If you are a business employer with no agricultural employees, you will
file the quarterly Form 941 (PDF) , Quarterly
Employer's Tax Return to report wages you have paid, tips your employees
have received, Federal income tax withheld, social security and Medicare taxes
withheld, your share of social security and Medicare taxes, and advance earned
income credit (AEIC) payments. A separate Form 941 is filed for each
quarter. The first quarter is January through March. The second quarter is
April through June. The third quarter is July through September. The fourth
quarter is October through December. Form 941 is due by the last
day of the month following the end of the quarter. For example, wages you
pay during the first quarter, January through March, must generally be reported
on Form 941 by April 30th. If the due date for filing a return falls
on a Saturday, Sunday or legal holiday, you may file the return on the next
business day.
Most employers are required to deposit their employment taxes before the Form
941 is filed. For the rules for making deposits, refer to Tax Topic 757.
If you have deposited all your tax on time, you have ten additional days to
file Form 941.
The total social security and Medicare taxes on Form 941 may differ
by a small amount from the total on your payroll records, due to fractions
of cents that you gained or lost when computing separate amounts for individual
employees. You may add or subtract this difference on the line for social
security and Medicare adjustments. Generally, this should not be more than
a few cents. You may also use this adjustment line to correct the social security
and Medicare taxes you were unable to collect on employees' tips, or for sick
pay wages you report but for which social security and Medicare taxes were
withheld by a third party, such as an insurance company. You may also use
this line to make an adjustment for certain errors on your prior quarter Form
941. Show the adjustment on the Form 941 for the quarter during
which the error was discovered and attach Form 941C (PDF), Supporting
Statement to Correct Information, or a written statement to explain the
changes.
The income tax withheld and social security and Medicare taxes are added
together on Form 941. If you made advance earned income credit payments
to employees during the quarter, the total amount is subtracted from your
total taxes. Refer to Tax Topic 754 for more information on advance earned income credit.
The resulting net tax is the amount of employment taxes you owe for the
quarter. If this amount is $2,500 or more, complete the Monthly Summary of
Federal Tax Liability portion of Form 941 if you are a monthly schedule
depositor, or Schedule B of Form 941 (PDF), if
you are a semiweekly depositor. The purpose of this part of the form is to
show the IRS when you were required to make deposits and whether they were
made timely.
On the record of liability (Schedule B for semiweekly depositors), you
must show the combined amount of social security, Medicare, and income tax
owed for each month or day. Your liability for employment taxes occurs when
you actually pay the employees their wages, not when the pay period ends.
For example, if your pay period ends September 24th, but you do not pay the
employees until October 1st, their wages would be reported in the fourth quarter,
when you actually became liable for the tax, not the third quarter when the
pay period ended.
It is very important that you complete the tax liability record correctly,
or it may appear that you did not deposit your taxes when due. There is a
late deposit penalty ranging from 2% to 15%, depending on the length of time
the deposit is late.
Generally, if your tax liability for the quarter is $2,500 or more and
you have made the proper deposits, you should not have a balance due with Form
941. Generally, only taxpayers with a tax liability of less than $2,500
may pay with the tax return. If you pay taxes with your tax return that should
have been deposited, you may be subject to a penalty. Be sure Form 941
is signed and dated before mailing it to your service center.
You may find Publication 15 (PDF), Employer's Tax Guide, helpful. It explains all the deposit rules and filing requirements for Form 941.
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