IRS Form 941: The Basics That Business Owners Need to Know

As a business owner, you’re responsible for withholding and reporting on payroll taxes. In most cases, reporting occurs on a quarterly basis. At the center of this stressful ordeal: IRS Form 941. Confused about the form and how to file? Read on to get a basic grasp of this critical document.

What Is Form 941? Who Needs to File It?

Form 941 allows employers who withhold federal income and FICA taxes to report amounts to the IRS. It’s not a payment form, but rather, a report. The form includes the following calculations:

  • Amounts withheld from employee paychecks to cover federal income and FICA taxes.
  • Calculations of required payroll tax contributions from both the employer and employee.
  • Amounts already covered by the employer, based on the number of employees and company payroll size.
  • Adjustments according to sick pay or tips.

Most businesses file Form 941 every quarter. A few employers can avoid it:

  • Seasonal employers only file Form 941 for the quarters in which employees work. For example, holiday businesses may not file Form 941 in July.
  • Individuals who employ butlers, nannies, and other household workers. These employers file Schedule H for Form 1040.
  • Agricultural employers replace Form 941 with Form 943.

Information to Include on Form 941

Form 941 should include business information such as employer identification number and current address. The form consists of several lines, highlighting:

  • The number of workers compensated in a given quarter.
  • Total compensation — including tips — provided for all employees.
  • Tax withheld from employee paychecks
  • Mention if compensation is not subject to FICA taxes.
  • Calculation of funds owed to Medicare and Social Security.

When Is Form 941 Due?

Employers must file Form 941 one month after the end of each quarter. For example, for the quarter ending on March 31, employers would file on April 30. Sometimes, the filing date falls on a holiday or weekend. In such situations, the form must be submitted the next business day.I

If you’re dealing with a crisis related to IRS Form 941—for instance, you’re late filing or paying payroll taxes—we can help. Contact the Highland Tax Group at 720-398-6088, or visit our website.