.

IRS Form 941: Everything You Need to Know in 2024