Paying taxes to the government is every employer’s responsibility. Failing to do so can hurt a business and its employees.
Therefore, employers must be attentive to changes to taxation rules, regulations, or deadlines.
Nowadays, most companies use payroll software to streamline the tax filing process. However, it’s still important to know what each form means precisely, starting with one of the most common ones: Form 941.
What is Form 941?
Form 941 is a tax return form that companies use to report a portion of their tax contributions and withhold income and FICA taxes from their employee’s paychecks.
Unlike the annual Form W-3, the tax form 941 is an Employer’s Quarterly Tax Return, which means employees must do it four times per year by the designated due dates. Failing to complete this responsibility on time would result in penalties for the company.
Since the IRS uses the data from this form to compare it to the annual Form W-3, an employer must understand how to report the taxes correctly, where to mail the form, and to follow the updates and legislation changes related to Form 941.
Who Needs to File IRS Form 941?
Filing the tax form 941 is mandatory for business owners who pay employee wages subject to income and FICA taxes.
However, there are a few exceptions to this rule, including:
- Employers of farm workers
- Seasonal business owners
- Employers of household employees
Additionally, those who get a notification to file Form 944, a yearly tax form that covers small business owners whose annual taxes are $1,000 or less, are exempt from the quarterly tax form.
What Taxes are Reported on Form 941?
Employers use the 941 quarterly forms to withhold income, Social Security, and Medicare (FICA) taxes from their employee’s paychecks and file their portion of FICA taxes.
- Social Security Tax
Business owners and their workers must pay 6.2% of each employee’s salary to this dedicated payroll tax. But it’s the employer’s responsibility to withhold FICA taxes from their employee’s wages, pay theirs, and report both the company and the worker’s shares to the IRS using the quarterly tax form.
This is also taxable under FICA, so the same rules apply to employees and employers. The only difference is that they each pay 1.45% tax on employee earnings.
- Income Taxes
Companies also use the form to report income tax withheld from their employee’s paychecks.
What is IRS Form 941 Schedule B?
The IRS Form 941 Schedule B is an addition to the tax form 941 for reporting tax liabilities for semi-weekly pay schedules.
Employers eligible for Schedule B are:
- Those on the semi-weekly deposit schedule, who paid $50,000 or more in payroll taxes to the federal government for the last tax year
- Business owners who accumulate $100,000 or more in taxes on any given day. In this case, the employer must make a next-day deposit to the government and document the tax payment in this report
IRS Form 941 Instructions
The key to successfully and timely reporting taxes requires a comprehensive understanding of all the details regarding filling out, submitting the report, and paying taxes.
Following these Form 941 instructions will ensure employers get it right from the first time and complete their quarterly tax obligations without risking a penalty.
- Filling Out Form 941
Usually, this is the most challenging part considering that the tax form consists of three pages and five parts, including a payment voucher at the end for those who submit it by mail.
For the tax form 941 for 2022, employers must fill out the following sections:
- Basic information about their company
- Part one, or information about the wages, employee tax withholdings, the number of employees, etc.
- Part two, or information about the quarter’s deposit schedule and tax liability; for monthly depositors, there are three different boxes for each month; if the employer is a semi-weekly depositor, they must complete Form 941 Schedule B and attach it to the form
- Part three requires more information about the company and the wages the employer pays to its employees; the “Reserved for future use” lines in this section were previously used for COBRA premium assistance payment credit
- Part four requires authorization for the IRS to speak to a third-party designee on behalf of the business owner, like a CPA, enrolled agent, or tax advisor
- Part five requests the employer’s signature; before signing the form, it’s best to double-check all information to ensure everything is correct
- The voucher for manual payment is optional
The IRS has detailed instructions on correctly filling out the report, which employers can find here.
- Submitting the Report
There are two ways to submit a form, through the federal e-File system or the mail. The manual submissions depend on the business’s whereabouts, meaning that the address changes depending on the company’s state and whether the employer is also submitting the payment.
- Making a Payment
Like the submissions, the business owner can make tax payments electronically through the EFTPS — Electronic Federal Tax Payment System, or by submitting the voucher and the report through the mail.
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What Information is Reported on Form 941?
The easiest way to complete the 941 quarterly form is to have some information organized beforehand. That includes, but is not limited to:
- The taxation quarters
- Business details, including company name, EIN, and address
- Employment details, including the number of employees, wages, and employee tax deductions
- The employer’s share of FICA taxes
- Tips employees reported to the employer
- Additional Medicare taxes that are withheld from a worker’s paycheck
- Deposits made to the IRS
- Deposit schedule and tax liability
- Online Signature PIN or Form 8453-EMP
Where Should You Mail Form 941?
Employers who prefer to submit the report and pay taxes through the post office should know where to mail form 941 since there are several different addresses.
The addresses for companies in the states listed below are:
Without payment: Department of the Treasury, Internal Revenue Service, Kansas City, MO 64999-0005.
With payment: Internal Revenue Service, PO Box 806532, Cincinnati, OH 45280-6532.
- District of Columbia
- New Hampshire
- New Jersey
- New York
- North Carolina
- Rhode Island
- South Carolina
- West Virginia
For the remaining states, the addresses are:
Without payment voucher: Department of the Treasury, Internal Revenue Service, Ogden, UT 84201-0005.
With payment voucher: Internal Revenue Service, P.O. Box 932100, Louisville, KY 40293-2100.
- New Mexico
- North Dakota
- South Dakota
For businesses that have no legal residence in any of the states, the submission addresses are:
Without payment: Internal Revenue Service, PO Box 409101, Ogden, UT 84409
With payment: Internal Revenue Service, P.O. Box 932100, Louisville, KY 40293-2100
Form 941 Due Date
There are four deadlines for filing and reporting the tax form 941, all falling on the last day of the first month after the end of a quarter.
- April 30, for the first quarter covering January 1 to March 31.
- July 31, for the second quarter covering April 1 to June 30.
- October 31, for the third quarter covering July 1 to September 30.
- January 31, for the fourth quarter covering October 1 to December 31.
The IRS allows a single 10-day extension to the deadline, but only if the employer has consistently submitted all the other deposits during the quarter.
Punctuality is essential when it comes to taxes.
Failing to file the form in the specified timeframe comes with a five percent penalty of the total tax amount due and an additional five percent for every other month if the company fails to do this for up to five months.
The Employer’s Quarterly Tax Return will no longer be mandatory for employers who close down their business or stop paying wages subjected to these taxes.
On a Final Note
Considering everything that’s necessary to calculate an employee’s gross wage, from pre-tax deductions and retirement contributions to mandatory taxes, the person responsible for taxes within an organization must be highly attentive.
Using a payroll service provider or hiring a dedicated payroll administrator can reduce most of the work in filing taxes, including Form 941.
However, it’s always good for employers to grasp the process and stay informed on everything tax-related to ensure the well-being of their business and employees.