IRS Form 941, also known as the “Employer’s Quarterly Federal Tax Return,” is a form that most employers must file quarterly with the Internal Revenue Service (IRS). This form reports income taxes, Social Security tax, or Medicare tax withheld from employees’ paychecks and the employer’s portion of Social Security or Medicare tax.
Who Needs to File Form 941?
If you pay wages to employees and withhold federal income, Social Security, or Medicare taxes, you likely need to file Form 941. This applies to businesses of all sizes, including those who have hired only one employee. However, if you have hired household employees, like a nanny or housekeeper, you might need to file Form 944 instead.
How to File Form 941
Step-by-Step Process
- Gather Information: Before you start filling out Form 941, ensure you have all necessary information, including your Employer Identification Number (EIN), the total amount of wages paid, and the federal income, Social Security, and Medicare taxes withheld from your employees’ wages.
- Fill Out the Form: You can download Form 941 from the IRS website. The form must be completed every quarter. Make sure to accurately report your total payroll, the amount of federal income tax withheld, and both the employer’s and employees’ shares of Social Security and Medicare taxes.
- Submit the Form: Form 941 can be filed electronically or mailed to the IRS. If you choose to file electronically, you may use IRS e-file. If mailing, the address depends on your state, which you can find on the IRS website.
- Payment: If you owe taxes, you can make a payment online through the Electronic Federal Tax Payment System (EFTPS), or you can send a check along with your mailed form.
What Happens If You Don’t File It?
Failing to file Form 941 can lead to several penalties. The IRS may charge you a penalty for not filing on time, which is typically 5% of the unpaid taxes for each month or part of a month that a tax return is late. If you don’t pay the taxes you owe by the due date, you’ll face a failure-to-pay penalty, which is 0.5% of the unpaid taxes for each month or part of a month after the due date. The total penalty for failure to file and pay can reach up to 47.5% of the unpaid tax, plus interest on the unpaid amount.
