If you are a business employer with no agricultural employees, you will
file the quarterly Form 941(PDF), Employer's
Quarterly Federal Tax Return to report wages you have paid, tips your
employees have reported to you, Federal income tax withheld, social security
and Medicare taxes withheld, your share of social security and Medicare taxes,
and advance earned income credit payments. A separate Form 941 is
filed for each quarter. The first quarter is January through March. The second
quarter is April through June. The third quarter is July through September.
The fourth quarter is October through December. Form 941 is due by
the last day of the month following the end of the quarter. For example, wages
you pay during the first quarter, January through March, must generally be
reported on Form 941 by April 30th. If the due date for filing a
return falls on a Saturday, Sunday or legal holiday, you may file the return
on the next business day.
Most employers are required to deposit their employment taxes before the Form
941 is filed. For the rules for making deposits, refer to Topic 757.
If you have deposited all your tax on time, you have ten additional days to
file Form 941.
The total social security and Medicare taxes on Form 941 may differ
by a small amount from the total on your payroll records, due to fractions
of cents that you gained or lost when computing separate amounts for individual
employees. You may add or subtract this difference on the line for tax adjustments.
Generally, this should not be more than a few cents. You may also use this
adjustment line to correct the social security and Medicare taxes you were
unable to collect on employees' tips, or for sick pay wages you report but
for which social security and Medicare taxes were withheld by a third party,
such as an insurance company. You may also use this line to make an adjustment
for certain errors on your prior quarter Form 941. Show the adjustment
on Form 941 for the quarter during which the error was discovered
and attach Form 941c(PDF), Supporting Statement
to Correct Information, or a written statement to explain the changes.
The income tax withheld and social security and Medicare taxes are added
together on Form 941. If you made advance earned income credit payments
to employees during the quarter, these payments are subtracted from your total
taxes. Refer to Topic 754 for more information on advance earned
income credit.
The resulting net tax is the amount of employment taxes you owe for the
quarter. If this amount is $2,500 or more, complete the Tax liability for
each month in Part 2 of Form 941 if you are a monthly schedule depositor,
or use instead Schedule B of Form 941(PDF) if
you are a semiweekly depositor. The purpose of Part 2 of Form 941 or Schedule
B is to show the IRS when you paid your employees. IRS uses this information
to determine if you deposited your payroll taxes on time. For your fourth
quarter 2004 Form 941(PDF), refer to line 17 instead
of Part 2
In Part 2 of Form 941 or Schedule B for semiweekly depositors, you must
show the combined amount of social security, Medicare, and income tax owed
for each month or day. Your liability for employment taxes occurs when you
actually pay the employees their wages, not when the pay period ends. For
example, if your pay period ends September 24th, but you do not pay the employees
until October 1st, their wages would be reported in the fourth quarter, when
you actually became liable for the tax, not the third quarter when the pay
period ended.
It is very important that you complete Part 2 of Form 941 or Schedule B
correctly, or it may appear that you did not deposit your taxes when due.
There is a late deposit penalty ranging from 2% to 15%, depending on the length
of time the deposit is late.
Generally, if your tax liability for the quarter is $2,500 or more and
you have made the proper deposits, you should not have a balance due with Form
941. Generally, only taxpayers with a tax liability of less than $2,500
may pay with the tax return. If you pay taxes with your tax return that should
have been deposited, you may be subject to a penalty. Be sure Form 941 is
signed and dated before mailing it to your service center.
You may find Publication 15, Circular E, Employer's Tax Guide,
helpful. It explains all the deposit rules and filing requirements for Form
941.
