Complete Guide to IRS Form 941 Filing & Mail Instructions (2024)

IRS Form 941 requires employers to report the income and payroll taxes withheld from their employees' pay each quarter. Also referred to as Employer’s Quarterly Federal Tax Return, this form also requires employers to calculate their portion of Social Security and Medicare tax payments. It’s all too easy for overworked business owners to fall behind on their tax documentation, but forgetting to file IRS Form 941 or filing it late can lead to costly penalties.

Learn more about filling out this form accurately, and for help with your business tax issues, browse our directory of tax professionals in your area.

What is IRS Form 941?

Throughout the year, employers withhold a number of taxes from employees’ paychecks. This includes their federal income taxes, Social Security taxes, and Medicare taxes. As a business owner, you are essentially allowing those funds to pass through you and onto the IRS—IRS Form 941 documents those withholdings and other relevant information so that the IRS can calculate how much you need to pay for the quarter.

Who Has to File Form 941?

Anyone who owns a business and has employees working for them should plan on filing Form 941 four times per year. However, there are a few exceptions. If you are going to pay less than $1,000 in employment tax annually, you may be able to file Form 944 (Employer's Annual Federal Tax Return) instead, but you must opt-in to file this form.

Additionally, those who hire farm workers can use Form 943 (Employer's Annual Federal Tax Return for Agricultural Employees), while household employers of maids and nannies, for example, can report their withheld taxes on Schedule H with their individual income tax return. Or if they also have a business, they may be able to include their household employees on their 941.

When is Form 941 Due?

This form must be submitted by the last day of the month after the end of the quarter. For example, the first quarter of the year is January through March, so your first 941 for the calendar year would be due April 30. If this day falls on a weekend or legal holiday, the due date rolls over to the next business day.

Employer Responsibilities With Form 941

Form 941 is part of an employer’s responsibilities and legal obligations to the IRS and to their employees. Employees must pay into Medicare, Social Security, and income, and employers withhold these sums and send them to the IRS. Employers must also match their employees' Medicare and Social Security contributions.

To illustrate, say an employee earns $1,000 for the week. Their employer must withhold $76.50 in Social Security and Medicare, and then, they withhold a certain amount of income tax based on the employees' filing status, other income, and dependents. Let's say the employer withholds $100 in income tax. After calculating the withholdings, the employer pays the employee $823.50. The employer then sends the withheld money ($176.50) plus their matching portion of $76.50 to the IRS. At the end of the quarter, the employer reports all of this information on their 941 form.

Form 941 is essentially the calculation of those taxes. In addition to the base tax withholdings you have to calculate, you are also required to make any necessary adjustments for sick pay, tips, and other sources of income. You may also need to make adjustments for fractions of cents that you gained or lost due to rounding when calculating payroll.

Form 941 vs. Form 944

Although Form 941 is required for most employers, some employers can file Form 944 once per year instead. Employers with small payrolls and government employers can file Form 944, Employer’s Annual Federal Tax Return, instead. This form is due on January 31 following the calendar year for which you are reporting taxes.

Generally, this is an option for companies with an annual tax liability of $1,000 or less. Before filing Form 944, an employer must note this preference on Form SS-4; if they do not, they have to get permission from the IRS first. Form SS-4 is the form you use to apply for an Employer Identification Number (EIN) which you use to identify your business on your payroll tax forms.

