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 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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