How to Complete and File Form 941 for Payroll Taxes
Form 941: An Employer's Quarterly Federal Tax Form
If you have been paying employees, and you have been withholding federal income taxes and Social Security and Medicare taxes, you must report the amounts that you have been withholding and pay those amounts including your business's required payments to the IRS.
What Is Form 941?
Form 941 is chiefly used by employers to report quarterly tax withholding amounts for estimated income tax payments, as well as employer payments, and FICA taxes (e.g., Social Security and Medicare), and includes the following:
- Withholding federal income taxes and FICA taxes from employee paychecks
- Withholding amounts due from Medicare wages for both the employees and the employer
- Withholding taxable social security wages
- Adjustments for sick pay
- Adjustments for tips
- Calculating the figure due in payment by the employer
- Amounts an employer has already paid, either on a semi-weekly or monthly basis, based on the size of the staff, and the payroll size
- Any underpayment or overpayment
When Is Form 941 Due?
IRS Form 941 is an important quarterly payroll tax form for every employer, and it's due four times each year. This form is due four times a year:
- March 31 for Quarter 1: January, February March
- June 30 for Quarter 2: April, May, June
- September 30 for Quarter 3: July, August, September
- December 31 for Quarter 4: October, November, December.
When due dates land on a holiday or a weekend day, the adjusted due date will be the next business day. For example, if the July 31 due date is a Saturday for that year, the due date for that payment would be Monday, August 2.
If you have made your payroll tax deposits for the quarter completely and on time, you have 10 more days after the due date above to file form 941 for the quarter. Here are the filing dates if you meet the criteria for the 10-day extension:
- For the first quarter, ending March 30, you must submit by May 10.
- For the second quarter, ending June 30, you must submit by August 10.
- For the third quarter, ending September 30, you must submit by November 10.
- For the fourth quarter, ending December 31, you must submit by February 10.
Information You Need for Completing Form 941
Here are a few reminders for IRS Form 941:
- The current Social Security rate is 6.2%, both for employees and the employer. The Social Security wage limit changes each year. This limit is the maximum annual pay subject to Social Security tax.
- Form 941 includes amounts withheld from employee pay for the additional Medicare tax for high-income individuals.
- The Medicare tax rate is 1.45% each for employees and employers. There is no maximum wage limit for Medicare tax.
- Effective for tax periods beginning after December 31, 2013, the credit for COBRA premium assistance payments cannot be claimed on Form 941.
- Check to be sure that all income should be counted for Social Security purposes. Read more about Social Security wages for FICA tax for more information on what wages to take out for this calculation.
How to Complete Form 941
This is a general overview of the steps in completing Form 941. You can find more details in the IRS Instructions for Form 941:
- Check the social security maximum for the year, as it changes annually. No withholding of social security is taken from employee wages above this amount.
- Account for the additional Medicare tax for higher-income employees.
- Provide this overall information:
- Line 1: The number of employees who were paid during the quarter.
- Line 2: The total compensation paid to these employees during the quarter.
- Line 3: Total income tax withheld from employee compensation during the quarter.
- Compute social security/Medicare tax.
- Line 4: If no employee compensation was subject to social security or Medicare tax, check the box and skip to task 4.
- Line 5a: Enter total taxable social security wages in Column 1, multiply by .124, and enter the amount in Column 2. Remember that social security wages are paid only up to the annual social security maximum amount for each employee.
- Line 5b: Do the same as 5a for tips.
- Line 5c: Enter total taxable Medicare wages and tips in column 1, multiply by .029, and enter the result in Column 2.
- Add Column 2 amounts from 5a, 5b, and 5c, and enter the total in 5d.
- Compute the total tax. To determine the amount of tax you owe, add the totals for Line 3—tax withheld, Line 5d: total social security and Medicare tax due, and subtract line 6d: HIRE Act exemption. Enter the total on Line 6e.
- Make adjustments.
- Line 7a: Adjustment for fractions of cents. Use traditional rounding—under 1/2, round down; half or more, round up. Use the negative sign, not parentheses, for decreases.
- Line 7b: Subtract any social security or Medicare withheld from sick pay by third-party payers such as insurance companies.
- Line 7c: Subtract adjustments for the uncollected employee share of social security and Medicare taxes on tips, and on group-term life insurance premiums paid for former employees.
- Line 8: Total these adjustments (6e through 7c) and enter the amount on Line 8.
- Total the deposits. On Line 11, enter the total for all payroll tax deposits you made during the quarter.
- Total the adjustments. Add Line 11: total deposits, Line 12a: COBRA premium assistance payments, and Line 12e: adjustment for social security tax on COBRA assistance.
- Determine the balance due or an overpayment:
- If Line 10, total taxes, is greater than Line 13, total deposits with adjustments, enter the balance due on Line 14.
- If Line 10, total taxes, is less than Line 13, total deposits with adjustments, enter the overpayment amount on Line 15. You may either apply the overpayment to the next return or request a refund.
- On page 2 of the form, note that You must provide information about your payroll deposit schedule. If you are a monthly depositor, you must enter the tax liability for each month in the quarter. If you are a semiweekly depositor, you must attach Schedule B: Form 941, showing the tax liability for each semiweekly deposit.
- Your tax liability is NOT your deposits for each quarter. Your tax liability is the total tax you owe based on gross payroll for each month. Your tax liability for the quarter must equal the total on Line 10.
- Answer the questions about your business, on lines 18 and 19, or leave them blank if they don't apply.
Part 4 asks if the IRS may communicate with your third-party designee. This is the person who prepared your Form 941 and who is responsible for the preparation of payroll taxes.
Don't forget to sign the form and include the other information in Part 5 before submitting it. Check for errors, especially those that might cause an underpayment. It's better to correct errors before you send in the form to avoid fines and penalties.
How to Submit Form 941
Form 941 may be submitted electronically using Federal E-file. You can E-file Form 941 and pay any balance due electronically by using tax preparation software or by consulting with a tax professional.
This IRS page "Where to File Your Taxes" for Form 941 gives information on where to mail your return, with or without payment.
Paying Taxes with Form 941
If you have paid the complete amount of your payroll taxes during the months covered by this form, you should see "$0" due. That's good. But what if you owe taxes? Use the IRS EFTPS tax payment system to pay your payroll taxes.
You cannot wait until you file Form 941 and pay all taxes for the quarter at that time. You must make either monthly or semi-weekly deposits, depending on the amount owed.
If you are required to make deposits, you may have a small balance due. Make that deposit electronically using the IRS EFTPS system.
IRS. Instructions for Form 941. "When to File Form 941," Page 4. Accessed Oct. 21, 2019.