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.
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.
Step-by-Step Process
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.
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