What Is Form 941?
Form 941 is the form used to report and pay an employer’s quarterly federal taxes. The IRS requires nearly all employers to use Form 941 to report the income and payroll taxes they withheld and remitted from their employees’ paychecks as well as to calculate and pay their employer’s portion of their employees’ Social Security and Medicare taxes.
Businesses use Form 941 to report:
- How many employees received compensation from them during the quarter
- The total salaries, wages, and compensation they paid
- Tips reported by their employees
- The federal income taxes they withheld
- The Social Security and Medicare taxes due
- Any adjustments or credits.
Who Needs to File Form 941?
Nearly every employer must file Form 941 each quarter — even if they didn’t pay employees during that quarter — although some exceptions do exist.
Seasonal employers that regularly don’t pay any wages during one or more quarters, for example, generally don’t need to file Form 941 for the quarters in which they don’t have employees.
In addition, the IRS doesn’t require employers of household or agricultural employees to file Form 941. Instead, they must file different forms to report and remit their federal income taxes as well as Social Security and Medicare taxes (i.e., Schedule H and Form 943).
How Much Are an Employer’s Quarterly Federal Taxes?
An employer’s quarterly federal tax return reports on — and remits — the personal federal income taxes withheld from employees as well as the employee’s and the employer’s portion of Social Security and Medicare taxes.
Employers are responsible for paying the employer’s portion of an employee’s Social Security and Medicare taxes, which typically equates to half of the employee’s total Social Security and Medicare tax.
The current tax rate for Social Security is 12.4% of the first $147,000 (in 2022) and the Medicare tax rate is 2.9% of all taxable wages. The employer’s portion of these then equates to 6.2% of each employee’s first $147,000 in wages for Social Security taxes plus 1.45% of each employee’s taxable wages for Medicare taxes.
When Is Form 941 Due?
The majority of employers must file Form 941 every quarter. If you fall into this group, you must file the form and remit the associated payments by the end of the month following the last month of the quarter. This gives you exactly one month to file Form 941 and complete your tax payments.
For example, Form 941 and federal income tax withholding along with Federal Insurance Contributions Act (FICA) payments for the first quarter (January to March) are due the last day of April — provided that date doesn’t fall on a weekend or holiday. The typical due dates for filing Form 941 and remitting the related tax payments are:
- Q1: April 30
- Q2: July 31
- Q3: October 31
- Q4: January 31
Methods for Filing Form 941
Employers can file Form 941 using three different methods:
- Efiling with the IRS by using an IRS-approved software provider
- Hiring a professional payroll service, accountant, or tax preparer equipped to prepare and efile employer quarterly tax returns.
If you choose to mail your return to the IRS, the mailing address for Form 941 will depend on the state in which you organized your business and if you plan to include payment. To find the correct mailing address for your state, check the IRS’ Form 941 instructions for the year for which you’re filing.
If you choose to prepare and efile Form 941 yourself, you’ll need to purchase software to prepare and file your return from an IRS-approved provider. The IRS publishes a list of approved, modernized efile software providers, including most of the large payroll and accounting software developers.
Many businesses outsource their payroll, accounting, and tax-filing processes — and most payroll service providers and accountants will handle the preparation and filing of Form 941 for you. 1-800Accountant offers a free consultation to help you get started with a professional today.
When Should You Make Your Employer’s Tax Payments?
When you make your employer tax deposits will depend on the size of your payroll and your payroll tax liability as an employer. The IRS will assign you to one of four employer tax deposit schedules before the end of the current tax year:
Businesses with less than $2,500 of payroll tax payments may be able to file Form 944 and pay their payroll tax liability annually in place of a quarterly return and more frequent payments.
Businesses with less than $2,500 of payroll tax payments during the previous or current quarter may be eligible to remit and pay their payroll tax payments on a quarterly basis with Form 941.
Businesses with between $2,500 and $50,000 of payroll tax payments during a look-back period (e.g., the previous 12 months) must pay their payroll tax payments on a monthly basis.
All other businesses (e.g., those with more than $50,000 of payroll tax payments during the look-back period of the previous 12 months) must make payroll tax payments on a biweekly basis (i.e., every other week).
Whether you're about to hire your first full-time employee or have had employees for many years, we recommend using a payroll service to help stay organized. Fill out the form below to get started with a payroll service today.
How to Make Quarterly Federal Tax Payments
Employers must pay their federal income tax along with their Social Security and Medicare tax withholding and payments either by using the IRS’ Electronic Federal Tax Payment System (EFTPS) according to their payment schedules or by making a same-day wire payment using the Federal Tax Collection Service.
The IRS enrolls all businesses in the EFTPS when they apply for and receive an Employer Identification Number (EIN). Thus, most businesses submit their payments online via the EFTPS because it’s easy and free. To learn more about obtaining an EIN for your business, read our guide on How to Get an EIN.
When filing Form 941, employers may pay the balance due by:
What Are the Penalties for Not Filing Form 941 or Filing Late?
The IRS may impose “failure to file” penalties of 5% of the tax due for each month that Form 941 is filed late — up to a maximum of 25%. In addition, the IRS may impose “failure to pay” penalties of 2% to 15% of the tax due plus interest of 0.5% per month on any unpaid amounts based on how late you pay your federal payroll taxes.
To learn more about S corp taxes, checkout our guide How to File S Corp Taxes.