Form 941 Instructions

Filling out Form 941 accurately and completely can help you avoid delays, having your form returned, and paying late penalties. To fill this form out, you should:

• Enter your identifying information, including your EIN, name, and address on page one and page two.
• Check the box for the first, second, third, or fourth quarter.
• In Part 1, you fill out the number of employees who received wages, the total amount paid out, and the federal income tax withheld from their compensation. Do not use dollar signs or decimal points; use the preprinted decimal points. Always use a number for cents, even if that number is zero.
• The rest of Part 1 requires you to mark taxable Social Security wages, qualified sick leave wages and family leave wages, taxable Social Security tips, taxable Medicare wages and tips, and taxable wages and tips subject to additional Medicare withholding. Multiply each number by the number provided by the IRS on the form and put the resulting number in Column 2. You can then add up the numbers in Column 2 and write the sum in 5e.
• After adding up all of the taxes due, you’ll make any necessary adjustments for fractions of cents in Line 7. You can also make adjustments for sick pay on Line 8 and adjustments for tips and group-term life insurance on Line 9 before putting the adjusted number in Line 10.
• Any adjustments and credits are made in Line 11, and the final amount due is calculated for Line 12.
• On Line 13, you will list your deposits for the current quarter. On Line 14, you’ll mark the balance due or you will mark the overpayment on Line 15. You cannot have an entry on both Line 14 and 15.
• Part 2 of the form requires you to indicate your deposit schedule and tax liability for the quarter. Your deposit or payment schedule is dependent on your total tax liability.
• Part 3 is only for businesses that have closed or stopped paying wages or businesses that are seasonal and do not have to file every quarter.
• Part 4 allows you to name a third-party designee the IRS can contact about this form.
• Finally, you will sign the form and write your name, the date, your title, and your phone number.

How to Pay Form 941 Taxes

In addition to submitting Form 941, you will need to pay the balance due listed on the form. In most cases, employers pay the tax long before filing these form. Most employers deposit payroll taxes monthly through the Electronic Federal Tax Payment System (EFTPS), but some employers have to make deposits more often.

Here's an example of a typical quarter. On or before February 15th, the employer deposits the withheld taxes and matching payments from employee paychecks in January. On or before March 15th, they make the deposits for February paychecks. On or before April 15th, they make the deposits for March paychecks. Then, on or before the last day of April, they file Form 941 detailing the payments and taxes for the first quarter.

How to File Form 941

The IRS prefers electronic filing. You can either submit the forms yourself using IRS-approved software—they provide a list—or use an Authorized IRS e-file Provider to submit the forms for you.

If you prefer to file a paper return, the 941 address to send your forms to depends on your location and whether or not you are including a payment with your return. Use the table on the Instructions for Form 941 provided by the IRS to find the right address for your situation. Ensure that you are always using the most up-to-date version of the IRS’s instructions, as your Form 941 mailing address may have changed since the previous publication.

Consequences of Failing to File

If you fall behind on filing your Form 941 each quarter, the IRS will assess penalties. If you do not file by the deadline, they will charge 5% of the tax amount due. They will charge an additional 5% each month that the IRS does not receive your form, up to a maximum of five months.

Penalties for Failing to Pay 941 Taxes

There are additional penalties if you do not pay the taxes owed on your Form 941. Employers that are required to make payroll tax deposits and fail to do so will also face failure to deposit penalties. A deposit that is one to five days late results in a 2% penalty, which increases to 5% for a payment that is six to 15 days late. Payments that are more than 15 days late are charged 10%. The penalty reaches 15% if you wait more than 10 calendar days after receiving a notice or letter from the IRS.

Trust Fund Recovery Penalty

Although the previous penalties can add up quickly, a Trust Fund Recovery Penalty is even more serious. If you withhold income taxes, Medicare taxes, and Social Security taxes but don’t send that money to the IRS, they can assess a penalty equal to the amount you withheld but did not pay. It essentially doubles your tax payment. The IRS can go after owners, CEOs, directors, and other parties who may be responsible for the unpaid taxes.

Get Help With Payroll Tax Problems

Payroll tax problems can quickly snowball, costing you an ever-increasing amount in penalties. It is crucial to get ahead of this problem quickly by working with a tax professional who can get you caught up and keep you compliant with IRS requirements. With the tax pro listings at TaxCure, you can find a tax professional with extensive experience in payroll taxes, trust fund taxes, and other business tax concerns.