How to Fill Out 941 Form and Avoid Penalties

Many business owners are required to file their quarterly tax returns nowadays. The Employer’s Quarterly Federal Tax Return, or the IRS fillable form 941, serves to report income/payroll taxes withheld from employees’ salaries. Since underreporting your tax liability can lead to receiving penalties from the IRS, follow the Form 941 instructions in our article and be on the safe side.
What Is Form 941?
Fillable Form 941 is the IRS document used to report your income/Social Security/Medicare taxes withheld from your employee’s paychecks. With this form, you can calculate, report, and pay the employer’s share of Medicare or Social Security tax.
Form 941 covers the following:
- federal income tax withheld from your employees’ salaries;
- tips reported by employees;
- paychecks you paid;
- the shares of Social Security and Medicare taxes on behalf of an employer and employee;
- extra Medicare tax withheld from employee paychecks, etc.
After making all calculations, you’ll get the sum you have to pay to cover any payroll tax obligations you have for the quarter.
Who Files Form 941?
Since most business owners who hire employees must file this IRS form, it would be reasonable to list those circumstances when you don’t have to deal with it:
- if you are a seasonal business owner and didn’t hire any employee during the quarter, you don’t have to file this document;
- if you employ only farmworkers for your business;
- in case you hire household employees.
Otherwise, you have to file the form on a quarterly basis to declare employment taxes. In several states, taxpayers are provided with Form 941 analogs so that they could report employer taxes and income withholdings at the state level.
How to Fill Out a 941 Form
Form 941 consists of three pages and has five parts to fill out. Collect all the required information beforehand and follow the guidelines step by step:
- In section 1, enter the basic business data (EIN, name, and address) and indicate the quarter you’re filing for.
Part 1 has 15 lines:
- Enter the number of employees whom you paid for the quarter in line 1.
- Line 2 requires the data on total wages, tips, or any other compensation paid for the quarter.
- Supply line 3 with the sum of federal income tax withheld from salaries and tips you paid for the quarter.
- Check box 4 if any compensation you paid is not subject to Social Security and Medicare tax.
- Determine your taxable Social Security and Medicare wages in sections 5a — 5d, add Column 2 from these lines and state the total sum in field 5e.
- Section 6 requires you to estimate your overall taxes prior to adjustments.
- Fill out lines 7 — 9 if your business has any arrangements to report tips, sick pay, and group term life insurance.
- In box 10, indicate your total taxes after adjustments (calculate the sum of lines 6 — 9).
- Fill out lines 11a —11g if your business may apply for payroll tax credits for enhanced research activities. Attach an 8974 form.
- In line 12, subtract line 11g from line 10 and define your overall taxes after adjustments and credits.
- Deduce your refundable advances and total deposits in sections 13a — 13i. If your liability exceeds the already made deposits, there will be a balance due stated on line 14.
- Choose if you want to get a compensation check or the overpayment applied as a credit on your future tax return in the appropriate box next to line 15.
- Now proceed to part 2. A monthly depositor has to complete the boxes named Month 1, Month 2, and Month 3. If you’re a semiweekly depositor, fill out Form 941 Schedule B and attach it to the document.
- In Part 3, report your health plan, sick leave, and wages related to the COVID measures.
- In Part 4, fill in the third-party designee name and contact number in the “Yes” box if you grant authorization to another person. Otherwise, go to the “No” box.
- Ensure the data is correct, sign Form 941, and date Part 5.
Afterward, submit the form to the IRS and pay the remaining balance.
Where to File Form 941?
You can file Form 941 via the federal e-File system. Another solution is to mail it. To know where to send Form 941, you should consider that the mailing address depends on your business location, a quarter you’re filing for and whether you’re submitting payment alongside your tax return. Don’t forget to attach the payment voucher to the form.
The due date for filing the form is one month, succeeding the last day of the reported period. Check on the calendar deadlines:
- 1st quarter: April 30, for the tax period covering January 1 to March 31;
- 2nd quarter: July 31, for the term from April 1 to June 30;
- 3rd quarter: October 31, for the tax period covering July 1 — September 30;
- 4th quarter: January 31, for the period from October 1 to December 31.
If the deadline happens on a holiday or weekend, file the form by the following business day.
Keep Your Finances in Order
Don’t risk getting penalties from the IRS. Follow our expert instructions, navigate through the fields, fill out Form 941 properly, send it by the due date, and keep your karma positive.
Based on article by pdfliner.com